Nuvectra Corporation (NASDAQ: NVTR), a neurostimulation medical
device company, announced today financial results for the first
quarter ended March 31, 2019.
Recent Business Highlights
- Increased Algovita® revenues 22% YoY to $11.0 million
- Providing additional information to FDA for Virtis™ PMA
submission
- Appointed Anthony P. Bihl as Chairman of the Board and elected
industry veterans Christopher G. Chavez and Jane J. Song as
Directors
Fred Parks, Chief Executive Officer, commented,
“Our primary focus remains on advancing Algovita to deliver
stronger results through the duration of 2019. We are continuing to
drive our clinical efforts, accelerating productivity, and
increasing our sales force from approximately 60 territories as of
May 1, 2019 to approximately 75 by year end. Therefore, we are
introducing full year 2019 Algovita revenue guidance of $57-62
million.”
Mr. Parks continued, “We remain committed to the
sacral neuromodulation (SNM) opportunity via the eventual FDA
approval of Virtis, our SNM system for the treatment of chronic
urinary retention and the symptoms of overactive bladder. As
an update, the FDA has requested additional information as part of
our PMA application. To satisfy their request, we will secure
supplementary data on the biocompatibility of our Virtis leads and
expect to submit this information around year end 2019.
Accordingly, we project potential Virtis approval in the first half
of 2020 and therefore no longer expect Virtis-related revenue in
2019.”
First Quarter 2019 Financial Results
Total revenue in the first quarter 2019 was $11.1 million, a 17%
increase from $9.5 million in the first quarter of 2018. Total
Algovita revenue in the first quarter of 2019 was $11.0 million, a
22% increase from $9.1 million in the first quarter of 2018.
Gross profit in the first quarter of 2019 was $5.1 million, or
46% gross margin, a decrease from $5.1 million, or 54% gross
margin, in the first quarter of 2018. This decrease was primarily
due to an increased inventory yield charge of $0.5 million from our
manufacturer as defined in our supply agreement, which was
unusually high and we do not expect to recur at this level.
The decrease was also attributable to a one-time charge of
$0.3 million related to minimum order quantity requirements under
our supply agreement and a charge of $0.2 million related to our
annual inventory revaluation.
Operating expenses in the first quarter of 2019
were $19.0 million, a 28% increase from $14.8 million in the first
quarter of 2018. SG&A expenses increased $2.8 million, which
included a severance charge of $1.2 million related to the
resignation of the former CEO and an increase of approximately $1.1
million in selling expenses. Additionally, RD&E expenses
increased $1.4 million from the comparable prior period.
Net loss for the first quarter of 2019 was
$(14.8) million or $(0.83) per share, compared with a net loss of
$(10.5) million, or $(0.84) per share, for the first quarter of
2018.
Total cash and cash equivalents were $81.3
million as of March 31, 2019.
2019 Algovita Revenue Guidance
The Company anticipates full year 2019 Algovita revenue in the
range of $57-62 million.
Conference Call Information
Nuvectra will hold a conference call on May 1,
2019 at 4:30pm ET to discuss the results. The dial in numbers are
(844) 882-7830 for domestic callers and (574) 990-9704 for
international callers. The conference ID is 7086025. A live
webcast of the conference call will be available on the investor
relations section of the Company’s website at
http://investors.nuvectramed.com/.
A replay of the call will be available starting
on May 1, 2019 through May 8, 2019. To access the replay, dial
(855) 859-2056 for domestic callers and (404) 537-3406 for
international callers and enter access code 7086025. The webcast
will be available in the investor relations section of the
Company’s website for 90 days following the completion of the
call.
About Nuvectra Corporation
Nuvectra® is a neurostimulation company committed to helping
physicians improve the lives of people with chronic conditions. The
Algovita® Spinal Cord Stimulation (SCS) System is our first
commercial offering and is CE marked and FDA approved for the
treatment of chronic intractable pain of the trunk and/or limbs.
Our innovative technology platform also has capabilities under
development to support other indications such as sacral
neuromodulation (SNM) for the treatment of overactive bladder, and
deep brain stimulation (DBS) for the treatment of Parkinson’s
Disease. Visit the Nuvectra website at www.nuvectramed.com.
Cautionary Note Regarding Forward-Looking
Statements
This press release contains "forward-looking statements,"
including statements we make regarding the outlook
for Nuvectra as an independent publicly-traded company.
