Vapotherm Reports Fourth Quarter and Fiscal Year 2020 Financial Results

Vapotherm Reports Fourth Quarter and Fiscal Year 2020 Financial Results




Vapotherm Reports Fourth Quarter and Fiscal Year 2020 Financial Results

2020 Revenue of $125.7 Million Reflects 161.4% Increase Over Prior Year

Results in Line with Preliminary Revenue of $125.4 Million

Worldwide Installed Base of Precision Flow Hi-VNI® Systems Grew by 72.8% in 2020

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 fourth quarter and fiscal year 2020 financial results.

Fourth Quarter 2020 Summary

  • Net revenue for the fourth quarter of 2020 was $40.9 million, representing a 214.4% increase over the prior year period
  • Gross margin was 50.6% in comparison to gross margin of 45.1% in the fourth quarter of 2019

Fiscal Year 2020 Summary

  • Net revenue for 2020 was $125.7 million, 161.4% growth over 2019
  • Disposable revenue in 2020 was $56.7 million, 61.8% growth over 2019
  • Gross margin was 50.1% in comparison to gross margin of 44.3% in 2019
  • Worldwide installed base of Precision Flow Hi-VNI systems grew by 72.8% in 2020

We are pleased with our progress in 2020, which has positioned us well for continued long-term growth beyond the COVID pandemic. During 2020, we saw increased worldwide awareness of High Velocity Therapy, significant growth in the number of new ED Gold and Silver accounts in the U.S., and 72.8% growth in our worldwide installed base of Precision Flow systems,” said Joe Army, President and CEO of Vapotherm. “In 2021, we will focus on educating our Customers on how to use High Velocity Therapy for Patients experiencing Type II respiratory distress, increasing our worldwide installed base, and launching new products worldwide.”

Results for the Three Months Ended December 31, 2020

The following table reflects the Company’s net revenue for the three months ended December 31, 2020 and 2019:

 

 

Three Months Ended December 31,

 

 

 

 

 

 

 

 

 

 

 

2020

 

 

2019

 

 

Change

 

 

 

(in thousands, except percentages)

 

 

 

Amount

 

 

% of Revenue

 

 

Amount

 

 

% of Revenue

 

 

$

 

 

%

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital (product & lease revenue)

 

$

21,582

 

 

 

52.8

%

 

$

2,920

 

 

 

22.4

%

 

$

18,662

 

 

 

639.1

%

Disposable

 

 

18,074

 

 

 

44.2

%

 

 

9,679

 

 

 

74.4

%

 

 

8,395

 

 

 

86.7

%

Service and Other

 

 

1,251

 

 

 

3.0

%

 

 

411

 

 

 

3.2

%

 

 

840

 

 

 

204.4

%

Total net revenue

 

$

40,907

 

 

 

100.0

%

 

$

13,010

 

 

 

100.0

%

 

$

27,897

 

 

 

214.4

%

Net revenue for the fourth quarter of 2020 was $40.9 million as compared to $13.0 million for the fourth quarter of 2019, a 214.4% increase over the fourth quarter of 2019. Total capital equipment revenue, including product and lease revenue, increased by $18.7 million or 639.1% over the fourth quarter of 2019. This increase was due to increased sales of our Precision Flow units as a result of demand related to the COVID-19 pandemic and increased average selling prices in the United States. Total disposable revenue increased 86.7% over the fourth quarter of 2019, primarily driven by an increase in the worldwide installed base of Precision Flow units and increased utilization to treat the respiratory distress experienced by many COVID-19 patients and higher average selling prices in the United States.

Revenue information by geography is summarized as follows:

 

 

Three Months Ended December 31,

 

 

 

 

 

 

 

 

 

 

 

2020

 

 

2019

 

 

Change

 

 

 

(in thousands, except percentages)

 

 

 

Amount

 

 

% of Revenue

 

 

Amount

 

 

% of Revenue

 

 

$

 

 

%

 

United States

 

$

33,612

 

 

 

82.2

%

 

$

9,821

 

 

 

75.5

%

 

$

23,791

 

 

 

242.2

%

International

 

 

7,295

 

 

 

17.8

%

 

 

3,189

 

 

 

24.5

%

 

 

4,106

 

 

 

128.8

%

Total net revenue

 

$

40,907

 

 

 

100.0

%

 

$

13,010

 

 

 

100.0

%

 

$

27,897

 

 

 

214.4

%

Worldwide revenue growth in the fourth quarter of 2020 was driven by an increase in the number of Precision Flow units sold over the prior year period and to a lesser extent an increase in single-use disposable sales due to higher installed bases of Precision Flow units worldwide.

