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Sientra Reports Third Quarter 2018 Financial Results

11/06/2018
Download the Third Quarter 2018 Supplemental Financial & Operational Schedule

Achieves Total Net Sales of $16.9 Million, Pro Forma Growth of 58% YoY, 72% on a GAAP Basis

Record miraDry® Net Sales of $8.3 Million, Pro Forma Growth of 174% YoY, 282% on a GAAP Basis

Initiates International Expansion of Breast Implants with Health Canada Submission

SANTA BARBARA, Calif., Nov. 06, 2018 (GLOBE NEWSWIRE) -- Sientra, Inc. (NASDAQ: SIEN), a medical aesthetics company (“Sientra” or the “Company”), announced today its financial results for the third quarter ended September 30, 2018.

Jeff Nugent, Chairman and Chief Executive Officer of Sientra, commented, “In the third quarter, we continued to build momentum across the business, achieving a combined pro forma sales growth of 58% compared to the third quarter 2017. Our solid performance was driven by both segments with 13% year-over-year growth for Breast Products and another record quarter for miraDry with 174% year-over-year growth on a pro forma basis. As is relates to miraDry, we believe that targeted investments in our salesforce, brand awareness and product development initiatives, along with a large addressable market, will further enable significant segment growth going forward.”

Mr. Nugent continued, “We are also advancing our strategic objectives designed to position the Breast Products segment to recapture and grow our market share. As we ramp our implant manufacturing at Vesta, we remain confident in our ability to deliver robust organic growth within the segment as we continue to build supply in the quarters ahead.”

Mr. Nugent concluded, “During the third quarter, we also submitted our breast implant Medical Device License Application to Health Canada with an objective to launch breast implant and tissue expanders in Canada late in 2019. This expansion represents the first step to launch our Breast Products into desirable international markets.  We are excited to take our FDA-approved Breast Products with superior 10-year clinical data into strategic markets outside the United States. With our third quarter achievements, we further validated Sientra’s progress in becoming a global diversified aesthetic leader.”

Third Quarter 2018 Financial Review

On a GAAP basis, total net sales for the third quarter 2018 were $16.9 million, an increase of 72% compared to total net sales of $9.8 million for the same period in 2017.  Total net sales increased 58% on a pro forma basis year over year compared to pro forma total net sales of $10.7 million in third quarter 2017. Pro forma net sales assume the miraDry acquisition was completed on January 1, 2017.

Net sales for the Breast Products segment totaled $8.6 million in the third quarter 2018, a 13% increase compared to $7.7 million for third quarter 2017. Breast Products sales growth was primarily driven by continued strong performance of both our AlloX2® and Dermaspan™ breast tissue expanders, partially offset by lower BIOCORNEUM® sales, and the impact of a change in revenue recognition accounting related to our Sientra Platinum20™ warranty program.

Net sales for the miraDry segment totaled $8.3 million in the third quarter 2018, a 174% increase on a pro forma basis compared to $3.0 million for the third quarter 2017. 

Gross profit for the third quarter of 2018 was $10.5 million, or 62% of sales, compared to gross profit of $6.3 million, or 65% of sales, for the same period in 2017.  The decrease in gross margin was primarily due to the inclusion of miraDry and the higher mix of capital and international sales which carries a lower margin than Breast Products. 

Operating expenses for the third quarter of 2018 were $30.0 million, an increase of $9.8 million, compared to operating expenses of $20.2 million for the same period in 2017.  Operating expenses in the third quarter 2018 were driven higher primarily by the inclusion of miraDry and the significant investment in its sales and marketing teams.

Net loss for the third quarter of 2018 was ($20.5) million, or ($0.72) per share, compared to a net loss of ($14.4) million, or ($0.74) per share, for the same period in 2017.

On a non-GAAP basis, the Company reported adjusted EBITDA loss of ($13.9) million for the third quarter 2018, compared to a loss of ($10.7) million for the third quarter 2017. The year over year increase can be mainly attributed to the inclusion of miraDry.

Net cash and cash equivalents as of September 30, 2018 were $103.0 million, compared to $112.6 million at the end of the second quarter of 2018.

Additional information on the Company’s financial results can be found in Sientra’s Supplemental Financial and Operational Information schedule by visiting the Investor Relations section of Sientra’s website at www.sientra.com.

Conference Call
Sientra will hold a conference call today, November 6, 2018 at 1:30 p.m. PT/4:30 p.m. ET to discuss the results.