Forward-looking statements are based only on our current beliefs,
expectations and assumptions regarding the future of our business,
future plans and strategies, projections, anticipated events and
trends, the economy and other future conditions, and therefore they
are subject to inherent uncertainties, risks and changes in
circumstances that are difficult to predict and may be outside of
our control. Our actual performance may differ materially from
those indicated in the forward-looking statements. Therefore, you
should not rely on any of these forward-looking statements. Any
forward-looking statement made by us is based only on information
currently available to us and speaks only as of the date on which
it is made. Important factors that could cause our actual
results to differ materially from those indicated in the
forward-looking statements include: (i) our ability to successfully
commercialize Algovita and to develop, complete and commercialize
enhancements or improvements to Algovita; (ii) our ability to
successfully compete with our current SCS competitors and the
ability of our U.S. sales representatives to successfully establish
market share and acceptance of Algovita, (iii) the uncertainty and
timing of obtaining regulatory approvals in the United
States and Europe for our Virtis SNM system, (iv)
our ability to successfully launch and commercialize the Virtis SNM
system if and when it receives regulatory approval (v) our ability
to demonstrate the features, perceived benefits and capabilities of
Algovita to physicians and patients in competition with similar
products already well established and sold in the SCS market; (vi)
our ability to anticipate and satisfy customer needs and
preferences and to develop, introduce and commercialize new
products or advancements and improvements to Algovita in order to
successfully meet our customers’ expectations; (vii) the outcome of
our development plans for our neurostimulation technology platform,
including our ability to identify additional indications or
conditions for which we may develop neurostimulation medical
devices or therapies and seek regulatory approval thereof; (viii)
our ability to identify business development and growth
opportunities and to successfully execute on our strategy,
including our ability to seek and develop strategic partnerships
with third parties to, among other things, fund clinical and
development costs for new product offerings; (ix) the performance
by our development partners, including Aleva
Neurotherapeutics, S.A., of their obligations under their
agreements with us; (x) the scope of protection for our
intellectual property rights covering Algovita and other products
using our neurostimulation technology platform, along with any
product enhancements or improvements; (xi) our ability to
successfully build, attract and maintain an effective commercial
infrastructure and qualified sales force in the United
States; (xii) our compliance with all regulatory and legal
requirements regarding implantable medical devices and interactions
with healthcare professionals; (xiii) our reliance on each of
Integer, our exclusive and sole manufacturer and supplier of parts
and components for Algovita, and Minnetronix, Inc., our sole-source
supplier of external peripheral devices; (xiv) any supplier
shortages related to Algovita or its components and any
manufacturing disruptions which may impact our inventory supply as
we expand our business; (xv) any product recalls, or the receipt of
any warning letters, mandatory corrections or fines from any
governmental or regulatory agency; (xvi) our ability to satisfy the
conditions and covenants of our Credit Facility; and (xvii) our
ability to raise capital should it become necessary to do so,
through another public offering of our common stock, private equity
or debt financings, strategic partnerships, or other sources.
Please see the section entitled “Risk Factors” in Nuvectra’s Annual
Report on Form 10-K and in our other quarterly and periodic filings
for a description of these and other risks and uncertainties.
We undertake no obligation to publicly update any forward-looking
statement, whether written or oral, that may be made from time to
time, whether as a result of new information, future developments
or otherwise.
