Itamar Medical Ltd., a medical technology company focused on the development and commercialization of non-invasive medical devices and solutions to aid in the diagnosis of respiratory sleep disorders, reported unaudited financial results for the second quarter of 2020.
- Second Quarter Revenues Increase 21% to $8.9 Million
- U.S. WatchPATTM Revenues Increase 31% to $6.6 Million
- Company to Host Conference Call Today at 8:00 am ET, 3:00 pm IT
CAESAREA, Israel, Aug. 11, 2020 (GLOBE NEWSWIRE) -- Itamar Medical Ltd. (Nasdaq and TASE: ITMR), a medical technology company focused on the development and commercialization of non-invasive medical devices and solutions to aid in the diagnosis of respiratory sleep disorders, today reported unaudited financial results for the second quarter of 2020.
“Our second quarter results reflect encouraging growth and we have taken several steps to capitalize on this momentum. The recent traction among both new and existing customers in the context of survey results from 300 centers indicating volumes of 70% Home Sleep Apnea Tests versus volumes of 30% in-lab1 is a testament to the advantage of our home-based and digital care pathway sleep solutions and our ability to reach the large undiagnosed patient population suffering from sleep apnea,” said Gilad Glick, President and Chief Executive Officer of Itamar Medical.
“While we are pleased with our solid results, there are still many macro factors that remain fluid as the pandemic unfolds, leading to our cautious near-term outlook as we approach the second half of the year. Nonetheless, this does not change our long-term value proposition or market opportunity,” concluded Glick.
Second Quarter 2020 Highlights
- Revenues in the second quarter of 2020 were $8.9 million, an increase of 21% year-over-year.
- U.S WatchPAT revenues in the second quarter of 2020 were $6.6 million, an increase of 31% year-over-year.
Recent Business and Production Updates
- Doubled WatchPAT ONE production capacity from approximately 3,000 units per week in May to approximately 6,000 units per week in June to meet the overwhelming demand as seen in our backlog from the first quarter, which, as a result, is now normalized.
- Active centers using WatchPAT ONE reached a total of 291 after onboarding over 10 new customers per week on average throughout the second quarter.
Second Quarter 2020 Financial Results
Revenues for the second quarter of 2020 increased 21% to $8.9 million, compared to $7.4 million in the same quarter in 2019. Revenue growth was driven by an increase in WatchPAT sales in the U.S. and Japan, offset by a decrease in WatchPAT sales in Europe and in the rest of the world.
WatchPAT revenues for the second quarter of 2020 increased 20% to $7.9 million, compared to $6.5 million in the same quarter in 2019.
U.S. WatchPAT revenues for the second quarter of 2020 increased 31% to $6.6 million, compared to $5.0 million in the same quarter in 2019, driven primarily by WatchPAT ONE sales as well as WatchPAT Direct sales. Sales from disposables and renewable products, including WatchPAT ONE, comprised approximately 78% of WatchPAT revenues in the U.S. in the second quarter of 2020, compared to 65% in the same quarter in 2019.
Gross profit for the second quarter of 2020 increased to $6.0 million, compared to $5.7 million in the same quarter in 2019. Gross profit margin for the second quarter of 2020 decreased to 68%, compared to 78% in the same quarter in 2019. Non-IFRS gross profit margin for the second quarter of 2020 decreased to 70%, compared to 79% in the same quarter in 2019) See “Use of Non-IFRS Measures” below(. Gross margin decline was manly driven by the increase in WatchPAT ONE sales.
Operating loss for the second quarter of 2020 was $3.2 million, compared to $1.7 million in the same quarter in 2019. The increase in operating loss was primarily attributable to an increase in operating expenses, partially offset by the increase in revenues. Selling and marketing expenses increased 31% to $5.9 million, compared to $4.5 million in the same quarter in 2019, due to the planned expansion of the U.S. sales team into new geographical territories and verticals (32 territories and verticals as of June 30, 2020, compared to 27 territories and verticals as of June 30, 2019), as well as additional sales commissions resulting from the increase in revenues. Research and development expenses increased 22% to 1.4 million, compared to $1.1 million in the same quarter in 2019, driven by an increase in personnel to support product development (including the digital health platform).
