PLANO, Texas, Nov. 09, 2016 (GLOBE NEWSWIRE) -- Nuvectra Corporation (NASDAQ:NVTR), a neurostimulation medical
device company, announced today financial results for the third quarter ended September 30, 2016.
Highlights
- U.S. Algovita sales organization foundationally established, now covering 42 territories
- Virtis™ CE mark and FDA regulatory submission filings expected towards year end
- Medical Advisory Board established, advancing efforts of clinical and educational initiatives
Scott Drees, Chief Executive Officer of Nuvectra, said, “We advanced the build-out of our U.S. sales
organization, including sales leadership, national account coverage and 42 active territories. We also continue to manage through
the hospital system and buying group approval processes, while growing our U.S. Algovita revenue. On the regulatory front, we
remain on track to submit our second indication to U.S. and European regulatory agencies for Virtis, our Sacral Nerve Stimulation
System, at or around the end of the year.”
Financial Results
Total revenue in the third quarter of 2016 was $3.8 million, a 196.3% increase from $1.3 million in the third
quarter of 2015. The increase reflects revenue related to the Company’s DBS development agreement with Aleva Neurotherapeutics,
S.A. and the U.S. commercial launch of the Algovita SCS System.
Gross profit in the third quarter of 2016 was $2.1 million, or 56.8% gross margin, a change from $0.7 million,
or 57.7% gross margin, in the third quarter of 2015.
Operating expenses in the third quarter of 2016 were $11.1 million, a 43.3% increase from $7.8 million in the
third quarter of 2015. The increase reflects investments in the Company’s sales and marketing team, along with higher headcount
related to becoming a public company. This was partially offset by lower research, development and engineering costs due to
decreased personnel-related expenses and no allocation of corporate expenses from Integer™ Holdings Corporation, formerly known as
Greatbatch, Inc.
Net loss for the third quarter of 2016 was $(9.5) million or $(0.92) per share, compared with a net loss of
$(7.0) million, or $(0.69) per share, for the third quarter of 2015.
Total cash and cash equivalents were $75.6 million as of September 30, 2016.
Conference Call Information
Nuvectra will hold a conference call on Wednesday, November 9, 2016 at 4:30pm ET to discuss the results. The
dial in numbers are (844) 882-7830 for domestic callers and (574) 990-9704 for international callers. The conference ID is
94246838. A live webcast of the conference call will be available on the investor relations section of the Company’s website
at http://investors.nuvectramed.com/.
A replay of the call will be available starting on November 9, 2016 through November 16, 2016. To access the
replay, dial (855) 859-2056 for domestic callers and (404) 537-3406 for international callers and enter access code 94246838. The
webcast will be available in the investor relations section of the Company’s website for 90 days following the completion of the
call.
About Nuvectra Corporation
Nuvectra™ is a neurostimulation company committed to helping physicians improve the lives of people with chronic
neurological conditions. The Algovita Spinal Cord Stimulation (SCS) System is our first commercial offering and is CE marked and
FDA approved for the treatment of chronic pain of the trunk and/or limbs. Our innovative technology platform also has capabilities
under development to support other neurological indications such as sacral nerve stimulation (SNS), and deep brain stimulation
(DBS). In addition, our NeuroNexus subsidiary designs, manufactures and markets leading-edge neural-interface technologies for the
neuroscience clinical research market. Visit the Nuvectra website at www.nuvectramed.com.
