Get Cash Back and $0 Commissions + The Power of TradeStation
Conformis Reports First Quarter 2019 Financial Results
Globe Newswire 1-May-2019 4:05 PM
BILLERICA, Mass., May 01, 2019 (GLOBE NEWSWIRE) -- Conformis, Inc. (NASDAQ:CFMS), a medical technology company that uses its proprietary iFit Image-to-Implant technology platform to develop, manufacture and sell patient specific joint replacement implants designed to fit each patient's unique anatomy, announced today financial results for the first quarter ended March 31, 2019.
Q1 Summary
Total revenue of $20.6 million, year-over-year up 5% on a reported basis and 6% on a constant currency basis
Product revenue of $20.5 million, year-over-year up 5% on a reported basis and 6% on a constant currency basis -- U.S. product revenue of $17.6 million, year-over-year up 10% -- Rest of World product revenue of $2.9 million, year-over-year down 16% on a reported basis and 11% on a constant currency basis
Royalty revenue of $0.2 million, consistent with prior year
Gross margin of 48%, a year-over-year increase of 300 basis points
"Our US growth of 10% represents continued progress in our US commercial performance. Our Rest of World business continues to contract due to reimbursement challenges in Germany," said Mark Augusti, President and Chief Executive Officer of Conformis, Inc. "Importantly, I am pleased that we significantly reduced our operating expenses as we had previously communicated. This resulted in a meaningful reduction in cash used versus previous quarters."
Three months ended March 31,
Increase/(decrease)
($, in thousands)
2019
2018
$ Change
% Change
% Change
(as reported)
(constant currency)
United States
$
17,554
$
16,027
$
1,527
10
%
10
%
Rest of world
2,915
3,456
(541
)
(16
)%
(11
)%
Product revenue
20,469
19,483
986
5
%
6
%
Royalty revenue
175
173
2
1
%
1
%
Total revenue
$
20,644
$
19,656
$
988
5
%
6
%
First Quarter 2019 Financial Results
Total revenue for the three-month period ended March 31, 2019 increased $1.0 million to $20.6 million, or 5% year-over-year on a reported basis and 6% on a constant currency basis. Total revenue in the first quarter of 2019 and 2018 includes royalty revenue of $0.2 million related to a patent license agreement.
Product revenue increased $1.0 million to $20.5 million, or 5% year-over-year on a reported basis and 6% on a constant currency basis. U.S. product revenue increased $1.5 million to $17.6 million, or 10% year-over-year, and Rest of World product revenue decreased $0.5 million to $2.9 million, or 16% year-over-year on a reported basis and 11% on a constant currency basis. Product revenue from sales of iTotal PS increased $1.7 million to $7.5 million, or 29% year-over-year on a reported and constant currency basis. Product revenue from sales of iTotal CR, iDuo and iUni decreased $1.2 million to $12.4 million, or 9% year-over-year on a reported basis and 8% on a constant currency basis. Conformis Hip System sales in the first quarter of 2019 was $0.5 million, which was all in the U.S.
Total gross profit increased $1.0 million to $9.8 million, or 48% of revenue, in the first quarter of 2019, compared to $8.8 million, or 45% of revenue, in the first quarter of 2018. This 300 basis point increase in gross margin was driven primarily by cost reductions as a result of vertical integration and manufacturing efficiencies.
Total operating expenses decreased $4.8 million to $16.4 million, or 23% year-over-year. This decrease in expenses was driven primarily by reductions in personnel costs, marketing programs and patent litigation expense as part of a plan announced at the end of 2018 to reduce cash burn beginning in 2019.
Net loss was $7.6 million, or $0.12 per basic and diluted share, in the first quarter of 2019, compared to a net loss of $12.0 million, or $0.22 per basic and diluted share, for the same period last year. Net loss in the first quarter of 2019 included foreign currency exchange expense of $0.7 million compared to foreign currency exchange income of $1.1 million in the same period last year. Net loss per basic and diluted share calculations assume weighted average basic and diluted shares outstanding of 62.8 million for the first quarter of 2019, compared to 54.7 million for the same period last year.
Cash and cash equivalents and investments totaled $18.6 million as of March 31, 2019, compared to $23.6 million as of December 31, 2018.
