Conformis, Inc. (NASDAQ:CFMS), an orthopedic medical device company
that features personalized knee and hip replacement products,
announced today financial results for the second quarter ended
June 30, 2023.
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 $26.2 million as of June 30,
2023.
- Announced merger agreement to be
acquired by restor3d in cash acquisition; special meeting of
Conformis stockholders scheduled for August 31, 2023 to adopt
merger agreement.
|
Three months ended June 30, |
Increase/(decrease) |
($, in
thousands) |
|
2023 |
|
2022 |
$ Change |
% Change |
% Change |
|
|
|
|
(as reported) |
(constant currency) |
United States |
$ |
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 of
June 30, 2023, compared to $37.8 million as of March 31,
2023.
Merger Agreement to be Acquired by restor3d
On June 22, 2023, Conformis entered into an agreement and plan
of merger with restor3d, pursuant to which, upon the terms and
subject to the conditions described therein, restor3d will acquire
Conformis via merger. Pursuant to the merger agreement, upon the
closing, each share of Conformis common stock, other than shares to
which appraisal rights are properly exercised and not withdrawn
under Delaware law, will automatically be converted into the right
to receive $2.27 in cash, without interest. A special meeting of
Conformis stockholders has been scheduled for August 31, 2023.
Conformis’ board of directors has unanimously resolved to recommend
that Conformis stockholders vote to adopt the merger agreement. If
the merger is consummated, Conformis’s common stock will be
delisted from The Nasdaq Capital Market and deregistered under the
Securities Exchange Act of 1934. Please see "Additional Information
and Where to Find It" and "Participants in the Solicitation" below
for important additional information regarding the proposed merger
and related matters.
Note on Non-GAAP Financial
Measures
In addition to disclosing financial measures prepared in
accordance with U.S. generally accepted accounting principles
(GAAP), the Company provides certain information regarding the
Company's financial results or projected financial results on a
non-GAAP "constant currency basis." This information estimates the
impact of changes in foreign currency rates on the translation of
the Company's current or projected future period financial results
as compared to the applicable comparable period. This impact is
derived by taking the adjusted current or projected local currency
results and translating them into U.S. dollars based upon the
foreign currency exchange rates for the applicable comparable
period. It does not include any other effect of changes in foreign
currency rates on the Company's results or business. Non-GAAP
information is not a substitute for, and is not superior to,
information presented on a GAAP basis. Company management uses
these non-GAAP measures internally to measure operational
performance.
About Conformis, Inc.
Conformis is a medical technology company focused on advancing
orthopedic patient care and creating a world without joint pain.
Its product portfolio is designed to maximize surgeon and patient
choice by offering fully personalized solutions through its
Image-to-Implant® Platinum Services℠ Program as well as
data-informed, standardized solutions that combine many benefits of
personalization with the convenience and flexibility of an
off-the-shelf system. Conformis’ sterile, just-in-time,
Surgery-in-a-Box™ delivery system is available with all of its
implants and personalized, single-use instruments. Conformis owns
or exclusively in-licenses issued patents and pending patent
applications that cover personalized implants and patient-specific
instrumentation for all major joints.
For more information, visit www.conformis.com. To receive
future releases in e-mail alerts, sign up at ir.conformis.com.
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 December 31, 2022, Quarterly Report on Form 10-Q for the
fiscal quarters ended March 31, 2023 and June 30, 2023, and other
public filings with the U.S. Securities and Exchange Commission
(the "SEC"). In addition, the forward-looking statements included
in this press release represent our views as of the date hereof. We
anticipate that subsequent events and developments may cause our
views to change. However, while we may elect to update these
forward-looking statements at some point in the future, we
specifically disclaim any obligation to do so. These
forward-looking statements should not be relied upon as
representing our views as of any date subsequent to the date
hereof.
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, Conformis filed a Definitive Proxy Statement with the SEC
on July 24, 2023. The Definitive Proxy Statement and proxy card is
being mailed to Conformis stockholders in advance of the special
meeting relating to the proposed merger, which is scheduled to
occur on August 31, 2023. BEFORE MAKING ANY VOTING DECISION,
CONFORMIS STOCKHOLDERS ARE URGED TO READ IN THEIR ENTIRETY THE
DEFINITIVE PROXY STATEMENTS (INCLUDING ANY FUTURE AMENDMENTS OR
SUPPLEMENTS THERETO) AND ANY OTHER DOCUMENTS TO BE FILED WITH THE
SEC IN CONNECTION WITH THE PROPOSED MERGER OR INCORPORTED BY
REFERENCE IN THE PROXY STATEMENT BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.
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 Conformis, Inc.,
Investor Relations, 600 Technology Park Drive, Billerica, MA,
telephone: (781) 374-5598.
Participants in the Solicitation
Conformis and its directors and executive officers may be deemed
participants in the solicitation of proxies from the stockholders
of Conformis in connection with the proposed transaction.
Information regarding Conformis’s directors and executive officers
is included in the Definitive Proxy Statement referred to above.
Security holders may also obtain information regarding Conformis’
directors and executive officers in Conformis’s definitive proxy
statement for its 2023 annual meeting of stockholders (filed with
the SEC on March 24, 2023), and in subsequent filings on Form 8-K.
To the extent that holdings of Conformis securities have changed
since the amounts printed in the Definitive Proxy Statement, such
changes have been or will be reflected on Statements of Change in
Ownership on Form 4 filed with the SEC. These documents are
available free of charge at the SEC’s web site at www.sec.gov and
from Conformis as described above. The contents of the websites
referenced above are not deemed to be incorporated by reference
into the Definitive Proxy Statement.
CONTACT: Investor Relationsir@conformis.com(781) 374-5598
CONFORMIS, INC. AND SUBSIDIARIES |
Consolidated Statements of Operations |
(unaudited) |
(in thousands, except share and per share
data) |
|
|
Three Months Ended June 30, |
|
|
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
CONFORMIS, INC. AND SUBSIDIARIES |
Consolidated Balance Sheets |
(in thousands, except share and per share
data) |
|
|
|
|
|
June 30, 2023 |
|
December 31, 2022 |
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, $0.00001 par value: |
|
|
|
Authorized: 5,000,000 shares authorized at June 30, 2023 and
December 31, 2022; no shares issued and outstanding as of June 30,
2023 and December 31, 2022 |
|
— |
|
|
|
— |
|
Common stock, $0.00001 par value: |
|
|
|
Authorized: 20,000,000 shares authorized at June 30, 2023 and
December 31, 2022; 7,878,332 and 7,502,462 shares issued and
outstanding at June 30, 2023 and December 31, 2022,
respectively |
|
— |
|
|
|
— |
|
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 |
|
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