- Record Fourth Quarter 2019 Revenues Increase 48% to $9.8 Million -
- Reaffirms Full Year 2020 Revenue Guidance of between $39.5 Million and $42.0 Million -
- Company to Host Conference Call Today at 8:00 am ET, 3:00 pm IT -
CAESAREA, Israel, March 03, 2020 (GLOBE NEWSWIRE) -- Itamar Medical Ltd. ITMR ITMR, a medical technology company focused on the development and commercialization of non-invasive medical devices to aid in the diagnosis of respiratory sleep disorders, today reported unaudited financial results for the three-month period and year ended December 31, 2019.
"2019 was a transformational year for Itamar Medical highlighted by record annual revenues, key business partnerships and innovative new product introductions," said Gilad Glick, President and Chief Executive Officer of Itamar Medical. "We are generating greater patient access to sleep apnea diagnosis by creating greater adoption of our WatchPAT™ technology. The successful launches of the WatchPAT 300 and WatchPAT ONE and recent collaboration with SoClean, which will enable us to penetrate the direct-to-consumer market in 2020, combined with growing clinical evidence of WatchPAT's accuracy and utility are examples on how we are successfully delivering on this goal. We intend to take a greater share of the home sleep apnea test market through increased sales and marketing activities, continued focus on the cardiology call point, recent business collaborations, and sustained commitment to product innovation. We believe that the funds from our recent U.S. public offering provide us with sufficient cash flexibility to implement these strategic initiatives, with the goal of generating value to customers, patients and shareholders."
Fourth Quarter 2019 Highlights and Recent Achievements
- Achieved highest revenue quarter, including record WatchPAT and U.S. WatchPAT sales.
- Completed a U.S. public offering in February 2020 with total gross proceeds of $40.25 million.
- Entered into a collaboration agreement with a wholly-owned subsidiary of SoClean Inc. to offer WatchPAT ONE and other digital health services through direct-to-consumer (DTC) channels to the U.S. sleep apnea market.
- Publication of COMPASS Study validating scoring guidelines that better enable physicians and respiratory technologists to review, verify and interpret WatchPAT automated scoring.
- Selected for inclusion in the Weizmann Institute's Project 10K longitudinal study.
Fourth Quarter 2019 Financial Results
Revenues for the fourth quarter of 2019 increased 48% to $9.8 million, compared to $6.6 million in the same quarter in 2018. Revenue growth was driven by an increase in WatchPAT sales in the U.S. and Europe.
WatchPAT revenues for the fourth quarter of 2019 increased 51% to $9.1 million, compared to $6.0 million in the same quarter in 2018.
U.S. WatchPAT revenues for the fourth quarter of 2019 increased 68% to $7.3 million, compared to $4.4 million in the same quarter in 2018. Sales from disposables and renewable products were approximately 50% (and 70% excluding an order of approximately $2.3 million for WatchPAT 300, from a customer mostly for an upgrade and expansion of its current WatchPAT fleet, previously reported by the Company) of U.S. WatchPAT revenues in the fourth quarter of 2019, compared to approximately 65% in the same quarter in 2018.
Gross profit for the fourth quarter of 2019 increased to $7.7 million, compared to $5.1 million in the same quarter in 2018. Gross profit margin for the fourth quarter of 2019 increased to 78.3%, compared to 77.4% in the same quarter in 2018.
Operating loss for the fourth quarter of 2019 was $0.9 million, compared to $0.6 million in the same quarter in 2018. The increase in operating loss was mainly due to an increase of $1.9 million in selling and marketing expenses associated with the expansion of the U.S. sales team into new geographical territories and verticals (27 territories and verticals as of December 31, 2019, compared to 19 territories and verticals as of December 31, 2018), an increase of $0.5 million in research and development expenses, associated with an increase in research and development personnel, and an increase of $0.5 million in general and administrative expenses, mainly due to the listing of the Company's American Depositary Shares (ADSs) on Nasdaq in February 2019, partially offset by the increase in revenues.
