Intersect ENT, Inc. (Nasdaq: XENT), a global ear, nose and
throat (“ENT”) medical technology leader dedicated to transforming
patient care, today reported financial results for the third
quarter ended September 30, 2021.
Total revenue was $24.4 million for the third quarter of 2021,
up 7%, compared to $22.7 million for the same period of 2020.
Gross profit for the third quarter of 2021 was $19.3 million and
gross margin was 79.2%, compared to gross profit of $14.9 million
and gross margin of 65.5% for the same period of 2020. Excluding
the impact of intangible asset amortization, adjusted gross profit
and adjusted gross margin for the third quarter of 2021 was $19.8
million and 81.2%, respectively. There were no adjustments in the
same period of 2020. Gross margin increased year-over-year due to
increased production levels.
Operating expenses for the third quarter of 2021 were $36.2
million, compared to $26.3 million in the same period of 2020.
R&D expenses increased to $6.7 million from $4.6 million for
the same period of 2020. SG&A expenses increased to $29.5
million from $21.7 million for the same period of 2020. The
year-on-year increase in SG&A expenses was principally driven
by one-time transaction costs and professional fees associated with
the announced Medtronic transaction.
Net loss for the third quarter of 2021 was $31.8 million, or
$0.95 per share, and adjusted net loss was $16.1 million, or $0.48
per share, compared to a net loss of $11.5 million, or $0.35 per
share, and adjusted net loss of $11.0 million, or $0.34 per share,
in the same period of 2020. Adjusted net loss for the third quarter
of 2021 excludes a $13.0 million loss on embedded derivatives in
our convertible debt associated with an increase in stock price and
the increased probability of a change in control, $2.0 million of
transaction costs primarily associated with the announced Medtronic
transaction, and $0.7 million of intangible asset amortization
expense. Adjusted net loss for the same period of 2020 excludes a
$1.0 million gain on embedded derivatives and $1.5 million in
transaction costs.
The balance of cash, cash equivalents, restricted cash, and
short-term investments as of September 30, 2021 was $99.0 million,
compared to $105.5 million at the start of the year.
Medtronic Transaction Update
On August 6, 2021, Intersect ENT announced that it had entered
into a definitive agreement with Medtronic plc, in which Medtronic
will acquire all outstanding shares of Intersect ENT for $28.25 per
share in an all-cash transaction implying an enterprise value of
approximately $1.1 billion. On September 22, 2021, the Company
received a second request of the Federal Trade Commission (“FTC”)
requesting additional materials regarding the transaction. On
October 8, 2021, Intersect ENT’s shareholders voted to approve the
transaction at a special meeting of the shareholders. Based on this
information, Intersect ENT believes the acquisition remains on
track to close toward the end of Medtronic’s current fiscal year,
April 30, 2022, subject to the satisfaction of customary closing
conditions and various regulatory clearances.
In light of this transaction, Intersect ENT will not host a
conference call to review third quarter financial results.
Non-GAAP Measures vs. GAAP Financial Measures
This release contains financial measures, adjusted gross profit,
adjusted gross margin, and adjusted net loss, that are not
calculated in accordance with U.S. generally accepted accounting
principles (“GAAP”). A reconciliation of non-GAAP to the most
directly comparable GAAP financial measures, is provided in the
financial schedules portion at the end of this press release.
Non-GAAP financial measures differ from GAAP financial measures and
may differ from non-GAAP financial measures with the same or
similar captions that are used by other companies. As such,
non-GAAP financial measures should not be considered a substitute
for, or superior to, financial measures calculated in accordance
with GAAP.
Intersect ENT uses non-GAAP financial measures to analyze its
operating performance and future prospects, develop internal
budgets and financial goals, and to facilitate period-to-period
comparisons. Intersect ENT believes that non-GAAP financial
measures are useful to investors as they reflect an additional way
of viewing aspects of its operations that, when viewed with its
GAAP results, provide a more complete understanding of factors and
trends affecting its business.
About Intersect ENT
Intersect ENT is a global ear, nose and throat medical
technology leader dedicated to transforming patient care. The
Company’s steroid releasing implants are designed to provide
mechanical spacing and deliver targeted therapy to the site of
disease. In addition, Intersect ENT is continuing to expand its
portfolio of products based on the Company’s unique localized
steroid releasing technology and is committed to broadening patient
access to less invasive and more cost-effective care. In October
2020, Intersect ENT acquired Fiagon AG Medical Technologies, a
global leader in electromagnetic surgical navigation solutions with
an expansive portfolio of ENT product offerings, including the
VenSure™ sinus dilation balloon, which is FDA-cleared in the U.S.,
and the CUBE™ Navigation System that complement the Company's
PROPEL® and SINUVA® sinus implants and extend its geographic
reach.
For additional information on the Company or the products
including risks and benefits please visit www.IntersectENT.com. For
more information about PROPEL® (mometasone furoate) sinus implants
and SINUVA® (mometasone furoate) sinus implant, please visit
www.PROPELOPENS.com and www.SINUVA.com.
Intersect ENT®, PROPEL® and SINUVA®, are registered trademarks
of Intersect ENT, Inc. in the U.S. and other countries. VenSure,
CUBE, and VirtuEye have pending trademark applications.
Forward-Looking Statements
The statements in this press release regarding Intersect ENT’s
beliefs regarding the timing of closing of the acquisition of
Intersect ENT by Medtronic are forward-looking statements and are
based on Intersect ENT’s current expectations and inherently
involve significant risks and uncertainties. Actual results and the
timing of events could differ materially from those anticipated in
such forward-looking statements due to risks and uncertainties,
including the risk that the FTC may prevent the transaction from
occurring, and the risk that the closing is subject to satisfaction
of customary closing conditions, which may not be met or waived.
