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Vapotherm Reports Second Quarter 2021 Financial Results

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EXETER, N.H., August 09, 2021--(BUSINESS WIRE)--Vapotherm, Inc. (NYSE: VAPO), ("Vapotherm" or the "Company"), a global medical technology company focused on the development and commercialization of its proprietary Vapotherm high velocity therapy® products which are used to treat patients of all ages suffering from respiratory distress, today announced second quarter 2021 financial results.

Second Quarter 2021 Summary

  • Revenue for the second quarter of 2021 was $20.6 million, a decrease of 41% over the second quarter of 2020

  • Revenue for the second quarter of 2021 of $20.6 million reflects an increase of 72% or a two-year compounded annual growth rate of 31% over revenue of $12.0 million in the second quarter of 2019.

  • Worldwide installed base of Precision Flow Hi-VNI systems increased by nearly 1,200 units in the second quarter of 2021

"We were pleased with our performance during the second quarter in which we expanded our worldwide Installed Base to over 32,000 units, which we expect will drive long-term recurring revenue growth," said Joe Army, President and CEO of Vapotherm. "For the second half of 2021, we will educate our new Customers on how to use High Velocity Therapy for the treatment of the full spectrum of respiratory distress and continue to grow the Installed Base. We will also launch our next generation technology platform, HVT 2.0. and our new digital offering, Vapotherm Access Post Care."

Results for the Three Months June 30, 2021

The following table reflects the Company’s net revenue for the three months ended June 30, 2021 and 2020:

Three Months Ended June 30,

2021

2020

Change

(in thousands, except percentages)

Amount

% of Revenue

Amount

% of Revenue

$

%

Revenue

Capital (product & lease revenue)

$

6,172

30.0

%

$

21,450

61.0

%

$

(15,278

)

-71.2

%

Disposables

12,794

62.0

%

13,163

37.5

%

(369

)

-2.8

%

Service and other

1,659

8.0

%

539

1.5

%

1,120

207.8

%

Total net revenue

$

20,625

100.0

%

$

35,152

100.0

%

$

(14,527

)

-41.3

%

Net revenue for the second quarter of 2021 was $20.6 million. Total capital equipment revenue, including product and lease revenue, decreased compared to the second quarter of 2020. This decrease was primarily due to reduced COVID-19 related demand for our capital equipment, partially offset by increased average selling prices in the United States. Total disposable revenue decreased compared to the second quarter of 2020, primarily driven by reduced COVID-19 related demand and lower respiratory census in the U.S. as measured by respiratory related discharges as compared to historical levels. This decrease was partially offset by higher demand in our International markets due to continued COVID-19 pandemic demand, along with higher average selling prices in the United States.

Revenue information by geography is summarized as follows:

Three Months Ended June 30,

2021

2020

Change

(in thousands, except percentages)

Amount

% of Revenue

Amount

% of Revenue

$

%

United States

$

11,330

54.9

%

$

25,682

73.1

%

$

(14,352

)

-55.9

%

International

9,295

45.1

%

9,470

26.9

%

(175

)

-1.8

%

Total net revenue

$

20,625

100.0

%

$

35,152

100.0

%

$

(14,527

)

-41.3

%

U.S. revenue decreased significantly due to reduced COVID-19 related demand for our capital equipment and disposables, partially offset by increased capital equipment and disposables average selling prices. International revenue decreased slightly in the second quarter of 2021 primarily due to reduced demand for our capital equipment due to reduced COVID-19 hospitalization rates in the European Union, partially offset by increased disposables demand.

Gross profit for the second quarter of 2021 was 9.4 million. Gross margin was 45.6% in the second quarter of 2021 compared to 50.1% in the second quarter of 2020. The decrease in gross margin is primarily due to overhead and labor absorption due to lower volumes. Gross profit was also negatively impacted due to a shift in revenue mix to International revenue partially offset by a shift to disposable revenue versus capital equipment revenue relative to the second quarter of 2020.

