Fuse Medical, Inc. Announces Fiscal Year 2020 Financial Results

April 2, 2021 13:00 UTC

 

 
 

RICHARDSON, Texas--(BUSINESS WIRE)--Fuse Medical Inc.. (OTCPINK: FZMD) (“Fuse” or the “Company”) an emerging manufacturer and distributor of innovative medical devices for the orthopedic and spine marketplace, announced that it has filed its annual report on Form 10-K for the year ended December 31, 2020 with the Securities and Exchange Commission (“SEC”) on Tuesday, March 30, 2021.

“2020 was a challenging and ambitious year, which began on the heels of the COVID-19 global pandemic, along with the ensuing government restrictions on elective surgeries in the largest markets we serve,” said Christopher C. Reeg, Chief Executive Officer of Fuse. “Despite these conditions, and an approximate 6% decline in revenues for 2020 as compared to 2019, which can be directly correlated to the government imposed quarantines, we were still able to increase our gross profit margin by approximately 10% during the same period. Our results of operations for 2020 and strategic milestones, along with our multiple new product launches, provide us the positive momentum for 2021 to be pivotal for the execution of our growth and profitability strategies,” said Mr. Reeg.

“In response to COVID-19, we took immediate and appropriate steps to align our business with the changing market conditions, as well as the necessary right sizing of our infrastructure and related costs,” said William E. McLaughlin, Chief Financial Officer. “As a result, we were successful in minimizing disruption to our revenue line, while reducing our net loss by $1.9 million or 57% from 2019. Further, we strengthened our balance sheet by improving accounts receivable collections, reducing inventory levels, and reduction of our borrowings on our credit facility.”

Fiscal Year 2020 Highlights:

Fuse’s 2020 has proved to be an exception and pivotal for Fuse’s growth as a Manufacturer and innovative product developer. Our focus to shift our business model from a sole distributor to an integrated Manufacturer and distributor was exceedingly successful during 2020, with continued growth and success serving as a spring-boarding into 2021. Highlights of Fuse’s 2020 strategic milestones include the following:

  • In August 2020, we were listed as the one-hundred thirty-sixth (136th) largest public company by revenue in the Dallas-Fort Worth Metroplex, by the Dallas Morning News.
  • In November 2020, Deloitte recognized our Company for our fast growth with a ranking of forty-third (43rd) on their 2020 Technology Fast 500TM.
  • In December 2020, we launched FuseChoiceTM, FuseChoiceTM Plus, and FuseChoiceTM Max, part of our amniotic and umbilical membrane product line. We also announced the planned 2021 launches of three additional Biologics product lines including the FuseChoiceTM Derm, FusePureTM DBM, and FuseTrilogyTM Viable Matrix products.
  • In January 2021, we entered into a marketing agreement with CarePICS Telehealth to increase our wound care offerings.
  • In January 2021, we entered into an exclusive agreement with Orthovestments, LLC for the manufacturing and commercialization of the novel OrbitumTM Staple System, which increases our Manufactured product portfolio.
  • In February 2021, we launched our Fuse ACP Anterior Cervical Plating System, expanding our offerings in our Spine division.
  • We were successful in adding 10 new distributors for 2020 and adding an additional 7 new distributors during the three months ended March 31, 2021.

Fiscal Year 2020 Financial Highlights

Net revenue for the year ended December 31, 2020 was $21.4 million, compared to $22.9 million for 2019. The decline in revenue was largely attributed to the impact of COVID-19 and the related deferrals in elective procedures that began in late March 2020. Elective procedures have recovered to some extent in the second half of 2020, partially offsetting this impact.

For the year ended December 31, 2020, gross profit was $12.7 million, or 59% of revenues, compared to $11.1 million, or 49% of revenues, for the year ended December 31, 2019.

Selling, general, administrative, and other expenses (“SG&A”) for the year ended December 31, 2020 declined by $1.9 million or 23% to $6.5 million compared to $8.4 million for 2019. The reduction in SG&A reflects our continued commitment to our strategic cost containment initiatives.

Commissions expense for the year ended December 31, 2020 increased to $7.0 million from $5.9 million for the year ended December 31, 2019, an increase of $1.1 million of approximately 18.5%.

For the year ended December 31, 2020, net loss was $1.4 million compared to $3.3 million for the year ended December 31, 2019, reflecting a reduction in our net loss of $1.9 million or approximately 57%.

