Press Release
TransEnterix, Inc. Reports Operating and Financial Results for the First Quarter 2019
Recent Highlights
-
Total revenue of
$2.2 million in the first quarter of 2019 - Sold one Senhance System globally in the first quarter in 2019
-
Received U.S.
FDA clearance for Senhance Ultrasonic System
“Commercially, we were disappointed with our results in the first
quarter. We did however make solid progress towards the expansion of our
global sales infrastructure and the development of our U.S. installed
base to support future growth,” said
Commercial and Clinical Update
In the quarter ended
On
First Quarter Financial Highlights
For the three months ended
For the three months ended
For the three months ended
For the three months ended
The Company had cash, restricted cash and short term investments of
approximately
Conference Call
About
Use of Non-GAAP Measures
The adjusted net loss and adjusted net loss per share presented in this press release are non-GAAP measures. The adjustments relate to the change in fair value of warrant liabilities, reversal of transfer fee accrual, amortization of intangible assets, change in fair value of contingent consideration, acquisition-related costs, loss on extinguishment of debt the loss (gain) on the sale of the SurgiBot assets. These financial measures are presented on a basis other than in accordance with U.S. generally accepted accounting principles ("Non-GAAP Measures"). In the tables that follow under "Reconciliation of Non-GAAP Measures,” we present adjusted net loss and adjusted net loss per share, reconciled to their comparable GAAP measures. These items are adjusted because they are not operational or because these charges are non-cash or non-recurring and management believes these adjustments are meaningful to understanding the Company's performance during the periods presented. These Non-GAAP Measures should be considered a supplement to, not a substitute for, or superior to, the corresponding financial measures calculated in accordance with GAAP.
Forward-Looking Statements
This press release includes statements relating to the current
regulatory and commercialization plans for the Senhance Surgical System.
These statements and other statements regarding our future plans and
goals constitute "forward looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, and are intended to qualify for the
safe harbor from liability established by the Private Securities
Litigation Reform Act of 1995. Such statements are subject to risks and
uncertainties that are often difficult to predict, are beyond our
control and which may cause results to differ materially from
expectations and include whether we will be able to leverage the
commercial foundation we have built globally to drive the adoption of
Senhance both in the U.S. and abroad and whether
| TransEnterix, Inc. | ||||||||
| Consolidated Statements of Operations and Comprehensive (Loss) Income | ||||||||
| (in thousands except per share amounts) | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2019 | 2018 | |||||||
| Revenue | $ | 2,181 | $ | 4,767 | ||||
| Cost of revenue | 2,467 | 2,555 | ||||||
| Gross (loss) profit | (286 | ) | 2,212 | |||||
| Operating Expenses (Income) | ||||||||
| Research and development | 5,655 | 5,265 | ||||||
| Sales and marketing | 7,674 | 5,970 | ||||||
| General and administrative | 4,560 | 2,676 | ||||||
| Amortization of intangible assets | 2,611 | 2,827 | ||||||
| Change in fair value of contingent consideration | 998 | 627 | ||||||
| Acquisition related costs | 45 | — | ||||||
| Loss (gain) from sale of SurgiBot assets, net | 97 | (11,996 | ) | |||||
| Total Operating Expenses (Income) | 21,640 | 5,369 | ||||||
| Operating Loss | (21,926 | ) | (3,157 | ) | ||||
| Other (Expense) Income | ||||||||
| Change in fair value of warrant liabilities | (106 | ) | 1,829 | |||||
| Interest income | 318 | 270 | ||||||
| Interest expense | (1,116 | ) | (656 | ) | ||||
| Other expense | (305 | ) | (58 | ) | ||||
| Total Other (Expense) Income, net | (1,209 | ) | 1,385 | |||||
| Loss before income taxes | $ | (23,135 | ) | $ | (1,772 | ) | ||
| Income tax benefit | 610 | 890 | ||||||
| Net loss | $ | (22,525 | ) | $ | (882 | ) | ||
| Comprehensive (loss) income | ||||||||
| Foreign currency translation (loss) gain | (1,949 | ) | 2,308 | |||||
| Comprehensive (loss) income | $ | (24,474 | ) | $ | 1,426 | |||
| Net loss per share - basic and diluted | $ | (0.10 | ) | $ | (0.00 | ) | ||
| Weighted average common shares outstanding - basic and diluted | 216,796 | 199,900 | ||||||
