PR Newswire
EXETER, N.H., Aug. 12, 2024
EXETER, N.H., Aug. 12, 2024 /PRNewswire/ -- Vapotherm, Inc. (OTCQX: VAPO), ("Vapotherm" or the "Company"), today announced second quarter 2024 financial results and related highlights.
Second Quarter 2024 Financial Results and Related Highlights
- Net revenue for the second quarter of 2024 was $16.9 million, an increase of 5.3% as compared to the second quarter of 2023
- Disposables revenue increased by 13.9% as compared to the second quarter of 2023
- U.S. disposables revenue increased by 25.9% as compared to the second quarter of 2023
- Gross margin in the second quarter of 2024 was 49.1% as compared to 42.8% in the second quarter of 2023
- For the second quarter of 2024, GAAP operating expenses were $17.6 million and non-GAAP cash operating expenses, as defined below, were $12.1 million
- GAAP operating expenses increased by $0.5 million from the second quarter of 2023
- Non-GAAP cash operating expenses decreased by $2.1 million from the second quarter of 2023
- Adjusted EBITDA loss in the second quarter of 2024 was $2.9 million as compared to an Adjusted EBITDA loss of $6.4 million in the second quarter of 2023
- The Company's unrestricted cash and cash equivalents were $2.9 million at the end of the second quarter of 2024
"I'm pleased our U.S. disposables revenue grew by nearly 26% over the second quarter of 2023 and our worldwide disposables revenue grew by nearly 14% over the same period," said Joseph Army, President and CEO. "We are seeing increased adoption of our technology on COPD patients since the results of the HYPERACT study were presented at the 2024 Critical Care Congress."
Results for the Three Months Ended June 30, 2024
The following table reflects the Company's net revenue for the three months ended June 30, 2024 and 2023:
Three Months Ended June 30, | ||||||||||||||||||||||||
2024 | 2023 | Change | ||||||||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||||||||||
Amount | % of Revenue | Amount | % of Revenue | $ | % | |||||||||||||||||||
Revenue | ||||||||||||||||||||||||
Capital (product & lease revenue) | $ | 3,061 | 18.1 | % | $ | 3,646 | 22.7 | % | $ | (585) | (16.0) | % | ||||||||||||
Disposables | 12,442 | 73.7 | % | 10,927 | 68.1 | % | 1,515 | 13.9 | % | |||||||||||||||
Service and other | 1,381 | 8.2 | % | 1,464 | 9.2 | % | (83) | (5.7) | % | |||||||||||||||
Total net revenue | $ | 16,884 | 100.0 | % | $ | 16,037 | 100.0 | % | $ | 847 | 5.3 | % | ||||||||||||
Net revenue for the second quarter of 2024 was $16.9 million and increased 5.3% over the second quarter of 2023 primarily due to U.S. disposables revenue growth of 25.9% over the second quarter of 2023, which was driven by increased unit volume and adoption of the Company's HVT 2.0 platform.
Revenue information by geography is summarized as follows:
Three Months Ended June 30, | ||||||||||||||||||||||||
2024 | 2023 | Change | ||||||||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||||||||||
Amount | % of Revenue | Amount | % of Revenue | $ | % | |||||||||||||||||||
United States | $ | 13,323 | 78.9 | % | $ | 11,847 | 73.9 | % | $ | 1,476 | 12.5 | % | ||||||||||||
International | 3,561 | 21.1 | % | 4,190 | 26.1 | % | (629) | (15.0) | % | |||||||||||||||
Total net revenue | $ | 16,884 | 100.0 | % | $ | 16,037 | 100.0 | % | $ | 847 | 5.3 | % | ||||||||||||
Net revenue in the United States for the second quarter of 2024 was $13.3 million and increased 12.5% over the second quarter of 2023 primarily due to U.S. disposables revenue growth. Net revenue in International markets for the second quarter of 2024 was $3.6 million and decreased 15.0% over the second quarter of 2023 due to a decrease in disposables revenue in distributor markets.
