Venus Concept Announces Third Quarter and First Nine Months of 2020 Financial Results
TORONTO, Nov. 16, 2020 (GLOBE NEWSWIRE) -- Venus Concept Inc. (“Venus Concept” or the “Company”) (NASDAQ: VERO), a global medical aesthetic technology leader, announced financial results for the three and nine months ended September 30, 2020.
Third Quarter 2020 Financial Summary:
- Total GAAP revenue for the third quarter of 2020 decreased 21% year-over-year, to $20.7 million, compared to $26.2 million for the third quarter 2019, driven by the negative impact on our business as a result of the COVID-19 global pandemic. Total GAAP revenue for the third quarter of 2020 increased 22%, compared to $17.0 million for the second quarter of 2020.
• Total GAAP revenue for the third quarter of 2020 includes $4.8 million of revenue from Venus Concept Inc. (formerly Restoration Robotics, Inc.) for the three months ended September 30, 2020. Sales of ARTAS® and ARTAS iX® systems and procedure-related kits increased 55% and 52% quarter-over-quarter, respectively, in the third quarter of 2020. - GAAP operating loss for the third quarter of 2020 was $5.3 million, compared to a loss of $6.6 million for the third quarter of 2019.
• In the nine months ended September 30, 2020, the Company realized more than $14.0 million of cost savings from the new restructuring program announced in response to the challenging business environment caused by COVID-19 and remains on target to realize the projected $20.0 million of cost savings for full fiscal year 2020. - GAAP net loss for the third quarter of 2020 of $7.3 million, compared to a loss of $9.0 million for the third quarter of 2019.
- Adjusted EBITDA (non-GAAP) loss of $1.4 million for the third quarter of 2020, compared to Adjusted EBITDA of $28 thousand in the third quarter of 2019.
- The Company had $12.8 million and $15.7 million of cash and cash equivalents as of September 30, 2020 and December 31, 2019, respectively, and total debt obligations of approximately $74.5 million and $69.0 million as of September 30, 2020 and December 31, 2019, respectively.
Management Commentary:
“While our third quarter revenue performance continued to be impacted by the COVID-19 global pandemic, we have many reasons for optimism,” said Domenic Serafino, Chief Executive Officer of Venus Concept. “We experienced a notable improvement in the operating environment in our key markets as evidenced by the strong procedure-related activity in both our aesthetics and hair restoration businesses during the third quarter. Importantly, while the recovery in capital equipment demand in the aesthetics and hair restoration markets remains challenged, our focused commercial strategy is helping us maximize our opportunities to drive adoption. Third quarter system sales results benefitted from strong sales of our Venus Bliss in the U.S. and strong adoption of our ARTAS iX® in EMEA.”
Mr. Serafino continued: “Our efforts to reduce the operating expense profile of the combined company are progressing well. We continue to expect our restructuring program, combined with previously announced synergies and cost reductions, to result in cost savings of approximately $38 million in 2020 and continuing into 2021. We are investing prudently in our R&D initiatives focused on the compelling opportunity to introduce new minimally invasive robotic solutions, beyond hair restoration, for medical aesthetic procedures that are currently treated by surgical intervention. While the near-term outlook has been challenged by this global pandemic, we continue to believe the long-term opportunity remains compelling for us as a leading player in both the global minimally invasive/non-invasive medical aesthetics market and the minimally invasive surgical hair restoration market.”
