Strong Q1 Breast Products Performance Despite COVID-19 Headwinds
Strengthened Focus on Core Breast Products Business and High-Margin bioTip® Sales to Drive Profitability and Growth
Q1 2020 & Recent Highlights:
- Q1 total net sales of $16.9 million, a 4% decrease year-over-year
- Breast Products Q1 net sales of $12.5 million, growth of 28% year-over-year
- miraDry Q1 net sales of $4.5 million, a 43% decrease year-over-year
- Well-capitalized balance sheet and restructured debt provides enhanced flexibility for investment in future growth
SANTA BARBARA, Calif., May 11, 2020 (GLOBE NEWSWIRE) -- Sientra, Inc. (NASDAQ: SIEN) (“Sientra” or the “Company”), a diversified medical aesthetics company, today announced its financial results for the first quarter ended March 31, 2020.
Jeff Nugent, Sientra’s Chairman and Chief Executive Officer, said, “Despite the challenging environment brought on by the COVID-19 pandemic, we were able maintain robust breast products sales throughout the quarter, with the impact of COVID-19 being felt most strongly in the final weeks. Our miraDry segment, with its distinct geographical mix and heavy end-of-quarter capital sales category model, was more significantly impacted as the COVID-19 pandemic first began to be felt earlier in the quarter in the Asia Pacific region followed by the United States at the critical end of quarter period.”
”While moratoriums on elective procedures have continued to impact sales into the second quarter, Sientra remains open for business. We have continued to ship product and have enacted a field support strategy which leverages the flexible nature of our commercial infrastructure, our virtual capabilities, and our ability to quickly adapt to changing market conditions to assist our customers to accelerate individual practice recovery. We have also acted to best position Sientra for long term success by prioritizing our core breast products business, while refocusing our miraDry business on high-margin bioTip utilization. These strategic decisions were made in addition to steps taken to carefully manage our operating expenses and our cash balance, ensuring that we are well-positioned as elective procedures begin to resume.”
Mr. Nugent continued, “I am also pleased to announce that we have reached agreement with certain of our lenders to restructure our existing debt facilities. Under the agreement we will have paid down $25 million of our term loan, gained access to up to $30 million in term loans, and reduced our revenue and cash covenants. This new debt structure, combined with our other debt facilities and well-capitalized balance sheet, provide us with enhanced latitude to invest in our business for continued growth.”
Mr. Nugent concluded, “Despite these uncertain times, I remain confident in Sientra’s ability to continue to drive significant market share gains in the breast products segment and to emerge in a position of increased strength. As an organization, Sientra has been committed to providing a unique portfolio of safe and effective products that help our medical professionals deliver life changing benefits to their patients around the world and despite these difficult times, we are unwavering in this commitment.”
First Quarter 2020 Financial Review
Total net sales for the first quarter 2020 were $16.9 million, a decrease of 4% compared to total net sales of $17.6 million for the same period in 2019.
Net sales for the Breast Products segment totaled $12.5 million in the first quarter 2020, a 28% increase compared to $9.8 million for the same period in 2019.
Net sales for the miraDry segment totaled $4.5 million in the first quarter 2020, a 43% decrease compared to $7.8 million for the same period in 2019.
Gross profit for the first quarter 2020 was $10.1 million, or 59.9% of sales, compared to gross profit of $11.1 million, or 63.1% of sales, for the same period in 2019.
Operating expenses for the first quarter 2020 were $37.1 million, compared to $36.9 million of operating expenses for the same period in 2019. Excluding a $6.4 million non-cash impairment of certain intangibles related to miraDry and restructuring charges totaling $1.7 million, operating expenses in the first quarter of 2020 decreased $8.0 million, or 22%, compared to the same period in 2019.
Net loss for the first quarter 2020 was ($28.6) million, or ($0.57) per share, compared to a net loss of ($26.5) million, or ($0.91) per share, for the same period in 2019.
On a non-GAAP basis, the Company reported an adjusted EBITDA loss of ($15.5) million for the first quarter 2020, compared to a loss of ($21.1) million for the same period in 2019.
Net cash and cash equivalents as of March 31, 2020 were $112 million, compared to $88 million as of December 31, 2019.
2020 Net Sales Outlook
Sientra withdrew its previously announced annual guidance for 2020 on April 7, 2020. Due to the uncertain scope and duration of the COVID-19 pandemic, and unknown timing of global recovery and economic normalization, the company remains unable to accurately estimate the impact on its operations and financial results.
