Form 8-K ConforMIS Inc For: Feb 11

 

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): February 11, 2016

 

 

ConforMIS, Inc.

(Exact Name of Company as Specified in Charter)

 

 

 

28 Crosby Drive

Bedford, MA 01730

(Address of Principal Executive Offices) (Zip Code)

 

Company’s telephone number, including area code: (781) 345-9001

 

 

(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 (see General Instruction A.2. below):

 

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

 

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

 

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

 

o                 Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 

Item 2.02. Results of Operations and Financial Condition

 

On February 11, 2016, ConforMIS, Inc. issued a press release announcing its financial results for the quarter ended December 31, 2015. A copy of such press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference in its entirety.

 

The information furnished under this Item 2.02, including the press release 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 shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as otherwise expressly stated in such filing.

 

Item 9.01. Financial Statements and Exhibits.

 

(d)              Exhibits.

 

Exhibit No.		Description
99.1*		Press Release of ConforMIS, Inc., dated February 11, 2016

 

*Furnished herewith

 

2

 

SIGNATURES

 

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

 

 

	CONFORMIS, INC.
Date: February 11, 2016	By:	/s/Paul Weiner
		Paul Weiner
		Chief Financial Officer

 

3

 

EXHIBIT INDEX

 

Exhibit
No.		Description
99.1*		Press Release of ConforMIS, Inc., dated February 11, 2016

 

*Furnished herewith

 

4

 

ConforMIS Reports Fourth Quarter and Fiscal Year 2015 Financial Results; Provides 2016 Financial Revenue Guidance

 

BEDFORD, Mass., February 11, 2016 (GLOBE NEWSWIRE) — ConforMIS, Inc. (NASDAQ: CFMS), a medical technology company that uses its proprietary iFit Image-to-Implant technology platform to develop, manufacture and sell joint replacement implants that are customized to fit each patient’s unique anatomy, announced today financial results for the fourth quarter and fiscal year ended December 31, 2015.

 

Q4 Summary:

 

·                  Total revenue of $19.1 million, up 34% year-over-year on a reported basis and up 38% year-over-year on a constant currency basis

·                  Product revenue of $18.8 million, up 33% year-over-year on a reported basis and up 37% year-over-year on a constant currency basis

·                  U.S. product revenue increased 39% year-over-year

·                  Rest of World product revenue increased 15% year-over-year on a reported basis and 31% year-over-year on a constant currency basis

 

“In the fourth quarter of 2015, we had stronger than expected revenue growth, which resulted in our fullyear revenue exceeding the high-end of our revised revenue guidance, which we published on August 31, 2015,” said Philipp Lang, MD, MBA, President and Chief Executive Officer of ConforMIS, Inc. “Full-year 2015 revenue grew by 39 percent year-over-year on a reported basis and 45 percent year-over-year on a constant currency basis, despite the commercial disruption in the third and fourth quarters due to our voluntary recall in the third quarter. In 2016, our commercial execution will be further supported by several key catalysts. We are on track for the broad commercial launch of iTotal PS at the American Academy of Orthopedic Surgeons in the first week of March, which will approximately triple our addressable market. We are excited about the progress made with our targeted regional commercial strategy in 2015: we have increased the number of Metropolitan Statistical Areas in which we have at least 10 percent market share of all primary knee replacements from 14 at the end of 2014 to 22 at the end of 2015. We are equally excited about the new Medicare Comprehensive Care for Joint Replacement Model (CJR) proposed by the Center for Medicare and Medicaid Innovation, and we have already begun leveraging our economic value proposition to hospitals participating in the CJR program. In the few months since the publication of the proposed rule in July 2015, we have signed new contracts that allow us access to more than 50 additional hospitals that will participate in the CJR program.  All of these catalysts bode well for ConforMIS’s continued growth into 2016 and subsequent years.”

