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Vapotherm Reports Fourth Quarter and Fiscal Year 2022 Financial Results

Vapotherm, Inc. (NYSE: VAPO), (“Vapotherm” or the “Company”), today announced fourth quarter and fiscal year 2022 financial results.

Fourth Quarter 2022 Summary

  • Total revenue for the fourth quarter of 2022 was $18.7 million
  • Gross margin was 27.5% in the fourth quarter of 2022
  • Substantially completed move of manufacturing operations from New Hampshire to Mexico

Fiscal Year 2022 Summary

  • Total revenue for 2022 was $66.8 million
  • Launched next generation High Velocity Therapy platform, HVT 2.0
  • Cost structure has been streamlined which resulted in a decrease in non-GAAP cash operating expenses from $100.8 million in 2021 to $83.6 million in 2022
  • Worldwide installed base of High Velocity Therapy systems grew by approximately 1,600 units in 2022, now at over 36,700 units

“2022 was a year of transition as we repositioned the business given the significant decrease in COVID-related hospitalizations as compared to 2020 and 2021,” said Joseph Army, President and CEO. “We executed on our path to profitability initiatives while still making investments in future growth drivers including the launch of our next generation platform, HVT 2.0. Recently, we completed a $23 million equity raise which has strengthened our balance sheet. We believe these initiatives will allow us to achieve our goals in 2023 and beyond. I’d like to thank our Team for all their hard work in executing on our Path to Profitability initiatives which we launched in early 2022 in response to a rapidly changing environment.”

Results for the Three Months December 31, 2022

The following table reflects the Company’s net revenue for the three months ended December 31, 2022 and 2021:

 

 

Three Months Ended December 31,

 

 

 

 

 

 

 

 

 

2022

 

 

2021

 

 

Change

 

 

 

(in thousands, except percentages)

 

 

 

Amount

 

 

% of Revenue

 

 

Amount

 

 

% of Revenue

 

 

$

 

 

%

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital (product & lease revenue)

 

$

3,039

 

 

 

16.3

%

 

$

5,357

 

 

 

24.1

%

 

$

(2,318

)

 

 

(43.3

)%

Disposables

 

 

14,113

 

 

 

75.6

%

 

 

15,007

 

 

 

67.5

%

 

 

(894

)

 

 

(6.0

)%

Service and other

 

 

1,511

 

 

 

8.1

%

 

 

1,880

 

 

 

8.4

%

 

 

(369

)

 

 

(19.6

)%

Total net revenue

 

$

18,663

 

 

 

100.0

%

 

$

22,244

 

 

 

100.0

%

 

$

(3,581

)

 

 

(16.1

)%

Net revenue for the fourth quarter of 2022 was $18.7 million, representing a 16.1% decrease from fourth quarter of 2021. Capital and disposables revenue were lower in the fourth quarter of 2022 due to lower demand for our products that was driven by a decrease in patient acuity from COVID infections as COVID variants transitioned from a lower respiratory disease to an upper respiratory disease.

Revenue information by geography is summarized as follows:

 

 

Three Months Ended December 31,

 

 

 

 

 

 

 

 

 

2022

 

 

2021

 

 

Change

 

 

 

(in thousands, except percentages)

 

 

 

Amount

 

 

% of Revenue

 

 

Amount

 

 

% of Revenue

 

 

$

 

 

%

 

United States

 

$

15,531

 

 

 

83.2

%

 

$

17,798

 

 

 

80.0

%

 

$

(2,267

)

 

 

(12.7

)%

International

 

 

3,132

 

 

 

16.8

%

 

 

4,446

 

 

 

20.0

%

 

 

(1,314

)

 

 

(29.6

)%

Total net revenue

 

$

18,663

 

 

 

100.0

%

 

$

22,244

 

 

 

100.0

%

 

$

(3,581

)

 

 

(16.1

)%

Gross profit and gross margin for the fourth quarter of 2022 was $5.1 million and 27.5%, respectively. In the fourth quarter of 2022, gross margin was negatively impacted by increases in our inventory and equipment reserves, under-absorption of labor and overhead costs due to lower production levels and non-recurring charges related to the transfer of our manufacturing operations from New Hampshire to Mexico.