Note on Non-GAAP Financial Measures
In addition to disclosing financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), the Company provides certain information regarding the Company's financial results or projected financial results on a non-GAAP "constant currency basis." This information estimates the impact of changes in foreign currency rates on the translation of the Company's current or projected future period financial results as compared to the applicable comparable period. This impact is derived by taking the adjusted current or projected local currency results and translating them into U.S. Dollars based upon the foreign currency exchange rates for the applicable comparable period. It does not include any other effect of changes in foreign currency rates on the Company's results or business. Non-GAAP information is not a substitute for, and is not superior to, information presented on a GAAP basis.
Conference Call
As previously announced, Conformis will conduct a webcast today at 4:30 PM Eastern Time. Management will discuss financial results and strategic matters. The webcast will be live at https://edge.media-server.com/m6/p/hw48x3ry and at the investor relations section of the company's website at ir.conformis.com.
The online archive of the webcast will be available on the company's website for 30 days.
About Conformis, Inc.
Conformis is a medical technology company that uses its proprietary iFit Image-to-Implant technology platform to develop, manufacture and sell joint replacement implants that are individually sized and shaped, or customized, to fit each patient's unique anatomy. Conformis offers a broad line of customized knee and hip implants and customized pre-sterilized, single-use instruments delivered to the hospital. In clinical studies, Conformis iTotal CR knee replacement system demonstrated superior clinical outcomes, including better function and greater patient satisfaction, compared to traditional, off-the-shelf implants. Conformis owns or exclusively in-licenses issued patents and pending patent applications that cover customized implants and customized patient-specific instrumentation for all major joints.
Statements in this press release about our future expectations, plans and prospects, including statements about the anticipated timing of our product launches, and our financial position and results, total revenue, product revenue, gross margin, operations, as well as other statements containing the words "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "plan," "potential," "predict," "project," "should," "target," "will," or "would" and similar expressions, constitute forward-looking statements within the meaning of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. We may not actually achieve the forecasts disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual financial results could differ materially from the projections disclosed in the forward-looking statements we make as a result of a variety of risks and uncertainties, including risks related to our estimates and expectations regarding our revenue, gross margin, expenses, revenue growth and other results of operations, and the other risks and uncertainties described in the "Risk Factors" sections of our public filings with the Securities and Exchange Commission. In addition, the forward-looking statements included in this press release represent our views as of the date hereof. We anticipate that subsequent events and developments may cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date hereof.
Foreign currency exchange transaction (loss) income
(653
)
1,085
Total other (expenses) income, net
(999
)
490
Loss before income taxes
(7,590
)
(11,968
)
Income tax provision
(9
)
33
Net loss
$
(7,581
)
$
(12,001
)
Net loss per share
Basic and diluted
$
(0.12
)
$
(0.22
)
Weighted average common shares outstanding
Basic and diluted
62,849,335
54,741,828
CONFORMIS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except share and per share data)
March 31, 2019
December 31, 2018
Assets
(unaudited)
Current Assets
Cash and cash equivalents
$
18,616
$
16,380
Investments
—
7,245
Accounts receivable, net
12,992
13,244
Royalty receivable
148
145
Inventories
9,561
9,534
Prepaid expenses and other current assets
1,477
1,408
Total current assets
42,794
47,956
Property and equipment, net
14,156
14,439
Operating lease right-of-use assets
6,678
—
Other Assets
Restricted cash
462
462
Intangible assets, net
83
109
Other long-term assets
17
17
Total assets
$
64,190
$
62,983
Liabilities and stockholder's equity
Current liabilities
Accounts payable
$
4,443
$
3,445
Accrued expenses
7,122
7,930
Operating lease liabilities
1,427
—
Current portion of long-term debt
1,250
—
Total current liabilities
14,242
11,375
Other long-term liabilities
—
616
Long-term debt, less debt issuance costs
13,567
14,792
Operating lease liabilities
5,994
—
Total liabilities
33,803
26,783
Stockholders' equity
Preferred stock, $0.00001 par value:
Authorized: 5,000,000 shares authorized at March 31, 2019 and December 31, 2018; no shares issued and outstanding as of March 31, 2019 and December 31, 2018
—
—
Common stock, $0.00001 par value:
Authorized: 200,000,000 shares authorized at March 31, 2019 and December 31, 2018; 67,880,664 and 65,290,879 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively
