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| 8-K - FORM 8-K - LDR HOLDING CORP | form8k.htm |
EXHIBIT 99.1
LDR HOLDING CORPORATION REPORTS THIRD QUARTER 2015 RESULTS
Third quarter revenue increased 9.5% year-over-year to $39.3 million or 14.2% constant currency
AUSTIN, Texas, November 4, 2015 - LDR Holding Corporation (NASDAQ: LDRH), a global medical device company focused on designing and commercializing novel and proprietary surgical technologies for the treatment of patients suffering from spine disorders, today reported its financial results for the third quarter ended September 30, 2015.
Third Quarter 2015 Revenue Highlights
• | Total revenue in the third quarter of 2015 increased 9.5% to $39.3 million, compared to $35.9 million in the third quarter of 2014. On a constant currency basis, total revenue grew 14.2%. |
• | Revenue from exclusive technology products in the third quarter of 2015 grew 14.5% to $36.7 million, compared to $32.1 million in the third quarter of 2014. On a constant currency basis, exclusive technology products revenue grew 18.0%. |
• | Revenue in the United States increased 15.0% to $32.3 million in the third quarter of 2015, compared to $28.1 million in the third quarter of 2014, and represented 82.2% of total revenue. |
• | International revenue decreased 10.3% during the third quarter of 2015 to $7.0 million compared to $7.8 million in the third quarter of 2014. On a constant currency basis, international revenue increased 11.4%. |
Revenue from sales of the Company’s exclusive cervical products grew 21.0%, or 25.2% on a constant currency basis, in the third quarter of 2015 to $27.5 million, compared with $22.8 million in the third quarter of 2014, due principally to the growth from sales of the Mobi-C® Cervical Disc. Revenue from LDR's exclusive lumbar products in the third quarter decreased 1.5%, or increased 0.5% on a constant currency basis, to $9.2 million, compared with $9.3 million in the third quarter of 2014.
The performance during the third quarter was driven by strong growth of Mobi-C and ROI-C®, supporting the effectiveness of the Company's strategy to gain market share in the cervical spine segment. The cross selling opportunity that Mobi-C provides to the ROI-C business is also contributing to the growth of the Company's exclusive cervical technology.
Christophe Lavigne, President and Chief Executive Officer of LDR, commented, “I am pleased by the demand for our exclusive cervical technology products during the third quarter of 2015, led by solid growth for Mobi-C. At the same time, seasonality was a factor on the year-over-year and sequential growth rates for the third quarter. This was evident in the United States as well as in our international markets, most notably with our international traditional technology products. We are maintaining our revenue guidance for the full year 2015, which was previously increased on our second quarter conference call.”
Gross profit for the third quarter of 2015 was $33.2 million and gross margin was 84.5%, compared to gross profit of $29.4 million and gross margin of 82.0% for the third quarter of 2014. The improvement in gross margin is due to geographic mix, royalties and inventory reserves, offset by increased freight charges.
Net loss for the third quarter of 2015 was $2.1 million, or $0.07 per share, compared to a net loss of $2.0 million, or $0.08 per share, for the same quarter a year ago.
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Adjusted EBITDA for the third quarter of 2015 was $(1.6) million compared to adjusted EBITDA of $243,000 for the third quarter of 2014.
Mr. Lavigne added, “We recently received FDA approval for an updated labeling of Mobi-C to include five-year clinical results, allowing LDR to market Mobi-C with a superiority claim to fusion through five years. We believe this unique five-year superiority claim, a first in the spine industry, adds to the growing weight of clinical evidence supporting cervical disc replacement and further solidifies the competitive advantage of Mobi-C, the only FDA-approved two-level cervical disc replacement solution in the marketplace. We believe we are in the early stages of the adoption of cervical disc replacement in the U.S. market with significant opportunity for additional expansion and a strong competitive advantage in Mobi-C. With this updated five-year labeling and our commitment to investing in sales, marketing, physician education and reimbursement, we are strategically positioned to continue to capitalize on our ‘first mover’ advantage.”
Balance Sheet and Liquidity
As of September 30, 2015, LDR had $123.5 million in cash and cash equivalents, $156.4 million in working capital (including cash and cash equivalents) and $2.0 million in debt.
2015 Guidance
Based on LDR’s results for the quarter ended September 30, 2015, the Company is reaffirming its expected revenue growth for the full year 2015 to be in the range of 19.0% to 20.0%, before any foreign exchange impact. This implies revenues, before any foreign exchange impact, in the range of approximately $168.1 million to $169.5 million for the full year 2015 or $161 million to $163.9 million, on a reported basis. Based on current foreign exchange rates, changes in foreign exchange rates are expected to negatively impact 2015 revenue by 4.0% to 5.0%.
