STRATA Skin Sciences Reports Fourth Quarter and Full Year 2020 Financial Results
Recent Highlights
- Total revenue for the fourth quarter of 2020 was
$6.7 million , a decrease of 24.5% over the fourth quarter of 2019- Global recurring revenue for the fourth quarter of 2020 was
$5.1 million , a 22.7% decrease over the fourth quarter of 2019 and a 32.4% increase over the third quarter of 2020 - Gross domestic recurring billings were
$5.4 million , a 13.7% increase over the third quarter 2020 (See Reconciliation of Non-GAAP measures below)
- Global recurring revenue for the fourth quarter of 2020 was
- Total gross margins in the fourth quarter of 2020 were 67.6%, a 1.2% decrease over the fourth quarter of 2019
- Cash, cash equivalents and restricted cash at
December 31, 2020 were$18.1 million - Concluded the quarter with a global recurring revenue installed base of 860 XTRAC devices, an increase of 30 over the fourth quarter of 2019
- Results of peer-reviewed study entitled, “Therapies for Psoriasis: Clinical and Economic Comparisons,” published in the
Journal of Drugs in Dermatology; XTRAC® was found to be most effective and economical treatment for plaque psoriasis compared to other therapies - Cigna, a global health company insuring over 20 million people in
the United States , added medical coverage policy statements, effectiveSeptember 2020 , insuring the previously uncovered condition of vitiligo
“I am excited to join the
Fourth Quarter 2020 Financial Results
Revenues for the fourth quarter of 2020 were
Gross profit for the fourth quarter of 2020 was
Selling and marketing costs for the fourth quarter of 2020 were
Other expense for the fourth quarter of 2020 was
Net loss for fourth quarter 2020 was
Full Year 2020 Financial Results
Revenues for the full year 2020 were
Gross profit for the full year 2020 was
Selling and marketing costs for the full year 2020 were
Other expense for the full year 2020 was
Net loss for full year 2020 was
Webcast and Conference Call Information
STRATA management will host a conference call today, beginning at
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 measures of net loss to non-GAAP measures included in this press release is as follows (in thousands) (unaudited):
For the Three Months Ended |
For the Year Ended |
|||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Net loss | $ | (443 | ) | $ | (515 | ) | $ | (4,412 | ) | $ | (3,790 | ) | ||||
Adjustments: | ||||||||||||||||
Income taxes | 68 | (38 | ) | 275 | (149 | ) | ||||||||||
Depreciation and amortization | 876 | 1,144 | 3,911 | 4,821 | ||||||||||||
Interest expense, net | 23 | 82 | 61 | 515 | ||||||||||||
Non-GAAP EBITDA | 524 | 673 | (165 | ) | 1,397 | |||||||||||
Stock-based compensation expense | 390 | 312 | 1,633 | 1,195 | ||||||||||||
Impairment of lasers placed-in-service | 24 | 30 | 24 | 30 | ||||||||||||
Loss on extinguishment of debt | - | 414 | - | 414 | ||||||||||||
Non-GAAP adjusted EBITDA | $ | 938 | $ | 1,429 | $ | 1,492 | $ | 3,036 |
Gross Domestic Recurring Billings
Gross domestic recurring billings represent the amount invoiced to partner clinics when treatment codes are sold to the physician. It does not include normal GAAP adjustments which are deferred revenue from prior quarters recorded as revenue in the current quarter, the deferral of revenue from the current quarter recorded as revenue in future quarters, adjustments for co-pay and other discounts. This excludes international recurring revenues.
Gross domestic recurring billings for October, November and
The following is a reconciliation of non-GAAP gross domestic billings to domestic recorded revenue for the fourth quarter of 2020 (in thousands):
Gross domestic recurring billings | $ | 5,400 | ||
Co-Pay adjustments | (70 | ) | ||
Other discounts | (20 | ) | ||
Deferred revenue from prior quarters | 1,390 | |||
Deferral of revenue to future quarters | (1,800 | ) | ||
GAAP Recorded domestic revenue | $ | 4,900 |
About STRATA Skin Sciences, Inc.
STRATA Skin Sciences is a medical technology company in dermatology and plastic surgery dedicated to developing, commercializing and marketing innovative products for the treatment of dermatologic conditions. Its products include the XTRAC® excimer laser and VTRAC® lamp systems utilized in the treatment of psoriasis, vitiligo and various other skin conditions.
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 31 million patients in the United States alone. The technology is covered by multiple patents.
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 832 clinics, with a worldwide installed base of over 2,300 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.
The Company has now introduced its Home by XTRAC™ business, leveraging in-house resources; including DTC advertising, in-house call center and its insurance reimbursement team to provide an at-home, insurance-reimbursed treatment option for patients with certain skin diseases that do not qualify for in-office treatments.
