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Envoy Medical Reports First Quarter 2024 Results

May 15, 2024 4:05 PM

The Company, a current leader in fully implanted hearing devices, continues to steadily march towards its ambition of disrupting the existing cochlear implant industry with its “breakthrough” fully implanted cochlear implant.

WHITE BEAR LAKE, Minn., May 15, 2024 (GLOBE NEWSWIRE) -- Envoy Medical®, Inc. (“Envoy Medical”) (Nasdaq: COCH), a revolutionary hearing health company focused on fully implanted hearing devices, today announces its corporate and financial results for the first quarter ended March 31, 2024.

Financial and Corporate Highlights from Q1 2024

“Envoy Medical continues to make steady progress towards our goal of becoming a household name in the hearing loss market,” commented Brent T. Lucas, Envoy Medical’s Chief Executive Officer. “We strongly believe that Envoy Medical has a bright future ahead of it. We look forward to the prospect of disrupting the hearing industry with new competition and significant innovation.”

Financial Results for the Quarter Ended March 31, 2024

Revenue was $59 thousand compared to $78 thousand for the same period in 2023, the decrease is primarily due to a decrease in the number of battery replacement requests received during the three months ended March 31, 2024.

R&D expenses increased approximately $0.4 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The increase is primarily due to an increase in personnel and salary costs for the three months ended March 31, 2024, as we increased headcount across our clinical and engineering departments in preparation for our pivotal clinical study for the Acclaim Cochlear Implant ("Acclaim CI").

Sales and marketing expenses decreased by $46 thousand for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. The decrease was due to a reduction in headcount.

General and administrative expenses increased by $0.7 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. The increase is primarily due to a $0.2 million increase in the cost of insurance coverage, and a $0.3 million increase in personnel-related costs, as we increased headcount in preparation for anticipated future growth, clinical study, and potential commercialization of the Acclaim CI.

As of March 31, 2024, cash and cash equivalents were approximately $4.9 million.

About the Fully Implanted Acclaim® Cochlear Implant

The Company believes the fully implanted Acclaim CI will be a first-of-its-kind fully implanted cochlear implant. Envoy Medical’s fully implanted technology includes a sensor designed to leverage the natural anatomy of the ear instead of a microphone to capture sound.

The Acclaim CI is designed to address severe to profound sensorineural hearing loss that is not adequately addressed by hearing aids. The Acclaim CI is expected to be indicated for adults who have been deemed adequate candidates by a qualified ear surgeon and audiologist.

The Acclaim Cochlear Implant received the Breakthrough Device Designation from the U.S. Food and Drug Administration (FDA) in 2019.

CAUTION The fully implanted Acclaim Cochlear Implant is an investigational device. Limited by United States law to investigational use.

About the Esteem® Fully Implanted Active Middle Ear Implant (FI-AMEI)

The Esteem fully implanted active middle ear implant (FI-AMEI) is the only FDA-approved, fully implanted hearing device for adults diagnosed with moderate to severe sensorineural hearing loss capable of delivering 24/7 hearing capability using the ear’s natural anatomy. The Esteem FI-AMEI requires no externally worn components and nothing is placed in the ear canal for it to function.* Unlike hearing aids, you never put it on or take it off.

*Once activated, the external Esteem FI-AMEI Personal Programmer is not required for daily use.

Important safety information for the Esteem FI-AMEI can be found at: https://www.envoymedical.com/safety-information.

Additional Information and Where to Find It

Copies of the documents filed by Envoy Medical with the SEC may be obtained free of charge at the SEC’s website at www.sec.gov.

Forward-Looking Statements

This press release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-Looking statements may be identified by the use of words such as “estimate,” “plan,” “project,” “forecast,” “intend,” “will,” “expect,” “anticipate,” “believe,” “seek,” “target” or other similar expressions that predict or indicate future events or trends or that are not statements of historical matters, but the absence of these words does not mean that a statement is not forward-looking. Such statements may include, but are not limited to, statements regarding the expectations of Envoy Medical concerning the outlook for its business, productivity, plans and goals for future operational improvements and capital investments, the availability and benefits of future funding, the Acclaim CI being the first to market fully implanted cochlear implant, the timing of Envoy Medical’s IDE submission and beginning of its clinical trial, the impact of proposed legislation on the hearing health market, reimbursement for the Esteem FI-AMEI device, and the Envoy Medical business, and future market conditions or economic performance, as well as any information concerning possible or assumed future operations of Envoy Medical. The forward-looking statements contained in this press release reflect Envoy Medical’s current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause its actual results to differ significantly from those expressed in any forward-looking statement. Envoy Medical does not guarantee that the transactions and events described will happen as described (or that they will happen at all). These forward-looking statements are subject to a number of risks and uncertainties, including, but not limited to changes in the market price of shares of Envoy Medical’s Class A Common Stock; Envoy Medical’s success in retaining or recruiting, or changes required in, its officers, key employees or directors; unpredictability in the medical device industry, the regulatory process to approve medical devices, and the clinical development process of Envoy Medical products; competition in the medical device industry, and the failure to introduce new products and services in a timely manner or at competitive prices to compete successfully against competitors; disruptions in relationships with Envoy Medical’s suppliers, or disruptions in Envoy Medical’s own production capabilities for some of the key components and materials of its products; changes in the need for capital and the availability of financing and capital to fund these needs; changes in interest rates or rates of inflation; legal, regulatory and other proceedings could be costly and time-consuming to defend; changes in applicable laws or regulations, or the application thereof on Envoy Medical; a loss of any of Envoy Medical’s key intellectual property rights or failure to adequately protect intellectual property rights; the effects of catastrophic events, including war, terrorism and other international conflicts; and other risks and uncertainties set forth in the section entitled “Risk Factors” and “Cautionary Note Regarding Forward Looking Statements” in the Annual Report on Form 10-K filed by Envoy Medical on April 1, 2024, and in other reports Envoy Medical files with the SEC. If any of these risks materialize or Envoy Medical’s assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. While forward-looking statements reflect Envoy Medical’s good faith beliefs, they are not guarantees of future performance. Envoy Medical disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes after the date of this press release, except as required by applicable law. You should not place undue reliance on any forward-looking statements, which are based only on information currently available to Envoy Medical.

