Remains on Track for FDA PMA Supplement Approval
by End of 2017
Sientra, Inc. (NASDAQ:SIEN) (“Sientra” or the “Company”), a medical
aesthetics company, today announced its financial results for the
second quarter ended June 30, 2017.
Jeffrey M. Nugent, Chairman and Chief Executive
Officer of Sientra, said, “The past few months have been a very
busy and exciting time for Sientra. In the second quarter, we
once again delivered solid revenue results and continued to drive
closer to FDA approval of our new manufacturing facility, while
also advancing our strategic plan to build Sientra into a
diversified global aesthetics company. This included the
acquisition of Miramar Labs completed in July, which will be
immediately accretive to revenue and provides a robust growth
opportunity. We also secured a $50 million credit facility to
further bolster our balance sheet and allow for continued
investment to drive growth.
"Importantly, we entered into a settlement
agreement with our former breast implant contract manufacturer,
allowing us to move forward without the distraction of this legal
issue. We view the settlement as an attractive conclusion for
Sientra with the actual expense and cash outlay being significantly
lower when accounting for the savings from ongoing legal costs
associated with taking both the litigation and arbitration lawsuits
through to trial.
"Looking ahead, I am confident that Sientra
remains on track with both near and long term strategic initiatives
to become a leader in the aesthetic space, and I am extremely
excited to continue to build on our momentum across our newer
segments as we move into 2018 and re-launch our breast implants
following expected FDA approval of our facility by the end of the
year.”
Mr. Nugent added, “We are also excited to
announce that Keith Sullivan has joined our Board of Directors.
Keith will initially be focused on commercial efforts at Miramar
Labs and as a member of our Board we welcome his extensive
aesthetic experience across our entire product portfolio.”
Mr. Sullivan most recently was Chief Commercial
Officer and President, North America of ZELTIQ Aesthetics, Inc., a
medical technology company focused on developing and
commercializing products utilizing its proprietary
controlled-cooling technology platform under the Coolsculpting®
brand. Mr. Sullivan led the restructuring of the global commercial
organization resulting in a nearly 50% 4-year CAGR leading to an
acquisition this year by Allergan. Mr. Sullivan, who has more than
30 years of senior sales leadership experience in the medical
device industry, has previously held leadership positions with
Medicis Pharmaceuticals, Reliant Technologies, Medtronic, Vision
Quest Laser and Coherent Medical. Mr. Sullivan received a
Bachelor of Business Administration from the College of William and
Mary.
Second Quarter 2017 Financial
Review
Total net sales for the second quarter of 2017
were $8.2 million, compared to total net sales of $6.2 million for
the same period in 2016. This increase was primarily driven
by the Company’s acquisition of the Specialty Surgical Products
tissue expander portfolio, completed in the fourth quarter of
2016.
Breast Products accounted for 83% of total net
sales for the second quarter of 2017, while bioCorneum®, the
Company’s Scar Management Product, accounted for 15% of total net
sales.
Gross profit for the second quarter of 2017 was
$5.5 million, or 68% of sales, compared to gross profit of $4.5
million, or 72% of sales, for the same period in 2016. The
decrease in gross margin was primarily due to an increase in the
non-cash inventory purchase accounting adjustment recorded from the
Company’s acquisition of the Specialty Surgical Products tissue
expander portfolio.
Operating expenses for the second quarter of
2017 were $25.8 million, compared to operating expenses of $14.7
million for the same period in 2016. Operating expenses in
the second quarter 2017 were driven higher primarily by the legal
settlement with our former breast implant contract
manufacturer.
Net loss for the second quarter of 2017 was
$20.4 million, compared to $10.2 million for the same period in
2016.
On a non-GAAP basis, the Company reported
adjusted EBITDA of $(7.6) million for the second quarter of
2017, compared to $(9.0) million for the second quarter of
2016.
Net cash and cash equivalents as of June 30,
2017 were $55.5 million compared to $58.8 million at the end of the
first quarter 2017.
Additional information on the Company’s
financial results can be found in Sientra’s Supplemental Financial
and Operational Information schedule by visiting the Investor
Relations section of Sientra’s website at www.sientra.com.