Gross profit and gross margin for the second quarter of 2024 was $8.3 million and 49.1%, respectively, as compared to gross profit of $6.9 million and gross margin of 42.8% for the second quarter of 2023. The increases in gross profit and gross margin were primarily due to the improved efficiency of our Mexico operation.
Total operating expenses were $17.6 million in the second quarter of 2024, an increase of $0.5 million as compared to the second quarter of 2023. Non-GAAP cash operating expenses, which exclude merger-related costs, gain on disposal of property and equipment, depreciation and amortization, stock-based compensation expense, and gain from deconsolidation were $12.1 million in the second quarter of 2024 compared to $14.2 million in the second quarter of 2023. The increase in operating expenses was primarily due to merger-related costs, partially offset by the Company's Path to Profitability initiatives. The decrease in non-GAAP cash operating expenses was primarily due to the Company's Path to Profitability initiatives.
Net loss for the second quarter of 2024 was $14.3 million, or $2.22 per share, compared to $14.8 million, or $2.34 per share, in the second quarter of 2023. Net loss per share was based on 6,442,763 and 6,328,222 weighted average shares outstanding for the second quarter of 2024 and 2023, respectively.
Adjusted EBITDA was negative $2.9 million for the second quarter of 2024 as compared to negative $6.4 million for the second quarter of 2023. The reduction in Adjusted EBITDA loss was primarily due to the Company's Path to Profitability initiatives.
Cash Position
Unrestricted cash and cash equivalents were $2.9 million as of June 30, 2024 compared to $9.7 million as of December 31, 2023.
Website Information
Vapotherm routinely posts important information for investors on the Investor Relations section of its website, http:// investors.vapotherm.com/. Vapotherm intends to use this website as a means of disclosing material, non-public information and for complying with Vapotherm's disclosure obligations under Regulation FD. Accordingly, investors should monitor the Investor Relations section of Vapotherm's website, in addition to following Vapotherm's press releases, Securities and Exchange Commission ("SEC") filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through, Vapotherm's website is not incorporated by reference into, and is not a part of, this document.
Non-GAAP Financial Measures
This press release includes non-GAAP financial measures, including EBITDA, Adjusted EBITDA, non-GAAP operating expenses and non-GAAP cash operating expenses. EBITDA and Adjusted EBITDA differ from net income as calculated in accordance with U.S. generally accepted accounting principles ("GAAP") and non-GAAP operating expenses and non-GAAP cash operating expenses differ from operating expenses as calculated in accordance with GAAP. EBITDA represents net loss less interest expense, net, income tax provision or benefit, and depreciation and amortization, and Adjusted EBITDA represents EBITDA as further adjusted for the merger-related costs, impact of foreign currency (loss) gain, stock-based compensation expense, gain from deconsolidation and gain on disposal of property and equipment. Non-GAAP operating expenses is calculated by excluding from GAAP operating expenses merger-related costs, gain on disposal of property and equipment, and non-GAAP cash operating expenses is calculated by further excluding additional items, including stock-based compensation expense, depreciation and amortization, and gain from deconsolidation. The Company has reconciled all historical non-GAAP financial measures with the most directly comparable GAAP financial measures in tables accompanying this release.
These non-GAAP financial measures are presented because the Company believes they are useful indicators of its operating performance. Management uses these non-GAAP financial measures, as measures of the Company's operating performance and for planning purposes, including the preparation of the Company's annual operating budget and financial projections. The Company believes these measures are useful to investors as supplemental information because they are frequently used by analysts, investors and other interested parties to evaluate companies in its industry. The Company believes Adjusted EBITDA is useful to its management and investors as a measure of comparative operating performance from period to period.