Total operating expenses were $22.8 million in the fourth quarter of 2022, a decrease of $2.9 million as compared to the same period last year. Non-GAAP cash operating expenses, excluding impairment charges, loss on disposal of property and equipment, depreciation and amortization, stock-based compensation expense, severance accruals and loss from deconsolidation were $18.0 million in the fourth quarter of 2022 compared to $23.8 million in the fourth quarter of 2021. The decreases in operating expenses and non-GAAP cash operating expenses were primarily due to cost saving measures in connection with the Company’s path-to-profitability initiatives. Operating expenses in the fourth quarter of 2022 include a non-cash impairment charge of $1.5 million related to the operating lease right-of-use assets and leasehold improvements recorded in connection with our plan to sublease unused spaced in New Hampshire as a result of the relocation of manufacturing operations to Mexico.

Net loss for the fourth quarter of 2022 was $21.4 million, or $0.78 per share, compared to $18.6 million, or $0.71 per share, in the fourth quarter of 2021. Net loss per share was based on 27,328,746 and 26,073,243 weighted average shares outstanding for the fourth quarter of 2022 and 2021, respectively. Net loss for the fourth quarter of 2022 includes a non-cash impairment charge of $1.5 million related to the long-lived assets record in connection with our operating lease and leasehold improvements in New Hampshire.

Adjusted EBITDA was negative $12.0 million for the fourth quarter of 2022 as compared to negative $14.9 million for the fourth quarter of 2021. The decrease in Adjusted EBITDA loss was primarily due to cost saving measures in connection with the Company’s path-to-profitability initiatives, partially offset by lower revenue and gross margin on a year over year basis.

Results for the Year Ended December 31, 2022

The following table reflects the Company’s net revenue for the years ended December 31, 2022 and 2021:

 

 

Year Ended December 31,

 

 

 

 

 

 

 

 

 

2022

 

 

2021

 

 

Change

 

 

 

(in thousands, except percentages)

 

 

 

Amount

 

 

% of Revenue

 

 

Amount

 

 

% of Revenue

 

 

$

 

 

%

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Equipment (product & lease revenue)

 

$

11,650

 

 

 

17.4

%

 

$

40,096

 

 

 

35.4

%

 

$

(28,446

)

 

 

(70.9

)%

Disposable

 

 

46,368

 

 

 

69.4

%

 

 

66,631

 

 

 

58.8

%

 

 

(20,263

)

 

 

(30.4

)%

Service and Other

 

 

8,783

 

 

 

13.2

%

 

 

6,565

 

 

 

5.8

%

 

 

2,218

 

 

 

33.8

%

Net revenue

 

$

66,801

 

 

 

100.0

%

 

$

113,292

 

 

 

100.0

%

 

$

(46,491

)

 

 

(41.0

)%

Net revenue for 2022 was $66.8 million, representing a 41.0% decrease from 2021. Total capital equipment revenue, including product and lease revenue, decreased 70.9% and total disposables revenue decreased 30.4%, each on a year over year basis. The decrease in demand for our products was driven by a decrease in patient acuity from COVID infections as COVID variants transitioned from a lower respiratory disease to an upper respiratory disease.

Revenue information by geography is summarized as follows:

 

 

Year Ended December 31,

 

 

 

 

 

 

 

 

 

2022

 

 

2021

 

 

Change

 

 

 

(in thousands, except percentages)

 

 

 

Amount

 

 

% of Revenue

 

 

Amount

 

 

% of Revenue

 

 

$

 

 

%

 

United States

 

$

52,591

 

 

 

78.7

%

 

$

84,147

 

 

 

74.3

%

 

$

(31,556

)

 

 

(37.5

)%

International

 

 

14,210

 

 

 

21.3

%

 

 

29,145

 

 

 

25.7

%

 

 

(14,935

)

 

 

(51.2

)%

Net Revenue

 

$

66,801

 

 

 

100.0

%

 

$

113,292

 

 

 

100.0

%

 

$

(46,491

)

 

 

(41.0

)%

Gross profit for the year ended December 31, 2022 was $17.2 million, a decrease of $35.9 million from 2021. Gross margin was 25.8% in 2022 in comparison to 46.9% in 2021. Gross margin was negatively impacted by lower revenue and production levels, non-recurring charges related to the transfer of certain activities to our contract manufacturer and our manufacturing facility in Mexico, increased reserves for excess and obsolete inventory, and increased termination costs.