Non-IFRS operating loss for the second quarter of 2020 was $2.4 million, compared to $0.9 million in the same quarter in 2019. Non-IFRS operating loss excludes approximately $0.8 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 $0.8 million of similar expenses for the same quarter in 2019 (see “Use of Non-IFRS Measures” below).
Net loss for the second quarter of 2020 was $3.2 million, compared to $2.0 million in the same quarter in 2019.
Non-IFRS net loss for the second quarter of 2020 was $2.4 million, compared to $1.2 million in the same quarter in 2019. Non-IFRS net loss excludes approximately $0.8 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 $0.7 million of similar expenses and gains for the same quarter in 2019 (see “Use of Non-IFRS Measures” below).
As of June 30, 2020, the Company had cash, cash equivalents and a short-term bank deposit of $45.2 million.
First Half 2020 Financial Results
Revenues for the six months ended June 30, 2020 increased 29% to $17.3 million, compared to $13.4 million for the six months ended June 30, 2019. Revenue growth was driven by an increase in WatchPAT sales in the U.S. and Japan, offset by a decrease in WatchPAT sales in the rest of the world.
WatchPAT revenues for the six months ended June 30, 2020 increased 30% to $16.1 million, compared to $12.3 million for the six months ended June 30, 2019.
U.S. WatchPAT revenues for the six months ended June 30, 2020 increased 36% to $12.7 million, compared to $9.3 million for the six months ended June 30, 2019. U.S. WatchPAT revenues increase was primarily driven by the increase of WatchPAT ONE as well as WatchPAT Direct sales.
Gross profit for the six months ended June 30, 2020 increased to $12.3 million, compared to $10.4 million for the six months ended June 30, 2019. Gross profit margin for the for the six months ended June 30, 2020 was 72%, compared to 77% for the six months ended June 30, 2019. Non-IFRS gross profit margin for six months ended June 30, 2020 decreased to 73%, compared to 79% for the six months ended June 30, 2019 (See “Use of Non-IFRS Measures” below(. Gross margin decline was mainly driven by the increase in WatchPAT ONE sales.
Operating loss for the six months ended June 30, 2020 was $5.2 million, compared to $3.0 million for the six months ended June 30, 2019. The increase in operating loss was primarily attributable to an increase in operating expenses, partially offset by the increase in revenues. Selling and marketing expenses increased 36% to $11.2 million, compared to $8.3 million in the first half of 2019, due to the planned expansion of the U.S. sales team into new geographical territories and verticals, as well as additional sales commissions resulting from the increase in revenues. Research and development expenses increased 29% to $2.7 million, compared to $2.1 million in the first half of 2019, driven by an increase in personnel to support product development (including the digital health platform).
Non-IFRS operating loss for the six months ended June 30, 2020 was $3.8 million, compared to $1.9 million for the six months ended June 30, 2019. Non-IFRS operating loss excludes approximately $1.4 million in share-based payments; depreciation and amortization of property and equipment and intangible asset; change in provision for doubtful and bad debt; and expenses relating to reduction in manpower, compared to $1.1 million of similar expenses for the six months ended June 30, 2019 (see “Use of Non-IFRS Measures” below).
Net loss for the six months ended June 30, 2020 was $5.2 million, compared to $3.1 million for the six months ended June 30, 2019.
Non-IFRS net loss for the for the six months ended June 30, 2020 was $3.9 million, compared to $2.4 million for the six months ended June 30, 2019. Non-IFRS net loss excludes approximately $1.3 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 $0.7 million of similar expenses and gains for the six months ended June 30, 2019 (see “Use of Non-IFRS Measures” below).
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: 833-519-1272
International: 914-800-3844
Israel toll-free: 1-809-315-362
Conference ID: 8798951
Please log in approximately 10 minutes prior to the scheduled start time. An archived webcast also will be provided in the Events and Presentations section of the Company’s website.
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 and net loss, 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 (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 and solutions 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. The Company’s key product, WatchPAT, is commercially available within major markets including the U.S., Japan and Europe. 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 the momentum gained by our business we are using forward-looking statements.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 Annual Report on Form 20-F, which is 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
Phone: +972-4-617-7700
bshy@itamar-medical.com
Itamar Medical Investor Relations Contact (U.S.)
