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VERO - Venus Concept Inc News Story

$1.73 -0.1  -3.9%

Last Trade - 18/01/22

Sector
Healthcare
Size
Small Cap
Market Cap £71.3m
Enterprise Value £117.2m
Revenue £72.3m
Position in Universe 5490th / 7386

Venus Concept Announces Third Quarter and First Nine Months of 2021 Financial Results; Updates Fiscal Year 2021 Revenue Guidance

Fri 12th November, 2021 12:00pm
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TORONTO, Nov. 12, 2021 (GLOBE NEWSWIRE) -- Venus Concept Inc. (“Venus
Concept” or the “Company”) (NASDAQ: VERO), a global medical aesthetic
technology leader, announced financial results for the three and nine months
ended September 30, 2021.

Third Quarter 2021 Summary & Recent Highlights:
* Total revenue of $24.6 million, up $3.9 million, or 19%, year-over-year. *
U.S. revenue of $13.0 million, up $5.2 million, or 67%, year-over-year.
* Total subscription and system revenue of $20.7 million, up $3.7 million, or
22% year-over-year.
 
* Gross margin of 70.5%, up 5.2% year-over-year.
* GAAP operating loss of $5.4 million, up $0.1 million, or 2%, year-over-year.
* GAAP net loss attributable to stockholders of $9.8 million, up $2.6 million,
or 35%, year-over-year.
* Adjusted EBITDA loss of $3.5 million, up $2.2 million, or 155%,
year-over-year.
* The Company received a Health Canada medical device license to market the
Venus Fiore Feminine Health System in Canada in July and FDA 510(k) clearance
to market the Venus Freedom device in the United States in October.
* On October 12, 2021, the Company announced the appointment of Ross J.
Portaro to the position of President of Global Sales, effective October 15,
2021.
Management Commentary:

“Third quarter revenue results reflect strong demand from customers,
particularly in the United States, despite the challenging operating
environment,” said Domenic Serafino, Chief Executive Officer of Venus
Concept. “Strong execution of our focused commercial strategy in the United
States drove revenue growth of 67% year-over-year, which offset a 10%
year-over year decrease in international revenue. International revenue
results were impacted by our inability to fulfill demand for certain of our
products due to the global supply disruptions related to COVID-19 which
resulted in a backlog for customer purchase orders received of $2.4 million as
of the end of the third quarter, of which we have fulfilled $1.4 million in
the first half of the fourth quarter. We continue to actively work with our
suppliers and third-party manufacturers to mitigate supply issues and intend
to fulfill the remaining customer purchase order backlog in the fourth quarter
of fiscal year 2021 and the first quarter of fiscal year 2022.”

Mr. Serafino continued: “Based on our current assessment and strong pipeline
activity, we believe that we will continue to see an improvement in capital
equipment demand in the aesthetics and hair restoration markets as we move
through 2021. We remain confident in our ability to deliver strong growth and
we have tightened our expectations for revenue growth to 33% to 37%
year-over-year in fiscal year 2021. We continue to expect to drive strong
operating leverage in 2021, as well. Importantly, our longer-term outlook is
compelling as we continue to make progress in the area of product development;
specifically, our efforts to develop AIme, the next generation robotic
technology for medical aesthetic applications.”

Third Quarter and First Nine Months of 2021 Revenue by Region and by Product
Type:

                        Three Months Ended September 30,                    Nine Months Ended September 30,                   
                        2021                            2020                2021                            2020              
                        (dollars in thousands)                              (dollars in thousands)                            
 Revenues by region:                                                                                                          
 United States          $       12,962                  $       7,784       $       37,025                  $       22,339    
 International                  11,601                          12,896              35,963                          29,845    
 Total revenue          $       24,563                  $       20,680      $       72,988                  $       52,184    



                           Three Months Ended September 30,                    Nine Months Ended September 30,                   
                           2021                            2020                2021                            2020              
                           (dollars in thousands)                              (dollars in thousands)                            
 Revenues by product:                                                                                                            
 Subscription—Systems      $       12,634                  $       9,431       $       33,958                  $       23,709    
 Products—Systems                  8,022                           7,503               26,526                          17,758    
 Products—Other ((1))              2,961                           2,631               9,330                           7,136     
 Services ( (2))                   946                             1,115               3,174                           3,581     
 Total revenue             $       24,563                  $       20,680      $       72,988                  $       52,184    

(1)    Products-Other include ARTAS procedure kits and other consumables.
(2)    Services include VeroGrafters technician services and extended
warranty sales.



