Close

Form 8-K Venus Concept Inc. For: Aug 12

August 12, 2022 7:11 AM EDT

Get instant alerts when news breaks on your stocks. Claim your 1-week free trial to StreetInsider Premium here.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM 8-K



CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): August 12, 2022



VENUS CONCEPT INC.
(Exact name of registrant as specified in its charter)



Delaware
001-38238
06-1681204
(State or other jurisdiction of incorporation)
(Commission File Number)
(IRS Employer Identification Number)
 
235 Yorkland Blvd, Suite 900
Toronto, Ontario M2J 4Y8
(Address of principal executive offices, including Zip Code)
 
Registrant’s telephone number, including area code: (877) 848-8430
 
Not Applicable
(Former name or former address, if changed since last report)



Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:


Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)


Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)


Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))


Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Securities registered pursuant to Section 12(b) of the Act:

Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common Stock, $0.0001 par value per share
 
VERO
 
The Nasdaq Global Market
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
 


Item 2.02.
Results of Operations and Financial Condition.

On August 12, 2022, Venus Concept Inc. (the “Company”) issued a press release relating to its financial results for the three and six months ended June 30, 2022. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.

The information in this Item 2.02 of this Form 8-K and the Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01.
Financial Statements and Exhibits.

Exhibit
No.
 
Description
     
 
Press release dated August 12, 2022.
104
 
Cover Page Interactive Data File (embedded within the Inline XBRL document)


SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
VENUS CONCEPT INC.
     
Date: August 12, 2022
By:
 /s/ Domenic Della Penna
   
Domenic Della Penna
   
Chief Financial Officer




 Exhibit 99.1
 
 
Venus Concept Announces Second Quarter of Fiscal Year 2022 Financial Results; Updates Fiscal Year 2022 Revenue Guidance
 
TORONTO, August 12, 2022 (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 six months ended June 30, 2022.
 
Second Quarter 2022 Summary & Operating Highlights:
 

Total revenue of $27.3 million, up $1.4 million, or 6%, year-over-year.

U.S. revenue up 7% year-over-year.

Total subscription and system revenue up 9% year-over-year.

GAAP net loss attributable to stockholders of $10.6 million, compared to net income of $0.4 million last year.

Second quarter 2021 GAAP net loss attributable to stockholders included approximately $6 million of non-cash gain and bad debt recovery which did not benefit GAAP net loss attributable to stockholders in the second quarter of 2022.

Adjusted EBITDA loss of $5.5 million, compared to Adjusted EBITDA income of $0.5 million last year.

On April 25, 2022, the Company announced the first patient treatment in a U.S. Investigational Device Exemption (IDE) clinical study evaluating the safety and efficacy of the Company’s Aime™ next generation robotic technology for the treatment of moderate to severe facial wrinkles. Aime is a robotic platform designed to provide micro-coring for medical aesthetic applications.

On April 28, 2022, the Company announced that it received a 510(k) clearance from the U.S. Food and Drug Administration (“FDA”) to market the Venus BlissMAX device (“BlissMAX”) with an expanded indication for use in new areas of the body and an increase in RF energy output.

Management Commentary:
 
“Second quarter total revenue results were below expectations driven by significant sales force disruption in a key market in the U.S.,” said Domenic Serafino, Chief Executive Officer of Venus Concept. “We experienced continued strong demand for Bliss and BlissMAX in our ‘Body Franchise’ and our ARTAS iX and Neograft in our ‘Hair Restoration Franchise’, and our sales team in the rest of the U.S. executed our focused sales strategy well, delivering 24% growth in subscription and system sales to U.S. customers in their respective regions in Q2.”
 
Mr. Serafino continued: “We have implemented a series of strategic initiatives and expect our focused commercial strategy, including prioritizing cash sales, and streamlined global operations to enhance the cash flow profile of our business and accelerate our path to long term profitability. We are also evaluating non-dilutive financing opportunities to enhance our cash position and balance sheet in the near term.”
 
