First Quarter 2020 Revenue of $19.1 Million
Reflects 55.4% Increase Over Prior Year
Vapotherm, Inc. (NYSE: VAPO), (“Vapotherm” or the “Company”), a
global medical technology company focused on the development and
commercialization of its proprietary Hi-VNI® Technology products
that are used to treat patients of all ages suffering from
respiratory distress, today announced first quarter 2020 financial
results.
First Quarter 2020 Summary
- Revenue for the first quarter of 2020 was $19.1 million,
representing a 55.4% increase over the prior year period
- Worldwide installed base of Precision Flow Hi-VNI systems grew
by 22.7% compared to the first quarter of 2019
- Gross margin was 48.2% or 610 basis points higher than gross
margin of 42.1% in the first quarter of 2019
Second Quarter 2020 Update
- Preliminary unaudited revenue for the month ended April 30,
2020 is estimated to be between $19.0 million and $19.3
million
- Worldwide installed base of Precision Flow Hi-VNI systems grew
by over 2,200 for the month ended April 30, 2020 compared to nearly
1,300 during the entire first quarter of 2020
“We believe the first quarter of 2020 was transformational for
Vapotherm as significant customer demand in both new and existing
accounts due to COVID-19 materially increased the awareness of our
Hi-VNI Technology for treating patients suffering from respiratory
distress. In the first quarter, we significantly exceeded
expectations for revenue, continued the rapid expansion of our
worldwide installed base of Precision Flow systems, and improved
our gross margin by 610 basis points over the prior year period
despite strong head winds. I am especially proud of the effort of
our operations team and suppliers as we dramatically increased
production capacity to meet increased demand,” said Joe Army,
President and CEO of Vapotherm. “The second quarter is off to a
very strong start as we continue to see increased demand from our
new and existing customers treating the respiratory distress
experienced by many COVID-19 patients, allowing us to significantly
increase our worldwide installed base. We intend to focus on
managing our supply chain to support our increased production
levels along with continuing to improve our gross margin and
expanding our limited market release of the Oxygen Assist Module in
the U.K. and potentially in certain European markets.”
Results for the Three Months Ended March 31, 2020
The following table reflects the Company’s revenue for the three
months ended March 31, 2020 and 2019:
Three Months Ended March
31,
2020
2019
Change
(unaudited)
(in thousands, except
percentages)
Amount
% of Revenue
Amount
% of Revenue
$
%
Revenue
Capital Equipment (product & lease
revenue)
$
6,034
31.6
%
$
2,678
21.8
%
$
3,356
125.3
%
Disposable
12,430
65.0
%
9,019
73.3
%
3,411
37.8
%
Service and Other
651
3.4
%
602
4.9
%
49
8.1
%
Total Revenue
$
19,115
100.0
%
$
12,299
100.0
%
$
6,816
55.4
%
Revenue for the first quarter of 2020 was $19.1 million, a 55.4%
increase over the first quarter of 2019, and in line with
preliminary first quarter revenue of $18.9 million as announced on
April 13, 2020. Total capital revenue, including both product
sales, lease revenue, and other lease revenue increased 125.3% over
the first quarter of 2019. This increase was primarily as a result
of increased sales and leases of our Precision Flow units. Total
disposable revenue increased 37.8% year over year, primarily driven
by an increase in the worldwide installed base of Precision Flow
units and increased utilization to treat the respiratory distress
experienced by many COVID-19 patients.
Revenue information by geography is summarized as follows:
Three Months Ended March
31,
2020
2019
Change
(unaudited)
(in thousands, except
percentages)
Amount
% of Revenue
Amount
% of Revenue
$
%
United States
$
14,341
75.0
%
$
10,049
81.7
%
$
4,292
42.7
%
International
4,774
25.0
%
2,250
18.3
%
2,524
112.2
%
Total Revenue
$
19,115
100.0
%
$
12,299
100.0
%
$
6,816
55.4
%
U.S. and International revenue growth in the first quarter of
2020 was driven by an increase in single-use disposable sales due
to higher installed bases of Precision Flow units and increased
utilization to treat the respiratory distress experienced by many
COVID-19 patients, as well as an increase in the number of
Precision Flow units sold year over year.
