Nuvectra Corporation (NASDAQ: NVTR), a neurostimulation medical
device company, announced today financial results for the second
quarter ended June 30, 2019.
Recent Business Highlights
- Algovita® revenues increased 7% year-over-year to $12.3
million
- Filed regulatory submission with FDA for Algovita full-body MR
conditional approval
- Highlighted positive preliminary Algovita clinical data at the
INS 14th Annual World Congress
- Revised full year 2019 Algovita revenue guidance to $50-55
million
Fred Parks, Chief Executive Officer, commented, “Despite some
short-term tactical issues, we are encouraged by our strategy to
reinvigorate Algovita revenue growth. We remain confident in our
ability to accomplish this by executing multiple initiatives,
including continuing to enhance our peripheral device experience,
expanding our addressable market upon full-body MR conditional
approval, and optimizing our salesforce by rebalancing the team
composition. Specifically, we anticipate shifting our selling
structure to include additional clinical specialists allowing our
territory managers to focus their efforts on physician interactions
that will drive revenue growth and improved productivity.”
Mr. Parks concluded, “Our strategic focus remains on expanded
introduction of advantaged neurostimulation products to the pain
market, with subsequent expansion into adjacent opportunities with
VirtisTM for sacral nerve.”
Second Quarter 2019 Financial Results
Total revenue in the second quarter of 2019 was $12.3 million, a
4% increase from $11.9 million in the second quarter of 2018. Total
Algovita revenue in the second quarter of 2019 was $12.3 million, a
7% increase from $11.5 million in the second quarter of 2018.
Gross profit in the second quarter of 2019 was $6.8 million, or
55% gross margin, an increase from $6.1 million, or 51% gross
margin, in the second quarter of 2018. This increase was primarily
due to a decrease in inventory-related charges and an increase in
the volume of Algovita sales.
Operating expenses in the second quarter of 2019
were $17.0 million, a 1% decrease from $17.1 million in the second
quarter of 2018.
Net loss for the second quarter of 2019 was
$(11.1) million or $(0.62) per share, compared with a net loss of
$(11.8) million, or $(0.83) per share, for the second quarter of
2018.
Total cash and cash equivalents were $69.8
million as of June 30, 2019.
2019 Algovita Revenue Guidance
Algovita 2019 revenue guidance revised to $50-55 million,
previously $57-62 million.
Conference Call Information
Nuvectra will hold a conference call on July 31,
2019 at 4:30pm ET to discuss the results. The dial in numbers are
(844) 882-7830 for domestic callers and (574) 990-9704 for
international callers. The conference ID is 3264026. 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 July 31, 2019 through August 7, 2019. To access the replay, dial
(855) 859-2056 for domestic callers and (404) 537-3406 for
international callers and enter access code 3264026. 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
CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONSAND COMPREHENSIVE LOSS —
UNAUDITED(IN THOUSANDS EXCEPT PER SHARE
DATA)
|
Three Months Ended |
|
Six Months Ended |
|
June 30, 2019 |
|
June 30, 2018 |
|
June 30, 2019 |
|
June 30, 2018 |
Sales: |
|
|
|
|
|
|
|
Product |
$ |
12,289 |
|
|
$ |
11,509 |
|
|
$ |
23,332 |
|
|
$ |
20,590 |
|
Service |
|
56 |
|
|
|
394 |
|
|
|
138 |
|
|
|
850 |
|
Total sales |
|
12,345 |
|
|
|
11,903 |
|
|
|
23,470 |
|
|
|
21,440 |
|
Cost of sales: |
|
|
|
|
|
|
|
Product |
|
5,466 |
|
|
|
5,326 |
|
|
|
11,374 |
|
|
|
9,392 |
|
Service |
|
82 |
|
|
|
474 |
|
|
|
211 |
|
|
|
828 |
|
Total cost of sales |
|
5,548 |
|
|
|
5,800 |
|
|
|
11,585 |
|
|
|
10,220 |
|
Gross profit |
|
6,797 |
|
|
|
6,103 |
|
|
|
11,885 |
|
|
|
11,220 |
|
Operating expenses: |
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
12,962 |
|
|
|
13,198 |
|
|
|
27,708 |
|
|
|
25,109 |
|
Research, development and engineering costs, net |
|
4,039 |
|
|
|
3,937 |
|
|
|
8,266 |