These non-GAAP financial measures should not be considered alternatives to, or superior to, net income or loss as a measure of financial performance or cash flows from operations as a measure of liquidity, or any other performance measure derived in accordance with GAAP. They should not be construed to imply that the Company's future results will be unaffected by unusual or non-recurring items. In addition, Adjusted EBITDA is not intended to be a measure of free cash flow for management's discretionary use, as it does not reflect certain cash requirements such as tax payments, debt service requirements, capital expenditures and certain other cash costs that may recur in the future. Adjusted EBITDA contains certain other limitations, including the failure to reflect our capital expenditures, cash requirements for working capital needs and cash costs to replace assets being depreciated and amortized. In evaluating Adjusted EBITDA, you should be aware that in the future the Company may incur expenses that are the same as or similar to some of the adjustments in the Adjusted EBITDA presentation. The Company's presentation of Adjusted EBITDA should not be construed to imply that its future results will be unaffected by any such adjustments. Management compensates for these limitations by primarily relying on the Company's GAAP results in addition to using Adjusted EBITDA and other non-GAAP financial measures on a supplemental basis. The Company's definitions of Adjusted EBITDA, non-GAAP operating expenses and non-GAAP cash operating expenses are not necessarily comparable to other similarly titled captions of other companies due to different methods of calculation.
About Vapotherm
Vapotherm, Inc. (OTCQX: VAPO) is a publicly traded developer and manufacturer of advanced respiratory technology based in Exeter, New Hampshire, USA. The Company develops innovative, comfortable, non-invasive technologies for respiratory support of patients with chronic or acute breathing disorders. Over 4.5 million patients have been treated with the use of Vapotherm high velocity therapy® systems. For more information, visit www.vapotherm.com.
Vapotherm high velocity therapy is mask-free non-invasive respiratory support and is a front-line tool for relieving respiratory distress—including hypercapnia, hypoxemia, and dyspnea. It allows for the fast, safe treatment of undifferentiated respiratory distress with one tool. The HVT 2.0 and Precision Flow systems' mask-free interface delivers optimally conditioned breathing gases, making it comfortable for patients and reducing the risks and care complexities associated with mask therapies. While being treated, patients can talk, eat, drink and take oral medication.
Legal Notice Regarding Forward-Looking Statements
This press release contains forward-looking statements under the Private Securities Litigation Reform Act of 1995, including the statement about the Company's belief regarding an increased willingness to use the Company's technology on COPD patients. In some cases, you can identify forward-looking statements by terms such as "believe," "expect," "continue," "plan," "intend," "will," "outlook," or "typically," or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words, and the use of future dates. Each forward-looking statement is subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such statement. Applicable risks and uncertainties include, but are not limited to the following: Vapotherm's proposed merger with Veronica Merger Sub, Inc. and Vapotherm's ability to satisfy the conditions to closing or otherwise complete the merger on a timely basis or at all and the impact the pending merger may have on Vapotherm's current plans and operations, including potentially diverting management's attention from our business; the effects of the merger (or the announcement or pendency thereof) on Vapotherm's future business and financial and operating results, its ability to retain key personnel and maintain relationships with customers, manufacturers, suppliers, employees (including the risks relating to the ability to retain or hire key personnel), other business partners or governmental entities, and the risk and outcome of legal proceedings related to the merger; Vapotherm's ability to raise additional capital to fund its existing operations and debt service obligations; Vapotherm's ability to comply with its financial covenants, execute on its path to profitability initiative, convert excess inventory into cash and fund its business and otherwise continue as a going concern through 2024; Vapotherm has incurred losses in the past and may be unable to achieve or sustain profitability in the future; risks associated with its manufacturing operations in Mexico; Vapotherm's dependence on sales generated from its High Velocity Therapy systems, competition from multi-national corporations who have significantly greater resources than Vapotherm and are more established in the respiratory market; the ability for High Velocity Therapy systems to gain increased market acceptance; Vapotherm's inexperience directly marketing and selling its products; the potential loss of one or more suppliers and dependence on its new third party manufacturer; Vapotherm's susceptibility to seasonal fluctuations; Vapotherm's failure to comply with applicable United States and foreign regulatory requirements; the failure to obtain U.S. Food and Drug Administration or other regulatory authorization to market and sell future products or its inability to secure, maintain or enforce patent or other intellectual property protection for its products; the impact of COVID on its business, including its supply chain; risks in holding Vapotherm stock in light of trading on the OTCQX tier of the OTC Markets; and the other risks and uncertainties included under the heading "Risk Factors" in Vapotherm's Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as filed with the SEC on February 22, 2024, and subsequent SEC reports. The forward-looking statements contained in this press release reflect Vapotherm's views as of the date hereof, and Vapotherm does not assume and specifically disclaims any obligation to update any forward-looking statements whether as a result of new information, future events or otherwise, except as required by law.