| TransEnterix, Inc. | ||||||||
| Consolidated Balance Sheets | ||||||||
| (in thousands, except share amounts) | ||||||||
| March 31, | December 31, | |||||||
| 2019 | 2018 | |||||||
| (unaudited) | ||||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 25,545 | $ | 21,061 | ||||
| Short-term investments | 22,904 | 51,790 | ||||||
| Accounts receivable, net | 8,531 | 8,560 | ||||||
| Inventories | 15,197 | 10,941 | ||||||
| Interest receivable | 34 | 26 | ||||||
| Other current assets | 10,211 | 9,205 | ||||||
| Total Current Assets | 82,422 | 101,583 | ||||||
| Restricted cash | 578 | 590 | ||||||
| Property and equipment, net | 5,923 | 6,337 | ||||||
| Intellectual property, net | 36,322 | 39,716 | ||||||
| In-process research and development | 10,527 | 10,747 | ||||||
| Goodwill | 79,509 | 80,131 | ||||||
| Other long term assets | 1,695 | 203 | ||||||
| Total Assets | $ | 216,976 | $ | 239,307 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | 4,756 | $ | 4,433 | ||||
| Accrued expenses | 7,044 | 9,619 | ||||||
| Deferred revenue – current portion | 1,618 | 1,733 | ||||||
| Contingent consideration – current portion | 70 | 72 | ||||||
| Deferred consideration – MST Acquisition | 6,044 | 5,962 | ||||||
| Total Current Liabilities | 19,532 | 21,819 | ||||||
| Long Term Liabilities | ||||||||
| Deferred revenue – less current portion | — | 109 | ||||||
| Contingent consideration – less current portion | 11,565 | 10,565 | ||||||
| Notes payable - net of debt discount | 29,267 | 28,937 | ||||||
| Warrant liabilities | 4,742 | 4,636 | ||||||
| Net deferred tax liabilities | 4,000 | 4,720 | ||||||
| Other long term liabilities | 1,104 | — | ||||||
| Total Liabilities | 70,210 | 70,786 | ||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ Equity | ||||||||
|
Common stock $0.001 par value, 750,000,000 shares authorized at
March 31, 2019 and December 31, 2018; 217,118,077 and 216,345,984 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively |
217 | 216 | ||||||
| Additional paid-in capital | 679,084 | 676,373 | ||||||
| Accumulated deficit | (531,924 | ) | (509,406 | ) | ||||
| Accumulated other comprehensive (loss) income | (611 | ) | 1,338 | |||||
| Total Stockholders’ Equity | 146,766 | 168,521 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 216,976 | $ | 239,307 | ||||
| TransEnterix, Inc. | ||||||||
| Consolidated Statements of Cash Flows | ||||||||
| (in thousands) | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2019 | 2018 | |||||||
| Operating Activities | ||||||||
| Net loss | $ | (22,525 | ) | $ | (882 | ) | ||
|
Adjustments to reconcile net loss to net cash and cash equivalents
used in
operating activities: |
||||||||
| Loss (gain) from sale of SurgiBot assets, net | 97 | (11,996 | ) | |||||
| Depreciation | 563 | 660 | ||||||
| Amortization of intangible assets | 2,611 | 2,827 | ||||||
| Amortization of debt discount and debt issuance costs | 330 | 274 | ||||||
| Amortization of short-term investment discount | (220 | ) | — | |||||
| Interest expense on deferred consideration – MST acquisition | 204 | — | ||||||
| Stock-based compensation | 2,981 | 1,834 | ||||||
| Deferred tax benefit | (610 | ) | (890 | ) | ||||
| Change in fair value of warrant liabilities | 106 | (1,829 | ) | |||||
| Change in fair value of contingent consideration | 998 | 627 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (129 | ) | (296 | ) | ||||
| Interest receivable | (8 | ) | (21 | ) | ||||
| Inventories | (4,621 | ) | (604 | ) | ||||
| Other current and long term assets | (2,655 | ) | 1,171 | |||||
| Accounts payable | 286 | (217 | ) | |||||
| Accrued expenses | (2,518 | ) | (2,871 | ) | ||||
| Deferred revenue | (197 | ) | (86 | ) | ||||
| Other long term liabilities | 1,112 | — | ||||||
| Net cash and cash equivalents used in operating activities | (24,195 | ) | (12,299 | ) | ||||
| Investing Activities | ||||||||
| Purchase of short-term investments | (10,894 | ) | — | |||||
| Proceeds from maturities of short-term investments | 40,000 | — | ||||||
| Proceeds related to sale of SurgiBot assets, net | — | 4,496 | ||||||
| Purchase of property and equipment | (118 | ) | (218 | ) | ||||
| Proceeds from sale of property and equipment | — | 17 | ||||||
| Net cash and cash equivalents provided by investing activities | 28,988 | 4,295 | ||||||
| Financing Activities | ||||||||
| Proceeds from issuance of common stock and warrants, net of issuance costs | — | 11 | ||||||
| Taxes paid related to net share settlement of vesting of restricted stock units | (499 | ) | — | |||||