Conference Call
Sientra will hold a conference call today,
Wednesday, August 9, 2017 at 1:30 p.m. PT/4:30 p.m. ET to discuss
the results.
The dial-in numbers are (844) 464-3933 for
domestic callers and (765) 507-2612 for international callers. The
conference ID is 58650481. A live webcast of the conference
call will be available on the Investor Relations section of the
Company's website at www.sientra.com.
Use of Non-GAAP Financial
MeasuresSientra 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 SientraHeadquartered in
Santa Barbara, California, Sientra is a medical aesthetics company
committed to making a difference in patients’ lives by enhancing
their body image, growing their self-esteem and restoring their
confidence. The Company was founded to provide greater choice to
board-certified plastic surgeons and patients in need of medical
aesthetics products. The Company has developed a broad portfolio of
products with technologically differentiated characteristics,
supported by independent laboratory testing and strong clinical
trial outcomes. The Company sells its breast implants and breast
tissue expanders exclusively to board-certified and
board-admissible plastic surgeons and tailors its customer service
offerings to their specific needs. The Company also offers a
range of other aesthetic and specialty products including
BIOCORNEUM®, the professional choice in scar management, and
miraDry, the only FDA cleared device to reduce underarm sweat, odor
and permanently reduce hair of all colors.
Forward-looking statementsThis
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 include, but are not limited to,
statements regarding the timing of FDA approval of the Company’s
new manufacturing facility, the expected benefits of the Miramar
acquisition; the Company’s ability to become a world class,
diversified aesthetics organization, the timing of the re-launch of
the Company’s breast implants; and the ability to leverage the
expertise of the Company’s new director. Such statements are
subject to risks and uncertainties, including the dependence on
positive reaction from plastic surgeons and their patients in order
to successfully re-enter the market, future profitability depending
on the success of the Company’s breast products, and risks
associated with contracting with any third-party manufacturer and
supplier, including uncertainties that the development and
validation of Vesta’s manufacturing facility will be timely
completed, that a PMA Supplement or other regulatory requirements
will be timely approved by the FDA or other applicable regulatory
authorities and that the integration of recently acquired product
lines will not achieve the anticipated benefits or will divert
attention of management from the operation of the existing
business. 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 most recently
filed Quarterly Report on Form 10-Q and its Annual Report on Form
10-K for the year ended December 31, 2016. 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,’’ 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. 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.
SIENTRA, INC. |
|
Condensed Balance Sheets |
|
(In thousands, except per share and share amounts) |
|
(Unaudited) |
|
|
|
|
|
June 30, |
|
|
