Form 8-K ENTELLUS MEDICAL INC For: Aug 03

 

 

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 3, 2016

 

 

ENTELLUS MEDICAL, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		001-36814		20-4627978
(State or other jurisdiction of incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)
3600 Holly Lane North, Suite 40 Plymouth, Minnesota				55447
(Address of principal executive offices)				(Zip Code)

(763) 463-1595

(Registrant’s telephone number, including area code)

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))

 

 

 

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Item 2.02.

Results of Operations and Financial Condition.

On August 3, 2016, Entellus Medical, Inc. announced its financial results for the quarter ended June 30, 2016. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information in this report (including Exhibit 99.1) 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, as amended, or the Exchange Act, except as expressly provided by specific reference in such a filing.

 

Item 9.01.

Financial Statements and Exhibits.

 

(d)

Exhibits.

 

Exhibit No.		Description
99.1		Press Release issued August 3, 2016 (furnished herewith)

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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.

 

Date: August 3, 2016				ENTELLUS MEDICAL, INC.
				By:		/s/ Brent A. Moen
				Name: Brent A. Moen
				Title:  Chief Financial Officer

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ENTELLUS MEDICAL, INC.

CURRENT REPORT ON FORM 8-K

EXHIBIT INDEX

 

Exhibit No.		Description		Method of Filing
99.1		Press Release issued August 3, 2016			Furnished herewith

Exhibit 99.1

 

ENTELLUS MEDICAL ANNOUNCES SECOND QUARTER 2016 FINANCIAL RESULTS

PLYMOUTH, MN. (August 3, 2016) – Entellus Medical, Inc. (the “Company” or “Entellus Medical”) (NASDAQ: ENTL), a medical technology company focused on delivering superior patient and physician experiences through products designed for the minimally invasive treatment of chronic and recurrent sinusitis patients, today reported its financial results for the quarter ended June 30, 2016.

Recent Highlights and Accomplishments

 

•

Revenue of $18.7 million in the second quarter of 2016, an increase of 23% year-over-year

 

•

Achieved balanced revenue growth across ear, nose and throat (ENT) offices and ORs – In-Office revenue represented 57% of U.S. product revenue in the second quarter

 

•

Acquired and entered into an exclusive license for XeroGel™ under which Entellus Medical has become the manufacturer of XeroGel. Entellus Medical continues to market and sell XeroGel to hospitals, offices and ambulatory surgery centers, enabling advanced office-based treatments and enhancing experiences for physicians and patients

 

•

Expanded Fiagon agreement to be the exclusive distributor of Fiagon Image Guidance Systems to hospitals in the U.S. and Canada, in addition to ENT offices and ambulatory surgery centers

 

•

Strengthened leadership team with the addition of Brent Moen as Chief Financial Officer and Corporate Secretary

“We are pleased with our second quarter accomplishments which include continued revenue growth and confirmation that our XprESS technologies are helping improve patient outcomes and building value for surgeons and their patients,” said Robert White, President and Chief Executive Officer of Entellus Medical. “We are encouraged by the growing trend of office-based procedures and intend to continue to seek opportunities that support this shift.”

Second Quarter 2016 Financial Results

Revenue for the second quarter increased 23% to $18.7 million from $15.2 million during the same period of the prior year. The growth in revenue was attributable to an increase in sales of the Company’s XprESS™ family of products through broader account penetration, both in the OR and the office, and increased sales of new products.

Gross margin for the second quarter of 2016 was 76.2%, compared to 78.0% for the same period in 2015. Gross margin was impacted by changes in sales mix resulting from the Company’s new product lines, continued geographic expansion and investment in expanded capacity for anticipated future growth.

Operating expenses for the second quarter of 2016 were $18.8 million, an increase of 32.4% compared to $14.2 million for the same period of the prior year. The increase in operating expenses was primarily due to increased compensation and other employee-related expenses, including stock-based compensation, resulting from expansion of the Company’s sales and finance staff.

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Net loss for the quarter ended June 30, 2016 was $5.0 million, or $0.27 per share, compared with net loss of $2.9 million, or $0.15 per share, for the same period of the prior year. Entellus Medical ended the second quarter of 2016 with $46.1 million in cash, cash equivalents, and short-term investments.

2016 Financial Outlook

Entellus Medical expects third quarter 2016 revenue will range from approximately $17.3 million to $18.3 million, representing growth of 17% to 24% versus the third quarter in the prior year and that gross margin will be in a range of 75% to 77% for the third quarter of 2016. Third quarter net loss is expected to be in the range of $6.5 million to $8.5 million.

Entellus Medical expects full year 2016 revenue will be in a range of $74 million to $77 million, representing growth of 20% to 25% annually, and that gross margin will be in a range of 75% to 77% for the full year 2016. This compares to the Company’s previous revenue expectation for 2016 of $73 million to $77 million, previous growth expectations of 19% to 25% annually, and previous gross margin expectations for 2016 of 75% to 77%. Full year 2016 net loss is now expected to be in a range of $21 million to $28 million. This compares to the Company’s previous expectations for net loss in a range of $21 million to $29 million.

