BEDFORD, Mass., Aug. 11, 2015 (GLOBE NEWSWIRE) — ConforMIS, Inc. (NASDAQ:CFMS), a medical technology company that uses its proprietary iFit Image-to-Implant technology platform to develop, manufacture and sell joint replacement implants that are customized to fit each patient’s unique anatomy, announced today financial results for the second quarter ended June 30, 2015.
Recent Accomplishments & Highlights
- Achieved total revenue of $19.2 million, including $3.5 million related to the settlement of patent litigation, up 72% year-over-year on a reported basis and up 81% year-over-year on a constant currency basis.
- Achieved product revenue of $15.8 million, up 41% year-over-year on a reported basis and up 50% year-over-year on a constant currency basis.
- Closed initial public offering and received net proceeds of approximately $140 million in July.
- Continued progress of limited launch of iTotal PS, our posterior stabilized version of iTotal, which upon full launch will nearly triple the addressable knee implant market from currently 28% to approximately 83%.
- Executed two patent license agreements for the use of patient-specific instrument technology covered by our patents and patent applications with off-the-shelf implants.
- Results from a U.S. multicenter study demonstrated that patients receiving iTotal CR knee replacements were 1.7 times more likely to achieve an excellent or good objective Knee Society Score, or KSS, whereas patients with off-the-shelf knee replacements were 2.6 times more likely to achieve a poor objective KSS.
“We are very pleased with our financial performance in the second quarter along with the growing body of clinical results,” said Philipp Lang, MD, MBA, Chief Executive Officer of ConforMIS, Inc. “Our strong product revenue growth this quarter was driven by the progressive adoption of our cruciate-retaining total knee implant, the iTotal CR, and the early contributions from our limited launch of our posterior-stabilized total knee implant, the iTotal PS. We believe ConforMIS’ proprietary platform technology for customized joint replacement implants has the potential to disrupt the $15 billion joint replacement market.”
| Three Months Ended June 30, |
Increase / Decrease | ||||
| ($, thousands) | $ | % | % | ||
| (unaudited) | 2015 | 2014 | Change | Change | Change |
| (as reported) |
(constant currency) |
||||
| United States | $11,871 | $8,026 | $3,845 | 48% | 48% |
| Rest of World | $3,892 | $3,147 | 745 | 24% | 54% |
| Product Revenue: | $15,763 | $11,173 | $4,590 | 41% | 50% |
| Royalty Revenue: | $3,459 | $0 | $3,459 | n/m | n/m |
| Total Revenue: | $19,222 | $11,173 | $8,049 | 72% | 81% |
Second Quarter 2015 Financial Results
Total revenue increased $8.0 million, or 72% year-over-year, to $19.2 million. Total revenue in the second quarter of 2015 includes royalty revenue of $3.5 million related to lump-sum payments from Wright Medical Group, Inc. (“Wright Medical”) and MicroPort Orthopaedics, Inc. (“MicroPort”), paid upon the signing of non-exclusive worldwide license agreements in connection with the settlement of patent litigation. The $5.1 million balance of the payments received from Wright Medical and MicroPort was allocated to deferred revenue and will be recognized over the term of the agreements, of which the last agreement ends in 2031. In addition, MicroPort agreed to an ongoing fixed royalty at a high-single to low-double digit percentage of net sales of patient specific instruments and the associated off-the-shelf knee implants.
Product revenue increased $4.6 million, or 41% year-over-year, to $15.8 million on a reported basis and 50% on a constant currency basis. U.S. product revenue increased $3.8 million, or 48% year-over-year, to $11.9 million, and rest of world product revenue increased $0.7 million, or 24% year-over-year, to $3.9 million on a reported basis and 54% on a constant currency basis. Product revenue from sales of iTotal CR, iUni and iDuo increased $4.0 million, or 36% year-over-year, to $15.2 million. Product revenue from sales of iTotal PS, which we launched on a limited basis in the United States in February 2015, was $0.6 million in the second quarter of 2015.
GAAP gross profit increased $4.5 million, or 110% year-over-year, to $8.6 million, or 45% of revenue, compared to $4.1 million, or 36% of revenue, in the second quarter of 2014. The increase in GAAP gross profit was driven primarily by the addition of royalty revenue from the license agreements. Non-GAAP product gross profit increased $1.0 million, or 25% year-over-year, to $5.1 million, or 32% of product revenue, compared to $4.1 million, or 36% of revenue, in the second quarter of 2014. The decrease in non-GAAP product gross profit margin was driven primarily by the changes in foreign exchange rates compared to last year.
Total operating expenses increased $4.8 million, or 33% year-over-year, to $19.4 million. The increase in expenses was driven primarily by higher sales and marketing and general and administrative expenses, and, to a lesser extent, higher research and development expense compared to the second quarter of 2014.
Net loss was $10.9 million, or $2.51 per share, compared to $10.5 million, or $2.49 per share, for the same period last year.
2015 Financial Guidance
For the full year 2015, the Company expects total revenue in a range of $72 million to $74 million, representing year-over-year growth of 50% to 54% on a reported basis and 57% to 61% on a constant currency basis. The Company’s total revenue guidance includes approximately $3 million of currency headwind in our revenue results.
The Company’s 2015 revenue guidance assumes the following:
- Product revenue in a range of $68 million to $70 million, representing year-over-year growth of 42% to 46% on a reported basis and 48% to 53% on a constant currency basis.
- Royalty revenue of approximately $4 million, including the $3.5 million recognized in the second quarter related to a patent litigation settlement.
Note on Non-GAAP Financial Measures
In addition to disclosing financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), this release and the accompanying tables contain certain non-GAAP financial measures that exclude royalty revenue. Non-GAAP information is not a substitute for, and is not superior to, information presented on a GAAP basis. Summary results presented on a GAAP basis, descriptions of our non-GAAP, or operating-basis, financial measures, and reconciliations of operating-basis information to GAAP-basis information are provided in the addendum included with this news release.
Constant Currency
The Company provides certain information regarding the Company’s financial results or projected financial results on a “constant currency basis.” This information estimates the impact of changes in foreign currency rates on the translation of the Company’s current or projected future period financial results as compared to the applicable comparable period. This impact is derived by taking the adjusted current or projected local currency results and translating them into U.S. Dollars based upon the foreign currency exchange rates for the applicable comparable period. It does not include any other effect of changes in foreign currency rates on the Company’s results or business.
Conference Call
As previously announced, ConforMIS will conduct a conference call and webcast today at 8:30 AM Eastern Time. Management will discuss financial results and strategic matters. To participate in the conference call, please call 877-703-9876 (or 616-548-5612 for international) and use conference ID number 95443100 or listen to the webcast in the investor relations section of the company’s website at ir.conformis.com. The online archive of the webcast will be available on the company’s website for 30 days.
About ConforMIS, Inc.
ConforMIS is a medical technology company that uses its proprietary iFit Image-to-Implant technology platform to develop, manufacture and sell joint replacement implants that are individually sized and shaped, or customized, to fit each patient’s unique anatomy. ConforMIS offers a broad line of customized knee implants and pre-sterilized, single-use instruments delivered in a single package to the hospital. In recent clinical studies, ConforMIS iTotal CR demonstrated superior clinical outcomes, including better function and greater patient satisfaction, compared to traditional, off-the-shelf implants. ConforMIS owns or exclusively in-licenses approximately 470 issued patents and pending patent applications that cover customized implants and patient-specific instrumentation for all major joints.
For more information, visit www.conformis.com. To receive future releases in e-mail alerts, sign up at http://ir.conformis.com.
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