December 31, |
|
|
|
2017 |
|
|
2016 |
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
55,495 |
|
|
$ |
67,212 |
|
Accounts
receivable, net of allowances of $4,532 and $4,329 at June 30,
2017 and December 31, 2016, respectively |
|
|
3,007 |
|
|
|
3,082 |
|
Inventories, net |
|
|
16,401 |
|
|
|
18,484 |
|
Insurance
recovery receivable |
|
|
97 |
|
|
|
9,375 |
|
Prepaid
expenses and other current assets |
|
|
3,401 |
|
|
|
1,852 |
|
Total
current assets |
|
|
78,401 |
|
|
|
100,005 |
|
Property and equipment,
net |
|
|
3,788 |
|
|
|
2,986 |
|
Goodwill |
|
|
4,878 |
|
|
|
4,878 |
|
Other intangible
assets, net |
|
|
5,332 |
|
|
|
6,186 |
|
Other assets |
|
|
1,226 |
|
|
|
228 |
|
Total
assets |
|
$ |
93,625 |
|
|
$ |
114,283 |
|
Liabilities and
Stockholders’ Equity |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Current
portion of long-term debt |
|
$ |
5,000 |
|
|
$ |
— |
|
Accounts
payable |
|
|
2,256 |
|
|
|
3,555 |
|
Accrued
and other current liabilities |
|
|
10,354 |
|
|
|
6,507 |
|
Legal
settlement payable |
|
|
10,000 |
|
|
|
10,900 |
|
Customer
deposits |
|
|
5,862 |
|
|
|
6,559 |
|
Total
current liabilities |
|
|
33,472 |
|
|
|
27,521 |
|
Warranty reserve and
other long-term liabilities |
|
|
4,315 |
|
|
|
3,145 |
|
Total
liabilities |
|
|
37,787 |
|
|
|
30,666 |
|
Commitments and
contingencies (Note 12) |
|
|
|
|
|
|
|
|
Stockholders’
equity: |
|
|
|
|
|
|
|
|
Preferred
stock, $0.01 par value – Authorized 10,000,000 shares; none issued
or outstanding |
|
|
— |
|
|
|
— |
|
Common
stock, $0.01 par value — Authorized 200,000,000 shares; issued
19,325,332 and 18,671,409 and outstanding 19,252,605 and 18,598,682
shares at June 30, 2017 and December 31, 2016
respectively |
|
|
193 |
|
|
|
186 |
|
Additional paid-in capital |
|
|
303,159 |
|
|
|
299,133 |
|
Treasury
stock, at cost (72,727 shares at June 30, 2017 and
December 31, 2016) |
|
|
(260 |
) |
|
|
(260 |
) |
Accumulated deficit |
|
|
(247,254 |
) |
|
|
(215,442 |
) |
Total
stockholders’ equity |
|
|
55,838 |
|
|
|
83,617 |
|
Total
liabilities and stockholders’ equity |
|
$ |
93,625 |
|
|
$ |
114,283 |
|
SIENTRA, INC. |
|
Condensed Statements of
Operations |
|
(In thousands, except per share and share
amounts) |
|
(Unaudited) |
|
|
|
|
|
Three Months Ended |
|
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
|
June 30, |
|
|
|
2017 |
|
|
2016 |
|
|
|
2017 |
|
|
2016 |
|
Net sales |
|
$ |
|
8,169 |
|
|
$ |
|
6,244 |
|
|
|
|
15,658 |
|
|
|
7,715 |
|
Cost of goods sold |
|
|
|
2,621 |
|
|
|
|
1,745 |
|
|
|
|
4,942 |
|
|
|
2,506 |
|
Gross
profit |
|
|
|
5,548 |
|
|
|
|
4,499 |
|
|
|
|
10,716 |
|
|
|
5,209 |
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and
marketing |
|
|
|
6,163 |
|
|
|
|
6,287 |
|
|
|
|
13,119 |
|
|
|
11,396 |
|
Research
and development |
|
|
|
1,573 |
|
|
|
|
3,062 |
|
|
|
|
4,766 |
|
|
|
5,317 |
|
General
and administrative |
|
|
|
8,022 |
|
|
|
|
5,357 |
|
|
|
|
14,458 |
|
|
|
10,642 |
|
Legal
settlement |
|
|
|
10,000 |
|
|
|
|
— |
|
|
|
|
10,000 |
|
|
|
— |
|
Total
operating expenses |
|
|
|
25,758 |
|
|
|
|
14,706 |
|
|
|
|
42,343 |
|
|
|
27,355 |
|
Loss from
operations |
|
|
|
(20,210 |
) |
|
|
|
(10,207 |
) |
|
|
|
(31,627 |
) |
|
|
(22,146 |
) |
Other income (expense),
net: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income |
