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Vapotherm Reports First Quarter 2021 Financial Results

05/05/2021

First Quarter 2021 Revenue of $32.3 Million Reflects 69% Increase Over Prior Year

EXETER, N.H.--(BUSINESS WIRE)-- Vapotherm, Inc. (NYSE: VAPO), (“Vapotherm” or the “Company”), a global medical technology company focused on the development and commercialization of its proprietary Vapotherm high velocity therapy® products which are used to treat patients of all ages suffering from respiratory distress, today announced first quarter 2021 financial results.

First Quarter 2021 Summary

  • Revenue for the first quarter of 2021 was $32.3 million, representing a 69% increase over the prior year period
  • Worldwide installed base of Precision Flow Hi-VNI systems grew by 73% compared to the first quarter of 2020
  • Gross margin was 53.1% or 490 basis points higher than gross margin of 48.2% in the first quarter of 2020

“We were pleased with our performance during the first quarter,” said Joe Army, President and CEO of Vapotherm. “We grew our worldwide Installed Base, improved our gross margin by 490 basis points, and reduced our adjusted EBITDA loss to $5.2 million. For the rest of 2021, we will focus on educating our Customers on how to use High Velocity Therapy for hypercapnic Patients experiencing respiratory distress, growing the Installed Base, and launching our next generation technology platform, HVT 2.0.”

Results for the Three Months Ended March 31, 2021

The following table reflects the Company’s net revenue for the three months ended March 31, 2021 and 2020:

 

 

Three Months Ended March 31,

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

2020

 

 

Change

 

 

 

(in thousands, except percentages)

 

 

 

Amount

 

 

% of Revenue

 

 

Amount

 

 

% of Revenue

 

 

$

 

 

%

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital (product & lease revenue)

 

$

13,454

 

 

 

41.6

%

 

$

6,034

 

 

 

31.6

%

 

$

7,420

 

 

 

123.0

%

Disposables

 

 

17,156

 

 

 

53.1

%

 

 

12,430

 

 

 

65.0

%

 

 

4,726

 

 

 

38.0

%

Service and other

 

 

1,698

 

 

 

5.3

%

 

 

651

 

 

 

3.4

%

 

 

1,047

 

 

 

160.8

%

Total net revenue

 

$

32,308

 

 

 

100.0

%

 

$

19,115

 

 

 

100.0

%

 

$

13,193

 

 

 

69.0

%

Net revenue for the first quarter of 2021 was $32.3 million, a 69% increase over the first quarter of 2020. Total capital equipment revenue, including product and lease revenue, increased 123% over the first quarter of 2020. This increase was primarily due to increased demand for our Precision Flow units worldwide due to the COVID-19 pandemic and increased average selling prices of both capital and disposables in the U.S. Total disposable revenue increased 38% over the first quarter of 2020, primarily driven by an increase in the worldwide installed base of Precision Flow units and increased demand for our products to treat the respiratory distress experienced by many COVID-19 patients in international markets.

Revenue information by geography is summarized as follows:

 

 

Three Months Ended March 31,

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

2020

 

 

Change

 

 

 

(in thousands, except percentages)

 

 

 

Amount

 

 

% of Revenue

 

 

Amount

 

 

% of Revenue

 

 

$

 

 

%

 

United States

 

$

22,069

 

 

 

68.3

%

 

$

14,341

 

 

 

75.0

%

 

$

7,728

 

 

 

53.9

%

International

 

 

10,239

 

 

 

31.7

%

 

 

4,774

 

 

 

25.0

%

 

 

5,465

 

 

 

114.5

%

Total net revenue

 

$

32,308

 

 

 

100.0

%

 

$

19,115

 

 

 

100.0

%

 

$

13,193

 

 

 

69.0

%

U.S. and International revenue growth in the first quarter of 2021 was driven by increased worldwide demand for our Precision Flow units due to COVID-19 and an increase in our disposable revenue due to an increase in our worldwide installed base of Precision Flow units and COVID-19 related demand worldwide. Revenue growth in the U.S. was also driven by an increase in average selling prices of both capital and disposables for the first quarter of 2021 compared to the first quarter of 2020.

Gross profit for the first quarter of 2021 was $17.2 million, an increase of $8.0 million over the first quarter of 2020. Gross margin was 53.1% in the first quarter of 2021 compared to 48.2% in the first quarter of 2020. The gross margin improvement was due to significantly higher revenue and production volume in comparison to the first quarter of 2020, as well as an increase in average selling prices in the U.S. on both capital and disposable sales.