Gross profit for the first quarter of 2020 was $9.2 million, an
increase of $4.0 million over the first quarter of 2019. Gross
margin was 48.2% in the first quarter of 2020 compared to 42.1% in
the first quarter of 2019. Gross margin was positively impacted by
improved overhead absorption as production capacity increased,
higher U.S. disposable average selling prices and higher
International capital average selling prices. Partially offsetting
these positive factors were strong headwinds, including higher
labor costs and increased supplier freight and expediting fees to
meet the rapid increase in production capacity, and to a lesser
extent a higher mix of capital equipment revenue and a higher mix
of International revenue.
Operating expenses were $21.9 million in the first quarter of
2020, an increase of $4.6 million as compared to $17.3 million in
the same period last year. The increase in operating expenses was
primarily a result of higher sales and marketing expenses due to
increased sales commissions as a result of increased revenue and
increased headcount, as well as higher general and administrative
expenses.
Net loss for the first quarter of 2020 was $13.8 million, or
$0.66 per share, compared to $13.0 million, or $0.76 per share, in
the first quarter of 2019. Net loss per share was based on
20,882,949 and 16,949,027 weighted average shares outstanding for
the first quarter of 2020 and 2019, respectively.
Adjusted EBITDA was ($10.2) million for the first quarter of
2020 as compared to ($9.6) million for the first quarter of 2019.
The $0.5 million increase in Adjusted EBITDA loss in the first
quarter of 2020 was primarily due to higher operating expenses
resulting from higher levels of sales and marketing expenses,
primarily sales commissions and increased headcount, and general
and administrative expenses, partially offset by higher gross
profit.
Cash Position
Cash and cash equivalents were $60.4 million as of March 31,
2020 compared to $71.7 million as of December 31, 2019.
Subsequent to March 31, 2020, the Company has raised gross
proceeds of $10.2 million, or $9.9 million net of commissions,
through its At-The-Market facility.
Fiscal 2020 Outlook
As announced on April 13, 2020, Vapotherm has withdrawn its
previously provided annual guidance for 2020 due to the inability
to estimate the scope, duration, and impact of the COVID-19
pandemic and the full year effect on the Company’s operations and
financial results. Vapotherm will continue to evaluate the impact
of the COVID-19 pandemic on its operations and financial results
and will provide additional information, to the extent practicable,
during its next earnings release.
The preliminary financial information for the month ended April
30, 2020 presented in this press release is based on Vapotherm’s
current expectations and may be adjusted as a result of, among
other things, completion of customary quarterly review
procedures.
Conference Call
Management will host a conference call at 4:30 p.m. Eastern Time
on May 5, 2020 to discuss the results of the quarter and the year
with a question and answer session. To listen to the conference
call on your telephone, please dial (877) 201-0168 for U.S.
callers, or (647) 788-4901 for international callers, approximately
ten minutes prior to the start time and reference conference code
4593734. To listen to a live webcast, please visit the Investors
section of the Vapotherm website at:
http://investors.vapotherm.com/events-and-presentations/events. The
webcast replay will be available on the Vapotherm website for 90
days following completion of the call. A replay of this conference
call will be available by telephone through May 12, 2020 by dialing
(800) 585-8367 in the U.S. or (416) 621-4642 outside of the U.S.
The replay access code is 4593734.
Website Information
Vapotherm routinely posts important information for investors on
the Investor Relations section of its website,
http://investors.vapotherm.com/. Vapotherm intends to use this
website as a means of disclosing material, non-public information
and for complying with Vapotherm’s disclosure obligations under
Regulation FD. Accordingly, investors should monitor the Investor
Relations section of Vapotherm’s website, in addition to following
Vapotherm’s press releases, Securities and Exchange Commission
filings, public conference calls, presentations and webcasts. The
information contained on, or that may be accessed through,
Vapotherm’s website is not incorporated by reference into, and is
not a part of, this document.
