Acutus Medical Reports Third Quarter 2020 Results

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CARLSBAD, Calif., Nov. 12, 2020 (GLOBE NEWSWIRE) -- Acutus Medical, Inc. (“Acutus”) (Nasdaq: AFIB), an arrhythmia management company focused on improving the way cardiac arrhythmias are diagnosed and treated, today reported results for the third quarter of 2020.

Recent Highlights:

  • Reported revenue of $3.2 million in the third quarter ended September 30, 2020, a 180% increase sequentially and a 391% increase over the same quarter last year.
  • Increased worldwide installed base of second generation AcQMap consoles to 37 as of September 30, 2020, up from 21 at the end of the prior quarter – bringing the total installed base of AcQMap consoles to 49 as of September 30, 2020.
  • Filled a key role with the addition of Dr. Steve Mickelson as our Chief Translational Science Officer. Dr. Mickelsen is a prominent figure in the emerging area of Pulsed Field Ablation.

Vince Burgess, President & CEO of Acutus, said, “In the third quarter we saw strong execution by our commercial team and made considerable progress on key development and operational fronts. Despite headwinds from COVID-19, we continued to add new customers and aggressively upgraded existing customers to our groundbreaking second-generation electrophysiology mapping system, AcQMap. Bringing on a new customer in our business requires extensive cross-functional collaboration with our customers and many members of our internal team. The growth of our installed base achieved this quarter demonstrates enthusiastic demand for our technology and terrific execution from our entire team during uniquely challenging times.   As we look to the future, we are highly confident that Acutus is well positioned for continued growth in the years ahead.”

Third Quarter 2020 Financial Results
Revenue was $3.2 million for the third quarter of 2020, compared to $1.1 million for the prior quarter and $0.6 million in the third quarter last year. The improvement over the same quarter last year was driven by increased direct sales of Acutus disposables, sales of our AcQMap consoles, and distributor sales through our partner Biotronik as we continue to operationalize this foundational relationship.

Gross margin was negative 62% for the third quarter of 2020, compared with negative 251% in the same quarter last year. The improvement was driven by greater production volumes and efficiencies in labor and manufacturing overhead absorption when compared to the same period last year. Also affecting margins in the quarter were our first ever console sales that are paid for via long-term disposables commitment deals. These types of sales, which will be common at Acutus going forward, allocate a portion of the future disposables’ revenue stream and all of the console COGS at the time of the placement. It is typical for these transactions to result in unfavorable gross margins on the up-front placement of the console that is more than offset by a committed, predictable annuity stream of disposables sales in future quarters. We continue to make significant investments in our manufacturing infrastructure to support our aggressive launch expectations and position us to scale in-house production as our business grows. As volumes increase over time, and the benefit of console sales accrues, we expect to see continuous improvements to our margin profile.

Operating expenses were $24.3 million for the third quarter of 2020, compared with $29.5 million in the same quarter last year. The decrease was driven by a $15.0 million payment for the acquisition and in-licensing of the force sensing product line from Biotronik made during the third quarter of 2019. This decrease was partially offset by the expansion of our commercial team in conjunction with our full commercial launch, various R&D projects related to console enhancements and catheter development programs, and increased G&A costs incurred associated with our initial public offering and becoming a public company.

Net loss on a GAAP basis was $31.3 million for the third quarter of 2020 and net loss per share was $1.95 on a weighted average basic and diluted outstanding share count of 16.1 million, compared to $32.1 million and a net loss per share of $47.21 on a weighted average basic and diluted outstanding share count of 0.7 million in the same period of the prior year. Excluding non-cash stock-based compensation expense, remeasurement of our warrant liability, and changes in the fair value of contingent consideration, our non-GAAP net loss for the third quarter of 2020 was $21.1 million, or $0.91 per share, compared to $30.6 million, or $1.86 per share, after giving effect to the pro forma conversion of our convertible preferred stock for the third quarter of 2019.

Cash, cash equivalents, marketable securities and restricted cash were $167.0 million as of September 30, 2020, which includes the $166.3 million net proceeds from our IPO, which closed on August 10, 2020.

Outlook and COVID-19
Due to uncertainty surrounding the COVID-19 pandemic, Acutus Medical will not provide financial guidance for the remainder of 2020 at this time. Management will continue to evaluate its guidance policies and anticipates providing an update at the time of its fourth quarter earnings announcement, to the extent practicable, based on available information at that time.

Non-GAAP Financial Measures
This press release includes references to non-GAAP net loss and non-GAAP net loss per share, which are non-GAAP financial measures, to provide information that may assist investors in understanding the Company’s financial results and assessing its prospects for future performance. We believe these non-GAAP financial measures are important indicators of our operating performance because they exclude items that are non-cash accounting line items unrelated to, and may not be indicative of, our core operating results. These non-GAAP financial measures, as we calculate them, may not necessarily be comparable to similarly titled measures of other companies and may not be appropriate measures for comparing the performance of other companies relative to the Company. These non-GAAP financial results are not intended to represent and should not be considered to be more meaningful measures than, or alternatives to, measures of operating performance as determined in accordance with GAAP. To the extent we utilize such non-GAAP financial measures in the future, we expect to calculate them using a consistent method from period to period. A reconciliation of each of the most directly comparable GAAP financial measures to the non-GAAP financial measures has been provided under the heading “Reconciliation of GAAP results to Non-GAAP Results” in the financial statement tables attached to this press release.