Second Quarter and First Six Months of 2022 Revenue by Region and by Product Type:
 
   
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
   
2022
   
2021
   
2022
   
2021
 
   
(dollars in thousands)
   
(dollars in thousands)
 
Revenues by region:
                       
United States
 
$
13,417
   
$
12,571
   
$
26,546
   
$
23,086
 
International
   
13,849
     
13,257
     
27,126
     
25,339
 
Total revenue
 
$
27,266
   
$
25,828
   
$
53,672
   
$
48,425
 


   
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
   
2022
   
2021
   
2022
   
2021
 
   
(dollars in thousands)
   
(dollars in thousands)
 
Revenues by product:
                       
Subscription—Systems
 
$
11,874
   
$
12,787
   
$
22,297
   
$
21,324
 
Products—Systems
   
11,548
     
8,694
     
23,422
     
18,504
 
Products—Other (1)
   
3,080
     
3,314
     
6,577
     
6,369
 
Services (2)
   
764
     
1,033
     
1,376
     
2,228
 
Total revenue
 
$
27,266
   
$
25,828
   
$
53,672
   
$
48,425
 

  (1)
Products-Other include ARTAS procedure kits and other consumables.
  (2)
Services include extended warranty sales and VeroGrafters technician services. VeroGrafters technician services were discontinued in the fourth quarter of 2021.

Second Quarter 2022 Financial Results:

   
Three Months Ended June 30,
             
   
2022
   
2021
   
Change
 
(in thousands, except percentages)
 

$
   
% of
Total
   

$
   
% of
Total
     $    

%
 
Revenues:
                                         
Subscription—Systems
 
$
11,874
     
43.5
   
$
12,787
     
49.5
   
$
(913
)
   
(7.1
)
Products—Systems
   
11,548
     
42.4
     
8,694
     
33.7
     
2,854
     
32.8
 
Products—Other
   
3,080
     
11.3
     
3,314
     
12.8
     
(234
)
   
(7.1
)
Services
   
764
     
2.8
     
1,033
     
4.0
     
(269
)
   
(26.0
)
Total
 
$
27,266
     
100.0
   
$
25,828
     
100.0
   
$
1,438
     
5.6
 

Total revenue for the second quarter of 2022 increased $1.4 million, or 5.6%, to $27.3 million, compared to the second quarter of 2021. The increase in total revenue, by region, was driven by a 7% increase year-over-year in United States revenue and a 5% year-over-year increase in international revenue. The increase in total revenue, by product category, was driven by a 33% increase in systems revenue, partially offset by a 7% decrease in lease revenue, a 26% decrease in services revenue and a 7% decrease in products revenue. The percentage of total systems revenue derived from the Company’s subscription model was approximately 51% this quarter, compared to 60% in the prior year period.
 
Gross profit for the second quarter of 2022 increased $0.3 million, or 2%, to $19.0 million compared to the second quarter of 2021. Gross margin was 69.9%, compared to 72.5% of revenue for the second quarter of 2021. The change in gross profit was primarily driven by an increase in revenue in the United States driven by the Company’s hair restoration business. The change in gross margin was driven by changes in foreign currencies which depreciated relative to the U.S. dollar in the period.
 
Operating expenses for the second quarter of 2022 were $26.2 million, compared to $17.2 million for the second quarter of 2021. The change in total operating expenses was driven by an increase of $6.4 million, or 82%, in general and administrative expenses and an increase of $0.4 million, or 20%, in research and development expenses, offset partially by a decrease of $0.6 million, or 6%, in sales and marketing expenses. In addition, in the three months ended June 30, 2021, operating expenses included a bad debt recovery of $3.2 million due to a reactivation of accounts impacted by COVID-19 which did not repeat in the three months ended June 30, 2022. The prior year period also included a $2.8 million non-cash gain on forgiveness of government assistance loans which did not repeat in the three months ended June 30, 2022.
 