Non-GAAP Financial Measures
This press release includes the non-GAAP financial measure of
EBITDA and Adjusted EBITDA, which differ from financial measures
calculated in accordance with U.S. generally accepted accounting
principles (“GAAP”). EBITDA in this press release represents net
loss less interest expense, net and depreciation and amortization.
Adjusted EBITDA in this release represents EBITDA as adjusted for
the impact of foreign currency loss or gain, and stock-based
compensation expense. The Company has reconciled these non-GAAP
financial measures with the most directly comparable GAAP financial
measures in tables accompanying this release.
Adjusted EBITDA is presented because the Company believes it is
a useful indicator of its operating performance. Management uses
the measure principally as a measure of the Company’s operating
performance and for planning purposes, including the preparation of
the Company’s annual operating budget and financial projections.
The Company believes this measure is useful to investors as
supplemental information because it is frequently used by analysts,
investors and other interested parties to evaluate companies in its
industry. The Company believes Adjusted EBITDA is useful to its
management and investors as a measure of comparative operating
performance from period to period.
Adjusted EBITDA is a non-GAAP financial measure and should not
be considered as an alternative to, or superior to, net income or
loss as a measure of financial performance or cash flows from
operations as a measure of liquidity, or any other performance
measure derived in accordance with GAAP. It should not be construed
to imply that the Company’s future results will be unaffected by
unusual or non-recurring items. In addition, the measure is not
intended to be a measure of free cash flow for management’s
discretionary use, as it does not reflect certain cash requirements
such as tax payments, debt service requirements, capital
expenditures and certain other cash costs that may recur in the
future. Adjusted EBITDA contain certain other limitations,
including the failure to reflect our capital expenditures, cash
requirements for working capital needs and cash costs to replace
assets being depreciated and amortized. In evaluating Adjusted
EBITDA, you should be aware that in the future the Company may
incur expenses that are the same as or similar to some of the
adjustments in this presentation. The Company’s presentation of
Adjusted EBITDA should not be construed to imply that its future
results will be unaffected by any such adjustments. Management
compensates for these limitations by primarily relying on the
Company’s GAAP results in addition to using Adjusted EBITDA on a
supplemental basis. The Company’s definition of this measure is not
necessarily comparable to other similarly titled captions of other
companies due to different methods of calculation.
About Vapotherm
Vapotherm, Inc. is a publicly traded developer and manufacturer
of advanced respiratory technology based in Exeter, New Hampshire,
USA. The Company develops innovative, comfortable, non-invasive
technologies for respiratory support of patients with chronic or
acute breathing disorders. Over 2.2 million patients have been
treated with Vapotherm Hi-VNI Technology. Hi-VNI Technology is
mask-free noninvasive ventilatory support for spontaneously
breathing patients and is a front-line tool for relieving
respiratory distress—including hypercapnia, hypoxemia, and dyspnea.
It allows for the fast, safe treatment of undifferentiated
respiratory distress with one tool. Hi-VNI Technology’s mask-free
interface delivers optimally conditioned breathing gases, making it
comfortable for patients and reducing the risks associated with
mask therapies. While being treated, patients can talk, eat, drink
and take oral medication. For more information, visit
www.vapotherm.com.