The dial-in numbers are (844) 464-3933 for domestic callers and (765) 507-2612 for international callers. The conference ID is 8754727.  A live webcast of the conference call will be available on the Investor Relations section of the Company's website at www.sientra.com.

A replay of the call will be available starting on November 6, 2018 at 4:30 p.m. PT/7:30 p.m. ET, through November 13, 2018 at 8:59 p.m. PT/11:59 p.m. ET.  To access the replay, dial (855) 859-2056 for domestic callers and (404) 537-3406 for international callers and use the replay conference ID 8754727. The webcast will be available on the Investor Relations section of the Company’s website for 30 days following the completion of the call.  

Use of Non-GAAP Financial Measures

Sientra has supplemented its US GAAP net income (loss) with a non-GAAP measure of Adjusted EBITDA. Management believes that this non-GAAP financial measure provides useful supplemental information to management and investors regarding the performance of the Company, facilitates a more meaningful comparison of results for current periods with previous operating results, and assists management in analyzing future trends, making strategic and business decisions and establishing internal budgets and forecasts. A reconciliation of non-GAAP Adjusted EBITDA to GAAP net income (loss), the most directly comparable GAAP measure, is provided in the schedule below.

There are limitations in using this non-GAAP financial measure because it is not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies. This non-GAAP financial measure should not be considered in isolation or as a substitute for GAAP financial measures. Investors and potential investors should consider non-GAAP financial measures only in conjunction with Sientra’s financial statements prepared in accordance with GAAP and the reconciliations of the non-GAAP financial measure provided in the schedule below.

About Sientra
Headquartered in Santa Barbara, California, Sientra® is a medical aesthetics company committed to making a difference in patients’ lives by enhancing their body image, boosting their self-esteem and restoring their confidence. The Company was founded to provide greater choice to board-certified plastic surgeons and patients in need of medical aesthetics products. The Company has developed a broad portfolio of products with technologically differentiated characteristics, supported by independent laboratory testing and strong clinical trial outcomes. The Company sells its OPUS brand of breast implants and breast tissue expanders exclusively to board-certified and board-admissible plastic surgeons and tailors its customer service offerings to their specific needs.  The Company also offers a range of other aesthetic and specialty products including BIOCORNEUM®, the professional choice in scar management, and miraDry®, the only FDA-cleared device to reduce underarm sweat, odor and permanently reduce hair of all colors.

For more information about Sientra, visit www.sientra.com.
Find Sientra on FacebookTwitterLinkedIn and Instagram.

Forward-Looking Statements
This press release 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, based on management’s current assumptions and expectations of future events and trends, which affect or may affect the Company’s business, strategy, operations or financial performance, and actual results may differ materially from those expressed or implied in such statements due to numerous risks and uncertainties.  Forward-looking statements include, but are not limited to, statements regarding  whether the Company’s investments in its salesforce, brand awareness and product development initiatives, along with a large addressable market, will further enable significant segment growth in its miraDry segment going forward, the Company’s ability to regain share in the U.S. breast implant market, the timing and ability to offer the Company’s breast products in international markets, the Company’s ability to deliver value and become a world class, diversified aesthetics organization, and the Company’s ability to finance its near and long-term strategic growth initiatives. Such statements are subject to risks and uncertainties, including the dependence on conclusion of review procedures for the quarter ended September 30, 2018 by the Company’s independent auditors, positive reaction from plastic surgeons and their patients to Sientra’s Breast Products, risks associated with contracting with any third-party manufacturer and supplier, including uncertainties that such parties will be able to meet consumer demand, that the integration of recently acquired product lines will not achieve the anticipated benefits.  Additional factors that could cause actual results to differ materially from those contemplated in this press release can be found in the Risk Factors section of Sientra’s Annual Report on Form 10-K for the year ended December 31, 2017.  All statements other than statements of historical fact are forward-looking statements. The words ‘‘believe,’’ ‘‘may,’’ ‘‘might,’’ ‘‘could,’’ ‘‘will,’’ ‘‘aim,’’ ‘‘estimate,’’ ‘‘ continue, ’’ ‘‘anticipate,’’ ‘‘intend,’’ ‘‘expect,’’ ‘‘plan,’’ or the negative of those terms, and similar expressions that convey uncertainty of future events or outcomes are intended to identify estimates, projections and other forward-looking statements. Estimates, projections and other forward-looking statements speak only as of the date they were made, and, except to the extent required by law, the Company undertakes no obligation to update or review any estimate, projection or forward-looking statement.

