Advanced Energy Sales increased 39%
year-over-year in Q3
Apyx Medical Corporation (NASDAQ:APYX) (the “Company”),
the manufacturer of a proprietary helium plasma and radiofrequency
technology marketed and sold as Renuvion®, today reported financial
results for its third quarter ended September 30, 2023, and updated
its financial expectations for the full year ending December 31,
2023.
Third Quarter 2023 Financial
Summary:
- Total revenue of $12.0 million, up 31% year-over-year.
- Advanced Energy revenue of $9.8 million, up 39%
year-over-year.
- OEM revenue of $2.1 million, up 5% year-over-year.
- Net loss attributable to stockholders of $4.6 million, down
$1.1 million, or 20%, year-over-year.
- Adjusted EBITDA loss of $3.1 million, down $0.8 million, or
21%, year-over-year.
Highlights Subsequent to Quarter
End
- On November 9, 2023, the Company announced a new, five-year
credit agreement with Perceptive Credit Holdings IV, LP
(“Perceptive”), an affiliate of Perceptive Advisors. The credit
agreement provides for a facility of up to $45.0 million consisting
of senior, secured term loans. The Perceptive credit facility
matures on November 8, 2028 and includes an initial loan of $37.5
million and a delayed draw loan of $7.5 million. The initial loan
of $37.5 million was fully funded on November 8, 2023, with
approximately $11.0 million of the proceeds used to satisfy all
obligations under the Company’s MidCap credit agreement, as well as
approximately $2.5 million of transaction fees and other expenses
related to the transactions.
- On November 9, 2023, the Company and Tara Semb, Chief Financial
Officer, announced that Ms. Semb would be leaving the Company in
order to pursue other opportunities. Ms. Semb’s departure is not
due to any disagreement with the Company on any matter, including
matters related to the Company’s operations, policies, practices,
financial reporting or controls. The Board of Directors initiated a
formal search process which has resulted in the Company identifying
her successor. Ms. Semb plans to continue in her position as Chief
Financial Officer until her successor is formally appointed.
Management Comments:
“We delivered Advanced Energy revenue growth in the third
quarter of 39% year-over-year, fueled primarily by global sales of
our generators, which increased by more than 65% both in the U.S.
and internationally, along with significant contributions from
handpiece sales as well,” said Charlie Goodwin, President and Chief
Executive Officer. “Our Advanced Energy sales performance benefited
from multiple factors, including our recently obtained FDA 510(k)
clearances for new clinical indications, the commercialization of
our next-generation Apyx One Generator and strong demand from
distributors in key geographic regions. We complemented our revenue
performance with continued profitability improvements as well,
reducing our net loss attributable to stockholders and adjusted
EBITDA by 20% and 21% year-over-year, respectively.”
Mr. Goodwin continued: “Ultimately, we did not see the level of
revenue performance in our Advanced Energy segment that we had
anticipated in the third quarter. We believe this was due to a
combination of factors, including stronger-than-anticipated
seasonality, surgeon reticence to purchase capital equipment given
the current financing environment and sales and marketing team
execution that did not meet our expectations. Our updated guidance
reflects both our third quarter results and our revised
expectations for the balance of the year. We are committed to
achieving our stated expectations for 2023 by executing our growth
strategy in the fourth quarter, while continuing to leverage our
recent progress in securing new 510(k) clearances, introducing new
products and raising awareness of the safety and efficacy of our
Renuvion technology for cosmetic procedures at both the surgeon and
patient level. Subsequent to quarter end, we capitalized on the
multiple regulatory, operating and commercial milestones achieved
in 2023 to secure a new credit facility with Perceptive Advisors,
providing us with additional capital – with more favorable terms
overall than our prior agreement – which significantly strengthens
our balance sheet and enhances our financial flexibility.”
