U.S. Markets closed
  • S&P 500

    4,397.94
    -84.79 (-1.89%)
     
  • Dow 30

    34,265.37
    -450.03 (-1.30%)
     
  • Nasdaq

    13,768.92
    -385.08 (-2.72%)
     
  • Russell 2000

    1,987.92
    -36.12 (-1.78%)
     
  • Crude Oil

    84.83
    -0.72 (-0.84%)
     
  • Gold

    1,836.10
    -6.50 (-0.35%)
     
  • Silver

    24.34
    -0.37 (-1.50%)
     
  • EUR/USD

    1.1348
    +0.0031 (+0.2724%)
     
  • 10-Yr Bond

    1.7470
    -0.0860 (-4.69%)
     
  • Vix

    28.85
    +3.26 (+12.74%)
     
  • GBP/USD

    1.3555
    -0.0045 (-0.3321%)
     
  • USD/JPY

    113.6500
    -0.4500 (-0.3944%)
     
  • BTC-USD

    35,003.81
    -3,784.82 (-9.76%)
     
  • CMC Crypto 200

    870.86
    +628.18 (+258.85%)
     
  • FTSE 100

    7,494.13
    -90.88 (-1.20%)
     
  • Nikkei 225

    27,522.26
    -250.64 (-0.90%)
     

Vapotherm Reports Third Quarter 2021 Financial Results

  • Oops!
    Something went wrong.
    Please try again later.
·17 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • VAPO

Disposables revenue increased 66.2% over the third quarter of 2020

EXETER, N.H., November 03, 2021--(BUSINESS WIRE)--Vapotherm, Inc. (NYSE: VAPO), ("Vapotherm" or the "Company"), a global medical technology company, today announced third quarter 2021 financial results.

Third Quarter 2021 Summary

  • Total revenue for the third quarter of 2021 was $38.1 million, an increase of 24.7% over the third quarter of 2020

  • Disposables revenue for the third quarter of 2021 of $21.7 million, an increase of 66.2% over the third quarter of 2020

  • Worldwide installed base of Precision Flow Hi-VNI systems increased by over 2,500 units in the third quarter of 2021

"I am very pleased with Vapotherm’s performance in the third quarter. Demand for our technology surged, resulting in one of the strongest quarters in the company’s history, including record disposable revenue," said Joseph Army, the company’s President and CEO. "Despite the labor and supply chain issues which affected the economy in general, our team found a way to satisfy customer demand during this latest COVID-19 surge and significantly expand our Installed Base. As proud as I am of our financial performance, I’m even prouder of the heroic efforts our team made to meet customer demand. The customer loyalty this generated, combined with our large Installed Base, leaves us well positioned in the respiratory care market at a time when many believe COVID-19 and its mutations will become a chronic, recurring problem likely to expand the total addressable market significantly. I’d like to acknowledge and thank the clinicians on the front-lines of this pandemic for their tireless work in supporting their Patients," Mr. Army concluded.

Results for the Three Months September 30, 2021

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

Three Months Ended September 30,

2021

2020

Change

(in thousands, except percentages)

Amount

% of Revenue

Amount

% of Revenue

$

%

Revenue

Capital (product & lease revenue)

$

15,113

39.7

%

$

16,898

55.3

%

$

(1,785

)

-10.6

%

Disposables

21,674

56.8

%

13,044

42.7

%

8,630

66.2

%

Service and other

1,328

3.5

%

617

2.0

%

711

115.2

%

Total net revenue

$

38,115

100.0

%

$

30,559

100.0

%

$

7,556

24.7

%

Net revenue for the third quarter of 2021 was $38.1 million. Disposables revenue increased in the third quarter of 2021 primarily driven by higher volume in the United States due to a surge of the COVID-19 pandemic in the United States and a much larger installed base of Precision Flow units, and to a lesser extent, an increase in average selling prices. Capital equipment revenue decreased in the third quarter of 2021 primarily due to decreased sales of our Precision Flow units in the United States.

Revenue information by geography is summarized as follows:

Three Months Ended September 30,

2021

2020

Change

(in thousands, except percentages)

Amount

% of Revenue

Amount

% of Revenue

$

%

United States

$

32,950

86.4

%

$

25,526

83.5

%

$

7,424

29.1

%

International

5,165

13.6

%

5,033

16.5

%

132

2.6

%

Total net revenue

$

38,115

100.0

%

$

30,559

100.0

%

$

7,556

24.7

%

United States revenue increased due to a surge of the COVID-19 pandemic and a much larger installed base of Precision Flow units which increased the volume of disposables sold period over period. International net revenue was relatively consistent during the third quarter of 2021 compared to the third quarter of 2020.