Investor Contact:CoreIR516-222-2560[email protected]

ENVOY MEDICAL, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(UNAUDITED)(In thousands, except share and per share amounts)
March 31,2024 December 31,2023
Assets
Current assets:
Cash $4,945 $4,218
Accounts receivable 189 70
Other receivables 32 176
Inventories 1,455 1,404
Prepaid expenses and other current assets 1,109 957
Total current assets 7,730 6,825
Property and equipment, net 317 351
Operating lease right-of-use assets (related party) 433 464
Total assets $8,480 $7,640
Liabilities and stockholders’ deficit
Current liabilities:
Accounts payable $913 $1,554
Accrued expenses 5,621 4,613
Product warranty liability, current portion 305 311
Operating lease liabilities (related party), current portion 157 158
Total current liabilities 6,996 6,636
Term loan payable (related party) 4,821
Product warranty liability, net of current portion 1,923 1,923
Operating lease liabilities (related party), net of current portion 378 404
Publicly traded warrant liability 1,509 332
Forward purchase agreement put option liability 103
Forward purchase agreement warrant liability 266 4
Total liabilities 15,893 9,402
Commitments and contingencies (see Note 14)
Stockholders’ deficit:
Series A Preferred Stock, $0.0001 par value; 10,000,000 shares authorized as of March 31, 2024 and December 31, 2023, respectively; 4,500,000 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively
Class A Common Stock, $0.0001 par value; 400,000,000 shares authorized as of March 31, 2024 and December 31, 2023 respectively; 19,599,982 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively 2 2
Additional paid-in capital 257,581 255,596
Accumulated deficit (264,877) (257,242)
Accumulated other comprehensive loss (119) (118)
Total stockholders’ deficit (7,413) (1,762)
Total liabilities and stockholders’ deficit $8,480 $7,640

ENVOY MEDICAL, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS(UNAUDITED)(In thousands, except share and per share amounts)
Three Months EndedMarch 31,
2024 2023
Net revenues $59 $78
Cost and operating expenses:
Cost of goods sold 153 175
Research and development 2,360 1,927
Sales and marketing 325 371
General and administrative 2,119 1,376
Total costs and operating expenses 4,957 3,849
Operating loss (4,898) (3,771)
Other income (expense):
Loss from changes in fair value of convertible notes payable (related party) (9,377)
Change in fair value of forward purchase agreement put option liability 103
Change in fair value of forward purchase agreement warrant liability (262)
Change in fair value of publicly traded warrant liability (1,177)
Interest expense, related party (36)
Other expense (105)
Total other expense, net (1,372) (9,482)
Net loss $(6,270) $(13,253)
Net loss attributable to common stockholders, basic and diluted $(6,270) $(13,253)
Net loss per share attributable to common stockholders, basic and diluted $(0.32) $(1.31)
Weighted-average common stock outstanding, basic and diluted 19,599,982 10,122,581
Other comprehensive loss:
Foreign currency translation adjustment (1)
Other comprehensive loss (1)
Comprehensive loss $(6,271) $(13,253)

ENVOY MEDICAL, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)(In thousands)
Three Months EndedMarch 31,
2024 2023
Cash flows from operating activities
Net loss $(6,270) $(13,253)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 34 27
Stock-based compensation 123
Change in fair value of convertible notes payable (related party) 9,377
Change in fair value of warrant liability (related party) 104
Change in fair value of publicly traded warrant liability 1,177
Change in fair value of forward purchase agreement warrant liability 262
Change in fair value of forward purchase agreement put option liability (103)
Change in operating lease right-of-use assets (related party) 31 22
Change in inventory reserve 89 (14)
Changes in operating assets and liabilities:
Accounts receivable, net (119) (22)
Other receivables 144 28
Inventories (140)
Prepaid expenses and other current assets (43) (37)
Accounts payable (641) 1,018
Operating lease liabilities (related party) (27) (19)
Accrued expenses (357) (180)
Product warranty liability (6) (62)
Net cash used in operating activities $(5,846) $(3,011)
Cash flows from investing activities
Purchases of property and equipment (59)
Deposit on equipment not yet placed in service (109)
Net cash used in investing activities $(109) $(59)
Cash flows from financing activities
Proceeds from the issuance of convertible notes payable (related party) 4,000
Proceeds from the issuance of term loan (related party) 5,000
Proceeds from the sale of common stock associated with the forward purchase agreement, net of transaction costs 1,683
Net cash provided by financing activities $6,683 $4,000
Effect of exchange rate changes on cash (1) 1
Net increase in cash 727 931
Cash, beginning of year 4,218 183
Cash, end of year $4,945 $1,114
Supplemental disclosures of cash flow information:
Cash paid for interest $ $
Cash paid for income taxes $ $
Non-cash investing and financing activities:
Deemed capital contribution from related party $ $1,952
Dividends on Series A Preferred Shares $1,365 $

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Source: Envoy Medical, Inc

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