Gross profit for the fourth quarter of 2020 was $20.7 million, an increase of $14.8 million over the fourth quarter of 2019. Gross margin was 50.6% in the fourth quarter of 2020 compared to 45.1% in the fourth quarter of 2019. Gross margin was positively impacted by improved overhead absorption due to higher production volumes and a higher mix of U.S. revenue.

Operating expenses were $33.0 million in the fourth quarter of 2020, an increase of $14.4 million as compared to $18.6 million in the same period last year. The increase in operating expenses was primarily due to higher sales and marketing expenses as a result of an increase in sales commissions, and increased sales and marketing headcount, and to a lesser extent increased general and administrative expenses as well as research and development expenses.

Net loss for the fourth quarter of 2020 was $17.2 million, or $0.67 per share, compared to net loss of $12.5 million, or $0.60 per share, in the fourth quarter of 2019. Net loss for the fourth quarter of 2020 includes a loss on debt extinguishment of $4.2 million recorded as a result of the Company’s debt refinancing. Net loss per share was based on 25,682,098 and 20,830,169 weighted average shares outstanding for the fourth quarter of 2020 and 2019, respectively.

Adjusted EBITDA was negative $9.1 million for the fourth quarter of 2020 as compared to negative $10.8 million for the fourth quarter of 2019. The $1.7 million improvement in Adjusted EBITDA in the fourth quarter of 2020 was primarily due to higher revenue and gross profit, partially offset by increased operating expenses resulting from higher levels of sales and marketing expenses, primarily sales commissions and increased headcount. Reconciliations of all historical non-GAAP financial measures used in this release to the most comparable GAAP measures can be found in the attached financial tables.

Results for the Twelve Months Ended December 31, 2020

The following table reflects the Company’s net revenue for the twelve months ended December 31, 2020 and 2019:

 

 

Year Ended December 31,

 

 

 

 

 

 

 

 

 

 

 

2020

 

 

2019

 

 

Change

 

 

 

(in thousands, except percentages)

 

 

 

Amount

 

 

% of Revenue

 

 

Amount

 

 

% of Revenue

 

 

$

 

 

%

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital (product & lease revenue)

 

$

65,964

 

 

 

52.5

%

 

$

11,045

 

 

 

22.9

%

 

$

54,919

 

 

 

497.2

%

Disposable

 

 

56,711

 

 

 

45.1

%

 

 

35,055

 

 

 

72.9

%

 

 

21,656

 

 

 

61.8

%

Service and Other

 

 

3,058

 

 

 

2.4

%

 

 

2,004

 

 

 

4.2

%

 

 

1,054

 

 

 

52.6

%

Total net revenue

 

$

125,733

 

 

 

100.0

%

 

$

48,104

 

 

 

100.0

%

 

$

77,629

 

 

 

161.4

%

Net revenue for 2020 was $125.7 million, representing a 161.4% increase over 2019. Total capital equipment revenue, including product and lease revenue, increased 497.2% year over year. This increase was due to increased sales of our Precision Flow units as a result of demand related to the COVID-19 pandemic and increased average selling prices in the United States. Total disposable revenue increased 61.8% year over year, primarily driven by an increase in the worldwide installed base of Precision Flow units and increased utilization to treat the respiratory distress experienced by many COVID-19 patients and higher average selling prices in the United States.

Revenue information by geography is summarized as follows:

 

 

Year Ended December 31,

 

 

 

 

 

 

 

 

 

 

 

2020

 

 

2019

 

 

Change

 

 

 

(in thousands, except percentages)

 

 

 

Amount

 

 

% of Revenue

 

 

Amount

 

 

% of Revenue

 

 

$

 

 

%

 

United States

 

$

99,161

 

 

 

78.9

%

 

$

36,583

 

 

 

76.0

%

 

$

62,578

 

 

 

171.1

%

International

 

 

26,572

 

 

 

21.1

%

 

 

11,521

 

 

 

24.0

%

 

 

15,051

 

 

 

130.6

%

Total net revenue

 

$

125,733

 

 

 

100.0

%

 

$

48,104

 

 

 

100.0

%

 

$

77,629

 

 

 

161.4

%

Worldwide revenue growth in 2020 was driven by an increase in the number of Precision Flow units sold year over year and to a lesser extent an increase in single-use disposable sales due to higher installed bases of Precision Flow units.

