Sientra Reports Second Quarter Revenue Growth Driven By Increased Acceleration in Reconstruction Channel

08/11/2022

SANTA BARBARA, Calif., Aug. 11, 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 second quarter that ended June 30, 2022.

Q 2 2022 Financial and Business Highlights

  • Net sales of $21.5 million, representing growth of 7% over the second quarter of 2021, driven by 23% year-over-year growth in reconstruction.
  • Year-to-date net sales of $42.9 million, representing growth of nearly 12% compared to the same period of 2021.
  • Gross margins of 59.2%, reflecting strong reconstruction performance and improved operational efficiencies compared to 56% for the same period last year.
  • Added record number of new accounts (~300) and continued to expand market share in both reconstruction and augmentation channels.
  • Exceeded 80% reorder rates for our higher-volume existing accounts.
  • Launched Dermaspan, six-tab tissue expander.
  • Received FDA-approval for Low Plus Profile Breast Implant.

Ron Menezes, Sientra’s President and Chief Executive Officer, said, “With our advanced technology, industry-leading safety profile, and innovative programs, we have been able to significantly outperform the market in both reconstruction and augmentation. We are encouraged by the high level of re-order rates we are seeing as well as overall new account growth, which we believe sets us up for continued growth in 2022 and beyond."

“We will continue to focus on higher growth innovative markets within the aesthetic space to enhance our product offerings for plastic surgeons. The recent acquisition of our novel fat grafting technology puts us in a strong position to compete in this fast-growing market. A recent survey we conducted showed approximately 80% of plastic surgeons have the intention to try our novel technology and see the unique clinical value that it offers."

“With the continued strong performance in reconstruction, coupled with our new product strategy, and operating discipline, we remain more confident than ever in our ability to double our revenues within the next three years and reach cashflow break even,” concluded Menezes.

Second Quarter 202 2 Financial Results

  • Total net sales were $21.5 million, an increase of 7.0% compared to total net sales of $20.1 million for the same period in 2021.
  • Gross profit for the second quarter 2022 was $12.7 million, or 59.2% of sales, compared to gross profit of $11.3 million, or 56.0% of sales, for the same period in 2021. Excluding one-time, non-cash charges related to the write-off of expiring product, gross margins would have been approximately 61% for the current period.
  • Operating expenses for the second quarter 2022 of $28.7 million compared to $20.4 million for the same period in 2021. This was mostly driven by higher investment in R&D and commercial operations in anticipation of new product launches.
  • Loss from continuing operations for the second quarter 2022 was $18.2 million compared to $18.5 million, for the same period in 2021.
  • Non-GAAP operating expenses for the second quarter 2022 were $22.3 million as compared to $17.0 million for the same period in 2021. The increase is primarily attributed to investments in R&D and commercial operations in anticipation of new product launches.
  • Net cash and cash equivalents as of June 30, 2022, were $25.0 million, compared to $51.8 million on December 31, 2021.

2022 Guidance

Macro headwinds have worsened through 2022, and continue to have a broad impact on overall consumer spending as recession concerns loom. The aesthetic market has seen some impact in the first half, and it is difficult to say how long these trends will persist at this time. We continue to gain share in the augmentation and reconstruction channels, and have done a good job navigating in this market, but given these headwinds, we are taking a more cautious stance. We are adjusting our full year's revenue guidance to a range of $90 to $95 million, down from prior guidance of $93 to $97 million. The new guidance reflects growth of 11% to 18% compared to sales of $80.7 million in 2021.

Conference Call

Sientra will hold a conference call today, August 11, 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 32094933. The webcast link is the following: Sientra Q2' 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 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 and US GAAP Operating Expenses with a non-GAAP measure of Non-GAAP Operating Expenses. 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 and Non-GAAP Operating Expenses to GAAP net income (loss) and GAAP Operating Expenses, 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 second quarter ended June 30, 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 Dermaspan 6-tab and Allox2 PRO products, 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 ad 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, Dermaspan 6-tab and Allox2 PRO, 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     Six Months Ended  
    June 30,     June 30,  
    2022     2021     2022     2021  
Net sales   $ 21,513     $ 20,103     $ 42,911     $ 38,415  
Cost of goods sold     8,771       8,838       17,324       16,997  
Gross profit     12,742       11,265       25,587       21,418  
Operating expenses:                        
Sales and marketing     13,664       10,477       29,252       22,296  
Research and development     2,959       2,400       6,103       4,595  
General and administrative     12,057       7,545       22,265       15,456  
Total operating expenses     28,680       20,422       57,620       42,347  
Loss from operations     (15,938 )     (9,157 )     (32,033 )     (20,929 )
Other income (expense), net:                        
Interest income     15       1       17       3  
Interest expense     (2,323 )     (2,113 )     (4,220 )     (4,117 )
Change in fair value of derivative liability           (7,270 )           (50,010 )
Other income (expense), net                 5       (97 )
Total other income (expense), net     (2,308 )     (9,382 )     (4,198 )     (54,221 )
Loss from continuing operations before income taxes     (18,246 )     (18,539 )     (36,231 )     (75,150 )
Income tax expense                        
Loss from continuing operations     (18,246 )     (18,539 )     (36,231 )     (75,150 )
Income (loss) from discontinued operations, net of income taxes     (58 )     (1,595 )     (114 )     326  
Net loss   $ (18,304 )   $ (20,134 )   $ (36,345 )   $ (74,824 )
Basic and diluted net loss per share attributable to
common stockholders
                       