Operating expenses were $26.9 million in the first quarter of 2021, an increase of $5.0 million as compared to $21.9 million in the same period last year. The increase in operating expenses was primarily due to an increase in general and administrative costs due to increased headcount, auditing and compliance costs as well as an increase in research and development expenses due to development costs of our next generation platform, HVT 2.0.

Net loss for the first quarter of 2021 was $10.4 million, or $0.40 per share, compared to $13.8 million, or $0.66 per share, in the first quarter of 2020. Net loss per share was based on 25,796,065 and 20,882,949 weighted average shares outstanding for the first quarter of 2021 and 2020, respectively.

Adjusted EBITDA was negative $5.2 million for the first quarter of 2021 as compared to negative $10.2 million for the first quarter of 2020. The reduction in Adjusted EBITDA loss was primarily due to higher revenue and gross margins.

Cash Position

Cash and cash equivalents were $93.8 million as of March 31, 2021 compared to $113.7 million as of December 31, 2020.

Fiscal 2021 Outlook

The assumptions we made related to our fiscal 2021 outlook remain the same as provided on our fourth quarter earnings call held on February 24, 2021. However, given the impact of COVID-19 in our International markets, we now expect a higher contribution of revenue from the International markets than our historical levels, especially in the second quarter of 2021.

As a reminder, the assumptions we stated in the fourth quarter earnings call were as follows. We continue to believe that, beginning in the second quarter of 2021, there will be very limited budget dollars available for capital equipment and, as a result, we expect capital sales to decrease significantly year over year given the COVID-19 driven demand we experienced in 2020. In addition, our current expectations are that vaccination efforts will be successful and will result in a declining number of COVID-19 cases and hospitalizations over the last three quarters of the year thereby reducing COVID-19 related demand for our disposables as well. Despite this, we expect that disposables will show year over year growth in the U.S due to an increased installed base and greater awareness of our ability to treat the symptoms of respiratory distress in all patients, including those who are hypercapnic. Lastly, given the significant expected year over year decrease in sales and production volumes for the last three quarters of this year, especially related to capital equipment, we expect full year gross margins to decrease year over year before improving next year to levels above 2020.

The Company continues to expect full year revenue to be between $82 million and $88 million, which represents a two-year compound annual growth rate of 33% at the mid-point of this range. We continue to expect full year gross margins of 46% to 48% and full year operating expenses of $97 million to $99 million.

Conference Call

Management will host a conference call at 4:30 p.m. Eastern Time on May 5, 2021 to discuss the results of the quarter with a question and answer session. To listen to the conference call on your telephone, please dial (833) 714-0922 for U.S. callers, or +1 (778) 560-2684 for international callers, approximately ten minutes prior to the start time and reference conference code 2178274. To listen to a live webcast, please visit the Investors section of the Vapotherm website at: http://investors.vapotherm.com/events-and-presentations/events. The webcast replay will be available on the Vapotherm website for 12 months following completion of the call. A replay of this conference call will be available by telephone through May 12, 2021 by dialing (800) 585-8367 in the U.S. or +1 (416) 621-4642 outside of the U.S. The replay access code is 2178274.

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 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 the non-GAAP financial measures of EBITDA and Adjusted EBITDA, which differ from financial measures calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). EBITDA in this press release represents net loss less interest expense, net and depreciation and amortization. Adjusted EBITDA in this release represents EBITDA as adjusted for the impact of foreign currency loss or gain, change in fair value of contingent consideration, and stock-based compensation expense. The Company has reconciled these 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 Adjusted EBITDA principally as a measure 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 this measure is useful to investors as supplemental information because it is 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 and 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 this 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 definition of Adjusted EBITDA is not necessarily comparable to other similarly titled captions of other companies due to different methods of calculation.

About Vapotherm

Vapotherm, Inc. (NYSE: 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 2.6 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 noninvasive ventilatory 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 Precision Flow system’s 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, including statements about our future focus on and ability to ensure our installed base of Precision Flow units is productive, grow the installed base and launch our new platform technology, HVT 2.0., and our expected revenue, gross margin and operating expenses for fiscal year 2021. In some cases, you can identify forward-looking statements by terms such as ‘‘expect,’’ “continue” “will” 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 has incurred losses in the past and may be unable to achieve or sustain profitability in the future, Vapotherm may need to raise additional capital to fund its existing commercial operations, develop and commercialize new products, and expand its operations, Vapotherm’s dependence on sales generated from its Precision Flow systems, competition from multi-national corporations who have significantly greater resources than Vapotherm and are more established in the respiratory market, the ability for Precision Flow systems to gain increased market acceptance, its inexperience directly marketing and selling its products, the potential loss of one or more suppliers, 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 the COVID-19 pandemic on its business, including its supply chain, 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, 2020, as filed with the Securities and Exchange Commission on February 24, 2021, Vapotherm’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, as filed with the Securities and Exchange Commission on May 5, 2021 and in any subsequent filings with the Securities and Exchange Commission. 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.

