Nuvectra Corporation (NASDAQ: NVTR), a neurostimulation medical
device company, announced today financial results for the fourth
quarter and full year ended December 31, 2018.
Recent Highlights
- Record consolidated revenues of $14.5 million and $48.8 million
in the fourth quarter and full year 2018, up 36% and 80% YoY,
excluding NeuroNexus revenues of $1.2 million and $4.9 million,
respectively
- Algovita gross margin increased to 56% in the fourth quarter of
2018, up from 50% in the fourth quarter of 2017
- Fred B. Parks, PhD, appointed Chief Executive Officer and
Christopher G. Chavez elected to Board of Directors effective
February 1, 2019
- Received FDA head-only and CE Mark full-body MR-conditional
approvals for Algovita in December 2018
- Divested NeuroNexus subsidiary for $5 million cash, effective
December 31, 2018
- Total cash and cash equivalents of $99.2 million as of December
31, 2018
Fred Parks, Chief Executive Officer, commented,
“Algovita sales grew 84% year over year in 2018, as the company
continued to expand its commercial organization and drive market
share. We expect to see continued growth in 2019, particularly
following the recent FDA head-only and CE Mark full-body
MR-conditional approvals for Algovita.”
Mr. Parks shared, “With respect to Virtis™, the
FDA is continuing to review our PMA submission, and we look forward
to continuing to work closely with them to conclude our PMA
review.”
Fourth Quarter and Full Year 2018 Financial
Results
Total revenue from continuing operations in the fourth quarter
of 2018 was $14.5 million, excluding NeuroNexus discontinued
operations revenue of $1.2 million, representing an increase of 36%
from $10.7 million from continuing operations in the fourth quarter
of 2017. Total revenue from continuing operations for the full year
2018 was $48.8 million, excluding NeuroNexus discontinued
operations revenue of $4.9 million, representing an 80% increase
from $27.1 million from continuing operations for the full year
2017. Total Algovita revenue in the fourth quarter of 2018 was
$14.1 million, a 36% increase from $10.4 million in the fourth
quarter of 2017. Total Algovita revenue for the full year 2018 was
$47.1 million, an 84% increase from $25.6 million for the full year
2017.
Gross profit from continuing operations in the fourth quarter of
2018 was $8.0 million, or 55% gross margin, an increase from $5.4
million, or 50% gross margin, from continuing operations in the
fourth quarter of 2017. Total gross profit from continuing
operations for the full year 2018 was $25.8 million, or 53% gross
margin, an increase from $12.7 million, or 47% gross margin, from
continuing operations for the full year 2017.
Operating expenses from continuing operations in
the fourth quarter of 2018 were $18.3 million, a 40% increase from
$13.1 million from continuing operations in the fourth quarter of
2017. Total operating expenses from continuing operations for the
full year 2018 were $69.0 million, an increase of 26% from $54.9
million from continuing operations for the full year 2017. The
increase for both periods was primarily the result of an increase
in personnel-related expenses.
Net loss for the fourth quarter of 2018 was
$(12.9) million or $(0.73) per share, including a loss of $(1.3)
million or $(0.08) per share from NeuroNexus discontinued
operations, compared with a net loss of $(8.6) million, or $(0.80)
per share, for the fourth quarter of 2017. Net loss for the full
year 2018 was $(48.1) million or $(3.25) per share, including a
loss of $(1.0) million or ($0.06) per share from NeuroNexus
discontinued operations, compared to $(44.6) million or $(4.22) per
share for the full year 2017.
Total cash and cash equivalents were $99.2
million as of December 31, 2018 compared to $28.2 million as of
December 31, 2017.
Conference Call Information
Nuvectra will hold a conference call on February
28, 2019 at 4:30pm ET to discuss the results. The dial in numbers
are (844) 822-7830 for domestic callers and (574) 990-9704 for
international callers. The conference ID is 5786645. A live
webcast of the conference call will be available on the investor
relations section of the Company’s website at
http://investors.nuvectramed.com/.
A replay of the call will be available starting
on February 28, 2019 through March 7, 2019. To access the replay,
dial (855) 859-2056 for domestic callers and (404) 537-3406 for
international callers and enter access code 5786645. The webcast
will be available in the investor relations section of the
Company’s website for 90 days following the completion of the
call.
About Nuvectra Corporation
Nuvectra® is a neurostimulation company committed to helping
physicians improve the lives of people with chronic conditions. The
Algovita® Spinal Cord Stimulation (SCS) System is our first
commercial offering and is CE marked and FDA approved for the
treatment of chronic intractable pain of the trunk and/or limbs.
