SIENTRA, INC. Q3 2022 Financial and Business Highlights
- Net sales of
$22.6 million , representing growth of 15% over the third quarter of 2021 - Year-to-date net sales of
$65.5 million , representing growth of nearly 13% compared to the same period of 2021 - Reduced free cash outflow to a record low of
$3.6 million - Added 130 new augmentation accounts, and 160 new reconstruction accounts
- Received approval of Sientra’s breast implants in the
Kingdom of Saudi Arabia , and approval for Low Plus Profile implants fromHealth Canada - Entered into a new debt facility with Deerfield, and completed a secondary equity offering to provide enhanced balance sheet flexibility
- Advanced preparations for launch of novel enhanced viability fat transfer system at Beauty Through Science meeting in
New York onDecember 1-3
Third Quarter 2022 Financial Results
- Total net sales were
$22.6 million , an increase of 15% compared to total net sales of$19.6 million for the same period in 2021 - Gross profit for the third quarter of 2022 was
$12.8 million , or 56.6% of sales, compared to gross profit of$10.6 million , or 54% of sales, for the same period in 2021 - GAAP Operating expenses for the third quarter of 2022 of
$25.3 million compared to$22.3 million for the same period in 2021. A driver to the increase was higher investment in R&D and commercial operations in anticipation of new product launches - Loss from continuing operations for the third quarter of 2022 was
$14.9 million compared to net income of$28.5 million for the same period in 2021 - Non-GAAP operating expenses for the third quarter of 2022 were
$21.7 million compared to$19.2 million for the same period in 2021. The increase is attributed to investments in R&D and commercial operations in anticipation of new product launches - Net cash and cash equivalents as of
September 30, 2022 , were$19.0 million , compared to$51.8 million onDecember 31, 2021 - Ending cash of
$19.0 million with improvement of free cash flow usage of$3.6 million in Q3 2022 compared to a free cash flow usage of$15.4 million in the same period last year.
Conference Call
Use of Non-GAAP Financial Measures
There are limitations in using these non-GAAP financial measures because they are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies. These non-GAAP financial measures should not be considered in isolation or as a substitute for GAAP financial measures. Investors and potential investors should consider non-GAAP financial measures only in conjunction with Sientra’s financial statements prepared in accordance with GAAP and the reconciliations of the non-GAAP financial measures provided in the schedules below.
About
Headquartered in
(*) Data on file
Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, based on management’s current assumptions and expectations of future events and trends, which affect or may affect the Company’s business, strategy, operations or financial performance, and actual results may differ materially from those expressed or implied in such statements due to numerous risks and uncertainties. Forward-looking statements are made only as of the date of this release. The words ‘‘believe,’’ ‘‘may,’’ ‘‘might,’’ ‘‘could,’’ ‘‘will,’’ ‘‘aim,’’ ‘‘estimate,’’ ‘‘continue, ‘‘anticipate,’’ ‘‘intend,’’ ‘‘expect,’’ ‘‘plan,’’ ‘‘position,” or the negative of those terms, and similar expressions that convey uncertainty of future events or outcomes are intended to identify estimates, projections and other forward-looking statements. Forward-looking statements may include information concerning the Company’s unaudited financial information for the third quarter ended
Investor Relations Contact
aman.patel@westwicke.com
| Consolidated Statements of Operations | ||||||||||||||||
| (In thousands, except per share and share amounts) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Net sales | $ | 22,570 | $ | 19,620 | $ | 65,481 | $ | 58,035 | ||||||||
| Cost of goods sold | 9,794 | 9,030 | 27,118 | 26,027 | ||||||||||||
| Gross profit | 12,776 | 10,590 | 38,363 | 32,008 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Sales and marketing | 12,290 | 12,052 | 41,542 | 34,348 | ||||||||||||