|
|
|
37 |
|
|
|
|
16 |
|
|
|
|
59 |
|
|
|
31 |
|
Interest
expense |
|
|
|
(185 |
) |
|
|
|
(12 |
) |
|
|
|
(194 |
) |
|
|
(13 |
) |
Other
income (expense), net |
|
|
|
(4 |
) |
|
|
|
10 |
|
|
|
|
4 |
|
|
|
(2 |
) |
Total
other income (expense), net |
|
|
|
(152 |
) |
|
|
|
14 |
|
|
|
|
(131 |
) |
|
|
16 |
|
Loss
before income taxes |
|
|
|
(20,362 |
) |
|
|
|
(10,193 |
) |
|
|
|
(31,758 |
) |
|
|
(22,130 |
) |
Income taxes |
|
|
|
29 |
|
|
|
|
— |
|
|
|
|
54 |
|
|
|
— |
|
Net
loss |
|
$ |
|
(20,391 |
) |
|
$ |
|
(10,193 |
) |
|
|
|
(31,812 |
) |
|
|
(22,130 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net
loss per share attributable to common stockholders |
|
$ |
|
(1.07 |
) |
|
$ |
|
(0.56 |
) |
|
|
|
(1.68 |
) |
|
|
(1.23 |
) |
Weighted average
outstanding common shares used for net loss per share
attributable to common stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted |
|
|
|
19,132,052 |
|
|
|
|
18,075,010 |
|
|
|
|
18,953,500 |
|
|
|
18,062,803 |
|
SIENTRA, INC. |
|
Condensed Statements of Cash
Flows |
|
(In thousands) |
|
(Unaudited) |
|
|
|
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
|
2017 |
|
|
2016 |
|
Cash flows from
operating activities: |
|
|
|
|
|
|
|
|
Net
loss |
|
$ |
(31,812 |
) |
|
$ |
(22,130 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
1,159 |
|
|
|
425 |
|
Provision
for doubtful accounts |
|
|
27 |
|
|
|
331 |
|
Provision
for warranties |
|
|
119 |
|
|
|
74 |
|
Provision
for inventory |
|
|
367 |
|
|
|
391 |
|
Change in
fair value of warrants |
|
|
83 |
|
|
|
6 |
|
Change in
fair value of deferred and contingent consideration |
|
|
449 |
|
|
|
— |
|
Non-cash
interest expense |
|
|
144 |
|
|
|
12 |
|
Stock-based compensation expense |
|
|
3,182 |
|
|
|
1,664 |
|
Loss on
disposal of property and equipment |
|
|
12 |
|
|
|
122 |
|
Deferred
income taxes |
|
|
54 |
|
|
|
— |
|
Changes
in assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts
receivable |
|
|
47 |
|
|
|
1,514 |
|
Prepaid
expenses, other current assets and other assets |
|
|
(2,395 |
) |
|
|
(574 |
) |
Inventories |
|
|
1,716 |
|
|
|
1,406 |
|
Insurance
recovery receivable |
|
|
9,277 |
|
|
|
— |
|
Accounts
payable |
|
|
(1,264 |
) |
|
|
(635 |
) |
Accrued
and other liabilities |
|
|
4,648 |
|
|
|
428 |
|
Legal
settlement payable |
|
|
(900 |
) |
|
|
— |
|
Customer
deposits |
|
|
(697 |
) |
|
|
(2,530 |
) |
Net cash
used in operating activities |
|
|
(15,784 |
) |
|
|
(19,496 |
) |
Cash flows from
investing activities: |
|
|
|
|
|
|
|
|
Purchase
of property and equipment |
|
|
(1,580 |
) |
|
|
(874 |
) |
Business
acquisitions |
|
|
— |
|
|
|
(6,759 |
) |
Net cash
used in investing activities |
|
|
(1,580 |
) |
|
|
(7,633 |
) |
Cash flows from
financing activities: |
|
|
|
|
|
|
|
|
Proceeds
from exercise of stock options |
|
|
1,096 |
|
|
|
57 |
|
Proceeds
from issuance of common stock under ESPP |
|
|
324 |
|
|
|
430 |
|
Tax
payments related to shares withheld for vested restricted stock
units (RSUs) |
|
|
(569 |
) |
|
|
— |
|
Gross
borrowings under the Revolving Line of Credit |
|
|
5,000 |
|
|
|
— |
|
Deferred
financing costs |
|
|
(204 |
) |
|
|
— |
|
Net cash
provided by financing activities |
|
|
5,647 |
|
|
|
487 |
|
Net
decrease in cash and cash equivalents |
|
|
(11,717 |
) |
|
|
(26,642 |