The following tables present revenue by reportable segment and
geography:
Three Months Ended
September 30,
Increase/Decrease
Nine Months Ended
September 30,
Increase/Decrease
(In thousands)
2023
2022
$ Change
% Change
2023
2022
$ Change
% Change
Advanced Energy
$
9,836
$
7,080
$
2,756
38.9
%
$
31,248
$
26,258
$
4,990
19.0
%
OEM
2,140
2,034
106
5.2
%
6,439
5,641
798
14.1
%
Total
$
11,976
$
9,114
$
2,862
31.4
%
$
37,687
$
31,899
$
5,788
18.1
%
Three Months Ended
September 30,
Increase/Decrease
Nine Months
Ended
September 30,
Increase/Decrease
(In thousands)
2023
2022
$ Change
% Change
2023
2022
$ Change
% Change
Domestic
$
8,652
$
6,997
$
1,655
23.7
%
$
27,660
$
22,492
$
5,168
23.0
%
International
3,324
2,117
1,207
57.0
%
10,027
9,407
620
6.6
%
Total
$
11,976
$
9,114
$
2,862
31.4
%
$
37,687
$
31,899
$
5,788
18.1
%
Third Quarter 2023
Results:
Total revenue for the three months ended September 30, 2023
increased $2.9 million, or 31% year-over-year, to $12.0 million,
compared to $9.1 million in the prior year period. Advanced Energy
segment sales increased $2.8 million, or 39% year-over-year, to
$9.8 million. OEM segment sales increased $0.1 million, or 5%
year-over-year to $2.1 million. The increase in Advanced Energy
sales was primarily due to growth in domestic sales, which was
driven by sales of the Company's recently launched Apyx One Console
to both new and existing customers. Advanced Energy sales also
benefited from growth in international generator and handpiece
sales. The increase in OEM sales was due to increased sales volume
to existing customers. For the third quarter of 2023, revenue in
the United States increased $1.7 million, or 24% year-over-year, to
$8.7 million, and international revenue increased $1.2 million, or
57% year-over-year, to $3.3 million.
Gross profit for the three months ended September 30, 2023,
increased $2.2 million, or 39% year-over-year, to $8.0 million,
compared to $5.8 million in the prior year period. Gross profit
margin for the three months ended September 30, 2023, was 66.6%,
compared to 63.2% in the prior year period. The increase in gross
profit margins for the three months ended September 30, 2023 from
the prior year period is primarily attributable to changes in the
sales mix between the Company's two segments, with the Advanced
Energy segment comprising a higher percentage of total sales and
sales mix within our Advanced Energy segment. These increases were
partially offset by geographic mix within the Advanced Energy
segment, with international sales comprising a higher percentage of
total sales, and by product mix.
Operating expenses for the three months ended September 30, 2023
increased $1.1 million, or 9% year-over-year, to $12.6 million,
compared to $11.5 million in the prior year period. The
year-over-year change in operating expenses was driven by a $0.8
million increase in salaries and related costs, a $0.2 million
increase in selling, general and administrative expenses and a $0.2
million increase in research and development expenses. These
increases were partially offset by a $0.1 million decrease in
professional services.
Income tax (benefit) expense for the three months ended
September 30, 2023 and 2022 was $(0.3) million and $0.1 million,
respectively.
Net loss attributable to stockholders for the three months ended
September 30, 2023 was $4.6 million, or $0.13 per share, compared
to $5.8 million, or $0.17 per share, in the prior year period.
Adjusted EBITDA loss for the three months ended September 30,
2023 and 2022 was approximately $3.1 million and $3.9 million,
respectively.
First Nine Months of 2023
Results:
Total revenue for the nine months ended September 30, 2023,
increased $5.8 million, or 18%, to $37.7 million, compared to $31.9
million in the prior year period. Advanced Energy segment sales
increased $5.0 million, or 19% year-over-year, to $31.2 million,
compared to $26.3 million in the prior year period. OEM segment
sales increased $0.8 million, or 14% year-over-year, to $6.4
million, compared to $5.6 million in the prior year period. For the
first nine months of 2023, revenue in the United States increased
$5.2 million, or 23% year-over-year, to $27.7 million, and
international revenue increased $0.6 million, or 7% year-over-year,
to $10.0 million. The increase in Advanced Energy sales was driven
by domestic sales of the Company’s recently launched Apyx One
Console to both new and existing customers. The increase in OEM
sales was due to increased sales volume to existing customers, as
well as incremental new sales upon the commencement of the supply
arrangement related to the completion of the development portion of
some of the Company’s OEM development agreements.
Net loss attributable to stockholders for the nine months ended
September 30, 2023 was $9.1 million, or $0.26 per share, compared
to $17.1 million, or $0.50 per share, in the prior year period.
Included in net loss for the nine months ended September 30, 2023
was a $2.7 million gain on the sale-leaseback of our Clearwater, FL
facility.
Full Year 2023 Financial
Outlook:
The Company is updating its financial guidance for the year
ending December 31, 2023 to:
- Total revenue in the range of $53.0 million to $54.0 million,
representing growth of approximately 19% to 21% year-over-year,
compared to total revenue of $44.5 million for the year ended
December 31, 2022. The Company’s prior guidance range for total
revenue was $59.0 million to $62.0 million, representing growth of
33% to 39% year-over-year.
- Total revenue guidance assumes:
- Advanced Energy revenue in the range of $44.5 million to $45.5
million, representing growth of approximately 21% to 24%
year-over-year, compared to Advanced Energy revenue of $36.8
million for the year ended December 31, 2022. The Company’s prior
guidance range for Advanced Energy revenue was $51.0 million to
$54.0 million, representing growth of 39% to 47%
year-over-year.
