CTSO: UPDATE: CytoSorbents reports 4th quarter and fiscal 2022 financial and operating results which showed positive revenue growth on a Core Product constant currency basis.
NASDAQ:CTSO
READ THE FULL CTSO RESEARCH REPORT
CytoSorbents (NASDAQ:CTSO) reported 4th quarter and full year 2022 results on March 9th with results largely in line with expectations. 4th quarter revenues declined 13.0% to $9.4 million from $10.8 million in the prior year period. Product sales declined to $7.6 million from $9.7 million in the 4th quarter of 2021, however that prior quarterly period contained approximately $1.7 million in Covid-19 related product sales which did not reoccur in the 4th quarter of 2022. Substantially all of the company’s product sales are located in international markets currently and on a constant currency basis, product sales increased 6.0% in the quarter. Product sales also improved on a sequential basis increasing 18.0% from the 3rd quarter of 2022. The product gross margin decreased to 75% from 78% in the prior year period largely due to manufacturing inefficiencies related to the relocation of manufacturing operations to a new facility.
For the full fiscal year 2022, revenues declined 20.0% to $34.7 million from $43.2 million in the prior year period. Product sales declined to $29.4 million from $40.1 million in 2021, however that prior period contained approximately $6.3 million in Covid-19 related product sales which were only $0.3 million in 2022. On a constant currency basis, core products sales declined only 4.6%. The product gross margin decreased to 70.0% from 80.0% in the prior year period largely due to manufacturing inefficiencies.
The company maintains a strong balance sheet with unrestricted cash and cash equivalents of $22.1million and $5.0 million in long-term debt as of December 31, 2022. The company also has $25 million in availability under its ATM equity facility as well as $10 million of debt availability under a bank term loan agreement. The grant contract backlog at year-end was approximately $11.5 million. The company also has net operating loss carryforwards of $27.2 million to help shield against future taxes.
At the beginning of the 2nd quarter of 2022, the company began introducing tighter cost controls and have reduced headcount by 10% in order to reduce the cash burn rate. The reduction in product sales and product gross margins as well as delays in realizing headcount reduction cost savings in Europe have offset these cost cutting efforts. The company is currently actively engaged in making further reductions to total operating expenses to reduce the future cash burn. These include a major reduction in capital expenditures, restoration of gross margins to the 75%-80% range, reduced fixed overhead, realization of cost savings from work force reductions and significantly reduced clinical trial expenses. It is expected that the quarterly burn rate starting in 2023 will be in the $4.0-$4.5 million range. The company believes they have sufficient cash to fund operations at least until the 4th quarter of 2023.
We are maintaining our Q1 2023 EPS estimate of ($0.08) and our full year 2023 estimate of ($0.28), which may prove to be conservative if the company’s major cost saving initiatives are greater than expected. There are no changes to our valuation target of $6.00 at this time as we believe that over the long-term, the company can generate substantial levels of free cash flow, particularly if the approval and commercialization of DrugSorb-ATR is successful.
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