Third Quarter 2021 Financial Results:

                                       Three Months Ended September 30,                                                                                              
                                       2021                                              2020                                       Change                           
 (in thousands, except percentages)    $                       % of Total                $                      % of Total          $                  %             
 Revenues:                                                                                                                                                           
 Subscription—Systems                  $    12, 634                    51.4              $    9,431                     45.6        $   3,204              34.0      
 Products—Systems                           8,022                      32.7                   7,503                     36.3            519                6.9       
 Products—Other                             2,961                      12.1                   2,631                     12.7            331                12.6      
 Services                                   946                        3.8                    1,115                     5.4             (169   )           (15.2  )  
 Total                                 $    24,563                     100.0             $    20,680                    100.0       $   3,883              18.8      

Total revenue for the third quarter of 2021 increased $3.9 million, or 19%, to
$24.6 million, compared to the third quarter of 2020. The increase in total
revenue, by region, was driven by a 67% increase year-over-year in United
States revenue, offset partially by a 10% year-over-year decrease in
international revenue. The increase in total revenue, by product category, was
driven by a 34% increase in lease revenue, a 7% increase in systems revenue
and a 13% increase in products revenue, offset partially by a 15% decrease in
services revenue. The percentage of total systems revenue derived from our
subscription model was approximately 61% this quarter, compared to
approximately 56% for the third quarter of 2020.

Gross profit for the third quarter of 2021 increased $3.8 million, or 28%, to
$17.3 million compared to the third quarter of 2020. Gross margin was 70.5%,
compared to 65.3% of revenue for the third quarter of 2020. The increase in
gross margin was primarily driven by higher sales of Venus consumables and
improved revenue mix of system sales sold under our subscription program,
primarily tracing to Venus Bliss, and the discontinuation of our 2two5
advertising agency services.

Operating expenses for the third quarter of 2021 increased $3.9 million, or
21%, to $22.7 million compared to the third quarter of 2020. The increase in
total operating expenses was driven by an increase of $3.1 million, or 55%, in
sales and marketing expenses, an increase of $0.7 million, or 6%, in general
and administrative expenses and an increase of $0.1 million, or 4%, in R&D
expenses.

Operating loss for the third quarter of 2021 increased $0.1 million, or 2%,
year-over-year to $5.4 million.

Net loss attributable to stockholders for the third quarter of 2021 increased
$2.6 million, or 35% year-over-year, to $9.8 million, or $0.18 per share.
Adjusted EBITDA loss for the third quarter of 2021 increased $2.2 million, or
156% year-over-year, to $3.5 million.

First Nine Months of 2021 Financial Results:

                                       Nine Months Ended September 30,                                                                                               
                                       2021                                             2020                                       Change                            
 (in thousands, except percentages)    $                      % of Total                $                      % of Total          $                   %             
 Revenues:                                                                                                                                                           
 Subscription—Systems                  $    33,958                    46.5              $    23,709                    45.4        $   10,249              43.2      
 Products—Systems                           26,526                    36.3                   17,758                    34.0            8,768               49.4      
 Products—Other                             9,330                     12.8                   7,136                     13.7            2,195               30.8      
 Services                                   3,174                     4.3                    3,581                     6.9             (407    )           (11.4  )  
 Total                                 $    72,988                    100.0             $    52,184                    100.0       $   20,804              39.9      

Total revenue for the nine months ended September 30, 2021, increased $20.8
million, or 40%, to $73.0 million. The increase in total revenue, by region,
was driven by a 66% increase in United States revenue and a 20% increase in
international revenue. The increase in total revenue, by product category, was
driven by a 43% increase in lease revenue, a 49% increase in systems revenue
and a 31% increase in products revenue, offset partially by a 11% decrease in
services revenue. The percentage of total systems revenue derived from our
subscription model was approximately 56%, compared to approximately 57% for
the nine months ended September 30, 2020.

