Third Quarter 2023 Financial and Business Highlights
- Net sales of
$19.5 million representing a decrease of 13.7% over the third quarter of 2022. For the first nine months of 2023, net sales totaled$65.2 million , approximately flat from$65.5 million for the same period in 2022. - Free cash flow usage of
$3.6 million , a slight improvement from$3.7 million in the same period in 2022. For the first nine months of 2023, free cash flow usage totaled$11.2 million , a 68.3% improvement versus free cash usage of$35.3 million for the same period in 2022. - Adjusted EBITDA loss of
$6.4 million , a 25.6% improvement from a$8.6 million loss for the same period in 2022. For the first nine months of 2023, adjusted EBITDA loss totaled$15.4 million , a 47.4% improvement versus a$29.3 million loss for the same period in 2022. - Presented at the
American Society of Plastic Surgeons meeting inAustin, Texas , unparalleled 12-month interim clinical data for the Viality™ fat transfer system demonstrating over 80% fat retention at all time points. - Obtained approval for Viality from
Health Canada , representing the first international expansion for the Company’s novel fat transfer technology.
“We are extremely excited about the interim 12-month clinical data on our Viality long-term retention study presented at Plastic Surgery: The Meeting,” commented Dr. Denise Dajles, Sientra’s Chief Technology Officer. “This first-of-its-kind study has demonstrated unparalleled fat retention of over 80% at the 3-, 6- and now 12-month time points. This retention rate is also consistent across cohorts, showing predictable, high retention rates for augmentation and reconstruction patients, including patients using fat with implants or just fat alone. This is highly significant, as it represents a truly minimally invasive option for patients who want to add volume without an implant, providing an important new tool for plastic surgeons in their patient care.”
Third Quarter 2023 Financial Results
- Total net sales were
$19.5 million , a decrease of 13.7% compared to total net sales of$22.6 million for the same period in 2022. - GAAP gross profit for the third quarter of 2023 was
$10.0 million , or 51.3% of sales, compared to gross profit of$12.8 million , or 56.6% of sales, for the same period in 2022. This quarter’s results were negatively affected by a non-cash depreciation and amortization charge of$1.4 million . This charge is primarily due to the inclusion of non-cash amortization of Viality manufacturing know-how and developed technology in cost of sales. Non-GAAP gross margin, excluding this non-cash depreciation and amortization charge, was 58.4% of sales for the current period as compared to 57.9% for the prior year period. - Total GAAP loss from continuing operations for the third quarter of 2023 was
$14.8 million , compared to$14.9 million for the same period in 2022, a 0.7% improvement from the prior year period. - Total GAAP operating expense for the third quarter of 2023 was
$19.4 million , compared to$25.3 million for the prior year period, a decrease of$5.9 million or 23.3%. - Non-GAAP total operating expenses for the third quarter of 2023 were
$17.8 million , compared to$21.7 million for the same period in 2022, an 18.0% reduction from the prior year period. - On a non-GAAP basis, adjusted EBITDA for the third quarter of 2023 was a
$6.4 million loss, a 25.6% improvement from a loss of$8.6 million for the same period in 2022. - Net cash and cash equivalents as of
September 30, 2023 , were$15 million , compared to$26.1 million onDecember 31, 2022 , and$18.6 million onJune 30, 2023 .