Third Quarter and First Nine Months of 2020 Revenue by Region and by Product Type:
Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
(dollars in thousands) | (dollars in thousands) | |||||||||||||||
Revenues by region: | ||||||||||||||||
United States | $ | 7,784 | $ | 10,118 | $ | 22,339 | $ | 31,337 | ||||||||
International | 12,896 | 16,036 | 29,845 | 47,215 | ||||||||||||
Total revenue | $ | 20,680 | $ | 26,154 | $ | 52,184 | $ | 78,552 | ||||||||
Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
(dollars in thousands) | (dollars in thousands) | |||||||||||||||
Revenues by product: | ||||||||||||||||
Subscription—Systems | $ | 9,431 | $ | 16,427 | $ | 23,709 | $ | 48,812 | ||||||||
Products—Systems | 7,503 | 7,105 | 17,758 | 21,188 | ||||||||||||
Products—Other | 2,631 | 1,167 | 7,136 | 4,117 | ||||||||||||
Services | 1,115 | 1,455 | 3,581 | 4,435 | ||||||||||||
Total revenue | $ | 20,680 | $ | 26,154 | $ | 52,184 | $ | 78,552 | ||||||||
Third Quarter 2020 Financial Results:
Three Months Ended September 30, | ||||||||||||||||||||||||||||||
2020 | 2019 | Change | ||||||||||||||||||||||||||||
(in thousands, except percentages) | $ | % of Total | $ | % of Total | $ | % | ||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||
Subscription—Systems | $ | 9,431 | 45.6 | $ | 16,427 | 62.8 | $ | (6,996 | ) | (42.6 | ) | |||||||||||||||||||
Products—Systems | 7,503 | 36.3 | 7,105 | 27.2 | 398 | 5.6 | ||||||||||||||||||||||||
Products—Other | 2,631 | 12.7 | 1,167 | 4.5 | 1,464 | 125.4 | ||||||||||||||||||||||||
Services | 1,115 | 5.4 | 1,455 | 5.5 | (340 | ) | (23.4 | ) | ||||||||||||||||||||||
Total | $ | 20,680 | 100.0 | $ | 26,154 | 100.0 | $ | (5,474 | ) | (20.9 | ) | |||||||||||||||||||
Total revenue for the third quarter of 2020 decreased $5.5 million, or 21%, to $20.7 million, compared to $26.2 million for the third quarter of 2019. Total lease revenue, from sales of systems via our subscription model, decreased $7.0 million, or 43%, to $9.4 million, compared to $16.4 million for the third quarter of 2019. Total products and services revenue for the third quarter of 2020 increased $1.5 million, or 16%, to $11.2 million, compared to $9.7 million for the third quarter of 2019.
The decrease in revenue was a result of decreased revenue in the United States of $2.3 million, or 23%, and decreased revenue in international markets of $3.2 million, or 20%. The decrease in revenue in both the United States and international markets was driven by COVID-19 related disruptions including lockdown measures or restrictions imposed by federal and state governments, a reduction in procedures at the clinic level caused by additional COVID-19 safety protocols, and a general reluctance on the part of some consumers to undergo non-essential aesthetic procedures given the risks presented by COVID-19. These disruptions and the resultant uncertainty at the clinic level negatively impacted our ability to sell into our customary channels in both the United States and international markets.
The decrease in total revenue, by product category, for the third quarter of 2020 was driven by a decrease of $7.0 million, or 43%, in lease revenue, a decrease of $0.3 million, or 23%, in service revenue, offset partially by an increase of $1.5 million, or 125%, in other products revenue, primarily ARTAS® and ARTAS iX® procedure kits and other consumables, and an increase of $0.4 million, or 6%, in system revenue. With the exception of the increase in other products revenue, the declines were attributable to aforementioned COVID-19 related disruptions that impacted our ability to sell into our customary U.S. and international markets. The percentage of systems revenue derived from our subscription model was approximately 56% in the three months ended September 30, 2020 compared to 70% in the three months ended September 30, 2019. The increase in system revenue for the third quarter of 2020 was driven by a significant contribution of revenue from the sale of ARTAS® and ARTAS iX® systems which did not contribute to system revenue in the third quarter of 2019. The increase in other product revenue was driven by sales of ARTAS procedure kits, which did not contribute to system revenue in the third quarter of 2019, partially offset by the aforementioned COVID-19 related disruptions. The decrease in service revenue for the third quarter of 2020 was driven by COVID-19 related restrictions imposed by federal, state, and local governments resulting in a decline in VeroGrafters™ technician services, along with the suspension of operations of the 2two5 marketing services, offset by additional warranty revenue on ARTAS® systems.
Gross profit for the third quarter of 2020 decreased $5.3 million, or 28%, to $13.5 million, compared to $18.8 million for the third quarter of 2019. The decrease in gross profit is primarily due to lower revenues caused by the aforementioned COVID-19 related disruptions in countries and markets in which the Company operates. Gross margin was 65.3% of revenue for the third quarter of 2020, compared to 71.8% of revenue for the third quarter of 2019. The decrease in gross margin is primarily related to changes in revenue mix, specifically, the strong sales of our robotic ARTAS® systems in the third quarter of 2020, which were sold at slightly lower margins than our other systems.