Operating expenses were $117.6 million for the year ended December 31, 2022, an increase of $7.2 million as compared to $110.4 million in 2021. Operating expenses for 2022 include non-cash charges of $14.7 million and $7.7 million related to the impairment of goodwill and long-lived and intangibles, and to a lesser extent, loss on disposal of property and equipment of $0.6 million. These non-cash charges were record in connection with our decision to cease future commercial investments in Vapotherm Access and RespirCare in the third quarter of 2022, and to a lesser extent relocate our manufacturing operations from New Hampshire to Mexico. Non-GAAP cash operating expenses, excluding impairment charges, loss on disposal of property and equipment, depreciation and amortization, stock-based compensation expense, severance accruals, loss from deconsolidation and change in the value of contingent consideration, were $83.6 million for the year ended December 31, 2022 compared to $100.8 million in 2021. The decrease in non-GAAP cash operating expenses was primarily due to cost saving measures in connection with the Company’s path-to-profitability initiatives.

Net loss for the year ended December 31, 2022 was $113.3 million, or $4.24 per share, compared to $59.8 million, or $2.31 per share, in 2021. Net loss per share was based on 26,732,940 and 25,936,970 weighted average shares outstanding for 2022 and 2021, respectively. Net loss for the year ended December 31, 2022 includes non-cash impairment charges of $22.4 million primarily related to the goodwill and long-lived assets recorded in connection with the acquisitions of HGE and RespirCare.

Adjusted EBITDA was negative $65.2 million for the year ended December 31, 2022 as compared to negative $43.1 million for 2021. The increase in Adjusted EBITDA loss was primarily due to lower revenue and gross margin on a year over year basis, and to a lesser extent increased termination costs.

Cash Position

Cash and cash equivalents were $15.7 million as of December 31, 2022 compared to $57.1 million as of December 31, 2021. The decrease in cash in 2022 was due to the net loss, partial offset from proceeds from our debt facility.

Fiscal 2023 Outlook

For fiscal 2023, the Company expects net revenue to be in the range of $77 million to $79 million. The Company anticipates that 75% of revenue will come from U.S. revenue and 25% from International revenue. The Company anticipates that 75% of the revenue will come from disposables revenue and that the remainder will come from capital equipment and service.

For fiscal 2023, gross margin is expected to be in the range of 48% and 50%.

For fiscal 2023, operating expenses are expected to be in the range of $76 million to $78 million.

For fiscal 2023, non-GAAP cash operating expenses excluding additional items as detailed below are expected to be in the range of $60 million to $62 million.

Conference Call Information

Management will host a conference call at 4:30 p.m. Eastern Time on February 23, 2023 to discuss the results of the quarter with a question and answer session. To listen to the conference call on your telephone, please dial +1 (888) 330-2391 for U.S. callers, or +1 (240) 789-2702 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 March 2, 2023 by dialing +1 (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 (“SEC”) 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 non-GAAP financial measures, including EBITDA, Adjusted EBITDA, non-GAAP operating expenses excluding impairment of long-lived assets, impairment of goodwill and loss on disposal of property and equipment, and non-GAAP cash operating expenses excluding additional items, including stock-based compensation expense, depreciation and amortization, severance accruals recorded, loss from deconsolidation, and change in fair value of contingent consideration, which differ from operating expenses calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). EBITDA represents net loss less interest expense, net, income tax provision or benefit, and depreciation and amortization, and Adjusted EBITDA represents EBITDA as adjusted for the impact of foreign currency loss or gain, change in fair value of contingent consideration, stock-based compensation expense, and impairment of long lived and intangible assets. Since these adjustments to the GAAP measures are highly variable, difficult to predict and of a size that could have substantial impact on Vapotherm’s reported results of operations for a period, Vapotherm cannot provide without unreasonable effort a quantitative reconciliation to the most directly comparable GAAP measures for its 2023 financial guidance regarding non-GAAP cash operating expenses excluding impairment of goodwill, impairment of long-lived assets, loss on disposal of property and equipment and other additional items as detailed below, or non-GAAP cash operating expenses. The Company has reconciled all historical 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 these non-GAAP financial measures, as measures 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 these measures are useful to investors as supplemental information because they are 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 definitions of Adjusted EBITDA and non-GAAP operating expenses excluding impairment of long-lived assets, impairment of goodwill and loss on disposal of property and equipment and non-GAAP cash operating expenses excluding the additional items detailed below, are 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 3.8 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 non-invasive 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 HVT 2.0 and Precision Flow systems’ 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 under the Private Securities Litigation Reform Act of 1995, including statements about the Company’s expected net revenue, gross margin, operating expenses and non-GAAP cash operating expenses for fiscal year 2023 and its expectations to execute on its path-to-profitability initiative, which the Company believes will allow it to achieve its goals in 2023 and beyond. In some cases, you can identify forward-looking statements by terms such as “expect,” “continue,” “plan,” “intend,” “will,” “outlook,” “guidance,” 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 2023 financial guidance; risks associated with the move of its manufacturing operations to Mexico; Vapotherm’s ability to raise additional capital to fund its existing commercial operations, develop and commercialize new products, and expand its operations; Vapotherm’s ability to comply with its $5 million minimum cash covenant, execute on its path-to-profitability initiative, convert $17 million of excess inventory into cash, fund its business through 2023 and get it to Adjusted EBITDA positive in the fourth quarter of 2023; Vapotherm’s dependence on sales generated from its High Velocity Therapy 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 COVID 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, 2022, as filed with the SEC on February 23, 2023, and in any subsequent filings with the SEC. 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.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

