Venus Concept Announces Second Quarter of Fiscal Year 2022 Financial Results; Updates Fiscal Year 2022 Revenue Guidance

·13 min read
Venus Concept Inc.
Venus Concept Inc.

TORONTO, Aug. 12, 2022 (GLOBE NEWSWIRE) -- Venus Concept Inc. (“Venus Concept” or the “Company”) (NASDAQ: VERO), a global medical aesthetic technology leader, announced financial results for the three and six months ended June 30, 2022.

Second Quarter 2022 Summary & Operating Highlights:

  • Total revenue of $27.3 million, up $1.4 million, or 6%, year-over-year.

    • U.S. revenue up 7% year-over-year.

    • Total subscription and system revenue up 9% year-over-year.

  • GAAP net loss attributable to stockholders of $10.6 million, compared to net income of $0.4 million last year.

    • Second quarter 2021 GAAP net loss attributable to stockholders included approximately $6 million of non-cash gain and bad debt recovery which did not benefit GAAP net loss attributable to stockholders in the second quarter of 2022.

  • Adjusted EBITDA loss of $5.5 million, compared to Adjusted EBITDA income of $0.5 million last year.

  • On April 25, 2022, the Company announced the first patient treatment in a U.S. Investigational Device Exemption (IDE) clinical study evaluating the safety and efficacy of the Company’s Aime™ next generation robotic technology for the treatment of moderate to severe facial wrinkles. Aime is a robotic platform designed to provide micro-coring for medical aesthetic applications.

  • On April 28, 2022, the Company announced that it received a 510(k) clearance from the U.S. Food and Drug Administration (“FDA”) to market the Venus BlissMAX device (“BlissMAX”) with an expanded indication for use in new areas of the body and an increase in RF energy output.

Management Commentary:

“Second quarter total revenue results were below expectations driven by significant sales force disruption in a key market in the U.S.,” said Domenic Serafino, Chief Executive Officer of Venus Concept. “We experienced continued strong demand for Bliss and BlissMAX in our ‘Body Franchise’ and our ARTAS iX and Neograft in our ‘Hair Restoration Franchise’, and our sales team in the rest of the U.S. executed our focused sales strategy well, delivering 24% growth in subscription and system sales to U.S. customers in their respective regions in Q2.”

Mr. Serafino continued: “We have implemented a series of strategic initiatives and expect our focused commercial strategy, including prioritizing cash sales, and streamlined global operations to enhance the cash flow profile of our business and accelerate our path to long term profitability. We are also evaluating non-dilutive financing opportunities to enhance our cash position and balance sheet in the near term.”

Second Quarter and First Six Months of 2022 Revenue by Region and by Product Type:

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

(dollars in thousands)

 

 

(dollars in thousands)

Revenues by region:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

$

13,417

 

 

$

12,571

 

 

$

26,546

 

 

$

23,086

International

 

 

13,849

 

 

 

13,257

 

 

 

27,126

 

 

 

25,339

Total revenue

 

$

27,266

 

 

$

25,828

 

 

$

53,672

 

 

$

48,425




 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

(dollars in thousands)

 

 

(dollars in thousands)

Revenues by product:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subscription—Systems

 

$

11,874

 

 

$

12,787

 

 

$

22,297

 

 

$

21,324

Products—Systems

 

 

11,548

 

 

 

8,694

 

 

 

23,422

 

 

 

18,504

Products—Other (1)

 

 

3,080

 

 

 

3,314

 

 

 

6,577

 

 

 

6,369

Services (2)

 

 

764

 

 

 

1,033

 

 

 

1,376

 

 

 

2,228

Total revenue

 

$

27,266

 

 

$

25,828

 

 

$

53,672

 

 

$

48,425


(1)

 

Products-Other include ARTAS procedure kits and other consumables.

(2)

 

Services include extended warranty sales and VeroGrafters technician services. VeroGrafters technician services were discontinued in the fourth quarter of 2021.