Investor Contacts:

Paul Little
Sientra, Chief Financial Officer
(805) 679-8832 
paul.little@sientra.com

Tram Bui / Brian Johnston
The Ruth Group
(646) 536-7035 / (646) 536-7028 
ir@sientra.com

   
Sientra, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share and share amounts)
(Unaudited)
 
   
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2018     2017     2018     2017  
Net sales   $ 16,875     $ 9,819     $ 49,104     $ 25,477  
Cost of goods sold     6,398       3,484       19,154       8,427  
Gross profit     10,477       6,335       29,950       17,050  
Operating expenses:                                
Sales and marketing     15,254       7,981       45,990       21,100  
Research and development     2,881       2,911       7,930       7,677  
General and administrative     11,904       9,298       31,419       23,753  
Legal settlement                       10,000  
Total operating expenses     30,039       20,190       85,339       62,530  
Loss from operations     (19,562 )     (13,855 )     (55,389 )     (45,480 )
Other income (expense), net:                                
Interest income     133       54       214       112  
Interest expense     (953 )     (409 )     (2,474 )     (603 )
Other income (expense), net     (163 )     (155 )     (347 )     (151 )
Total other income (expense), net     (983 )     (510 )     (2,607 )     (642 )
Loss before income taxes     (20,545 )     (14,365 )     (57,996 )     (46,122 )
Income taxes           16             70  
Net loss   $ (20,545 )   $ (14,381 )   $ (57,996 )   $ (46,192 )
Basic and diluted net loss per share
  attributable to common stockholders
  $ (0.72 )   $ (0.74 )   $ (2.39 )   $ (2.42 )
Weighted average outstanding common
  shares used for net loss per share
  attributable to common stockholders:
                               
Basic and diluted     28,462,975       19,328,244       24,312,300       19,079,788  
                                 

2017 includes the results of miraDry as of the acquisition date of 7/25/2017

   
   
Sientra, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
 
   
    September 30,     December 31,  
    2018     2017  
Assets                
Current assets:                
Cash and cash equivalents   $ 103,008     $ 26,588  
Accounts receivable, net     18,956       6,569  
Inventories, net     22,909       20,896  
Prepaid expenses and other current assets     3,482       1,512  
Total current assets     148,355       55,565  
Property and equipment, net     2,440       4,763  
Goodwill     12,507       12,507  
Other intangible assets, net     17,069       18,803  
Other assets     709       575  
Total assets   $ 181,080     $ 92,213  
Liabilities and Stockholders’ Equity                
Current liabilities:                
Current portion of long-term debt   $ 3,356     $ 24,639  
Accounts payable     11,510       5,811  
Accrued and other current liabilities     25,218       13,474  
Legal settlement payable     410       1,000  
Customer deposits     7,706       5,423  
Refund liability     5,335      
Total current liabilities     53,535       50,347  
Long-term debt     31,361        
Deferred and contingent consideration     6,330       12,597  
Warranty reserve and other long-term liabilities     1,877       1,646  
Total liabilities     93,103       64,590  
Stockholders’ equity:                
Total stockholders’ equity     87,977       27,623  
Total liabilities and stockholders’ equity   $ 181,080     $ 92,213  
                 

Sientra, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

    Nine months ended  
    September 30,  
    2018     2017  
Cash flows from operating activities:                
Net loss   $ (57,996 )   $ (46,192 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Depreciation and amortization     2,500       2,037  
Provision for doubtful accounts     996       84  
Provision for warranties     2       133  
Provision for inventory     708       468  
Amortization of acquired inventory step-up     106       802  
Change in fair value of warrants     333       151  
Change in fair value of deferred consideration     18       (10 )
Change in fair value of contingent consideration     2,178       768  
Change in deferred revenue     275        
Non-cash portion of debt extinguishment loss           16  
Amortization of debt discount and issuance costs     132       97  
Non-cash interest expense           1  
Stock-based compensation expense     10,077       4,777  
Loss on disposal of property and equipment           12  
Deferred income taxes           70  
Changes in assets and liabilities, net of effects from acquisitions:                
Accounts receivable     (9,476 )     411  
Inventories     (2,827 )     1,208  
Prepaid expenses, other current assets and other assets     (2,168 )     (2,083 )
Insurance recovery receivable     33       9,300  
Accounts payable     6,780       (478 )
Accrued and other liabilities     3,789       3,613  
Legal settlement payable     (590 )     (9,900 )
Customer deposits     2,283       (987 )
Sales return liability     1,429        
Net cash used in operating activities     (41,418 )     (35,702 )
Cash flows from investing activities:                
Purchase of property and equipment     (414 )     (1,173 )
Business acquisitions, net of cash acquired           (18,455 )
Net cash used in investing activities     (414 )     (19,628 )
Cash flows from financing activities:                
Proceeds from exercise of stock options     1,149       1,327  
Proceeds from issuance of common stock under ESPP     993       647  
Tax payments related to shares withheld for vested restricted stock units (RSUs)     (1,419 )     (569 )
Net proceeds from issuance of common stock     107,551        
Gross borrowings under the Term Loan     10,000       25,000  
Gross borrowings under the Revolving Loan     12,109       5,000  
Repayment of the Revolving Loan     (12,109 )     (5,000 )
Deferred financing costs     (22 )     (646 )
Net cash provided by financing activities     118,252       25,759  
Net increase (decrease) in cash and cash equivalents     76,420       (29,571 )
Cash and cash equivalents at:                
Beginning of period     26,588       67,212  
End of period   $ 103,008     $ 37,641  
                 

