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Acutus Medical Reports Third Quarter 2023 Financial Results

CARLSBAD, Calif., Nov. 08, 2023 (GLOBE NEWSWIRE) -- Acutus Medical, Inc. (“Acutus” or the “Company”) (Nasdaq: AFIB) today reported results for the third quarter of 2023.

Recent Highlights:

  • Third quarter revenue of $5.2 million grew 44% year-over-year, led by strong growth in distribution revenue from sales of left-heart access products to Medtronic
  • Registered significant year-over-year reductions in both GAAP and non-GAAP operating expenses and cash burn, resulting from disciplined focus on expense management
  • Announced strategic realignment of resources and corporate restructuring with the objective of optimizing financial position and maximizing free cash flow

Third Quarter 2023 Financial Results
Revenue was $5.2 million for the third quarter of 2023, an increase of 44% compared to $3.6 million for the third quarter of 2022. The improvement over the same quarter last year was primarily driven by sales through the Company’s distribution agreement with Medtronic, higher capital sales, and increases in service, rent and other revenue.

Gross margin on a GAAP basis was negative 64% for the third quarter of 2023 compared to negative 91% for the same quarter last year. Non-GAAP gross margin was negative 60% for the third quarter of 2023 compared to negative 109% for the same quarter last year. The improvement on both a GAAP and non-GAAP basis was driven by higher production volumes primarily related to left-heart access manufacturing, lower manufacturing variances, and reduced manufacturing overhead expenses.

Operating expenses, consisting of research and development and selling, general and administrative expenses on a GAAP basis were $12.2 million for the third quarter of 2023 compared to $15.6 million for the same quarter last year. Non-GAAP operating expenses were $11.1 million for the third quarter of 2023 compared to $15.2 million for the same quarter last year. The decrease in operating expenses on both a GAAP and Non-GAAP basis resulted from reduced discretionary spend, and the reprioritization of certain research and development programs.

Net loss on a GAAP basis was $13.2 million for the third quarter of 2023 and net loss per share was $0.45 on a weighted average basic and diluted outstanding share count of 29.3 million, compared to a net loss of $20.4 million and a net loss per share of $0.72 on a weighted average basic and diluted outstanding share count of 28.4 million for the same quarter last year. Non-GAAP net loss for the third quarter of 2023 was $15.2 million, or $0.52 per share, compared to non-GAAP net loss of $20.0 million, or $0.70 per share, for the third quarter of 2022.

Cash, cash equivalents, marketable securities and restricted cash were $45.5 million as of September 30, 2023.

Outlook
Due to the announced plan to realign resources to support the left-heart access distribution business and exit from the electrophysiology mapping and ablation businesses, the Company will no longer provide financial guidance.

Non-GAAP Financial Measures
This press release includes references to non-GAAP gross margin, non-GAAP operating expenses, non-GAAP net loss and non-GAAP basic and diluted net loss per share, which are non-GAAP financial measures, to provide information that may assist investors in understanding the Company’s financial results and assessing its prospects for future performance. The Company believes these non-GAAP financial measures are important indicators of its operating performance because they exclude items that are primarily non-cash accounting line items unrelated to, and may not be indicative of, the Company’s core operating results. These non-GAAP financial measures, as Acutus calculates them, may not necessarily be comparable to similarly titled measures of other companies and may not be appropriate measures for comparing the performance of other companies relative to the Company. These non-GAAP financial results are not intended to represent and should not be considered to be more meaningful measures than, or alternatives to, measures of operating performance as determined in accordance with GAAP. Non-GAAP net loss is defined as net loss before income taxes, and all non-GAAP figures provided herein adjust for stock-based compensation, amortization of acquisition-related intangibles, employee retention credit, restructuring charges, changes in the fair value of contingent consideration, gain on sale of business, and change in fair value of warrant liability (as applicable). To the extent such non-GAAP financial measures are used in the future, the Company expects to calculate them using a consistent method from period to period. A reconciliation of the most directly comparable GAAP financial measure to the non-GAAP financial measure has been provided under the heading “Reconciliation of GAAP Results to Non-GAAP Results” in the financial statement tables attached to this press release.