Conference Call
Use of Non-GAAP Financial Measures
About
Headquartered in
(*) Data on file
Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, based on management’s current assumptions and expectations of future events and trends, which affect or may affect the Company’s business, strategy, operations or financial performance, and actual results may differ materially from those expressed or implied in such statements due to numerous risks and uncertainties. Forward-looking statements are made only as of the date of this release. The words ‘‘believe,’’ ‘‘may,’’ ‘‘might,’’ ‘‘could,’’ ‘‘will,’’ ‘‘aim,’’ ‘‘estimate,’’ ‘‘continue, ‘‘anticipate,’’ ‘‘intend,’’ ‘‘expect,’’ ‘‘plan,’’ ‘‘position,” or the negative of those terms, and similar expressions that convey uncertainty of future events or outcomes are intended to identify estimates, projections and other forward-looking statements. Forward-looking statements may include information concerning the Company’s unaudited financial information for the third quarter ended
Investor Relations Contact
aman.patel@westwicke.com
Condensed Consolidated Statements of Operations | ||||||||||||||||
(In thousands, except per share and share amounts) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Net sales | $ | 19,544 | $ | 22,570 | $ | 65,231 | $ | 65,481 | ||||||||
Cost of goods sold | 9,515 | 9,794 | 30,440 | 27,118 | ||||||||||||
Gross profit | 10,029 | 12,776 | 34,791 | 38,363 | ||||||||||||
Operating expenses: | ||||||||||||||||
Sales and marketing | 9,330 | 12,290 | 29,487 | 41,542 | ||||||||||||
Research and development | 2,476 | 3,720 | 7,571 | 9,823 | ||||||||||||
General and administrative | 7,620 | 9,324 | 24,805 | 31,589 | ||||||||||||
Total operating expenses | 19,426 | 25,334 | 61,863 | 82,954 | ||||||||||||
Loss from operations | (9,397 | ) | (12,558 | ) | (27,072 | ) | (44,591 | ) | ||||||||
Other (expense) income, net: | ||||||||||||||||
Interest income | 168 | 41 | 458 | 58 | ||||||||||||
Interest expense | (2,367 | ) | (2,364 | ) | (7,250 | ) | (6,584 | ) | ||||||||
Change in fair value of derivative liability | (3,153 | ) | — | (3,153 | ) | — | ||||||||||
Other (expense) income, net | (24 | ) | (6 | ) | (125 | ) | (1 | ) | ||||||||
Total other (expense) income, net | (5,376 | ) | (2,329 | ) | (10,070 | ) | (6,527 | ) | ||||||||
Loss from continuing operations before income taxes | (14,773 | ) | (14,887 | ) | (37,142 | ) | (51,118 | ) | ||||||||
Loss from continuing operations | (14,773 | ) | (14,887 | ) | (37,142 | ) | (51,118 | ) | ||||||||
Loss from discontinued operations, net of income taxes | — | (94 | ) | — | (208 | ) | ||||||||||
Net loss | $ | (14,773 | ) | $ | (14,981 | ) | $ | (37,142 | ) | $ | (51,326 | ) | ||||
Basic and diluted net loss per share attributable to common stockholders | ||||||||||||||||
Continuing operations | $ | (1.31 | ) | $ | (2.37 | ) | $ | (3.23 | ) | $ | (8.16 | ) | ||||
Discontinued operations | — | (0.01 | ) | — | (0.03 | ) | ||||||||||
Basic and diluted net loss per share | $ | (1.31 | ) | $ | (2.38 | ) | $ | (3.23 | ) | $ | (8.20 | ) | ||||
Weighted average outstanding common shares used for net loss per share attributable to common stockholders: | ||||||||||||||||
Basic and diluted | 11,290,699 | 6,284,817 | 11,488,310 | 6,261,350 |
Condensed Consolidated Balance Sheets | ||||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
2023 | 2022 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 15,026 | $ | 26,071 | ||||
