Sientra Reports Record Second Quarter Financial and Operational Results

August 10, 2023

Revenue growth of 7.5% driven by continued market share gains in reconstruction and augmentation

Best operational results in company history with 95% and 63% year-over-year improvement in
operating cash flow and adjusted EBITDA respectively

Continued success in advancing products through the FDA regulatory process with clearance
of Allox2 Pro, the first and only FDA-cleared MRI-compatible tissue expander

IRVINE, Calif., Aug. 10, 2023 (GLOBE NEWSWIRE) -- Sientra, Inc. (NASDAQ: SIEN) (“Sientra” or the “Company”), a surgical aesthetics company developing the safest and most innovative solutions for the best aesthetic outcomes, today announced its financial results for the second quarter that ended June 30, 2023.

Second Quarter 2023 Financial and Business Highlights

  • Twelfth consecutive quarter of year-over-year growth, with net sales of $23.1 million representing growth of 7.5% over the second quarter of 2022.
  • Continued market share gains, adding 240 new accounts.
  • Record free cash flow usage of $0.7 million, a 95% improvement from $13.2 million in the same period in 2022.
  • Record adjusted EBITDA loss of $3.4 million, a 63% improvement from a $9.2 million loss for the same period in 2022.
  • Obtained FDA 510k clearances for the Company’s novel, patented AlloX2 Pro Tissue Expander and Portfinder™ technologies.

Ron Menezes, Sientra’s President and Chief Executive Officer, said, "Sientra is proud to report significant progress toward our goal of sustainable and profitable growth, exemplified by a record low free cash flow usage for the Company. With this near break-even result, we are confident of reaching our goal of positive free cash flow performance by year-end."

"We experienced our twelfth consecutive quarter of year-over-year revenue growth, driven by continued strong performance in reconstruction. While we also outperformed the overall augmentation segment, we continued to see softness in this channel as patient spending on elective cash pay aesthetics procedures declined.”

“We recently introduced Viality™, the only system designed for enhanced viability fat transfer, and SimpliDerm®, an innovative acellular dermal matrix for soft tissue repair. Those products will leverage our plastic surgery platform, accelerate Sientra’s long-term growth and further our leading position in reconstruction. We are encouraged by the early positive responses we have received from those who have already adopted these products. As we continue to work through the hospital contracting process, we expect to see an increase in sales later this year positioning us well for 2024 and beyond.”

Second Quarter 2023 Financial Results

  • Total net sales were $23.1 million, an increase of 7.5% compared to total net sales of $21.5 million for the same period in 2022.
  • GAAP gross profit for the second quarter of 2023 was $12.6 million, or 54.5% of sales, compared to gross profit of $12.7 million, or 59.2% of sales, for the same period in 2022. Non-GAAP gross margin, which excludes non-cash depreciation and amortization expense primarily related to the launch of Viality, was 61.1% of sales for the current period as compared to 60.9% for the prior year period.
  • Total GAAP loss from continuing operations for the second quarter of 2023 was $9.5 million, compared to $18.2 million for the same period in 2022, a 48% improvement from the prior year period.
  • Total GAAP operating expense for the second quarter of 2023 was $19.7 million, compared to $28.7 million for the prior year period, a decrease of $9 million or 31.2%.
  • Non-GAAP total operating expenses for the second quarter of 2023 was $17.5 million, compared to $22.3 million for the same period in 2022, a 21.6% improvement from the prior year period.
  • On a non-GAAP basis, adjusted EBITDA for the second quarter of 2023 was a $3.4 million loss, a 63% improvement from a loss of $9.2 million for the same period in 2022.
  • Net cash and cash equivalents as of June 30, 2023, were $18.6 million, compared to $26.1 million on December 31, 2022 and $19.4 million at March 31, 2023.

Revised Full Year 2023 Guidance

Due to continued softness in the augmentation market, the Company is revising its full year guidance, expecting total net sales of $98 million to $102 million. This represents growth of 8% to 13% compared to net sales of $90.5 million in 2022.

With Sientra’s continued improvement in operational efficiencies, the Company is also reducing its GAAP operating spend to a forecasted level of $84 million to $87 million, and non-GAAP operating spend to a forecasted level of $75 million to $78 million, in each case for the full year 2023. The non-GAAP operating spend is a reduction of $3.5 million at the midpoint from the prior full year guidance. At the midpoint, the GAAP forecasted range is an absolute decrease of $25 million or 23% compared to $110.6 million for the full year 2022, and a non-GAAP operating expense reduction of $15 million, or 16.5%, as compared to the $91.6 million for the full year 2022. Sientra’s confidence in achieving these cost reductions while growing net sales by a projected 10.5% at the midpoint of revised guidance reflects the Company’s commitment to sustainable, long-term profitable growth.