About Acutus
Acutus is focused on the production of left-heart access products under its distribution agreement with Medtronic, Inc. Founded in 2011, Acutus is based in Carlsbad, California.

Caution Regarding Forward-Looking Statements
This press release includes statements that may constitute “forward-looking” statements, usually containing the words “believe,” “estimate,” “project,” “expect” or similar expressions. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, the Company’s ability to continue to manage expenses and cash burn rate at sustainable levels, successful completion of the Company’s restructuring plan, continued acceptance of the Company’s left-heart access products in the marketplace, the effect of global economic conditions on the ability and willingness of Medtronic to purchase the Company’s left-heart access products and the timing of such purchases, competitive factors, changes resulting from healthcare policy in the United States and globally including changes in government reimbursement of procedures, dependence upon third-party vendors and distributors, timing of regulatory approvals, the Company’s ability to maintain its listing on Nasdaq, and other risks discussed in the Company’s periodic and other filings with the Securities and Exchange Commission. By making these forward-looking statements, Acutus undertakes no obligation to update these statements for revisions or changes after the date of this release, except as required by law.

Investor Contact:
Chad Hollister
Acutus Medical, Inc.
investors@acutus.com

ACUTUS MEDICAL, INC.
Condensed Consolidated Balance Sheets
(in thousands, except per share amounts)
 
 September 30, 2023 December 31, 2022
 (unaudited)  
ASSETS   
Current assets:   
Cash and cash equivalents$24,100  $25,584 
Marketable securities, short-term 14,375   44,863 
Restricted cash, short-term 7,015   5,764 
Accounts receivable 8,952   21,085 
Inventory 15,728   13,327 
Employer retention credit receivable    4,703 
Prepaid expenses and other current assets 2,467   2,541 
Total current assets 72,637   117,867 
    
Property and equipment, net 6,611   9,221 
Right-of-use asset, net 3,359   3,872 
Intangible assets, net 1,433   1,583 
Other assets 688   897 
Total assets$84,728  $133,440 
    
LIABILITIES AND STOCKHOLDERS' EQUITY   
Current liabilities:   
Accounts payable$4,754  $4,721 
Accrued liabilities 7,438   9,686 
Contingent consideration, short-term    1,800 
Operating lease liabilities, short-term 707   319 
Warrant liability 1,868   3,346 
Total current liabilities 14,767   19,872 
    
Operating lease liabilities, long-term 3,462   4,103 
Long-term debt 34,761   34,434 
Other long-term liabilities 32   12 
Total liabilities 53,022   58,421 
    
Commitments and contingencies   
    
Stockholders' equity   
Preferred stock, $0.001 par value; 5,000,000 shares authorized as of September 30, 2023 and December 31, 2022; 6,666 shares of the preferred stock, designated as Series A Common Equivalent Preferred Stock, are issued and outstanding as of September 30, 2023 and December 31, 2022     
Common stock, $0.001 par value; 260,000,000 shares authorized as of September 30, 2023 and December 31, 2022; 29,289,934 and 28,554,656 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively 29   29 
Additional paid-in capital 598,842   594,173 
Accumulated deficit (566,212)  (518,314)
Accumulated other comprehensive loss (953)  (869)
Total stockholders' equity 31,706   75,019 
Total liabilities and stockholders' equity$84,728  $133,440 


ACUTUS MEDICAL, INC.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except per share amounts)
 
 Three Months Ended September 30, Nine Months Ended September 30,
  2023   2022   2023   2022 
 (unaudited)
Revenue$5,238  $3,644  $14,696  $11,401 
Cost of products sold 8,595   6,951   23,447   23,589 
Gross profit (3,357)  (3,307)  (8,751)  (12,188)
        
