STRATA Skin Sciences Reports Second Quarter 2021 Financial Results
Recent Highlights
- Total revenue for the second quarter of 2021 was
$7.4 million , an increase of 83.1% as compared to the second quarter of 2020- Recurring revenue for the second quarter of 2021 was
$5.5 million , a 95.0% increase over the second quarter of 2020 - Gross domestic recurring billings were
$5.5 million , a 196.6% increase over the second quarter 2020 (See Reconciliation of Non-GAAP measures below)
- Recurring revenue for the second quarter of 2021 was
- Total gross margins in the second quarter of 2021 were 64.5%, a 15.8% increase over second quarter 2020
- Cash, cash equivalents and restricted cash at
June 31, 2021 were$17.0 million down from$17.5 million atMarch 31, 2021 - Concluded the quarter with a global recurring revenue installed base of 889 XTRAC devices, an increase of 18 devices from
March 31, 2021 - Acquired
U.S. dermatology business of Ra Medical Systems, significantly expanding opportunity to generate additional recurring revenue and expand customer base - Hired New VP of Marketing,
Brent Cowgill - Received notification of Paycheck Protection Program forgiveness
“We were encouraged by our second quarter results, which showed significant growth over the second quarter of 2020, but more importantly, reflect total revenues at 95% of the comparable quarter of 2019 levels,” said
“Additionally, we’ve seen significant progress on our new strategic plan approved by our Board in May, including the positive impact of our improved direct to consumer and direct to dermatologist marketing efforts, as well as the successful execution of our sales initiatives. We were also pleased to announce the acquisition of the Pharos 308nm excimer laser business from Ra Medical. This transaction further demonstrates our commitment to commercial execution to drive both organic and inorganic growth,” continued
Second Quarter 2021 Financial Results
Revenues were
Gross profit was
Engineering and product development costs were
Net income was
Webcast and Conference Call Information
STRATA management will host a conference call today, beginning at
Reconciliation of Non-GAAP Measures
To supplement the Company’s consolidated financial statements, prepared in accordance with accounting principles generally accepted in
The Company’s reference to these non-GAAP measures should be considered in addition to results prepared under current accounting standards, but is not a substitute for, nor superior to, GAAP results. These non-GAAP measures are provided to enhance investors' overall understanding of STRATA’s current financial performance and to provide further information for comparative purposes.
Specifically, the Company believes the non-GAAP measures provide useful information to both management and investors by isolating certain expenses, gains and losses that may not be indicative of the Company’s core operating results and business outlook. In addition, the Company believes non-GAAP measures enhance the comparability of results against prior periods. Reconciliation of the GAAP measures of net loss to non-GAAP measures included in this press release is as follows (in thousands):
Adjusted EBITDA
For the Three Months Ended |
For the Six Months Ended |
||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||
Net income (loss) | $ | 1,082 | $ | (1,680 | ) | $ | (1,336 | ) | $ | (2,715 | ) | ||||||
Adjustments: | |||||||||||||||||
Depreciation/amortization | 961 | 1,028 | 1,880 | 2,145 | |||||||||||||
Income taxes | 4 | 47 | 8 | 135 | |||||||||||||
Loss on lasers placed in service | 63 | 19 | 63 | 19 | |||||||||||||
Gain on extinguishment of debt | (2,028 | ) | - | (2,028 | ) | - | |||||||||||
Interest expense, net | 19 | 18 | 41 | 17 | |||||||||||||
Non-GAAP EBITDA | 101 | (568 | ) | (1,372 | ) | (399 | ) | ||||||||||
Stock compensation | 581 | 410 | 1,243 | 840 | |||||||||||||
Non-GAAP adjusted EBITDA | $ | 682 | $ | (158 | ) | $ | (129 | ) | $ | 441 |
Gross Domestic Recurring Billings
Gross domestic recurring billings represent the amount invoiced to partner clinics when treatment codes are sold to the physician. It does not include normal GAAP adjustments which are deferred revenue from prior quarters recorded as revenue in the current quarter, the deferral of revenue from the current quarter recorded as revenue in future quarters, adjustments for co-pay and other discounts. This excludes international recurring revenues.