 

 

December 31,

 

 

 

2022

 

 

2021

 

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

15,738

 

 

$

57,071

 

Accounts receivable, net

 

 

9,102

 

 

 

10,909

 

Inventories

 

 

32,980

 

 

 

36,562

 

Prepaid expenses and other current assets

 

 

2,081

 

 

 

5,205

 

Total current assets

 

 

59,901

 

 

 

109,747

 

Property and equipment, net

 

 

26,636

 

 

 

22,157

 

Operating lease right-of-use assets

 

 

5,805

 

 

 

7,045

 

Restricted cash

 

 

1,109

 

 

 

253

 

Goodwill

 

 

536

 

 

 

15,300

 

Intangible assets, net

 

 

-

 

 

 

4,398

 

Deferred income tax assets

 

 

96

 

 

 

78

 

Other long-term assets

 

 

2,112

 

 

 

1,107

 

Total assets

 

$

96,195

 

 

$

160,085

 

Liabilities and Stockholders’ (Deficit) Equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

2,739

 

 

$

5,923

 

Contract liabilities

 

 

1,216

 

 

 

2,081

 

Accrued expenses and other current liabilities

 

 

15,609

 

 

 

28,559

 

Revolving loan facility

 

 

-

 

 

 

6,608

 

Total current liabilities

 

 

19,564

 

 

 

43,171

 

Long-term loans payable, net

 

 

96,994

 

 

 

39,726

 

Other long-term liabilities

 

 

7,827

 

 

 

10,521

 

Total liabilities

 

 

124,385

 

 

 

93,418

 

Commitments and contingencies

 

 

 

 

 

 

Stockholders’ (deficit) equity

 

 

 

 

 

 

Preferred stock ($0.001 par value) 25,000,000 shares authorized; no shares issued and outstanding as of December 31, 2022 and 2021

 

 

-

 

 

 

-

 

Common stock ($0.001 par value) 175,000,000 shares authorized as of December 31, 2022 and 2021, 28,516,047 and 26,126,253 shares issued and outstanding as of December 31, 2022 and 2021, respectively

 

 

29

 

 

 

26

 

Additional paid-in capital

 

 

461,940

 

 

 

443,358

 

Accumulated other comprehensive (loss) income

 

 

(157

)

 

 

26

 

Accumulated deficit

 

 

(490,002

)

 

 

(376,743

)

Total stockholders’ (deficit) equity

 

 

(28,190

)

 

 

66,667

 

Total liabilities and stockholders’ (deficit) equity

 

$

96,195

 

 

$

160,085

 

 

VAPOTHERM, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

 

 

Three Months Ended

December 31,

 

 

Year Ended

December 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

(unaudited)

 

 

 

 

Net revenue

 

$

18,663

 

 

$

22,244

 

 

$

66,801

 

 

$

113,292

 

Cost of revenue

 

 

13,540

 

 

 

14,455

 

 

 

49,558

 

 

 

60,104

 

Gross profit

 

 

5,123

 

 

 