Net loss attributable to stockholders for the nine months ended September 30,
2021 decreased $51.9 million, or 74%, to $18.7 million, or $0.35 per share.
Adjusted EBITDA loss for the nine months ended September 30, 2021 decreased
$9.7 million, or 55%, to $8.1 million.

Updated Fiscal Year 2021 Revenue Guidance:

The Company now expects total revenue for the twelve months ending December
31, 2021 in the range of $104.0 million to $107.0 million, representing an
increase of approximately 33% to 37%, year-over-year, compared to total
revenue of $78.0 million for the twelve months ended December 31, 2020. This
compares to the Company’s prior guidance range of $102.0 million to $107.0
million.

Conference Call Details:

Management will host a conference call at 8:00 a.m. Eastern Time on November
12, 2021 to discuss the results of the quarter with a question and answer
session. Those who would like to participate may dial 877-407-2991
(201-389-0925 for international callers) and provide access code 13723892. A
live webcast of the call will also be provided on the investor relations
section of the Company’s website at ir.venusconcept.com.

For those unable to participate, a replay of the call will be available for
two weeks at 877-660-6853 (201-612-7415 for international callers); access
code 13723892. The webcast will be archived at ir.venusconcept.com.

About Venus Concept

Venus Concept is an innovative global medical aesthetic technology leader with
a broad product portfolio of minimally invasive and non-invasive medical
aesthetic and hair restoration technologies and reach in over 60 countries and
18 direct markets. Venus Concept focuses its product sales strategy on a
subscription-based business model in North America and in its well-established
direct global markets. Venus Concept’s product portfolio consists of
aesthetic device platforms, including Venus Versa, Venus Legacy, Venus
Velocity, Venus Fiore, Venus Freedom, Venus Viva, Venus Freeze Plus, Venus
Glow, Venus Bliss, Venus Epileve and Venus Viva MD. Venus Concept’s hair
restoration systems include NeoGraft®, an automated hair restoration system
that facilitates the harvesting of follicles during a FUE process and the
ARTAS® and ARTAS iX® Robotic Hair Restoration systems, which harvest
follicular units directly from the scalp and create recipient implant sites
using proprietary algorithms. Venus Concept has been backed by leading
healthcare industry growth equity investors including EW Healthcare Partners
(formerly Essex Woodlands), HealthQuest Capital, Longitude Capital Management,
and Aperture Venture Partners.

Cautionary Statement Regarding Forward-Looking Statements

This communication contains contains “forward-looking” statements within
the meaning of Section 27A of the Securities Act of 1933, as amended and
Section 21E of the Securities Exchange Act of 1934, as amended. Any
statements contained herein that are not of historical facts may be deemed to
be forward-looking statements. In some cases, you can identify these
statements by words such as such as “anticipates,” “believes,”
“plans,” “expects,” “projects,” “future,” “intends,”
“may,” “should,” “could,” “estimates,” “predicts,”
“potential,” “continue,” “guidance,” and other similar expressions
that are predictions of or indicate future events and future trends. These
forward-looking statements include, but are not limited to, statements about
our financial performance; the growth in demand for our systems and other
products; and general economic conditions, including the global economic
impact of COVID-19, and involve risks and uncertainties that may cause results
to differ materially from those set forth in the statements. These
forward-looking statements are based on current expectations, estimates,
forecasts, and projections about our business and the industry in which the
Company operates and management’s beliefs and assumptions and are not
guarantees of future performance or developments and involve known and unknown
risks, uncertainties, and other factors that are in some cases beyond our
control. As a result, any or all of our forward-looking statements in this
communication may turn out to be inaccurate. Factors that could materially
affect our business operations and financial performance and condition
include, but are not limited to, those risks and uncertainties described under
Part II Item 1A—“Risk Factors” in our Quarterly Reports on Form 10-Q and
Part I Item 1A—“Risk Factors” in our Annual Report on Form 10-K for the
fiscal year ended December 31, 2020. You are urged to consider these factors
carefully in evaluating the forward-looking statements and are cautioned not
to place undue reliance on the forward-looking statements. The forward-looking
statements are based on information available to us as of the date of this
communication. Unless required by law, the Company does not intend to publicly
update or revise any forward-looking statements to reflect new information or
future events or otherwise.