Second Quarter 2022 Financial Results:

 

 

Three Months Ended June 30,

 

 

 

 

 

 

 

 

 

 

 

2022

 

 

2021

 

 

Change

 

(in thousands, except percentages)

 

$

 

 

% of Total

 

 

$

 

 

% of Total

 

 

$

 

 

%

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subscription—Systems

 

$

11,874

 

 

43.5

 

 

$

12,787

 

 

 

49.5

 

 

$

(913

)

 

 

(7.1

)

Products—Systems

 

 

11,548

 

 

42.4

 

 

 

8,694

 

 

 

33.7

 

 

 

2,854

 

 

 

32.8

 

Products—Other

 

 

3,080

 

 

11.3

 

 

 

3,314

 

 

 

12.8

 

 

 

(234

)

 

 

(7.1

)

Services

 

 

764

 

 

2.8

 

 

 

1,033

 

 

 

4.0

 

 

 

(269

)

 

 

(26.0

)

Total

 

$

27,266

 

 

100.0

 

 

$

25,828

 

 

 

100.0

 

 

$

1,438

 

 

 

5.6

 

Total revenue for the second quarter of 2022 increased $1.4 million, or 5.6%, to $27.3 million, compared to the second quarter of 2021. The increase in total revenue, by region, was driven by a 7% increase year-over-year in United States revenue and a 5% year-over-year increase in international revenue. The increase in total revenue, by product category, was driven by a 33% increase in systems revenue, partially offset by a 7% decrease in lease revenue, a 26% decrease in services revenue and a 7% decrease in products revenue. The percentage of total systems revenue derived from the Company’s subscription model was approximately 51% this quarter, compared to 60% in the prior year period.

Gross profit for the second quarter of 2022 increased $0.3 million, or 2%, to $19.0 million compared to the second quarter of 2021. Gross margin was 69.9%, compared to 72.5% of revenue for the second quarter of 2021. The change in gross profit was primarily driven by an increase in revenue in the United States driven by the Company’s hair restoration business. The change in gross margin was driven by changes in foreign currencies which depreciated relative to the U.S. dollar in the period.

Operating expenses for the second quarter of 2022 were $26.2 million, compared to $17.2 million for the second quarter of 2021. The change in total operating expenses was driven by an increase of $6.4 million, or 82%, in general and administrative expenses and an increase of $0.4 million, or 20%, in research and development expenses, offset partially by a decrease of $0.6 million, or 6%, in sales and marketing expenses. In addition, in the three months ended June 30, 2021, operating expenses included a bad debt recovery of $3.2 million due to a reactivation of accounts impacted by COVID-19 which did not repeat in the three months ended June 30, 2022. The prior year period also included a $2.8 million non-cash gain on forgiveness of government assistance loans which did not repeat in the three months ended June 30, 2022.

Operating loss for the second quarter of 2022 was $7.1 million, compared to operating income of $1.5 million for the second quarter of 2021.

Net loss attributable to stockholders for the second quarter of 2022 was $10.6 million, or $0.16 per share, compared to net income of $0.4 million for the second quarter of 2021. Adjusted EBITDA loss for the second quarter of 2022 was $5.5 million, compared to adjusted EBITDA income of $0.5 million for the second quarter of 2021.

Fiscal Year 2022 Revenue Guidance:

The Company now expects total revenue for the twelve months ending December 31, 2022 in the range of $110 million to $113 million, representing an increase of approximately 4% to 7%, year-over-year, compared to total revenue of $105.6 million for the twelve months ended December 31, 2021.

Conference Call Details:

Management will host a conference call at 8:00 a.m. Eastern Time on August 12, 2022, to discuss the results of the quarter with a question and answer session. Those who would like to participate may dial 877-407-2991 (201-389-0925 for international callers) and provide access code 13731063. A live webcast of the call will also be provided on the investor relations section of the Company's website at ir.venusconcept.com.