Operating loss for the second quarter of 2022 was $7.1 million, compared to operating income of $1.5 million for the second quarter of 2021.
 

Net loss attributable to stockholders for the second quarter of 2022 was $10.6 million, or $0.16 per share, compared to net income of $0.4 million for the second quarter of 2021. Adjusted EBITDA loss for the second quarter of 2022 was $5.5 million, compared to adjusted EBITDA income of $0.5 million for the second quarter of 2021.
 
Fiscal Year 2022 Revenue Guidance:
 
The Company now expects total revenue for the twelve months ending December 31, 2022 in the range of $110 million to $113 million, representing an increase of approximately 4% to 7%, year-over-year, compared to total revenue of $105.6 million for the twelve months ended December 31, 2021.

Conference Call Details:
 
Management will host a conference call at 8:00 a.m. Eastern Time on August 12, 2022, 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 13731063. 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 13731063. The webcast will be archived at ir.venusconcept.com.
 
About Venus Concept
 
Venus Concept is an innovative global medical aesthetic technology leader with a broad product portfolio of minimally invasive and non-invasive medical aesthetic and hair restoration technologies and reach in over 60 countries and 18 direct markets. Venus Concept focuses its product sales strategy on a subscription-based business model in North America and in its well-established direct global markets. Venus Concept’s product portfolio consists of aesthetic device platforms, including Venus Versa, Venus Legacy, Venus Velocity, Venus Fiore, Venus Viva, Venus Glow, Venus Bliss, Venus BlissMAX, Venus Epileve and Venus Viva MD. Venus Concept’s hair restoration systems include NeoGraft® and the ARTAS® and ARTAS iX® Robotic Hair Restoration systems. Venus Concept has been backed by leading healthcare industry growth equity investors including EW Healthcare Partners (formerly Essex Woodlands), HealthQuest Capital, Longitude Capital Management, Aperture Venture Partners, and Masters Special Situations.
 
Cautionary Statement Regarding Forward-Looking Statements
 
This communication contains 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. Any statements contained herein that are not of historical facts may be deemed to be forward-looking statements. In some cases, you can identify these statements by words such as such as “anticipates,” “believes,” “plans,” “expects,” “projects,” “future,” “intends,” “may,” “should,” “could,” “estimates,” “predicts,” “potential,” “continue,” “guidance,” and other similar expressions that are predictions of or indicate future events and future trends. These forward-looking statements include, but are not limited to, statements about our financial performance; the growth in demand for our systems and other products; and general economic conditions, including the global economic impact of COVID-19, and involve risks and uncertainties that may cause results to differ materially from those set forth in the statements. These forward-looking statements are based on current expectations, estimates, forecasts, and projections about our business and the industry in which the Company operates and management's beliefs and assumptions and are not guarantees of future performance or developments and involve known and unknown risks, uncertainties, and other factors that are in some cases beyond our control. As a result, any or all of our forward-looking statements in this communication may turn out to be inaccurate. Factors that could materially affect our business operations and financial performance and condition include, but are not limited to, those risks and uncertainties described under Part II Item 1A—“Risk Factors” in our Quarterly Reports on Form 10-Q and Part I Item 1A—“Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. You are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on the forward-looking statements. The forward-looking statements are based on information available to us as of the date of this communication. Unless required by law, the Company does not intend to publicly update or revise any forward-looking statements to reflect new information or future events or otherwise.
 
