Sientra Reports Record Third Quarter 2022 Financial Results

11/10/2022

SANTA BARBARA, Calif., Nov. 10, 2022 (GLOBE NEWSWIRE) -- Sientra, Inc. (NASDAQ: SIEN) (“Sientra” or the “Company”), a medical aesthetics company focused on enhancing lives by advancing the art of plastic surgery, today announced its financial results for the third quarter that ended September 30, 2022.

Q3 2022 Financial and Business Highlights

  • Net sales of $22.6 million, representing growth of 15% over the third quarter of 2021
  • Year-to-date net sales of $65.5 million, representing growth of nearly 13% compared to the same period of 2021
  • Reduced free cash outflow to a record low of $3.6 million
  • Added 130 new augmentation accounts, and 160 new reconstruction accounts
  • Received approval of Sientra’s breast implants in the Kingdom of Saudi Arabia, and approval for Low Plus Profile implants from Health Canada
  • Entered into a new debt facility with Deerfield, and completed a secondary equity offering to provide enhanced balance sheet flexibility
  • Advanced preparations for launch of novel enhanced viability fat transfer system at Beauty Through Science meeting in New York on December 1-3

Ron Menezes, Sientra’s President, and Chief Executive Officer, said, “We are extremely proud of the execution by our team this quarter. Our results demonstrate the strong demand for Sientra’s industry-leading products backed by an unrivaled safety profile, strong relationships with Plastic Surgeons, and innovative programs. Looking forward, we see significant market opportunities and believe that the upcoming launch of our novel enhanced viability fat transfer system will be revolutionary, transforming Sientra into a full aesthetics company.”

Third Quarter 2022 Financial Results

  • Total net sales were $22.6 million, an increase of 15% compared to total net sales of $19.6 million for the same period in 2021
  • Gross profit for the third quarter of 2022 was $12.8 million, or 56.6% of sales, compared to gross profit of $10.6 million, or 54% of sales, for the same period in 2021
  • GAAP Operating expenses for the third quarter of 2022 of $25.3 million compared to $22.3 million for the same period in 2021. A driver to the increase was higher investment in R&D and commercial operations in anticipation of new product launches
  • Loss from continuing operations for the third quarter of 2022 was $14.9 million compared to net income of $28.5 million for the same period in 2021
  • Non-GAAP operating expenses for the third quarter of 2022 were $21.7 million compared to $19.2 million for the same period in 2021. The increase is attributed to investments in R&D and commercial operations in anticipation of new product launches
  • Net cash and cash equivalents as of September 30, 2022, were $19.0 million, compared to $51.8 million on December 31, 2021
  • Ending cash of $19.0 million with improvement of free cash flow usage of $3.6 million in Q3 2022 compared to a free cash flow usage of $15.4 million in the same period last year.

Conference Call
Sientra will hold a conference call today, November 10, 2022, at 4:30 pm ET to discuss second quarter 2022 results. The dial-in numbers are 1-866-374-5140 for domestic callers. The conference ID is 57765123#. The webcast link is the following: Sientra Q3 2022 Earnings Call Webcast Registration Link. A live webcast of the conference call will be available on the Investor Relations section of the Company's website at www.sientra.com. The webcast will be archived on the website following the call’s completion.

Use of Non-GAAP Financial Measures
Sientra has supplemented its US GAAP net income (loss) with a non-GAAP measure of Adjusted EBITDA, US GAAP Operating Expenses with a non-GAAP measure of Non-GAAP Operating Expenses, and US GAAP cash flow from operating activities with a non-GAAP measure of Free Cash Flow. Management believes that these non-GAAP financial measures provide useful supplemental information to management and investors regarding the performance of the Company, facilitate a more meaningful comparison of results for current periods with previous operating results, and assist management in analyzing future trends, making strategic and business decisions and establishing internal budgets and forecasts. Reconciliations of non-GAAP Adjusted EBITDA, Non-GAAP Operating Expenses, and Free Cash Flow to GAAP net income (loss), GAAP Operating Expenses and Cash flow from operating activities, the most directly comparable GAAP measures, are provided in the schedules below. In the current period, management added “Bad debt expense” as an adjustment to the non-GAAP measure of Adjusted EBITDA to align with internal targets, budgets and forecasts. The prior periods have been recast to conform with the current period presentation.

