Conformis Reports Second Quarter 2021 Financial Results
Second Quarter 2021 Summary
- Total revenue of
$56.3 million, an increase of 189% year-over-year on a reported and constant currency basis.
- Product revenue of
$15.2 million, an increase of 56% year-over-year on a reported basis and 54% on a constant currency basis.
- Royalty and licensing revenue of
$41.1 million, including $25.0 millionin connection with the third and final milestone under the Stryker development and license agreements and the settlement and license agreement with Stryker, Wright Medical, and Tornier.
- Conformis Hip System revenue up 62% year-over-year to
- Received 510(k) clearance for Identity Imprint™ Knee Replacement System.
- Received 510(k) clearance for patient-specific instrumentation developed in connection with the Stryker license and development agreements. First procedure successfully completed on
July 14, 2021.
- Full forgiveness of Paycheck Protection Program (“PPP”) loan of
$4.7 millionprincipal loan amount, plus accrued interest.
Executive Commentary –
“We had another steady quarter of progress as we executed our growth strategy. The environment for orthopedic surgical procedures has improved and we believe procedure levels will continue to normalize. We remain cautiously optimistic about the second half of the year as we aim to get back to our 2019 revenue run rate.
We continue to make progress with our new product development plans. As part of a limited market release, the first surgery using our patient-specific instrumentation with a Stryker knee implant recently occurred and was successful. We also obtained 510(k) clearance from the FDA for our new Imprint knee offering, and we expect our first surgeries to occur soon. We believe that these two new products position us well as medical facilities, particularly ambulatory surgical centers, continue returning to normal operations and look for efficient, cost-effective knee implant solutions.
We are also pleased that we have been able to continue protecting and monetizing our intellectual property. This quarter, we generated
|Three months ended
|($, in thousands)||2021||2020||$ Change||% Change||% Change|
|(as reported)||(constant currency)|
|Rest of world||1,775||1,412||363||26||%||14||%|
Second Quarter 2021 Highlights
- Increase in revenue year-over-year was driven primarily by increased elective procedure volumes, and an increase in royalty and licensing revenue related to patent license settlement and development agreements.
- Conformis Hip System revenue of
$0.9 millionfor the second quarter of 2021 was up 62% year-over-year and increased 38% from the first quarter of 2021.
- Product Revenue compared to the second quarter of 2019 was down 21%, a sequential improvement from the 33% decline in the first quarter.
- Total gross profit increased
$36.5 millionto $47.5 million, or 84% of revenue, in the second quarter of 2021, compared to $11.0 million, or 57% of revenue, in the second quarter of 2020.
- The 2,780 basis-point increase in gross margin year-over-year was driven primarily by the increase in royalty and licensing revenue associated with the Stryker development and license agreements and the settlement and license agreement with Stryker, Wright Medical, and Tornier.
- Product gross margin of 42% increased by 1,180 basis points as compared to the second quarter of 2020 driven primarily by lower cancelled case inventory expense and lower manufacturing variances as a result of increased production volumes.
- Total operating expenses of
$16.6 million, an increase of 25% year-over-year.
- Sales and marketing expenses increased
$2.2 millionprimarily due to higher sales commissions, travel expenses, marketing programs, and training events.
- Research and development expenses increased
$0.9 millionprimarily driven by personnel and project related costs to support our new product pipeline.
- General and administrative expenses increased
$0.2 millionprimarily driven by higher professional fees related to the protection of our intellectual property.
- Net income was
$38.0 million, or $0.21per basic and diluted share, in the second quarter of 2021, compared to a net loss of $2.1 million, or $0.03per basic and diluted share, in the same period last year.
- Several non-recurring items drove net income this quarter including royalty and licensing revenue, forgiveness of the PPP loan plus accrued interest of
$4.8 million, and $2.5 millionfor the unused portion of the advance on research and development under the development agreement with Stryker. The last two items are included in other income.
- Foreign currency exchange income was
$0.5 millionin the second quarter of 2021, compared to $0.7 millionin the same period last year.
- Weighted average basic and diluted shares outstanding of 177.7 million and 180.0 million respectively, for the second quarter of 2021, compared to 68.2 million for both weighted average basic and diluted shares outstanding for the same period last year.
Capital Structure and Liquidity
- Cash and cash equivalents totaled
$108.3 millionas of June 30, 2021, compared to $28.7 millionas of December 31, 2020. $4.7 millionPPP loan forgiven in full. Loan proceeds were used to maintain our staffing through the pandemic.
- We expect our third quarter product revenue to improve sequentially from the second quarter and to be in the range of
$15.5 millionto $16.5 million.
- We believe elective procedure volumes will continue to improve and approach 2019 levels in the fourth quarter as vaccines become more widely available and medical facilities recover from pandemic-related staffing impacts.
Note on Non-GAAP Financial Measures
In addition to disclosing financial measures prepared in accordance with
As previously announced,
The online archive of the webcast will be available on the Company's website for 30 days.
Cautionary Statement Regarding Forward-Looking Statements
Statements in this press release about our future expectations, plans and prospects, including statements about the impact of the novel coronavirus (COVID-19) pandemic, the anticipated timing of our product launches, whether or when restrictions on elective surgeries will be relaxed and demand for procedures will increase, 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, including risks related to the novel coronavirus pandemic and the response to the pandemic; whether our cash resources will be sufficient to fund our continuing operations for the periods anticipated; risks related to our estimates and expectations regarding our revenue, gross margin, expenses, revenue growth and other results of operations, and the other risks and uncertainties described in the "Risk Factors" sections of our Annual Report on Form 10-K for the fiscal year ended
|Consolidated Statements of Operations|
|(in thousands, except share and per share data)|
|Three Months Ended
|Royalty and licensing||41,149||9,725|
|Cost of revenue||8,810||8,450|
|Sales and marketing||6,304||4,102|
|Research and development||3,650||2,738|
|General and administrative||6,689||6,474|
|Total operating expenses||16,643||13,314|
|Income (loss) from operations||30,895||(2,296||)|
|Other income and expenses|
|Foreign currency exchange transaction income||455||694|
|Total other income||7,139||133|
|Income (loss) before income taxes||38,034||(2,163||)|
|Income tax provision||(8||)||(28||)|
|Net income (loss)||$||38,042||$||(2,135||)|
|Net income (loss) per share:|
|Weighted average common shares outstanding:|
|Consolidated Balance Sheets|
|(in thousands, except share and per share data)|
|Cash and cash equivalents||$||108,320||$||28,673|
|Accounts receivable, net||8,903||8,515|
|Royalty and licensing receivable||15,643||1,256|
|Prepaid expenses and other current assets||2,314||2,315|
|Total current assets||148,601||53,344|
|Property and equipment, net||11,108||12,240|
|Operating lease right-of-use assets||8,268||5,215|
|Other long-term assets||218||239|
|Liabilities and stockholder's equity|
|Operating lease liabilities||1,782||1,620|
|Advance on research and development||—||3,168|
|Total current liabilities||15,289||30,919|
|Long-term debt, less debt issuance costs||20,627||25,003|
|Operating lease liabilities||7,112||4,206|
|Commitments and contingencies|
|Authorized: 5,000,000 shares authorized at
|Authorized: 300,000,000 shares authorized at
|Additional paid-in capital||630,435||543,809|
|Accumulated other comprehensive loss||(2,806||)||(4,000||)|
|Total stockholders' equity||125,729||11,372|
|Total liabilities and stockholders' equity||$||168,757||$||71,500|
CONTACT: Investor Relations firstname.lastname@example.org (781) 374-5598
Source: Conformis, Inc.