Second Quarter 2023 Summary
- Total revenue of
$13.0 million , a decrease of 15% year-over-year on a reported and constant currency basis. - Product revenue of
$12.5 million , a decrease of 17% year-over-year on a reported and constant currency basis. Conformis hip system revenue of$1.0 million , an increase of 30% year-over-year.- Cash and cash equivalents of
$26.2 million as ofJune 30, 2023 . - Announced merger agreement to be acquired by restor3d in cash acquisition; special meeting of
Conformis stockholders scheduled forAugust 31, 2023 to adopt merger agreement.
Three months ended | Increase/(decrease) | ||||||||||
($, in thousands) | 2023 | 2022 | $ Change | % Change | % Change | ||||||
(as reported) | (constant currency) | ||||||||||
| $ | 10,777 | $ | 13,415 | $ | (2,638 | ) | (20)% | (20)% | ||
Rest of world | 1,719 | 1,727 | (8 | ) | —% | —% | |||||
Product revenue | 12,496 | 15,142 | (2,646 | ) | (17)% | (17)% | |||||
Royalty revenue | 527 | 153 | 374 | 244% | 244% | ||||||
Total revenue | $ | 13,023 | $ | 15,295 | $ | (2,272 | ) | (15)% | (15)% |
Second Quarter 2023 Highlights
Revenue
- Decrease in product revenue year-over-year was primarily due to declines in
U.S. knee orders following our business model transition and manufacturing/supply chain challenges. - Royalty and licensing revenue increased year-over-year as a result of revenue recognized under the License Agreements with Bodycad and
Exactech .
Gross Margin
- Product gross profit margin was 38% in the second quarter of 2023, compared to 35% in the same period last year. The product gross margin rate increased year-over-year primarily as a result of higher selling prices on our fully personalized knees due to our Platinum Services℠ Program, volume transition to our lower cost Imprint™ knee system, and decreased cancelled case inventory expense partially offset by increased labor and material costs and lower manufacturing volumes.
- Total gross profit decreased
$3.6 million to$1.8 million , or 14% of revenue, for the second quarter of 2023, compared to$5.5 million , or 36% of revenue, in the same period last year. The decrease in gross margin was driven primarily by a settlement paid in connection with the Osteoplastic Settlement and License Agreement.
Operating Expenses
- Total operating expenses of
$14.1 million decreased$4.1 million , a 22% reduction year-over-year, driven by cost management efforts, lower litigation expense, and lower variable expenses as a result of the decline in revenue. - Sales and marketing expenses decreased
$2.5 million primarily due to lower tradeshow, commission, and personnel expenses. - Research and development expenses decreased
$1.8 million primarily driven by lower personnel, revenue share, and project related expenses. - General and administrative expenses increased
$0.2 million primarily driven by an increase in professional services, partially offset by a decrease in legal expenses.
Net Loss
- Net loss was
$13.0 million , or$1.78 per basic and diluted share, in the second quarter of 2023, compared to a net loss of$15.5 million , or$2.15 per basic and diluted share, in the same period last year. - Foreign currency exchange transaction loss was
$0.0 million in the second quarter of 2023, compared to foreign currency exchange transaction loss of$2.4 million in the same period last year. - Weighted average basic and diluted shares outstanding of 7.3 million for the second quarter of 2023, compared to weighted average basic and diluted shares outstanding of 7.2 million for the same period last year. All share and per share information has been retroactively adjusted for all periods presented to give effect to the 1-for-25 reverse stock split that occurred in
November 2022 .
Capital Structure and Liquidity
- Cash and cash equivalents totaled
$26.2 million as ofJune 30, 2023 , compared to$37.8 million as ofMarch 31, 2023 .
Merger Agreement to be Acquired by restor3d
On
Note on Non-GAAP Financial Measures
In addition to disclosing financial measures prepared in accordance with
About
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Cautionary Statement Regarding Forward-Looking Statements
Statements in this press release about our future expectations, plans and prospects, the anticipated timing of our product launches, and our financial position and results, total revenue, product revenue, gross margin, operations and growth, 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" or the negative of these terms or other and similar expressions are intended to identify forward-looking statements within the meaning of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make as a result of a variety of risks and uncertainties. Such risks and uncertainties include, but are not limited to, (i) the risk that the proposed merger transaction with restor3d may not be completed in a timely manner or at all, which may adversely affect the business and the price of our common stock, (ii) the failure to satisfy any of the conditions to the consummation of the proposed transaction, including the receipt of approval by our stockholders, (iii) the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement, (iv) the outcome of any legal proceedings that have been or may be instituted against us or restor3d related to the proposed transaction, (v) whether our cash resources will be sufficient to fund our continuing operations for the periods anticipated, and whether we may be unable to continue as a going concern if the merger with restor3d is not consummated and we are unable to raise additional capital; (vi) risks related to our estimates and expectations regarding our revenue, gross margin, expenses, revenue growth and other results of operations, and (vii) the other risks and uncertainties described in the "Risk Factors" sections of our Annual Report on Form 10-K for the fiscal year ended
No Offer or Solicitation
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval with respect to the proposed merger or otherwise.