| Research and development | 3,720 | 2,367 | 9,823 | 6,962 | ||||||||||||
| General and administrative | 9,324 | 7,865 | 31,589 | 23,321 | ||||||||||||
| Total operating expenses | 25,334 | 22,284 | 82,954 | 64,631 | ||||||||||||
| Loss from operations | (12,558 | ) | (11,694 | ) | (44,591 | ) | (32,623 | ) | ||||||||
| Other (expense) income, net: | ||||||||||||||||
| Interest income | 41 | 1 | 58 | 4 | ||||||||||||
| Interest expense | (2,364 | ) | (2,026 | ) | (6,584 | ) | (6,143 | ) | ||||||||
| Change in fair value of derivative liability | — | 35,550 | — | (14,460 | ) | |||||||||||
| Other (expense) income, net | (6 | ) | 6,672 | (1 | ) | 6,575 | ||||||||||
| Total other (expense) income, net | (2,329 | ) | 40,197 | (6,527 | ) | (14,024 | ) | |||||||||
| (Loss) income from continuing operations before income taxes | (14,887 | ) | 28,503 | (51,118 | ) | (46,647 | ) | |||||||||
| Income tax expense | — | — | — | — | ||||||||||||
| (Loss) Income from continuing operations | (14,887 | ) | 28,503 | (51,118 | ) | (46,647 | ) | |||||||||
| (Loss) Income from discontinued operations, net of income taxes | (94 | ) | (93 | ) | (208 | ) | 233 | |||||||||
| Net (loss) income | $ | (14,981 | ) | $ | 28,410 | $ | (51,326 | ) | $ | (46,414 | ) | |||||
| Basic (loss) earnings per share: | ||||||||||||||||
| Continuing operations | $ | (0.24 | ) | $ | 0.49 | $ | (0.82 | ) | $ | (0.82 | ) | |||||
| Discontinued operations | (0.00 | ) | 0.00 | (0.00 | ) | 0.00 | ||||||||||
| Basic (loss) earnings per share | $ | (0.24 | ) | $ | 0.49 | $ | (0.82 | ) | $ | (0.82 | ) | |||||
| Diluted loss per share: | ||||||||||||||||
| Continuing operations | $ | (0.24 | ) | $ | (0.08 | ) | $ | (0.82 | ) | $ | (0.82 | ) | ||||
| Discontinued operations | (0.00 | ) | (0.00 | ) | (0.00 | ) | (0.00 | ) | ||||||||
| Diluted loss per share | $ | (0.24 | ) | $ | (0.08 | ) | $ | (0.82 | ) | $ | (0.82 | ) | ||||
| Weighted average outstanding common shares used for net (loss) income per share attributable to common stockholders: | ||||||||||||||||
| Basic | 62,848,172 | 58,005,784 | 62,613,501 | 56,680,594 | ||||||||||||
| Diluted | 62,848,172 | 72,639,930 | 62,613,501 | 56,680,594 | ||||||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
| 2022 | 2021 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 18,975 | $ | 51,772 | ||||
| Accounts receivable, net | 34,360 | 33,105 | ||||||
| Inventories, net | 51,640 | 52,914 | ||||||
| Prepaid expenses and other current assets | 3,557 | 2,979 | ||||||
| Current assets of discontinued operations | 4 | 4 | ||||||
| Total current assets | 108,536 | 140,774 | ||||||
| Property and equipment, net | 14,059 | 13,998 | ||||||
| 9,202 | 9,202 | |||||||
| Other intangible assets, net | 26,361 | 28,765 | ||||||
| Right of use assets, net | 6,894 | 6,565 | ||||||
| Other assets | 881 | 600 | ||||||
| Total assets | $ | 165,933 | $ | 199,904 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Current portion of long-term debt | $ | - | $ | 2,237 | ||||
| Accounts payable | 7,352 | 7,402 | ||||||
| Accrued and other current liabilities | 18,320 | 21,298 | ||||||
| Customer deposits | 43,013 | 35,182 | ||||||
| Sales return liability | 12,016 | 13,399 | ||||||
| Current liabilities of discontinued operations | 500 | 500 | ||||||
| Total current liabilities | 81,201 | 80,018 | ||||||
| Long-term debt | 70,064 | 62,434 | ||||||
| Deferred and contingent consideration | 5,837 | 5,872 | ||||||
| Warranty reserve | 2,675 | 2,505 | ||||||
| Lease liabilities | 6,999 | 5,604 | ||||||
| Other liabilities | 3,488 | 2,614 | ||||||
| Total liabilities | 170,264 | 159,047 | ||||||
| Stockholders’ equity: | ||||||||
| Total stockholders’ equity | (4,331 | ) | 40,857 | |||||
| Total liabilities and stockholders’ equity | $ | 165,933 | $ | 199,904 | ||||
| Condensed Consolidated Statements of Cash Flows | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
| Nine Months Ended | ||||||||
| 2022 | 2021 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (51,326 | ) | $ | (46,414 | ) | ||
| (Loss) Income from discontinued operations, net of income taxes | (208 | ) | 233 | |||||
