Eargo, Inc. (Nasdaq: EAR) (“Eargo” or the “Company”), a medical
device company on a mission to improve hearing health, today
reported its financial results for the fourth quarter ended
December 31, 2022.
Christian Gormsen, President and CEO, said, “The fourth quarter
marked the culmination of a pivotal year for Eargo. In 2022, we
settled our DOJ investigation and cleared our SEC filing
delinquency, recapitalized the business through a major financing
and added Patient Square Capital as our majority shareholder, and
made meaningful progress against our most important business
priorities. We also are excited to have commercially launched Eargo
7, our most advanced technology yet, in February 2023.”
Mr. Gormsen continued, “Perhaps most impactful
to the future of Eargo was the progress we made on our strategic
evolution into a true omni-channel business, led by our entry into
the physical retail space through a partnership with Victra, one of
America’s largest wireless retailers. Given the challenging
circumstances, we believe Eargo has made significant progress in
2022, and we are excited about the continued evolution of our
business in 2023.”
Fourth Quarter 2022 Financial
Results
On January 17, 2023, the Company effected a 1-for-20 reverse
stock split. All share and per share information presented herein
has been retrospectively adjusted to reflect the reverse stock
split.
Gross systems shipped for the fourth quarter of 2022 were 8,863,
compared to 7,767 during the fourth quarter of 2021. The increase
in shipment volume year over year was largely driven by shipments
of our Eargo hearing devices to Victra, our retail partner, for
in-person customer sales at its approximately 1,500 store locations
across the United States, for which we recognize revenue upon
shipment to Victra.
In addition, beginning September 2022, we
resumed accepting insurance benefits as a method of direct payment
in certain limited circumstances and for which revenue is and has
been recognized. Shipment volume in the fourth quarter of 2021 was
impacted by our decision to temporarily stop accepting insurance
benefits as a method of direct payment in December of 2021.
Net revenue was $12.9 million for the fourth
quarter of 2022, compared to $10.1 million for the fourth quarter
of 2021. The increase was driven by an increase in gross systems
shipped for which we were able to recognize revenue as described
above.
Gross profit for the fourth quarter of 2022 was
$6.2 million, compared to gross profit of $2.4 million for the
fourth quarter of 2021. Gross margin was 47.7% for the fourth
quarter of 2022, compared with 24.0% for the fourth quarter of
2021. The increase in gross profit and gross margin is primarily
due to an increase in the number of gross systems shipped for which
we were able to recognize revenue. We did not record revenue and
related sales returns reserve for approximately 1,560 shipments of
Eargo hearing aid systems to customers with potential insurance
benefits during the three months ended December 31, 2021 subsequent
to learning of the DOJ investigation.
Total operating expenses were $30.0 million or
232.6% of net revenues for the fourth quarter of 2022, compared
with $47.6 million or 473.6% for the fourth quarter of 2021. The
decrease in total operating expenses was primarily due to a net
decrease in headcount, lower stock-based compensation related to
the suspension of our ESPP in November 2021, lower media spend and
lower professional fees related to activities related to the DOJ
investigation and compliance matters.
Sales and marketing expenses were $15.6 million
or 121.1% of net revenues for the fourth quarter of 2022, compared
with $22.6 million or 224.2% for the fourth quarter of 2021. The
decrease in sales and marketing expenses was primarily due to lower
media spend and lower stock-based compensation related to the
suspension of our ESPP in November 2021.
Research and development expenses were $4.1
million or 31.9% of net revenues for the fourth quarter of 2022,
compared with $8.0 million or 79.6% for the fourth quarter of 2021.
The decrease was primarily driven by lower stock-based compensation
related to the suspension of our ESPP in November 2021.
General and administrative expenses were $10.3
million or 79.6% of net revenues for the fourth quarter of 2022,
compared with $17.1 million or 169.7% for the fourth quarter of
2021. The decrease was primarily due to lower stock-based
compensation related to the suspension of our ESPP in November 2021
and lower professional fees related to activities related to the
DOJ investigation and compliance matters.
Excluding stock-based compensation expense,
non-GAAP operating expenses for the fourth quarter of 2022 were
$27.7 million, including research and development expenses of $4.2
million, sales and marketing expenses of $14.9 million, and general
and administrative expenses of $8.6 million. Please refer to the
section below titled “Use of Non-GAAP Financial Measures” and the
non-GAAP reconciliation tables at the end of this press
release.