Gross profit for the twelve months of 2020 was $63.0 million, an increase of $41.7 million over 2019. Gross margin was 50.1% in comparison to 44.3% in 2019. Gross margin was positively impacted by improved overhead absorption due to higher production volumes and a higher mix of U.S. revenue partially offset by higher labor costs, increased supplier freight and expediting fees to meet the rapid increase in production capacity.

Operating expenses were $106.1 million for the year ended December 31, 2020, an increase of $36.6 million as compared to $69.5 million in 2019. The increase in operating expenses was primarily due to higher sales and marketing expenses as a result of an increase in sales commissions and increased sales and marketing headcount and, to a lesser extent, general and administrative expenses as well as research and development costs.

Net loss for the year ended December 31, 2020 was $51.5 million or $2.16 per share compared to a net loss of $51.1 million or $2.74 per share in 2019. Net loss for 2020 includes a loss on debt extinguishment of $4.2 million recorded as a result of the Company’s debt refinancing in the fourth quarter of 2020. Net loss per share was based on 23,818,447 and 18,604,707 weighted average shares outstanding for the year ended December 31, 2020 and 2019, respectively.

Adjusted EBITDA was negative $31.8 million for the year ended December 31, 2020 as compared to negative $41.3 million for 2019. The improvement in Adjusted EBITDA in 2020 was primarily due to higher revenue and gross profit, partially offset by increased operating expenses resulting from higher levels of sales and marketing expenses, primarily sales commissions and increased headcount, and to a lesser extent general and administrative expenses and research and development costs.

Cash Position

Cash and cash equivalents were $113.7 million as of December 31, 2020 compared to $139.0 million as of September 30, 2020 and $71.7 million as of December 31, 2019.

Fiscal 2021 Outlook

COVID-19 has driven dramatic increases in our installed base and awareness of the benefits our technology, which will enable us to produce long-term growth post pandemic. Due to the significant and rapid changes in COVID-19 related hospitalizations, forecasting the demand for both our capital and disposables in the near term remains challenging. From an overall business standpoint, we are addressing this variability by positioning ourselves to respond quickly to changes in demand. This was a significant focus during 2020, and we believe we are positioned well to respond quickly to COVID-19 driven increases or decreases in demand. From a financial outlook standpoint, we are providing a range of outcomes based on a set of assumptions derived from the best information available to us at this time.

To start 2021, we saw near peak COVID-19 related hospitalizations across the U.S. and Europe resulting in demand for our capital and disposables at levels we experienced in late 2020. Beginning in mid-January of 2021, we saw a decrease in U.S. hospitalizations from the peak experienced in early January and reduced COVID-19 related demand for our products. In addition, we have not seen meaningful flu related cases or hospitalizations in the U.S. quarter to date which is a trend we expect to continue throughout 2021. Typically, U.S. disposable utilization rates are the highest in the first quarter each year due to the impact of the flu.

Beginning in the second quarter of 2021, we expect that 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 in Type II respiratory distress. Lastly, given the significant expected year over year decrease in sales and production volumes, especially related to capital equipment, we expect gross margins to decrease in 2021 before improving again in 2022 to levels above 2020.

For fiscal 2021, we expect revenue in the range of $82 million to $88 million, which represents a two-year compound annual growth rate of 33% at the mid-point of this range.

For the first quarter of 2021, we expect revenue in the range of $30 million to $33 million.

For fiscal 2021, we expect gross margin to be in the range of 46% and 48%.

For fiscal 2021, we expect operating expenses to be in the range of $97 million to $99 million.

We are still in a highly dynamic environment given the impact of COVID-19 and should our expectations regarding COVID-19 or other aspects of our operating results not play out as anticipated, it could result in materially different financial results than what we are currently expecting.

Conference Call

Management will host a conference call at 4:30 p.m. Eastern Time on February 24th to discuss the results of the quarter and the year 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 5693622. 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 March 3, 2021 by dialing (800) 585-8367 in the U.S. or (416) 621-4642 outside of the U.S. The replay access code is 5693622.

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 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, taxes and depreciation and amortization. Adjusted EBITDA in this release represents EBITDA as adjusted for the impact of foreign currency loss or gain, stock-based compensation expense, loss on debt extinguishment and gain on legal settlement. The Company has reconciled all historical 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 should not be considered as 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. 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 Vapotherm high velocity therapy. High velocity therapy is mask-free noninvasive ventilatory support for spontaneously breathing patients 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 associated with mask therapies. While being treated, patients can talk, eat, drink and take oral medication. For more information, visit www.vapotherm.com.