| Loss from continuing operations, net of income taxes | (51,118 | ) | (46,647 | ) | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 4,947 | 3,149 | ||||||
| Provision for doubtful accounts | 1,086 | 875 | ||||||
| Provision for warranties | 583 | 684 | ||||||
| Provision for inventory | 607 | 638 | ||||||
| Fair value adjustments to derivative liability | — | 14,460 | ||||||
| Fair value adjustments of other liabilities held at fair value | (88 | ) | 49 | |||||
| Amortization of debt discount and issuance costs | 3,029 | 2,632 | ||||||
| Stock-based compensation expense | 6,113 | 8,073 | ||||||
| Payments of contingent consideration liability in excess of acquisition-date fair value | — | (2,419 | ) | |||||
| Other non-cash adjustments | 135 | 584 | ||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | (2,341 | ) | (7,558 | ) | ||||
| Inventories | 667 | (12,999 | ) | |||||
| Prepaid expenses, other current assets and other assets | 1,997 | (205 | ) | |||||
| Accounts payable, accrued, and other liabilities | (5,514 | ) | 1,279 | |||||
| Customer deposits | 7,830 | 12,381 | ||||||
| Sales return liability | (1,383 | ) | 3,113 | |||||
| Net cash flow used in operating activities - continuing operations | (33,450 | ) | (28,563 | ) | ||||
| Net cash flow used in operating activities - discontinued operations | (208 | ) | (989 | ) | ||||
| Net cash used in operating activities | (33,658 | ) | (29,552 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of property and equipment | (1,856 | ) | (4,882 | ) | ||||
| Net cash flow from investing activities - continuing operations | (1,856 | ) | (4,882 | ) | ||||
| Net cash flow from investing activities - discontinued operations | — | 11,314 | ||||||
| Net cash (used in) provided by investing activities | (1,856 | ) | 6,432 | |||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of common stock for employee stock-based plans | 475 | 1,824 | ||||||
| Net proceeds from issuance of common stock | — | 39,226 | ||||||
| Tax payments related to shares withheld for vested restricted stock units (RSUs) | (448 | ) | (2,420 | ) | ||||
| Gross borrowings under the Term Loan | 5,000 | 1,000 | ||||||
| Gross borrowings under the Revolving Loan | 5,440 | — | ||||||
| Repayment of the Revolving Loan | (7,678 | ) | — | |||||
| Payments of contingent consideration up to acquisition-date fair value | — | (4,550 | ) | |||||
| Payments for debt financing fees | (73 | ) | (800 | ) | ||||
| Net cash provided by financing activities | 2,716 | 34,280 | ||||||
| Net (decrease) increase in cash, cash equivalents and restricted cash | (32,798 | ) | 11,160 | |||||
| Cash, cash equivalents and restricted cash at: | ||||||||
| Beginning of period | 52,068 | 55,300 | ||||||
| End of period | $ | 19,270 | $ | 66,460 | ||||
| Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets | ||||||||
| Cash and cash equivalents | 18,975 | 66,127 | ||||||
| Restricted cash included in other assets | 295 | 333 | ||||||
| Total cash, cash equivalents and restricted cash | $ | 19,270 | $ | 66,460 | ||||
| Reconciliation of Loss from Continuing Operations to Non-GAAP Adjusted EBITDA | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| Dollars, in thousands | 2022 | 2021 | 2022 | 2021 | ||||||||||||
| (Loss) income from continuing operations, as reported | $ | (14,887 | ) | $ | 28,503 | $ | (51,118 | ) | $ | (46,647 | ) | |||||
| Adjustments to (loss) income from continuing operations: | ||||||||||||||||
| Interest (income) expense and other, net | 2,329 | 2,005 | 6,528 | 6,216 | ||||||||||||
| Depreciation and amortization | 1,545 | 1,039 | 4,947 | 3,149 | ||||||||||||
| Fair value adjustments to contingent consideration | — | — | (88 | ) | 49 | |||||||||||
| Fair value adjustments to derivative liability | — | (35,550 | ) | — | 14,460 | |||||||||||
| Gain on extinguishment of debt | — | (6,652 | ) | — | (6,652 | ) | ||||||||||
| Stock-based compensation | 1,855 | 2,326 | 6,113 | 8,072 | ||||||||||||
| Bad debt expense | 582 | 257 | 1,086 | 875 | ||||||||||||
| One-time severance charges | — | — | 2,171 | — | ||||||||||||
| Legal settlement expense | — | — | 1,600 | — | ||||||||||||