|
NUVECTRA CORPORATION |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
AND COMPREHENSIVE LOSS —
UNAUDITED |
(IN THOUSANDS EXCEPT PER SHARE
DATA) |
|
|
Three
Months Ended |
|
March 31,
2019 |
|
March 31,
2018 |
Sales: |
|
|
|
|
|
|
|
Product |
$ |
11,043 |
|
|
$ |
9,081 |
|
Service |
|
82 |
|
|
|
456 |
|
Total
sales |
|
11,125 |
|
|
|
9,537 |
|
Cost of sales: |
|
|
|
|
|
|
|
Product |
|
5,908 |
|
|
|
4,066 |
|
Service |
|
129 |
|
|
|
354 |
|
Total
cost of sales |
|
6,037 |
|
|
|
4,420 |
|
Gross
profit |
|
5,088 |
|
|
|
5,117 |
|
Operating
expenses: |
|
|
|
|
|
|
|
Selling,
general and administrative expenses |
|
14,746 |
|
|
|
11,911 |
|
Research,
development and engineering costs, net |
|
4,227 |
|
|
|
2,861 |
|
Total
operating expenses |
|
18,973 |
|
|
|
14,772 |
|
Operating
loss |
|
(13,885 |
) |
|
|
(9,655 |
) |
Interest expense,
net |
|
851 |
|
|
|
850 |
|
Other (income) expense,
net |
|
(6 |
) |
|
|
23 |
|
Loss from
continuing operations before taxes |
|
(14,730 |
) |
|
|
(10,528 |
) |
Provision for income
taxes |
|
40 |
|
|
|
10 |
|
Loss from
continuing operations |
|
(14,770 |
) |
|
|
(10,538 |
) |
|
|
|
|
|
|
|
|
Discontinued
operations: |
|
|
|
|
|
|
|
Income
from operations of discontinued operations |
|
— |
|
|
|
8 |
|
Provision
for income taxes |
|
— |
|
|
|
3 |
|
Income
from discontinued operations |
|
— |
|
|
|
5 |
|
|
|
|
|
|
|
|
|
Net
loss |
$ |
(14,770 |
) |
|
$ |
(10,533 |
) |
|
|
|
|
|
|
|
|
Other comprehensive
gain: |
|
|
|
|
|
|
|
Unrealized holding gain on investments arising during
period |
|
— |
|
|
|
1 |
|
Other comprehensive
gain |
|
— |
|
|
|
1 |
|
Comprehensive loss |
$ |
(14,770 |
) |
|
$ |
(10,532 |
) |
|
|
|
|
|
|
|
|
Basic and diluted net
loss per share: |
|
|
|
|
|
|
|
Loss from
continuing operations |
$ |
(0.83 |
) |
|
$ |
(0.84 |
) |
Income
from discontinued operations |
|
— |
|
|
|
— |
|
Basic and
diluted net loss per share |
$ |
(0.83 |
) |
|
$ |
(0.84 |
) |
Basic and diluted
weighted average shares outstanding |
|
17,739 |
|
|
|
12,509 |
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of
these condensed consolidated financial statements.
|
NUVECTRA CORPORATION |
CONSOLIDATED BALANCE SHEETS —
UNAUDITED |
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE
DATA) |
|
|
As of |
|
March 31,
2019 |
|
December
31,2018 |
ASSETS |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and
cash equivalents |
$ |
81,310 |
|
|
$ |
99,240 |
|
Trade
accounts receivable, net of allowance for doubtful accounts of $720
and $691 in 2019 and 2018, respectively |
|
10,245 |
|
|
|
12,324 |
|
Inventories |
|
8,087 |
|
|
|
6,627 |
|
Prepaid
expenses and other current assets |
|
1,093 |
|
|
|
1,117 |
|
Total
current assets |
|
100,735 |
|
|
|
119,308 |
|
Property, plant and
equipment, net |
|
5,305 |
|
|
|
5,213 |
|
Goodwill |
|
33,491 |
|
|
|
33,491 |
|
Other long-term
assets |
|
1,285 |
|
|
|
— |
|
Total
assets |
$ |
140,816 |
|
|
$ |
158,012 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Accounts
payable |
$ |
6,525 |
|
|
$ |
7,950 |
|
Accrued
liabilities |
|
5,831 |
|
|
|
5,736 |
|
Accrued
compensation |
|
2,903 |
|
|
|
6,858 |
|
Total
current liabilities |
|
15,259 |
|
|
|
20,544 |
|
Other long-term
liabilities |
|
1,629 |
|
|
|
490 |
|
Long-term debt, net |
|
44,375 |
|
|
|
44,082 |
|
Total
liabilities |
|
61,263 |
|
|
|
65,116 |
|
|
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
Common
stock, $0.001 par value, 100,000,000 shares authorized; 17,792,244
and 17,689,928 shares issued and outstanding in 2019 and 2018,
respectively |
|
18 |
|
|
|
18 |
|
Additional
paid-in capital |
|
220,271 |
|
|
|
218,844 |
|
Accumulated
other comprehensive gain |
|
1 |
|
|
|
1 |
|
Accumulated
deficit |
|
(140,737 |
) |
|
|
(125,967 |
) |
Total
stockholders’ equity |
|
79,553 |
|
|
|
92,896 |
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders’ equity |
$ |
140,816 |
|
|
$ |
158,012 |
|
|
The accompanying notes are an integral part of
these condensed consolidated financial statements.
Company Contacts:Nuvectra
Corporation
Walter Berger, COO & CFO(214)
474-3102wberger@nuvectramed.com
Investor Contacts:The Ruth Group
Tram Bui / Brian Johnston(646) 536-7035 / 7028
investors@nuvectramed.com
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