Operating expenses for the third quarter of 2020 decreased $6.5 million, or 26%, to $18.8 million, compared to $25.3 million for the third quarter of 2019. The year-over-year decrease in operating expenses was primarily driven by a decrease of $3.5 million, or 39%, in sales and marketing expenses and a decrease of $3.2 million, or 22%, in general & administrative expenses, partially offset by a $0.2 million increase in R&D expenses or 10%. In the third quarter of 2020, the Company realized $7.0 million, of the projected $20.0 million for full fiscal year 2020, in cost savings from the new restructuring program in response to the challenging business environment from COVID-19, which was previously announced.
Operating loss for the third quarter of 2020 was $5.3 million, compared to operating loss of $6.6 million for the third quarter of 2019.
Net loss attributable to Venus Concept Inc. stockholders for the third quarter of 2020 was $7.2 million, or $0.18 per share, compared to net loss attributable to Venus Concept Inc. stockholders of $8.6 million, or $1.77 per share, for the third quarter of 2019. Weighted average shares used to compute net loss attributable to Venus Concept Inc. stockholders per share were 40.5 million and 4.9 million for the third quarters of 2020 and 2019, respectively.
Adjusted EBITDA loss (non-GAAP) for the third quarter of 2020 was $1.4 million, compared to Adjusted EBITDA of $28 thousand for the third quarter of 2019.
First Nine Months of 2020 Financial Results:
Nine Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2019 | Change | ||||||||||||||||||||||
(in thousands, except percentages) | $ | % of Total | $ | % of Total | $ | % | ||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Subscription—Systems | $ | 23,709 | 45.4 | $ | 48,812 | 62.1 | $ | (25,103 | ) | (51.4 | ) | |||||||||||||
Products—Systems | 17,758 | 34.0 | 21,188 | 27.0 | (3,430 | ) | (16.2 | ) | ||||||||||||||||
Products other | 7,136 | 13.7 | 4,117 | 5.2 | 3,019 | 73.3 | ||||||||||||||||||
Services | 3,581 | 6.9 | 4,435 | 5.7 | (854 | ) | (19.3 | ) | ||||||||||||||||
Total | $ | 52,184 | 100.0 | $ | 78,552 | 100.0 | $ | (26,368 | ) | (33.6 | ) | |||||||||||||
Total revenue for the first nine months of 2020 decreased by $26.4 million, or 34%, to $52.2 million, compared to $78.6 million for the first nine months of 2019. The decrease in revenue was a result of decreased revenue in the United States of $9.0 million, or 29%, and decreased revenue in international markets of $17.4 million, or 37%. The decrease in revenue in both the United States and international markets was driven by the aforementioned COVID-19 related disruptions.
Net loss attributable to Venus Concept Inc. stockholders for the first nine months of 2020 was $70.6 million, or $2.04 per share, compared to net loss attributable to Venus Concept Inc. stockholders of $19.8 million, or $4.12 per share, for the first nine months of 2019. Weighted average shares used to compute net loss attributable to Venus Concept Inc. stockholders per share were 34.6 million and 4.8 million for the first nine months of 2020 and 2019, respectively.
Adjusted EBITDA (non-GAAP) loss for the first nine months of 2020 was $17.7 million, compared to adjusted EBITDA loss of $1.0 million for the first nine months of 2019.
Fiscal Year 2020 Revenue Guidance:
On March 30, 2020, due to the rapidly evolving market conditions and continued uncertainties from the impact of COVID-19, the Company withdrew its previously announced fiscal year 2020 revenue guidance which was issued on January 13, 2020. At this date the Company cannot predict the specific extent or duration of the impact of the COVID-19 outbreak on its financial and operating results for the fiscal year 2020.
Conference Call Details:
Management will host a conference call at 8:00 a.m. Eastern Time on November 16, 2020 to discuss the results of the quarter with a question and answer session. Those who would like to participate may dial 877-407-2991 (201-389-0925 for international callers) and provide access code 13711300. A live webcast of the call will also be provided on the investor relations section of the Company's website at ir.venusconcept.com.
For those unable to participate, a replay of the call will be available for two weeks at 877-660-6853 (201-612-7415 for international callers); access code 13711300. The webcast will be archived at ir.venusconcept.com.
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