Non-IFRS operating loss for the fourth quarters of 2019 and 2018 was $0.2 million. Non-IFRS operating loss excludes approximately $0.7 million in share-based payments; depreciation and amortization of property and equipment and intangible assets; and change in provision for doubtful and bad debt, compared to $0.4 million of similar expenses for the same quarter in 2018 (see "Use of Non-IFRS Measures" below). The non-IFRS operating loss was impacted by the increase in revenues, offset by the increase in operating expenses as described above.
Net loss for the fourth quarter of 2019 increased to $1.0 million, compared to $0.2 million in the same quarter in 2018.
Non-IFRS net loss for the fourth quarter of 2019 decreased to $0.3 million, compared to $0.4 million in the same quarter in 2018. Non-IFRS net loss excludes approximately $0.7 million in share-based payments; depreciation and amortization of property and equipment and intangible assets; change in provision for doubtful and bad debt; and gain from reevaluation of derivatives, compared to $(0.2) million of similar expenses and gains for the same quarter in 2018 (see "Use of Non-IFRS Measures" below).
As of December 31, 2019, the Company had cash and cash equivalents of $15.1 million. This does not include the net proceeds of $35.5 million from the recently completed public offering in February 2020.
Full Year 2019 Financial Results
Revenues for the full year ended December 31, 2019 increased 29% to $31.3 million, compared to $24.2 million in 2018. Revenue growth for the full year ended December 31, 2019 was mainly due to the same reasons as mentioned above.
WatchPAT revenues for the full year ended December 31, 2019 increased 29% to $29.0 million, compared to $22.4 million in 2018.
U.S. WatchPAT revenues for the full year ended December 31, 2019 increased 33% to $22.4 million, compared to $16.8 million in 2018.
Gross profit for the full year ended December 31, 2019 increased to $24.3 million, compared to $18.5 million in 2018. Gross profit margin for the full year ended December 31, 2019 was 77.7%, compared to 76.3% in 2018.
Operating loss for the full year ended December 31, 2019 was $4.9 million, compared to $3.1 million in 2018. The increase in operating loss was mainly due to an increase of $5.6 million in selling and marketing expenses associated with the expansion of the U.S. sales team into new geographical territories and verticals, as described above, an increase of $0.9 million in research and development expenses, associated with an increase in research and development personnel, and an increase of $1.1 million in general and administrative expenses, mainly due to the listing of the Company's ADSs on Nasdaq in February 2019, partially offset by the increase in revenues.
Non-IFRS operating loss for the full year ended December 31, 2019 was $2.6 million, compared to $1.5 million in 2018. Non-IFRS operating loss excludes approximately $2.3 million in share-based payments; depreciation and amortization of property and equipment and intangible assets; change in provision for doubtful and bad debt; and expenses relating to reduction in manpower, compared to $1.6 million of similar expenses in 2018 (see "Use of Non-IFRS Measures" below). The non-IFRS operating loss was impacted by the increase in revenues, offset by the increase in operating expenses as described above.
Net loss for the full year ended December 31, 2019 increased to $5.3 million, compared to $1.7 million in 2018.
Non-IFRS net loss for the full year ended December 31, 2019 increased to $3.4 million, compared to $2.6 million in 2018. Non-IFRS net loss excludes approximately $1.9 million in share-based payments; depreciation and amortization of property and equipment and intangible assets; change in provision for doubtful and bad debt; expenses relating to reduction in manpower; and gain from reevaluation of derivatives, compared to $(0.9) million of similar expenses and gains in 2018 (see "Use of Non-IFRS Measures" below).
2020 Revenue Guidance
The Company reaffirms its full year 2020 revenue guidance range of between $39.5 million and $42.0 million, reflecting growth of between 26% and 35% over full year 2019 revenue.
Conference Call and Webcast Information
The Company will host a conference call today at 8:00 a.m. Eastern Time, 3:00 p.m. Israel Time to review financial results and provide a corporate update.