Operating expenses were $26.0 million in the second quarter of 2021, an increase of 1.6 million as compared to $24.4 million in the same period last year. The increase in operating expenses was primarily due to an increase in research and development and general and administrative expenses partially offset by reduced sales and marketing expenses.

Net loss for the second quarter of 2021 was $17.3 million, or $0.67 per share, compared to $8.0 million, or $0.35 per share, in the second quarter of 2020. Net loss per share was based on 25,887,313 and 23,090,613 weighted average shares outstanding for the second quarter of 2021 and 2020, respectively.

Adjusted EBITDA was negative $12.3 million for the second quarter of 2021 as compared to negative $4.3 million for the second quarter of 2020. The increase in Adjusted EBITDA loss was primarily due to a reduction in revenue on a year over year basis.

Cash Position

Cash and cash equivalents were $81.5 million as of June 30, 2021, $93.8 million as of March 31, 2021 and $113.7 million as of December 31, 2020.

Fiscal 2021 Outlook

As previously communicated, the Company expected light capital sales in the second half of the year due to reduced capital budgets. However, the Company is currently seeing increased demand for its capital units and disposables in certain U.S. geographies due to the impact of COVID-19 variants. Therefore, the Company expects to see near similar worldwide revenue levels in the third quarter as it did in the second quarter driven by COVID-19 demand in the U.S. while the Company expects International revenue to grow by about 30% over the third quarter of 2019. It continues to be difficult to predict the timing, duration and impact of COVID-19 on hospitalizations around the world and, to the extent the impact of COVID-19 deviates from the Company’s expectations, its full year revenue forecast would be impacted. Lastly, given the significant expected year over year decrease in revenue and production volumes, especially related to capital equipment, the Company expects full year gross margins to decrease year over year before improving next year to levels above 2020 levels.

The Company now expects full year revenue to be between $85 million and $91 million, which represents an increase of 83% over 2019 revenue and a two-year compounded annual growth rate of 35% at the mid-point of this range. This new revenue guidance reflects an update from previously issued full year revenue guidance of $82 million to $88 million. The Company continues to expect full year gross margins of 46% to 48%. The Company now expects full year operating expenses of $99 million to $102 million compared to previously issued full year operating expense guidance of $97 million to $99 million due primarily to investments in its new digital business, Vapotherm Access.

Conference Call

Management will host a conference call at 4:30 p.m. Eastern Time on August 9, 2021 to discuss the results of the quarter with a question and answer session. To listen to the conference call on your telephone, please dial (833) 714-0922 for U.S. callers, or +1 (778) 560-2684 for international callers, approximately ten minutes prior to the start time and reference conference code 4833015. To listen to a live webcast, please visit the Investors section of the Vapotherm website at: http://investors.vapotherm.com/events-and-presentations/events. The webcast replay will be available on the Vapotherm website for 12 months following completion of the call. A replay of this conference call will be available by telephone through May 12, 2021 by dialing (800) 585-8367 in the U.S. or +1 (416) 621-4642 outside of the U.S. The replay access code is 4833015.

Website Information

Vapotherm routinely posts important information for investors on the Investor Relations section of its website, http://investors.vapotherm.com/. Vapotherm intends to use this website as a means of disclosing material, non-public information and for complying with Vapotherm’s disclosure obligations under Regulation FD. Accordingly, investors should monitor the Investor Relations section of Vapotherm’s website, in addition to following Vapotherm’s press releases, Securities and Exchange Commission filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through, Vapotherm’s website is not incorporated by reference into, and is not a part of, this document.

Non-GAAP Financial Measures

This press release includes the non-GAAP financial measures of EBITDA and Adjusted EBITDA, which differ from financial measures calculated in accordance with U.S. generally accepted accounting principles ("GAAP"). EBITDA in this press release represents net loss less interest expense, net and depreciation and amortization. Adjusted EBITDA in this release represents EBITDA as adjusted for the impact of foreign currency loss or gain, change in fair value of contingent consideration, and stock-based compensation expense. The Company has reconciled these non-GAAP financial measures with the most directly comparable GAAP financial measures in tables accompanying this release.