Total operating losses were $23.9 million or
184.9% of net revenues for the fourth quarter of 2022, compared
with $45.2 million or 449.6% of net revenues for the fourth quarter
of 2021. The decrease in total operating losses was primarily due
to factors described in the above paragraphs. Excluding stock-based
compensation expense, non-GAAP operating losses for the fourth
quarter of 2022 were $21.5 million, compared with $33.3 million in
the fourth quarter of 2021.
Net loss attributable to common stockholders for
the fourth quarter of 2022 was ($43.8) million, or ($4.42) per
share, compared to a net loss attributable to common stockholders
of ($45.5) million, or ($23.16) per share, for the fourth quarter
of 2021. Net loss in the fourth quarter of 2022 primarily include
the loss associated with the change in the fair value of the
Patient Square convertible notes at issuance and the fair value of
the shares on the dates of conversion. Excluding stock-based
compensation expense, non-GAAP net loss attributable to common
stockholders for the fourth quarter of 2022 was ($41.4) million, or
($4.18) per share, compared to a non-GAAP net loss of ($33.6)
million, or ($17.11) per share, for the same period in 2021.
Quarterly operating cash burn for the fourth
quarter of 2022 was approximately $20.4 million, compared to our
previous guidance of approximately $20 million to $25 million for
the quarter. Overall, our cash balance increased by $13.2 million
in the fourth quarter of 2022, primarily driven by the rights
offering and Patient Square investment.
Full Year 2022 Financial
ResultsThe Company is not providing commentary on full
year 2022 financial results in this earnings release given the
difficult year-over-year comparison as a result of the impact of
the DOJ investigation. Please refer to the Company’s Annual Report
on Form 10-K and Quarterly Reports on Form 10-Q and our other
filings with the Securities and Exchange Commission for a detailed
discussion of such results.
2023 Financial GuidanceThe
Company is not providing financial guidance at this time.
Conference Call and Webcast
InformationEargo will host a conference call to discuss
the fourth quarter financial results after market close on March
23, 2023, at 1:30 p.m. Pacific Time / 4:30 p.m. Eastern Time. The
conference call can be accessed live over the phone at (800)
715-9871 for U.S. callers or (646) 307-1963 for international
callers, using conference ID: 2951533. The live webinar can be
accessed at ir.eargo.com.
About EargoEargo is a medical
device company on a mission to improve hearing health. Our
innovative products and go-to-market approach address the major
challenges of traditional hearing aid adoption, including social
stigma, accessibility and cost. We believe our Eargo hearing aids
are the first virtually invisible, rechargeable,
completely-in-canal, FDA-regulated devices indicated to compensate
for mild to moderate hearing loss. Our differentiated,
consumer-first approach empowers consumers to take control of their
hearing. Consumers can purchase online, at retail locations or over
the phone and get personalized and convenient consultation and
support from hearing professionals via phone, text, email or video
chat. Eargo hearing aids are offered to consumers at approximately
half the cost of competing hearing aids purchased through
traditional channels in the United States.
Eargo’s seventh generation device, Eargo 7, is
an FDA 510(k) cleared, self-fitting over-the-counter hearing aid
featuring Sound Adjust+ with Comfort and Clarity Modes, which
focuses on noise reduction and adapting to the user’s environment
and needs. Eargo 7 is available for purchase here.
Related Linkshttp://eargo.com
Forward-Looking StatementsThis
press release contains forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements other
than statements of historical fact contained in this press release
are forward-looking statements, including statements regarding
continued evolution of the Company’s omni-channel business.
Forward-looking statements are not guarantees of future performance
and are subject to risks, uncertainties and assumptions that could
cause actual results and events to differ materially from those
anticipated, including, but not limited to, risks, uncertainties
and assumptions related to: our expectations regarding our
omni-channel business, including partnerships with brick-and-mortar
retailers and resellers with online storefronts; the extent to
which we may be able to validate processes to support the
submission of claims for reimbursement from the FEHB program in the
future, if at all, and our ability to maintain or increase
insurance coverage of our hearing aids; the timing or results of
ongoing claims audits and medical records reviews by third-party
payors; estimates of our future capital needs and our ability to
raise capital on favorable terms, if at all, including the timing
of future capital requirements and the terms or timing of any
future financings; the impact of third-party payor audits and the
regulatory landscape for hearing aid devices on our business and
results of operations; our expectations concerning additional
orders by existing customers; our expectations regarding the
potential market size and size of the potential consumer
populations for our products and any future products, including
insurance coverage of our hearing aids; our ability to release new
hearing aids and the anticipated features of any such hearing aids;
developments and projections relating to our competitors and our
industry, including competing products; our ability to maintain our
competitive technological advantages against new entrants in our
industry; the pricing of our hearing aids; our expectations
regarding the ability to make certain claims related to the
performance of our hearing aids relative to competitive products;
our expectations with regard to changes in the regulatory landscape
for hearing aid devices, including the implementation of the new
over-the-counter hearing aid regulatory framework; our estimates
regarding the COVID-19 pandemic, including but not limited to, its
duration and its impact on our business and results of operations;
and uncertainty or volatility in the market (including recent and
potential disruption in the banking system and financial markets).