7,789

 

 

 

17,243

 

 

 

53,188

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

4,561

 

 

 

4,944

 

 

 

20,802

 

 

 

18,410

 

Sales and marketing

 

 

9,476

 

 

 

12,971

 

 

 

46,091

 

 

 

60,140

 

General and administrative

 

 

7,042

 

 

 

7,427

 

 

 

27,796

 

 

 

31,375

 

Impairment of goodwill

 

 

-

 

 

 

-

 

 

 

14,701

 

 

 

-

 

Impairment of long-lived and intangible assets

 

 

1,501

 

 

 

323

 

 

 

7,676

 

 

 

323

 

Loss on disposal of property and equipment

 

 

247

 

 

 

105

 

 

 

568

 

 

 

105

 

Total operating expenses

 

 

22,827

 

 

 

25,770

 

 

 

117,634

 

 

 

110,353

 

Loss from operations

 

 

(17,704

)

 

 

(17,981

)

 

 

(100,391

)

 

 

(57,165

)

Other (expense) income

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(3,771

)

 

 

(635

)

 

 

(11,643

)

 

 

(2,595

)

Interest income

 

 

26

 

 

 

17

 

 

 

139

 

 

 

91

 

Foreign currency loss

 

 

(51

)

 

 

(37

)

 

 

(239

)

 

 

(225

)

Loss on extinguishment of debt

 

 

-

 

 

 

-

 

 

 

(1,114

)

 

 

-

 

Other

 

 

-

 

 

 

-

 

 

 

-

 

 

 

18

 

Net loss before income taxes

 

$

(21,500

)

 

$

(18,636

)

 

$

(113,248

)

 

$

(59,876

)

(Benefit) provision for income taxes

 

 

(63

)

 

 

(76

)

 

 

11

 

 

 

(76

)

Net loss

 

$

(21,437

)

 

$

(18,560

)

 

$

(113,259

)

 

$

(59,800

)

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

229

 

 

 

7

 

 

 

(183

)

 

 

(15

)

Total other comprehensive loss

 

 

229

 

 

 

7

 

 

 

(183

)

 

 

(15

)

Total comprehensive loss

 

$

(21,208

)

 

$

(18,553

)

 

$

(113,442

)

 

$

(59,815

)

Net loss per share basic and diluted

 

$

(0.78

)

 

$

(0.71

)

 

$

(4.24

)

 

$

(2.31

)

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

 

 

27,328,746

 

 

 

26,073,243

 

 

 

26,732,940

 

 

 

25,936,970

 

 

VAPOTHERM, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

 

Year Ended December 31,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities

 

 

 

 

 

 

Net loss

 

$

(113,259

)

 

$

(59,800

)

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

 

 

 

 

 

 

Stock-based compensation expense

 

 

10,385

 

 

 

9,766

 

Depreciation and amortization

 

 

5,180

 

 

 

5,648

 

Provision for bad debts

 

 

224

 

 

 

(161

)

Provision for inventory valuation

 

 

3,083

 

 

 

70

 

Non-cash lease expense

 

 

2,127

 

 

 

1,764

 

Change in fair value of contingent consideration

 

 

(3,351

)

 

 

(1,813

)

Impairment of goodwill

 

 

14,701

 

 

 

-

 

Impairment of long-lived and intangible assets

 

 

7,676

 

 

 

323

 

Loss on disposal of property and equipment

 

 

568

 

 

 

105

 

Placed unit reserve

 

 

646

 

 

 

155

 

Amortization of discount on debt

 

 

686

 

 

 

128

 

Loss from deconsolidation

 

 

35

 

 

 

-

 

Deferred income taxes

 

 

11

 

 

 

(76

)

Loss on extinguishment of debt

 

 

1,114

 

 

 

-

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

1,162

 

 

 

12,400

 

Inventories

 

 

449

 

 

 

(16,759

)

Prepaid expenses and other assets

 

 

(1,771

)

 

 

1,458

 

Accounts payable

 

 

(3,347

)

 

 

798

 

Contract liabilities

 

 

(844

)

 

 

(892

)

Accrued expenses and other liabilities

 

 

(3,285

)

 

 

(6,724

)

Operating lease liabilities, current and long-term

 

 

(2,347

)

 

 

(1,761

)

Net cash used in operating activities

 

 

(80,157

)