These non-GAAP financial measures are presented because the Company believes they are useful indicators of its operating performance. Management uses Adjusted EBITDA principally as a measure of the Company’s operating performance and for planning purposes, including the preparation of the Company’s annual operating budget and financial projections. The Company believes this measure is useful to investors as supplemental information because it is frequently used by analysts, investors and other interested parties to evaluate companies in its industry. The Company believes Adjusted EBITDA is useful to its management and investors as a measure of comparative operating performance from period to period.

These non-GAAP financial measures and should not be considered alternatives to, or superior to, net income or loss as a measure of financial performance or cash flows from operations as a measure of liquidity, or any other performance measure derived in accordance with GAAP. They should not be construed to imply that the Company’s future results will be unaffected by unusual or non-recurring items. In addition, Adjusted EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not reflect certain cash requirements such as tax payments, debt service requirements, capital expenditures and certain other cash costs that may recur in the future. Adjusted EBITDA contains certain other limitations, including the failure to reflect our capital expenditures, cash requirements for working capital needs and cash costs to replace assets being depreciated and amortized. In evaluating Adjusted EBITDA, you should be aware that in the future the Company may incur expenses that are the same as or similar to some of the adjustments in this presentation. The Company’s presentation of Adjusted EBITDA should not be construed to imply that its future results will be unaffected by any such adjustments. Management compensates for these limitations by primarily relying on the Company’s GAAP results in addition to using Adjusted EBITDA and other non-GAAP financial measures on a supplemental basis. The Company’s definition of Adjusted EBITDA is not necessarily comparable to other similarly titled captions of other companies due to different methods of calculation.

About Vapotherm

Vapotherm, Inc. (NYSE: VAPO) is a publicly traded developer and manufacturer of advanced respiratory technology based in Exeter, New Hampshire, USA. The Company develops innovative, comfortable, non-invasive technologies for respiratory support of patients with chronic or acute breathing disorders. Over 3.0 million patients have been treated with the use of Vapotherm high velocity therapy® systems. For more information, visit www.vapotherm.com.

Vapotherm high velocity therapy is mask-free noninvasive ventilatory support and is a front-line tool for relieving respiratory distress—including hypercapnia, hypoxemia, and dyspnea. It allows for the fast, safe treatment of undifferentiated respiratory distress with one tool. The Precision Flow system’s mask-free interface delivers optimally conditioned breathing gases, making it comfortable for patients and reducing the risks and care complexities associated with mask therapies. While being treated, patients can talk, eat, drink and take oral medication.

Legal Notice Regarding Forward-Looking Statements

This press release contains forward-looking statements, including statements about our future focus on and ability to ensure our installed base of Precision Flow units is productive, grow the installed base and launch our new platform technology, HVT 2.0., and our expected revenue, gross margin and operating expenses for fiscal year 2021. In some cases, you can identify forward-looking statements by terms such as ‘‘expect,’’ "continue" "will" or "typically," or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words, and the use of future dates. Each forward-looking statement is subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such statement. Applicable risks and uncertainties include, but are not limited to the following: Vapotherm has incurred losses in the past and may be unable to achieve or sustain profitability in the future, Vapotherm may need to raise additional capital to fund its existing commercial operations, develop and commercialize new products, and expand its operations, Vapotherm’s dependence on sales generated from its Precision Flow systems, competition from multi-national corporations who have significantly greater resources than Vapotherm and are more established in the respiratory market, the ability for Precision Flow systems to gain increased market acceptance, its inexperience directly marketing and selling its products, the potential loss of one or more suppliers, Vapotherm’s susceptibility to seasonal fluctuations, Vapotherm’s failure to comply with applicable United States and foreign regulatory requirements, the failure to obtain U.S. Food and Drug Administration or other regulatory authorization to market and sell future products or its inability to secure, maintain or enforce patent or other intellectual property protection for its products, the impact of the COVID-19 pandemic on its business, including its supply chain, and the other risks and uncertainties included under the heading "Risk Factors" in Vapotherm’s Annual Report on Form 10-K for the fiscal year ended December, 31, 2020, as filed with the Securities and Exchange Commission on February 24, 2021, Vapotherm’s Quarterly Report on Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021, as filed with the Securities and Exchange Commission on May 5, 2021 and August 9, 2021 respectively, and in any subsequent filings with the Securities and Exchange Commission. The forward-looking statements contained in this press release reflect Vapotherm’s views as of the date hereof, and Vapotherm does not assume and specifically disclaims any obligation to update any forward-looking statements whether as a result of new information, future events or otherwise, except as required by law.