The total gross domestic recurring billings for the second quarter of 2021 was
The following is a reconciliation of non-GAAP gross domestic billings to recorded revenue for the second quarter of 2021 and 2020 (in thousands):
2021 | 2020 | ||||||
Gross domestic recurring billings | $ | 5,482 | $ | 1,848 | |||
Co-Pay adjustments | (186 | ) | (86 | ) | |||
Other discounts | (41 | ) | (4 | ) | |||
Deferred revenue from prior quarters | 1,769 | 1,458 | |||||
Deferral of revenue to future quarters | (1,897 | ) | (546 | ) | |||
GAAP Recorded revenue | $ | 5,127 | $ | 2,670 |
About
The Company’s proprietary XTRAC and recently acquired Pharos excimer lasers deliver a highly targeted therapeutic beam of UVB light to treat psoriasis, vitiligo, eczema, atopic dermatitis and leukoderma, diseases which impact over 31 million patients in
STRATA’s unique business model leverages targeted Direct to Consumer (DTC) advertising to generate awareness and utilizes its in-house call center and insurance advocacy teams to increase volume for the Company’s partner dermatology clinics.
Safe Harbor
This press release includes "forward-looking statements" within the meaning of the Securities Litigation Reform Act of 1995. These statements include but are not limited to the Company’s plans, objectives, expectations and intentions and may contain words such as “will,” “may,” “seeks,” and “expects,” that suggest future events or trends. These statements, the Company’s ability to migrate customers from the Pharos system to XTRAC and to execute new service agreements to at least portions of the Pharos user base, to generate the growth in its core business, including transitioning capital equipment purchasers into recurring revenue users, to integrate the Pharos service business into the Company’s field service offering, the Company’s ability to develop social media marketing campaigns, and the Company’s ability to build a leading franchise in dermatology and aesthetics, are based on the Company’s current expectations and are inherently subject to significant uncertainties and changes in circumstances. Actual results may differ materially from the Company’s expectations due to financial, economic, business, competitive, market, regulatory, adverse market conditions or supply chain interruptions resulting from the coronavirus and political factors or conditions affecting the Company and the medical device industry in general, future responses to and effects of COVID-19 pandemic and its variants including the distribution and effectiveness of the COVID-19 vaccines, as well as more specific risks and uncertainties set forth in the Company’s
Investor Contact
(415) 937-5404 | ||
ir@strataskin.com |
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
ASSETS | (unaudited) | ||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 9,576 | $ | 10,604 | |||
Restricted cash | 7,457 | 7,508 | |||||
Accounts receivable, net of allowance for doubtful accounts of |
2,854 | 2,944 | |||||
Inventories | 3,049 | 3,444 | |||||
Prepaid expenses and other current assets | 526 | 331 | |||||
Total current assets | 23,462 | 24,831 | |||||
Property and equipment, net | 5,931 | 5,529 | |||||
Operating lease right-of-use assets, net | 814 | 988 | |||||
Intangible assets, net | 5,640 | 6,345 | |||||
8,803 | 8,803 | ||||||
Other assets | 249 | 282 | |||||
Total assets | $ | 44,899 | $ | 46,778 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Note payable | $ | 7,275 | $ | 7,275 | |||
Current portion of long-term debt | 3 | 1,478 | |||||
Accounts payable | 2,642 | 2,764 | |||||
Other accrued liabilities | 5,101 | 4,690 | |||||
Current portion of operating lease liabilities | 383 | 369 | |||||
Deferred revenues | 2,375 | 2,262 | |||||
Total current liabilities | 17,779 | 18,838 | |||||
Long-term liabilities: | |||||||
Long-term debt, net | 497 | 1,050 | |||||
Deferred tax liability | 262 | 254 | |||||
Long-term operating lease liabilities, net | 513 | 710 | |||||
Other liabilities | 49 | 34 | |||||
Total liabilities | 19,100 | 20,886 | |||||
Commitments and contingencies | |||||||
Stockholders' equity: | |||||||
Series C Convertible Preferred Stock, |
- | - | |||||
Common Stock, |
34 | 34 | |||||
Additional paid-in capital | 246,074 | 244,831 | |||||
Accumulated deficit | (220,309 | ) | (218,973 | ) | |||
Total stockholders' equity | 25,799 | 25,892 | |||||
Total liabilities and stockholders’ equity | $ | 44,899 | $ | 46,778 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(unaudited)