 

 

(55,371

)

Cash flows from investing activities

 

 

 

 

 

 

Purchases of property and equipment

 

 

(11,610

)

 

 

(5,895

)

Acquisition of business, net of cash acquired

 

 

-

 

 

 

(1,304

)

Net cash used in investing activities

 

 

(11,610

)

 

 

(7,199

)

Cash flows from financing activities

 

 

 

 

 

 

Proceeds from loans, net of discount

 

 

99,094

 

 

 

-

 

Proceeds from revolving loan facility

 

 

-

 

 

 

4,882

 

Repayment of loans

 

 

(40,000

)

 

 

-

 

Payments of debt extinguishment costs

 

 

(817

)

 

 

-

 

Payment of debt issuance costs

 

 

(1,567

)

 

 

-

 

Repayments on revolving loan facility

 

 

(6,608

)

 

 

(3,162

)

Payment of contingent consideration

 

 

(135

)

 

 

-

 

Proceeds from issuance of common stock in connection with at-the-market offerings, net

 

 

1,064

 

 

 

-

 

Proceeds from issuance of common stock under Employee Stock Purchase Plan

 

 

228

 

 

 

1,139

 

Proceeds from exercise of stock options

 

 

65

 

 

 

1,511

 

Net cash provided by financing activities

 

 

51,324

 

 

 

4,370

 

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

 

 

(34

)

 

 

(12

)

Net decrease in cash, cash equivalents and restricted cash

 

 

(40,477

)

 

 

(58,212

)

Cash, cash equivalents and restricted cash

 

 

 

 

 

 

Beginning of period

 

 

57,324

 

 

 

115,536

 

End of period

 

$

16,847

 

 

$

57,324

 

Supplemental disclosures of cash flow information

 

 

 

 

 

 

Interest paid during the period

 

$

8,834

 

 

$

2,466

 

Property and equipment purchases in accounts payable and accrued expenses

 

$

702

 

 

$

422

 

Issuance of common stock to satisfy contingent consideration

 

$

5,630

 

 

$

-

 

Issuance of common stock warrants in conjunction with long term debt

 

$

1,201

 

 

$

-

 

Issuance of common stock for services

 

$

360

 

 

$

413

 

Issuance of common stock upon vesting of restricted stock units

 

$

12

 

 

$

161

 

Non-GAAP Financial Measures

The following tables contain a reconciliation of net loss to Adjusted EBITDA for the three months and years ended December 31, 2022 and 2021, respectively.

(unaudited)

 

 

Three Months Ended

December 31,

 

 

Year Ended

December 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

(in thousands)

 

Net loss

 

$

(21,437

)

 

$

(18,560

)

 

$

(113,259

)

 

$

(59,800

)

Interest expense, net

 

 

3,745

 

 

 

618

 

 

 

11,504

 

 

 

2,504

 

(Benefit) provision for income taxes

 

 

(63

)

 

 

(76

)

 

 

11

 

 

 

(76

)

Depreciation and amortization

 

 

1,174

 

 

 

1,467

 

 

 

5,180

 

 

 

5,648

 

EBITDA

 

$

(16,581

)

 

$

(16,551

)

 

$

(96,564

)

 

$

(51,724

)

Foreign currency

 

 

51

 

 

 

37

 

 

 

239

 

 

 

225

 

Loss on extinguishment of debt

 

 

-

 

 

 

-

 

 

 

1,114

 

 

 

-

 

Change in fair value of contingent consideration

 

 

-

 

 

 

(1,356

)

 

 

(3,351

)

 

 

(1,813

)

Stock-based compensation

 

 

2,760

 

 

 

2,569

 

 

 

10,385

 

 

 

9,766

 

Impairment of goodwill

 

 

-

 

 

 

-

 

 

 

14,701

 

 

 

-

 

Impairment of long-lived and intangible assets

 

 

1,501

 

 

 

323

 

 

 

7,676

 

 

 

323

 

Loss on disposal of property and equipment

 

 

247

 

 

 

105

 

 

 

568

 

 

 

105

 

Adjusted EBITDA

 

$

(12,022

)

 

$

(14,873

)

 

$

(65,232

)

 

$

(43,118

)

 

The following tables contain a reconciliation of operating expenses to non-GAAP operating expenses and non-GAAP cash operating expenses for the three months and years ended December 31, 2022 and 2021, respectively.