To listen live via webcast, please visit https://www.itamar-medical.com/, or by clicking here.
To participate via phone, please use the dial in information:
U.S. toll-free: 877-407-3088
International: 201-389-0927
Israel toll-free: 1-809-406-247
Passcode: 13698996
Please log in approximately 10 minutes prior to the scheduled start time. The archived webcast will be available in the Events and Presentations section of the Company's website for at least 60 days following the call.
Use of Non-IFRS Measures*
In addition to disclosing financial results prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standard Board (IASB), this press release contains Non-IFRS financial measures for operating loss, net loss and diluted loss per ADS, which are adjusted from results based on IFRS to exclude: (i) share-based payments; (ii) depreciation and amortization of property and equipment and intangible assets; (iii) change in provision for doubtful and bad debt; (iv) expenses relating to reduction in manpower; and, in the case of net loss, (v) gain from reevaluation of derivatives. Management believes that the Non-IFRS financial measures provided in this press release are useful to investors' understanding and assessment of the Company's performance. Management uses both IFRS and Non-IFRS measures when operating and evaluating the Company's business internally and therefore decided to make these Non-IFRS adjustments available to investors. The presentation of this Non-IFRS financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with IFRS. For further details, see a reconciliation of operating loss and net loss on an IFRS basis to a Non-IFRS basis that is provided in the table that accompanies this press release.
About Itamar Medical Ltd.
Itamar Medical is a medical technology company focused on the development and commercialization of non-invasive medical devices to aid in the diagnosis of respiratory sleep disorders. Itamar Medical commercializes a digital healthcare platform to facilitate the continuum of care for effective sleep apnea management with a focus on the core sleep, cardiology and direct to consumer markets. Itamar Medical offers a Total Sleep Solution to help physicians provide comprehensive sleep apnea management in a variety of clinical environments to optimize patient care and reduce healthcare system costs. Itamar Medical is a public company traded on the Nasdaq and on the Tel Aviv Stock Exchanges, and is based in Caesarea, Israel with U.S. headquarters based in Atlanta, GA. For additional information visit www.itamar-medical.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and other applicable securities laws. Statements preceded by, followed by, or that otherwise include the words "believes", "expects", "anticipates", "intends", "estimates", "plans", and similar expressions or future or conditional verbs such as "will", "should", "would", "may" and "could" are generally forward-looking in nature and not historical facts. For example, when we discuss taking a greater share of the home sleep apnea test market and product innovation and reaffirm full year 2020 revenue guidance, we are using forward-looking statements. In addition, announced results for the fourth quarter and full year 2019 are preliminary, unaudited and subject to year-end audit adjustments. Because such statements deal with future events, they are subject to various risks, uncertainties and assumptions, including events and circumstances out of Itamar Medical's control and actual results, expressed or implied by such forward-looking statements, could differ materially from Itamar Medical's current expectations. Factors that could cause or contribute to such differences include, but are not limited to, risks, uncertainties and assumptions discussed from time to time by Itamar Medical in reports filed with, or furnished to, the U.S. Securities and Exchange Commission ("SEC") and the Israel Securities Authority ("ISA"), including the Company's latest Form 20-F and in the Company's final prospectus filed under Rule 424(b) on January 31, 2020, which are on file with the SEC (accessible at www.sec.gov) and the ISA. Except as otherwise required by law, Itamar Medical undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Company Contact
Itamar Medical Ltd.
Shy Basson
Chief Financial Officer and U.S. Chief Operating Officer
Phone: +972-4-617-7700
bshy@itamar-medical.com
Investor Relations Contact (U.S.)
Lazar FINN Partners
David Carey
Phone: 212-867-1762
david.carey@finnpartners.com
* The contents of any website or hyperlinks mentioned in this press release are for informational purposes and the contents thereof are not part of this press release.
