ThermoGenesis Holdings Announces 2020 Year End Financial Results and Provides Corporate Update
RANCHO CORDOVA, Calif., March 17, 2021 /PRNewswire/ -- ThermoGenesis Holdings, Inc. (Nasdaq: THMO), a market leader in automated cell processing tools and services in the cell and gene therapy field, today reported financial and operating results for the year ended December 31, 2020 and provided a corporate strategic update.
Key 2020 and Subsequent Achievements:
"During 2020, we remained focused on our core business, providing tools and services for the cell and gene therapy markets," stated Chris Xu, Ph.D., Chief Executive Officer of ThermoGenesis. "We are committed to the expansion of our brand, especially within immuno-oncology and aim to not only continue providing improvements and new accessories for our CAR-TXpress™ platform, but also intend to offer customers a one-stop shop with cell-based contract development and manufacturing (CDMO) services, as well. According to industry sources, there are over 1,000 cell and gene therapy trials currently under way and the industry could see numerous cell therapy approvals in the coming years, making it more important than ever to ensure companies can rely on the manufacturing of high-quality, clinical-grade cell therapies at commercial scale. With that in mind, ThermoGenesis intends to utilize its high efficiency, semi-automated CAR-TXpress™ platform to help provide these groundbreaking treatments to as many patients as possible."
Dr. Xu continued, "To address the industry's ever-growing needs, in early 2021, we were pleased to introduce the PXP-LAVARE System, an optional cell reformation accessory for our cutting edge, FDA-cleared PXP-1000, which is used for downstream cGMP compliant clinical manufacturing of cell-based therapeutics, such as CAR-T cells. Also, of note, in mid-2020, was the implementation of our global distribution agreement with Corning Life Sciences to distribute our X-SERIES cell processing platform. We continue to explore opportunities to co-develop, in-license and acquire additional innovative products and solutions which would be synergistic with our current portfolio."
Jeff Cauble, Chief Financial Officer of ThermoGenesis, added, "In 2020, we significantly bolstered our balance sheet, ending the year with approximately $7.2 million in cash. While our revenues were impacted by the global pandemic, we expect sales within our core business line to return to their prior levels once the health emergency subsides."
Financial Results for the Year Ended December 31, 2020
Net revenues. Net revenues for the year ended December 31, 2020 were $9.7 million compared to $13.0 million for the year ended December 31, 2019, a decrease of $3.3 million or 25%. The decrease was driven by AXP® disposable sales, which declined by approximately $1.7 million, with approximately 1,000 fewer cases sold in 2020 as compared to 2019. The primary reason for the decrease was the COVID-19 pandemic, which had a significant impact on the cord blood industry, with fewer cord blood units being stored globally after the start of the pandemic. The pandemic also caused other problems with some domestic customers opting to utilize existing safety stock at the start of the pandemic in lieu of placing new orders, to minimize on-site workers. Internationally, customs delays led some customers to temporarily switch to manual processing due to the long wait to clear products through customs departments with reduced staffing. AXP® device sales decreased by approximately $0.9 million in 2020 as compared to 2019 due to one-time revenues in 2019 from customers converting to the Company's new generation AXP® II devices. The Company also had a decrease of approximately $0.9 million in BioArchive® sales, primarily due to two fewer devices being sold and lower service revenue in 2020 as compared to 2019. Partially offsetting these decreases was an increase of approximately $0.3 million in CAR-TXpress revenue driven by $0.2 million more recognized in 2020 from the exclusivity fee paid by the Company's X-SERIES distributor in 2019 and other revenue which increased by approximately $0.3 million primarily due to antibody testing kits sold in 2020.
Gross profit. Gross profit was $1.3 million, or 13% of net revenues, for the year ended December 31, 2020 compared to $5.7 million, or 44% of net revenues, for the year ended December 31, 2019, a decrease of $4.4 million, or 78%. The decrease was primarily due to an inventory disposition expense of approximately $2.8 million for the remaining inventory of COVID-19 testing kits purchased from ImmuneCyte and a $0.5 million increase in inventory reserves driven by X-Series disposables. The remainder of the decrease was driven by reduced gross profit of approximately $1.2 million from lower AXP® device and disposable sales.