Conference Call
Sientra will hold a conference call today, May 11, 2020 at 5:00 pm ET to discuss first quarter results. The dial-in numbers are 844-464-3933 for domestic callers and 765-507-2612 for international callers. The conference ID is 3594402. A live webcast of the conference call will be available on the Investor Relations section of the Company's website at www.sientra.com. The webcast will be archived on the website following the completion of the call.
Use of Non-GAAP Financial Measures
Sientra has supplemented its US GAAP net income (loss) with a non-GAAP measure of Adjusted EBITDA. Management believes that this non-GAAP financial measure provides useful supplemental information to management and investors regarding the performance of the Company, facilitates a more meaningful comparison of results for current periods with previous operating results, and assists management in analyzing future trends, making strategic and business decisions and establishing internal budgets and forecasts. A reconciliation of non-GAAP Adjusted EBITDA to GAAP net income (loss), the most directly comparable GAAP measure, is provided in the schedule below.
There are limitations in using this non-GAAP financial measure because it is not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies. This non-GAAP financial measure should not be considered in isolation or as a substitute for GAAP financial measures. Investors and potential investors should consider non-GAAP financial measures only in conjunction with Sientra’s financial statements prepared in accordance with GAAP and the reconciliations of the non-GAAP financial measure provided in the schedule below.
About Sientra
Headquartered in Santa Barbara, California, Sientra is a diversified global medical aesthetics company and a leading partner to aesthetic physicians. The Company offers a suite of products designed to make a difference in patients' lives by enhancing their body image, growing their self-esteem, and restoring their confidence. Sientra has developed a broad portfolio of products with technologically differentiated characteristics, supported by independent laboratory testing and strong clinical trial outcomes. The Company’s Breast Products Segment includes its OPUS® breast implants, the first fifth generation breast implants approved by the FDA for sale in the United States, its ground-breaking Allox2® breast tissue expander with patented dual-port and integral drain technology, and BIOCORNEUM® the #1 performing, preferred and recommended scar gel of plastic surgeons(*). The Company’s miraDry Segment, comprises its miraDry® system, which is approved for sale in over 40 international markets, and is the only non-surgical FDA-cleared device for the permanent reduction of underarm sweat, odor and hair of all colors.
Sientra uses its investor relations website to publish important information about the Company, including information that may be deemed material to investors. Financial and other information about Sientra is routinely posted and is accessible on the Company’s investor relations website at www.sientra.com.
(*) Data on file
Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, based on management’s current assumptions and expectations of future events and trends, which affect or may affect the Company’s business, strategy, operations or financial performance, and actual results may differ materially from those expressed or implied in such statements due to numerous risks and uncertainties. Forward-looking statements are made only as of the date of this release. The words ‘‘believe,’’ ‘‘may,’’ ‘‘might,’’ ‘‘could,’’ ‘‘will,’’ ‘‘aim,’’ ‘‘estimate,’’ ‘‘continue, ‘‘anticipate,’’ ‘‘intend,’’ ‘‘expect,’’ ‘‘plan,’’ ‘‘position,” or the negative of those terms, and similar expressions that convey uncertainty of future events or outcomes are intended to identify estimates, projections and other forward-looking statements. Forward-looking statements may include information concerning the impact of the COVID-19 pandemic on the Company and its operations, the Company’s possible or assumed future results of operations, including descriptions of the Company’s revenues, profitability, outlook and overall business strategy. Such statements are subject to risks and uncertainties, including the scope and duration of the COVID-19 pandemic, the Company’s ability to recapture delayed procedures resulting from the COVID-19 pandemic, the positive reaction from plastic surgeons and their patients to Sientra’s Breast Products, the ability to meet consumer demand, the acceptance and growth of its miraDry segment, and the Company’s ability to manage its operating expenses and cash balance. Additional factors that could cause actual results to differ materially from those contemplated in this press release can be found in the Risk Factors section of Sientra’s public filings with the Securities and Exchange Commission. All statements other than statements of historical fact are forward-looking statements. The words ‘‘believe,’’ ‘‘may,’’ ‘‘might,’’ ‘‘could,’’ ‘‘will,’’ ‘‘aim,’’ ‘‘estimate,’’ ‘‘continue, ‘‘anticipate,’’ ‘‘intend,’’ ‘‘expect,’’ ‘‘plan,’’ ‘‘position,” or the negative of those terms, and similar expressions that convey uncertainty of future events or outcomes are intended to identify estimates, projections and other forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, and such estimates, projections and other forward-looking statements speak only as of the date they were made, and, except to the extent required by law, the Company undertakes no obligation to update or review any estimate, projection or forward-looking statement. Actual results may differ from those set forth in this press release due to the risks and uncertainties inherent in the Company’s business.