Conference Call
LDR Holding Corporation will host a conference call today at 5:00 p.m. Eastern Time to discuss its third quarter 2015 financial results. The conference call will be available to interested parties through a live audio webcast available through LDR’s website at www.ldr.com. Those without internet access may join the call from within the United States by dialing (877) 312-5637; outside the United States, by dialing (253) 237-1149.
For those who are not available to listen to the live webcast, the webcast replay will be archived for 12 months on LDR’s website.
Forward-Looking Statements
This press release contains statements that constitute forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. Forward-looking statements contained in this press release include the intent, belief or current expectations of LDR and members of its management team with respect to LDR’s future business operations as well as the assumptions upon which such statements are based. Forward-looking statements include specifically, but are not limited to, LDR’s market opportunities, growth, future revenues, future products, market acceptance of its products, sales and financial results and such statements are subject to risks and uncertainties such as the timing and success of new product introductions, physician acceptance, endorsement, and use of LDR’s products, regulatory matters, competitor activities, changes in and adoption of reimbursement rates, potential product recalls, effects of global economic conditions and changes in foreign currency exchange rates. Additional factors that could cause actual results to differ materially from those contemplated within this press release can also be found in LDR’s Risk Factors disclosure in its Annual Report on Form 10-K, filed on February 20, 2015,
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and in LDR’s other filings with the SEC. LDR disclaims any responsibility to update any forward-looking statements.
About LDR Holding Corporation
LDR Holding Corporation is a global medical device company focused on designing and commercializing novel and proprietary surgical technologies for the treatment of patients suffering from spine disorders. LDR’s primary products are based on its exclusive Mobi® non-fusion and VerteBRIDGE® fusion technology platforms and are designed for applications in the cervical and lumbar spine. These technologies are designed to enable products that are less invasive, provide greater intra-operative flexibility, offer simplified surgical techniques and promote improved clinical outcomes for patients as compared to existing alternatives. In August 2013, LDR received approval from the U.S. Food and Drug Administration (FDA) for the Mobi-C cervical disc replacement device, the first and only cervical disc replacement device to receive FDA approval to treat both one-level and two-level cervical disc disease. For more information regarding LDR Holding, visit www.ldr.com.
Use of Non-GAAP Financial Measures
To supplement LDR’s consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP), LDR uses certain non-GAAP financial measures, such as Adjusted EBITDA and revenue on a constant currency basis, in this press release and accompanying tables.
Management defines EBITDA as net income (loss) plus interest (income) expense, net, income tax expense and depreciation and amortization. The Company defines Adjusted EBITDA as EBITDA plus stock-based compensation expense and other interest (expense), net. The Company presents Adjusted EBITDA because management believes it is a useful indicator of operating performance. LDR’s management uses Adjusted EBITDA principally as a measure of operating performance and believes that Adjusted EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties in their evaluation of the operating performance of companies in industries similar to LDR. Management also uses Adjusted EBITDA for planning purposes, including the preparation of the annual operating budget and financial projections.
Adjusted EBITDA should not be considered in isolation or as a substitute for a measure of the Company’s liquidity or operating performance prepared in accordance with GAAP and is not indicative of operating income (loss) from operations as determined under GAAP. Adjusted EBITDA has limitations that should be considered before using this measure to evaluate the Company’s liquidity or financial performance. Adjusted EBITDA does not include certain expenses that may be necessary to review LDR’s operating results and liquidity requirements. Management’s definition and calculation of Adjusted EBITDA may differ from that of other companies.
Management calculates revenue on a constant currency basis by using the average foreign exchange rates for each month during the previous year and applying these rates to foreign-denominated revenue in the corresponding months in the current quarter. The difference between revenue calculated based on these foreign exchange rates and revenue calculated in accordance with GAAP is referred to as the foreign exchange impact on revenue. Management uses revenue on a constant currency basis to improve comparability between periods as though fluctuations from changes in foreign currency did not exist.
Revenue on a constant currency basis should not be considered in isolation or as a substitute for revenue prepared in accordance with GAAP as it is not indicative of revenue as determined under GAAP. Management’s calculation of revenue on a constant currency basis may differ from that of other companies.
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A reconciliation of the non-GAAP financial measures used in this release to the most comparable U.S. GAAP measures for the respective periods can be found in a table later in this release immediately following the condensed consolidated statements of cash flows.