ITAMAR MEDICAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited)
| December 31, | |||||||||||
| 2019 | 2018 | ||||||||||
| U.S. dollars in thousands | |||||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 15,115 | $ | 6,471 | |||||||
| Trade receivables | 8,384 | 6,549 | |||||||||
| Other receivables | 1,404 | 1,018 | |||||||||
| Inventories | 3,363 | 2,235 | |||||||||
| Total current assets | 28,266 | 16,273 | |||||||||
| Non-current assets | |||||||||||
| Long-term restricted deposits and prepaid expenses | 476 | 365 | |||||||||
| Long-term trade receivables | 156 | 243 | |||||||||
| Property and equipment | 1,472 | 1,213 | |||||||||
| Intangible assets | 395 | 298 | |||||||||
| Right-of-use assets | 2,442 | - | |||||||||
| Total non-current assets | 4,941 | 2,119 | |||||||||
| Total assets | $ | 33,207 | $ | 18,392 | |||||||
| Liabilities | |||||||||||
| Current liabilities | |||||||||||
| Short-term bank loan | $ | 5,000 | $ | 5,000 | |||||||
| Current maturities of lease liabilities | 890 | - | |||||||||
| Trade payables | 2,028 | 1,517 | |||||||||
| Other accounts payable | 3,455 | 2,063 | |||||||||
| Accrued expenses | 1,317 | 1,034 | |||||||||
| Provisions | 273 | 215 | |||||||||
| Short-term employee benefits | 352 | 222 | |||||||||
| Total current liabilities | 13,315 | 10,051 | |||||||||
| Non-current liabilities | |||||||||||
| Lease liabilities | 1,708 | - | |||||||||
| Derivative instruments | - | 442 | |||||||||
| Long-term employee benefits | 260 | 159 | |||||||||
| Other long-term liabilities | 1,260 | 1,052 | |||||||||
| Total non-current liabilities | 3,228 | 1,653 | |||||||||
| Total liabilities | 16,543 | 11,704 | |||||||||
| Equity | |||||||||||
| Ordinary share capital | 878 | 748 | |||||||||
| Additional paid-in capital | 125,435 | 111,486 | |||||||||
| Accumulated deficit | (109,649 | ) | (105,546 | ) | |||||||
| Total equity | 16,664 | 6,688 | |||||||||
| Total liabilities and equity | $ | 33,207 | $ | 18,392 | |||||||
ITAMAR MEDICAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Year Ended December 31, | Three Months Ended December 31, | ||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||||
| U.S. dollars in thousands (except per share and ADS data) | |||||||||||||||||
| Revenues | $ | 31,258 | $ | 24,189 | $ | 9,765 | $ | 6,582 | |||||||||
| Cost of revenues | 6,984 | 5,726 | 2,115 | 1,487 | |||||||||||||
| Gross profit | 24,274 | 18,463 | 7,650 | 5,095 | |||||||||||||
| Operating expenses: | |||||||||||||||||
| Selling and marketing | 18,294 | 12,699 | 5,309 | 3,457 | |||||||||||||
| Research and development | 4,520 | 3,638 | 1,355 | 877 | |||||||||||||
| General and administrative | 6,354 | 5,247 | 1,863 | 1,315 | |||||||||||||
| Total operating expenses | 29,168 | 21,584 | 8,527 | 5,649 | |||||||||||||
| Operating loss | (4,894 | ) | (3,121 | ) | (877 | ) | (554 | ) | |||||||||
| Financial income (expenses), net: | |||||||||||||||||
| Financial income from cash and investments | 454 | 244 | 118 | 7 | |||||||||||||
| Financial expenses from notes and loans | (1,233 | ) | (1,161 | ) | (338 | ) | (200 | ) | |||||||||
| Gain from derivatives instruments, net | 442 | 2,433 | - | 547 | |||||||||||||
| Financial income (expenses), net | (337 | ) | 1,516 | (220 | ) | 354 | |||||||||||