|
|
|
6,798 |
|
Total operating expenses |
|
17,001 |
|
|
|
17,135 |
|
|
|
35,974 |
|
|
|
31,907 |
|
Operating loss |
|
(10,204 |
) |
|
|
(11,032 |
) |
|
|
(24,089 |
) |
|
|
(20,687 |
) |
Interest expense, net |
|
966 |
|
|
|
936 |
|
|
|
1,817 |
|
|
|
1,786 |
|
Other (income) expense,
net |
|
(10 |
) |
|
|
54 |
|
|
|
(16 |
) |
|
|
77 |
|
Loss from continuing operations before taxes |
|
(11,160 |
) |
|
|
(12,022 |
) |
|
|
(25,890 |
) |
|
|
(22,550 |
) |
Provision (benefit) for income
taxes |
|
(14 |
) |
|
|
(39 |
) |
|
|
26 |
|
|
|
(29 |
) |
Loss from continuing operations |
|
(11,146 |
) |
|
|
(11,983 |
) |
|
|
(25,916 |
) |
|
|
(22,521 |
) |
|
|
|
|
|
|
|
|
Discontinued operations: |
|
|
|
|
|
|
|
Income from operations of discontinued operations |
|
— |
|
|
|
259 |
|
|
|
— |
|
|
|
267 |
|
Provision for income taxes |
|
— |
|
|
|
54 |
|
|
|
— |
|
|
|
57 |
|
Income from discontinued
operations |
|
— |
|
|
|
205 |
|
|
|
— |
|
|
|
210 |
|
|
|
|
|
|
|
|
|
Net loss |
$ |
(11,146 |
) |
|
$ |
(11,778 |
) |
|
$ |
(25,916 |
) |
|
$ |
(22,311 |
) |
|
|
|
|
|
|
|
|
Other comprehensive gain: |
|
|
|
|
|
|
|
Unrealized holding gain on investments arising during
period |
|
1 |
|
|
|
— |
|
|
|
1 |
|
|
|
1 |
|
Other comprehensive gain |
|
1 |
|
|
|
— |
|
|
|
1 |
|
|
|
1 |
|
Comprehensive loss |
$ |
(11,145 |
) |
|
$ |
(11,778 |
) |
|
$ |
(25,915 |
) |
|
$ |
(22,310 |
) |
|
|
|
|
|
|
|
|
Basic and diluted net loss per
share: |
|
|
|
|
|
|
|
Loss from continuing operations |
$ |
(0.62 |
) |
|
$ |
(0.84 |
) |
|
$ |
(1.46 |
) |
|
$ |
(2.06 |
) |
Income from discontinued operations |
|
— |
|
|
|
0.01 |
|
|
|
— |
|
|
|
0.02 |
|
Basic and diluted net loss per share |
$ |
(0.62 |
) |
|
$ |
(0.83 |
) |
|
$ |
(1.46 |
) |
|
$ |
(2.04 |
) |
Basic and diluted weighted
average shares outstanding |
|
17,848 |
|
|
|
14,209 |
|
|
|
17,794 |
|
|
|
10,922 |
|
The accompanying notes are an integral part of these condensed
consolidated financial statements.
NUVECTRA
CORPORATIONCONSOLIDATED BALANCE SHEETS —
UNAUDITED(IN THOUSANDS, EXCEPT SHARE AND PER SHARE
DATA)
|
|
As of |
|
|
|
June 30, 2019 |
|
|
December 31,2018 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
69,764 |
|
|
$ |
99,240 |
|
Trade accounts receivable, net of allowance for doubtful accounts
of $641 and $691 in 2019 and 2018, respectively |
|
|
9,430 |
|
|
|
12,324 |
|
Inventories |
|
|
8,149 |
|
|
|
6,627 |
|
Prepaid expenses and other current assets |
|
|
2,502 |
|
|
|
1,117 |
|
Total current assets |
|
|
89,845 |
|
|
|
119,308 |
|
Property, plant and equipment,
net |
|
|
5,186 |
|
|
|
5,213 |
|
Goodwill |
|
|
33,491 |
|
|
|
33,491 |
|
Other long-term assets |
|
|
1,166 |
|
|
|
— |
|
Total assets |
|
$ |
129,688 |
|
|
$ |
158,012 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
5,431 |
|
|
$ |
7,950 |
|
Accrued liabilities |
|
|
4,997 |
|
|
|
5,736 |
|
Accrued compensation |
|
|
3,559 |
|
|
|
6,858 |
|
Short-term debt |
|
|
4,500 |
|
|
|
— |
|
Total current liabilities |
|
|
18,487 |
|
|
|
20,544 |
|
Other long-term liabilities |
|
|
1,481 |
|
|
|
490 |
|
Long-term debt, net |
|
|
40,173 |
|
|
|
44,082 |
|
Total liabilities |
|
|
60,141 |
|
|
|
65,116 |
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
Common stock, $0.001 par value, 100,000,000 shares authorized;
17,885,297 and 17,689,928 shares issued and outstanding in 2019 and
2018, respectively |
|
|
18 |
|
|
|
18 |
|
Additional paid-in capital |
|
|
221,410 |
|
|
|
218,844 |
|
Accumulated other comprehensive gain |
|
|
2 |
|
|
|
1 |
|
Accumulated deficit |
|
|
(151,883 |
) |
|
|
(125,967 |
) |
Total stockholders’ equity |
|
|
69,547 |
|
|
|
92,896 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity |
|
$ |
129,688 |
|
|
$ |
158,012 |
|
The accompanying notes are an integral part of
these condensed consolidated financial statements.
Company Contact:Nuvectra
Corporation Jennifer
Kosharek(214) 474-3107
jkosharek@nuvectramed.com |
|
|
|
Investor Contact:The Ruth Group
Tram Bui(646) 536-7035
investors@nuvectramed.com |
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