STRATA Skin Sciences Reports First Quarter 2020 Financial Results
Recurring revenue for the first quarter of 2020 grew 7.3% over first quarter 2019
Total gross margins in the first quarter of 2020 grew 3.8% over first quarter 2019
Global recurring revenue installed base totaled 838 systems at
Conference call and webcast, today at
First Quarter Revenue and Business Highlights
- Total revenue for the first quarter of 2020 was
$6.7 million , a decrease of 10.1% over total revenues for the first quarter of 2019 as our overseas equipment revenue was impacted by COVID-19. - Total global XTRAC® recurring revenue in the first quarter of 2020 was
$5.7 million , up 7.3% over first quarter 2019 total global XTRAC recurring revenues. - Total gross margins and recurring gross margins were 65.4% and 68.4%, respectively, an increase of 3.8% and 2.2%, respectively, as compared to first quarter 2019.
- Net loss was
$1.0 million , a decrease of 22.4% from a net loss of$1.3 million in the first quarter 2019. - Domestic and International recurring installed base of 822 and 16 XTRAC devices, respectively, an increase of 2 and 6 devices, respectively.
- A peer reviewed study published in
Journal of Drugs in Dermatology (April 2020 ) showing 92% of participants in study achieved reduction in mPASI score of 75% or more after receiving Optimal Therapeutic Dose Therapy with the XTRAC Multi-Micro Dose® diagnostic tip for treatment of plaque psoriasis. - Cash and cash equivalents and restricted cash at
March 31, 2020 was$15.6 million . - The Company received, on
April 21, 2020 , a$2.0 million forgivable loan under the SBA Payroll Protection Plan (the “PPP loan”).
“While recurring revenue in the second half of March was impacted by the lockdown and restrictions due to the COVID-19 pandemic, which dramatically slowed the number of patients seeking treatment, we were very pleased to see our business continue to generate revenue during the quarter,” said Dr.
Thirty-one states have recently announced a phased plan to return to normal business activities, allowing us to expand our previously announced Patient Outreach Program to drive patient referrals to our partner clinics. The Company has approximately 350 partner clinics in the states that have recently announced phase-one plans, which are generally in the Midwest and South East regions.
An active outreach effort to both partner clinics and patients is in place to rekindle our recurring revenue. Following the recent receipt of the PPP loan, the Company has called back many of its previously furloughed employees to assist in these outreach efforts and execute plans for growth in the second half of the year. The Company’s unique recurring business model positions us well to assist our partner clinics to resume business, fill their appointment books and get back to treating patients.
Being a solution to both patients and physicians in their search for a safe and effective treatment option for psoriasis and vitiligo resonates in the feedback STRATA is receiving from its physician partners, reflecting XTRAC’s increased importance to their practice without the associated risks of other alternative immune suppressant and systemic treatments.
“Following guidelines, we are currently not seeing any new starts on systemic, potentially immunosuppressive therapies for mild to moderate plaque psoriasis so we are pleased to be able to offer a safe alternative such as XTRAC for the patient who does not want to delay therapy during the COVID-19 outbreak,” stated
“XTRAC laser treatment does not have systemic side effects, immunosuppressive effects, risk of systemic infections and works effectively when combined with topical treatment modalities (topical corticosteroid, calcipotriene and retinoids),” stated
First Quarter 2020 Reported Financial Results
Revenues for the first quarter of 2020 were
Gross profit for the first quarter of 2020 was
Selling and marketing costs for the first quarter of 2020 were
Net (loss) for first quarter 2020 was
Reconciliation of Non-GAAP Measures
To supplement the Company’s consolidated financial statements, prepared in accordance with accounting principles generally accepted in
The Company’s reference to these non-GAAP measures should be considered in addition to results prepared under current accounting standards, but is not a substitute for, nor superior to, GAAP results. These non-GAAP measures are provided to enhance investors' overall understanding of our current financial performance and to provide further information for comparative purposes.