Conference Call

Sientra will hold a conference call today, August 10, 2023, at 4:30 pm ET to discuss second quarter 2023 results. The dial-in numbers are (844) 735-3763 for domestic callers and (412) 317-5711 for international callers. The webcast link is the following: Sientra Q2 2023 Earnings Call Webcast Registration Link. A live conference call webcast 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 U.S. GAAP net income (loss) with a non-GAAP measure of adjusted EBITDA, U.S. GAAP gross profit and gross margin with a non-GAAP measure of adjusted gross profit and gross margin, U.S. GAAP operating expenses with a non-GAAP measure of non-GAAP operating expenses, and U.S. 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 adjusted gross profit and gross margin, non-GAAP operating expenses, and free cash flow to U.S. GAAP net income (loss), U.S. GAAP operating expenses and U.S. GAAP cash flow from operating activities, the most directly comparable U.S. GAAP measures, are provided in the schedules below. There are limitations in using these non-GAAP financial measures because they are not prepared in accordance with U.S. 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 U.S. 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 U.S. GAAP and the reconciliations of the non-GAAP financial measures provided in the schedules below.

About Sientra

Headquartered in Irvine, California, Sientra is a surgical aesthetics company focused on empowering people to change their lives through increased self-confidence and self-respect. Backed by unrivaled clinical and safety data, Sientra’s platform of products includes a comprehensive portfolio of round and shaped breast implants, the first fifth-generation breast implants approved by the FDA for sale in the United States, the ground-breaking AlloX2®breast tissue expander with patented dual-port and integral drain technology, the next-generation AlloX2Pro™, the first and only FDA-cleared MRI-compatible tissue expander, the Viality™ with AuraClens™ enhanced viability fat transfer system, the SimpliDerm® Human Acellular Dermal Matrix, 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.
To learn more about Sientra, visit our website and follow Sientra on LinkedIn, Instagram, and Facebook.

(*) 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, 2023, the Company’s possible or assumed future results of operations, including descriptions of the Company’s revenues, operating expense, profitability, outlook and overall business strategy, the Company’s ability and timing to successfully integrate the Viality™ with AuraClens™ fat transfer system and SimpliDerm® human Acellular Dermal Matrix into its existing operations, the reception of plastic surgeons to the Company’s products, the Company’s ability to expand into aesthetic applications outside of breast procedures, the Company’s ability to add additional products and strategic partnerships, 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 Company’s ability to recapture delayed procedures resulting from the COVID-19 pandemic, the positive reaction from plastic surgeons and their patients to the Company’s products, the ability to meet consumer demand including any potential supply issues resulting from the COVID-19 pandemic or the war in Ukraine, the growth of the plastic surgery market and breast procedures, and the ability of the Company to execute on its commercial, operational, 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.  
Condensed Consolidated Statements of Operations  
(In thousands, except per share and share amounts)  
(Unaudited)  
                         
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2023     2022     2023     2022  
Net sales   $ 23,130     $ 21,513     $ 45,687     $ 42,911  
Cost of goods sold     10,515       8,771       20,925       17,324  
Gross profit     12,615       12,742       24,762       25,587  
Operating expenses:                        
Sales and marketing     10,005       13,664       20,157       29,252  
Research and development     2,387       2,959       5,095       6,103  
General and administrative     7,334       12,057       17,185       22,265  
Total operating expenses     19,726       28,680       42,437       57,620  
Loss from operations     (7,111 )     (15,938 )     (17,675 )     (32,033 )
Other (expense) income, net:                        
Interest income     184       15       290       17  
Interest expense     (2,506 )     (2,323 )     (4,883 )     (4,220 )
Other (expense) income, net     (44 )           (101 )     5  
Total other (expense) income, net     (2,366 )     (2,308 )     (4,694 )     (4,198 )
Loss from continuing operations before income taxes     (9,477 )     (18,246 )     (22,369 )     (36,231 )
Income tax expense                        
Loss from continuing operations     (9,477 )     (18,246 )     (22,369 )     (36,231 )
Loss from discontinued operations, net of income taxes           (58 )           (114 )
Net loss   $ (9,477 )   $ (18,304 )   $ (22,369 )   $ (36,345 )
Basic and diluted net loss per share attributable to
common stockholders
                       
Continuing operations   $ (0.85 )   $ (2.91 )   $ (1.93 )   $ (5.80 )
Discontinued operations           (0.01 )           (0.02 )
Basic and diluted net loss per share   $ (0.85 )   $ (2.92 )   $ (1.93 )   $ (5.82 )
Weighted average outstanding common shares used for net loss per share attributable to common stockholders:                        
Basic and diluted     11,205,000       6,264,954       11,589,311       6,249,356  