There are limitations in using these non-GAAP financial measures because they are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies. These non-GAAP financial measures 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 measures provided in the schedules below.

About Sientra
Headquartered in Santa Barbara, California, Sientra is a medical aesthetics company exclusively focused on plastic surgery. The Company mission is to offer proprietary innovations and unparalleled partnerships that radically advance how plastic surgeons think, work and care for their patients. Sientra has developed a broad portfolio of products with technologically differentiated characteristics, supported by independent laboratory testing and strong clinical trial outcomes. The Company’s product portfolio includes its Sientra round and shaped breast implants, the first fifth generation breast implants approved by the FDA for sale in the United States, its ground-breaking Allox2® breast tissue expander with patented dual-port and integral drain technology, the AuraGen fat grafting system, and BIOCORNEUM®, the #1 performing, preferred and recommended scar gel of plastic surgeons (*).

Sientra uses its investor relations website to publish important information about the Company, including information that may be deemed material to investors. Financial and other information about Sientra is routinely posted and is accessible on the Company’s investor relations website at www.sientra.com.

(*) Data on file

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 are made only as of the date of this release. The words ‘‘believe,’’ ‘‘may,’’ ‘‘might,’’ ‘‘could,’’ ‘‘will,’’ ‘‘aim,’’ ‘‘estimate,’’ ‘‘continue, ‘‘anticipate,’’ ‘‘intend,’’ ‘‘expect,’’ ‘‘plan,’’ ‘‘position,” 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. Forward-looking statements may include information concerning the Company’s unaudited financial information for the third quarter ended September 31, 2022, the impact of the COVID-19 pandemic on the Company and its operations, the impact of current economic headwinds on the Company and its operation, the Company’s possible or assumed future results of operations, including descriptions of the Company’s revenues, profitability, outlook and overall business strategy, the Company’s ability to successfully integrate the AuraGen fat grafting system into its existing operations, the reception of plastic surgeons to the Company’s products, including the AuraGen fat grafting system, \, the Company’s ability to expand into aesthetic applications outside of breast procedures, and the Company’s ability to capture additional market share and customer accounts in the plastic surgery market. Such statements are subject to risks and uncertainties, including the audit of the Company’s financial statements which audit is not yet complete and the numbers presented here could differ from the final audited financial statements presented by the Company, the scope and duration of the COVID-19 pandemic, the scope and duration of the current economic headwinds, the Company’s ability to recapture delayed procedures resulting from the COVID-19 pandemic, the positive reaction from plastic surgeons and their patients to Sientra’s Breast Products, including the AuraGen fat grafting system, , the ability to meet consumer demand, the growth of the plastic surgery market and breast procedures, regulatory timelines in the United States and abroad for approval of the Company’s products, and the ability of the Company to execute on its commercial, marketing, research and development and regulatory plans. 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 public filings with the Securities and Exchange Commission. 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,’’ ‘‘position,” 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. You are cautioned not to place undue reliance on these forward-looking statements, and such 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. Actual results may differ from those set forth in this press release due to the risks and uncertainties inherent in the Company’s business.

