STRATA Skin Sciences Reports Second Quarter 2020 Financial Results
Recurring revenue for the second quarter of 2020 was
Total gross margins in the second quarter of 2020 was 48.7%, a 14.9% decrease over second quarter 2019
Global recurring revenue installed base totaled 806 systems at
Conference call and webcast, today at
“While our overall second quarter revenue performance reflects the impact of the COVID-19 global pandemic, we are encouraged by the monthly improvement in our recurring revenue business, which follows the gradual reopening of clinical practices, domestically and internationally,” said Dr.
Second Quarter Revenue and Business Highlights
- Total revenue for the second quarter of 2020 was
$4.0 million , a decrease of 47.8% over total revenues for the second quarter of 2019 as our revenue was impacted by the COVID-19 global pandemic. - Total global XTRAC® recurring revenue in the second quarter of 2020 was
$2.8 million , a decrease of 52.1% over second quarter 2019 total global XTRAC recurring revenues. - Total gross margins and recurring gross margins were 48.7% and 51.2%, respectively, a decrease of 14.9% and 19.1%, respectively, as compared to second quarter 2019.
- Net loss was
$1.7 million , an increase of 55.3% from a net loss of$1.1 million in the second quarter 2019. - Domestic and International recurring installed base of 789 and 17 XTRAC devices, respectively, a decrease of 33 and an increase of 1, respectively.
- Cash and cash equivalents and restricted cash at
June 30, 2020 was$18.6 million . - During the second quarter the Company received a
$2.0 million forgivable loan under the SBA Payroll Protection Plan (the “PPP loan”) and estimates approximately 80% will be forgiven based on current guidelines. - During the second quarter the Company also received
$500 thousand in loan proceeds from the SBA under the Economic Injury Disaster Loan program (the “EIDL loan”). - Saw the publication of a physician-sponsored, peer reviewed study entitled: “308-nm Excimer Laser Plus Platelet-Rich Plasma for Treatment of Stable Vitiligo: A Prospective, Randomized Case–Control Study” in the journal Clinical, Cosmetic and Investigational Dermatology. The randomized study, conducted at the
Xian Vitiligo Specialist Hospital inChina , evaluated the XTRAC Velocity 400i-308 nm excimer laser therapeutic system plus PRP in the treatment of vitiligo patients. Results of the 60 patient trial reaffirmed that the effect of PRP combined with XTRAC on stable vitiligo is significantly better than that of PRP or 308 nm excimer laser alone. - The Company entered into a Settlement Agreement and Release with Ra Medical Systems, Inc. (“Ra Medical”), under which the Company and Ra Medical agreed to dismiss all pending lawsuits between the parties with prejudice, each party releases the opposing parties from any and all claims, demands, and causes of action.
“While COVID-19 has impacted our revenue, our business has shown its resiliency and our fundamental trends are moving in the right direction as patients return to clinics. We are seeing month to month growth in our gross domestic recurring billings from April through July of
* Gross Domestic Recurring Gross Billings is a non-GAAP financial measure. For more information, see “Reconciliation of Non-GAAP Measures” below.