The Company’s primary sources of liquidity are cash from operations and its credit facility. At December 31, 2020, the Company’s current assets exceeded it current liabilities by $5,372,651 (“Working Capital”), which included $1,187,458 in cash and cash equivalents. As of December 31, 2020, the Company had sufficient collateral and had approximately $1.3 million in credit facility capacity. The Company expects to renew its RLOC maturing May 4, 2021.

About Fuse Medical, Inc.

Fuse is an emerging manufacturer and distributor of innovative medical devices for the orthopedic and spine marketplace. We provide a comprehensive portfolio of products in the orthopedic total joints, sports medicine, trauma, foot and ankle space, as well as, degenerative and deformity spine, osteobiologics, wound care, and regenerative medicine products. For more information about the Company, or if you’re interested in becoming a distributor of any Fuse’s products, please contact us at info@fusemedical.com or visit: www.fusemedical.com.

Forward Looking Statements

Certain statements in this press release, constitute “forward-looking statements” within the meaning of the federal securities laws. Words such as “may,” “might,” “will,” “should,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” “predict,” “forecast,” “project,” “plan,” “intend,” or similar expressions or statements regarding intent, belief, or current expectations, are forward-looking statements. While the Company believes these forward-looking statements are reasonable, undue reliance should not be placed on any such forward-looking statements, which are based only on information available to the Company as of the date of this release. These forward-looking statements are based upon current estimates and assumptions and are subject to various risks and uncertainties, including, without limitation, those set forth in the Company’s filings with the Securities and Exchange Commission; the failure of the Company to close the transaction; and integration issues with the consolidated company. Thus, actual results could be materially different. The Company expressly disclaims any obligation to update or alter statements whether as a result of new information, future events, or otherwise, except as required by law.

             

FUSE MEDICAL, INC.

CONSOLIDATED BALANCE SHEETS

(in dollars, except share data)

             

 

 

December 31, 2020

 

 

December 31, 2019

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,187,458

 

 

$

1,099,310

 

Accounts receivable, net of allowance of $787,766 and $615,278, respectively

 

 

4,427,896

 

 

 

5,249,653

 

Inventories, net of allowance of $3,077,728 and $3,805,730, respectively

 

 

6,981,413

 

 

 

7,855,887

 

Prepaid expenses and other current assets

 

 

24,203

 

 

 

39,850

 

Total current assets

 

 

12,620,970

 

 

 

14,244,700

 

Property and equipment, net

 

 

17,791

 

 

 

32,639

 

Long term accounts receivable, net of allowance of $2,615,834 and $728,000, respectively

 

 

1,669,510

 

 

 

924,646

 

Intangible assets, net

 

 

1,138,080

 

 

 

1,206,620

 

Goodwill

 

 

1,972,886

 

 

 

1,972,886

 

Total assets

 

$

17,419,237

 

 

$

18,381,491

 

Liabilities and Stockholders' Equity (Accumulated Deficit)

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

3,236,592

 

 

$

2,752,854

 

Accrued expenses

 

 

2,584,734

 

 

 

3,302,904

 

Convertible notes payable - related parties

 

 

150,000

 

 

 

150,000

 

Payroll Protection Program loan

 

 

361,400

 

 

 

-

 

Economic Injury Disaster Loan - short term portion

 

 

2,241

 

 

 

-

 

Senior secured revolving credit facility

 

 

913,352

 

 

 

1,752,501

 

Total current liabilities

 

 

7,248,319

 

 

 

7,958,259

 

Notes payable - related parties

 

 

200,000

 

 

 

-

 

Economic Injury Disaster Loan - long term portion

 

 

147,759

 

 

 

-

 

Earn-out liability

 

 

11,936,000

 

 

 

11,645,365

 

Total liabilities

 

 

19,532,078

 

 

 

19,603,624

 

Commitments and contingencies

 

 

-

 

 

 

-

 

Stockholders’ equity (accumulated deficit):

 

 

 

 

 

 

 

 

Preferred stock, $0.01 par value; 20,000,000 shares authorized; no shares issued and outstanding

 

 

-

 

 

 

-

 

Common stock, $0.01 par value; 100,000,000 shares authorized; 73,124,458 shares issued and outstanding as of December 31, 2020 and 2019

 

 

731,245

 

 

 

731,245

 

Additional paid-in capital

 

 

1,184,222

 

 

 

642,435

 

Accumulated deficit

 

 

(4,028,308

)

 

 

(2,595,813

)

Total stockholders’ equity (accumulated deficit)

 

 

(2,112,841

)

 

 

(1,222,133

)