Specifically, the Company believes the non-GAAP measures provide useful information to both management and investors by isolating certain expenses, gains and losses that may not be indicative of the Company’s core operating results and business outlook. In addition, the Company believes non-GAAP measures enhance the comparability of results against prior periods. Reconciliation of the GAAP measure of net loss to non-GAAP measures included in this press release is as follows:
For the Three Months Ended |
|||||
2020 | 2019 | ||||
Net Loss | $ | (1,035) | $ | (1,333) | |
Adjustments: | |||||
Depreciation/amortization | 1,117 | 1,297 | |||
Income taxes | 88 | (43) | |||
Interest (income) expense, net | (1) | 135 | |||
Non-GAAP EBITDA | 169 | 56 | |||
Stock compensation | 430 | 323 | |||
Non-GAAP adjusted EBITDA | $ | 599 | $ | 379 |
STRATA management will host a conference call with investors today,
Conference Call Details:
Date: | |
Time: | |
Toll Free: | 877-451-6152 |
International: | 201-389-0879 |
1 809 406 247 | |
Passcode: | 13703218 |
Webcast: | www.strataskinsciences.com |
About
The Company’s proprietary XTRAC® excimer laser delivers a highly targeted therapeutic beam of UVB light to treat psoriasis, vitiligo, eczema, atopic dermatitis and leukoderma, diseases, which impact over 35 million patients in
STRATA’s unique business model leverages targeted Direct to Consumer (DTC) advertising to generate awareness and utilizes its in-house call center and insurance advocacy teams to increase volume for the Company’s partner dermatology clinics.
The XTRAC business has used this proven DTC model to grow its domestic dermatology partner network to over 822 clinics, with a worldwide installed base of over 2,000 devices. The Company is able to offer 90% of DTC patients an introduction to physicians prescribing a reimbursable solution, using XTRAC, within a 10-mile radius of their house. The Company is a leader in dermatology in-clinic business generation for its partners.
Safe Harbor
This press release includes "forward-looking statements" within the meaning of the Securities Litigation Reform Act of 1995. These statements include but are not limited to the Company’s plans, objectives, expectations and intentions and may contain words such as “will,” “may,” “seeks,” and “expects,” that suggest future events or trends. These statements, the Company’s ability to generate the growth in its core business, the Company’s ability to develop social media marketing campaigns, and the Company’s ability to build a leading franchise in dermatology and aesthetics, are based on the Company’s current expectations and are inherently subject to significant uncertainties and changes in circumstances. Actual results may differ materially from the Company’s expectations due to financial, economic, business, competitive, market, regulatory, adverse market conditions or supply chain interruptions resulting from the corona virus and political factors or conditions affecting the Company and the medical device industry in general, as well as more specific risks and uncertainties set forth in the Company’s
Investor Contacts:
215-619-3200 | 646-889-1200 | |
ir@strataskin.com | mpicciano@lifesciadvisors.com |
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
ASSETS | (unaudited) | ||||
Current assets: | |||||
Cash and cash equivalents | $ | 8,150 | $ | 8,129 | |
Restricted cash | 7,481 | 7,500 | |||
Accounts receivable, net of allowance for doubtful accounts of |
3,208 | 4,386 | |||
Inventories | 3,471 | 3,027 | |||
Prepaid expenses and other current assets | 487 | 513 | |||
Total current assets | 22,797 | 23,555 | |||
Property and equipment, net | 5,379 | 5,369 | |||
Operating lease right-of-use assets, net | 1,235 | 1,314 | |||
Intangible assets, net | 7,503 | 7,955 | |||
8,803 | 8,803 | ||||
Other assets | 330 | 347 | |||