Webcast and Conference Call Information
Acutus Medical will host a conference call to discuss the third quarter financial results after market close on Thursday, November 12, 2020 at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time. The conference call can be accessed live over the phone (833) 570-1131 for U.S. callers or (914) 987-7078 for international callers, using conference ID: 6990208. The live webinar can be accessed at https://ir.acutusmedical.com.

About Acutus Medical, Inc.
Acutus Medical is an arrhythmia management company focused on improving the way cardiac arrhythmias are diagnosed and treated. Acutus is committed to advancing the field of electrophysiology with a unique array of products and technologies which will enable more physicians to treat more patients more efficiently and effectively. Through internal product development, acquisitions, and global partnerships, Acutus has established a global sales presence delivering a broad portfolio of highly differentiated electrophysiology products. Acutus Medical’s goal is to provide its customers with a complete solution for catheter-based treatment of cardiac arrhythmias in each of its geographic markets. Founded in 2011, Acutus is based in Carlsbad, California.

Caution Regarding Forward-Looking Statements
This press release includes statements that may constitute “forward-looking” statements, usually containing the words “believe,” “estimate,” “project,” “expect” or similar expressions. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, the Company's ability to continue to manage expenses and cash burn rate at sustainable levels, continued acceptance of the Company's products in the marketplace, the effect of global economic conditions on the ability and willingness of customers to purchase its systems and the timing of such purchases, competitive factors, changes resulting from healthcare policy in the United States, including changes in government reimbursement of procedures, dependence upon third-party vendors and distributors, timing of regulatory approvals, the impact of the coronavirus (COVID-19) pandemic and our response to it, and other risks discussed in the Company's periodic and other filings with the Securities and Exchange Commission. By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release, except as required by law.

Investor Contact:
Caroline Corner
Westwicke ICR
D: 415-314-1725
Caroline.corner@westwicke.com

Holly Windler
M: 619-929-1275
media@acutusmedical.com


Acutus Medical, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)

     
 September 30, December 31, 
 2020 2019 
 (unaudited)   
ASSETS:    
Current assets:    
Cash and cash equivalents$58,302  $9,452  
Marketable securities, short-term 99,742   62,351  
Restricted cash 150   150  
Accounts receivable 1,893   263  
Inventory 10,932   8,424  
Prepaid expenses and other current assets 4,635   1,816  
Total current assets 175,654   82,456  
     
Marketable securities, long-term 8,789   -  
Property and equipment, net 9,940   4,427  
Right-of-use asset, net 1,838   2,341  
Intangible assets, net 3,780   4,110  
Goodwill 12,026   12,026  
Other assets 482   95  
Total assets$ 212,509  $ 105,455  
     
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)    
Current liabilities:    
Accounts payable$4,723  $3,882  
Accrued liabilities 6,500   10,076  
Contingent consideration, short-term 4,000   8,200  
Operating lease liabilities, short-term 907   833  
Common and preferred stock warrant liability -   8,919  
Total current liabilities 16,130   31,910  
     
Operating lease liabilities, long-term 1,365   2,054  
Long-term debt 38,762   38,244  
Contingent consideration, long-term 3,600   5,700  
Other long-term liabilities 8   -  
Total liabilities 59,865   77,908  
     
Commitments and contingencies    
     
Convertible preferred stock    
     
     
Series A convertible preferred stock -   3,059  
Series B convertible preferred stock -   40,685  
Series C convertible preferred stock -   74,575  
Series D convertible preferred stock -   135,039  
     
Stockholders' equity (deficit)    
Preferred stock -   -  
Common stock 28   1  
Additional paid-in capital 484,162   33,252  
Accumulated deficit (331,613)  (259,034) 
Accumulated other comprehensive income (loss) 67   (30) 
Total stockholders' equity (deficit) 152,644   (225,811) 
Total liabilities, convertible preferred stock and stockholders' equity (deficit)$ 212,509  $ 105,455  
     


Acutus Medical, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except share and per share amounts)
(Unaudited)

   Three Months Ended September 30, Nine Months Ended September 30, 
   2020 2019 2020 2019 
 Revenue $3,173  $646  $5,890  $2,167  
           
 Costs and operating expenses:         
 Cost of products sold  5,141   2,267   10,998   6,878  
 Research and development  8,343   5,865   24,492   15,489  
 Research and development - license acquired  -   15,000   -   15,000  
 Selling, general and administrative  15,833   7,978   35,193   18,998  
 Change in fair value of contingent consideration  118   700   (1,466)  700  
 Total costs and operating expenses  29,435   31,810   69,217   57,065  
 Loss from operations  (26,262)  (31,164)  (63,327)  (54,898) 
           