   
Sientra, Inc.  
Condensed Consolidated Balance Sheets  
(In thousands)  
(Unaudited)  
             
    June 30,     December 31,  
    2023     2022  
Assets            
Current assets:            
Cash and cash equivalents   $ 18,637     $ 26,071  
Accounts receivable, net     31,819       36,892  
Inventories     39,408       42,692  
Prepaid expenses and other current assets     2,044       2,094  
Total current assets     91,908       107,749  
Property and equipment, net     13,984       14,941  
Goodwill     9,202       9,202  
Other intangible assets, net     23,881       25,676  
Right of use assets, net     6,175       7,004  
Other assets     849       849  
Total assets   $ 145,999     $ 165,421  
Liabilities and Stockholders’ Deficit            
Current liabilities:            
Accounts payable     4,795       6,818  
Accrued and other current liabilities     17,209       22,599  
Customer deposits     53,718       45,161  
Sales return liability     12,756       15,773  
Total current liabilities     88,478       90,351  
Long-term debt     57,796       55,406  
Derivative liability           880  
Deferred and contingent consideration     3,073       2,791  
Warranty reserve     8,778       8,186  
Lease liabilities     4,437       5,518  
Other liabilities     2,069       2,698  
Total liabilities     164,631       165,830  
Stockholders’ deficit:            
Total stockholders’ deficit     (18,632 )     (409 )
Total liabilities and stockholders’ deficit   $ 145,999     $ 165,421  


   
Sientra, Inc.  
Condensed Consolidated Statements of Cash Flows  
(In thousands)  
(Unaudited)  
             
             
    Six Months Ended June 30,  
    2023     2022  
Cash flows from operating activities:            
Net loss   $ (22,369 )   $ (36,345 )
Loss from discontinued operations, net of income taxes           (114 )
Loss from continuing operations, net of income taxes     (22,369 )     (36,231 )
Adjustments to reconcile net loss to net cash used in operating activities:            
Depreciation and amortization     3,677       3,402  
Provision for doubtful accounts     534       505  
Provision for warranties     894       525  
Provision for inventory     7       404  
Fair value adjustments of other liabilities held at fair value     279       (88 )
Amortization of debt discount and issuance costs     2,506       1,927  
Employee stock-based compensation expense     3,060       4,258  
Other non-cash adjustments           70  
Changes in operating assets and liabilities:            
Accounts receivable     4,539       (3,698 )
Inventories     3,277       (291 )
Prepaid expenses, other current assets and other assets     50       916  
Accounts payable, accrued and other liabilities     (8,787 )     (4,691 )
Customer deposits     8,557       3,052  
Sales return liability     (3,017 )     (905 )
Net cash flow used in operating activities - continuing operations     (6,793 )     (30,845 )
Net cash flow used in operating activities - discontinued operations           (114 )
Net cash used in operating activities     (6,793 )     (30,959 )
Cash flows from investing activities:            
Purchases of property and equipment     (786 )     (813 )
Net cash flow used in investing activities - continuing operations     (786 )     (813 )
Net cash used in investing activities     (786 )     (813 )
Cash flows from financing activities:            
Proceeds from issuance of common stock for employee stock-based plans     253       329  
Tax payments related to shares withheld for vested RSUs     (47 )     (430 )
Gross borrowings under the Term Loan           5,000  
Gross borrowings under the Revolving Loan           5,440  
Repayments of the Revolving Loan           (5,277 )
Deferred financing costs     (61 )     (73 )
Net cash provided by financing activities - continuing operations     145       4,989  
Net cash provided by financing activities     145       4,989  
Net decrease in cash, cash equivalents and restricted cash     (7,434 )     (26,783 )
Cash, cash equivalents and restricted cash at:            
Beginning of period     26,677       52,068  
End of period   $ 19,243     $ 25,285  
             
Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets            
Cash and cash equivalents     18,637       24,990  
Restricted cash included in other assets     606       295  
Total cash, cash equivalents and restricted cash   $ 19,243     $ 25,285  


   
Sientra, Inc.  
Reconciliation of US GAAP Loss from Continuing Operations to Non-GAAP Adjusted EBITDA  
(In thousands)  
(Unaudited)  
                         
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2023     2022     2023     2022  
Loss from continuing operations, as reported   $ (9,477 )   $ (18,246 )   $ (22,369 )   $ (36,231 )
Adjustments to loss from continuing operations:                        
Interest (income) expense and other, net     2,366       2,308       4,694       4,198  
Depreciation and amortization     1,971       1,659       3,849       3,402  
Fair value adjustments to contingent consideration     90       (88 )     90       (88 )
Stock-based compensation     1,338       2,061       3,060       4,258  
Provision for doubtful accounts     (172 )     190       534       505  
Severance     317       1,314       317       1,635  
SEC/DOJ related legal fees     210             1,016        
Legal settlement expense           1,600             1,600  
Total adjustments to loss from continuing operations     6,120       9,044       13,561       15,510  
Adjusted EBITDA   $ (3,357 )   $ (9,202 )   $ (8,808 )   $ (20,721 )
                         