Our innovative technology platform also has capabilities under
development to support other indications such as sacral
neuromodulation (SNM) for the treatment of overactive bladder, and
deep brain stimulation (DBS) for the treatment of Parkinson’s
Disease. Visit the Nuvectra website at www.nuvectramed.com.
Cautionary Note Regarding Forward-Looking
Statements
This press release contains "forward-looking statements,"
including statements we make regarding the outlook
for Nuvectra as an independent publicly-traded company.
Forward-looking statements are based only on our current beliefs,
expectations and assumptions regarding the future of our business,
future plans and strategies, projections, anticipated events and
trends, the economy and other future conditions, and therefore they
are subject to inherent uncertainties, risks and changes in
circumstances that are difficult to predict and may be outside of
our control. Our actual performance may differ materially from
those indicated in the forward-looking statements. Therefore, you
should not rely on any of these forward-looking statements. Any
forward-looking statement made by us is based only on information
currently available to us and speaks only as of the date on which
it is made. Important factors that could cause our actual
results to differ materially from those indicated in the
forward-looking statements include: (i) our ability to successfully
commercialize Algovita and to develop, complete and commercialize
enhancements or improvements to Algovita; (ii) our ability to
successfully compete with our current SCS competitors and the
ability of our U.S. sales representatives to successfully establish
market share and acceptance of Algovita, (iii) the uncertainty and
timing of obtaining regulatory approvals in the United
States and Europe for our Virtis SNM system, (iv)
our ability to successfully launch and commercialize the Virtis SNM
system if and when it receives regulatory approval (v) our ability
to demonstrate the features, perceived benefits and capabilities of
Algovita to physicians and patients in competition with similar
products already well established and sold in the SCS market; (vi)
our ability to anticipate and satisfy customer needs and
preferences and to develop, introduce and commercialize new
products or advancements and improvements to Algovita in order to
successfully meet our customers’ expectations; (vii) the outcome of
our development plans for our neurostimulation technology platform,
including our ability to identify additional indications or
conditions for which we may develop neurostimulation medical
devices or therapies and seek regulatory approval thereof; (viii)
our ability to identify business development and growth
opportunities and to successfully execute on our strategy,
including our ability to seek and develop strategic partnerships
with third parties to, among other things, fund clinical and
development costs for new product offerings; (ix) the performance
by our development partners, including Aleva
Neurotherapeutics, S.A., of their obligations under their
agreements with us; (x) the scope of protection for our
intellectual property rights covering Algovita and other products
using our neurostimulation technology platform, along with any
product enhancements or improvements; (xi) our ability to
successfully build, attract and maintain an effective commercial
infrastructure and qualified sales force in the United
States; (xii) our compliance with all regulatory and legal
requirements regarding implantable medical devices and interactions
with healthcare professionals; (xiii) our reliance on each of
Integer, our exclusive and sole manufacturer and supplier of parts
and components for Algovita, and Minnetronix, Inc., our sole-source
supplier of external peripheral devices; (xiv) any supplier
shortages related to Algovita or its components and any
manufacturing disruptions which may impact our inventory supply as
we expand our business; (xv) any product recalls, or the receipt of
any warning letters, mandatory corrections or fines from any
governmental or regulatory agency; (xvi) our ability to satisfy the
conditions and covenants of our Credit Facility; and (xvii) our
ability to raise capital should it become necessary to do so,
through another public offering of our common stock, private equity
or debt financings, strategic partnerships, or other sources.
Please see the section entitled “Risk Factors” in Nuvectra’s Annual
Report on Form 10-K and in our other quarterly and periodic filings
for a description of these and other risks and uncertainties.
We undertake no obligation to publicly update any forward-looking
statement, whether written or oral, that may be made from time to
time, whether as a result of new information, future developments
or otherwise.