Financial Statements:

VAPOTHERM, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

 

 

 

March 31, 2021

 

 

December 31, 2020

 

 

 

(unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

93,828

 

 

$

113,683

 

Accounts receivable, net

 

 

13,659

 

 

 

23,488

 

Inventories

 

 

26,935

 

 

 

19,873

 

Prepaid expenses and other current assets

 

 

6,485

 

 

 

5,041

 

Total current assets

 

 

140,907

 

 

 

162,085

 

Property and equipment, net

 

 

21,667

 

 

 

20,573

 

Operating lease right-of-use assets

 

 

7,835

 

 

 

8,260

 

Restricted cash

 

 

253

 

 

 

1,853

 

Goodwill

 

 

14,009

 

 

 

16,226

 

Intangible assets, net

 

 

5,201

 

 

 

5,694

 

Other long-term assets

 

 

1,166

 

 

 

967

 

Total assets

 

$

191,038

 

 

$

215,658

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

6,049

 

 

$

4,967

 

Contract liabilities

 

 

1,285

 

 

 

2,977

 

Accrued expenses and other current liabilities

 

 

19,535

 

 

 

34,033

 

Revolving loan facility, current portion

 

 

1,158

 

 

 

-

 

Total current liabilities

 

 

28,027

 

 

 

41,977

 

Long-term loans payable, net

 

 

39,671

 

 

 

39,653

 

Revolving loan facility, net of current portion

 

 

3,731

 

 

 

4,888

 

Deferred income tax liabilities

 

 

9

 

 

 

6

 

Other long-term liabilities

 

 

12,598

 

 

 

15,229

 

Total liabilities

 

 

84,036

 

 

 

101,753

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

 

 

Preferred stock ($0.001 par value) 25,000,000 shares authorized; no shares issued

and outstanding as of March 31, 2021 and December 31, 2020

 

 

-

 

 

 

-

 

Common stock ($0.001 par value) 175,000,000 shares authorized as of

March 31, 2021 and December 31, 2020, 25,834,208 and 25,722,984

shares issued and outstanding as of March 31, 2021 and

December 31, 2020, respectively

 

 

26

 

 

 

26

 

Additional paid-in capital

 

 

434,274

 

 

 

430,781

 

Accumulated other comprehensive income

 

 

52

 

 

 

41

 

Accumulated deficit

 

 

(327,350

)

 

 

(316,943

)

Total stockholders' equity

 

 

107,002

 

 

 

113,905

 

Total liabilities and stockholders’ equity

 

$

191,038

 

 

$

215,658

 

Vapotherm, Inc.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Net revenue

 

$

32,308

 

 

$

19,115

 

Cost of revenue

 

 

15,140

 

 

 

9,898

 

Gross profit

 

 

17,168

 

 

 

9,217

 

Operating expenses

 

 

 

 

 

 

 

 

Research and development

 

 

4,910

 

 

 

3,362

 

Sales and marketing

 

 

13,900

 

 

 

13,317

 

General and administrative

 

 

8,059

 

 

 

5,251

 

Total operating expenses

 

 

26,869

 

 

 

21,930

 

Loss from operations

 

 

(9,701

)

 

 

(12,713

)

Other (expense) income

 

 

 

 

 

 

 

 

Foreign currency gain (loss)

 

 

(70

)

 

 

24

 

Interest income

 

 

29

 

 

 

125

 

Interest expense

 

 

(665

)

 

 

(1,295

)

Other

 

 

-

 

 

 

15

 

Net loss

 

$

(10,407

)

 

$

(13,844

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

11

 

 

 

(71

)

Total other comprehensive income (loss)

 

$

11

 

 

$

(71

)

Total comprehensive loss

 

$

(10,396

)

 

$

(13,915

)

 

 

 

 

 

 

 

 

 

Net loss per share - basic and diluted

 

$

(0.40

)

 

$

(0.66

)

Weighted-average number of shares used in calculating net

loss per share, basic and diluted

 

 

25,796,065

 

 

 

20,882,949

 

 

VAPOTHERM, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(10,407

)

 

$

(13,844

)

Adjustments to reconcile net loss to net cash used in operating activities

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

2,685

 

 

 

1,447

 

Depreciation and amortization

 

 

1,574

 

 

 

1,097

 

Provision for bad debts

 

 

(156

)

 

 

101

 

Provision for inventory valuation

 