Operating expenses (income):       
Research and development 4,795   5,946   17,712   21,884 
Selling, general and administrative 7,432   9,679   26,280   38,207 
Goodwill impairment          12,026 
Restructuring    1,331   475   2,280 
Change in fair value of contingent consideration    198   123   1,153 
Gain on sale of business (2,648)     (5,927)  (43,575)
Total operating expenses 9,579   17,154   38,663   31,975 
Loss from operations (12,936)  (20,461)  (47,414)  (44,163)
        
Other income (expense):       
Loss on debt extinguishment          (7,947)
Change in fair value of warrant liability 636   904   1,478   904 
Interest income 547   241   2,223   292 
Interest expense (1,409)  (1,109)  (4,110)  (3,810)
Total other income (expense), net (226)  36   (409)  (10,561)
Loss before income taxes (13,162)  (20,425)  (47,823)  (54,724)
Income tax expense 75      75    
Net loss$(13,237) $(20,425) $(47,898) $(54,724)
        
Other comprehensive income (loss):       
Unrealized gain on marketable securities 4   39   7    
Foreign currency translation adjustment (66)  (351)  (91)  (904)
Comprehensive loss$(13,299) $(20,737) $(47,982) $(55,628)
        
Net loss per common share, basic and diluted$(0.45) $(0.72) $(1.65) $(1.93)
Weighted average shares outstanding, basic and diluted 29,262,768   28,359,516   29,024,353   28,273,207 


ACUTUS MEDICAL, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
 
 Nine Months Ended
September 30,
  2023   2022 
 (unaudited)
Cash flows from operating activities   
Net loss$(47,898) $(54,724)
Adjustments to reconcile net loss to net cash used in operating activities:   
Depreciation expense 3,498   4,653 
AcQMap Systems converted to sales 238   266 
Sales-type lease gain (310)  (87)
Amortization of intangible assets 150   370 
Non-cash stock-based compensation expense 4,915   7,497 
(Accretion of discounts) amortization of premiums on marketable securities, net (1,318)  237 
Amortization of debt issuance cost 325   741 
Amortization of operating lease right-of-use assets 513   480 
Loss on debt extinguishment    7,947 
Goodwill impairment    12,026 
Gain on sale of business, net (5,927)  (43,575)
Direct costs paid related to sale of business    (2,917)
Change in fair value of warrant liability (1,478)  (904)
Loss on disposal of property and equipment 268    
Change in fair value of contingent consideration 123   1,153 
Changes in operating assets and liabilities:   
Accounts receivable 1,244   420 
Inventory (2,401)  1,812 
Employer retention credit receivable 4,703    
Prepaid expenses and other current assets 420   (4,296)
Other assets 495   386 
Accounts payable (2)  (2,929)
Accrued liabilities (2,430)  (179)
Operating lease liabilities (253)  (390)
Other long-term liabilities 20   (40)
Net cash used in operating activities (45,105)  (72,053)
    
Cash flows from investing activities   
Proceeds from sale of business 17,000   50,000 
Purchases of available-for-sale marketable securities (38,521)  (33,235)
Sales of available-for-sale marketable securities    18,599 
Maturities of available-for-sale marketable securities 70,250   59,642 
Purchases of property and equipment (1,394)  (2,473)
Net cash provided by investing activities 47,335   92,533 
    
Cash flows from financing activities   
Repayment of debt    (44,550)
Penalty fees paid for early prepayment of debt    (1,063)
Borrowing under new debt    34,825 
Payment of debt issuance costs    (626)
Proceeds from the exercise of stock options 4   66 
Repurchase of common shares to pay employee withholding taxes (275)  (62)
Proceeds from employee stock purchase plan 25   182 
Payment of contingent consideration (1,923)  (873)
Net cash used in financing activities (2,169)  (12,101)
    
Effect of exchange rate changes on cash, cash equivalents and restricted cash (294)  (447)
    
