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ConforMIS Reports Third Quarter 2017 Financial Results

BILLERICA, Mass., Nov. 01, 2017 (GLOBE NEWSWIRE) -- ConforMIS, Inc. (NASDAQ:CFMS), a medical technology company that uses its proprietary iFit Image-to-Implant technology platform to develop, manufacture and sell joint replacement implants that are customized to fit each patient's unique anatomy, announced today financial results for the third quarter ended September 30, 2017.

Q3 Summary:

  • Total revenue of $18.4 million, down 1.2% year-over-year on a reported basis and down 1.6% on a constant currency basis
  • Product revenue of $18.2 million, down 1.2% year-over-year on a reported basis and down 1.6% on a constant currency basis
    • U.S. product revenue increased 3.8% year-over-year
    • Rest of World product revenue decreased 23.1% year-over-year on a reported basis and decreased 25.0% year-over-year on a constant currency basis
  • Gross margin of 40%, an increase of 800 basis points year-over-year

"We are pleased with our third quarter results as we saw improved commercial performance in the US and excellent progress in our operating performance for the quarter,” said Mark Augusti, President and Chief Executive Officer of ConforMIS, Inc. “We are especially pleased with our continued progress on gross margin realizing an 800 basis point improvement over prior year.  Consistent with what we have communicated previously, we remain on track as we enter the last quarter of the year.”

Third Quarter 2017 Financial Results

Revenue Three months ended September 30, Increase/decrease
($, in thousands)   2017   2016 $
Change
%
Change
%
Change
        (as reported) (constant
currency)
United States $   15,519 $   14,946 $   573   3.8 % 3.8 %
Rest of world     2,657     3,454     (797 ) -23.1 % -25.0 %
Product revenue     18,176     18,400     (224 ) -1.2 % -1.6 %
Royalty revenue     249     243     6   2.4 % 2.4 %
Total revenue $   18,425 $   18,643 $   (218 ) -1.2 % -1.6 %

Total revenue decreased $0.2 million to $18.4 million, or 1.2% year-over-year on a reported basis and decreased 1.6% on a constant currency basis. Total revenue in the third quarter of 2017 included royalty revenue related to patent license agreements of $0.2 million which was consistent with the third quarter of 2016. 

Product revenue decreased $0.2 million to $18.2 million, or 1.2% year-over-year on a reported basis and decreased 1.6% on a constant currency basis. U.S. product revenue increased $0.6 million to $15.5 million, or 3.8% year-over-year, and Rest of World product revenue decreased $0.8 million to $2.7 million, or 23.1% year-over-year on a reported basis and decreased 25% on a constant currency basis. Product revenue from sales of iTotal CR, iDuo and iUni was $13.0 million for the three months ended September 30, 2017 compared to $14.4 million for the three months ended September 30, 2016, a decrease of $1.4 million, or 10% year-over-year on a reported and constant currency basis.  Product revenue from sales of iTotal PS was $5.2 million for the three months ended September 30, 2017 compared to $4.0 million for the three months ended September 30, 2016, an increase of $1.2 million, or 29% year-over-year on a reported and constant currency basis.

Gross profit increased $1.3 million to $7.3 million, or 40% of revenue, in the third quarter of 2017, compared to $6.0 million, or 32% of revenue, in the third quarter of 2016. The 800 basis point increase in gross margin year-over-year was driven primarily by cost reductions as a result of vertical integration and manufacturing efficiencies.

Total operating expenses increased $1.3 million to $20.2 million, or 7% year-over-year. The increase in operating expenses was driven primarily by higher general and administrative costs, partially offset by lower sales and marketing costs.

Net loss was $12.5 million, or $0.29 per basic share, in the third quarter of 2017, compared to a net loss of $12.8 million, or $0.31 per basic share, for the same period last year. The decrease in third quarter net loss was driven primarily by higher gross profit and higher foreign currency exchange transaction income related to international intercompany receivables, partially offset by an increase in operating expenses.

As of September 30, 2017, the Company’s cash and cash equivalents and investments totaled $54.5 million, compared to $65.5 million as of December 31, 2016.

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.

Conference Call

As previously announced, ConforMIS will conduct a conference call and webcast today at 4:30 PM Eastern Time. Management will discuss financial results and strategic matters. To participate in the conference call, please call 877-809-6331 (or 615-247-0224 for international) and use conference ID number 99181599 or listen to the webcast in the investor relations section of the company's website at ir.conformis.com. The online archive of the webcast will be available on the company's website for 30 days.

About ConforMIS, Inc.