 

 

		Three Months Ended December 31,						Increase / Decrease
($, thousands)		2015			2014			$ Change			% Change		% Change
											(as reported)		(constant currency)
United States		$	14,632		$	10,550		$	4,082		39	%	39	%
Rest of World		$	4,206		$	3,662		$	544		15	%	31	%
Product Revenue		$	18,838		$	14,212		$	4,626		33	%	37	%
Other Revenue		$	233		$	0		$	233		n/m		n/m
Total Revenue		$	19,071		$	14,212		$	4,859		34	%	38	%

 

Fourth Quarter 2015 Financial Results

 

Total revenue increased $4.9 million to $19.1 million, or 34% year-over-year on a reported basis. Total revenue increased 38% year-over-year on a constant currency basis. Total revenue in the fourth quarter of 2015 includes royalty revenue of $0.2 million related to ongoing patent license royalty payments.

 

Product revenue increased $4.6 million to $18.8 million, or 33% year-over-year on a reported basis and 37% on a constant currency basis. U.S. product revenue increased $4.1 million to $14.6 million, or 39% year-over-year, and Rest of World product revenue increased $0.5 million to $4.2 million, or 15% year-over-year on a reported basis, and increased 31% on a constant currency basis. Product revenue from sales of iTotal CR, iDuo and iUni increased $2.9 million to $17.1 million, or 20% year-over-year on a reported basis and 25% on a constant currency basis. Product revenue from sales of iTotal PS, which we launched on a limited basis in February 2015, was $1.7 million in the fourth quarter of 2015.

 

Total gross profit increased $1.5 million to $7.0 million, or 37% of revenue, in the fourth quarter of 2015, compared to $5.5 million, or 39% of revenue, in the fourth quarter of 2014. The decrease in gross margin as compared to the prior year was primarily caused by additional production costs, including higher costs associated with the limited launch of the iTotal PS, and changes in the foreign exchange rates.

 

Total operating expenses increased $4.4 million to $21.9 million, or 25% year-over-year on a reported basis. The increase in expenses was driven primarily by higher sales and marketing and general and administrative expenses, including public company related expenses, and, to a lesser extent, higher research and development expense as compared to the fourth quarter of 2014.

 

Net loss was $15.0 million, or $0.37 per basic share, in the fourth quarter of 2015, compared to a net loss of $12.1 million, or $2.83 per basic share, for the same period last year. Net loss per basic share calculations assume weighted-average basic shares outstanding of 40.8 million for the fourth quarter of fiscal year 2015, compared to 4.3 million in the same period last year.

 

 

		Twelve Months Ended December 31,						Increase / Decrease
($, thousands)		2015			2014			$ Change			% Change		% Change
											(as reported)		(constant currency)
United States		$	47,234		$	34,332		$	12,902		38	%	38	%
Rest of World		$	15,557		$	13,854		$	1,703		12	%	33	%
Product Revenue		$	62,791		$	48,186		$	14,605		30	%	36	%
Other Revenue		$	4,096		$	0		$	4,096		n/m		n/m
Total Revenue		$	66,887		$	48,186		$	18,701		39	%	45	%

 

Fiscal Year 2015 Financial Results

 

Total revenue for the twelve-month period ending December 31, 2015 increased $18.7 million to $66.9 million, or 39% year-over-year on a reported basis. Total revenue increased 45% year-over-year on a constant currency basis. Total revenue for the fiscal year 2015 period included royalty revenue of $4.1 million related to patent license agreements.

 

Product revenue increased $14.6 million to $62.8 million, or 30% year-over-year on a reported basis and 36% on a constant currency basis. U.S. product revenue increased $12.9 million to $47.2 million, or 38% year-over-year, and Rest of World product revenue increased $1.7 million to $15.6 million, or 12% year-over-year on a reported basis and increased 33% on a constant currency basis. Product revenue from sales of iTotal CR, iDuo and iUni increased $11.3 million to $59.5 million, or 24% year-over-year on a reported basis and 29% on a constant currency basis. Product revenue from sales of iTotal PS, which we launched on a limited basis in February 2015, was $3.3 million for the full year 2015.