For those unable to participate, a replay of the call will be available for two weeks at 877-660-6853 (201-612-7415 for international callers); access code 13731063. The webcast will be archived at ir.venusconcept.com.

About Venus Concept

Venus Concept is an innovative global medical aesthetic technology leader with a broad product portfolio of minimally invasive and non-invasive medical aesthetic and hair restoration technologies and reach in over 60 countries and 18 direct markets. Venus Concept focuses its product sales strategy on a subscription-based business model in North America and in its well-established direct global markets. Venus Concept’s product portfolio consists of aesthetic device platforms, including Venus Versa, Venus Legacy, Venus Velocity, Venus Fiore, Venus Viva, Venus Glow, Venus Bliss, Venus BlissMAX, Venus Epileve and Venus Viva MD. Venus Concept’s hair restoration systems include NeoGraft® and the ARTAS® and ARTAS iX® Robotic Hair Restoration systems. Venus Concept has been backed by leading healthcare industry growth equity investors including EW Healthcare Partners (formerly Essex Woodlands), HealthQuest Capital, Longitude Capital Management, Aperture Venture Partners, and Masters Special Situations.

Cautionary Statement Regarding Forward-Looking Statements

This communication contains 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. Any statements contained herein that are not of historical facts may be deemed to be forward-looking statements. In some cases, you can identify these statements by words such as such as “anticipates,” “believes,” “plans,” “expects,” “projects,” “future,” “intends,” “may,” “should,” “could,” “estimates,” “predicts,” “potential,” “continue,” “guidance,” and other similar expressions that are predictions of or indicate future events and future trends. These forward-looking statements include, but are not limited to, statements about our financial performance; the growth in demand for our systems and other products; and general economic conditions, including the global economic impact of COVID-19, and involve risks and uncertainties that may cause results to differ materially from those set forth in the statements. These forward-looking statements are based on current expectations, estimates, forecasts, and projections about our business and the industry in which the Company operates and management's beliefs and assumptions and are not guarantees of future performance or developments and involve known and unknown risks, uncertainties, and other factors that are in some cases beyond our control. As a result, any or all of our forward-looking statements in this communication may turn out to be inaccurate. Factors that could materially affect our business operations and financial performance and condition include, but are not limited to, those risks and uncertainties described under Part II Item 1A—“Risk Factors” in our Quarterly Reports on Form 10-Q and Part I Item 1A—“Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. You are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on the forward-looking statements. The forward-looking statements are based on information available to us as of the date of this communication. Unless required by law, the Company does not intend to publicly update or revise any forward-looking statements to reflect new information or future events or otherwise.



Venus Concept Inc.
Condensed Consolidated Balance Sheets

(Unaudited)
(In thousands of U.S. dollars, except share and per share data)

 

 

June 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

ASSETS

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

10,540

 

 

$

30,876

 

Accounts receivable, net of allowance of $14,100 and $11,997 as of June 30, 2022, and December 31, 2021

 

 

46,754

 

 

 

46,918

 

Inventories

 

 

22,363

 

 

 

20,543

 

Prepaid expenses

 

 

2,169

 

 

 

2,737

 

Advances to suppliers

 

 

2,869

 

 

 

2,162

 

Other current assets

 

 

3,873

 

 

 

3,758

 

Total current assets

 

 

88,568

 

 

 

106,994

 

LONG-TERM ASSETS:

 

 

 

 

 

 

 

 

Long-term receivables

 

 

26,724

 

 

 

27,710

 

Deferred tax assets

 

 

579

 

 

 

284

 

Severance pay funds

 

 

815

 

 

 

817

 

Property and equipment, net

 

 

2,395

 

 

 

2,669

 

Intangible assets

 

 

13,670

 

 

 

15,393

 

Total long-term assets

 

 

44,183

 

 

 

46,873

 

TOTAL ASSETS

 

$

132,751

 

 