Additional Information and Where to Find It
In connection with the proposed merger transaction with restor3d,
Investors and security holders may obtain free copies of the Definitive Proxy Statement, definitive additional materials and such other documents containing important information about the proposed merger transaction at the SEC’s web site at www.sec.gov, and on Conformis’s website at www.conformis.com and clicking on the “Investors” link and then clicking on the "SEC Filings" link. The contents of the websites referenced above are not deemed to be incorporated by reference into the Definitive Proxy Statement. In addition, the Definitive Proxy Statement and other documents may be obtained free of charge by directing a request to
Participants in the Solicitation
CONTACT:
Investor Relations
ir@conformis.com
(781) 374-5598
Consolidated Statements of Operations | |||||||
(unaudited) | |||||||
(in thousands, except share and per share data) | |||||||
Three Months Ended | |||||||
2023 | 2022 | ||||||
Revenue | |||||||
Product | $ | 12,496 | $ | 15,142 | |||
Royalty and licensing | 527 | 153 | |||||
Total revenue | 13,023 | 15,295 | |||||
Cost of revenue | 11,189 | 9,835 | |||||
Gross profit | 1,834 | 5,460 | |||||
Operating expenses | |||||||
Sales and marketing | 4,063 | 6,562 | |||||
Research and development | 2,158 | 3,958 | |||||
General and administrative | 7,918 | 7,693 | |||||
Total operating expenses | 14,139 | 18,213 | |||||
Loss from operations | (12,305 | ) | (12,753 | ) | |||
Other income and expenses | |||||||
Interest income | 6 | 14 | |||||
Interest expense | (668 | ) | (453 | ) | |||
Foreign currency exchange transaction loss | (13 | ) | (2,432 | ) | |||
Total other expenses | (675 | ) | (2,871 | ) | |||
Loss before income taxes | (12,980 | ) | (15,624 | ) | |||
Income tax (benefit) provision | 31 | (100 | ) | ||||
Net loss | $ | (13,011 | ) | $ | (15,524 | ) | |
Net loss per share: | |||||||
Basic and diluted* | $ | (1.78 | ) | $ | (2.15 | ) | |
Weighted average common shares outstanding: | |||||||
Basic and diluted* | 7,316,286 | 7,211,851 |
*Adjusted for the 1-for-25 reverse stock split
Consolidated Balance Sheets | |||||||
(in thousands, except share and per share data) | |||||||
Assets | (unaudited) | ||||||
Current Assets | |||||||
Cash and cash equivalents | $ | 26,182 | $ | 48,667 | |||
Accounts receivable, net | 7,676 | 9,773 | |||||
Royalty and licensing receivable | 121 | 134 | |||||
Inventories, net | 19,024 | 18,910 | |||||
Prepaid expenses and other current assets | 1,616 | 1,785 | |||||
Total current assets | 54,619 | 79,269 | |||||
Property and equipment, net | 7,455 | 8,154 | |||||
Operating lease right-of-use assets | 5,159 | 6,078 | |||||
Other Assets | |||||||
Restricted cash | 462 | 462 | |||||
Other long-term assets | 86 | 85 | |||||
Total assets | $ | 67,781 | $ | 94,048 | |||
Liabilities and stockholder's equity | |||||||
Current liabilities | |||||||
Accounts payable | $ | 3,584 | $ | 4,163 | |||
Accrued expenses | 5,252 | 7,978 | |||||
Operating lease liabilities | 1,936 | 1,932 | |||||
Total current liabilities | 10,772 | 14,073 | |||||
Other long-term liabilities | 336 | 230 | |||||
Long-term debt, less debt issuance costs | 20,639 | 20,563 | |||||
Operating lease liabilities | 4,009 | 5,003 | |||||
Total liabilities | 35,756 | 39,869 | |||||
Commitments and contingencies | |||||||
Stockholders' equity | |||||||
Preferred stock, | |||||||
Authorized: 5,000,000 shares authorized at | — | — | |||||
Common stock, | |||||||
Authorized: 20,000,000 shares authorized at | — | — | |||||
Additional paid-in capital | 635,703 | 634,647 | |||||
Accumulated deficit | (603,906 | ) | (581,324 | ) | |||
Accumulated other comprehensive income | 228 | 856 | |||||
Total stockholders' equity | 32,025 | 54,179 | |||||
Total liabilities and stockholders' equity | $ | 67,781 | $ | 94,048 |
Source:
2023 GlobeNewswire, Inc., source