Legal Notice Regarding Forward-Looking Statements
This press release contains forward-looking statements,
including statements about our ability to meet increased demand
from our customers during the COVID-19 pandemic, our ability to
manage our supply chain during the COVID-19 pandemic, increasing
our installed base, commercializing our Oxygen Assist Module and
improving our gross margins. In some cases, you can identify
forward-looking statements by terms such as ‘‘expect,’’ “guide” or
“typically” or the negative of these terms or other similar
expressions, although not all forward-looking statements contain
these words. Each forward-looking statement is subject to risks and
uncertainties that could cause actual results to differ materially
from those expressed or implied in such statement. Applicable risks
and uncertainties include, but are not limited to the following:
Vapotherm has incurred losses in the past and may be unable to
achieve or sustain profitability in the future, Vapotherm may need
to raise additional capital to fund its existing commercial
operations, develop and commercialize new products, and expand its
operations, Vapotherm’s dependence on sales generated from its
Precision Flow systems, competition from multi-national
corporations who have significantly greater resources than
Vapotherm and are more established in the respiratory market, the
ability for Precision Flow systems to gain increased market
acceptance, its inexperience directly marketing and selling its
products, the potential loss of one or more suppliers, Vapotherm’s
susceptibility to seasonal fluctuations, Vapotherm’s failure to
comply with applicable United States and foreign regulatory
requirements, the failure to obtain U.S. Food and Drug
Administration or other regulatory authorization to market and sell
future products or its inability to secure and maintain patent or
other intellectual property protection for its products, the impact
of the COVID-19 pandemic on its business, including its supply
chain, and the other risks and uncertainties included under the
heading “Risk Factors” in Vapotherm’s Annual Report on Form 10-K
for the fiscal year ended December, 31, 2019, as filed with the
Securities and Exchange Commission on March 4, 2020, Vapotherm’s
Current Report on Form 8-K filed with the Securities and Exchange
Commission on April 13, 2020, Vapotherm’s Quarterly Report on Form
10-Q for the quarter ended March 31, 2020, as filed with the
Securities and Exchange Commission on May 5, 2020 and in any
subsequent filings with the Securities and Exchange Commission. The
forward-looking statements contained in this press release reflect
Vapotherm’s views as of the date hereof, and Vapotherm does not
assume and specifically disclaims any obligation to update any
forward-looking statements whether as a result of new information,
future events or otherwise, except as required by law.
Financial Statements:
VAPOTHERM, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
March 31, 2020
December 31, 2019
(unaudited)
Assets
Current assets
Cash and cash equivalents
$
60,393
$
71,655
Accounts receivable, net
11,948
8,243
Inventories
9,103
9,137
Prepaid expenses and other current
assets
4,021
4,066
Total current assets
85,465
93,101
Property and equipment, net
15,696
15,086
Restricted cash
1,852
1,852
Goodwill
549
588
Intangible assets, net
303
353
Deferred income tax assets
63
66
Other long-term assets
856
844
Total assets
$
104,784
$
111,890
Liabilities and Stockholders’
Equity
Current liabilities
Accounts payable
$
4,614
$
3,375
Contract liabilities
175
137
Accrued expenses and other current
liabilities
12,152
9,187
Short-term line of credit
4,489
3,491
Total current liabilities
21,430
16,190
Long-term loans payable, net
41,858
41,787
Other long-term liabilities
127
174
Total liabilities
63,415
58,151
Commitments and contingencies (Note 9)
Stockholders' equity
Preferred stock ($0.001 par value)
25,000,000 shares authorized; no shares issued
and outstanding as of March 31, 2020 and
December 31, 2019
-
-
Common stock ($0.001 par value)
175,000,000 shares authorized as of
March 31, 2020 and December 31, 2019,
20,917,149 and 20,851,531
shares issued and outstanding as of March
31, 2020 and