Investor Relations Contact
Aman R. Patel, CFA
aman.patel@westwicke.com

Sientra, Inc.  
Consolidated Statements of Operations  
(In thousands, except per share and share amounts)  
(Unaudited)  
                         
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2022     2021     2022     2021  
Net sales   $ 22,570     $ 19,620     $ 65,481     $ 58,035  
Cost of goods sold     9,794       9,030       27,118       26,027  
Gross profit     12,776       10,590       38,363       32,008  
Operating expenses:                        
Sales and marketing     12,290       12,052       41,542       34,348  
Research and development     3,720       2,367       9,823       6,962  
General and administrative     9,324       7,865       31,589       23,321  
Total operating expenses     25,334       22,284       82,954       64,631  
Loss from operations     (12,558 )     (11,694 )     (44,591 )     (32,623 )
Other (expense) income, net:                        
Interest income     41       1       58       4  
Interest expense     (2,364 )     (2,026 )     (6,584 )     (6,143 )
Change in fair value of derivative liability           35,550             (14,460 )
Other (expense) income, net     (6 )     6,672       (1 )     6,575  
Total other (expense) income, net     (2,329 )     40,197       (6,527 )     (14,024 )
(Loss) income from continuing operations before income taxes     (14,887 )     28,503       (51,118 )     (46,647 )
Income tax expense                        
(Loss) Income from continuing operations     (14,887 )     28,503       (51,118 )     (46,647 )
(Loss) Income from discontinued operations, net of income taxes     (94 )     (93 )     (208 )     233  
Net (loss) income   $ (14,981 )   $ 28,410     $ (51,326 )   $ (46,414 )
Basic (loss) earnings per share:                        
Continuing operations   $ (0.24 )   $ 0.49     $ (0.82 )   $ (0.82 )
Discontinued operations     (0.00 )     0.00       (0.00 )     0.00  
Basic (loss) earnings per share   $ (0.24 )   $ 0.49     $ (0.82 )   $ (0.82 )
Diluted loss per share:                        
Continuing operations   $ (0.24 )   $ (0.08 )   $ (0.82 )   $ (0.82 )
Discontinued operations     (0.00 )     (0.00 )     (0.00 )     (0.00 )
Diluted loss per share   $ (0.24 )   $ (0.08 )   $ (0.82 )   $ (0.82 )
Weighted average outstanding common shares used for net (loss) income per share attributable to common stockholders:                        
Basic     62,848,172       58,005,784       62,613,501       56,680,594  
Diluted     62,848,172       72,639,930       62,613,501       56,680,594  


Sientra, Inc.  
Condensed Consolidated Balance Sheets  
(In thousands)  
(Unaudited)  
             
             
    September 30,     December 31,  
    2022     2021  
Assets            
Current assets:            
Cash and cash equivalents   $ 18,975     $ 51,772  
Accounts receivable, net     34,360       33,105  
Inventories, net     51,640       52,914  
Prepaid expenses and other current assets     3,557       2,979  
Current assets of discontinued operations     4       4  
Total current assets     108,536       140,774  
Property and equipment, net     14,059       13,998  
Goodwill     9,202       9,202  
Other intangible assets, net     26,361       28,765  
Right of use assets, net     6,894       6,565  
Other assets     881       600  
Total assets   $ 165,933     $ 199,904  
Liabilities and Stockholders’ Equity            
Current liabilities:            
Current portion of long-term debt   $ -     $ 2,237  
Accounts payable     7,352       7,402  
Accrued and other current liabilities     18,320       21,298  
Customer deposits     43,013       35,182  
Sales return liability     12,016       13,399  
Current liabilities of discontinued operations     500       500  
Total current liabilities     81,201       80,018  
Long-term debt     70,064       62,434  
Deferred and contingent consideration     5,837       5,872  
Warranty reserve     2,675       2,505  
Lease liabilities     6,999       5,604  
Other liabilities     3,488       2,614  
Total liabilities     170,264       159,047  
Stockholders’ equity:            
Total stockholders’ equity     (4,331 )     40,857  
Total liabilities and stockholders’ equity   $ 165,933     $ 199,904  


Sientra, Inc.  
Condensed Consolidated Statements of Cash Flows  
(In thousands)  
(Unaudited)  
             