2017 includes the results of miraDry as of the acquisition date of 7/25/2017

 

   
Sientra, Inc.
Reconciliation of Net Loss to Non-GAAP Adjusted EBITDA
(Unaudited)
 
   
    Three Months Ended   Nine Months Ended  
    September 30,   September 30,  
Dollars, in thousands   2018     2017   2018     2017  
Net loss, as reported   $ (20,545 )   $ (14,381 ) $ (57,996 )   $ (46,192 )
Adjustments to net loss:                              
Interest (income) expense and other, net     983       510     2,607       642  
Provision for income taxes     -       16     -       70  
Depreciation and amortization - COGS     145       425     467       847  
Depreciation and amortization - G&A     605       692     1,823       1,614  
Depreciation and amortization - S&M     30       30     92       106  
Depreciation and amortization - R&D     20       115     224       272  
Accretion in fair value adjustments to contingent consideration     470       306     2,178       768  
Legal settlement expense     -       -     -       10,000  
Stock-based compensation     4,391       1,595     10,077       4,777  
Total adjustments to net loss     6,644       3,689     17,468       19,096  
Adjusted EBITDA   $ (13,901 )   $ (10,692 ) $ (40,528 )   $ (27,096 )
                               
                               
    Three Months Ended   Nine Months Ended  
    September 30,   September 30,  
As a Percentage of Revenue**   2018     2017   2018     2017  
Net loss, as reported     (121.7 %)     (146.5 %)   (118.1 %)     (181.3 %)
Adjustments to net loss:                              
Interest (income) expense and other, net     5.8 %     5.2 %   5.3 %     2.5 %
Provision for income taxes     0.0 %     0.2 %   0.0 %     0.3 %
Depreciation and amortization - COGS     0.9 %     4.3 %   1.0 %     3.3 %
Depreciation and amortization - G&A     3.6 %     7.0 %   3.7 %     6.3 %
Depreciation and amortization - S&M     0.2 %     0.3 %   0.2 %     0.4 %
Depreciation and amortization - R&D     0.1 %     1.2 %   0.5 %     1.1 %
Accretion in fair value adjustments to contingent consideration     2.8 %     3.1 %   4.4 %     3.0 %
Legal settlement expense     0.0 %     0.0 %   0.0 %     39.3 %
Stock-based compensation     26.0 %     16.2 %   20.5 %     18.8 %
Total adjustments to net loss     39.4 %     37.6 %   35.6 %     75.0 %
Adjusted EBITDA     (82.4 %)     (108.9 %)   (82.5 %)     (106.4 %)
                               

2017 includes the results of miraDry as of the acquisition date of 7/25/2017
** Adjustments may not add to the total figure due to rounding

   
Sientra, Inc.
Non-GAAP Pro Forma Net Sales
(Unaudited)
 
   
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
Dollars, in thousands   2018     2017     2018     2017  
Net sales - pro forma   $ 16,875     $ 10,668     $ 49,104     $ 35,681  
                                 

 

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Source: Sientra, Inc.

NASD: SIEN

Stock Quote: NASD

$18.25 -0.73
Volume 251,081
Previous Close 18.98
Intraday High 19.38
Intraday Low 18.10
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Price Change % Change -3.85% 52 Week High 26.79 52 Week Low 8.79 Today's Open 19.00 Nov 16, 2018 04:00 PM

Investor Contact

Sientra Investor Relations
855.344.5714
IR@sientra.com

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