|
|
NUVECTRA
CORPORATIONCONSOLIDATED STATEMENTS OF
OPERATIONSAND COMPREHENSIVE
LOSS(in thousands, except per share
data)(Unaudited) |
|
|
|
|
|
Three Months Ended |
|
|
Year Ended |
|
|
|
December 31, 2018 |
|
|
December 30, 2017 |
|
|
December 31, 2018 |
|
|
December 30, 2017 |
|
Sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product |
|
$ |
14,099 |
|
|
|
$ |
10,387 |
|
|
|
$ |
47,149 |
|
|
|
$ |
25,567 |
|
|
Service |
|
|
429 |
|
|
|
|
317 |
|
|
|
|
1,682 |
|
|
|
|
1,513 |
|
|
Total
sales |
|
|
14,528 |
|
|
|
|
10,704 |
|
|
|
|
48,831 |
|
|
|
|
27,080 |
|
|
Cost of Sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product |
|
|
6,268 |
|
|
|
|
5,161 |
|
|
|
|
21,640 |
|
|
|
|
13,530 |
|
|
Service |
|
|
293 |
|
|
|
|
189 |
|
|
|
|
1,357 |
|
|
|
|
897 |
|
|
Total
cost of sales |
|
|
6,561 |
|
|
|
|
5,350 |
|
|
|
|
22,997 |
|
|
|
|
14,427 |
|
|
Gross
profit |
|
|
7,967 |
|
|
|
|
5,354 |
|
|
|
|
25,834 |
|
|
|
|
12,653 |
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general and administrative expenses |
|
|
14,358 |
|
|
|
|
10,219 |
|
|
|
|
54,423 |
|
|
|
|
42,744 |
|
|
Research,
development and engineering costs, net |
|
|
3,946 |
|
|
|
|
2,854 |
|
|
|
|
14,599 |
|
|
|
|
12,140 |
|
|
Total
operating expenses |
|
|
18,304 |
|
|
|
|
13,073 |
|
|
|
|
69,022 |
|
|
|
|
54,884 |
|
|
Operating
loss |
|
|
(10,337 |
) |
|
|
|
(7,719 |
) |
|
|
|
(43,188 |
) |
|
|
|
(42,231 |
) |
|
Interest expense,
net |
|
|
816 |
|
|
|
|
769 |
|
|
|
|
3,588 |
|
|
|
|
1,959 |
|
|
Other expense, net |
|
|
302 |
|
|
|
|
105 |
|
|
|
|
390 |
|
|
|
|
604 |
|
|
Loss from
continuing operations before taxes |
|
|
(11,455 |
) |
|
|
|
(8,593 |
) |
|
|
|
(47,166 |
) |
|
|
|
(44,794 |
) |
|
Provision (benefit) for
income taxes |
|
|
63 |
|
|
|
|
34 |
|
|
|
|
(21 |
) |
|
|
|
(58 |
) |
|
Loss from
continuing operations |
|
$ |
(11,518 |
) |
|
|
$ |
(8,627 |
) |
|
|
$ |
(47,145 |
) |
|
|
$ |
(44,736 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued
operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)
income from operations of discontinued operations |
|
|
(1,376 |
) |
|
|
|
7 |
|
|
|
|
(932 |
) |
|
|
|
219 |
|
|
(Benefit)
provision for income taxes |
|
|
(41 |
) |
|
|
|
(18 |
) |
|
|
|
54 |
|
|
|
|
83 |
|
|
(Loss)
income from discontinued operations |
|
$ |
(1,335 |
) |
|
|
$ |
25 |
|
|
|
$ |
(986 |
) |
|
|
$ |
136 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss |
|
$ |
(12,853 |
) |
|
|
$ |
(8,602 |
) |
|
|
$ |
(48,131 |
) |
|
|
$ |
(44,600 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss |
|
$ |
(12,852 |
) |
|
|
$ |
(8,603 |
) |
|
|
$ |
(48,129 |
) |
|
|
$ |
(44,599 |
) |
|
Basic and diluted net
loss per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
continuing operations |
|
$ |
(0.65 |
) |
|
|
$ |
(0.80 |
) |
|
|
$ |
(3.19 |
) |
|
|
$ |
(4.23 |
) |
|
(Loss)
income from discontinued operations |
|
|
(0.08 |
) |
|
|
|
— |
|
|
|
|
(0.06 |
) |
|
|
|
0.01 |
|
|
Basic and
diluted net loss per share |
|
|
(0.73 |
) |
|
|
|
(0.80 |
) |
|
|
|
(3.25 |
) |
|
|
|
(4.22 |
) |
|
Basic and diluted
weighted average shares outstanding |
|
|
17,647 |
|
|
|
|
10,813 |
|
|
|
|
14,801 |
|
|
|
|
10,576 |
|
|
|
NUVECTRA
CORPORATIONCONSOLIDATED BALANCE
SHEETS(in thousands, except share and per share
data)(Unaudited) |
|
|
|
As of |
|
|
December 31,2018 |
|
|
December 31,2017 |
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash
equivalents |
|
$ |
99,240 |
|
|
|
$ |
28,165 |
|
|
Trade
accounts receivable, net of allowance for doubtful accounts of $691
and $414 in 2018 and 2017, respectively |
|
|
12,324 |
|
|
|
|
9,920 |
|
|
Inventories |
|
|
6,627 |
|
|