Venus Concept Inc.
Condensed Consolidated Balance Sheets
(In thousands of U.S. dollars, except share and per share data)

                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                 September 30, 2021           December 31,          
                                                                                                                                                                                                                                                              2020                  
 ASSETS                                                                                                                                                                                                                                                                             
 CURRENT ASSETS:                                                                                                                                                                                                                                                                    
 Cash and cash equivalents                                                                                                                                                                                                       $           15,781           $        34,297       
 Restricted cash                                                                                                                                                                                                                             83                        83           
 Accounts receivable, net of allowance of $11,459 and $18,490 as of September 30, 2021, and December 31, 2020                                                                                                                                47,792                    52,764       
 Inventories                                                                                                                                                                                                                                 21,005                    17,759       
 Prepaid expenses                                                                                                                                                                                                                            2,395                     2,240        
 Advances to suppliers                                                                                                                                                                                                                       2,728                     2,587        
 Other current assets                                                                                                                                                                                                                        4,756                     5,674        
 Total current assets                                                                                                                                                                                                                        94,540                    115,404      
 LONG-TERM ASSETS:                                                                                                                                                                                                                                                                  
 Long-term receivables                                                                                                                                                                                                                       23,243                    21,148       
 Deferred tax assets                                                                                                                                                                                                                         785                       884          
 Severance pay funds                                                                                                                                                                                                                         742                       685          
 Property and equipment, net                                                                                                                                                                                                                 2,575                     3,539        
 Intangible assets                                                                                                                                                                                                                           16,268                    18,865       
 Total long-term assets                                                                                                                                                                                                                      43,613                    45,121       
 TOTAL ASSETS                                                                                                                                                                                                                    $           138,153          $        160,525      
 LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                                                                                                                               
 CURRENT LIABILITIES:                                                                                                                                                                                                                                                               
 Trade payables                                                                                                                                                                                                                  $           4,749            $        6,322        
 Accrued expenses and other current liabilities                                                                                                                                                                                              17,180                    20,253       
 Taxes payable                                                                                                                                                                                                                               2,149                     1,132        
 Unearned interest income                                                                                                                                                                                                                    2,565                     1,950        
 Warranty accrual                                                                                                                                                                                                                            1,173                     1,106        
 Deferred revenues                                                                                                                                                                                                                           420                       1,752        
 Current portion of government assistance loans                                                                                                                                                                                              950                       —            
 Total current liabilities                                                                                                                                                                                                                   29,186                    32,515       
 LONG-TERM LIABILITIES:                                                                                                                                                                                                                                                             
 Long-term debt                                                                                                                                                                                                                              76,857                    75,491       
 Government assistance loans                                                                                                                                                                                                                 —                         4,110        
 Taxes payable                                                                                                                                                                                                                               478                       478          
 Accrued severance pay                                                                                                                                                                                                                       852                       755          
 Deferred tax liabilities                                                                                                                                                                                                                    45                        811          
 Unearned interest income                                                                                                                                                                                                                    1,291                     1,778        
 Warranty accrual                                                                                                                                                                                                                            471                       533          
 Other long-term liabilities                                                                                                                                                                                                                 202                       293          
 Total long-term liabilities                                                                                                                                                                                                                 80,196                    84,249       
 TOTAL LIABILITIES                                                                                                                                                                                                                           109,382                   116,764      
 Commitments and Contingencies (Note 8)                                                                                                                                                                                                                                             
 STOCKHOLDERS’ EQUITY (Note 1):                                                                                                                                                                                                                                                     
 Common Stock, $0.0001 par value: 300,000,000 shares authorized as of September 30, 2021 and December 31, 2020; 54,157,969 and 53,551,126 issued and outstanding as of September 30, 2021 and December 31, 2020, respectively                26                        26           
 Additional paid-in capital (Note 1)                                                                                                                                                                                                         204,094                   201,598      
 Accumulated deficit                                                                                                                                                                                                                         (176,072    )             (157,392  )  
 TOTAL STOCKHOLDERS’ EQUITY                                                                                                                                                                                                                  28,048                    44,232       
 Non-controlling interests                                                                                                                                                                                                                   723                       (471      )  
                                                                                                                                                                                                                                             28,771                    43,761       
 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                                                                      $           138,153          $        160,525      