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, the Company’s ability to build a leading franchise in dermatology and aesthetics, and the Company’s ability to develop a home-based treatment of skin disease 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 coronavirus and political factors or conditions affecting the Company and the medical device industry in general, future responses to and effects of COVID-19 pandemic, as well as more specific risks and uncertainties set forth in the Company’s
Investor Contact
(415) 937-5404 | ||
ir@strataskin.com |
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(unaudited)
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 10,604 | $ | 8,129 | |||||
Restricted cash | 7,508 | 7,500 | |||||||
Accounts receivable, net | 2,944 | 4,386 | |||||||
Inventories | 3,444 | 3,027 | |||||||
Prepaid expenses and other current assets | 331 | 513 | |||||||
Total current assets | 24,831 | 23,555 | |||||||
Property and equipment, net | 5,529 | 5,369 | |||||||
Operating lease right-of-use assets | 988 | 1,314 | |||||||
Intangible assets, net | 6,345 | 7,955 | |||||||
8,803 | 8,803 | ||||||||
Other assets | 282 | 347 | |||||||
Total assets | $ | 46,778 | $ | 47,343 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
Current liabilities: | |||||||||
Note payable | $ | 7,275 | $ | 7,275 | |||||
Current portion of long-term debt | 1,478 | - | |||||||
Accounts payable | 2,764 | 1,880 | |||||||
Other accrued liabilities | 4,690 | 5,134 | |||||||
Deferred revenues | 2,262 | 2,832 | |||||||
Current portion of operating lease liabilities | 369 | 313 | |||||||
Total current liabilities | 18,838 | 17,434 | |||||||
Long-term liabilities: | |||||||||
Long-term debt, net | 1,050 | - | |||||||
Long-term operating lease liabilities; net | 710 | 1,078 | |||||||
Deferred tax liability | 254 | - | |||||||
Other liabilities | 34 | 178 | |||||||
Total liabilities | 20,886 | 18,690 | |||||||
Commitments and contingencies (see Note 11) | |||||||||
Stockholders’ equity: | |||||||||
Series C Convertible Preferred Stock, |
- | 1 | |||||||
Common Stock, |
34 | 33 | |||||||
Additional paid-in capital | 244,831 | 243,180 | |||||||
Accumulated deficit | (218,973 | ) | (214,561 | ) | |||||
Total stockholders’ equity | 25,892 | 28,653 | |||||||
Total liabilities and stockholders’ equity | $ | 46,778 | $ | 47,343 |
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(unaudited)
For the Three Months Ended |
||||||||
2020 | 2019 | |||||||
Revenues, net | $ | 6,717 | $ | 8,898 | ||||
Cost of revenues | 2,176 | 2,772 | ||||||
Gross profit | 4,541 | 6,126 | ||||||
Operating expenses: | ||||||||
Engineering and product development | 324 | 214 | ||||||
Selling and marketing | 2,592 | 3,092 | ||||||
General and administrative | 1,977 | 2,877 | ||||||
4,893 | 6,183 | |||||||
Loss from operations | (352 | ) | (57 | ) | ||||
Other (expense) income, net: | ||||||||
Interest expense, net | (23 | ) | (82 | ) | ||||
Loss on extinguishment of debt | - | (414 | ) | |||||
(23 | ) | (496 | ) | |||||
Loss before income taxes | (375 | ) | (553 | ) | ||||
Income tax (expense) benefit | (68 | ) | 38 | |||||
Net loss | $ | (443 | ) | $ | (515 | ) | ||
Loss attributable to common shares | $ | (443 | ) | (503 | ) | |||
Loss attributable to Preferred Series C shares | $ | - | (12 | ) | ||||
Loss Earnings per common share: | ||||||||
Basic | $ | (0.01 | ) | $ | (0.02 | ) | ||
Diluted | $ | (0.01 | ) | $ | (0.02 | ) | ||
Loss per Preferred Series C share - basic and diluted | $ | - | $ | (5.75 | ) |
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(unaudited)
For the Year Ended |
||||||||
2020 | 2019 | |||||||
Revenues, net | $ | 23,090 | $ | 31,586 | ||||
Cost of revenues | 8,956 | 11,316 | ||||||
Gross profit | 14,134 | 20,270 | ||||||
Operating expenses: | ||||||||
Engineering and product development | 1,274 | 1,002 | ||||||
Selling and marketing | 9,038 | 12,003 | ||||||
General and administrative | 7,898 | 10,275 | ||||||
18,210 | 23,280 | |||||||
Loss from operations | (4,076 | ) | (3,010 | ) | ||||
Other (expense) income, net: | ||||||||
Interest expense, net | (61 | ) | (515 | ) | ||||
Loss on extinguishment of debt | - | (414 | ) | |||||
(61 | ) | (929 | ) | |||||
Loss before income taxes | (4,137 | ) | (3,939 | ) | ||||