December 31, 2019, respectively
21
21
Additional paid-in capital
320,660
319,115
Accumulated other comprehensive income
(loss)
(27
)
44
Accumulated deficit
(279,285
)
(265,441
)
Total stockholders' equity
41,369
53,739
Total liabilities and stockholders’
equity
$
104,784
$
111,890
Vapotherm, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands, except share and per share
amounts)
Three Months Ended March
31,
2020
2019
Net revenue
$
19,115
$
12,299
Cost of revenue
9,898
7,120
Gross profit
9,217
5,179
Operating expenses
Research and development
3,362
3,273
Sales and marketing
13,317
9,161
General and administrative
5,251
4,879
Total operating expenses
21,930
17,313
Loss from operations
(12,713
)
(12,134
)
Other (expense) income
Foreign currency gain (loss)
24
(9
)
Interest income
125
203
Interest expense
(1,295
)
(1,024
)
Other
15
-
Net loss
$
(13,844
)
$
(12,964
)
Other comprehensive loss, net of tax:
Foreign currency translation
adjustments
(71
)
-
Total other comprehensive loss
$
(71
)
$
-
Total comprehensive loss
$
(13,915
)
$
(12,964
)
Net loss per share attributable to common
stockholders - basic and diluted
$
(0.66
)
$
(0.76
)
Weighted-average number of shares used in
calculating net
loss per share, basic and diluted
20,882,949
16,949,027
VAPOTHERM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
(In thousands)
Three Months Ended March
31,
2020
2019
Cash flows from operating
activities
Net loss
$
(13,844
)
$
(12,964
)
Adjustments to reconcile net loss to net
cash used in operating activities
Stock-based compensation expense
1,447
1,903
Depreciation and amortization
1,097
621
Provision for bad debts
101
13
Provision for inventories
23
2
Loss on disposal of property and
equipment
3
23
Amortization of discount on debt
63
44
Changes in operating assets and
liabilities, net of acquisition:
Accounts receivable
(3,875
)
847
Inventories
(12
)
1,780
Prepaid expenses and other assets
33
197
Accounts payable
1,310
(1,094
)
Contract liabilities
38
22
Accrued expenses and other current
liabilities
2,894
(1,225
)
Net cash used in operating activities
(10,722
)
(9,831
)
Cash flows from investing
activities
Purchases of property and equipment
(1,558
)
(1,128
)
Acquisition of business, net of cash
acquired
-
(1,560
)
Net cash used in investing activities
(1,558
)
(2,688
)
Cash flows from financing
activities
Short-term line of credit
995
837
Proceeds from exercise of stock
options
40
-
Proceeds on loans
-
10,500
Debt issuance costs
-
(322
)
Net cash provided by financing
activities
1,035
11,015
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
(17
)
-
Net decrease in cash, cash equivalents and
restricted cash
(11,262
)
(1,504
)
Cash, cash equivalents and restricted
cash
Beginning of period
73,507
60,022
End of period
$
62,245
$
58,518
Supplemental disclosures of cash flow
information
Interest paid during the period
$
1,202
$
939
Property and equipment purchases in
accounts payable and accrued expenses
$
36
$
42
Issuance of warrants in conjunction with
debt draw down
$
-
$
293
Non-GAAP Financial Measures
The following tables contain a reconciliation of net loss to
Adjusted EBITDA for the three ended March 31, 2020 and 2019,
respectively.
Three Months Ended March
31,
Amount
2020
2019
(unaudited)
(in thousands)
Net loss
$
(13,844
)
$
(12,964
)
Interest expense, net
1,170
821
Depreciation and amortization
1,097
621
EBITDA
$
(11,577
)
$
(11,522
)
Foreign currency
(24
)
9
Stock-based compensation
1,447
1,903
Adjusted EBITDA
$
(10,154
)
$
(9,610
)
Supplemental Operating Metrics
Three Months Ended March
31,
2020
2019
Change
Amount
Amount
Amount
%
Precision Flow Units Installed
Base
United States
12,715
10,713
2,002
18.7
%
International
5,153
3,846
1,307
34.0
%
Total
17,868
14,559
3,309
22.7
%
Precision Flow Units Sold and
Leased
United States
623
324
299
92.3
%
International
419
141
278
197.2
%
Total
1,042
465
577
124.1
%
Disposable Patient Circuits
Sold
United States
92,591
71,376
21,215
29.7
%
International
33,900
17,301
16,599
95.9
%
Total
126,491
88,677
37,814
42.6
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200505005840/en/
Investor Relations: Mark Klausner or Mike Vallie,
Westwicke, an ICR Company, ir@vtherm.com, +1 (603) 658-0011
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