These and other risks are described in greater detail under the
section titled “Risk Factors” contained in our Annual Report on
Form 10-K and Quarterly Reports on Form 10-Q and our other filings
with the Securities and Exchange Commission. Any forward-looking
statements in this press release are made pursuant to the Private
Securities Litigation Reform Act of 1995, as amended, are based on
current expectations, forecasts and assumptions, and speak only as
of the date of this press release. Except as required by law, we
undertake no obligation to publicly update any forward-looking
statements, whether as a result of new information, future events
or otherwise.
Use of Non-GAAP Financial
MeasuresThe Company may report non-GAAP results for gross
margin, operating expenses, sales and marketing expense as a
percent of net revenues, net income/loss, and net income/loss per
share in addition to, and not as a substitute for, or superior to,
financial measures calculated in accordance with GAAP. The
Company’s financial measures under GAAP include charges such as
stock-based compensation, as listed in the itemized reconciliations
between GAAP and non-GAAP financial measures included in this press
release. Management has excluded the effects of this item in
non-GAAP measures to assist investors in analyzing and assessing
operating performance. The Company encourages investors to
carefully consider its results under GAAP, as well as its
supplemental non-GAAP information and the reconciliation between
these presentations, to more fully understand its business.
Investor ContactNick LaudicoChief Retail
Officerir@eargo.com
Eargo, Inc. Consolidated
Balance Sheets (Unaudited) (In
thousands, except share and per share amounts)
|
|
December 31, |
|
December 31, |
|
|
2022 |
|
2021 |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
101,238 |
|
|
$ |
110,500 |
|
Accounts receivable, net |
|
|
1,910 |
|
|
|
12,547 |
|
Inventories |
|
|
5,036 |
|
|
|
5,712 |
|
Prepaid expenses and other current assets |
|
|
7,846 |
|
|
|
10,873 |
|
Total current assets |
|
|
116,030 |
|
|
|
139,632 |
|
Operating lease right-of-use
assets |
|
|
5,765 |
|
|
|
7,165 |
|
Property and equipment, net |
|
|
7,441 |
|
|
|
9,551 |
|
Intangible assets, net |
|
|
1,063 |
|
|
|
1,681 |
|
Goodwill |
|
|
873 |
|
|
|
873 |
|
Other assets |
|
|
906 |
|
|
|
1,209 |
|
Total assets |
|
$ |
132,078 |
|
|
$ |
160,111 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
|
$ |
6,504 |
|
|
$ |
9,053 |
|
Accrued expenses |
|
|
12,715 |
|
|
|
9,235 |
|
Sales returns reserve |
|
|
3,942 |
|
|
|
13,827 |
|
Settlement liability |
|
|
— |
|
|
|
34,372 |
|
Long-term debt, current portion |
|
|
— |
|
|
|
3,333 |
|
Other current liabilities |
|
|
1,462 |
|
|
|
1,813 |
|
Lease liability, current portion |
|
|
628 |
|
|
|
750 |
|
Total current liabilities |
|
|
25,251 |
|
|
|
72,383 |
|
Lease liability, noncurrent
portion |
|
|
5,973 |
|
|
|
6,640 |
|
Long-term debt, noncurrent
portion |
|
|
— |
|
|
|
11,924 |
|
Total liabilities |
|
|
31,224 |
|
|
|
90,947 |
|
Stockholders’ equity: |
|
|
|
|
Preferred stock, $0.0001 par
value per share; 5,000,000 shares authorized as of December 31,
2022 and December 31, 2021, respectively; zero shares issued and
outstanding as of December 31, 2022 and December 31, 2021,