| Proceeds from issuance of common stock related to sale of SurgiBot assets | — | 3,000 | ||||||
| Proceeds from exercise of stock options and warrants | 236 | 1,712 | ||||||
| Net cash and cash equivalents (used in) provided by financing activities | (263 | ) | 4,723 | |||||
| Effect of exchange rate changes on cash and cash equivalents | (58 | ) | 88 | |||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 4,472 | (3,193 | ) | |||||
| Cash, cash equivalents and restricted cash, beginning of period | 21,651 | 97,606 | ||||||
| Cash, cash equivalents and restricted cash, end of period | $ | 26,123 | $ | 94,413 | ||||
| Supplemental Disclosure for Cash Flow Information | ||||||||
| Interest paid | $ | 750 | $ | 304 | ||||
| Supplemental Schedule of Noncash Investing and Financing Activities | ||||||||
| Transfer of inventories to property and equipment | $ | 86 | $ | 71 | ||||
| Reclass of warrant liability to common stock and additional paid-in capital | $ | — | $ | 516 | ||||
|
|
| TransEnterix, Inc. | ||||||
| Reconciliation of Non-GAAP Measures | ||||||
| Adjusted Net Loss and Net Loss per Share | ||||||
| (in thousands except per share amounts) | ||||||
| (Unaudited) | ||||||
| Three Months Ended | ||||||
| March 31, | ||||||
| 2019 | 2018 | |||||
| (Unaudited, U.S. Dollars, in thousands) | ||||||
| Net loss (GAAP) | $ | (22,525) | $ | (882) | ||
| Adjustments | ||||||
| Loss (gain) from sale of SurgiBot assets, net | 97 | (11,996) | ||||
| Amortization of intangible assets | 2,611 | 2,827 | ||||
| Change in fair value of contingent consideration | 998 | 627 | ||||
| Acquisition related costs | 45 | — | ||||
| Change in fair value of warrant liabilities | 106 | (1,829) | ||||
| Adjusted net loss (Non-GAAP) | $ | (18,668) | $ | (11,253) | ||
| Three Months Ended | ||||||
| March 31, | ||||||
| (Unaudited, per diluted share) | 2019 | 2018 | ||||
| Net loss per share (GAAP) | $ | (0.10) | $ | (0.00) | ||
| Adjustments | ||||||
| Loss (gain) from sale of SurgiBot assets | 0.00 | (0.06) | ||||
| Amortization of intangible assets | 0.01 | 0.01 | ||||
| Change in fair value of contingent consideration | 0.00 | 0.00 | ||||
| Acquisition related costs | 0.00 | — | ||||
| Change in fair value of warrant liabilities | 0.00 | (0.01) | ||||
| Adjusted net loss per share (non-GAAP) | $ | (0.09) | $ | (0.06) | ||
The non-GAAP financial measures for the three months ended
a) Gain from sale of SurgiBot assets relates to amounts received from
b) Intangible assets that are amortized consist of developed technology and purchased patent rights recorded at cost and amortized over 5 to 10 years.
c) Contingent consideration in connection with the acquisition of the Senhance System in 2015 is recorded as a liability and is the estimate of the fair value of potential milestone payments related to business acquisitions. Contingent consideration is measured at fair value using a discounted cash flow model utilizing significant unobservable inputs including the probability of achieving each of the potential milestones and an estimated discount rate associated with the risks of the expected cash flows attributable to the various milestones. Significant increases or decreases in any of the probabilities of success or changes in expected timelines for achievement of any of these milestones would result in a significantly higher or lower fair value of these milestones, respectively, and commensurate changes to the associated liability. The contingent consideration is revalued at each reporting period and changes in fair value are recognized in the consolidated statements of operations and comprehensive loss.
d) Acquisition related costs were incurred in connection with the
e) The Company’s Series B Warrants are measured at fair value using a simulation model which takes into account, as of the valuation date, factors including the current exercise price, the expected life of the warrant, the current price of the underlying stock, its expected volatility, holding cost and the risk-free interest rate for the term of the warrant. The warrant liability is revalued at each reporting period or upon exercise and changes in fair value are recognized in the consolidated statements of operations and comprehensive loss.
View source version on businesswire.com: https://www.businesswire.com/news/home/20190509005758/en/
Source:
For TransEnterix, Inc.
Investors:
Mark Klausner, +1
443-213-0501
invest@transenterix.com
or
Media:
Joanna
Rice, +1 951-751-1858
joanna@greymattermarketing.com