Financial Statements:

VAPOTHERM, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

June 30, 2021

December 31, 2020

(unaudited)

Assets

Current assets

Cash and cash equivalents

$

81,488

$

113,683

Accounts receivable, net

8,498

23,488

Inventories

29,355

19,873

Prepaid expenses and other current assets

5,117

5,041

Total current assets

124,458

162,085

Property and equipment, net

21,617

20,573

Operating lease right-of-use assets

7,401

8,260

Restricted cash

253

1,853

Goodwill

14,012

16,226

Intangible assets, net

5,042

5,694

Other long-term assets

1,172

967

Total assets

$

173,955

$

215,658

Liabilities and Stockholders’ Equity

Current liabilities

Accounts payable

$

5,088

$

4,967

Contract liabilities

1,361

2,977

Accrued expenses and other current liabilities

19,284

34,033

Revolving loan facility, current portion

1,170

-

Total current liabilities

26,903

41,977

Long-term loans payable, net

39,689

39,653

Revolving loan facility, net of current portion

1,726

4,888

Deferred income tax liabilities

8

6

Other long-term liabilities

12,403

15,229

Total liabilities

80,729

101,753

Commitments and contingencies

Stockholders' equity

Preferred stock ($0.001 par value) 25,000,000 shares authorized; no shares issued

and outstanding as of June 30, 2021 and December 31, 2020

-

-

Common stock ($0.001 par value) 175,000,000 shares authorized as of

June 30, 2021 and December 31, 2020, 25,956,505 and 25,722,984

shares issued and outstanding as of June 30, 2021 and

December 31, 2020, respectively

26

26

Additional paid-in capital

437,758

430,781

Accumulated other comprehensive income

59

41

Accumulated deficit

(344,617

)

(316,943

)

Total stockholders' equity

93,226

113,905

Total liabilities and stockholders’ equity

$

173,955

$

215,658

Vapotherm, Inc.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

2021

2020

Net revenue

$

20,625

$

35,152

$

52,933

$

54,267

Cost of revenue

11,218

17,544

26,358

27,442

Gross profit

9,407

17,608

26,575

26,825

Operating expenses

Research and development

4,577

3,895

9,487

7,257

Sales and marketing

12,804

14,858

26,704

28,175

General and administrative

8,627

5,627

16,686

10,878

Total operating expenses

26,008

24,380

52,877

46,310

Loss from operations

(16,601

)

(6,772

)

(26,302

)

(19,485

)

Other (expense) income

Foreign currency loss

(60

)

(25

)

(130

)

(1

)

Interest income

24

60

53

185

Interest expense

(648

)

(1,295

)

(1,313

)

(2,590

)

Other

18

-

18

15

Net loss

$

(17,267

)

$

(8,032

)

$

(27,674

)

$

(21,876

)

Other comprehensive income (loss):

Foreign currency translation adjustments

7

(4

)

18

(75

)

Total other comprehensive income (loss)

$

7

$

(4

)

$

18

$

(75

)

Total comprehensive loss

$

(17,260

)

$

(8,036

)

$

(27,656

)

$

(21,951

)

Net loss per share - basic and diluted

$

(0.67

)

$

(0.35

)

$

(1.07

)

$

(0.99

)

Weighted-average number of shares used in calculating net loss per share, basic and diluted