Total liabilities and stockholders’ equity (accumulated deficit)

 

$

17,419,237

 

 

$

18,381,491

 

             

FUSE MEDICAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in dollars, except share data)

             

 

 

For the

Year Ended December 31, 2020

 

 

For the

Year Ended December 31, 2019

 

Net revenues

 

$

21,398,936

 

 

$

22,900,277

 

Cost of revenues

 

 

8,694,713

 

 

 

11,762,790

 

Gross profit

 

 

12,704,223

 

 

 

11,137,487

 

Operating expenses

 

 

 

 

 

 

 

 

Selling, general, administrative and other

 

 

6,541,659

 

 

 

8,466,077

 

Commissions

 

 

7,086,335

 

 

 

5,982,075

 

Depreciation and amortization

 

 

104,143

 

 

 

107,073

 

Goodwill impairment

 

 

-

 

 

 

932,203

 

Total operating expenses

 

 

13,732,137

 

 

 

15,487,428

 

Operating loss

 

 

(1,027,914

)

 

 

(4,349,941

)

Other income (expense):

 

 

 

 

 

 

 

 

Change in fair value of contingent purchase consideration

 

 

(290,635

)

 

 

1,936,164

 

Interest expense

 

 

(94,953

)

 

 

(121,633

)

Total other income (expense)

 

 

(385,588

)

 

 

1,814,531

 

Operating loss before income tax

 

 

(1,413,502

)

 

 

(2,535,410

)

Income tax expense

 

 

18,993

 

 

 

781,085

 

Net loss

 

$

(1,432,495

)

 

$

(3,316,495

)

Loss per common share - basic

 

$

(0.02

)

 

$

(0.05

)

Loss per common share - diluted

 

$

(0.02

)

 

$

(0.05

)

Weighted average number of common shares outstanding - basic

 

 

70,221,566

 

 

 

70,221,566

 

Weighted average number of common shares outstanding - diluted

 

 

70,221,566

 

 

 

70,221,566

 

             

FUSE MEDICAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

             

 

 

For the

Year Ended December 31, 2020

 

 

For the

Year Ended December 31, 2019

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(1,432,495

)

 

$

(3,316,495

)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

104,143

 

 

 

107,073

 

Change in fair value of contingent purchase consideration

 

 

290,635

 

 

 

(1,936,164

)

Impairment of goodwill

 

 

-

 

 

 

932,203

 

Stock based compensation

 

 

553,184

 

 

 

627,678

 

Provision for discounts on long term accounts receivable

 

 

1,887,836

 

 

 

645,046

 

Provision for bad debts and discounts

 

 

172,488

 

 

 

30,269

 

Provision for slow moving and obsolete inventory

 

 

(728,002

)

 

 

2,093,858

 

Deferred income tax expense

 

 

-

 

 

 

760,993

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

649,269

 

 

 

(178,354

)

Inventories

 

 

1,602,476

 

 

 

1,126,144

 

Prepaid expenses and other current assets

 

 

15,647

 

 

 

(10,297

)

Long term accounts receivable

 

 

(2,632,698

)

 

 

(1,445,261

)

Accounts payable

 

 

483,738

 

 

 

39,935

 

Accrued expenses

 

 

(729,567

)

 

 

518,633

 

Net cash provided by/(used in) operating activities

 

 

236,654

 

 

 

(4,739

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(20,757

)

 

 

(15,318

)

Net cash used in investing activities

 

 

(20,757

)

 

 

(15,318

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Net payments/proceeds from senior secured revolving credit facility

 

 

(839,149

)

 

 

275,053

 

Payroll protection program proceeds

 

 

361,400

 

 

 

-

 

Economic injury disaster loan proceeds

 

 

150,000

 

 

 

-

 

Proceeds from related party notes payable

 

 

200,000

 

 

 

-

 

Net cash provided by/(used in) financing activities

 

 

(127,749

)

 

 

275,053

 

Net increase in cash and cash equivalents

 

 

88,148

 

 

 

254,996

 

Cash and cash equivalents - beginning of year

 

 

1,099,310

 

 

 

844,314

 

Cash and cash equivalents - end of year

 

$

1,187,458

 

 

$

1,099,310

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

62,866

 

 

$

94,545

 

 

Contacts

Fuse Medical, Inc.
Devon Morgan, Sr. Investor Relations Analyst
Office (469) 862-3030
Facsimile (469) 862-3035
info@Fusemedical.com

 
 

Source: Fuse Medical, Inc.

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