Accounts receivable, net | 29,610 | 36,892 | ||||||
Inventories | 39,268 | 42,692 | ||||||
Prepaid expenses and other current assets | 2,604 | 2,094 | ||||||
Total current assets | 86,508 | 107,749 | ||||||
Property and equipment, net | 13,289 | 14,941 | ||||||
9,202 | 9,202 | |||||||
Other intangible assets, net | 24,332 | 25,676 | ||||||
Right of use assets, net | 5,753 | 7,004 | ||||||
Other assets | 849 | 849 | ||||||
Total assets | $ | 139,933 | $ | 165,421 | ||||
Liabilities and Stockholders’ Deficit | ||||||||
Current liabilities: | ||||||||
Current portion of long-term debt | $ | 58,810 | $ | - | ||||
Accounts payable | 5,284 | 6,818 | ||||||
Accrued and other current liabilities | 20,655 | 22,599 | ||||||
Customer deposits | 53,598 | 45,161 | ||||||
Sales return liability | 13,745 | 15,773 | ||||||
Total current liabilities | 152,092 | 90,351 | ||||||
Long-term debt | — | 55,406 | ||||||
Derivative liability | 3,153 | 880 | ||||||
Deferred and contingent consideration | 1,794 | 2,791 | ||||||
Warranty reserve | 8,758 | 8,186 | ||||||
Lease liabilities | 4,129 | 5,518 | ||||||
Other liabilities | 2,052 | 2,698 | ||||||
Total liabilities | 171,978 | 165,830 | ||||||
Stockholders’ deficit: | ||||||||
Total stockholders’ deficit | (32,045 | ) | (409 | ) | ||||
Total liabilities and stockholders’ deficit | $ | 139,933 | $ | 165,421 |
Condensed Consolidated Statements of Cash Flows | ||||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
Nine Months Ended | ||||||||
2023 | 2022 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (37,142 | ) | $ | (51,326 | ) | ||
Loss from discontinued operations, net of income taxes | — | (208 | ) | |||||
Loss from continuing operations, net of income taxes | (37,142 | ) | (51,118 | ) | ||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization | 5,546 | 4,947 | ||||||
Provision for doubtful accounts | 448 | 1,086 | ||||||
Provision for warranties | 1,510 | 583 | ||||||
Provision for inventories | 68 | 607 | ||||||
Fair value adjustments to derivative liability | 3,153 | — | ||||||
Fair value adjustments of other liabilities held at fair value | 350 | (88 | ) | |||||
Amortization of debt discount and issuance costs | 3,621 | 3,029 | ||||||
Employee stock-based compensation expense | 4,293 | 6,113 | ||||||
Other non-cash adjustments | — | 135 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 6,610 | (2,341 | ) | |||||
Inventories | 3,357 | 667 | ||||||
Prepaid expenses, other current assets and other assets | 741 | 1,997 | ||||||
Accounts payable, accrued and other liabilities | (9,122 | ) | (5,514 | ) | ||||
Customer deposits | 8,437 | 7,830 | ||||||
Sales return liability | (2,029 | ) | (1,383 | ) | ||||
Net cash flow used in operating activities - continuing operations | (10,159 | ) | (33,450 | ) | ||||
Net cash flow used in operating activities - discontinued operations | — | (208 | ) | |||||
Net cash used in operating activities | (10,159 | ) | (33,658 | ) | ||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment | (1,056 | ) | (1,856 | ) | ||||
Net cash flow used in investing activities - continuing operations | (1,056 | ) | (1,856 | ) | ||||
Net cash used in investing activities | (1,056 | ) | (1,856 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from issuance of common stock for employee stock-based plans | 428 | 475 | ||||||
Shares repurchased for tax withholding on vesting RSUs | (96 | ) | (448 | ) | ||||