- OEM revenue of approximately $8.5 million, representing growth
of approximately 10% year-over-year, compared to $7.7 million for
the year ended December 31, 2022. The Company’s prior guidance for
OEM revenue was $8.0 million, representing growth of 4%
year-over-year.
- Net loss attributable to stockholders of approximately $16
million, compared to $23.2 million for the year ended December 31,
2022. The Company’s prior guidance for net loss attributable to
stockholders was approximately $10.5 million.
Conference Call Details:
Management will host a conference call at 8:00 a.m. Eastern Time
on November 9, 2023 to discuss the results of the quarter, and to
host a question and answer session. To listen to the call by phone,
interested parties may dial 877-407-8289 (or 201-689-8341 for
international callers) and provide access code 13741467.
Participants should ask for the Apyx Medical Corporation Call. A
live webcast of the call will be accessible via the Investor
Relations section of the Company’s website and at:
https://event.choruscall.com/mediaframe/webcast.html?webcastid=wXKixaYt
A telephonic replay will be available approximately three hours
after the end of the call through the following two weeks. The
replay can be accessed by dialing 877-660-6853 for U.S. callers or
201-612-7415 for international callers and using the replay access
code: 13741467. The webcast will be archived on the Investor
Relations section of the Company’s website.
About Apyx Medical
Corporation:
Apyx Medical Corporation is an advanced energy technology
company with a passion for elevating people’s lives through
innovative products, including its Helium Plasma Technology
products marketed and sold as Renuvion® in the cosmetic surgery
market and J-Plasma® in the hospital surgical market. Renuvion® and
J-Plasma® offer surgeons a unique ability to provide controlled
heat to tissue to achieve their desired results. The Company also
leverages its deep expertise and decades of experience in unique
waveforms through OEM agreements with other medical device
manufacturers. For further information about the Company and its
products, please refer to the Apyx Medical Corporation website at
www.ApyxMedical.com.
Cautionary Statement on Forward-Looking
Statements:
Certain matters discussed in this release and oral statements
made from time to time by representatives of the Company may
constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 and the Federal
securities laws. Although the Company believes that the
expectations reflected in such forward-looking statements are based
upon reasonable assumptions, it can give no assurance that its
expectations will be achieved.
All statements other than statements of historical fact are
statements that could be deemed forward-looking statements,
including but not limited to, projections of net revenue, margins,
expenses, net earnings, net earnings per share, or other financial
items; projections or assumptions concerning the possible receipt
by the Company of any regulatory approvals from any government
agency or instrumentality including but not limited to the U.S.
Food and Drug Administration (the “FDA”), supply chain disruptions,
component shortages, manufacturing disruptions or logistics
challenges; or macroeconomic or geopolitical matters and the impact
of those matters on the Company’s financial performance.
Forward-looking statements and information are subject to
certain risks, trends and uncertainties that could cause actual
results to differ materially from those projected. Many of these
factors are beyond the Company’s ability to control or predict.
Important factors that may cause the Company’s actual results to
differ materially and that could impact the Company and the
statements contained in this release include but are not limited to
risks, uncertainties and assumptions relating to the regulatory
environment in which the Company is subject to, including the
Company’s ability to gain requisite approvals for its products from
the FDA and other governmental and regulatory bodies, both
domestically and internationally; the impact of the March 14, 2022
FDA Safety Communication on our business and operations; sudden or
extreme volatility in commodity prices and availability, including
supply chain disruptions; changes in general economic, business or
demographic conditions or trends; changes in and effects of the
geopolitical environment; liabilities and costs which the Company
may incur from pending or threatened litigations, claims, disputes
or investigations; and other risks that are described in the
Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2022 and the Company’s other filings with the
Securities and Exchange Commission. For forward-looking statements
in this release, the Company claims the protection of the safe
harbor for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995. The Company assumes no
obligation to update or supplement any forward-looking statements
whether as a result of new information, future events or
otherwise.