Legal Notice Regarding Forward-Looking Statements

This press release contains forward-looking statements, including statements about our ability to grow our installed base, our ability to educate new customers on the use of Vapotherm’s High Velocity Therapy, especially on hypercapnic patients, increasing our production and our installed base, expanding the limited release of our Oxygen Assist Module, improving our gross margins and expected revenue for the first quarter of 2021 and 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,’’ “guide” or “typically” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. 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, 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.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

 

 

 

December 31,

 

 

 

2020

 

 

2019

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

113,683

 

 

$

71,655

 

Accounts receivable, net

 

 

23,488

 

 

 

8,243

 

Inventories

 

 

19,873

 

 

 

9,137

 

Prepaid expenses and other current assets

 

 

5,041

 

 

 

4,066

 

Total current assets

 

 

162,085

 

 

 

93,101

 

Property and equipment, net

 

 

20,573

 

 

 

15,086

 

Operating lease right-of-use assets

 

 

8,260

 

 

 

 

Restricted cash

 

 

1,853

 

 

 

1,852

 

Goodwill

 

 

16,226

 

 

 

588

 

Intangible assets, net

 

 

5,694

 

 

 

353

 

Deferred income tax assets

 

 

 

 

 

66

 

Other long-term assets

 

 

967

 

 

 

844

 

Total assets

 

$

215,658

 

 

$

111,890

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

4,967

 

 

$

3,375

 

Contract liabilities

 

 

459

 

 

 

137

 

Accrued expenses and other liabilities

 

 

36,551

 

 

 

9,187

 

Short-term line of credit

 

 

 

 

 

3,491

 

Total current liabilities

 

 

41,977

 

 

 

16,190

 

Long-term loans payable, net

 

 

39,653

 

 

 

41,787

 

Revolving loan facility

 

 

4,888

 

 

 

 

Deferred income tax liabilities

 

 

6

 

 

 

 

Other long-term liabilities

 

 

15,229

 

 

 

174

 

Total liabilities

 

 

101,753

 

 

 

58,151

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

 

 

Preferred stock ($.001 par value) 25,000,000 shares authorized; no shares

issued and outstanding as of December 31, 2020 and 2019

 

 

 

 

 

 

Common stock ($.001 par value) 175,000,000 shares authorized as of

December 31, 2020 and 2019; 25,722,984 and 20,851,531 shares issued

and outstanding as of December 31, 2020 and 2019, respectively

 

 

26

 

 

 

21

 

Additional paid-in capital

 

 

430,781

 

 

 

319,115

 

Accumulated other comprehensive income

 

 

41

 

 

 

44

 

Accumulated deficit

 

 

(316,943

)

 

 

(265,441

)

Total stockholders’ equity

 

 

113,905

 

 

 

53,739

 

Total liabilities and stockholders’ equity

 

$

215,658

 

 

$

111,890

 

Vapotherm, Inc.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

 

 

 

Three Months Ended December 31,

 

 

 

2020

 

 

2019

 

Net revenue

 

$

40,907

 

 

$

13,010

 

Cost of goods sold

 

 

20,196

 

 

 

7,147

 

Gross profit

 

 

20,711

 

 

 

5,863

 

Operating expenses

 

 

 

 

 

 

 

 

Research and development

 

 

4,954

 

 

 

3,656

 

Sales and marketing

 

 

20,958

 

 

 

9,903

 

General and administrative

 

 

7,114

 

 

 

5,021

 

Total operating expenses

 

 

33,026

 

 

 

18,580

 

Loss from operations

 

 

(12,315

)

 

 

(12,717

)

Other (expense) income

 

 

 

 

 

 

 

 

Foreign currency gain

 

 

77

 

 

 

81

 

Interest income

 

 

30

 

 

 

202

 

Gain on litigation settlement

 

 

 

 

 

1,151

 

Interest expense

 

 

(813

)

 

 

(1,313

)

Loss on extinguishment of debt

 

 

(4,163

)

 

 

 

Net loss before income taxes

 

$

(17,184

)

 

$

(12,596

)

Benefit for income taxes

 

 

 

 

 

(146

)

Net loss

 

$

(17,184

)

 

$

(12,450

)

Other comprehensive income

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

38

 

 

 

114

 

Total other comprehensive income

 

$

38

 

 

 

114

 

Total comprehensive loss

 

$

(17,146

)

 

$

(12,336

)

 

 

 

 

 

 

 

 

 

Net loss per share – basic and diluted

 

$

(0.67

)

 

$

(0.60

)

Weighted-average number of shares used in calculating net loss per share,

basic and diluted

 

 

25,682,098

 

 

 

20,830,169

 

Contacts

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

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