Gross profit and gross margin for the third quarter of 2021 was $18.8 million and 49.4%, respectively. In the third quarter of 2021, gross margin was negatively impacted by one-time charges related to the transfer of certain activities to our contract manufacturer in Mexico, partially offset by increased labor and overhead absorption due to higher disposable volumes and a greater percentage of total revenue coming from the United States.

Operating expenses were $31.7 million in the third quarter of 2021, an increase of $5.0 million as compared to the same period last year. The increase was primarily due to increased sales commissions, employee-related expenses, stock-based compensation, travel expenses, and increased spend on marketing materials.

Net loss for the third quarter of 2021 was $13.6 million, or $0.52 per share, compared to $12.4 million, or $0.49 per share, in the third quarter of 2020. Net loss per share was based on 25,987,648 and 25,578,328 weighted average shares outstanding for the third quarter of 2021 and 2020, respectively.

Adjusted EBITDA was negative $10.7 million for the third quarter of 2021 as compared to negative $8.2 million for the third quarter of 2020. The increase in Adjusted EBITDA loss was primarily due to an increase in operating expenses and a decrease in gross margin on a year over year basis.

Cash Position

Cash and cash equivalents were $70.3 million as of September 30, 2021, $81.5 million as of June 30, 2021 and $113.7 million as of December 31, 2020.

Fiscal 2021 Outlook

The Company now expects full year revenue to be greater than $106 million, which represents an increase of $4 million over the Company’s updated guidance of $102 million provided on September 8, 2021. This represents an increase of 120% over 2019 revenue and a two-year compounded annual growth rate of 48%. 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.

Given the expected year over year decrease in revenue and production volumes the Company expects full year gross margins to decrease year over year before improving in 2022 to levels above 2020 levels. The Company now expects full year gross margins of 47% to 49% in 2021, an increase from the previously provided guidance of 46% to 48%.

The Company now expects full year operating expenses of at least $106 million. The increase in full year operating expense guidance is due primarily to higher selling expenses due to increased revenue and investments in its new digital business, Vapotherm Access.

Conference Call

Management will host a conference call at 4:30 p.m. Eastern Time on November 3, 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 (888) 330-2022 for U.S. callers, or +1 (646) 960-0690 for international callers, approximately ten minutes prior to the start time and reference conference code 6585549. 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 November 12, 2021 by dialing (800) 770-2030 in the U.S. or +1 (647) 362-9199 outside of the U.S. The replay access code is 6585549.

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 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 3.2 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 the Company’s plan to grow its Installed Base, add additional production capacity in Mexico, and its 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," "plan," "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 or achieve its 2021 financial guidance; 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; Vapotherm’s inexperience directly marketing and selling its products; the potential loss of one or more suppliers and dependence on its new third party manufacturer; 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 and Vapotherm’s most recent Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 as filed with the Securities and Exchange Commission on November 3 ,2021, 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)

September 30,

December 31,

2021

2020

(unaudited)

Assets

Current assets

Cash and cash equivalents

$

70,335

$

113,683

Accounts receivable, net

20,812

23,488

Inventories

24,730

19,873

Prepaid expenses and other current assets

5,924

5,041

Total current assets

121,801

162,085

Property and equipment, net

21,727

20,573

Operating lease right-of-use assets

6,956

8,260

Restricted cash

253

1,853

Goodwill

13,996

16,226

Intangible assets, net

4,877

5,694

Other long-term assets

1,201

967

Total assets

$

170,811

$

215,658

Liabilities and Stockholders’ Equity

Current liabilities

Accounts payable

$

4,143

$

4,967

Contract liabilities

2,190

2,977

Accrued expenses and other current liabilities

28,830

34,033

Total current liabilities

35,163

41,977

Long-term loans payable, net

39,707

39,653

Revolving loan facility

1,726

4,888

Deferred income tax liabilities

8

6

Other long-term liabilities

11,978

15,229

Total liabilities

88,582

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 September 30, 2021 and December 31, 2020

-

-

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

September 30, 2021 and December 31, 2020, 26,043,578 and 25,722,984

shares issued and outstanding as of September 30, 2021 and

December 31, 2020, respectively

26

26

Additional paid-in capital

440,367

430,781

Accumulated other comprehensive income

19

41

Accumulated deficit

(358,183

)

(316,943

)

Total stockholders' equity

82,229

113,905

Total liabilities and stockholders’ equity

$

170,811

$

215,658

Vapotherm, Inc.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

Net revenue

$

38,115

$

30,559

$

91,048

$

84,826

Cost of revenue

19,291

15,049

45,649

42,491

Gross profit

18,824

15,510

45,399

42,335

Operating expenses

Research and development

3,979

4,745

13,466

12,002

Sales and marketing

20,465

15,932

47,169

44,107

General and administrative

7,262

6,047

23,948

16,925

Total operating expenses

31,706

26,724

84,583

73,034

Loss from operations

(12,882

)