ConforMIS is a medical technology company that uses its proprietary iFit Image-to-Implant technology platform to develop, manufacture and sell joint replacement implants that are individually sized and shaped, or customized, to fit each patient's unique anatomy. ConforMIS offers a broad line of customized knee implants and pre-sterilized, single-use instruments delivered in a single package to the hospital. In clinical studies, ConforMIS’ iTotal CR demonstrated superior clinical outcomes, including better function and greater patient satisfaction, compared to traditional, off-the-shelf implants. ConforMIS owns or exclusively in-licenses approximately 450 issued patents and pending patent applications that cover customized 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 http://ir.conformis.com/.

Cautionary Statement Regarding Forward-Looking Statements

Any statements in this press release about our future expectations, plans and prospects, including statements about our strategy, future operations, future financial position and results, market growth, total revenue and revenue mix by product and geography, gross margin, operating trends, the potential impact and advantages of using customized implants, and potential transition at the Company 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" and similar expressions, constitute forward-looking statements within the meaning of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. 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 our estimates regarding the potential market opportunity for our current and future products, our expectations regarding our revenue, gross margin, expenses, revenue growth, transition and other results of operations, and the other risks and uncertainties described in the "Risk Factors" sections of our public filings with the Securities and Exchange Commission. 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. 

CONTACT:    
Investor contact
Oksana Bradley
ir@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
September 30,
Nine Months Ended
September 30,
    2017     2016     2017     2016  
         
Revenue        
Product $   18,176   $   18,400   $   56,601   $   57,486  
Royalty     249       243       763       740  
Total revenue     18,425       18,643       57,364       58,226  
Cost of revenue     11,111       12,645       37,307       39,564  
Gross profit     7,314       5,998       20,057       18,662  
         
Operating expenses        
Sales and marketing     8,741       9,301       28,932       31,063  
Research and development     4,081       4,099       12,976       12,474  
General and administrative     7,402       5,503       22,304       17,285  
Total operating expenses     20,224       18,903       64,212       60,822  
Loss from operations     (12,910 )     (12,905 )     (44,155 )     (42,160 )
         
Other income and expenses        
Interest income     137       127       367       409  
Interest expense     (718 )     (4 )     (1,397 )     (104 )
Foreign currency exchange transaction income     1,099       34       3,606       34  
Total other income (expenses), net     518       157       2,576       339  
Loss before income taxes     (12,392 )     (12,748 )     (41,579 )     (41,821 )
Income tax provision     80       14       143       27  
         
Net loss $   (12,472 ) $   (12,762 ) $   (41,722 ) $   (41,848 )
         
Net loss per share - basic and diluted $   (0.29 ) $   (0.31 ) $   (0.97 ) $   (1.01 )
Weighted average common shares outstanding - basic and diluted     43,468,559     41,682,244       43,182,090     41,332,958  
         
   

 
CONFORMIS, INC. AND SUBSIDIARIES 
Consolidated Balance Sheets
(in thousands, except share and per share data)
     
  September 30,
2017
December 31, 2016
Assets  (unaudited)   
Current Assets    
Cash and cash equivalents $   26,547   $   37,257  
Investments     27,951       28,242  
Accounts receivable, net     12,599       14,675  
Inventories     10,577       11,720  
Prepaid expenses and other current assets     2,516       3,954  
Total current assets     80,190       95,848  
Property and equipment, net     16,310       15,084  
Other Assets    
Restricted cash     462       300  
Investments     --       --  
Intangible assets, net     574       746  
Goodwill     6,731       753  
Other long-term assets     18       79  
Total assets $   104,285   $   112,810  
     
Liabilities and stockholder's equity    
Current liabilities    
Accounts payable $   4,335   $   5,474  
Accrued expenses     8,314       8,492  
Deferred revenue     305       305  
Total current liabilities     12,954       14,271  
Other long-term liabilities     652       164  
Deferred tax liabilities     42     --  
Deferred revenue     4,091       4,320  
Long-term debt,less debt issuance costs     29,640       --  
Total liabilities     47,379       18,755  
Commitments and contingencies     --       --  
Stockholders' equity    
Preferred stock, $0.00001 par value:    
Authorized: 5,000,000 shares authorized at September 30, 2017 and December 31, 2016, respectively,
no shares outstanding as of September 30, 2017 and December 31, 2016.
    --       --  
Common stock, $0.00001 par value:    
Authorized: 200,000,000 shares at September 30, 2017 and December 31, 2016; 45,292,573 and
43,399,547 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively
    --       --  
Additional paid-in capital     484,665       476,486  
Accumulated deficit     (424,963 )     (382,930 )
Accumulated other comprehensive (loss) income     (2,796 )     499  
Total stockholders' equity     56,906       94,055  
Total liabilities and stockholders' equity $   104,285   $   112,810  

 

ConforMIS, Inc.