Cautionary Note Regarding Forward-Looking Statements
This press release contains "forward-looking statements," including statements we make regarding the outlook
for Nuvectra as an independent publicly-traded company. Forward-looking statements are based only on our current beliefs,
expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and
trends, the economy and other future conditions, and therefore they are subject to inherent uncertainties, risks and changes in
circumstances that are difficult to predict and may be outside of our control. Our actual performance may differ materially from
those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Any
forward-looking statement made by us is based only on information currently available to us and speaks only as of the date on which
it is made. Important factors that could cause our actual results to differ materially from those indicated in the
forward-looking statements include: (i) our ability to successfully commercialize Algovita and to develop, complete and
commercialize enhancements or improvements to Algovita; (ii) our ability to successfully compete with our current SCS competitors
and the ability of our U.S. sales representatives to successfully establish market share and acceptance of Algovita, (iii) our
ability to demonstrate the features, perceived benefits and capabilities of Algovita to physicians and patients in competition with
similar products already well established and sold in the SCS market; (iv) our ability to anticipate and satisfy customer needs and
preferences and to develop, introduce and commercialize new products or advancements and improvements to Algovita in order to
successfully meet our customers’ expectations; (v) the outcome of our development plans for our neurostimulation technology
platform, including our ability to identify additional indications or conditions for which we may develop neurostimulation medical
devices or therapies and seek regulatory approval thereof; (vi) our ability to identify business development and growth
opportunities and to successfully execute on our strategy, including our ability to seek and develop strategic partnerships with
third parties to, among other things, fund clinical and development costs for new product offerings; (vii) the performance by our
development partners, including Aleva Neurotherapeutics, S.A., of their obligations under their agreements with us; (viii) the
scope of protection for our intellectual property rights covering Algovita and other products using our neurostimulation technology
platform, along with any product enhancements or improvements; (ix) our ability to successfully build, attract and maintain an
effective commercial infrastructure and qualified sales force in the United States; (x) our compliance with all regulatory and
legal requirements regarding implantable medical devices and interactions with healthcare professionals; (xi) any product recalls,
or the receipt of any warning letters, mandatory corrections or fines from any governmental or regulatory agency; and (xii) our
ability to satisfy the conditions and covenants, including trailing six month revenue milestones, of our Credit Facility.
Please see the sections entitled “Cautionary Statement Concerning Forward-Looking Statements" and “Risk Factors” in Nuvectra’s
Registration Statement on Form 10 and in our other quarterly and periodic filings for a description of these and other risks and
uncertainties. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may
be made from time to time, whether as a result of new information, future developments or otherwise.
Nuvectra Corporation |
|
CONDENSED CONSOLIDATED BALANCE
SHEETS—Unaudited |
|
(in thousands except share and per share
data) |
|
|
As of |
|
September 30,
2016 |
|
January 1,
2016 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
75,623 |
|
|
|
$ |
202 |
|
|
Trade accounts receivable, net of allowance for doubtful accounts of $8 in fiscal 2016 and $56
in fiscal 2015 |
|
|
2,142 |
|
|
|
|
|
417 |
|
|