|
|
4,978 |
|
|
Prepaid
expenses and other current assets |
|
|
1,117 |
|
|
|
|
995 |
|
|
Current
assets of discontinued operations |
|
|
— |
|
|
|
|
971 |
|
|
Total
current assets |
|
|
119,308 |
|
|
|
|
45,029 |
|
|
Property, plant and
equipment, net |
|
|
5,213 |
|
|
|
|
5,900 |
|
|
Goodwill |
|
|
33,491 |
|
|
|
|
33,491 |
|
|
Other long-term
assets |
|
|
— |
|
|
|
|
245 |
|
|
Noncurrent assets of
discontinued operations |
|
|
— |
|
|
|
|
6,438 |
|
|
Total
assets |
|
$ |
158,012 |
|
|
|
$ |
91,103 |
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
7,950 |
|
|
|
$ |
2,043 |
|
|
Accrued
liabilities |
|
|
5,736 |
|
|
|
|
8,563 |
|
|
Accrued
compensation |
|
|
6,858 |
|
|
|
|
4,278 |
|
|
Short-term
debt |
|
|
— |
|
|
|
|
789 |
|
|
Current
liabilities of discontinued operations |
|
|
— |
|
|
|
|
378 |
|
|
Total
current liabilities |
|
|
20,544 |
|
|
|
|
16,051 |
|
|
Other long-term
liabilities |
|
|
490 |
|
|
|
|
993 |
|
|
Long-term debt, net |
|
|
44,082 |
|
|
|
|
25,886 |
|
|
Total
liabilities |
|
|
65,116 |
|
|
|
|
42,930 |
|
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
Common
stock, $0.001 par value, 100,000,000 shares authorized; 17,689,928
and 10,849,385 shares issued and outstanding in 2018 and 2017,
respectively |
|
|
18 |
|
|
|
|
11 |
|
|
Additional
paid-in capital |
|
|
218,844 |
|
|
|
|
125,999 |
|
|
Accumulated
other comprehensive gain (loss) |
|
|
1 |
|
|
|
|
(1 |
) |
|
Accumulated
deficit |
|
|
(125,967 |
) |
|
|
|
(77,836 |
) |
|
Total
stockholders’ equity |
|
|
92,896 |
|
|
|
|
48,173 |
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders’ equity |
|
$ |
158,012 |
|
|
|
$ |
91,103 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
The carrying amounts of the NeuroNexus assets and liabilities
that were classified as assets and liabilities of discontinued
operations held for sale were as follows (in thousands):
|
December 31, 2017 |
|
Accounts receivable, net
of allowance for doubtful accounts of $3 thousand |
$ |
955 |
|
Prepaid expenses and
other current assets |
|
16 |
|
Current assets of discontinued
operations held for sale |
|
971 |
|
Property, plant and
equipment, net |
|
319 |
|
Intangible assets,
net |
|
1,428 |
|
Goodwill |
|
4,691 |
|
Noncurrent assets of discontinued
operations held for sale |
|
6,438 |
|
Total assets |
|
7,409 |
|
Accrued
liabilities |
|
264 |
|
Accrued
compensation |
|
114 |
|
Current liabilities of discontinued
operations held for sale |
|
378 |
|
Net assets |
$ |
7,031 |
|
Income (loss) from discontinued operations, net of income taxes,
were as follows (in thousands):
|
|
Year Ended |
|
|
December 31,2018 |
|
|
December 31,2017 |
|
|
|
|
|
|
|
|
Sales |
|
$ |
4,855 |
|
|
|
$ |
4,756 |
Cost of sales |
|
|
1,637 |
|
|
|
|
1,460 |
Gross
profit |
|
|
3,218 |
|
|
|
|
3,296 |
Operating expenses: |
|
|
|
|
|
|
|
Selling,
general and administrative expenses |
|
|
1,075 |
|
|
|
|
1,114 |
Research,
development and engineering costs, net |
|
|
1,814 |
|
|
|
|
1,963 |
Goodwill
impairment |
|
|
1,261 |
|
|
|
|
— |
Total
operating expenses |
|
|
4,150 |
|
|
|
|
3,077 |
(Loss)
income from discontinued operations before taxes |
|
|
(932 |
) |
|
|
|
219 |
Provision for income
taxes |
|
|
54 |
|
|
|
|
83 |
|
|
|
|
|
|
|
|
(Loss) income from
discontinued operations |
|
$ |
(986 |
) |
|
|
$ |
136 |
|
|
|
|
|
|
|
|
|
Company Contacts:
|
|
Investor Contacts: |
Nuvectra Corporation
|
|
The Ruth Group
|
Walter Berger, COO & CFO
|
|
Tram Bui / Brian Johnston |
(214) 474-3102
|
|
(646) 536-7035 / 7028
|
wberger@nuvectramed.com
|
|
investors@nuvectramed.com |
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