 

Total gross profit increased $6.9 million to $24.5 million, or 37% of revenue, in 2015 compared to $17.5 million, or 36% of revenue, in 2014. Total operating expenses increased $17.5 million to $80.4 million, or 28% year-over-year in 2015.

 

Net loss was $57.2 million, or $2.60 per basic share, for 2015 compared to a net loss of $45.7 million, or $10.78 per basic share, for 2014. Net loss per basic share calculations assume weighted-average basic shares outstanding of 22.0 million for fiscal year 2015, compared to 4.2 million in the same period last year.

 

As of December 31, 2015, the Company’s cash and cash equivalents totaled $117.2 million, compared to $37.9 million last year.

 

2016 Financial Guidance

 

For the full year 2016, the Company expects total revenue in a range of $84 million to $87 million.  The Company’s 2016 revenue guidance assumes the following:

 

 

·                  Product revenue in a range of $83 million to $86 million, representing year-over-year growth of 32% to 37% on a reported basis and 33% to 38% on a constant currency basis.

·                  Royalty revenue of approximately $0.8 million related to ongoing patent license royalty payments.

 

Constant Currency

 

The Company provides certain information regarding the Company’s financial results or projected financial results on a “constant currency basis.” This information estimates the impact of changes in foreign currency rates on the translation of the Company’s current or projected future period financial results as compared to the applicable comparable period. This impact is derived by taking the adjusted current or projected local currency results and translating them into U.S. Dollars based upon the foreign currency exchange rates for the applicable comparable period. It does not include any other effect of changes in foreign currency rates on the Company’s results or business.

 

Conference Call

 

As previously announced, ConforMIS will conduct a conference call and webcast today at 4:30 PM Eastern Time. Management will discuss financial results and strategic matters. To participate in the conference call, please call 877-703-9876 (or 616-548-5612 for international) and use conference ID number 35700545 or listen to the webcast in the investor relations section of the company’s website at ir.conformis.com. The online archive of the webcast will be available on the company’s website for 30 days.

 

About ConforMIS, Inc.

 

ConforMIS is a medical technology company that uses its proprietary iFit Image-to-Implant technology platform to develop, manufacture and sell joint replacement implants that are individually sized and shaped, or customized, to fit each patient’s unique anatomy. ConforMIS offers a broad line of customized knee implants and pre-sterilized, single-use instruments delivered in a single package to the hospital. In recent clinical studies, ConforMIS iTotal CR demonstrated superior clinical outcomes, including better function and greater patient satisfaction, compared to traditional, off-the-shelf implants. ConforMIS owns or exclusively in-licenses approximately 500 issued patents and pending patent applications that cover customized implants and patient-specific instrumentation for all major joints.

 

For more information, visit www.conformis.com. To receive future releases in e-mail alerts, sign up at http://ir.conformis.com/.

 

Cautionary Statement Regarding Forward-Looking Statements

 

Any statements in this press release about future expectations, plans and prospects for ConforMIS, including statements about ConforMIS’s strategy, future operations, future financial position and results, market growth, total revenue and revenue mix by product and geography, gross margin, operating trends, the potential impact and advantages of using customized

 

 

implants, the commercial launch of iTotal PS, our targeted regional marketing strategy, and the impact of our voluntary recall, as well as other statements containing the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” and similar expressions, constitute forward-looking statements within the meaning of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make as a result of a variety of risks and uncertainties, including risks related to our estimates regarding the potential market opportunity for our current and future products, our expectations regarding our sales, expenses, gross margins and other results of operations, the impact of its manufacturing interruption on its financial results, the impact of the CJR program, and the other risks and uncertainties described in the “Risk Factors” sections of our public filings with the Securities and Exchange Commission. In addition, the forward-looking statements included in this press release represent ConforMIS’s views as of the date hereof. ConforMIS anticipates that subsequent events and developments may cause ConforMIS’s views to change. However, while ConforMIS may elect to update these forward-looking statements at some point in the future, ConforMIS specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing ConforMIS’s views as of any date subsequent to the date hereof.