$

153,867

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Trade payables

 

$

4,184

 

 

$

4,913

 

Accrued expenses and other current liabilities

 

 

17,449

 

 

 

19,512

 

Income taxes payable

 

 

690

 

 

 

294

 

Unearned interest income

 

 

2,884

 

 

 

2,678

 

Warranty accrual

 

 

1,173

 

 

 

1,245

 

Deferred revenues

 

 

1,800

 

 

 

2,030

 

Current portion of government assistance loans

 

 

 

 

 

543

 

Total current liabilities

 

 

28,180

 

 

 

31,215

 

LONG-TERM LIABILITIES:

 

 

 

 

 

 

 

 

Long-term debt

 

 

77,507

 

 

 

77,325

 

Income tax payable

 

 

582

 

 

 

563

 

Accrued severance pay

 

 

931

 

 

 

911

 

Deferred tax liabilities

 

 

58

 

 

 

46

 

Unearned interest income

 

 

1,433

 

 

 

1,355

 

Warranty accrual

 

 

437

 

 

 

508

 

Other long-term liabilities

 

 

227

 

 

 

348

 

Total long-term liabilities

 

 

81,175

 

 

 

81,056

 

TOTAL LIABILITIES

 

 

109,355

 

 

 

112,271

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

 

 

 

Common Stock, $0.0001 par value: 300,000,000 shares authorized as of June 30, 2022 and December 31, 2021; 64,399,044 and 63,982,580 issued and outstanding as of June 30, 2022, and December 31, 2021, respectively

 

 

27

 

 

 

27

 

Additional paid-in capital

 

 

222,393

 

 

 

221,321

 

Accumulated deficit

 

 

(199,583

)

 

 

(180,405

)

TOTAL STOCKHOLDERS’ EQUITY

 

 

22,837

 

 

 

40,943

 

Non-controlling interests

 

 

559

 

 

 

653

 

 

 

 

23,396

 

 

 

41,596

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

132,751

 

 

$

153,867

 



Venus Concept Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands of U.S. dollars, except per share data)

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leases

 

$

11,874

 

 

$

12,787

 

 

$

22,297

 

 

$

21,324

 

Products and services

 

 

15,392

 

 

 

13,041

 

 

 

31,375

 

 

 

27,101

 

 

 

 

27,266

 

 

 

25,828

 

 

 

53,672

 

 

 

48,425

 

Cost of goods sold

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leases

 

 

2,761

 

 

 

2,736

 

 

 

5,461

 

 

 

4,506

 

Products and services

 

 

5,459

 

 

 

4,375

 

 

 

11,402

 

 

 

9,968

 

 

 

 

8,220

 

 

 

7,111

 

 

 

16,863

 

 

 

14,474

 

Gross profit

 

 

19,046

 

 

 

18,717

 

 

 

36,809

 

 

 

33,951

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

9,487

 

 

 

10,114

 

 

 

19,390

 

 

 

17,968

 

General and administrative

 

 

14,249

 

 

 

7,828

 

 

 

27,343

 

 

 

19,993

 

Research and development

 

 

2,436

 

 

 

2,024

 

 

 

4,638

 

 

 

4,075

 

Gain on forgiveness of government assistance loans

 

 

 

 

 

(2,775

)

 

 

 

 

 

(2,775

)

Total operating expenses

 

 

26,172

 

 

 

17,191

 

 

 

51,371

 

 

 

39,261

 

(Loss) income from operations

 

 

(7,126

)

 

 

1,526

 

 

 

(14,562

)

 

 

(5,310

)

Other expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange loss

 

 

2,370

 

 

 

130

 

 

 

2,375

 

 

 

844

 

Finance expenses

 

 

1,034

 

 

 

1,161

 

 

 

1,957

 

 

 

3,046

 

(Loss) income before income taxes

 

 

(10,530

)

 

 

235

 

 

 

(18,894

)

 

 

(9,200

)