Total assets | $ | 46,047 | $ | 47,343 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||
Current liabilities: | |||||
Note payable | $ | 7,275 | $ | 7,275 | |
Accounts payable | 2,102 | 1,880 | |||
Other accrued liabilities | 5,150 | 5,134 | |||
Current portion of operating lease liabilities | 343 | 313 | |||
Deferred revenues | 1,934 | 2,832 | |||
Total current liabilities | 16,804 | 17,434 | |||
Long-term liabilities: | |||||
Deferred tax liability | 88 | - | |||
Long-term operating lease liabilities, net | 988 | 1,078 | |||
Other liabilities | 119 | 178 | |||
Total liabilities | 17,999 | 18,690 | |||
Commitments and contingencies | |||||
Stockholders' equity: | |||||
Series C Convertible Preferred Stock, |
- | 1 | |||
Common Stock, |
34 | 33 | |||
Additional paid-in capital | 243,610 | 243,180 | |||
Accumulated deficit | (215,596) | (214,561) | |||
Total stockholders' equity | 28,048 | 28,653 | |||
Total liabilities and stockholders’ equity | $ | 46,047 | $ | 47,343 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(unaudited)
For the Three Months Ended |
|||||
2020 | 2019 | ||||
Revenues, net | $ | 6,730 | $ | 7,483 | |
Cost of revenues | 2,331 | 2,874 | |||
Gross profit | 4,399 | 4,609 | |||
Operating expenses: | |||||
Engineering and product development | 292 | 304 | |||
Selling and marketing | 2,953 | 3,066 | |||
General and administrative | 2,102 | 2,480 | |||
5,347 | 5,850 | ||||
Loss from operations | (948) | (1,241) | |||
Other income (expense), net: | |||||
Interest income (expense), net | 1 | (135) | |||
1 | (135) | ||||
Loss before income taxes | (947) | (1,376) | |||
Income tax (expenses) benefit | (88) | 43 | |||
Net loss | $ | (1,035) | $ | (1,333) | |
Loss attributable to common shares | $ | (1,018) | $ | (1,216) | |
Loss attributable to Preferred Series C shares | $ | (17) | $ | (117) | |
Loss per common share: | |||||
Basic | $ | (0.03) | $ | (0.04) | |
Diluted | $ | (0.03) | $ | (0.04) | |
Shares used in computing loss per common share: | |||||
Basic | 33,164,321 | 30,703,501 | |||
Diluted | 33,164,321 | 30,703,501 | |||
Loss per Preferred Series C share basic and diluted | $ | (11.42) | $ | (14.72) | |
Shares used in computing loss per basic and diluted Preferred Series C Shares | 1,480 | 7,944 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
For the Three Months Ended |
|||||
2020 | 2019 | ||||
Cash Flows From Operating Activities: | |||||
Net loss | $ | (1,035) | $ | (1,333) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||
Depreciation and amortization | 1,038 | 1,204 | |||
Amortization of right-of-use asset | 79 | 93 | |||
Provision for doubtful accounts | 2 | (7) | |||
Loss on disposal of property and equipment and lasers placed in service | - | 22 | |||
Stock-based compensation | 430 | 323 | |||
Deferred taxes | 88 | (42) | |||
Amortization of debt discount | - | 7 | |||
Amortization of deferred financing costs | - | 27 | |||
Changes in operating assets and liabilities: | |||||
Accounts receivable | 1,176 | (175) | |||
Inventories | (444) | (327) | |||
Prepaid expenses and other assets | 43 | 142 | |||
Accounts payable | 222 | 281 | |||
Other accrued liabilities | 16 | 224 | |||
Other liabilities | (59) | 9 | |||
Operating lease liabilities | (60) | (76) | |||
Deferred revenues | (898) | (36) | |||
Net cash provided by operating activities | 598 | 336 | |||
Cash Flows From Investing Activities: | |||||
Lasers placed-in-service | (596) | (434) | |||
Net cash used in investing activities | (596) | (434) | |||
Net increase (decrease) in cash and cash equivalents and restricted cash | 2 | (98) | |||
Cash, cash equivalents and restricted cash, beginning of period | 15,629 | 16,487 | |||
Cash, cash equivalents and restricted cash, end of period | $ | 15,631 | $ | 16,389 | |
Cash and cash equivalents | $ | 8,150 | $ | 16,389 | |
Restricted cash | 7,481 | - | |||
$ | 15,631 | $ | 16,389 |
Source: STRATA Skin Sciences, Inc.