| Loss before taxes on income | (5,231 | ) | (1,605 | ) | (1,097 | ) | (200 | ) | |||||||||
| Tax benefit (taxes on income) | (37 | ) | (124 | ) | 98 | (14 | ) | ||||||||||
| Net loss | $ | (5,268 | ) | $ | (1,729 | ) | $ | (999 | ) | $ | (214 | ) | |||||
| Loss per share (in U.S. dollars): | |||||||||||||||||
| Basic | $ | (0.02 | ) | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.00 | ) | |||||
| Diluted | $ | (0.02 | ) | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.00 | ) | |||||
| Weighted average number of shares used in computation of loss per shares (in thousands): | |||||||||||||||||
| Basic | 332,648 | 277,665 | 334,124 | 287,063 | |||||||||||||
| Diluted | 346,195 | 320,911 | 344,124 | 326,939 | |||||||||||||
| Loss per ADS (in U.S. dollars): | |||||||||||||||||
| Basic | $ | (0.48 | ) | $ | (0.19 | ) | $ | (0.09 | ) | $ | (0.02 | ) | |||||
| Diluted | $ | (0.49 | ) | $ | (0.39 | ) | $ | (0.09 | ) | $ | (0.07 | ) | |||||
| Weighted average number of ADSs used in computation of loss per ADS (in thousands): | |||||||||||||||||
| Basic | 11,088 | 9,255 | 11,137 | 9,569 | |||||||||||||
| Diluted | 11,540 | 10,697 | 11,137 | 10,898 | |||||||||||||
ITAMAR MEDICAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Year Ended December 31, | Three Months Ended December 31, | ||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||||
| U.S. dollars in thousands | |||||||||||||||||
| Cash flows from operating activities | |||||||||||||||||
| Net loss | $ | (5,268 | ) | $ | (1,729 | ) | $ | (999 | ) | $ | (214 | ) | |||||
| Adjustments for: | |||||||||||||||||
| Depreciation and amortization | 1,446 | 481 | 387 | 130 | |||||||||||||
| Share-based payment | 1,259 | 1,021 | 373 | 255 | |||||||||||||
| Change in provision for doubtful and bad debt | 349 | 104 | 157 | (30 | ) | ||||||||||||
| Net financial cost | 490 | 914 | 321 | 216 | |||||||||||||
| Gain from reevaluation of derivatives | (442 | ) | (2,433 | ) | - | (547 | ) | ||||||||||
| Increase in trade receivables | (2,097 | ) | (1,061 | ) | (2,426 | ) | (1,212 | ) | |||||||||
| Increase in other receivable | (410 | ) | (330 | ) | (161 | ) | (51 | ) | |||||||||
| Increase in inventories | (1,579 | ) | (340 | ) | (426 | ) | (68 | ) | |||||||||
| Increase (decrease) in trade payables | 537 | 237 | (187 | ) | 468 | ||||||||||||
| Increase in other accounts payable and accrued expenses | 1,650 | 61 | 1,066 | 288 | |||||||||||||
| Increase in provisions | 58 | 32 | 41 | 22 | |||||||||||||
| Increase (decrease) in employee benefits | 137 | 14 | 35 | (66 | ) | ||||||||||||
| Income tax expenses (benefit) | 37 | 124 | (98 | ) | 73 | ||||||||||||
| Taxes refunded (paid) during the period | (22 | ) | (176 | ) | 22 | (37 | ) | ||||||||||
| Net interest paid during the period | (377 | ) | (802 | ) | (180 | ) | (92 | ) | |||||||||
| Net cash used in operating activities | (4,232 | ) | (3,883 | ) | (2,075 | ) | (865 | ) | |||||||||
| Cash flows from investing activities | |||||||||||||||||
| Sale of marketable securities | - | 3,109 | - | - | |||||||||||||
| Redemption of shore-term bank deposit | - | - | 9,000 | - | |||||||||||||
| Purchase of property and equipment, intangible assets and capitalization of development expenditure | (547 | ) | (310 | ) | (141 | ) | (157 | ) | |||||||||