Income tax (benefit) expense

 

 

(18

)

 

 

(7

)

 

 

254

 

 

 

(7

)

Net (loss) income

 

 

(10,512

)

 

 

242

 

 

 

(19,148

)

 

 

(9,193

)

Net (loss) income attributable to stockholders of the Company

 

 

(10,559

)

 

 

377

 

 

 

(19,178

)

 

 

(8,882

)

Net income (loss) attributable to non-controlling interest

 

 

47

 

 

 

(135

)

 

 

30

 

 

 

(311

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.16

)

 

$

0.01

 

 

$

(0.30

)

 

$

(0.16

)

Diluted

 

$

(0.16

)

 

$

0.01

 

 

$

(0.30

)

 

$

(0.16

)

Weighted-average number of shares used in per share calculation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

64,130

 

 

 

54,088

 

 

 

64,059

 

 

 

53,917

 

Diluted

 

 

64,130

 

 

 

54,237

 

 

 

64,059

 

 

 

53,917

 

Use of Non-GAAP Financial Measures

Adjusted EBITDA is a non-GAAP measure defined as net income (loss) before foreign exchange loss (gain), financial expenses, income tax expense (benefit), depreciation and amortization, stock-based compensation and non-recurring items for a given period. Adjusted EBITDA is not a measure of our financial performance under U.S. GAAP and should not be considered an alternative to net income or any other performance measures derived in accordance with U.S. GAAP. Accordingly, you should consider Adjusted EBITDA along with other financial performance measures, including net income, and our financial results presented in accordance with U.S. GAAP. Other companies, including companies in our industry, may calculate Adjusted EBITDA differently or not at all, which reduces its usefulness as a comparative measure. We understand that although Adjusted EBITDA is frequently used by securities analysts, lenders and others in their evaluation of companies, Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under U.S. GAAP. Some of these limitations are: Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments; Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; and although depreciation and amortization are non-cash charges, the assets being depreciated will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements.

We believe that Adjusted EBITDA is a useful measure for analyzing the performance of our core business because it facilitates operating performance comparisons from period to period and company to company by backing out potential differences caused by changes in foreign exchange rates that impact financial assets and liabilities denominated in currencies other than the U.S. dollar, tax positions (such as the impact on periods or companies of changes in effective tax rates), the age and book depreciation of fixed assets (affecting relative depreciation expense), amortization of intangible assets, stock-based compensation expense (because it is a non-cash expense) and non-recurring items as explained below.
The following reconciliation of net (loss) income to Adjusted EBITDA for the periods presented:

Venus Concept Inc.
Reconciliation of Net Loss to Non-GAAP Adjusted EBITDA

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Reconciliation of net loss to adjusted EBITDA

 

(in thousands)

 

 

(in thousands)

 

Net (loss) income

 

$

(10,512

)

 

$

242

 

 

$

(19,148

)

 

$

(9,193

)

Foreign exchange loss

 

 

2,370

 

 

 

130

 

 

 

2,375

 

 

 

844

 

Finance expenses

 

 

1,034

 

 

 

1,161

 

 

 

1,957

 

 

 

3,046

 

Income tax (benefit) expense

 

 

(18

)

 

 

(7

)

 

 

254

 

 

 

(7

)

Depreciation and amortization

 

 

1,111

 

 

 

1,147

 

 

 

2,212

 

 

 

2,451

 

Stock-based compensation expense

 

 

558

 

 

 

558

 

 

 

1,001

 

 

 

1,066

 

Gain on forgiveness of government assistance loans

 

 

 

 

 

(2,775

)

 

 

 

 

 

(2,775

)

Adjusted EBITDA

 

$

(5,457

)

 

$

456

 

 

$

(11,349

)

 

$

(4,568

)

CONTACT: Investor Relations Contact: ICR Westwicke on behalf of Venus Concept: Mike Piccinino, CFA VenusConceptIR@westwicke.com