Reported Financial Results
Revenues for the second quarter of 2020 were
Revenues for the six months ended
Gross profit for the second quarter of 2020 was
Gross profit for the six months ended
Selling and marketing costs for the second quarter of 2020 were
Sales and marketing costs for the six months ended
Net (loss) for second quarter 2020 was
Net (loss) for the six months ended
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):
Adjusted EBITDA:
For the Three Months Ended |
For the Six Months Ended |
|||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Net Loss | $ | (1,680 | ) | $ | (1,082 | ) | $ | (2,715 | ) | $ | (2,415 | ) | ||||
Adjustments: | ||||||||||||||||
Depreciation/amortization* | 1,028 | 1,197 | 2,145 | 2,494 | ||||||||||||
Income taxes | 47 | (46 | ) | 135 | (89 | ) | ||||||||||
Interest expense, net | 18 | 145 | 17 | 280 | ||||||||||||
Non-GAAP EBITDA | (587 | ) | 214 | (418 | ) | 270 | ||||||||||
Stock compensation | 410 | 303 | 840 | 626 | ||||||||||||
Non-GAAP adjusted EBITDA | $ | (177 | ) | $ | 517 | $ | 422 | $ | 896 |
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 April, May, June and
The following is a reconciliation of non-GAAP gross domestic billings to recorded revenue for the second quarter of 2020 (in thousands):
Gross domestic recurring billings | $ | 1,848 | |
Co-Pay adjustments | (86 | ) | |
Other discounts | (4 | ) | |
Deferred revenue from prior quarters | 1,458 | ||
Deferral of revenue to future quarters | (546 | ) | |
Recorded revenue | $ | 2,670 |
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: | 13707396 |
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 789 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 | 646-627-8390 | |
ir@strataskin.com | chuck@lifesciadvisors.com |
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
ASSETS | (unaudited) | ||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 11,231 | $ | 8,129 | |||
Restricted cash | 7,397 | 7,500 | |||||
Accounts receivable, net of allowance for doubtful accounts of |
1,361 | 4,386 | |||||
Inventories | 3,470 | 3,027 | |||||
Prepaid expenses and other current assets | 430 | 513 | |||||
Total current assets | 23,889 | 23,555 | |||||
Property and equipment, net | 4,999 | 5,369 | |||||
Operating lease right-of-use assets, net | 1,155 | 1,314 | |||||
Intangible assets, net | 7,050 | 7,955 | |||||
8,803 | 8,803 | ||||||
Other assets | 314 | 347 | |||||
Total assets | $ | 46,210 | $ | 47,343 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Note payable | $ | 7,275 | $ | 7,275 | |||
Current portion of long-term debt | 799 | - | |||||
Accounts payable | 2,451 | 1,880 | |||||
Other accrued liabilities | 4,703 | 5,134 | |||||
Current portion of operating lease liabilities | 353 | 313 | |||||
Deferred revenues | 1,020 | 2,832 | |||||
Total current liabilities | 16,601 | 17,434 | |||||
Long-term liabilities: | |||||||
Long-term debt, net | 1,729 | - | |||||
Deferred tax liability | 135 | - | |||||
Long-term operating lease liabilities, net | 896 | 1,078 | |||||
Other liabilities | 71 | 178 | |||||
Total liabilities | 19,432 | 18,690 | |||||
Commitments and contingencies | |||||||
Stockholders' equity: | |||||||
Series C Convertible Preferred Stock, |
- | 1 | |||||
Common Stock, |
34 | 33 | |||||
Additional paid-in capital | 244,020 | 243,180 | |||||
Accumulated deficit | (217,276 | ) | (214,561 | ) | |||
Total stockholders' equity | 26,778 | 28,653 | |||||
Total liabilities and stockholders’ equity | $ | 46,210 | $ | 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 | $ | 4,030 | $ | 7,725 | ||||
Cost of revenues | 2,066 | 2,815 | ||||||
Gross profit | 1,964 | 4,910 | ||||||
Operating expenses: | ||||||||
Engineering and product development | 247 | 235 | ||||||
Selling and marketing | 1,442 | 2,958 | ||||||
General and administrative | 1,890 | 2,700 | ||||||
3,579 | 5,893 | |||||||
Loss from operations | (1,615 | ) | (983 | ) | ||||
Other expense, net: | ||||||||
Interest expense, net | (18 | ) | (145 | ) | ||||
(18 | ) | (145 | ) | |||||
Loss before income taxes | (1,633 | ) | (1,128 | ) | ||||