Gross borrowings under the Term Loan | — | 5,000 | ||||||
Gross borrowings under the Revolving Loan | — | 5,440 | ||||||
Repayments of the Revolving Loan | — | (7,678 | ) | |||||
Deferred financing costs | (162 | ) | (73 | ) | ||||
Net cash provided by financing activities - continuing operations | 170 | 2,716 | ||||||
Net cash provided by financing activities | 170 | 2,716 | ||||||
Net decrease in cash, cash equivalents and restricted cash | (11,045 | ) | (32,798 | ) | ||||
Cash, cash equivalents and restricted cash at: | ||||||||
Beginning of period | 26,677 | 52,068 | ||||||
End of period | $ | 15,632 | $ | 19,270 | ||||
Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets | ||||||||
Cash and cash equivalents | 15,026 | 18,975 | ||||||
Restricted cash included in other assets | 606 | 295 | ||||||
Total cash, cash equivalents and restricted cash | $ | 15,632 | $ | 19,270 |
Reconciliation of US GAAP Loss from Continuing Operations to Non-GAAP Adjusted EBITDA | ||||||||||||||||
(In thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Loss from continuing operations, as reported | $ | (14,773 | ) | $ | (14,887 | ) | $ | (37,142 | ) | $ | (51,118 | ) | ||||
Adjustments to loss from continuing operations: | ||||||||||||||||
Interest (income) expense and other, net | 2,223 | 2,329 | 6,917 | 6,528 | ||||||||||||
Depreciation and amortization | 1,887 | 1,545 | 5,546 | 4,947 | ||||||||||||
Fair value adjustments to contingent consideration | — | — | 90 | (88 | ) | |||||||||||
Fair value adjustments to derivative liability | 3,153 | — | 3,153 | — | ||||||||||||
Stock-based compensation | 1,233 | 1,855 | 4,293 | 6,113 | ||||||||||||
Provision for doubtful accounts | (86 | ) | 582 | 448 | 1,086 | |||||||||||
Severance | 280 | — | 598 | 1,635 | ||||||||||||
— | — | 1,016 | — | |||||||||||||
Legal settlement expense | (265 | ) | — | (265 | ) | 1,600 | ||||||||||
Total adjustments to loss from continuing operations | 8,425 | 6,311 | 21,796 | 21,821 | ||||||||||||
Adjusted EBITDA | $ | (6,348 | ) | $ | (8,576 | ) | $ | (15,346 | ) | $ | (29,297 | ) | ||||
Three Months Ended | Nine Months Ended | |||||||||||||||
As a Percentage of Revenue** | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Loss from continuing operations, as reported | (75.6 | %) | (66.0 | %) | (56.9 | %) | (78.1 | %) | ||||||||
Adjustments to loss from continuing operations: | ||||||||||||||||
Interest (income) expense and other, net | 11.4 | % | 10.3 | % | 10.6 | % | 10.0 | % | ||||||||
Depreciation and amortization | 9.7 | % | 6.8 | % | 8.5 | % | 7.6 | % | ||||||||
Fair value adjustments to contingent consideration | 0.0 | % | 0.0 | % | 0.1 | % | (0.1 | %) | ||||||||
Fair value adjustments to derivative liability | 16.1 | % | 0.0 | % | 4.8 | % | 0.0 | % | ||||||||
(Loss) gain on extinguishment of debt | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | ||||||||
Stock-based compensation | 6.3 | % | 8.2 | % | 6.6 | % | 9.3 | % | ||||||||
Provision for doubtful accounts | (0.4 | %) | 2.6 | % | 0.7 | % | 1.7 | % | ||||||||
Severance | 1.4 | % | 0.0 | % | 0.9 | % | 2.5 | % | ||||||||
0.0 | % | 0.0 | % | 1.6 | % | 0.0 | % | |||||||||
Legal settlement expense | (1.4 | %) | 0.0 | % | (0.4 | %) | 2.4 | % | ||||||||
Total adjustments to loss from continuing operations | 43.1 | % | 28.0 | % | 33.4 | % | 33.3 | % | ||||||||
Adjusted EBITDA | (32.5 | %) | (38.0 | %) | (23.5 | %) | (44.7 | %) | ||||||||