Contacts
Robert McNamara
Executive Vice President and Chief Financial Officer
LDR Holding Corporation
(512) 344-3333
Matthew Norman
Director, Investor Relations
LDR Holding Corporation
(512) 344-3408
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LDR HOLDING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, 2015 | December 31, 2014 | |||||||
Unaudited | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 123,511 | $ | 73,883 | ||||
Accounts receivable, net | 26,367 | 26,484 | ||||||
Inventory, net | 27,788 | 24,996 | ||||||
Other current assets | 6,525 | 4,864 | ||||||
Prepaid expenses | 1,481 | 1,419 | ||||||
Deferred tax asset, current | 278 | 296 | ||||||
Total current assets | 185,950 | 131,942 | ||||||
Property and equipment, net | 20,798 | 19,025 | ||||||
Goodwill | 6,621 | 6,621 | ||||||
Intangible assets, net | 3,683 | 3,858 | ||||||
Deferred tax assets | 5,470 | 192 | ||||||
Other assets | 544 | 171 | ||||||
Total assets | $ | 223,066 | $ | 161,809 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 8,912 | $ | 8,302 | ||||
Accrued expenses | 19,514 | 19,366 | ||||||
Short-term financing | 479 | 4,343 | ||||||
Current portion of long-term debt | 689 | 1,009 | ||||||
Total current liabilities | 29,594 | 33,020 | ||||||
Line of credit, net of discount | — | 18,166 | ||||||
Long-term debt, net of discount and current portion | 832 | 1,422 | ||||||
Deferred tax liabilities | 685 | 740 | ||||||
Other long-term liabilities | 780 | 760 | ||||||
Total liabilities | 31,891 | 54,108 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity: | ||||||||
Common stock | 29 | 27 | ||||||
Treasury stock at cost | (8 | ) | (8 | ) | ||||
Additional paid-in capital | 302,971 | 205,920 | ||||||
Accumulated other comprehensive loss | (5,982 | ) | (3,500 | ) | ||||
Accumulated deficit | (105,835 | ) | (94,738 | ) | ||||
Total stockholders' equity | 191,175 | 107,701 | ||||||
Total liabilities and stockholders' equity | $ | 223,066 | $ | 161,809 | ||||
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LDR HOLDING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands, except share and per share amounts)
(Unaudited)
Three Months Ended September 30, | Nine months ended September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Revenue | $ | 39,294 | $ | 35,901 | $ | 119,918 | $ | 101,721 | ||||||||
Cost of goods sold | 6,086 | 6,462 | 19,354 | 17,575 | ||||||||||||
Gross profit | 33,208 | 29,439 | 100,564 | 84,146 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 2,704 | 2,831 | 8,523 | 9,309 | ||||||||||||
Sales and marketing | 25,895 | 21,610 | 79,691 | 61,238 | ||||||||||||
General and administrative | 9,873 | 7,238 | 27,953 | 20,653 | ||||||||||||
Total operating expenses | 38,472 | 31,679 | 116,167 | 91,200 | ||||||||||||
Operating loss | (5,264 | ) | (2,240 | ) | (15,603 | ) | (7,054 | ) | ||||||||
Other operating income (expense): | ||||||||||||||||
Other income (expense) | (1,100 | ) | 1,366 | 855 | 1,403 | |||||||||||
Interest income | 9 | 2 | 12 | 21 | ||||||||||||
Interest expense | (123 | ) | (211 | ) | (492 | ) | (719 | ) | ||||||||
Total other income (expense), net | (1,214 | ) | 1,157 | 375 | 705 | |||||||||||
Loss before income taxes | (6,478 | ) | (1,083 | ) | (15,228 | ) | (6,349 | ) | ||||||||
Income tax expense | 4,390 | (936 | ) | 4,131 | (1,497 | ) | ||||||||||
Net loss | (2,088 | ) | (2,019 | ) | (11,097 | ) | (7,846 | ) | ||||||||
Other comprehensive loss: | ||||||||||||||||
Foreign currency translation | 478 | (2,160 | ) | (2,482 | ) | (2,404 | ) | |||||||||
Comprehensive loss | $ | (1,610 | ) | $ | (4,179 | ) | $ | (13,579 | ) | $ | (10,250 | ) | ||||
Net loss per common share: | ||||||||||||||||
Basic and diluted | $ | (0.07 | ) | $ | (0.08 | ) | $ | (0.41 | ) | $ | (0.31 | ) | ||||
Weighted average number of shares outstanding: | ||||||||||||||||