Venus Concept Inc.
Condensed Consolidated Statements of Operations
(In thousands of U.S. dollars, except per share data)

                                                                     Three Months Ended September 30,                     Nine Months Ended September 30,                      
                                                                     2021                            2020                 2021                             2020                
 Revenue                                                                                                                                                                       
 Leases                                                              $       12,634                  $       9,431        $       33,958                   $       23,709      
 Products and services                                                       11,929                          11,249               39,030                           28,475      
                                                                             24,563                          20,680               72,988                           52,184      
 Cost of goods sold                                                                                                                                                            
 Leases                                                                      2,938                           2,303                7,444                            5,296       
 Products and services                                                       4,319                           4,874                14,287                           12,208      
                                                                             7,257                           7,177                21,731                           17,504      
 Gross profit                                                                17,306                          13,503               51,257                           34,680      
 Operating expenses:                                                                                                                                                           
 Selling and marketing                                                       8,775                           5,657                26,743                           18,813      
 General and administrative                                                  11,990                          11,291               31,983                           40,057      
 Research and development                                                    1,930                           1,849                6,005                            6,043       
 Goodwill impairment                                                         —                               —                    —                                27,450      
 Gain on forgiveness of government assistance loans                          —                               —                    (2,775   )                       —           
 Total operating expenses                                                    22,695                          18,797               61,956                           92,363      
 Loss from operations                                                        (5,389  )                       (5,294  )            (10,699  )                       (57,683  )  
 Other expenses:                                                                                                                                                               
 Foreign exchange loss                                                       1,645                           1,096                2,489                            4,209       
 Finance expenses                                                            1,000                           1,897                4,046                            6,522       
 Loss on disposal of subsidiaries                                            188                             -                    188                              385         
 Loss before income taxes                                                    (8,222  )                       (8,287  )            (17,422  )                       (68,799  )  
 Income tax expense (benefit)                                                616                             (966    )            609                              (1,010   )  
 Net loss                                                                    (8,838  )                       (7,321  )            (18,031  )                       (67,789  )  
 Deemed dividend                                                             -                               -                    -                                (3,564   )  
 Loss attributable to stockholders of the Company                            (9,798  )                       (7,243  )            (18,680  )                       (70,585  )  
 Income (loss) attributable to non-controlling interest                      960                             (78     )            649                              (768     )  
                                                                                                                                                                               
 Net loss per share:                                                                                                                                                           
 Basic                                                               $       (0.18   )               $       (0.18   )    $       (0.35    )               $       (2.04    )  
 Diluted                                                             $       (0.18   )               $       (0.18   )    $       (0.35    )               $       (2.04    )  
 Weighted-average number of shares used in per share calculation:                                                                                                              
 Basic                                                                       54,145                          40,466               53,994                           34,553      
 Diluted                                                                     54,145                          40,466               53,994                           34,553      

