Profound Medical Announces First Quarter 2021 Financial Results
Profound Medical Corp. (NASDAQ:PROF; TSX:PRN) ("Profound" or the "Company"), a commercial-stage medical device company that develops and markets customizable, incision-free therapies for the ablation of diseased tissue, today reported financial results for the first quarter ended March 31, 2021.
Recent Corporate Highlights
"Our first quarter 2021 sales performance was negatively impacted by COVID-19 headwinds, particularly in the months of January and February," said Arun Menawat, Profound's CEO. "Business began to rebound in March, however, and so far that positive momentum has continued into the current quarter. Accordingly, while we continue to be cautious about the scope and pace of U.S. TULSA-PRO commercial adoption in the near-term due to the pandemic, the impact of which remains unpredictable, we believe that we have the potential to make up the Q1-2021 revenue shortfall throughout the remainder of the year."
Summary First Quarter 2021 Results
Effective December 31, 2020, Profound changed its presentation currency from the Canadian dollar to the United States dollar. The comparative figures disclosed in this press release have been retrospectively changed to reflect the change in presentation currency to the U.S. dollar, as if the U.S. dollar had been used as the presentation currency for the period ended March 31, 2020. Unless specified otherwise, all amounts in this press release are expressed in U.S. dollars and are presented in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.
For the quarter ended March 31, 2021, the Company recorded revenue of approximately $711,000, with $234,000 from the one-time sale of capital equipment and $477,000 from non-capital - recurring revenue, which consists of the sale of consumables, lease of medical devices, procedures and services associated with extended warranties. First quarter 2021 revenue decreased approximately 39% from $1.2 million in the same period a year ago.
Total operating expenses, which consist of research and development ("R&D"), general and administrative ("G&A"), and selling and distribution expenses, were approximately $6.8 million in the first quarter of 2021, an increase of 28% compared with approximately $5.3 million in first quarter of 2020.
Expenditures for R&D for the three months ended March 31, 2021 were approximately $3.1 million, an increase of 47% compared with approximately $2.1 million in the three months ended March 31, 2020, primarily driven by increased spending for R&D initiatives and projects, options awarded to employees, additional headcount and overall increase to general expenses, partially offset by decreased travel expenses due to COVID-19 restrictions.
G&A expenses for the 2021 first quarter decreased by 6% to approximately $2.1 million, compared with approximately $2.3 million in the same period in 2020, due to lower salaries and benefits as the result of bonuses awarded to management in the prior year and timing differences associated with the accruals, partially offset by increases to consulting fees and share based compensation.
First quarter 2021 selling and distribution expenses increased by 70% to approximately $1.6 million, compared with $933,000 in the first quarter of 2020. While selling and distribution expenses have historically been lower than R&D expenses, Profound continues to expect that, in the future, selling and distribution expenses will exceed R&D expenses as the Company continues to commercialize the TULSA-PRO system in the United States.
Net finance costs for the three months ended March 31, 2021 were approximately $900,000, compared with net finance income of $2.3 million in the three months ended March 31, 2020.
First quarter 2021 net loss was approximately $7.5 million, or $0.37 per common share, compared to approximately $2.7 million, or $0.21 per common share, in the three months ended March 31, 2020.
Liquidity and Outstanding Share Capital
As at March 31, 2021, Profound had cash of approximately $78.5 million.
As at May 12, 2021, Profound had 20,346,954 common shares issued and outstanding.
For complete financial results, please see Profound's filings at www.sedar.com, www.sec.gov and on the Company's website at www.profoundmedical.com under "Financial" in the Investors section.
Conference Call Details
Profound Medical is pleased to invite all interested parties to participate in a conference call today, May 12, 2021, at 4:30 pm ET during which time the results will be discussed.
Live Call: 1-833-710-1825 (Canada and the United States) 1-929-517-0404 (International) Replay: 1-404-537-3406 Passcode: 4366998
The call will also be broadcast live and archived on the Company's website at www.profoundmedical.com under "Webcasts" in the Investors section.
About Profound Medical Corp.
Profound is a commercial-stage medical device company that develops and markets customizable, incision-free therapies for the ablation of diseased tissue.
Profound is commercializing TULSA-PRO, a technology that combines real-time MRI, robotically-driven transurethral ultrasound and closed-loop temperature feedback control. TULSA-PRO is designed to provide customizable and predictable radiation-free ablation of a surgeon-defined prostate volume while actively protecting the urethra and rectum to help preserve the patient's natural functional abilities. TULSA-PRO has the potential to be a flexible technology in customizable prostate ablation, including intermediate stage cancer, localized radio-recurrent cancer, retention and hematuria palliation in locally advanced prostate cancer, and the transition zone in large volume benign prostatic hyperplasia (BPH). TULSA-PROis CE marked, Health Canada approved, and 510(k) cleared by the U.S. Food and Drug Administration ("FDA").