Leigh Salvo or Caroline Paul
Gilmartin Group
Phone: +1-415-937-5412
investors@itamar-medical.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)
| June 30, 2020 |
December 31, 2019 |
||||||
| U.S. dollars in thousands | |||||||
| Assets | |||||||
| Current assets | |||||||
| Cash and cash equivalents | $ | 37,666 | $ | 15,115 | |||
| Short-term bank deposit | 7,500 | - | |||||
| Trade receivables | 7,662 | 8,384 | |||||
| Other receivables | 2,015 | 1,404 | |||||
| Inventories | 4,727 | 3,363 | |||||
| Total current assets | 59,570 | 28,266 | |||||
| Non-current assets | |||||||
| Long-term restricted deposits and prepaid expenses | 519 | 476 | |||||
| Long-term trade receivables | 263 | 156 | |||||
| Property and equipment | 1,924 | 1,472 | |||||
| Intangible assets | 687 | 395 | |||||
| Right-of-use assets | 1,961 | 2,442 | |||||
| Total non-current assets | 5,354 | 4,941 | |||||
| Total assets | $ | 64,924 | $ | 33,207 | |||
| Liabilities | |||||||
| Current liabilities | |||||||
| Short-term bank loan | $ | 5,000 | $ | 5,000 | |||
| Current maturities of lease liabilities | 883 | 890 | |||||
| Trade payables | 2,646 | 2,028 | |||||
| Other accounts payable | 3,248 | 3,455 | |||||
| Accrued expenses | 1,119 | 1,317 | |||||
| Provisions | 334 | 273 | |||||
| Short-term employee benefits | 593 | 352 | |||||
| Total current liabilities | 13,823 | 13,315 | |||||
| Non-current liabilities | |||||||
| Lease liabilities, net of current maturities | 1,253 | 1,708 | |||||
| Recognized liability for defined benefit plan, net | 203 | 260 | |||||
| Other long-term liabilities | 1,262 | 1,260 | |||||
| Total non-current liabilities | 2,718 | 3,228 | |||||
| Total liabilities | 16,541 | 16,543 | |||||
| Equity | |||||||
| Ordinary share capital | 1,133 | 878 | |||||
| Additional paid-in capital | 161,407 | 125,435 | |||||
| Accumulated deficit | (114,157 | ) | (109,649 | ) | |||
| Total equity | 48,383 | 16,664 | |||||
| Total liabilities and equity | $ | 64,924 | $ | 33,207 | |||
ITAMAR MEDICAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||
| U.S. dollars in thousands (except per shareand ADS data) | |||||||||||||||
| Revenues | $ | 8,885 | $ | 7,353 | $ | 17,263 | $ | 13,409 | |||||||
| Cost of revenues | 2,869 | 1,627 | 4,919 | 3,029 | |||||||||||
| Gross profit | 6,016 | 5,726 | 12,344 | 10,380 | |||||||||||
| Selling and marketing expenses | 5,943 | 4,546 | 11,206 | 8,268 | |||||||||||
| Research and development expenses | 1,377 | 1,130 | 2,679 | 2,070 | |||||||||||
| General and administrative expenses | 1,914 | 1,793 | 3,634 | 3,080 | |||||||||||
| Total operating expenses | 9,234 | 7,469 | 17,519 | 13,418 | |||||||||||
| Operating loss | (3,218 | ) | (1,743 | ) | (5,175 | ) | (3,038 | ) | |||||||
| Financial income (expenses): | |||||||||||||||
| Financial income | 152 | 101 | 387 | 193 | |||||||||||
| Financial expenses | (166 | ) | (298 | ) | (400 | ) | (596 | ) | |||||||
| Gain from derivatives instruments, net | - | 78 | - | 442 | |||||||||||
| Financial income (expenses), net | (14 | ) | (119 | ) | (13 | ) | 39 | ||||||||
| Loss before taxes on income | (3,232 | ) | (1,862 | ) | (5,188 | ) | (2,999 | ) | |||||||
| Taxes on income | (10 | ) | (96 | ) | (52 | ) | (123 | ) | |||||||
| Net loss | $ | (3,242 | ) | $ | (1,958 | ) | $ | (5,240 | ) | $ | (3,122 | ) | |||
| Loss per share – basic and diluted (in U.S. dollars) | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.01 | ) | |||
| Weighted average number of shares used in computation of loss per shares (in thousands): | |||||||||||||||
| Basic | 423,137 | 333,951 | 406,624 | 331,087 | |||||||||||