Contact
Investor Relations
805-679-8885
| Sientra, Inc | |||||||
| Condensed Consolidated Statements of Operations | |||||||
| (In thousands, except per share and share amounts) | |||||||
| (Unaudited) | |||||||
| Three Months Ended | |||||||
| March 31, | |||||||
| 2020 | 2019 | ||||||
| Net sales | $ | 16,932 | $ | 17,552 | |||
| Cost of goods sold | 6,792 | 6,474 | |||||
| Gross profit | 10,140 | 11,078 | |||||
| Operating expenses: | |||||||
| Sales and marketing | 16,763 | 20,401 | |||||
| Research and development | 2,908 | 3,054 | |||||
| General and administrative | 9,304 | 13,474 | |||||
| Restructuring | 1,739 | — | |||||
| Impairment | 6,432 | — | |||||
| Total operating expenses | 37,146 | 36,929 | |||||
| Loss from operations | (27,006 | ) | (25,851 | ) | |||
| Other income (expense), net: | |||||||
| Interest income | 180 | 304 | |||||
| Interest expense | (1,623 | ) | (952 | ) | |||
| Other income (expense), net | (163 | ) | 15 | ||||
| Total other income (expense), net | (1,606 | ) | (633 | ) | |||
| Loss before income taxes | (28,612 | ) | (26,484 | ) | |||
| Income tax | — | — | |||||
| Net loss | $ | (28,612 | ) | $ | (26,484 | ) | |
| Basic and diluted net loss per share attributable to common stockholders | $ | (0.57 | ) | $ | (0.91 | ) | |
| Weighted average outstanding common shares used for net loss per share attributable to common stockholders: | |||||||
| Basic and diluted | 49,916,412 | 29,099,382 | |||||
| Sientra, Inc | |||||||
| Condensed Consolidated Balance Sheets | |||||||
| (In thousands) | |||||||
| (Unaudited) | |||||||
| March 31, | December 31, | ||||||
| 2020 | 2019 | ||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 112,062 | $ | 87,608 | |||
| Accounts receivable, net | 25,425 | 27,548 | |||||
| Inventories, net | 42,118 | 39,612 | |||||
| Prepaid expenses and other current assets | 2,264 | 2,489 | |||||
| Total current assets | 181,869 | 157,257 | |||||
| Property and equipment, net | 12,344 | 12,314 | |||||
| Goodwill | 9,202 | 9,202 | |||||
| Other intangible assets, net | 10,383 | 17,390 | |||||
| Other assets | 9,048 | 8,241 | |||||
| Total assets | $ | 222,846 | $ | 204,404 | |||
| Liabilities and Stockholders’ Equity | |||||||
| Current liabilities: | |||||||
| Current portion of long-term debt | $ | 25,000 | $ | 6,508 | |||
| Accounts payable | 5,835 | 9,352 | |||||
| Accrued and other current liabilities | 26,402 | 32,551 | |||||
| Customer deposits | 15,227 | 13,943 | |||||
| Sales return liability | 8,707 | 8,116 | |||||
| Total current liabilities | 81,171 | 70,470 | |||||
| Long-term debt, net of current portion | 55,918 | 38,248 | |||||
| Derivative liability | 16,230 | — | |||||
| Deferred and contingent consideration | 5,285 | 5,177 | |||||
| Warranty reserve and other long-term liabilities | 9,375 | 8,627 | |||||
| Total liabilities | 167,979 | 122,522 | |||||
| Stockholders’ equity: | |||||||
| Total stockholders’ equity | 54,867 | 81,882 | |||||
| Total liabilities and stockholders’ equity | $ | 222,846 | $ | 204,404 | |||
| Sientra, Inc | |||||||
| Condensed Consolidated Statements of Cash Flows | |||||||
| (In thousands) | |||||||
| (Unaudited) | |||||||
| Three Months Ended March 31, | |||||||
| 2020 | 2019 | ||||||
| Cash flows from operating activities: | |||||||
| Net loss | $ | (28,612 | ) | $ | (26,484 | ) | |
| Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
| Impairment | 6,432 | — | |||||
| Depreciation and amortization | 1,228 | 831 | |||||
| Provision for doubtful accounts | 357 | 342 | |||||
| Provision for warranties | 236 | 273 | |||||
| Provision for inventory | 1,081 | 289 | |||||
| Fair value adjustments of liabilities held at fair value | 91 | 98 | |||||