Investor Relations Contact:
 
ICR Westwicke on behalf of Venus Concept:
Mike Piccinino, CFA
 

Venus Concept Inc.
Condensed Consolidated Balance Sheets
(Unaudited)

(In thousands of U.S. dollars, except share and per share data)

   
June 30,
2022
   
December 31,
2021
 
ASSETS
           
CURRENT ASSETS:
           
Cash and cash equivalents
 
$
10,540
   
$
30,876
 
Accounts receivable, net of allowance of $14,100 and $11,997 as of June 30, 2022, and December 31, 2021
   
46,754
     
46,918
 
Inventories
   
22,363
     
20,543
 
Prepaid expenses
   
2,169
     
2,737
 
Advances to suppliers
   
2,869
     
2,162
 
Other current assets
   
3,873
     
3,758
 
Total current assets
   
88,568
     
106,994
 
LONG-TERM ASSETS:
               
Long-term receivables
   
26,724
     
27,710
 
Deferred tax assets
   
579
     
284
 
Severance pay funds
   
815
     
817
 
Property and equipment, net
   
2,395
     
2,669
 
Intangible assets
   
13,670
     
15,393
 
Total long-term assets
   
44,183
     
46,873
 
TOTAL ASSETS
 
$
132,751
   
$
153,867
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
CURRENT LIABILITIES:
               
Trade payables
 
$
4,184
   
$
4,913
 
Accrued expenses and other current liabilities
   
17,449
     
19,512
 
Income taxes payable
   
690
     
294
 
Unearned interest income
   
2,884
     
2,678
 
Warranty accrual
   
1,173
     
1,245
 
Deferred revenues
   
1,800
     
2,030
 
Current portion of government assistance loans
   
     
543
 
Total current liabilities
   
28,180
     
31,215
 
LONG-TERM LIABILITIES:
               
Long-term debt
   
77,507
     
77,325
 
Income tax payable
   
582
     
563
 
Accrued severance pay
   
931
     
911
 
Deferred tax liabilities
   
58
     
46
 
Unearned interest income
   
1,433
     
1,355
 
Warranty accrual
   
437
     
508
 
Other long-term liabilities
   
227
     
348
 
Total long-term liabilities
   
81,175
     
81,056
 
TOTAL LIABILITIES
   
109,355
     
112,271
 
Commitments and Contingencies
               
STOCKHOLDERS’ EQUITY:
               
Common Stock, $0.0001 par value: 300,000,000 shares authorized as of June 30, 2022 and December 31, 2021; 64,399,044 and 63,982,580 issued and outstanding as of June 30, 2022, and December 31, 2021, respectively
   
27
     
27
 
Additional paid-in capital
   
222,393
     
221,321
 
Accumulated deficit
   
(199,583
)
   
(180,405
)
TOTAL STOCKHOLDERS’ EQUITY
   
22,837
     
40,943
 
Non-controlling interests
   
559
     
653
 
     
23,396
     
41,596
 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
 
$
132,751
   
$
153,867
 


Venus Concept Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands of U.S. dollars, except per share data)

   
Three Months Ended
June 30,
   
Six Months Ended June
30,
 
   
2022
   
2021
   
2022
   
2021
 
Revenue
                       
Leases
 
$
11,874
   
$
12,787
   
$
22,297
   
$
21,324
 
Products and services
   
15,392
     
13,041
     
31,375
     
27,101
 
     
27,266
     
25,828
     
53,672
     
48,425
 
Cost of goods sold
                               
Leases
   
2,761
     
2,736
     
5,461
     
4,506
 
Products and services
   
5,459
     
4,375
     
11,402
     
9,968
 
     
8,220
     
7,111
     
16,863
     
14,474
 
Gross profit
   
19,046
     
18,717
     
36,809
     
33,951
 
Operating expenses:
                               
Sales and marketing
   
9,487
     
10,114
     
19,390
     
17,968
 
General and administrative
   
14,249
     
7,828
     
27,343
     
19,993
 
Research and development
   
2,436
     
2,024
     
4,638
     
4,075
 
Gain on forgiveness of government assistance loans
   
     
(2,775
)
   
     
(2,775
)
Total operating expenses
   
26,172
     
17,191
     
51,371
     
39,261
 
(Loss) income from operations
   
(7,126
)
   