Use of Non-GAAP Financial Measures

Adjusted EBITDA is a non-GAAP measure defined as net income (loss) before
foreign exchange loss (gain), financial expenses, income tax expense
(benefit), depreciation and amortization, stock-based
compensation and non-recurring items for a given period. Adjusted EBITDA
is not a measure of our financial performance under U.S. GAAP and should not
be considered an alternative to net income or any other performance measures
derived in accordance with U.S. GAAP. Accordingly, you should consider
Adjusted EBITDA along with other financial performance measures, including net
income, and our financial results presented in accordance with U.S. GAAP.
Other companies, including companies in our industry, may calculate Adjusted
EBITDA differently or not at all, which reduces its usefulness as a
comparative measure. We understand that although Adjusted EBITDA is frequently
used by securities analysts, lenders and others in their evaluation of
companies, Adjusted EBITDA has limitations as an analytical tool, and you
should not consider it in isolation, or as a substitute for analysis of our
results as reported under U.S. GAAP. Some of these limitations are: Adjusted
EBITDA does not reflect our cash expenditures or future requirements for
capital expenditures or contractual commitments; Adjusted EBITDA does not
reflect changes in, or cash requirements for, our working capital needs; and
although depreciation and amortization are non-cash charges, the assets
being depreciated will often have to be replaced in the future, and Adjusted
EBITDA does not reflect any cash requirements for such replacements.

We believe that Adjusted EBITDA is a useful measure for analyzing the
performance of our core business because it facilitates operating performance
comparisons from period to period and company to company by backing out
potential differences caused by changes in foreign exchange rates that impact
financial assets and liabilities denominated in currencies other than the U.S.
dollar, tax positions (such as the impact on periods or companies of changes
in effective tax rates), the age and book depreciation of fixed assets
(affecting relative depreciation expense), amortization of intangible assets,
stock-based compensation expense (because it
is a non-cash expense) and non-recurring items as explained below.

The following reconciliation of net loss to Adjusted EBITDA for the periods
presented:

Venus Concept Inc.
Reconciliation of Net loss to Non-GAAP Adjusted EBITDA

                                                         Three Months Ended September 30,                     Nine Months Ended September 30,                      
                                                                2021                         2020                    2021                          2020            
 Reconciliation of net loss to Adjusted EBITDA           (in thousands)                                       (in thousands)                                       
 Net loss                                                $      (8,838  )             $      (7,321  )        $      (18,031  )             $      (67,789  )      
 Foreign exchange loss                                          1,645                        1,096                   2,489                         4,209           
 Interest expense                                               940                          1,750                   3,008                         6,084           
 Accretion on long-term debt and amortization of fees           60                           147                     1,038                         438             
 Income tax expense (benefit)                                   616                          (966    )               609                           (1,010   )      
 Depreciation and amortization                                  1,305                        1,181                   3,756                         3,695           
 Stock-based compensation expense                               536                          547                     1,602                         1,603           
 Goodwill impairment charge                                     —                            —                       —                             27,450          
 Gain on forgiveness of government assistance loans             —                            —                       (2,775   )                    —               
 Other adjustments ((1))                                        188                          2,178                   188                           7,480           
 Adjusted EBITDA                                         $      (3,548  )             $      (1,388  )        $      (8,116   )             $      (17,840  )      

((1)   For the three and nine months ended September 30, 2021, the other
adjustments are represented by a loss on the sale of a subsidiary in South
Africa ($0.2 and $0.2 million, respectively). For the three and nine months
ended September 30, 2020, the other adjustments are mainly represented by
severance and retention payments ($nil and $1.4 million, respectively),
additional bad debt provision due to COVID-19 ($2.2 million and $5.7 million,
respectively) as well as a loss on the sale of a subsidiary in Bulgaria ($nil
and $0.4 million, respectively).)

Investor Relations Contact:

Westwicke Partners on behalf of Venus Concept:
Mike Piccinino, CFA
VenusConceptIR@westwicke.com

(https://www.globenewswire.com/NewsRoom/AttachmentNg/81cf55e5-d665-4ddf-8011-51412960a3a6)



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