Profound Medical Announces Q4 and Full Year 2022 Financials................
"Our U.S. TULSA business, both in terms of installed base growth and existing system utilization, has increasingly become the primary driver of our recurring revenue growth," said Arun Menawat, Profound's CEO and Chairman. "While one-time capital sales, particularly in select international markets such as China and Japan, have and continue to be challenged by COVID-19 headwinds, we expect this recurring revenue growth trend to continue in 2023. In addition, based on the proposed agenda, we are pleased to confirm that a CPT(R) Category 1 application for TULSA will be considered at the upcoming CPT(R) Editorial Panel Meeting, being held May 4-6, 2023, in Chicago. If approved, we believe that this, combined with initial data from our ongoing CAPTAIN clinical trial, will be a significant catalyst for TULSA adoption in the U.S., beginning in the first quarter of 2025."
Summary Fourth Quarter 2022 Results
For the quarter ended December 31, 2022, the Company recorded revenue of approximately $1.3 million, with the full amount coming from recurring revenue, which consists of the sale of TULSA-PRO(R) consumables, lease of medical devices, procedures and services associated with extended warranties. Fourth quarter 2022 revenue increased approximately 26% from approximately $1.0 million in the same three-month period a year ago.
Total operating expenses, which consist of research and development ("R&D"), general and administrative ("G&A"), selling and distribution ("S&D"), and goodwill impairment expenses, were approximately $9.4 million in the fourth quarter of 2022, a decrease of 8% compared with approximately $10.2 million in the fourth quarter of 2021.
Expenditures for R&D for the three months ended December 31, 2022 were approximately $3.1 million, a decrease of 34% compared with approximately $4.7 million in the three months ended December 31, 2021, primarily driven by lower spending on R&D initiatives, as the primary focus was on the verification and validation of new designs in connection with MRI testing, technology and software improvements and increased in-house projects that utilized existing employees rather than consultants, decreased rent, lower salaries and share-based compensation, and a decrease in depreciation and amortization expenses. These were offset partially by an increase in clinical trial costs due to increased enrolment for the CAPTAIN trial and the setup costs.
G&A expenses for the 2022 fourth quarter decreased by 35% to approximately $2.1 million, compared with approximately $3.2 million in the same period in 2021, due to lower salaries and benefits, consulting fees, share based compensation, rent, software, insurance and other expenses.
Fourth quarter 2022 S&D expenses decreased by 27% to approximately $1.7 million, compared with $2.3 million in the fourth quarter of 2021. This was driven by lower salaries and benefits, consulting fees and share based compensation, due to lower vacation accruals and bonuses awarded to management, fewer consultants hired, and fewer options awarded to employees. These were offset partially by an increase in travel and other expenses due to increased in-person conferences and customer meetings and MRI time as part of the Company's U.S. sales initiative.
Partially offsetting the decreases in R&D, G&A and S&D expenses, the Company recognized a non-cash impairment of approximately $2.5 million in the fourth quarter of 2022, representing all its goodwill associated with the Sonalleve(R) business, as the return to business in China continues to be delayed due to COVID-19.
Net finance costs for the three months ended December 31, 2022 were approximately $499,000, compared with approximately $464,000 in the three months ended December 31, 2021.
Fourth quarter 2022 net loss was approximately $9.5 million, or $0.46 per common share, compared to approximately $10.2 million, or $0.49 per common share, in the three months ended December 31, 2021.
Summary Full Year 2022 Results
For the year ended December 31, 2022, the Company recorded revenue of approximately $6.7 million, with $4.7 million from recurring revenue and $2.0 million from the one-time sale of capital equipment. This compares to revenue of approximately $6.9 million in the twelve months ended December 31, 2021. While recurring revenues increased 26% in 2022 over 2021, this was offset by a 36% decline in one-time capital sales as international markets continued to be negatively impacted by COVID-19.
Profound's full year 2022 total operating expenses were approximately $35.1 million, a 6% increase compared to approximately $33.2 million in the same period of 2021.
Expenditures for R&D for the 12 months ended December 31, 2022 were approximately $14.7 million, a decrease of 4% compared with approximately $15.3 million in 2021. This was primarily driven by lower spending on R&D initiatives, decreased rent, share-based compensation, and a decrease in depreciation and amortization expenses. These were offset partially by an increase in clinical trial costs, travel, salaries and benefits, and office and shop supply expenditures.
G&A expenses for the year ended December 31, 2022 decreased 8% to approximately $9.5 million from $10.3 million for the year ended December 31, 2021. This was due to lower consulting fees, share based compensation, and insurance and other general expenses, offset partially by increases in salaries and benefits, and travel and software costs, and an increase in amortization expense.
Full year 2022 S&D expenses were approximately $8.5 million, an increase of 11% from $7.7 million in 2021. Salaries and benefits, and travel and other expenses were higher due to increases in salesforce and in-person conferences and customer meetings and MRI time as part of the Company's U.S. sales initiative. These were partially offset by a decrease in consulting fees and share based compensation.
Net finance income for the year ended December 31, 2022, which was primarily due to a foreign exchange gain, was approximately $3.7 million, compared with net finance costs of approximately $303,000 in 2021.
The Company recorded a net loss for the year ended December 31, 2022 of approximately $28.7 million, or $1.38 per common share, compared to approximately $30.7 million, or $1.50 per common share, for the year ended December 31, 2021.
Liquidity and Outstanding Share Capital
As at December 31, 2022, Profound had cash of approximately $46.5 million.
As at March 7, 2023, Profound had 20,911,032 common shares issued and outstanding.