For the Three Months Ended |
||||||||
2021 | 2020 | |||||||
Revenues, net | $ | 7,382 | $ | 4,030 | ||||
Cost of revenues | 2,621 | 2,066 | ||||||
Gross profit | 4,761 | 1,964 | ||||||
Operating expenses: | ||||||||
Engineering and product development | 403 | 247 | ||||||
Selling and marketing | 3,160 | 1,442 | ||||||
General and administrative | 2,121 | 1,890 | ||||||
5,684 | 3,579 | |||||||
Loss from operations | (923 | ) | (1,615 | ) | ||||
Other income (expense), net: | ||||||||
Gain on extinguishment of debt | 2,028 | - | ||||||
Interest expense net | (19 | ) | (18 | ) | ||||
2,009 | (18 | ) | ||||||
Income (loss) before income taxes | 1,086 | (1,633 | ) | |||||
Income tax expense | (4 | ) | (47 | ) | ||||
Net income (loss) | $ | 1,082 | $ | (1,680 | ) | |||
Earnings (loss) attributable to common shares | $ | 1,082 | $ | (1,680 | ) | |||
Earnings (loss) attributable to Preferred Series C shares | - | - | ||||||
Earnings (loss) per common share: | ||||||||
Basic | $ | 0.03 | $ | (0.05 | ) | |||
Diluted | $ | 0.03 | $ | (0.05 | ) | |||
Shares used in computing earnings (loss) per common share: | ||||||||
Basic | 33,876,568 | 33,731,739 | ||||||
Diluted | 34,318,495 | 33,731,739 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(unaudited)
For the Six Months Ended |
||||||||
2021 | 2020 | |||||||
Revenues, net | $ | 13,209 | $ | 10,760 | ||||
Cost of revenues | 4,735 | 4,397 | ||||||
Gross profit | 8,474 | 6,363 | ||||||
Operating expenses: | ||||||||
Engineering and product development | 787 | 539 | ||||||
Selling and marketing | 6,092 | 4,395 | ||||||
General and administrative | 4,910 | 3,992 | ||||||
11,789 | 8,926 | |||||||
Loss from operations | (3,315 | ) | (2,563 | ) | ||||
Other income (expense), net: | ||||||||
Gain on extinguishment of debt | 2,028 | - | ||||||
Interest expense, net | (41 | ) | (17 | ) | ||||
1,987 | (17 | ) | ||||||
Loss before income taxes | (1,328 | ) | (2,580 | ) | ||||
Income tax expense | (8 | ) | (135 | ) | ||||
Net loss | $ | (1,336 | ) | $ | (2,715 | ) | ||
Loss attributable to common shares | $ | (1,336 | ) | $ | (2,693 | ) | ||
Loss attributable to Preferred Series C shares | - | $ | (22 | ) | ||||
Loss per common share: | ||||||||
Basic | $ | (0.04 | ) | $ | (0.08 | ) | ||
Diluted | $ | (0.04 | ) | $ | (0.08 | ) | ||
Shares used in computing loss per common share: | ||||||||
Basic | 33,839,554 | 33,448,030 | ||||||
Diluted | 33,839,554 | 33,448,030 | ||||||
Loss per Preferred Series C share - basic and diluted |
- | $ | (29.93 | ) | ||||
Shares used in computing loss per basic and diluted Preferred Series C Shares | - | 740 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
For the Six Months Ended |
|||||||
2021 | 2020 | ||||||
Cash Flows From Operating Activities: | |||||||
Net loss | $ | (1,336 | ) | $ | (2,715 | ) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Depreciation and amortization | 1,706 | 1,986 | |||||
Amortization of right-of-use asset | 174 | 159 | |||||
Provision for doubtful accounts | (68 | ) | 72 | ||||
Stock-based compensation | 1,243 | 840 | |||||
Loss on lasers placed in-service | 63 | 19 | |||||
Gain on extinguishment of debt | (2,028 | ) | - | ||||
Deferred taxes | 8 | 135 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 158 | 2,953 | |||||
Inventories | 395 | (443 | ) | ||||
Prepaid expenses and other assets | (162 | ) | 116 | ||||
Accounts payable | (122 | ) | 571 | ||||
Other accrued liabilities | 411 | (431 | ) | ||||
Other liabilities | 15 | (107 | ) | ||||
Operating lease liabilities | (183 | ) | (142 | ) | |||
Deferred revenues | 113 | (1,812 | ) | ||||
Net cash provided by operating activities | 387 | 1,201 | |||||
Cash Flows From Financing Activities | |||||||
Proceeds from note payables and long-term debt | - | 2,528 | |||||
Net cash proceeds by financing activities | - | 2,528 | |||||
Cash Flows From Investing Activities: | |||||||
Lasers placed-in-service | (1,369 | ) | (730 | ) | |||
Purchases of property and equipment | (97 | ) | - | ||||
Net cash used in investing activities | (1,466 | ) | (730 | ) | |||
Net (decrease) increase in cash and cash equivalents and restricted cash | (1,079 | ) | 2,999 | ||||
Cash, cash equivalents and restricted cash, beginning of period | 18,112 | 15,629 | |||||
Cash, cash equivalents and restricted cash, end of period | $ | 17,033 | $ | 18,628 | |||
Source: STRATA Skin Sciences, Inc.