Basic and diluted | 28,064,850 | 26,011,393 | 27,244,496 | 25,005,434 | ||||||||||||
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LDR HOLDING CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited) | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Operating activities: | ||||||||||||||||
Net loss | $ | (2,088 | ) | $ | (2,019 | ) | $ | (11,097 | ) | $ | (7,846 | ) | ||||
Adjustments to reconcile net loss to cash used in operating activities: | ||||||||||||||||
Bad debt expense | 653 | 120 | 1,124 | 470 | ||||||||||||
Provision for excess and obsolete inventories | 459 | 561 | 1,203 | 957 | ||||||||||||
Depreciation and amortization | 1,628 | 1,226 | 4,635 | 3,349 | ||||||||||||
Stock-based compensation | 2,075 | 1,257 | 7,273 | 3,640 | ||||||||||||
Amortization of debt issuance costs | 4 | 4 | 12 | 14 | ||||||||||||
Deferred income tax expense | (4,740 | ) | 9 | (5,277 | ) | 174 | ||||||||||
Loss on disposal of assets | 78 | 48 | 125 | 199 | ||||||||||||
Unrealized foreign currency gains | 1,087 | (1,458 | ) | (301 | ) | (1,207 | ) | |||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Cash restricted for line of credit agreement | — | — | — | 2,000 | ||||||||||||
Accounts receivable | (431 | ) | (986 | ) | (1,744 | ) | (2,258 | ) | ||||||||
Prepaid expenses and other current assets | (1,517 | ) | (841 | ) | (1,901 | ) | (1,792 | ) | ||||||||
Inventory | (216 | ) | (1,560 | ) | (5,316 | ) | (7,814 | ) | ||||||||
Other assets | — | 4 | (370 | ) | (24 | ) | ||||||||||
Accounts payable | (513 | ) | (1,399 | ) | 624 | 410 | ||||||||||
Accrued expenses | 1,621 | 3,843 | (574 | ) | 4,549 | |||||||||||
Other long-term liabilities | — | — | 200 | — | ||||||||||||
Net cash used in operating activities | (1,900 | ) | (1,191 | ) | (11,384 | ) | (5,179 | ) | ||||||||
Investing activities: | ||||||||||||||||
Proceeds from sale of property and equipment | 12 | 3 | 60 | 15 | ||||||||||||
Purchase of intangible assets | (204 | ) | (154 | ) | (629 | ) | (565 | ) | ||||||||
Purchase of property and equipment | (2,451 | ) | (2,059 | ) | (6,226 | ) | (4,892 | ) | ||||||||
Net cash used in investing activities | (2,643 | ) | (2,210 | ) | (6,795 | ) | (5,442 | ) | ||||||||
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LDR HOLDING CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued) (in thousands) (Unaudited) | ||||||||||||||||
Financing activities: | ||||||||||||||||
Proceeds from issuance of common stock in public offering | 92,000 | — | 92,000 | 36,628 | ||||||||||||
Stock issuance costs | (5,131 | ) | (8 | ) | (5,131 | ) | (2,640 | ) | ||||||||
Exercise of stock options | 260 | 445 | 2,374 | 968 | ||||||||||||
Proceeds from issuance of stock under Employee Stock Purchase Plan | — | — | 775 | 1,761 | ||||||||||||
Proceeds from Employee Stock Purchase Plan | 522 | 209 | 697 | 281 | ||||||||||||
Purchase of treasury stock | — | — | — | (8 | ) | |||||||||||
Payments on capital leases | (4 | ) | (9 | ) | (12 | ) | (33 | ) | ||||||||
Payments on line of credit | (18,166 | ) | — | (18,166 | ) | — | ||||||||||
Net proceeds (payments) on short-term financings | (3,777 | ) | 2,100 | (3,678 | ) | 1,589 | ||||||||||
Proceeds from long-term debt | — | — | 96 | — | ||||||||||||
Payments on long-term debt | (273 | ) | (461 | ) | (801 | ) | (1,405 | ) | ||||||||
Net cash provided by financing activities | 65,431 | 2,276 | 68,154 | 37,141 | ||||||||||||
Effect of exchange rate on cash | 13 | (122 | ) | (347 | ) | (162 | ) | |||||||||
Net change in cash and cash equivalents | 60,901 | (1,247 | ) | 49,628 | 26,358 | |||||||||||
Cash and cash equivalents, beginning of period | 62,610 | 84,283 | 73,883 | 56,678 | ||||||||||||
Cash and cash equivalents, end of period | $ | 123,511 | $ | 83,036 | $ | 123,511 | $ | 83,036 | ||||||||