Webcast and Conference Call Information

The Company’s management team will host a corresponding conference call beginning today at 3:30pm CT/4:30pm ET to discuss the financial results and recent business developments. Individuals interested in listening to the conference call may do so by dialing (877) 930-5751 for domestic callers or (253) 336-7277 for international callers, using Conference ID: 42991916. To listen to a live webcast or a replay, please visit the investor relations section of the Entellus Medical website at: www.entellusmedical.com.

About Entellus Medical, Inc.

Entellus Medical is a medical technology company focused on delivering superior patient and physician experiences through products designed for the minimally invasive treatment of chronic and recurrent sinusitis in both adult and pediatric patients. The Entellus Medical platform of products provides effective and easy-to-use solutions intended to help simplify everything from diagnosis and patient selection, to complex case revisions and post-operative care. Entellus Medical’s core product lines, XprESS™ Multi-Sinus Dilation Systems, MiniFESS™ Surgical Instruments, XeroGel Nasal Dressing and FocESS™ Imaging & Navigation, combine to enable ENT physicians to conveniently and comfortably perform a broad range of procedures in the office and simplify OR based treatment. Entellus Medical is committed to broadening its product portfolio with high-quality and purposeful innovations for the global ENT market. For more information, please visit the Company’s website at www.entellusmedical.com.

Forward-Looking Statements:

All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the use of words such as “expect,” “anticipate,” “could,” “may,” “intend,” “will,” “estimate,” “continue,” “outlook,” “guidance,” “future,” other words of similar meaning and the use of future dates. Forward-looking statements in this release

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include the Company’s financial guidance for third quarter 2016 and full year 2016 and expectations regarding a shift to office-based procedures. These forward-looking statements are based on the current expectations of Entellus Medical’s management and involve known and unknown risks and uncertainties that may cause Entellus Medical’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such risks and uncertainties include, among others, the dependence of the Company’s net sales on its XprESS family of products, future market acceptance and adoption of such products and adequate levels of coverage or reimbursement for procedures using such products; the Company’s ability to successfully develop and commercialize new ENT products; competition; ability to expand, manage and maintain its direct sales organization and market and sell its products in the United States and internationally; risks and uncertainties involved in its international operations, especially in light of the recent referendum vote of the United Kingdom to exit the European Union; the compliance of its products and activities with the laws and regulations of the countries in which they are marketed; failure or delay in obtaining FDA or other regulatory approvals or the effect of FDA or other regulatory actions; risks and uncertainties involved in the XeroGel acquisition, including the failure to realize intended benefits from the transaction or delay in realization thereof, the integration taking longer or being more difficult, time-consuming or costly to accomplish than expected and business disruption after the transaction; the Company’s ability to manage its anticipated growth; risk of product recalls, product liability claims and litigation and inadequate insurance coverage relating thereto; intellectual property disputes; loss of key suppliers; inadequacy of capital resources and inability to raise additional financing when needed and on favorable terms. Other factors that could cause actual results to differ materially from those contemplated in this press release can be found under the caption “Risk Factors” in the Company’s Securities and Exchange Commission (“SEC”) reports, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2015 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2016 to be filed with the SEC. Entellus Medical undertakes no obligation to update or revise any forward-looking statements, even if subsequent events cause its views to change.

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Entellus Medical, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

 

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2016				2015				2016				2015
Revenue		$	18,730			$	15,191			$	35,632			$	28,693
Cost of goods sold			4,459				3,348				8,459				6,297
Gross profit			14,271				11,843				27,173				22,396
Gross margin			76.2	%			78.0	%			76.3	%			78.1	%
Operating expenses
Selling and marketing			13,086				9,815				26,493				19,702
Research and development			1,873				1,308				3,785				2,608
General and administrative			3,838				3,074				7,787				5,890
Total operating expenses			18,797				14,197				38,065				28,200
Loss from operations			(4,526	)			(2,354	)			(10,892	)			(5,804	)
Other expense, net			(495	)			(514	)			(1,001	)			(1,412	)
Net loss		$	(5,021	)		$	(2,868	)		$	(11,893	)		$	(7,216	)
Net loss per share, basic and diluted		$	(0.27	)		$	(0.15	)		$	(0.63	)		$	(0.46	)
Weighted average common shares used to compute net loss per share, basic and diluted			18,824				18,718				18,812				15,647

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Entellus Medical, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

		June 30,				December 31,
		2016				2015
Assets
Current assets
Cash and cash equivalents		$	8,001			$	28,548
Short-term investments			38,108				38,210
Accounts receivable, net			11,946				10,687
Inventories			4,749				3,889
Prepaid expenses and other current assets			1,755				1,691
Total current assets			64,559				83,025
Property and equipment, net			5,218				4,126
Intangible assets, net			6,298				—
Goodwill			4,242				—
Other non-current assets			199				34
Total assets		$	80,516			$	87,185
Liabilities and stockholders’ equity
Current liabilities
Accounts payable		$	3,147			$	2,208
Accrued expenses			8,247				6,995
Current portion of long-term debt			4,048				—
Total current liabilities			15,442				9,203
Long-term liabilities
Long-term debt, less current portion			15,806				19,824
Other non-current liabilities			722				562
Total liabilities			31,970				29,589
Total stockholders’ equity			48,546				57,596
Total liabilities and stockholders’ equity		$	80,516			$	87,185

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