Other risks relating to Intersect ENT are described in Intersect
ENT’s latest 10-Q filed with the Securities and Exchange Commission
(SEC) on August 6, 2021, and available at the SEC’s Internet site
(www.sec.gov). Intersect ENT does not undertake any obligation to
update forward-looking statements and expressly disclaims any
obligation or undertaking to release publicly any updates or
revisions to any forward-looking statements contained herein,
except as required by law.
Intersect ENT, Inc.
Condensed Consolidated
Statements of Operations
(in thousands, except
percentages and per share data)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021
2020
2021
2020
Revenue
$
24,400
$
22,720
$
76,077
$
52,326
Cost of sales
5,087
7,845
21,874
21,612
Gross profit
19,313
14,875
54,203
30,714
Gross margin
79.2
%
65.5
%
71.2
%
58.7
%
Operating expenses:
Selling, general and administrative
29,473
21,702
86,281
67,399
Research and development
6,719
4,551
19,449
13,715
Total operating expenses
36,192
26,253
105,730
81,114
Loss from operations
(16,879
)
(11,378
)
(51,527
)
(50,400
)
Interest expense
(1,760
)
(886
)
(4,544
)
(1,372
)
Other income (expense), net
(13,654
)
799
(13,716
)
(350
)
Loss before income taxes
(32,293
)
(11,465
)
(69,787
)
(52,122
)
Provision for income tax (benefit)
(444
)
—
(1,306
)
—
Net loss
$
(31,849
)
$
(11,465
)
$
(68,481
)
$
(52,122
)
Net loss per share, basic and diluted
$
(0.95
)
$
(0.35
)
$
(2.06
)
$
(1.60
)
Weighted average common shares used to
compute net loss per share, basic and diluted
33,352
32,695
33,187
32,552
Intersect ENT, Inc.
Condensed Consolidated Balance
Sheets
(in thousands)
September 30, 2021
December 31, 2020
(unaudited)
(1)
Assets
Current assets:
Cash, cash equivalents and short-term
investments
$
80,996
$
88,027
Accounts receivable, net
14,402
14,592
Inventories, net
20,057
12,054
Prepaid expenses and other current
assets
4,406
3,494
Total current assets
119,861
118,167
Property and equipment, net
5,416
5,624
Operating lease right-of-use assets
16,038
17,151
Intangible assets, net
18,923
21,193
Goodwill
47,035
46,639
Restricted cash
17,978
17,500
Other non-current assets
2,715
1,107
Total assets
$
227,966
$
227,381
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
10,249
$
6,042
Accrued compensation
14,555
13,559
Deferred acquisition related
consideration, current
20,338
21,071
Other current liabilities
5,646
3,575
Total current liabilities
50,788
44,247
Operating lease liabilities
15,101
17,736
Long-term debt
111,661
63,650
Deferred acquisition related
consideration, non-current
32,806
33,167
Deferred tax liability and other
non-current liabilities
1,396
1,569
Total liabilities
211,752
160,369
Total stockholders’ equity
16,214
67,012
Total liabilities and stockholders’
equity
$
227,966
$
227,381
(1) Amounts have been derived from the December 31, 2020 audited
consolidated financial statements included in the Company’s Annual
Report on Form 10-K filed with the Securities and Exchange
Commission.
Intersect ENT, Inc.
Reconciliation of Condensed
Consolidated GAAP Financial Measures to Non-GAAP Financial
Measures
(in thousands, except per
share data)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021
2020
2021
2020
Non-GAAP Gross Profit
Gross Profit, as reported (GAAP)
$
19,313
$
14,875
$
54,203
$
30,714
Amortization of intangible assets
478
—
1,433
—
Adjusted Gross Profit (non-GAAP)
$
19,791
$
14,875
$
55,636
$
30,714
Non-GAAP Gross Margin
Gross Margin, as reported (GAAP)
79.2
%
65.5
%
71.2
%
58.7
%
Amortization of intangible assets
2.0
—
1.9
—
Adjusted Gross Margin (non-GAAP)
81.2
%
65.5
%
73.1
%
58.7
%
Non-GAAP Net Loss
Net Loss, as reported (GAAP)
$
(31,849
)
$
(11,465
)
$
(68,481
)
$
(52,122
)
Loss (gain) on embedded derivatives
13,034
(1,001
)
12,721
795
Amortization of intangible assets
694
—
2,270
—
Transaction and integration costs
2,014
1,461
4,095
1,866
Restructuring costs
—
—
—
242
Adjusted Net Loss (non-GAAP)
$
(16,107
)
$
(11,005
)
$
(49,395
)
$
(49,219
)
Basic and Diluted Net Loss per
Share:
Net Loss per share, as reported (GAAP)
$
(0.95
)
$
(0.35
)
$
(2.06
)
$
(1.60
)
Adjusted Net Loss per share (non-GAAP)
$
(0.48
)
$
(0.34
)
$
(1.49
)
$
(1.51
)
Shares used to compute GAAP and
Non-GAAP Basic and Diluted Net Loss per Share
33,352
32,695
33,187
32,552
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211102006202/en/
Intersect ENT, Inc. Randy Meier, 650-641-2105
ir@intersectENT.com
Intersect ENT (NASDAQ:XENT)
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