| Total adjustments to (loss) income from continuing operations | 6,311 | (36,575 | ) | 22,357 | 26,169 | |||||||||||
| Adjusted EBITDA | $ | (8,576 | ) | $ | (8,072 | ) | $ | (28,761 | ) | $ | (20,478 | ) | ||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| As a Percentage of Revenue** | 2022 | 2021 | 2022 | 2021 | ||||||||||||
| (Loss) income from continuing operations, as reported | (66.0 | %) | 145.3 | % | (78.1 | %) | (80.4 | %) | ||||||||
| Adjustments to (loss) income from continuing operations: | ||||||||||||||||
| Interest (income) expense and other, net | 10.3 | % | 10.2 | % | 10.0 | % | 10.7 | % | ||||||||
| Depreciation and amortization | 6.8 | % | 5.3 | % | 7.6 | % | 5.4 | % | ||||||||
| Fair value adjustments to contingent consideration | 0.0 | % | 0.0 | % | (0.1 | %) | 0.1 | % | ||||||||
| Fair value adjustments to derivative liability | 0.0 | % | (181.2 | %) | 0.0 | % | 24.9 | % | ||||||||
| Gain on extinguishment of debt | 0.0 | % | (33.9 | %) | 0.0 | % | (11.5 | %) | ||||||||
| Stock-based compensation | 8.2 | % | 11.9 | % | 9.3 | % | 13.9 | % | ||||||||
| Bad debt expense | 2.6 | % | 1.3 | % | 1.7 | % | 1.5 | % | ||||||||
| One-time severance charges | 0.0 | % | 0.0 | % | 3.3 | % | 0.0 | % | ||||||||
| Legal settlement expense | 0.0 | % | 0.0 | % | 2.4 | % | 0.0 | % | ||||||||
| Total adjustments to (loss) income from continuing operations | 28.0 | % | (186.4 | %) | 34.1 | % | 45.1 | % | ||||||||
| Adjusted EBITDA | (38.0 | %) | (41.1 | %) | (43.9 | %) | (35.3 | %) | ||||||||
| ** Adjustments may not add to the total figure due to rounding | ||||||||||||||||
| Reconciliation of GAAP Operating Expenses to Non-GAAP Operating Expenses | ||||||||||||||||
| (In thousands) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| GAAP operating expenses, as reported | $ | 25,334 | $ | 22,284 | $ | 82,954 | $ | 64,631 | ||||||||
| Adjustments to GAAP operating expenses: | ||||||||||||||||
| Depreciation and amortization | 1,244 | 550 | 3,815 | 1,527 | ||||||||||||
| Fair value adjustments to contingent consideration | — | — | (88 | ) | 49 | |||||||||||
| Stock-based compensation | 1,855 | 2,326 | 6,113 | 8,072 | ||||||||||||
| Bad debt expense | 582 | 257 | 1,086 | 875 | ||||||||||||
| One-time severance charges | — | — | 1,635 | — | ||||||||||||
| Legal settlement | — | — | 1,600 | — | ||||||||||||
| Total adjustments to GAAP operating expenses | 3,681 | 3,133 | 14,161 | 10,523 | ||||||||||||
| Non-GAAP operating expenses | $ | 21,653 | $ | 19,151 | $ | 68,793 | $ | 54,108 | ||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| GAAP operating expenses, as reported | ||||||||||||||||
| Sales and marketing | $ | 12,290 | $ | 12,052 | $ | 41,542 | $ | 34,348 | ||||||||
| Research and development | 3,720 | 2,367 | 9,823 | 6,962 | ||||||||||||
| General and administrative | 9,324 | 7,865 | 31,589 | 23,321 | ||||||||||||
| Total GAAP operating expenses, as reported | $ | 25,334 | $ | 22,284 | $ | 82,954 | $ | 64,631 | ||||||||
| Adjustments to GAAP operating expenses: | ||||||||||||||||
| Sales and marketing | 640 | 855 | 3,065 | 2,868 | ||||||||||||
| Research and development | 173 | 237 | 575 | 1,222 | ||||||||||||
| General and administrative | 2,868 | 2,041 | 10,521 | 6,433 | ||||||||||||
| Total adjustments to GAAP operating expenses | 3,681 | 3,133 | 14,161 | 10,523 | ||||||||||||
| Non-GAAP operating expenses | ||||||||||||||||
| Sales and marketing | 11,650 | 11,197 | 38,477 | 31,480 | ||||||||||||
| Research and development | 3,547 | 2,130 | 9,248 | 5,740 | ||||||||||||
| General and administrative | 6,456 | 5,824 | 21,068 | 16,888 | ||||||||||||
| Total Non-GAAP operating expenses | $ | 21,653 | $ | 19,151 | $ | 68,793 | $ | 54,108 | ||||||||
| Free Cash Flow | ||||||||||||||||
| (In thousands) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Net cash flow used in operating activities - continuing operations | $ | (2,605 | ) | $ | (13,724 | ) | $ | (33,450 | ) | $ | (28,563 | ) | ||||
| Purchase of property and equipment | (1,043 | ) | (1,712 | ) | (1,856 | ) | (4,882 | ) | ||||||||
| Free cash flow | $ | (3,648 | ) | $ | (15,436 | ) | $ | (35,306 | ) | $ | (33,445 | ) | ||||
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