| Diluted | 423,137 | 335,149 | 406,624 | 331,087 | |||||||||||
| Loss per ADS – basic and diluted (in U.S. dollars) | $ | (0.23 | ) | $ | (0.18 | ) | $ | (0.39 | ) | $ | (0.28 | ) | |||
| Weighted average number of ADSs used in computation of loss per ADS (in thousands): | |||||||||||||||
| Basic | 14,105 | 11,132 | 13,554 | 11,036 | |||||||||||
| Diluted | 14,105 | 11,172 | 13,554 | 11,036 | |||||||||||
ITAMAR MEDICAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| U.S. dollars in thousands | ||||||||||||||||
| Cash flows from operating activities | ||||||||||||||||
| Net loss | $ | (3,242 | ) | $ | (1,958 | ) | $ | (5,240 | ) | $ | (3,122 | ) | ||||
| Adjustments for: | ||||||||||||||||
| Depreciation and amortization | 479 | 343 | 889 | 674 | ||||||||||||
| Share-based payment | 309 | 355 | 671 | 531 | ||||||||||||
| Change in provision for doubtful and bad debt | 126 | 207 | 158 | 194 | ||||||||||||
| Net financial cost (income) | (102 | ) | 148 | (199 | ) | 172 | ||||||||||
| Gain from reevaluation of derivatives | - | (78 | ) | - | (442 | ) | ||||||||||
| Decrease (increase) in trade receivables | (728 | ) | (251 | ) | 456 | (59 | ) | |||||||||
| Increase in other accounts receivable | (832 | ) | (318 | ) | (604 | ) | (190 | ) | ||||||||
| Increase in inventories | (1,054 | ) | (247 | ) | (1,815 | ) | (520 | ) | ||||||||
| Increase in trade payables | 151 | 147 | 580 | 525 | ||||||||||||
| Increase (decrease) in other accounts payable and accrued expenses | 866 | 78 | (426 | ) | 314 | |||||||||||
| Increase in employee benefits | 166 | 39 | 245 | 129 | ||||||||||||
| Increase in provisions | 10 | 3 | 61 | 7 | ||||||||||||
| Income tax expenses | 10 | 96 | 52 | 123 | ||||||||||||
| Taxes paid during the period | (29 | ) | (17 | ) | (30 | ) | (44 | ) | ||||||||
| Net interest received (paid) during the period | 127 | (166 | ) | 53 | (174 | ) | ||||||||||
| Net cash used in operating activities | (3,743 | ) | (1,619 | ) | (5,149 | ) | (1,882 | ) | ||||||||
| Cash flows from investing activities | ||||||||||||||||
| Investment in short-term bank deposits | (7,500 | ) | (9,000 | ) | (7,500 | ) | (9,000 | ) | ||||||||
| Investment in restricted long-term deposits | (50 | ) | - | (50 | ) | - | ||||||||||
| Purchase of property and equipment, intangible assets and capitalization of development expenditure | (478 | ) | (116 | ) | (709 | ) | (262 | ) | ||||||||
| Net cash provided by (used in) investing activities | (8,028 | ) | (9,116 | ) | (8,259 | ) | (9,262 | ) | ||||||||
| Cash flows from financing activities | ||||||||||||||||
| Proceeds from issuance of shares, net of share issuance costs (share issuance costs) | (876 | ) | - | 36,185 | 13,968 | |||||||||||
| Repayment of principal of lease liabilities | (220 | ) | (215 | ) | (445 | ) | (439 | ) | ||||||||
| Issuance of shares due to the exercise of stock options | 81 | 14 | 81 | 25 | ||||||||||||
| Net cash provided by (used in) financing activities | (1,015 | ) | (201 | ) | 35,821 | 13,554 | ||||||||||
| Increase (decrease) in cash and cash equivalents | (12,786 | ) | (10,936 | ) | 22,413 | 2,410 | ||||||||||
| Cash and cash equivalents at beginning of period | 50,442 | 19,887 | 15,115 | 6,471 | ||||||||||||
| Effect of exchange rate fluctuations on balances of cash and cash equivalents | 10 | 65 | 138 | 135 | ||||||||||||
| Cash and cash equivalent balance at end of period | $ | 37,666 | $ | 9,016 | $ | 37,666 | $ | 9,016 | ||||||||
| Non-cash financing activity- share issuance costs | $ | 38 | $ | - | $ | 38 | $ | - | ||||||||
ITAMAR MEDICAL LTD.