             
    Nine Months Ended September 30,  
    2022     2021  
Cash flows from operating activities:            
Net loss   $ (51,326 )   $ (46,414 )
(Loss) Income from discontinued operations, net of income taxes     (208 )     233  
Loss from continuing operations, net of income taxes     (51,118 )     (46,647 )
Adjustments to reconcile net loss to net cash used in operating activities:            
Depreciation and amortization     4,947       3,149  
Provision for doubtful accounts     1,086       875  
Provision for warranties     583       684  
Provision for inventory     607       638  
Fair value adjustments to derivative liability           14,460  
Fair value adjustments of other liabilities held at fair value     (88 )     49  
Amortization of debt discount and issuance costs     3,029       2,632  
Stock-based compensation expense     6,113       8,073  
Payments of contingent consideration liability in excess of acquisition-date fair value           (2,419 )
Other non-cash adjustments     135       584  
Changes in assets and liabilities:            
Accounts receivable     (2,341 )     (7,558 )
Inventories     667       (12,999 )
Prepaid expenses, other current assets and other assets     1,997       (205 )
Accounts payable, accrued, and other liabilities     (5,514 )     1,279  
Customer deposits     7,830       12,381  
Sales return liability     (1,383 )     3,113  
Net cash flow used in operating activities - continuing operations     (33,450 )     (28,563 )
Net cash flow used in operating activities - discontinued operations     (208 )     (989 )
Net cash used in operating activities     (33,658 )     (29,552 )
Cash flows from investing activities:            
Purchase of property and equipment     (1,856 )     (4,882 )
Net cash flow from investing activities - continuing operations     (1,856 )     (4,882 )
Net cash flow from investing activities - discontinued operations           11,314  
Net cash (used in) provided by investing activities     (1,856 )     6,432  
Cash flows from financing activities:            
Proceeds from issuance of common stock for employee stock-based plans     475       1,824  
Net proceeds from issuance of common stock           39,226  
Tax payments related to shares withheld for vested restricted stock units (RSUs)     (448 )     (2,420 )
Gross borrowings under the Term Loan     5,000       1,000  
Gross borrowings under the Revolving Loan     5,440        
Repayment of the Revolving Loan     (7,678 )      
Payments of contingent consideration up to acquisition-date fair value           (4,550 )
Payments for debt financing fees     (73 )     (800 )
Net cash provided by financing activities     2,716       34,280  
Net (decrease) increase in cash, cash equivalents and restricted cash     (32,798 )     11,160  
Cash, cash equivalents and restricted cash at:            
Beginning of period     52,068       55,300  
End of period   $ 19,270     $ 66,460  
             
Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets            
Cash and cash equivalents     18,975       66,127  
Restricted cash included in other assets     295       333  
Total cash, cash equivalents and restricted cash   $ 19,270     $ 66,460  


Sientra, Inc.  
Reconciliation of Loss from Continuing Operations to Non-GAAP Adjusted EBITDA  
(Unaudited)  
                         
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
Dollars, in thousands   2022     2021     2022     2021  
(Loss) income from continuing operations, as reported   $ (14,887 )   $ 28,503     $ (51,118 )   $ (46,647 )
Adjustments to (loss) income from continuing operations:                        
Interest (income) expense and other, net     2,329       2,005       6,528       6,216  
Depreciation and amortization     1,545       1,039       4,947       3,149  
Fair value adjustments to contingent consideration                 (88 )     49  
Fair value adjustments to derivative liability           (35,550 )           14,460  
Gain on extinguishment of debt           (6,652 )           (6,652 )
Stock-based compensation     1,855       2,326       6,113       8,072  
Bad debt expense     582       257       1,086       875  
One-time severance charges                 2,171        
Legal settlement expense                 1,600        
Total adjustments to (loss) income from continuing operations     6,311       (36,575 )     22,357       26,169  
Adjusted EBITDA   $ (8,576 )   $ (8,072 )   $ (28,761 )   $ (20,478 )
                         