) |
Cash and cash
equivalents at: |
|
|
|
|
|
|
|
|
Beginning
of period |
|
|
67,212 |
|
|
|
112,801 |
|
End of
period |
|
$ |
55,495 |
|
|
$ |
86,159 |
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure
of cash flow information: |
|
|
|
|
|
|
|
|
Interest
paid |
|
$ |
50 |
|
|
$ |
— |
|
Supplemental disclosure
of non-cash investing and financing activities: |
|
|
|
|
|
|
|
|
Property
and equipment in accounts payable and accrued liabilities |
|
$ |
461 |
|
|
$ |
— |
|
Acquisition of business, deferred and contingent consideration
obligations at fair value |
|
|
— |
|
|
|
550 |
|
SIENTRA, INC. |
Reconciliation of Net Loss to Non-GAAP
Adjusted EBITDA |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended, |
|
Six Months Ended |
|
June 30, |
|
June 30, |
Dollars, in
thousands |
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
Net Loss, as
reported |
$ |
(20,391 |
) |
|
$ |
(10,193 |
) |
|
$ |
(31,812 |
) |
|
$ |
(22,130 |
) |
Adjustments to net
income: |
|
|
|
|
|
|
|
Interest
(income) expense and other, net |
|
152 |
|
|
|
(14 |
) |
|
|
131 |
|
|
|
(16 |
) |
Provision
for income taxes |
|
29 |
|
|
|
- |
|
|
|
54 |
|
|
|
- |
|
Depreciation and amortization - COGS |
|
219 |
|
|
|
- |
|
|
|
422 |
|
|
|
- |
|
Depreciation and amortization - S&M |
|
38 |
|
|
|
25 |
|
|
|
76 |
|
|
|
49 |
|
Depreciation and amortization - R&D |
|
87 |
|
|
|
13 |
|
|
|
156 |
|
|
|
25 |
|
Depreciation and amortization - G&A |
|
461 |
|
|
|
244 |
|
|
|
922 |
|
|
|
351 |
|
Legal
settlement expense |
|
10,000 |
|
|
|
- |
|
|
|
10,000 |
|
|
|
- |
|
Stock-based compensation |
|
1,822 |
|
|
|
925 |
|
|
|
3,182 |
|
|
|
1,664 |
|
Total
Adjustments to net income |
|
12,808 |
|
|
|
1,193 |
|
|
|
14,943 |
|
|
|
2,073 |
|
Adjusted EBITDA |
$ |
(7,583 |
) |
|
$ |
(9,000 |
) |
|
$ |
(16,869 |
) |
|
$ |
(20,057 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As a percentage
of revenue* |
|
|
|
|
|
|
|
Net Loss, as
reported |
|
(249.6 |
%) |
|
|
(163.2 |
%) |
|
|
(203.2 |
%) |
|
|
(286.8 |
%) |
Adjustments to net
income: |
|
|
|
|
|
|
|
Interest
(income) expense and other, net |
|
1.9 |
% |
|
|
(0.2 |
%) |
|
|
0.8 |
% |
|
|
(0.2 |
%) |
Provision
for income taxes |
|
0.4 |
% |
|
|
0.0 |
% |
|
|
0.3 |
% |
|
|
0.0 |
% |
Depreciation and amortization - COGS |
|
2.7 |
% |
|
|
0.0 |
% |
|
|
2.7 |
% |
|
|
0.0 |
% |
Depreciation and amortization - S&M |
|
0.5 |
% |
|
|
0.4 |
% |
|
|
0.5 |
% |
|
|
0.6 |
% |
Depreciation and amortization - R&D |
|
1.1 |
% |
|
|
0.2 |
% |
|
|
1.0 |
% |
|
|
0.3 |
% |
Depreciation and amortization - G&A |
|
5.6 |
% |
|
|
3.9 |
% |
|
|
5.9 |
% |
|
|
4.5 |
% |
Legal
settlement expense |
|
122.4 |
% |
|
|
0.0 |
% |
|
|
63.9 |
% |
|
|
0.0 |
% |
Stock-based compensation |
|
22.3 |
% |
|
|
14.8 |
% |
|
|
20.3 |
% |
|
|
21.6 |
% |
Total
Adjustments to net income |
|
156.8 |
% |
|
|
19.1 |
% |
|
|
95.4 |
% |
|
|
26.9 |
% |
Adjusted EBITDA |
|
(92.8 |
%) |
|
|
(144.1 |
%) |
|
|
(107.7 |
%) |
|
|
(260.0 |
%) |
*Adjustments may not
add to the total figure due to rounding |
|
|
|
|
|
|
|
Investor Contacts:
Patrick F. Williams
Sientra, Chief Financial Officer
(619) 675-1047
patrick.williams@sientra.com
Zack Kubow / Brian Johnston
The Ruth Group
(646) 536-7020 / (646) 536-7028
ir@Sientra.com
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