RECONCILIATIONS OF IFRS TO NON-IFRS FINANCIAL MEASURES
(Unaudited)
| Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||
| U.S. dollars in thousands (except per shareand ADS data) | |||||||||||||||
| IFRS operating loss | $ | (3,218 | ) | $ | (1,743 | ) | $ | (5,175 | ) | $ | (3,038 | ) | |||
| IFRS net loss | $ | (3,242 | ) | $ | (1,958 | ) | $ | (5,240 | ) | $ | (3,122 | ) | |||
| Cost of revenues: | |||||||||||||||
| Share-based payment | 5 | 2 | 7 | 4 | |||||||||||
| Depreciation and amortization of property and equipment and intangible assets | 162 | 90 | 264 | 169 | |||||||||||
| Expenses relating to reduction of manpower | 27 | - | 27 | - | |||||||||||
| 194 | 92 | 298 | 173 | ||||||||||||
| Operating expenses: | |||||||||||||||
| Selling and marketing: | |||||||||||||||
| Share-based payment | 80 | 169 | 199 | 168 | |||||||||||
| Depreciation and amortization of property and equipment and intangible assets | 37 | 30 | 68 | 59 | |||||||||||
| Expenses relating to reduction of manpower | 63 | - | 63 | - | |||||||||||
| 180 | 199 | 330 | 227 | ||||||||||||
| Research and development: | |||||||||||||||
| Share-based payment | 71 | 25 | 142 | 54 | |||||||||||
| Depreciation and amortization of property and equipment and intangible assets | 31 | 16 | 50 | 28 | |||||||||||
| Expenses relating to reduction of manpower | 18 | 115 | 18 | 115 | |||||||||||
| 120 | 156 | 210 | 197 | ||||||||||||
| General and administrative: | |||||||||||||||
| Share-based payment | 147 | 153 | 310 | 293 | |||||||||||
| Depreciation and amortization of property and equipment and intangible assets | 18 | 14 | 34 | 26 | |||||||||||
| Change in provision for doubtful and bad debt | 126 | 207 | 158 | 194 | |||||||||||
| Expenses relating to reduction of manpower | 9 | - | 9 | - | |||||||||||
| 300 | 374 | 511 | 513 | ||||||||||||
| Financial income (expenses), net: | |||||||||||||||
| Share-based payment | 6 | 6 | 13 | 12 | |||||||||||
| Gain from reevaluation of derivatives | - | (78 | ) | - | (442 | ) | |||||||||
| 6 | (72 | ) | 13 | (430 | ) | ||||||||||
| Non-IFRS operating loss | $ | (2,424 | ) | $ | (922 | ) | $ | (3,826 | ) | $ | (1,928 | ) | |||
| Non-IFRS net loss | $ | (2,442 | ) | $ | (1,209 | ) | $ | (3,878 | ) | $ | (2,442 | ) | |||
| IFRS loss per ADS – basic and diluted (in U.S. dollars) | $ | (0.23 | ) | $ | (0.18 | ) | $ | (0.39 | ) | $ | (0.28 | ) | |||
| Non-IFRS loss per ADS – basic and diluted (in U.S. dollars) | $ | (0.17 | ) | $ | (0.11 | ) | $ | (0.29 | ) | $ | (0.22 | ) | |||
1 COVID-19 sleep center impact study. EnsoData. 2020. Available at https://www.ensodata.com/landing-pages/covid-19-sleep-center-impact-study.