| Increase in restricted long-term deposits | (68 | ) | - | - | - | ||||||||||||
| Net cash provided by (used in) investing activities | (615 | ) | 2,799 | 8,859 | (157 | ) | |||||||||||
| Cash flow from financing activities | |||||||||||||||||
| Proceeds from issuance of shares, net of share issuance costs | 13,966 | 5,209 | - | - | |||||||||||||
| Short-term bank credit | - | 5,000 | - | - | |||||||||||||
| Principle element of lease payments | (787 | ) | - | (204 | ) | - | |||||||||||
| Repayment of convertible notes | - | (9,939 | ) | - | - | ||||||||||||
| Repayment of shareholders' loans | - | (435 | ) | - | - | ||||||||||||
| Issuance of shares due to the exercise of stock options | 113 | 80 | 88 | 55 | |||||||||||||
| Net cash provided by (used in) financing activities | 13,292 | (85 | ) | (116 | ) | 55 | |||||||||||
| Increase (decrease) in cash and cash equivalents | 8,445 | (1,169 | ) | 6,668 | (967 | ) | |||||||||||
| Cash and cash equivalents at beginning of period | 6,471 | 7,643 | 8,426 | 7,462 | |||||||||||||
| Effect of exchange rate fluctuations on balances of cash and cash equivalents | 199 | (3 | ) | 21 | (24 | ) | |||||||||||
| Cash and cash equivalent balance at end of period | $ | 15,115 | $ | 6,471 | $ | 15,115 | $ | 6,471 | |||||||||
ITAMAR MEDICAL LTD.
RECONCILIATIONS OF IFRS TO NON-IFRS FINANCIAL MEASURES
(Unaudited)
| Year Ended December 31, | Three Months Ended December 31, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||
| U.S. dollars in thousands (except per ADS data) | |||||||||||||||
| IFRS operating loss | $ | (4,894 | ) | $ | (3,121 | ) | $ | (877 | ) | $ | (554 | ) | |||
| Share-based payment | 1,234 | 1,021 | 366 | 255 | |||||||||||
| Depreciation and amortization of property and equipment and intangible assets | 616 | 481 | 167 | 130 | |||||||||||
| Change in provision for doubtful and bad debt | 349 | 104 | 157 | (30 | ) | ||||||||||
| Expenses relating to reduction of manpower | 115 | - | - | - | |||||||||||
| Non-IFRS operating loss | $ | (2,580 | ) | $ | (1,515 | ) | $ | (187 | ) | $ | (199 | ) | |||
| IFRS net loss | $ | (5,268 | ) | $ | (1,729 | ) | $ | (999 | ) | $ | (214 | ) | |||
| Share-based payment | 1,259 | 1,021 | 373 | 255 | |||||||||||
| Depreciation and amortization of property and equipment and intangible assets | 616 | 481 | 167 | 130 | |||||||||||
| Change in provision for doubtful and bad debt | 349 | 104 | 157 | (30 | ) | ||||||||||
| Expenses relating to reduction of manpower | 115 | - | - | - | |||||||||||
| Gain from reevaluation of derivatives | (442 | ) | (2,433 | ) | - | (547 | ) | ||||||||
| Non-IFRS net loss | $ | (3,371 | ) | $ | (2,556 | ) | $ | (302 | ) | $ | (406 | ) | |||
| IFRS loss per ADS (in U.S. dollars) | $ | (0.49 | ) | $ | (0.39 | ) | $ | (0.09 | ) | $ | (0.07 | ) | |||
| Share-based payment | 0.11 | 0.10 | 0.03 | 0.02 | |||||||||||
| Depreciation and amortization of property and equipment and intangible assets | 0.05 | 0.04 | 0.02 | 0.01 | |||||||||||
| Change in provision for doubtful and bad debt | 0.03 | 0.01 | 0.01 | (0.00 | ) | ||||||||||
| Expenses relating to reduction of manpower | 0.01 | - | - | - | |||||||||||
| Non-IFRS loss per ADS (in U.S. dollars) | $ | (0.29 | ) | $ | (0.24 | ) | $ | (0.03 | ) | $ | (0.04 | ) | |||
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