respectively |
|
|
— |
|
|
|
— |
|
Common stock; $0.0001 par value;
450,000,000 and 110,000,000 shares authorized as of December 31,
2022 and December 31, 2021, respectively; 20,726,965 and 1,965,347
shares issued and outstanding as of December 31, 2022 and
December 31, 2021, respectively |
|
|
2 |
|
|
|
— |
|
Additional paid-in capital |
|
|
615,151 |
|
|
|
425,976 |
|
Accumulated deficit |
|
|
(514,299 |
) |
|
|
(356,812 |
) |
Total stockholders’ equity |
|
|
100,854 |
|
|
|
69,164 |
|
Total liabilities and
stockholders’ equity |
|
$ |
132,078 |
|
|
$ |
160,111 |
|
|
|
|
|
|
|
|
|
|
Eargo, Inc.Consolidated
Statements of Operations and Comprehensive Loss
(Unaudited) (In thousands, except share
and per share amounts)
|
|
Three months
endedDecember 31, |
|
Twelve months endedDecember 31, |
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Revenue, net |
|
$ |
12,917 |
|
|
$ |
10,060 |
|
|
$ |
37,248 |
|
|
$ |
32,122 |
|
Cost of revenue |
|
|
6,757 |
|
|
|
7,645 |
|
|
|
22,988 |
|
|
|
27,956 |
|
Gross profit (loss) |
|
|
6,160 |
|
|
|
2,415 |
|
|
|
14,260 |
|
|
|
4,166 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
Research and development |
|
|
4,124 |
|
|
|
8,010 |
|
|
|
18,813 |
|
|
|
25,232 |
|
Sales and marketing |
|
|
15,641 |
|
|
|
22,557 |
|
|
|
52,947 |
|
|
|
85,759 |
|
General and administrative |
|
|
10,279 |
|
|
|
17,076 |
|
|
|
54,259 |
|
|
|
49,882 |
|
Total operating expenses |
|
|
30,044 |
|
|
|
47,643 |
|
|
|
126,019 |
|
|
|
160,873 |
|
Loss from operations |
|
|
(23,884 |
) |
|
|
(45,228 |
) |
|
|
(111,759 |
) |
|
|
(156,707 |
) |
Other income (expense), net: |
|
|
|
|
|
|
|
|
Interest income |
|
|
716 |
|
|
|
2 |
|
|
|
1,196 |
|
|
|
21 |
|
Interest expense |
|
|
— |
|
|
|
(270 |
) |
|
|
(549 |
) |
|
|
(1,068 |
) |
Change in fair value of convertible notes |
|
|
(20,503 |
) |
|
|
— |
|
|
|
(45,503 |
) |
|
|
— |
|
Loss on extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
(772 |
) |
|
|
— |
|
Total other income (expense),
net |
|
|
(19,787 |
) |
|
|
(268 |
) |
|
|
(45,628 |
) |
|
|
(1,047 |
) |
Loss before income taxes |
|
|
(43,671 |
) |
|
|
(45,496 |
) |
|
|
(157,387 |
) |
|
|
(157,754 |
) |
Income tax provision |
|
|
100 |
|
|
|
— |
|
|
|
100 |
|
|
|
— |
|
Net loss attributable to common
stockholders, basic and diluted |
|
$ |
(43,771 |
) |
|
$ |
(45,496 |
) |
|
$ |
(157,487 |
) |
|
$ |
(157,754 |
) |
Net loss per share attributable
to common stockholders, basic and diluted |
|
$ |
(4.42 |
) |
|
$ |
(23.16 |
) |
|
$ |
(39.68 |
) |
|
$ |
(81.11 |
) |
Weighted-average shares used in
computing net loss per share attributable to common stockholders,
basic and diluted |
|
|
9,904,301 |
|
|
|
1,964,793 |
|
|
|
3,968,432 |
|
|
|
1,944,857 |
|
|
|
|
|
|
|
|
|
|
Eargo, Inc. Results of
Operations – Reconciliation between GAAP and Non-GAAP
(Unaudited) (In thousands, except per
share amounts)
Reconciliation between GAAP and non-GAAP net loss per
share attributable to common stockholders:
|
Three months
endedDecember 31, |
|
Twelve months
endedDecember 31, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
GAAP net loss per share to common stockholders, basic and
diluted |
$ |
(4.42 |
) |
|
$ |
(23.16 |
) |
|
$ |
(39.68 |
) |
|
$ |
(81.11 |
) |
Stock-based compensation |
|
0.24 |
|
|
|
6.05 |
|
|
|
2.51 |
|
|
|