Income tax (expense) benefit | (275 | ) | 149 | |||||
Net loss | $ | (4,412 | ) | $ | (3,790 | ) | ||
Loss attributable to common shares | $ | (4,394 | ) | $ | (3,597 | ) | ||
Loss attributable to Preferred Series C shares | $ | (18 | ) | $ | (193 | ) | ||
Loss per common share: | ||||||||
Basic | $ | (0.13 | ) | $ | (0.11 | ) | ||
Diluted | $ | (0.13 | ) | $ | (0.11 | ) | ||
Shares used in computing loss per common share: | ||||||||
Basic | 33,609,922 | 31,978,665 | ||||||
Diluted | 33,609,922 | 31,978,665 | ||||||
Loss per Preferred Series C share - basic and diluted | $ | (48.59 | ) | $ | (42.24 | ) | ||
Shares used in computing loss per basic and diluted Preferred Series C shares | 368 | 4,577 |
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE YEARS ENDED
(In thousands, except share amounts)
(unaudited)
Convertible Preferred Stock – Series C | Common Stock | Additional Paid- | Accumulated | ||||||||||||||
Shares | Amount | Shares | Amount | In Capital | Deficit | Total | |||||||||||
BALANCE, |
9,968 | $ | 1 | 29,943,086 | $ | 30 | $ | 241,988 | $ | (210,771 | ) | $ | 31,248 | ||||
Stock-based compensation | - | - | - | - | 1,195 | - | 1,195 | ||||||||||
Conversion of convertible preferred stock into common stock | (7,865 | ) | - | 2,923,791 | 3 | (3 | ) | - | - | ||||||||
Exercise of stock options | - | - | 36,410 | - | - | - | - | ||||||||||
Issuance of restricted stock | - | - | 28,986 | - | - | - | - | ||||||||||
Net loss | - | - | - | - | - | (3,790 | ) | (3,790 | ) | ||||||||
BALANCE, |
2,103 | $ | 1 | 32,932,273 | $ | 33 | $ | 243,180 | $ | (214,561 | ) | $ | 28,653 | ||||
Stock-based compensation | - | - | - | - | 1,633 | - | 1,633 | ||||||||||
Conversion of grantable preferred stock into common stock | (2,103 | ) | (1 | ) | 782,089 | 1 | - | - | - | ||||||||
Exercise of stock options | - | - | 15,000 | - | 18 | - | 18 | ||||||||||
Issuance of restricted stock | - | - | 71,683 | - | - | - | - | ||||||||||
Net loss | - | - | - | - | - | (4,412 | ) | (4,412 | ) | ||||||||
BALANCE, |
- | $ | - | 33,801,045 | $ | 34 | $ | 244,831 | $ | (218,973 | ) | $ | 25,892 |
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
For the Year Ended |
||||||||
2020 | 2019 | |||||||
Cash Flows From Operating Activities: | ||||||||
Net loss | $ | (4,412 | ) | $ | (3,790 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 3,585 | 4,503 | ||||||
Amortization of right-of-use assets | 326 | 318 | ||||||
Provision for doubtful accounts | 90 | 43 | ||||||
Impairment of lasers placed-in-service | 24 | 30 | ||||||
Stock-based compensation | 1,633 | 1,195 | ||||||
Deferred taxes | 254 | (111 | ) | |||||
Amortization of deferred financing costs and debt discount | - | 174 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 1,352 | (1,036 | ) | |||||
Inventories | (417 | ) | (233 | ) | ||||
Prepaid expenses and other assets | 247 | 104 | ||||||
Accounts payable | 884 | 116 | ||||||
Other accrued liabilities | (444 | ) | 634 | |||||
Other liabilities | (144 | ) | (210 | ) | ||||
Operating lease liabilities | (312 | ) | (241 | ) | ||||
Deferred revenues | (570 | ) | 733 | |||||
Net cash provided by operating activities | 2,096 | 2,229 | ||||||
Cash Flows From Investing Activities: | ||||||||
Lasers placed-in-service | (2,133 | ) | (2,676 | ) | ||||
Purchases of property and equipment | (26 | ) | (115 | ) | ||||
Net cash used in investing activities | (2,159 | ) | (2,791 | ) |
CONSOLIDATED STATEMENTS OF CASH FLOWS
(continued)
(In thousands)
(unaudited)
For the Year Ended |
||||||||
Cash Flows From Financing Activities: | 2020 | 2019 | ||||||
Proceeds from exercise of stock options | $ | 18 | $ | - | ||||
Repayments of long-term debt | - | (7,571 | ) | |||||
Proceeds on notes payable | 2,528 | 7,275 | ||||||
Net cash provided by (used in) financing activities | 2,546 | (296 | ) | |||||
Net increase (decrease) in cash and cash equivalents and restricted cash | 2,483 | (858 | ) | |||||
Cash and cash equivalents and restricted cash, beginning of period | 15,629 | 16,487 | ||||||
Cash and cash equivalents and restricted cash, end of period | $ | 18,112 | $ | 15,629 | ||||
Cash and cash equivalents | $ | 10,604 | $ | 8,129 | ||||
Restricted cash | 7,508 | 7,500 | ||||||
$ | 18,112 | $ | 15,629 |
Source: STRATA Skin Sciences, Inc.