1,526
     
(14,562
)
   
(5,310
)
Other expenses:
                               
Foreign exchange loss
   
2,370
     
130
     
2,375
     
844
 
Finance expenses
   
1,034
     
1,161
     
1,957
     
3,046
 
(Loss) income before income taxes
   
(10,530
)
   
235
     
(18,894
)
   
(9,200
)
Income tax (benefit) expense
   
(18
)
   
(7
)
   
254
     
(7
)
Net (loss) income
   
(10,512
)
   
242
     
(19,148
)
   
(9,193
)
Net (loss) income attributable to stockholders of the Company
   
(10,559
)
   
377
     
(19,178
)
   
(8,882
)
Net income (loss) attributable to non-controlling interest
   
47
     
(135
)
   
30
     
(311
)
                                 
Net (loss) income per share:
                               
Basic
 
$
(0.16
)
 
$
0.01
   
$
(0.30
)
 
$
(0.16
)
Diluted
 
$
(0.16
)
 
$
0.01
   
$
(0.30
)
 
$
(0.16
)
Weighted-average number of shares used in per share calculation:
                               
Basic
   
64,130
     
54,088
     
64,059
     
53,917
 
Diluted
   
64,130
     
54,237
     
64,059
     
53,917
 


Use of Non-GAAP Financial Measures
 
Adjusted EBITDA is a non-GAAP measure defined as net income (loss) before foreign exchange loss (gain), financial expenses, income tax expense (benefit), depreciation and amortization, stock-based compensation and non-recurring items for a given period. Adjusted EBITDA is not a measure of our financial performance under U.S. GAAP and should not be considered an alternative to net income or any other performance measures derived in accordance with U.S. GAAP. Accordingly, you should consider Adjusted EBITDA along with other financial performance measures, including net income, and our financial results presented in accordance with U.S. GAAP. Other companies, including companies in our industry, may calculate Adjusted EBITDA differently or not at all, which reduces its usefulness as a comparative measure. We understand that although Adjusted EBITDA is frequently used by securities analysts, lenders and others in their evaluation of companies, Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under U.S. GAAP. Some of these limitations are: Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments; Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; and although depreciation and amortization are non-cash charges, the assets being depreciated will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements.
 
We believe that Adjusted EBITDA is a useful measure for analyzing the performance of our core business because it facilitates operating performance comparisons from period to period and company to company by backing out potential differences caused by changes in foreign exchange rates that impact financial assets and liabilities denominated in currencies other than the U.S. dollar, tax positions (such as the impact on periods or companies of changes in effective tax rates), the age and book depreciation of fixed assets (affecting relative depreciation expense), amortization of intangible assets, stock-based compensation expense (because it is a non-cash expense) and non-recurring items as explained below.
 
The following reconciliation of net (loss) income to Adjusted EBITDA for the periods presented:

Venus Concept Inc.
Reconciliation of Net Loss to Non-GAAP Adjusted EBITDA

   
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
   
2022
   
2021
   
2022
   
2021
 
Reconciliation of net loss to adjusted EBITDA
 
(in thousands)
   
(in thousands)
 
Net (loss) income
 
$
(10,512
)
 
$
242
   
$
(19,148
)
 
$
(9,193
)
Foreign exchange loss
   
2,370
     
130
     
2,375
     
844
 
Finance expenses
   
1,034
     
1,161
     
1,957
     
3,046
 
Income tax (benefit) expense
   
(18
)
   
(7
)
   
254
     
(7
)
Depreciation and amortization
   
1,111
     
1,147
     
2,212
     
2,451
 
Stock-based compensation expense
   
558
     
558
     
1,001
     
1,066
 
Gain on forgiveness of government assistance loans
   
     
(2,775
)
   
     
(2,775
)
Adjusted EBITDA
 
$
(5,457
)
 
$
456
   
$
(11,349
)
 
$
(4,568
)





Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

SEC Filings