 

(12

)

 

 

23

 

Non-cash lease expense

 

 

422

 

 

 

256

 

Change in fair value of contingent consideration

 

 

202

 

 

 

-

 

Loss on disposal of property and equipment

 

 

23

 

 

 

3

 

Amortization of discount on debt

 

 

32

 

 

 

63

 

Deferred income taxes

 

 

3

 

 

 

-

 

Changes in operating assets and liabilities, net of acquisition:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

9,987

 

 

 

(3,875

)

Inventories

 

 

(7,042

)

 

 

(12

)

Prepaid expenses and other assets

 

 

(1,651

)

 

 

33

 

Accounts payable

 

 

870

 

 

 

1,310

 

Contract liabilities

 

 

(1,730

)

 

 

143

 

Accrued expenses and other current liabilities

 

 

(14,338

)

 

 

2,789

 

Operating lease liabilities, current and long-term

 

 

(424

)

 

 

(256

)

Net cash used in operating activities

 

 

(19,962

)

 

 

(10,722

)

Cash flows from investing activities

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(2,256

)

 

 

(1,558

)

Net cash used in investing activities

 

 

(2,256

)

 

 

(1,558

)

Cash flows from financing activities

 

 

 

 

 

 

 

 

Proceeds from short-term line of credit

 

 

-

 

 

 

995

 

Proceeds from exercise of stock options

 

 

761

 

 

 

40

 

Net cash provided by financing activities

 

 

761

 

 

 

1,035

 

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

 

2

 

 

 

(17

)

Net decrease in cash, cash equivalents and restricted cash

 

 

(21,455

)

 

 

(11,262

)

Cash, cash equivalents and restricted cash

 

 

 

 

 

 

 

 

Beginning of period

 

 

115,536

 

 

 

73,507

 

End of period

 

$

94,081

 

 

$

62,245

 

Supplemental disclosures of cash flow information

 

 

 

 

 

 

 

 

Interest paid during the period

 

$

639

 

 

$

1,202

 

Property and equipment purchases in accounts payable and accrued expenses

 

$

263

 

 

$

36

 

Issuance of common stock upon vesting of restricted stock units

 

$

47

 

 

$

58

 

 

Non-GAAP Financial Measures

The following tables contain a reconciliation of net loss to Adjusted EBITDA for the three ended March 31, 2021 and 2020, respectively.

(unaudited)

 

 

Three Months Ended March 31,

 

 

Amount

 

 

 

2021

 

 

2020

 

 

 

(in thousands)

 

Net loss

 

$

(10,407

)

 

$

(13,844

)

Interest expense, net

 

 

636

 

 

 

1,170

 

Depreciation and amortization

 

 

1,574

 

 

 

1,097

 

EBITDA

 

$

(8,197

)

 

$

(11,577

)

Foreign currency

 

 

70

 

 

 

(24

)

Change in fair value of contingent consideration

 

 

202

 

 

 

-

 

Stock-based compensation

 

 

2,685

 

 

 

1,447

 

Adjusted EBITDA

 

$

(5,240

)

 

$

(10,154

)

Supplemental Operating Metrics

 

March 31,

 

 

 

 

 

 

 

 

 

 

2021

 

 

2020

 

 

Change

 

 

Amount

 

 

Amount

 

 

Amount

 

 

%

 

Precision Flow Units Installed Base

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

20,720

 

 

 

12,715

 

 

 

8,005

 

 

 

63.0

%

International

 

10,109

 

 

 

5,153

 

 

 

4,956

 

 

 

96.2

%

Total

 

30,829

 

 

 

17,868

 

 

 

12,961

 

 

 

72.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

 

 

 

 

 

 

 

 

2021

 

 

2020

 

 

Change

 

 

Amount

 

 

Amount

 

 

Amount

 

 

%

 

Precision Flow Units Sold and Leased

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

875

 

 

 

623

 

 

 

252

 

 

 

40.4

%

International

 

1,322

 

 

 

419

 

 

 

903

 

 

 

215.5

%

Total

 

2,197

 

 

 

1,042

 

 

 

1,155

 

 

 

110.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Disposable Patient Circuits Sold

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

110,381

 

 

 

92,591

 

 

 

17,790

 

 

 

19.2

%

International

 

62,539

 

 

 

33,900

 

 

 

28,639

 

 

 

84.5

%

Total

 

172,920

 

 

 

126,491

 

 

 

46,429

 

 

 

36.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Relations Contacts:
Mark Klausner or Mike Vallie, Westwicke, an ICR Company, ir@vtherm.com, +1 (603) 658-0011

Source: Vapotherm, Inc.

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