 

(unaudited)

 

 

Three Months Ended

December 31,

 

 

Years Ended

December 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

(in thousands)

 

GAAP operating expenses

 

$

22,827

 

 

$

25,770

 

 

$

117,634

 

 

$

110,353

 

Impairment of goodwill

 

 

-

 

 

 

-

 

 

 

(14,701

)

 

 

-

 

Impairment of long-lived and intangible assets

 

 

(1,501

)

 

 

(323

)

 

 

(7,676

)

 

 

(323

)

Loss on disposal of property and equipment

 

 

(247

)

 

 

(105

)

 

 

(568

)

 

 

(105

)

Non-GAAP operating expenses

 

 

21,079

 

 

 

25,342

 

 

 

94,689

 

 

 

109,925

 

Stock-based compensation

 

 

(2,663

)

 

 

(2,377

)

 

 

(9,668

)

 

 

(9,037

)

Depreciation and amortization

 

 

(342

)

 

 

(484

)

 

 

(1,709

)

 

 

(1,915

)

Termination benefits

 

 

(30

)

 

 

-

 

 

 

(3,060

)

 

 

-

 

Loss from deconsolidation

 

 

(35

)

 

 

-

 

 

 

(35

)

 

 

-

 

Change in fair value of contingent consideration

 

 

-

 

 

 

1,356

 

 

 

3,351

 

 

 

1,813

 

Non-GAAP cash operating expenses

 

$

18,009

 

 

$

23,837

 

 

$

83,568

 

 

$

100,786

 

Supplemental Operating Metrics

 

December 31,

 

 

 

 

 

 

 

 

2022

 

 

2021

 

 

Change

 

 

Amount

 

 

Amount

 

 

Amount

 

 

%

 

HVT 2.0 and precision flow units installed base

 

 

 

 

 

 

 

 

 

 

 

United States

 

24,327

 

 

 

23,368

 

 

 

959

 

 

 

4.1

%

International

 

12,439

 

 

 

11,848

 

 

 

591

 

 

 

5.0

%

Total

 

36,766

 

 

 

35,216

 

 

 

1,550

 

 

 

4.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

 

 

 

 

 

 

 

2022

 

 

2021

 

 

Change

 

 

Amount

 

 

Amount

 

 

Amount

 

 

%

 

HVT 2.0 and precision flow units sold and leased

 

 

 

 

 

 

 

 

 

 

 

United States

 

239

 

 

 

419

 

 

 

(180

)

 

 

(43.0

)%

International

 

75

 

 

 

194

 

 

 

(119

)

 

 

(61.3

)%

Total

 

314

 

 

 

613

 

 

 

(299

)

 

 

(48.8

)%

 

 

 

 

 

 

 

 

 

 

 

 

Disposable patient circuits sold

 

 

 

 

 

 

 

 

 

 

 

United States

 

104,302

 

 

 

108,200

 

 

 

(3,898

)

 

 

(3.6

)%

International

 

24,551

 

 

 

34,395

 

 

 

(9,844

)

 

 

(28.6

)%

Total

 

128,853

 

 

 

142,595

 

 

 

(13,742

)

 

 

(9.6

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

 

 

 

 

 

 

 

2022

 

 

2021

 

 

Change

 

 

Amount

 

 

Amount

 

 

Amount

 

 

%

 

HVT 2.0 and precision flow units sold and leased

 

 

 

 

 

 

 

 

 

 

 

United States

 

813

 

 

 

3,600

 

 

 

(2,787

)

 

 

(77.4

)%

International

 

531

 

 

 

2,972

 

 

 

(2,441

)

 

 

(82.1

)%

Total

 

1,344

 

 

 

6,572

 

 

 

(5,228

)

 

 

(79.5

)%

 

 

 

 

 

 

 

 

 

 

 

 

Disposable patient circuits sold

 

 

 

 

 

 

 

 

 

 

 

United States

 

331,044

 

 

 

452,605

 

 

 

(121,561

)

 

 

(26.9

)%

International

 

118,226

 

 

 

200,901

 

 

 

(82,675

)

 

 

(41.2

)%

Total

 

449,270

 

 

 

653,506

 

 

 

(204,236

)

 

 

(31.3

)%

 

Contacts

Investor Relations:

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

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