APYX MEDICAL
CORPORATION
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except per
share data)
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Sales
$
11,976
$
9,114
$
37,687
$
31,899
Cost of sales
3,998
3,357
12,857
11,009
Gross profit
7,978
5,757
24,830
20,890
Other costs and expenses:
Research and development
1,276
1,061
3,596
3,289
Professional services
1,831
1,936
5,165
6,611
Salaries and related costs
4,667
3,871
14,770
13,944
Selling, general and administrative
4,841
4,671
15,474
14,675
Total other costs and expenses
12,615
11,539
39,005
38,519
Gain on sale-leaseback
—
—
2,692
—
Loss from operations
(4,637
)
(5,782
)
(11,483
)
(17,629
)
Interest income
248
73
478
93
Interest expense
(585
)
(1
)
(1,362
)
(12
)
Other (expense) income, net
(19
)
(35
)
622
551
Total other (expense) income,
net
(356
)
37
(262
)
632
Loss before income taxes
(4,993
)
(5,745
)
(11,745
)
(16,997
)
Income tax (benefit) expense
(318
)
50
(2,519
)
216
Net loss
(4,675
)
(5,795
)
(9,226
)
(17,213
)
Net loss attributable to non-controlling
interest
(46
)
(31
)
(120
)
(78
)
Net loss attributable to
stockholders
$
(4,629
)
$
(5,764
)
$
(9,106
)
$
(17,135
)
Loss per share:
Basic and Diluted
$
(0.13
)
$
(0.17
)
$
(0.26
)
$
(0.50
)
Weighted average number of shares
outstanding - basic and diluted
34,642
34,569
34,614
34,488
APYX MEDICAL
CORPORATION
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except share
and per share data)
September 30,
2023
(Unaudited)
December 31,
2022
ASSETS
Current assets:
Cash and cash equivalents
$
22,134
$
10,192
Trade accounts receivable, net of
allowance of $652 and $668
12,648
10,602
Income tax receivables
—
7,545
Other receivables
596
99
Inventories, net of provision for
obsolescence of $611 and $457
11,285
11,797
Prepaid expenses and other current
assets
3,487
2,737
Total current assets
50,150
42,972
Property and equipment, net
2,093
6,761
Operating lease right-of-use assets
5,274
710
Finance lease right-of-use assets
74
115
Other assets
1,855
1,217
Total assets
$
59,446
$
51,775
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
2,050
$
2,669
Accrued expenses and other liabilities
7,914
8,928
Current portion of operating lease
liabilities
310
216
Current portion of finance lease
liabilities
20
37
Total current liabilities
10,294
11,850
Term loan, net
9,009
—
Long-term operating lease liabilities
4,992
470
Long-term finance lease liabilities
58
73
Long-term contract liabilities
1,326
1,408
Other liabilities
181
181
Total liabilities
25,860
13,982
EQUITY
Preferred Stock, $0.001 par value;
10,000,000 shares authorized; 0 issued and outstanding as of
September 30, 2023 and December 31, 2022
—
—
Common stock, $0.001 par value; 75,000,000
shares authorized; 34,643,855 issued and outstanding as of
September 30, 2023 and 34,597,822 issued and outstanding as of
December 31, 2022
35
35
Additional paid-in capital
78,154
73,282
Accumulated deficit
(44,841
)
(35,735
)
Total stockholders' equity
33,348
37,582
Non-controlling interest
238
211
Total equity
33,586
37,793
Total liabilities and equity
$
59,446
$
51,775
APYX MEDICAL CORPORATION
RECONCILIATION OF GAAP NET LOSS RESULTS TO NON-GAAP ADJUSTED
EBITDA (Unaudited)
Use of Non-GAAP Financial Measure
We present the following non-GAAP measure because we believe
such measure is a useful indicator of our operating performance.
Our management uses this non-GAAP measure principally as a measure
of our operating performance and believes that this measure is
useful to investors because it is frequently used by analysts,
investors and other interested parties to evaluate companies in our
industry. We also believe that this measure is useful to our
management and investors as a measure of comparative operating
performance from period to period. The non-GAAP financial measure
presented in this release should not be considered as a substitute
for, or preferable to, the measures of financial performance
prepared in accordance with GAAP.
The Company has presented the following non-GAAP financial
measure in this press release: adjusted EBITDA. The Company defines
adjusted EBITDA as its reported net income (loss) attributable to
stockholders (GAAP) plus income tax expense (benefit), interest,
depreciation and amortization, stock-based compensation expense and
other significant non-recurring items.
(In thousands)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Net loss attributable to stockholders
$
(4,629
)
$
(5,764
)
$
(9,106
)
$
(17,135
)
Interest income
(248
)
(73
)
(478
)
(93
)
Interest expense
585
1
1,362
12
Income tax (benefit) expense
(318
)
50
(2,519
)
216
Depreciation and amortization
186
216
540
688
Stock based compensation
1,351
1,692
4,200
5,056
Gain on sale-leaseback
—
—
(2,692
)
—
Adjusted EBITDA
$
(3,073
)
$
(3,878
)
$
(8,693
)
$
(11,256
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231109366715/en/
Investor Relations:
ICR Westwicke on behalf of Apyx Medical Corporation Mike
Piccinino, CFA investor.relations@apyxmedical.com
Apyx Medical (NASDAQ:APYX)
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