VAPOTHERM, INC. | ||||||||
June 30, 2024 | December 31, 2023 | |||||||
(unaudited) | ||||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 2,904 | $ | 9,725 | ||||
Accounts receivable, net of expected credit losses | 8,563 | 10,672 | ||||||
Inventories, net | 23,295 | 22,968 | ||||||
Prepaid expenses and other current assets | 2,259 | 3,058 | ||||||
Total current assets | 37,021 | 46,423 | ||||||
Property and equipment, net | 23,592 | 23,703 | ||||||
Operating lease right-of-use assets | 2,911 | 3,372 | ||||||
Restricted cash | 1,109 | 1,109 | ||||||
Goodwill | 561 | 565 | ||||||
Deferred income tax assets | 56 | 57 | ||||||
Other long-term assets | 2,677 | 2,388 | ||||||
Total assets | $ | 67,927 | $ | 77,617 | ||||
Liabilities and Stockholders' Deficit | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 4,381 | $ | 5,053 | ||||
Contract liabilities | 1,258 | 1,237 | ||||||
Accrued expenses and other current liabilities | 22,913 | 12,805 | ||||||
Current portion of loans payable, net | 118,406 | - | ||||||
Total current liabilities | 146,958 | 19,095 | ||||||
Long-term loans payable, net | - | 107,059 | ||||||
Other long-term liabilities | 2,288 | 6,797 | ||||||
Total liabilities | 149,246 | 132,951 | ||||||
Commitments and contingencies | ||||||||
Stockholders' deficit | ||||||||
Preferred stock ($0.001 par value) 25,000,000 shares authorized; no shares | - | - | ||||||
Common stock ($0.001 par value) 21,875,000 shares authorized as of | 6 | 6 | ||||||
Additional paid-in capital | 496,083 | 492,764 | ||||||
Accumulated other comprehensive (loss) income | (106) | 91 | ||||||
Accumulated deficit | (577,302) | (548,195) | ||||||
Total stockholders' deficit | (81,319) | (55,334) | ||||||
Total liabilities and stockholders' deficit | $ | 67,927 | $ | 77,617 | ||||
VAPOTHERM, INC. | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
Net revenue | $ | 16,884 | $ | 16,037 | $ | 36,018 | $ | 33,768 | ||||||||
Cost of revenue | 8,601 | 9,177 | 18,078 | 20,696 | ||||||||||||
Gross profit | 8,283 | 6,860 | 17,940 | 13,072 | ||||||||||||
Operating expenses | ||||||||||||||||
Research and development | 3,328 | 3,723 | 6,960 | 7,710 | ||||||||||||
Sales and marketing | 6,732 | 8,276 | 13,874 | 17,868 | ||||||||||||
General and administrative | 3,768 | 5,019 | 8,240 | 10,789 | ||||||||||||
Merger-related costs | 3,723 | - | 3,723 | - | ||||||||||||
Impairment of right-of-use assets | - | - | - | 432 | ||||||||||||
(Gain) loss on disposal of property and equipment | (1) | (2) | (9) | 53 | ||||||||||||
Total operating expenses | 17,550 | 17,016 | 32,788 | 36,852 | ||||||||||||
Loss from operations | (9,267) | (10,156) | (14,848) | (23,780) | ||||||||||||
Other (expense) income | ||||||||||||||||
Interest expense | (4,944) | (4,642) | (14,197) | (8,973) | ||||||||||||
Interest income | 1 | 26 | 6 | 54 | ||||||||||||
Foreign currency (loss) gain | (43) | 9 | (39) | (145) | ||||||||||||
Net loss before income taxes | $ | (14,253) | $ | (14,763) | $ | (29,078) | $ | (32,844) | ||||||||
Provision for income taxes | 18 | 25 | 29 | 34 | ||||||||||||
Net loss | $ | (14,271) | $ | (14,788) | $ | (29,107) | $ | (32,878) | ||||||||
Other comprehensive (loss) income: | ||||||||||||||||
Foreign currency translation adjustments | (35) | (22) | (197) | 113 | ||||||||||||