14.26 |
|
Non-GAAP net loss per share to
common stockholders, basic and diluted |
$ |
(4.18 |
) |
|
$ |
(17.11 |
) |
|
$ |
(37.17 |
) |
|
$ |
(66.85 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation between GAAP and non-GAAP net loss
attributable to common stockholders:
|
Three months
endedDecember 31, |
|
Twelve months
endedDecember 31, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
GAAP net loss attributable to common stockholders, basic and
diluted |
$ |
(43,771 |
) |
|
$ |
(45,496 |
) |
|
$ |
(157,487 |
) |
|
$ |
(157,754 |
) |
Stock-based compensation |
|
2,373 |
|
|
|
11,881 |
|
|
|
9,965 |
|
|
|
27,731 |
|
Non-GAAP net loss attributable to
common stockholders, basic and diluted |
$ |
(41,398 |
) |
|
$ |
(33,615 |
) |
|
$ |
(147,522 |
) |
|
$ |
(130,023 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation between GAAP and non-GAAP operating
expenses and operating loss:
|
Three months
endedDecember 31, |
|
Twelve months
endedDecember 31, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
GAAP gross profit |
$ |
6,160 |
|
|
$ |
2,415 |
|
|
$ |
14,260 |
|
|
$ |
4,166 |
|
Stock-based compensation |
|
32 |
|
|
|
335 |
|
|
|
126 |
|
|
|
738 |
|
Non-GAAP gross profit |
$ |
6,192 |
|
|
$ |
2,750 |
|
|
$ |
14,386 |
|
|
$ |
4,904 |
|
|
|
|
|
|
|
|
|
GAAP gross
margin |
|
47.7 |
% |
|
|
24.0 |
% |
|
|
38.3 |
% |
|
|
13.0 |
% |
Stock-based compensation |
|
0.2 |
% |
|
|
3.3 |
% |
|
|
0.3 |
% |
|
|
2.3 |
% |
Non-GAAP gross margin |
|
47.9 |
% |
|
|
27.3 |
% |
|
|
38.6 |
% |
|
|
15.3 |
% |
|
|
|
|
|
|
|
|
GAAP research and
development expense |
$ |
4,124 |
|
|
$ |
8,010 |
|
|
$ |
18,813 |
|
|
$ |
25,232 |
|
Stock-based compensation |
|
103 |
|
|
|
(3,188 |
) |
|
|
(1,039 |
) |
|
|
(6,939 |
) |
Non-GAAP research and development
expense |
$ |
4,227 |
|
|
$ |
4,822 |
|
|
$ |
17,774 |
|
|
$ |
18,293 |
|
|
|
|
|
|
|
|
|
GAAP sales and marketing
expense |
$ |
15,641 |
|
|
$ |
22,557 |
|
|
$ |
52,947 |
|
|
$ |
85,759 |
|
Stock-based compensation |
|
(745 |
) |
|
|
(5,618 |
) |
|
|
(2,720 |
) |
|
|
(11,213 |
) |
Non-GAAP sales and marketing
expense |
$ |
14,896 |
|
|
$ |
16,939 |
|
|
$ |
50,227 |
|
|
$ |
74,546 |
|
|
|
|
|
|
|
|
|
GAAP general and
administrative expense |
$ |
10,279 |
|
|
$ |
17,076 |
|
|
$ |
54,259 |
|
|
$ |
49,882 |
|
Stock-based compensation |
|
(1,699 |
) |
|
|
(2,740 |
) |
|
|
(6,080 |
) |
|
|
(8,841 |
) |
Non-GAAP general and
administrative expense |
$ |
8,580 |
|
|
$ |
14,336 |
|
|
$ |
48,179 |
|
|
$ |
41,041 |
|
|
|
|
|
|
|
|
|
GAAP total operating
expense |
$ |
30,044 |
|
|
$ |
47,643 |
|
|
$ |
126,019 |
|
|
$ |
160,873 |
|
Stock-based compensation |
|
(2,341 |
) |
|
|
(11,546 |
) |
|
|
(9,839 |
) |
|
|
(26,993 |
) |
Non-GAAP total operating
expense |
$ |
27,703 |
|
|
$ |
36,097 |
|
|
$ |
116,180 |
|
|
$ |
133,880 |
|
|
|
|
|
|
|
|
|
GAAP operating
loss |
$ |
(23,884 |
) |
|
$ |
(45,228 |
) |
|
$ |
(111,759 |
) |
|
$ |
(156,707 |
) |
Stock-based compensation |
|
2,373 |
|
|
|
11,881 |
|
|
|
9,965 |
|
|
|
27,731 |
|
Non-GAAP operating loss |
$ |
(21,511 |
) |
|
$ |
(33,347 |
) |
|
$ |
(101,794 |
) |
|
$ |
(128,976 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eargo (NASDAQ:EAR)
Gráfica de Acción Histórica
De May 2024 a Jun 2024
Eargo (NASDAQ:EAR)
Gráfica de Acción Histórica
De Jun 2023 a Jun 2024