 Other income (expense):         
 Change in fair value of warrant liability and embedded derivative  (3,683)  (3)  (5,555)  (608) 
 Loss on debt extinguishment  -   (49)  -   (1,447) 
 Interest income  23   525   393   733  
 Interest expense  (1,366)  (1,394)  (4,090)  (20,905) 
 Total other expense, net  (5,026)  (921)  (9,252)  (22,227) 
 Net loss  $(31,288) $(32,085) $(72,579) $(77,125) 
           
 Other comprehensive income (loss)         
 Unrealized (loss) gain on marketable securities  (9)  40   (50)  47  
 Foreign currency translation adjustment  78   (45)  147   (57) 
 Comprehensive loss $ (31,219) $ (32,090) $ (72,482) $ (77,135) 
           
 Net loss per common share, basic and diluted $(1.95) $(47.21) $(12.36) $(115.66) 
 Weighted average shares outstanding, basic and diluted  16,080,467   679,591   5,870,861   666,823  
           


Acutus Medical, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)

   Nine Months Ended September 30, 
   2020 2019 
 Cash flows from operating activities     
 Net loss $(72,579) $(77,125) 
 Adjustments to reconcile net loss to net cash used in operating activities:     
 Depreciation expense  1,754   1,676  
 Amortization of intangible assets  330   125  
 Stock-based compensation expense  9,272   2,174  
 Amortization of premiums/(accretion of discounts) on marketable securities, net  113   (100) 
 Amortization of debt issuance costs  518   17,438  
 Amortization of right-of-use assets  507   470  
 Research and development - license acquired  -   15,000  
 Gain on disposal of property and equipment  -   (1) 
 Loss on debt extinguishment  -   1,447  
 Change in fair value of warrant liability and embedded derivative  5,555   608  
 Change in fair value of contingent consideration  (1,466)  700  
 Changes in operating assets and liabilities, net of effect from business combination:    
 Accounts receivable  (1,630)  (697) 
 Inventory  (1,865)  (3,829) 
 Prepaid expenses and other current assets  (2,729)  (306) 
 Other assets  (387)  (8) 
 Accounts payable  753   2,873  
 Accrued liabilities  1,423   9,268  
 Operating lease liabilities  (615)  (536) 
 Other long-term liabilities  8   -  
 Net cash used in operating activities  (61,038)  (30,823) 
       
 Cash flows from investing activities     
 Purchases of available-for-sale marketable securities  (108,528)  (68,735) 
 Sales of available-for-sale marketable securities  17,095   -  
 Maturities of available-for-sale marketable securities  45,000   11,550  
 Purchases of property and equipment  (7,822)  (683) 
 Purchase of research and development license  -   (10,000) 
 Cash paid, net of cash acquired for the Rhythm Xience Acquisition  -   (3,000) 
 Net cash used in investing activities  (54,255)  (70,868) 
       
 Cash flows from financing activities     
 Proceeds from issuance of debt and warrants  -   77,000  
 Repayment of debt  -   (15,000) 
 Payment of issuance and extinguishment costs related to debt  -   (2,332) 
 Payment of contingent consideration  (2,636)  -  
 Proceeds from issuance of convertible preferred stock, net of issuance costs  -   66,567  
 Proceeds from issuance of common stock upon IPO, net of issuance costs  166,286   -  
 Proceeds from stock options exercises  350   76  
 Net cash provided by financing activities  164,000   126,311  
       
 Effect of exchange rate changes on cash, cash equivalents and restricted cash  143   (50) 
       
 Net change in cash, cash equivalents and restricted cash  48,850   24,570  
 Cash, cash equivalents and restricted cash, at the beginning of the period  9,602   9,775  
 Cash, cash equivalents and restricted cash, at the end of the period $ 58,452  $ 34,345  
       

 


Acutus Medical, Inc. and Subsidiaries

Reconciliation of GAAP Results to Non-GAAP Results
(in thousands, except share and per share data)
(Unaudited)

       
   Three Months Ended September 30, Nine Months Ended September 30, 
   2020 2019 2020 2019 
 GAAP net loss $(31,288) $(32,085) $(72,579) $(77,125) 
 Stock-based compensation  6,374   812   9,272   2,174  
 Change in fair value of contingent consideration  118   700   (1,466)  700  
 Change in fair value of warrant liability and embedded derivative  3,683   3   5,555   608  
 Non-GAAP net loss $(21,113) $(30,569) $(59,218) $(73,643) 
       
       
       
           
 Denominator       
 Weighted average shares of common stock outstanding used in GAAP per share calculations  16,080,467   679,591   5,870,861   666,823  
 Adjustments to reflect the assumed conversion of convertible preferred stock (1)  7,205,624   15,712,489   13,373,360   11,290,142  
 Shares used in non-GAAP per share calculations  23,286,091   16,392,080   19,244,221   11,956,965  
           
 GAAP net loss per share $(1.95) $(47.21) $(12.36) $(115.66) 
 Non-GAAP net loss per share $(0.91) $(1.86) $(3.08) $(6.16) 
           
 (1) Assumes the conversion of outstanding shares of convertible preferred stock into shares of common stock as if such conversion had occurred at the beginning of the period or their issuance dates, if later.

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