Total other comprehensive (loss) income | (35) | (22) | (197) | 113 | ||||||||||||
Total comprehensive loss | $ | (14,306) | $ | (14,810) | $ | (29,304) | $ | (32,765) | ||||||||
Net loss per share - basic and diluted | $ | (2.22) | $ | (2.34) | $ | (4.52) | $ | (5.76) | ||||||||
Weighted-average number of shares used in calculating net | 6,442,763 | 6,328,222 | 6,436,631 | 5,705,607 | ||||||||||||
(1) On August 18, 2023, the Company effected a 1:8 reverse stock split for each share of common stock issued | ||||||||||||||||
VAPOTHERM, INC. | ||||||||
Six Months Ended June 30, | ||||||||
2024 | 2023 | |||||||
Cash flows from operating activities | ||||||||
Net loss | $ | (29,107) | $ | (32,878) | ||||
Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
Stock-based compensation expense | 3,290 | 5,405 | ||||||
Depreciation and amortization | 2,528 | 2,445 | ||||||
Provision for credit losses | 110 | (2) | ||||||
Provision for inventory valuation | 73 | 283 | ||||||
Non-cash lease expense | 461 | 733 | ||||||
Impairment of right-of-use assets | - | 432 | ||||||
(Gain) loss on disposal of property and equipment | (9) | 53 | ||||||
Placed units reserve | 234 | 418 | ||||||
Interest paid in-kind | 4,918 | 4,553 | ||||||
Non-cash interest expense | 4,931 | 620 | ||||||
Amortization of discount on debt | 429 | 368 | ||||||
Deferred income taxes | 29 | 34 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 1,986 | 212 | ||||||
Inventories | (407) | 7,646 | ||||||
Prepaid expenses and other assets | 506 | (2,794) | ||||||
Accounts payable | (579) | (315) | ||||||
Contract liabilities | 23 | 72 | ||||||
Accrued expenses and other liabilities | 2,045 | (3,460) | ||||||
Operating lease liabilities, current and long-term | (1,288) | (1,213) | ||||||
Net cash used in operating activities | (9,827) | (17,388) | ||||||
Cash flows from investing activities | ||||||||
Purchases of property and equipment | (2,662) | (1,408) | ||||||
Net cash used in investing activities | (2,662) | (1,408) | ||||||
Cash flows from financing activities | ||||||||
Proceeds from issuance of common stock and pre-funded warrants and | - | 20,943 | ||||||
Proceeds from loans, net of discount | 5,820 | - | ||||||
Proceeds from exercise of warrants | - | 3 | ||||||
Proceeds from exercise of stock options | 1 | - | ||||||
Proceeds from issuance of common stock under Employee Stock Purchase Plan | 12 | 77 | ||||||
Net cash provided by financing activities | 5,833 | 21,023 | ||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (165) | 35 | ||||||
Net (decrease) increase in cash, cash equivalents and restricted cash | (6,821) | 2,262 | ||||||
Cash, cash equivalents and restricted cash | ||||||||
Beginning of period | 10,834 | 16,847 | ||||||
End of period | $ | 4,013 | $ | 19,109 | ||||
Supplemental disclosures of cash flow information | ||||||||
Interest paid during the period | $ | 3,557 | $ | 2,720 | ||||
Property and equipment purchases in accounts payable and accrued expenses | $ | 732 | $ | 175 | ||||
Issuance of common stock warrants in conjunction with long term debt | $ | 16 | $ | 71 | ||||
Issuance of common stock for services | $ | 155 | $ | 117 | ||||
Non-GAAP Financial Measures
The following table contains a reconciliation of net loss to Adjusted EBITDA for the three months ended June 30, 2024 and 2023, respectively.