Sales and marketing expenses. Sales and marketing expenses were $1.9 million for the year ended December 31, 2020, as compared to $1.7 million for the year ended December 31, 2019, an increase of $0.3 million or 18%. The increase was driven by approximately $0.2 million more in salaries and benefits and approximately $0.1 million in additional consulting expenses for the new marketing firm the Company engaged in 2020.
Research and development expenses. Research and development expenses were $2.5 million for the year ended December 31, 2020, compared to $2.4 million for the year ended December 31, 2019, an increase of $0.1 million or 3%. The increase was driven primarily by approximately $0.1 million more in spending for project expenses in 2020, offset by a decrease in salaries and benefits of approximately $35,000.
General and administrative expenses. General and administrative expenses for the year ended December 31, 2020 were $5.7 million, compared to $6.4 million for the year ended December 31, 2019, a decrease of $0.6 million or 10%. The decrease was driven by a settlement expense of $1.4 million related to the Mavericks lawsuit in 2019, partially offset by approximately $0.4 million in accrued expenses related to the Company's employee short-term incentive program, approximately $0.3 million more in stock compensation expense related to awards granted in 2020 to Executives and Directors and approximately $0.1 million more in corporate insurance expense.
Interest Expense. Interest expense increased to $7.9 million for the year ended December 31, 2020 as compared to $4.5 million for the year ended December 31, 2019, a difference of $3.4 million. The increase was driven by the accelerated expense of the unamortized debt discount of $2.5 million for the beneficial conversion feature associated with the portions of the Revolving Credit Agreement with Boyalife Asset Holding II, Inc. which were converted during the first quarter of 2020. The remainder of the increase was driven by additional interest expense and amortization of the debt discount of approximately $0.8 million related to the Revolving Credit Agreement with Boyalife Asset Holding II, Inc.
Loss on Extinguishment of Debt: The Company recorded a loss of extinguishment of debt of $0 for the year ended December 31, 2020 as compared to $0.8 million for the year ended December 31, 2019. The recorded loss of extinguishment of debt in 2019 was due to the extinguishment of an unsecured note payable to an accredited investor.
Net loss. For the year ended December 31, 2020, the Company reported a comprehensive loss attributable to common stockholders of $16.3 million, or ($2.60) per share, based on approximately 6.3 million weighted average basic and diluted common shares outstanding. This compares to a comprehensive net loss of $9.5 million, or ($3.36) per share, based on approximately 2.8 million weighted average basic and diluted common shares outstanding for the year ended December 31, 2019.
Adjusted EBITDA. In addition to the results reported under US GAAP, the Company also uses a non-GAAP measure, Adjusted EBITDA, to evaluate operating performance and to facilitate the comparison of our historical results and trends. The Company uses the metric to determine operational cash flow. Adjusted EBITDA loss for the year ended December 31, 2020 was $7.3 million, as compared to a loss of $3.3 million for the year ended December 31, 2019, an increase of $4.0 million or 119%. The increase in the adjusted EBITDA loss was primarily due to an inventory disposition expense of approximately $2.8 million for the remaining inventory of COVID-19 testing kits purchased from ImmuneCyte and a $0.5 million increase in inventory reserves driven by X-SERIES disposables. The year ended December 31, 2020 also had reduced gross profit of approximately $1.2 million due to lower sales and approximately $0.5 million more in salaries and benefits. These increases were partially offset by a settlement expense of $1.4 million related to the Mavericks lawsuit in 2019. A reconciliation of adjusted EBITDA loss to net loss is set forth below.
Liquidity and Capital Resources. At December 31, 2020, the Company had cash and cash equivalents totaling $7.2 million, compared with $3.2 million at December 31, 2019. Working capital improved to $9.2 million at December 31, 2020 as compared to $2.8 million at December 31, 2019.
Conference Call and Webcast Information
A webcast replay will also be available on ThermoGenesis' website for three months, please visit: https://thermogenesis.com/investors/news-and-events/events-webcasts.
About ThermoGenesis Holdings, Inc.
The Company defines adjusted EBITDA as income (or loss) from operations less, depreciation, amortization, stock compensation and impairment of intangible assets.
SOURCE ThermoGenesis Holdings, Inc.
Company Codes: NASDAQ-NMS:THMO