** Adjustments may not add to the total figure due to rounding. |
Reconciliation of US GAAP Gross Profit to Adjusted Gross Profit and Adjusted Gross Margin | ||||||||||||||||
(In thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Net sales | $ | 19,544 | $ | 22,570 | $ | 65,231 | $ | 65,481 | ||||||||
Cost of goods sold | 9,515 | 9,794 | 30,440 | 27,118 | ||||||||||||
Gross profit | $ | 10,029 | $ | 12,776 | $ | 34,791 | $ | 38,363 | ||||||||
Gross margin | 51.3 | % | 56.6 | % | 53.3 | % | 58.6 | % | ||||||||
Adjustments to gross profit | ||||||||||||||||
Depreciation and amortization | 1,386 | 301 | 4,087 | 1,132 | ||||||||||||
Total adjustments to gross profit | 1,386 | 301 | 4,087 | 1,132 | ||||||||||||
Adjusted gross profit | $ | 11,415 | $ | 13,077 | $ | 38,878 | $ | 39,495 | ||||||||
Adjusted gross margin | 58.4 | % | 57.9 | % | 59.6 | % | 60.3 | % |
Reconciliation of US GAAP Operating Expenses to Non-GAAP Operating Expenses | ||||||||||||||||
(In thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
US GAAP operating expenses, as reported | $ | 19,426 | $ | 25,334 | $ | 61,863 | $ | 82,954 | ||||||||
Adjustments to GAAP operating expenses: | ||||||||||||||||
Depreciation and amortization | 501 | 1,244 | 1,459 | 3,815 | ||||||||||||
Fair value adjustments to contingent consideration | — | — | 90 | (88 | ) | |||||||||||
Stock-based compensation | 1,233 | 1,855 | 4,293 | 6,113 | ||||||||||||
Provision for doubtful accounts | (86 | ) | 582 | 448 | 1,086 | |||||||||||
Severance | 280 | — | 598 | 1,635 | ||||||||||||
— | — | 1,016 | — | |||||||||||||
Legal settlement expense | (265 | ) | — | (265 | ) | 1,600 | ||||||||||
Total adjustments to GAAP operating expenses | 1,663 | 3,681 | 7,639 | 14,161 | ||||||||||||
Non-GAAP operating expenses | 17,763 | 21,653 | 54,224 | 68,793 |
Reconciliation of US GAAP Operating Expenses to Non-GAAP Operating Expenses | ||||||||||||||||
(In thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
US GAAP operating expenses, as reported | ||||||||||||||||
Sales and marketing | $ | 9,330 | $ | 12,290 | $ | 29,487 | $ | 41,542 | ||||||||
Research and development | 2,476 | 3,720 | 7,571 | 9,823 | ||||||||||||
General and administrative | 7,620 | 9,324 | 24,805 | 31,589 | ||||||||||||
Total GAAP operating expenses, as reported | $ | 19,426 | $ | 25,334 | $ | 61,863 | $ | 82,954 | ||||||||
Adjustments to GAAP operating expenses: | ||||||||||||||||
Sales and marketing | 425 | 640 | 1,332 | 3,065 | ||||||||||||
Research and development | 205 | 173 | 528 | 575 | ||||||||||||
General and administrative | 1,033 | 2,868 | 5,779 | 10,521 | ||||||||||||
Total adjustments to GAAP operating expenses | 1,663 | 3,681 | 7,639 | 14,161 | ||||||||||||
Non-GAAP operating expenses | ||||||||||||||||
Sales and marketing | 8,905 | 11,650 | 28,155 | 38,477 | ||||||||||||
Research and development | 2,271 | 3,547 | 7,043 | 9,248 | ||||||||||||
General and administrative | 6,587 | 6,456 | 19,026 | 21,068 | ||||||||||||
Total Non-GAAP operating expenses | $ | 17,763 | $ | 21,653 | $ | 54,224 | $ | 68,793 | ||||||||
Free Cash Flow | ||||||||||||||||
(In thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Net cash flow used in operating activities - continuing operations | $ | (3,367 | ) | $ | (2,605 | ) | $ | (10,159 | ) | $ | (33,450 | ) | ||||
Purchases of property and equipment | (270 | ) | (1,043 | ) | (1,056 | ) | (1,856 | ) | ||||||||
Free cash flow | $ | (3,637 | ) | $ | (3,648 | ) | $ | (11,216 | ) | $ | (35,306 | ) |
Source:
2023 GlobeNewswire, Inc., source