Prepaid expenses and other current assets |
|
|
1,976 |
|
|
|
|
|
145 |
|
|
Total current assets |
|
|
79,741 |
|
|
|
|
|
764 |
|
|
Property, plant and equipment, net |
|
|
6,564 |
|
|
|
|
|
4,469 |
|
|
Intangible assets, net |
|
|
1,786 |
|
|
|
|
|
1,983 |
|
|
Goodwill |
|
|
38,182 |
|
|
|
|
|
38,182 |
|
|
Other long-term assets |
|
|
526 |
|
|
|
|
|
|
— |
|
|
Total assets |
$ |
126,799 |
|
|
|
$ |
45,398 |
|
|
Liabilities
and Stockholders’ Equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable and other current liabilities |
$ |
8,448 |
|
|
|
$ |
18 |
|
|
Amount due to non-controlling interests |
|
|
|
— |
|
|
|
|
|
6,818 |
|
|
Deferred revenue |
|
|
547 |
|
|
|
|
|
|
— |
|
|
Other accrued compensation |
|
|
1,459 |
|
|
|
|
|
524 |
|
|
Accrued bonuses |
|
|
434 |
|
|
|
|
|
198 |
|
|
Total current liabilities |
|
|
10,888 |
|
|
|
|
|
7,558 |
|
|
Other long-term liabilities |
|
|
1,360 |
|
|
|
|
|
|
— |
|
|
Long-term debt, net |
|
|
13,583 |
|
|
|
|
|
|
— |
|
|
Total liabilities |
|
|
25,831 |
|
|
|
|
|
7,558 |
|
|
Commitments and contingencies |
|
|
|
Stockholders’ equity: |
|
|
|
Common stock, $0.001 par value, 100,000,000 shares authorized; 10,288,856 and 0 shares issued
and outstanding in fiscal 2016 and fiscal 2015, respectively |
|
|
10 |
|
|
|
|
|
|
— |
|
|
Additional paid-in capital |
|
|
121,119 |
|
|
|
|
|
|
— |
|
|
Accumulated deficit |
|
|
(20,161 |
) |
|
|
|
|
(125,094 |
) |
|
Greatbatch’s net investment |
|
|
|
— |
|
|
|
|
|
162,934 |
|
|
Total stockholders’ equity |
|
|
100,968 |
|
|
|
|
|
37,840 |
|
|
Total liabilities and stockholders’ equity |
$ |
126,799 |
|
|
|
$ |
45,398 |
|
|
Nuvectra Corporation |
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
|
|
|
AND COMPREHENSIVE LOSS —
Unaudited |
|
|
|
(in thousands except per share
data) |
|
|
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
|
September 30,
2016 |
|
October 2,
2015 |
|
September 30,
2016 |
|
October 2,
2015 |
|
Sales: |
|
|
|
|
|
|
|
|
Product |
$ |
2,603 |
|
|
$ |
1,271 |
|
|
$ |
6,044 |
|
|
$ |
3,942 |
|
|
Service |
|
1,163 |
|
|
|
— |
|
|
|
2,338 |
|
|
|
— |
|
|
Total sales |
|
3,766 |
|
|
|
1,271 |
|
|
|
8,382 |
|
|
|
3,942 |
|
|
Cost of sales: |
|
|
|
|
|
|
|
|
Product |
|
1,144 |
|
|
|
538 |
|
|
|
2,872 |
|
|
|
2,475 |
|
|
Service |
|
484 |
|
|
|
— |
|
|
|
1,074 |
|
|
|
— |
|
|
Total cost of sales |
|
1,628 |
|
|
|
538 |
|
|
|
3,946 |
|
|
|
2,475 |
|
|
Gross profit |
|
2,138 |
|
|
|
733 |
|
|
|
4,436 |
|
|
|
1,467 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
8,006 |
|
|
|
3,914 |
|
|
|
18,185 |
|
|
|
8,190 |
|
|
Research, development and engineering costs, net |
|
3,114 |
|
|
|
4,051 |
|
|
|
10,097 |
|
|
|
11,742 |
|
|
Other operating expenses (income) |
|
7 |
|
|
|
(198 |
) |
|
|
476 |
|
|
|
260 |
|
|
Total operating expenses |
|
11,127 |
|
|
|
7,767 |
|
|
|
28,758 |
|
|
|
20,192 |
|
|
Operating loss |
|
(8,989 |
) |
|
|
(7,034 |
) |
|
|
(24,322 |
) |
|
|
(18,725 |
) |
|
Interest expense |
|
455 |
|
|
|
— |
|
|
|
978 |
|
|
|
— |
|
|
Other expense, net |
|
6 |
|
|
|
— |
|
|
|
53 |
|
|
|
— |
|
|
Loss before provision for income taxes |
|
(9,450 |
) |
|
|
(7,034 |
) |
|
|
(25,353 |
) |
|
|
(18,725 |
) |
|
Provision for income taxes |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Net loss |
$ |
(9,450 |
) |
|
$ |
(7,034 |
) |
|
$ |
(25,353 |
) |
|
$ |
(18,725 |
) |
|
Comprehensive loss |
$ |
(9,450 |
) |
|
$ |
(7,034 |
) |
|
$ |
(25,353 |
) |
|
$ |
(18,725 |
) |
|
Basic and diluted net loss per share |
$ |
(0.92 |
) |
|
$ |
(0.69 |
) |
|
$ |
(2.47 |
) |
|
$ |
(1.83 |
) |
|
Basic and diluted weighted average shares outstanding |
|
10,279 |
|
|
|
10,258 |
|
|
|
10,268 |
|
|
|
10,258 |
|
|
Company Contacts: Nuvectra Corporation Walter Berger, Chief Financial Officer (214) 474-3102 wberger@nuvectramed.com Jennifer Armstrong, Media Relations (214) 474-3110 jarmstrong@nuvectramed.com Investor Contacts: The Ruth Group Nick Laudico (646) 536-7030 nlaudico@theruthgroup.com Zack Kubow (646) 536-7020 zkubow@theruthgroup.com
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