Income tax (expense) benefit | (47 | ) | 46 | |||||
Net loss | $ | (1,680 | ) | $ | (1,082 | ) | ||
Loss attributable to common shares | $ | (1,680 | ) | $ | (1,007 | ) | ||
Loss attributable to Series C Convertible Preferred shares | - | $ | (75 | ) | ||||
Loss per common share: | ||||||||
Basic | $ | (0.05 | ) | $ | (0.03 | ) | ||
Diluted | $ | (0.05 | ) | $ | (0.03 | ) | ||
Shares used in computing loss per common share: | ||||||||
Basic | 33,731,739 | 31,359,104 | ||||||
Diluted | 33,731,739 | 31,359,104 | ||||||
Loss per Series C Convertible Preferred share basic and diluted |
- | $ | (11.94 | ) | ||||
Shares used in computing loss per basic and diluted Series C Convertible Preferred shares | - | 6,250 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(unaudited)
For the Six Months Ended |
||||||||
2020 | 2019 | |||||||
Revenues, net | $ | 10,760 | $ | 15,208 | ||||
Cost of revenues | 4,397 | 5,689 | ||||||
Gross profit | 6,363 | 9,519 | ||||||
Operating expenses: | ||||||||
Engineering and product development | 539 | 539 | ||||||
Selling and marketing | 4,395 | 6,024 | ||||||
General and administrative | 3,992 | 5,180 | ||||||
8,926 | 11,743 | |||||||
Loss from operations | (2,563 | ) | (2,224 | ) | ||||
Other expense, net: | ||||||||
Interest expense, net | (17 | ) | (280 | ) | ||||
(17 | ) | (280 | ) | |||||
Loss before income taxes | (2,580 | ) | (2,504 | ) | ||||
Income tax (expense) benefit | (135 | ) | 89 | |||||
Net loss | $ | (2,715 | ) | $ | (2,415 | ) | ||
Loss attributable to common shares | $ | (2,693 | ) | $ | (2,226 | ) | ||
Loss attributable to Series C Convertible Preferred shares | $ | (22 | ) | $ | (189 | ) | ||
Loss per common share: | ||||||||
Basic | $ | (0.08 | ) | $ | (0.07 | ) | ||
Diluted | $ | (0.08 | ) | $ | (0.07 | ) | ||
Shares used in computing loss per common share: | ||||||||
Basic | 33,448,030 | 31,033,114 | ||||||
Diluted | 33,448,030 | 31,033,114 | ||||||
Loss per Series C Convertible Preferred share basic and diluted |
$ | (29.93 | ) | $ | (26.66 | ) | ||
Shares used in computing loss per basic and diluted Series C Convertible Preferred shares | 740 | 7,093 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
For the Six Months Ended |
|||||||
2020 | 2019 | ||||||
Cash Flows From Operating Activities: | |||||||
Net loss | $ | (2,715 | ) | $ | (2,415 | ) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Depreciation and amortization | 1,986 | 2,347 | |||||
Amortization of right-of-use asset | 159 | 147 | |||||
Provision for doubtful accounts | 72 | 2 | |||||
Loss on disposal of property and equipment and lasers placed in service | 19 | 22 | |||||
Stock-based compensation | 840 | 626 | |||||
Deferred taxes | 135 | (89 | ) | ||||
Amortization of debt discount | - | 12 | |||||
Amortization of deferred financing costs | - | 57 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 2,953 | (85 | ) | ||||
Inventories | (443 | ) | (813 | ) | |||
Prepaid expenses and other assets | 116 | (42 | ) | ||||
Accounts payable | 571 | 327 | |||||
Other accrued liabilities | (431 | ) | 248 | ||||
Other liabilities | (107 | ) | (5 | ) | |||
Operating lease liabilities | (142 | ) | (126 | ) | |||
Deferred revenues | (1,812 | ) | 193 | ||||
Net cash provided by operating activities | 1,201 | 406 | |||||
Cash Flows From Investing Activities: | |||||||
Lasers placed-in-service | (730 | ) | (947 | ) | |||
Purchases of property and equipment | - | (5 | ) | ||||
Net cash used in investing activities | (730 | ) | (952 | ) | |||
Cash Flows From Financing Activities: | |||||||
Proceeds from note payable and long-term debt | 2,528 | - | |||||
Net cash provided by financing activities | 2,528 | - | |||||
Net increase (decrease) in cash and cash equivalents and restricted cash | 2,999 | (546 | ) | ||||
Cash, cash equivalents and restricted cash, beginning of period | 15,629 | 16,487 | |||||
Cash, cash equivalents and restricted cash, end of period | $ | 18,628 | $ | 15,941 | |||
Cash and cash equivalents | $ | 11,231 | $ | 15,941 | |||
Restricted cash | 7,397 | - | |||||
$ | 18,628 | $ | 15,941 |
Source: STRATA Skin Sciences, Inc.