 

CONTACT: Investor contact

Oksana Bradley

[email protected]

(781) 374-5598

 

Primary Identifiers: CFMS-US
Related Identifiers: CFMS-US, CFMS
Subjects: Earnings Releases and Operating Results

 

 

CONFORMIS, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(unaudited)

(in thousands, except share and per share data)

 

		Three Months Ended December 31,						Twelve Months Ended December 31,
		2015			2014			2015			2014
Revenue
Product		$	18,838		$	14,212		$	62,791		$	48,186
Royalty		233			—			4,096			—
Total revenue		19,071			14,212			66,887			48,186
Cost of revenue		12,023			8,676			42,415			30,638
Gross profit		7,048			5,536			24,472			17,548
Operating expenses
Sales and marketing		10,682			8,562			40,245			31,103
Research and development		4,779			3,945			16,997			15,107
General and administrative		6,401			4,989			23,191			16,763
Total operating expenses		21,862			17,496			80,433			62,973
Loss from operations		(14,814		)	(11,960		)	(55,961		)	(45,425		)
Other income and expenses
Interest income		46			—			138			104
Interest expense		(5		)	(158		)	(1,385		)	(360		)
Loss on extinguishment of debt		(205		)	—			(205		)	—
Other income (expense)		—			—			208			—
Total other expenses		(164		)	(158		)	(1,244		)	(256		)
Loss before income taxes		(14,978		)	(12,118		)	(57,205		)	(45,681		)
Income tax provision		12			12			41			41
Net loss		$	(14,990	)	$	(12,130	)	$	(57,246	)	$	(45,722	)
Net loss per share - basic and diluted		$	(0.37	)	$	(2.83	)	$	(2.60	)	$	(10.78	)
Weighted average common shares outstanding - basic and diluted		40,824,571			4,284,948			21,993,066			4,239,564

 

 

CONFORMIS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands, except share and per share data)

 

		December 31, 2015			December 31, 2014
		(unaudited)
Assets
Current Assets
Cash and cash equivalents		$	117,185		$	37,900
Accounts receivable, net		14,867			9,119
Inventories		11,520			7,691
Prepaid expenses and other current assets		2,451			1,158
Total current assets		146,023			55,868
Property and equipment, net		10,966			8,696
Other Assets
Restricted cash		600			4,438
Intangible assets, net		995			1,243
Goodwill		753			753
Other long-term assets		32			280
Total assets		$	159,369		$	71,278
Liabilities and stockholder’s equity
Current liabilities
Accounts payable		$	4,718		$	3,618
Accrued expenses		7,811			6,942
Deferred revenue		305			—
Current portion of long-term debt		295			272
Total current liabilities		13,129			10,832
Other long-term liabilities		220			271
Deferred revenue		4,625			—
Long-term debt		183			10,348
Total liabilities		18,157			21,451
Commitments and contingencies		—			—
Stockholders’ equity
Convertible preferred stock, $0.00001 par value:
Authorized: Zero and 53,496,241 shares authorized at December 31, 2015 and December 31, 2014, respectively, zero and 50,985,652 shares issued and outstanding December 31, 2015 and December 31, 2014, respectively; (aggregate liquidation value of $0 and $352,626 at December 31, 2015 and December 31, 2014, respectively)		—			—
Preferred stock, $0.00001 par value:
Authorized: 5,000,000 and zero shares authorized at December 31, 2015 and December 31, 2014, respectively; no shares issued and outstanding as of December 31, 2015 and December 31, 2014		—			—
Common stock, $0.00001 par value:
Authorized: 200,000,000 and 80,000,000 shares at December 31, 2015 and December 31, 2014, respectively; 41,110,127 and 4,286,164 shares issued and outstanding at December 31, 2015 and December 31, 2014, respectively		—			—
Additional paid-in capital		467,075			318,420
Accumulated deficit		(325,342		)	(268,096		)
Accumulated other comprehensive loss		(521		)	(497		)
Total stockholders’ equity		141,212			49,827
Total liabilities and stockholders’ equity		$	159,369		$	71,278