                         
                         
                         
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
As a Percentage of Revenue**   2022     2021     2022     2021  
(Loss) income from continuing operations, as reported     (66.0 %)     145.3 %     (78.1 %)     (80.4 %)
Adjustments to (loss) income from continuing operations:                        
Interest (income) expense and other, net     10.3 %     10.2 %     10.0 %     10.7 %
Depreciation and amortization     6.8 %     5.3 %     7.6 %     5.4 %
Fair value adjustments to contingent consideration     0.0 %     0.0 %     (0.1 %)     0.1 %
Fair value adjustments to derivative liability     0.0 %     (181.2 %)     0.0 %     24.9 %
Gain on extinguishment of debt     0.0 %     (33.9 %)     0.0 %     (11.5 %)
Stock-based compensation     8.2 %     11.9 %     9.3 %     13.9 %
Bad debt expense     2.6 %     1.3 %     1.7 %     1.5 %
One-time severance charges     0.0 %     0.0 %     3.3 %     0.0 %
Legal settlement expense     0.0 %     0.0 %     2.4 %     0.0 %
Total adjustments to (loss) income from continuing operations     28.0 %     (186.4 %)     34.1 %     45.1 %
Adjusted EBITDA     (38.0 %)     (41.1 %)     (43.9 %)     (35.3 %)
                         
** Adjustments may not add to the total figure due to rounding  


Sientra, Inc.  
Reconciliation of GAAP Operating Expenses to Non-GAAP Operating Expenses  
(In thousands)  
(Unaudited)  
                         
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2022     2021     2022     2021  
GAAP operating expenses, as reported   $ 25,334     $ 22,284     $ 82,954     $ 64,631  
Adjustments to GAAP operating expenses:                        
Depreciation and amortization     1,244       550       3,815       1,527  
Fair value adjustments to contingent consideration                 (88 )     49  
Stock-based compensation     1,855       2,326       6,113       8,072  
Bad debt expense     582       257       1,086       875  
One-time severance charges                 1,635        
Legal settlement                 1,600        
Total adjustments to GAAP operating expenses     3,681       3,133       14,161       10,523  
Non-GAAP operating expenses   $ 21,653     $ 19,151     $ 68,793     $ 54,108  


    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2022     2021     2022     2021  
GAAP operating expenses, as reported                        
Sales and marketing   $ 12,290     $ 12,052     $ 41,542     $ 34,348  
Research and development     3,720       2,367       9,823       6,962  
General and administrative     9,324       7,865       31,589       23,321  
Total GAAP operating expenses, as reported   $ 25,334     $ 22,284     $ 82,954     $ 64,631  
Adjustments to GAAP operating expenses:                        
Sales and marketing     640       855       3,065       2,868  
Research and development     173       237       575       1,222  
General and administrative     2,868       2,041       10,521       6,433  
Total adjustments to GAAP operating expenses     3,681       3,133       14,161       10,523  
Non-GAAP operating expenses                        
Sales and marketing     11,650       11,197       38,477       31,480  
Research and development     3,547       2,130       9,248       5,740  
General and administrative     6,456       5,824       21,068       16,888  
Total Non-GAAP operating expenses   $ 21,653     $ 19,151     $ 68,793     $ 54,108  
                         
                         
                         
Sientra, Inc.  
Free Cash Flow  
(In thousands)  
(Unaudited)  
                         
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2022     2021     2022     2021  
                         
Net cash flow used in operating activities - continuing operations   $ (2,605 )   $ (13,724 )   $ (33,450 )   $ (28,563 )
Purchase of property and equipment     (1,043 )     (1,712 )     (1,856 )     (4,882 )
Free cash flow   $ (3,648 )   $ (15,436 )   $ (35,306 )   $ (33,445 )

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Source: Sientra, Inc.

Nasdaq: SIEN

Stock Quote: NASD

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Sientra Investor Relations
ir@sientra.com

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