Net change in cash, cash equivalents and restricted cash (233)  7,932 
Cash, cash equivalents and restricted cash, at the beginning of the period 31,348   24,221 
Cash, cash equivalents and restricted cash, at the end of the period$31,115  $32,153 
    
Supplemental disclosure of cash flow information:   
Cash paid for interest$3,731  $3,101 
    
    
 Nine Months Ended
September 30,
  2023   2022 
 (unaudited)
Supplemental disclosure of noncash investing and financing activities:   
Accounts receivable from sale of business$6,111  $ 
Change in unrealized (gain) loss on marketable securities$(7) $ 
Change in unpaid purchases of property and equipment$35  $48 
Contingent consideration escrow release$  $380 
Net book value on AcQMap system sales-type leases$238  $244 
Amount of debt proceeds allocated to warrant liability$  $3,379 


ACUTUS MEDICAL, INC.
Reconciliation of GAAP Results to Non-GAAP Results
(in thousands)
(unaudited)
 
Three Months Ended September 30, 2023 Cost of Products Sold Research and Development Selling, General and Administrative Loss from Operations Other Expense, Net Net Loss Basic and Diluted EPS
Reported $8,595  $4,795  $7,432  $(12,936) $(226) $(13,237) $(0.45)
Amortization of acquired intangibles  (50)        50      50    
Stock-based compensation  (146)  (317)  (815)  1,278      1,278   0.04 
Change in fair value of warrant liability              (636)  (636)  (0.02)
Change in fair value of contingent consideration                    0.00 
Gain on sale of business           (2,648)     (2,648)  (0.09)
Adjusted $8,399  $4,478  $6,617  $(14,256) $(862) $(15,193) $(0.52)
               
               
Three Months Ended September 30, 2022 Cost of Products Sold Research and Development Selling, General and Administrative Loss from Operations Other Income (Expense), Net Net Loss Basic and Diluted EPS
Reported $6,951  $5,946  $9,679  $(20,461) $36  $(20,425) $(0.72)
Amortization of acquired intangibles  (50)        50      50    
Stock-based compensation  (93)  (349)  (1,442)  1,884      1,884   0.07 
Change in fair value of warrant liability              (904)  (904)  (0.03)
Change in fair value of contingent consideration           198      198   0.01 
Restructuring           1,331      1,331   0.05 
Employee retention credit  813   414   919   (2,146)     (2,146)  (0.08)
Adjusted $7,621  $6,011  $9,156  $(19,144) $(868) $(20,012) $(0.70)
               

ACUTUS MEDICAL, INC.
Key Business Metrics
(unaudited)

Installed Base and Procedure Volumes

The total installed base which includes AcQMap Systems as of September 30, 2023 and 2022 are as follows:

 As of September 30,
 2023 2022
Acutus   
U.S.26 32
Outside the U.S.56 42
Total Acutus net system placements82 74
    

Procedure volumes for the three and nine months ended September 30, 2023 and 2022 are as follows:

 Three Months Ended Nine Months Ended
 September 30, September 30,
 2023 2022 2023 2022
Procedure volumes531 441 1,566 1,389
        

Revenue

The following table sets forth the Company’s revenue for disposables, systems and service/other for the three and nine months ended September 30, 2023 and 2022 (in thousands):

 Three Months Ended Nine Months Ended
 September 30, September 30,
 2023 2022 2023 2022
Disposables$4,069 $2,857 $11,409 $9,402
Systems 563  476  1,254  823
Service / other 606  311  2,033  1,176
Total revenue$5,238 $3,644 $14,696 $11,401
            

The following table presents revenue by geographic location for the three and nine months ended September 30, 2023 and 2022 (in thousands):

 Three Months Ended Nine Months Ended
 September 30, September 30,
 2023 2022 2023 2022
United States$3,347 $1,925 $8,720 $5,985
Outside the United States 1,891  1,719  5,976  5,416
Total revenue$5,238 $3,644 $14,696 $11,401

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