Continuing operations   $ (0.29 )   $ (0.32 )   $ (0.58 )   $ (1.34 )
Discontinued operations     (0.00 )     (0.03 )     (0.00 )     (0.00 )
Basic and diluted net loss per share   $ (0.29 )   $ (0.35 )   $ (0.58 )   $ (1.34 )
Weighted average outstanding common shares used for
net loss per share attributable to common stockholders:
                       
Basic and diluted     62,649,540       57,647,883       62,493,559       56,003,274  


Sientra, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
             
             
    June 30,     December 31,  
    2022     2021  
Assets            
Current assets:            
Cash and cash equivalents   $ 24,990     $ 51,772  
Accounts receivable, net     36,298       33,105  
Inventories, net     52,801       52,914  
Prepaid expenses and other current assets     3,874       2,979  
Current assets of discontinued operations     4       4  
Total current assets     117,967       140,774  
Property and equipment, net     12,839       13,998  
Goodwill     9,202       9,202  
Other intangible assets, net     26,973       28,765  
Right of use assets, net     7,305       6,565  
Other assets     894       600  
Total assets   $ 175,180     $ 199,904  
Liabilities and Stockholders’ Equity            
Current liabilities:            
Current portion of long-term debt   $ 8,607     $ 2,237  
Accounts payable     7,297       7,402  
Accrued and other current liabilities     17,253       21,298  
Customer deposits     38,235       35,182  
Sales return liability     12,494       13,399  
Current liabilities of discontinued operations     500       500  
Total current liabilities     84,386       80,018  
Long-term debt     63,072       62,434  
Deferred and contingent consideration     5,634       5,872  
Warranty reserve     2,764       2,505  
Lease liabilities     7,495       5,604  
Other liabilities     3,160       2,614  
Total liabilities     166,511       159,047  
Stockholders’ equity:            
Total stockholders’ equity     8,669       40,857  
Total liabilities and stockholders’ equity   $ 175,180     $ 199,904  


Sientra, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
             
             
    Six Months Ended June 30,  
    2022     2021  
Cash flows from operating activities:            
Net loss   $ (36,345 )   $ (74,824 )
Income (loss) from discontinued operations, net of income taxes     (114 )     326  
Loss from continuing operations, net of income taxes     (36,231 )     (75,150 )
Adjustments to reconcile net loss to net cash used in operating activities:            
Depreciation and amortization     3,402       2,110  
Provision for doubtful accounts     505       618  
Provision for warranties     525       444  
Provision for inventory     404       427  
Fair value adjustments to derivative liability           50,010  
Fair value adjustments of other liabilities held at fair value     (88 )     49  
Amortization of debt discount and issuance costs     1,927       1,722  
Stock-based compensation expense     4,258       5,747  
Payments of contingent consideration liability in excess of acquisition-date fair value           (2,416 )
Other non-cash adjustments     70       459  
Changes in assets and liabilities:            
Accounts receivable     (3,698 )     (2,167 )
Inventories     (291 )     (6,565 )
Prepaid expenses, other current assets and other assets     916       126  
Accounts payable, accrued, and other liabilities     (4,691 )     (1,465 )
Customer deposits     3,052       9,832  
Sales return liability     (905 )     1,380  
Net cash flow from operating activities - continuing operations     (30,845 )     (14,839 )
Net cash flow from operating activities - discontinued operations     (114 )     (263 )
Net cash used in operating activities     (30,959 )     (15,102 )
Cash flows from investing activities:            
Purchase of property and equipment     (813 )     (3,170 )
Net cash flow from investing activities - continuing operations     (813 )     (3,170 )
Net cash flow from investing activities - discontinued operations           11,314  
Net cash used in investing activities     (813 )     8,144  
Cash flows from financing activities:            
Proceeds from issuance of common stock for employee stock-based plans     329       1,474  
Net proceeds from issuance of common stock           39,226  
Tax payments related to shares withheld for vested restricted stock units (RSUs)     (430 )     (1,942 )
Gross borrowings under the Term Loan     5,000       1,000  
Gross borrowings under the Revolving Loan     5,440        
Repayment of the Revolving Loan     (5,277 )      
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     4,989       34,408  
Net increase (decrease) in cash, cash equivalents and restricted cash     (26,783 )     27,450  
Cash, cash equivalents and restricted cash at:            
Beginning of period     52,068       55,300  
End of period   $ 25,285     $ 82,750  
             
Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets            
Cash and cash equivalents     24,990       82,417  
Restricted cash included in other assets     295       333  
Total cash, cash equivalents and restricted cash   $ 25,285     $ 82,750  


Sientra, Inc.
Reconciliation of Loss from Continuing Operations to Non-GAAP Adjusted EBITDA
(Unaudited)
                         
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
Dollars, in thousands   2022     2021     2022     2021  
Loss from continuing operations, as reported   $ (18,246 )   $ (18,539 )   $ (36,231 )   $ (75,150 )
Adjustments to loss from continuing operations:                        
Interest (income) expense and other, net     2,308       2,112       4,198       4,211  
Depreciation and amortization     1,659       1,074       3,402       2,110  
Fair value adjustments to contingent consideration     (88 )     31       (88 )     49  
Fair value adjustments to derivative liability           7,270             50,010  
Stock-based compensation     2,061       2,584       4,258       5,747  
Bad debt expense     190       349       505       618  
One-time severance charges     1,314             1,635        
Legal settlement expense     1,600             1,600        
Total adjustments to loss from continuing operations     9,044       13,420       15,510       62,745  
Adjusted EBITDA   $ (9,202 )   $ (5,119 )   $ (20,721 )   $ (12,405 )
                         
                         
                         
                         
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
As a Percentage of Revenue**   2022     2021     2022     2021  
Loss from continuing operations, as reported     (84.8 %)     (92.2 %)     (84.4 %)     (195.6 %)
Adjustments to loss from continuing operations:                        
Interest (income) expense and other, net     10.7 %     10.5 %     9.8 %     11.0 %
Depreciation and amortization     7.7 %     5.3 %     7.9 %     5.5 %
Fair value adjustments to contingent consideration     (0.4 %)     0.2 %     (0.2 %)     0.1 %
Fair value adjustments to derivative liability     0.0 %     36.2 %     0.0 %     130.2 %
Stock-based compensation     9.6 %     12.9 %     9.9 %     15.0 %
Bad debt expense     0.9 %     1.7 %     1.2 %     1.6 %
One-time severance charges     6.1 %     0.0 %     3.8 %     0.0 %
Legal settlement expense     7.4 %     0.0 %     3.7 %     0.0 %
Total adjustments to loss from continuing operations     42.0 %     66.8 %     36.1 %     163.3 %
Adjusted EBITDA     (42.8 %)     (25.5 %)     (48.3 %)     (32.3 %)
                         
** 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     Six Months Ended  
    June 30,     June 30,  
    2022     2021     2022     2021  
GAAP operating expenses, as reported   $ 28,680     $ 20,422     $ 57,620     $ 42,347  
Adjustments to GAAP operating expenses:                        
Depreciation and amortization     1,289       492       2,571       977  
Fair value adjustments to contingent consideration     (88 )     31       (88 )     49  
Stock-based compensation     2,061       2,584       4,258       5,747  
Bad debt expense     190       349       505       618  
One-time severance charges     1,314             1,635        
Legal settlement     1,600             1,600        
Total adjustments to GAAP operating expenses     6,366       3,456       10,481       7,391  
Non-GAAP operating expenses   $ 22,314     $ 16,966     $ 47,139     $ 34,956  


Sientra, Inc.
Reconciliation of GAAP Operating Expenses to Non-GAAP Operating Expenses
(In thousands)
(Unaudited)
                         
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2022     2021     2022     2021  
GAAP operating expenses, as reported                        
Sales and marketing   $ 13,664     $ 10,477     $ 29,252     $ 22,296  
Research and development     2,959       2,400       6,103       4,595  
General and administrative     12,057       7,545       22,265       15,456  
Total GAAP operating expenses, as reported   $ 28,680     $ 20,422     $ 57,620     $ 42,347  
Adjustments to GAAP operating expenses:                        
Sales and marketing     1,681       816       2,426       2,014  
Research and development     97       414       402       985  
General and administrative     4,588       2,226       7,653       4,392  
Total adjustments to GAAP operating expenses     6,366       3,456       10,481       7,391  
Non-GAAP operating expenses                        
Sales and marketing     11,983       9,661       26,826       20,282  
Research and development     2,862       1,986       5,701       3,610  
General and administrative     7,469       5,319       14,612       11,064  
Total Non-GAAP operating expenses   $ 22,314     $ 16,966     $ 47,139     $ 34,956  

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Source: Sientra, Inc.

Nasdaq: SIEN

Stock Quote: NASD

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