| Stock-based compensation expense | 2,133 | 3,700 | |||||
| Payments of contingent consideration liability in excess of acquisition-date fair value | — | (630 | ) | ||||
| Other non-cash adjustments | 397 | 56 | |||||
| Changes in assets and liabilities: | |||||||
| Accounts receivable | 1,766 | (2,583 | ) | ||||
| Inventories | (3,720 | ) | (3,373 | ) | |||
| Prepaid expenses, other current assets and other assets | (587 | ) | 396 | ||||
| Accounts payable, accrueds, and other liabilities | (9,867 | ) | (75 | ) | |||
| Customer deposits | 1,284 | 956 | |||||
| Sales return liability | 592 | 1,968 | |||||
| Legal settlement payable | — | (410 | ) | ||||
| Net cash used in operating activities | (27,189 | ) | (24,646 | ) | |||
| Cash flows from investing activities: | |||||||
| Purchase of property and equipment | (1,206 | ) | (610 | ) | |||
| Net cash used in investing activities | (1,206 | ) | (610 | ) | |||
| Cash flows from financing activities: | |||||||
| Proceeds from option exercises and employee stock purchase plan | 534 | 789 | |||||
| Net proceeds from issuance of common stock | 264 | — | |||||
| Tax payments related to shares withheld for vested restricted stock units (RSUs) | (1,201 | ) | (2,725 | ) | |||
| Gross borrowings under the Revolving Loan | — | 4,183 | |||||
| Repayment of the Revolving Loan | (6,508 | ) | (1,565 | ) | |||
| Net proceeds from issuance of the Convertible Note | 60,000 | — | |||||
| Payments of contingent consideration up to acquisition-date fair value | — | (370 | ) | ||||
| Deferred financing costs | (240 | ) | — | ||||
| Net cash provided by financing activities | 52,849 | 312 | |||||
| Net increase in cash, cash equivalents and restricted cash | 24,454 | (24,944 | ) | ||||
| Cash, cash equivalents and restricted cash at: | |||||||
| Beginning of period | 87,951 | 87,242 | |||||
| End of period | $ | 112,405 | $ | 62,298 | |||
| Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets | |||||||
| Cash and cash equivalents | $ | 112,062 | $ | 61,955 | |||
| Restricted cash included in other assets | 343 | 343 | |||||
| Total cash, cash equivalents and restricted cash | $ | 112,405 | $ | 62,298 | |||
| Sientra, Inc. | |||||||
| Reconciliation of Net Loss to Non-GAAP Adjusted EBITDA | |||||||
| (Unaudited) | |||||||
| Three Months Ended | |||||||
| March 31, | |||||||
| Dollars, in thousands | 2020 | 2019 | |||||
| Net loss, as reported | $ | (28,612 | ) | $ | (26,484 | ) | |
| Adjustments to net loss: | |||||||
| Interest (income) expense and other, net | 1,606 | 633 | |||||
| Depreciation and amortization | 1,228 | 831 | |||||
| Accretion in fair value adjustments to contingent consideration | — | 185 | |||||
| Stock-based compensation | 2,133 | 3,700 | |||||
| Restructuring | 1,739 | — | |||||
| Impairment | 6,432 | — | |||||
| Total adjustments to net loss | 13,138 | 5,349 | |||||
| Adjusted EBITDA | $ | (15,474 | ) | $ | (21,135 | ) | |
| Three Months Ended | |||||||
| March 31, | |||||||
| As a Percentage of Revenue** | 2020 | 2019 | |||||
| Net loss, as reported | (169.0 | %) | (150.9 | %) | |||
| Adjustments to net loss: | |||||||
| Interest (income) expense and other, net | 9.5 | % | 3.6 | % | |||
| Depreciation and amortization | 7.3 | % | 4.7 | % | |||
| Accretion in fair value adjustments to contingent consideration | 0 | % | 1.1 | % | |||
| Stock-based compensation | 12.6 | % | 21.1 | % | |||
| Restructuring | 10.3 | % | 0 | % | |||
| Impairment | 38 | % | 0 | % | |||
| Total adjustments to net loss | 77.6 | % | 30.5 | % | |||
| Adjusted EBITDA | (91.4 | %) | (120.4 | %) | |||
| ** Adjustments may not add to the total figure due to rounding | |||||||