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LDR HOLDING CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET LOSS TO NON-GAAP FINANCIAL MEASURES
(in thousands, except margin percentages)
(Unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Net loss | $ | (2,088 | ) | $ | (2,019 | ) | $ | (11,097 | ) | $ | (7,846 | ) | ||||
Interest (income) expense, net | 114 | 209 | 480 | 698 | ||||||||||||
Income tax (benefit) expense | (4,390 | ) | 936 | (4,131 | ) | 1,497 | ||||||||||
Depreciation and amortization | 1,628 | 1,226 | 4,635 | 3,349 | ||||||||||||
EBITDA | (4,736 | ) | 352 | (10,113 | ) | (2,302 | ) | |||||||||
Stock-based compensation | 2,075 | 1,257 | 7,273 | 3,640 | ||||||||||||
Other (income) expense, net | 1,100 | (1,366 | ) | (855 | ) | (1,403 | ) | |||||||||
Non-GAAP adjusted EBITDA | $ | (1,561 | ) | $ | 243 | $ | (3,695 | ) | $ | (65 | ) | |||||
Non-GAAP adjusted EBITDA margin | (4.0 | )% | 0.7 | % | (3.1 | )% | (0.1 | )% | ||||||||
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LDR HOLDING CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP REVENUE TO NON-GAAP REVENUE ON A CONSTANT CURRENCY BASIS
(in thousands)
(Unaudited)
Three Months Ended September 30, | |||||||||||||||||||||||
GAAP | Foreign Exchange Impact on International Revenue | Non-GAAP Revenue on a Constant Currency Basis (1) | GAAP | 2015 on a Constant Currency Basis / 2014 | |||||||||||||||||||
2015 | 2015 | 2015 | 2014 | $ | % | ||||||||||||||||||
Revenue in the United States | $ | 32,285 | $ | — | $ | 32,285 | $ | 28,084 | $ | 4,201 | 15.0 | % | |||||||||||
International revenue | 7,009 | 1,699 | 8,708 | 7,817 | 891 | 11.4 | |||||||||||||||||
Total revenue | $ | 39,294 | $ | 1,699 | $ | 40,993 | $ | 35,901 | $ | 5,092 | 14.2 | ||||||||||||
Exclusive cervical products | $ | 27,548 | $ | 945 | $ | 28,493 | $ | 22,759 | $ | 5,734 | 25.2 | % | |||||||||||
Exclusive lumbar products | 9,201 | 189 | 9,390 | 9,341 | 49 | 0.5 | |||||||||||||||||
Exclusive technology products | 36,749 | 1,134 | 37,883 | 32,100 | 5,783 | 18.0 | |||||||||||||||||
Traditional fusion products | 2,545 | 565 | 3,110 | 3,801 | (691 | ) | (18.2 | ) | |||||||||||||||
Total revenue | $ | 39,294 | $ | 1,699 | $ | 40,993 | $ | 35,901 | $ | 5,092 | 14.2 | ||||||||||||
Nine Months Ended September 30, | |||||||||||||||||||||||
GAAP | Foreign Exchange Impact on International Revenue | Non-GAAP Revenue on a Constant Currency Basis (1) | GAAP | 2015 on a Constant Currency Basis / 2014 | |||||||||||||||||||
2015 | 2015 | 2015 | 2014 | $ | % | ||||||||||||||||||
Revenue in the United States | $ | 96,898 | $ | — | $ | 96,898 | $ | 77,587 | $ | 19,311 | 24.9 | % | |||||||||||
International revenue | 23,020 | 5,505 | 28,525 | 24,134 | 4,391 | 18.2 | |||||||||||||||||
Total revenue | $ | 119,918 | $ | 5,505 | $ | 125,423 | $ | 101,721 | $ | 23,702 | 23.3 | ||||||||||||
Exclusive cervical products | $ | 82,664 | $ | 2,791 | $ | 85,455 | $ | 61,529 | $ | 23,926 | 38.9 | % | |||||||||||
Exclusive lumbar products | 28,218 | 724 | 28,942 | 27,638 | 1,304 | 4.7 | |||||||||||||||||
Exclusive technology products | 110,882 | 3,515 | 114,397 | 89,167 | 25,230 | 28.3 | |||||||||||||||||
Traditional fusion products | 9,036 | 1,990 | 11,026 | 12,554 | (1,528 | ) | (12.2 | ) | |||||||||||||||
Total revenue | $ | 119,918 | $ | 5,505 | $ | 125,423 | $ | 101,721 | $ | 23,702 | 23.3 | ||||||||||||
__________
(1) | Revenue on a constant currency basis is calculated using the average foreign exchange rates for each month during the previous year and applying these rates to foreign-denominated revenue in the corresponding months in the current quarter. The difference between revenue calculated based on these foreign exchange rates and revenue calculated in accordance with GAAP is listed as foreign exchange impact in the table above. |
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