25,887,313

23,090,613

25,841,944

21,986,774

VAPOTHERM, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Six Months Ended June 30,

2021

2020

Cash flows from operating activities

Net loss

$

(27,674

)

$

(21,876

)

Adjustments to reconcile net loss to net cash used in operating activities

Stock-based compensation expense

5,118

2,824

Depreciation and amortization

2,863

2,148

Provision for bad debts

(202

)

282

Provision for inventory valuation

(183

)

(327

)

Non-cash lease expense

861

518

Change in fair value of contingent consideration

763

-

Loss on disposal of property and equipment

40

3

Amortization of discount on debt

64

127

Deferred income taxes

7

-

Changes in operating assets and liabilities, net of acquisition:

Accounts receivable

15,195

(8,542

)

Inventories

(9,286

)

(9,204

)

Prepaid expenses and other assets

(281

)

(547

)

Accounts payable

(308

)

3,380

Contract liabilities

(1,664

)

868

Accrued expenses and other current liabilities

(14,856

)

6,189

Operating lease liabilities, current and long-term

(859

)

(518

)

Net cash used in operating activities

(30,402

)

(24,675

)

Cash flows from investing activities

Purchases of property and equipment

(3,156

)

(3,839

)

Net cash used in investing activities

(3,156

)

(3,839

)

Cash flows from financing activities

Proceeds from short-term line of credit

-

995

Payments on short-term line of credit

(1,993

)

-

Proceeds from exercise of stock options

917

267

Proceeds from issuance of common stock in connection with public offering

-

94,156

Proceeds from issuance of common stock in connection with at-the-market offering

-

9,926

Proceeds from issuance of common stock under Employee Stock Purchase Plan

851

359

Common stock offering costs

-

(471

)

Net cash provided by (used in) financing activities

(225

)

105,232

Effect of exchange rate changes on cash, cash equivalents and restricted cash

(12

)

(28

)

Net increase (decrease) in cash, cash equivalents and restricted cash

(33,795

)

76,690

Cash, cash equivalents and restricted cash

Beginning of period

115,536

73,507

End of period

$

81,741

$

150,197

Supplemental disclosures of cash flow information

Interest paid during the period

$

1,249

$

2,422

Property and equipment purchases in accounts payable and accrued expenses

$

442

$

341

Issuance of common stock upon vesting of restricted stock units

$

91

$

111

Non-GAAP Financial Measures

The following tables contain a reconciliation of net loss to Adjusted EBITDA for the three months ended June 30, 2021 and 2020, respectively.

(unaudited)

Three Months Ended June 30,

2021

2020

(in thousands)

Net loss

$

(17,267

)

$

(8,032

)

Interest expense, net

624

1,235

Depreciation and amortization

1,289

1,051

EBITDA

$

(15,354

)

$

(5,746

)

Foreign currency

60

25

Change in fair value of contingent consideration

561

-

Stock-based compensation

2,433

1,377

Adjusted EBITDA

$

(12,300

)

$

(4,344

)

Supplemental Operating Metrics

June 30,

2021

2020

Change

Amount

Amount

Amount

%

Precision Flow Units Installed Base

United States

21,004

15,417

5,587

36.2

%

International

11,019

6,640

4,379

65.9

%

Total

32,023

22,057

9,966

45.2

%

Three Months Ended June 30,

2021

2020

Change

Amount

Amount

Amount

%

Precision Flow Units Sold and Leased

United States

415

2,556

(2,141

)

-83.8

%

International

900

1,393

(493

)

-35.4

%

Total

1,315

3,949

(2,634

)

-66.7

%

Disposable Patient Circuits Sold

United States

65,553

90,776

(25,223

)

-27.8

%

International

72,466

47,777

24,689

51.7

%

Total

138,019

138,553

(534

)

-0.4

%

View source version on businesswire.com: https://www.businesswire.com/news/home/20210809005665/en/

Contacts

Investor Relations Contacts:
Mark Klausner or Mike Vallie, Westwicke, an ICR Company, ir@vtherm.com, +1 (603) 658-0011