Three Months Ended June 30, | ||||||||
2024 | 2023 | |||||||
(Unaudited) | (in thousands) | |||||||
Net loss | $ | (14,271) | $ | (14,788) | ||||
Interest expense, net | 4,943 | 4,616 | ||||||
Provision for income taxes | 18 | 25 | ||||||
Depreciation and amortization | 1,224 | 1,197 | ||||||
EBITDA | $ | (8,086) | $ | (8,950) | ||||
Merger-related costs | 3,723 | - | ||||||
Stock-based compensation | 1,456 | 2,585 | ||||||
Foreign currency loss (gain) | 43 | (9) | ||||||
Gain from deconsolidation | - | (5) | ||||||
Gain on disposal of property and equipment | (1) | (2) | ||||||
Adjusted EBITDA | $ | (2,865) | $ | (6,381) | ||||
The following table contains a reconciliation of operating expenses to Non-GAAP operating expenses and Non-GAAP cash operating expenses for the three months ended June 30, 2024 and June 30, 2023, respectively.
Three Months Ended June 30, | ||||||||
2024 | 2023 | |||||||
(Unaudited) | (in thousands) | |||||||
GAAP operating expenses | $ | 17,550 | $ | 17,016 | ||||
Merger-related costs | (3,723) | - | ||||||
Gain on disposal of property and equipment | 1 | 2 | ||||||
Non-GAAP operating expenses | 13,828 | 17,018 | ||||||
Stock-based compensation | (1,423) | (2,534) | ||||||
Depreciation and amortization | (262) | (293) | ||||||
Gain from deconsolidation | - | 5 | ||||||
Non-GAAP cash operating expenses | $ | 12,143 | $ | 14,196 | ||||
Supplemental Operating Metrics | |||||||||||||||
June 30, | |||||||||||||||
2024 | 2023 | Change | |||||||||||||
Amount | Amount | Amount | % | ||||||||||||
HVT 2.0 and precision flow units installed base | |||||||||||||||
United States | 24,992 | 24,563 | 429 | 1.7 | % | ||||||||||
International | 12,975 | 12,729 | 246 | 1.9 | % | ||||||||||
Total | 37,967 | 37,292 | 675 | 1.8 | % | ||||||||||
Three Months Ended June 30, | |||||||||||||||
2024 | 2023 | Change | |||||||||||||
Amount | Amount | Amount | % | ||||||||||||
HVT 2.0 and precision flow units sold and leased | |||||||||||||||
United States | 193 | 293 | (100) | (34.1) | % | ||||||||||
International | 99 | 146 | (47) | (32.2) | % | ||||||||||
Total | 292 | 439 | (147) | (33.5) | % | ||||||||||
Disposable patient circuits sold | |||||||||||||||
United States | 82,290 | 69,323 | 12,967 | 18.7 | % | ||||||||||
International | 29,634 | 35,744 | (6,110) | (17.1) | % | ||||||||||
Total | 111,924 | 105,067 | 6,857 | 6.5 | % | ||||||||||
Investor Relations Contacts:
John Landry, SVP & CFO, [email protected], +1 (603) 658-0011
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SOURCE Vapotherm, Inc.