Profound is also commercializing Sonalleve, an innovative therapeutic platform that is CE marked for the treatment of uterine fibroids and palliative pain treatment of bone metastases. Sonalleve has also been approved by the China National Medical Products Administration for the non-invasive treatment of uterine fibroids and has FDA approval under a Humanitarian Device Exemption for the treatment of osteoid osteoma. The Company is in the early stages of exploring additional potential treatment markets for Sonalleve where the technology has been shown to have clinical application, such as non-invasive ablation of abdominal cancers and hyperthermia for cancer therapy.
This release includes forward-looking statements regarding Profound and its business which may include, but is not limited to, the expectations regarding the efficacy of Profound's technology in the treatment of prostate cancer, uterine fibroids, palliative pain treatment and osteoid osteoma. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "is expected", "expects", "scheduled", "intends", "contemplates", "anticipates", "believes", "proposes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Such statements are based on the current expectations of the management of Profound. The forward-looking events and circumstances discussed in this release, may not occur by certain specified dates or at all and could differ materially as a result of known and unknown risk factors and uncertainties affecting the company, including risks regarding the medical device industry, regulatory approvals, reimbursement, economic factors, the equity markets generally and risks associated with growth and competition. Although Profound has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. No forward-looking statement can be guaranteed. In addition, there is uncertainty about the spread of the COVID-19 virus and the impact it will have on Profound's operations, the demand for its products, global supply chains and economic activity in general. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and Profound undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, other than as required by law.
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Profound Medical Corp.
Interim Condensed Consolidated Balance Sheets
March 31, December 31, 2021 2020 $ $ Assets Current assets Cash 78,513 83,913 Trade and other receivables 6,342 7,431 Inventory 7,414 5,331 Prepaid expenses and deposits 745 1,067 Total current assets 93,014 97,742 Property and equipment 864 859 Intangible assets 1,824 1,898 Right-of-use assets 1,356 1,424 Goodwill 2,711 2,678 Total assets 99,769 104,601 Liabilities Current liabilities Accounts payable and accrued liabilities 2,498 3,382 Deferred revenue 456 358 Provisions 160 195 Other liabilities - 99 Derivative financial instrument 434 450 Lease liabilities 428 312 Income taxes payable - 13 Total current liabilities 3,976 4,809 Deferred revenue 1,173 1,078 Lease liabilities 1,188 1,364 Total liabilities 6,337 7,251 Shareholders' Equity Share capital 215,272 211,527 Contributed surplus 12,071 11,250 Accumulated other comprehensive loss 3,582 4,567 Deficit (137,493) (129,994) Total Shareholders' Equity 93,432 97,350 Total Liabilities and Shareholders' Equity 99,769 104,601
Profound Medical Corp.
Interim Condensed Consolidated Statements of Loss and Comprehensive Loss
Three months Three months ended ended March 31, March 31, 2021 2020 $ $ Revenue Capital equipment 234 740 Non-capital - recurring 477 420 711 1,160 Cost of sales 459 718 Gross profit 252 442 Operating expenses Research and development 3,105 2,111 General and administrative 2,132 2,270 Selling and distribution 1,587 933 Total operating expenses 6,824 5,314 Operating Loss 6,572 4,872 Net finance costs/(income) 900 (2,281) Loss before taxes 7,472 2,591 Income taxes 27 92 Net loss attributed to shareholders for the period 7,499 2,683 Other comprehensive loss Item that may be reclassified to loss Foreign currency translation adjustment (985) 8,806 Net loss/(gain) and comprehensive loss/(gain) for the period 8,484 (6,123) Loss per share Basic and diluted loss per common share 0.37 0.21
Profound Medical Corp.
Interim Condensed Consolidated Statements of Cashflows
Three months Three months ended ended March 31, March 31, 2021 2020 $ $ Operating activities Net loss for the period (7,499) (2,683) Adjustments to reconcile net loss to net cash flows from operating activities: Depreciation of property and equipment 102 88 Amortization of intangible assets 242 215 Depreciation of right-of-use assets 81 75 Share-based compensation 1,097 454 Interest and accretion expense 22 495 Deferred revenue 193 145 Change in fair value of derivative financial instrument (21) (24) Change in fair value of contingent consideration - 11 Changes in non-cash working capital balances Trade and other receivables 1,089 (307) Prepaid expenses and deposits 322 203 Inventory (2,149) (973) Accounts payable and accrued liabilities (645) (749) Provisions (35) 12 Income taxes payable (13) (8) Foreign exchange on cash 943 (4,134) Net cash flow used in operating activities (6,271) (7,180) Investing activities Purchase of property and equipment (32) - Purchase of intangible assets (149) - Total cash used in investing activities (181) - Financing activities Issuance of common shares - 39,523 Transaction costs paid - (3,150) Payment of other liabilities (99) (66) Payment of long-term debt and interest - (9,293) Proceeds from share options exercised 264 1,101 Proceeds from warrants exercised 1,141 6,725 Payment of lease liabilities (105) (61) Total cash from financing activities 1,201 34,779 Net change in cash during the period (5,251) 27,599 Foreign exchange on cash (149) 1,233 Cash - Beginning of period 83,913 14,800 Cash - End of period 78,513 43,632