(11,214

)

(39,184

)

(30,699

)

Other (expense) income

Foreign currency gain (loss)

(58

)

38

(188

)

37

Interest income

21

42

74

227

Interest expense

(647

)

(1,308

)

(1,960

)

(3,898

)

Other

-

-

18

15

Net loss

$

(13,566

)

$

(12,442

)

$

(41,240

)

$

(34,318

)

Other comprehensive income (loss):

Foreign currency translation adjustments

(40

)

34

(22

)

(41

)

Total other comprehensive income (loss)

$

(40

)

$

34

$

(22

)

$

(41

)

Total comprehensive loss

$

(13,606

)

$

(12,408

)

$

(41,262

)

$

(34,359

)

Net loss per share - basic and diluted

$

(0.52

)

$

(0.49

)

$

(1.59

)

$

(1.48

)

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

25,987,648

25,578,328

25,891,045

23,192,703

VAPOTHERM, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Nine Months Ended September 30,

2021

2020

Cash flows from operating activities

Net loss

$

(41,240

)

$

(34,318

)

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

Stock-based compensation expense

7,197

4,580

Depreciation and amortization

4,181

3,371

Provision for bad debts

(110

)

251

Provision for inventory valuation

(285

)

(428

)

Non-cash lease expense

1,304

797

Change in fair value of contingent consideration

(457

)

-

Loss on disposal of property and equipment

126

13

Amortization of discount on debt

55

190

Deferred income taxes

12

-

Changes in operating assets and liabilities, net of acquisition:

Accounts receivable

2,776

(2,916

)

Inventories

(4,576

)

(15,468

)

Prepaid expenses and other assets

(1,102

)

(1,039

)

Accounts payable

(854

)

2,803

Contract liabilities

(658

)

332

Accrued expenses and other current liabilities

(4,286

)

10,520

Operating lease liabilities, current and long-term

(1,305

)

(797

)

Net cash used in operating activities

(39,222

)

(32,109

)

Cash flows from investing activities

Purchases of property and equipment

(4,814

)

(5,944

)

Net cash used in investing activities

(4,814

)

(5,944

)

Cash flows from financing activities

Proceeds from short-term line of credit

-

995

Payments on short-term line of credit

(3,163

)

-

Proceeds from exercise of stock options

1,405

485

Proceeds from issuance of common stock in connection with public offering

-

94,155

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

-

9,927

Proceeds from issuance of common stock under Employee Stock Purchase Plan

851

360

Common stock offering costs

-

(471

)

Net cash provided by (used in) financing activities

(907

)

105,451

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

(5

)

(37

)

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

(44,948

)

67,361

Cash, cash equivalents and restricted cash

Beginning of period

115,536

73,507

End of period

$

70,588

$

140,868

Supplemental disclosures of cash flow information

Interest paid during the period

$

1,862

$

3,670

Property and equipment purchases in accounts payable and accrued expenses

$

133

$

139

Issuance of common stock upon vesting of restricted stock units

$

133

$

162

Non-GAAP Financial Measures

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

(unaudited)

Three Months Ended September 30,

2021

2020

(in thousands)

Net loss

$

(13,566

)

$

(12,442

)

Interest expense, net

626

1,266

Depreciation and amortization

1,318

1,223

EBITDA

$

(11,622

)

$

(9,953

)

Foreign currency

58

(38

)

Change in fair value of contingent consideration

(1,220

)

-

Stock-based compensation

2,079

1,756

Adjusted EBITDA

$

(10,705

)

$

(8,235

)

Supplemental Operating Metrics

September 30,

2021

2020

Change

Amount

Amount

Amount

%

Precision Flow Units Installed Base

United States

22,911

17,401

5,510

31.7

%

International

11,623

7,401

4,222

57.0

%

Total

34,534

24,802

9,732

39.2

%

Three Months Ended September 30,

2021

2020

Change

Amount

Amount

Amount

%

Precision Flow Units Sold and Leased

United States

1,891

2,121

(230

)

-10.8

%

International

556

549

7

1.3

%

Total

2,447

2,670

(223

)

-8.4

%

Disposable Patient Circuits Sold

United States

168,471

94,595

73,876

78.1

%

International

31,501

34,360

(2,859

)

-8.3

%

Total

199,972

128,955

71,017

55.1

%

View source version on businesswire.com: https://www.businesswire.com/news/home/20211103005937/en/

Contacts

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