                         
                         
                         
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
As a Percentage of Revenue**   2023     2022     2023     2022  
Loss from continuing operations, as reported     (41.0 %)     (84.8 %)     (49.0 %)     (84.4 %)
Adjustments to loss from continuing operations:                        
Interest (income) expense and other, net     10.2 %     10.7 %     10.3 %     9.8 %
Depreciation and amortization     8.5 %     7.7 %     8.4 %     7.9 %
Fair value adjustments to contingent consideration     0.4 %     (0.4 %)     0.2 %     (0.2 %)
Stock-based compensation     5.8 %     9.6 %     6.7 %     9.9 %
Provision for doubtful accounts     (0.7 %)     0.9 %     1.2 %     1.2 %
Severance     1.4 %     6.1 %     0.7 %     3.8 %
SEC/DOJ related legal fees     0.9 %     0.0 %     2.2 %     0.0 %
Legal settlement expense     0.0 %     7.4 %     0.0 %     3.7 %
Total adjustments to loss from continuing operations     26.5 %     42.0 %     29.7 %     36.1 %
Adjusted EBITDA     (14.5 %)     (42.8 %)     (19.3 %)     (48.3 %)
                         
** Adjustments may not add to the total figure due to rounding.  


                         
Sientra, Inc.  
Reconciliation of US GAAP Gross Profit to Adjusted Gross Profit and Adjusted Gross Margin  
(In thousands)  
(Unaudited)  
                         
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2023     2022     2023     2022  
Net sales   $ 23,130     $ 21,513     $ 45,687     $ 42,911  
Cost of goods sold     10,515       8,771       20,925       17,324  
Gross profit   $ 12,615     $ 12,742     $ 24,762     $ 25,587  
Gross margin     54.5 %     59.2 %     54.2 %     59.6 %
Adjustments to gross profit                        
Depreciation and amortization     1,523       370       2,868       831  
Total adjustments to gross profit     1,523       370       2,868       831  
Adjusted gross profit   $ 14,138     $ 13,112     $ 27,630     $ 26,418  
Adjusted gross margin     61.1 %     60.9 %     60.5 %     61.6 %


   
Sientra, Inc.  
Reconciliation of US GAAP Operating Expenses to Non-GAAP Operating Expenses  
(In thousands)  
(Unaudited)  
                         
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2023     2022     2023     2022  
US GAAP operating expenses, as reported   $ 19,726     $ 28,680     $ 42,437     $ 57,620  
Adjustments to GAAP operating expenses:                        
Depreciation and amortization     448       1,289       982       2,571  
Fair value adjustments to contingent consideration     90       (88 )     90       (88 )
Stock-based compensation     1,338       2,061       3,060       4,258  
Provision for doubtful accounts     (172 )     190       534       505  
Severance     317       1,314       317       1,635  
SEC/DOJ related legal fees     210             1,016        
Legal settlement           1,600             1,600  
Total adjustments to GAAP operating expenses     2,231       6,366       5,999       10,481  
Non-GAAP operating expenses     17,495       22,314       36,438       47,139  


Sientra, Inc.  
Reconciliation of US GAAP Operating Expenses to Non-GAAP Operating Expenses  
(In thousands)  
(Unaudited)  
                         
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2023     2022     2023     2022  
US GAAP operating expenses, as reported                        
Sales and marketing   $ 10,005     $ 13,664     $ 20,157     $ 29,252  
Research and development     2,387       2,959       5,095       6,103  
General and administrative     7,334       12,057       17,185       22,265  
Total GAAP operating expenses, as reported   $ 19,726     $ 28,680     $ 42,437     $ 57,620  
Adjustments to GAAP operating expenses:                        
Sales and marketing     298       1,681       912       2,425  
Research and development     158       97       323       402  
General and administrative     1,775       4,588       4,764       7,654  
Total adjustments to GAAP operating expenses     2,231       6,366       5,999       10,481  
Non-GAAP operating expenses                        
Sales and marketing     9,707       11,983       19,245       26,827  
Research and development     2,229       2,862       4,772       5,701  
General and administrative     5,559       7,469       12,421       14,611  
Total Non-GAAP operating expenses   $ 17,495     $ 22,314     $ 36,438     $ 47,139  
                         
                         
                         
                         
                         
Sientra, Inc.  
Free Cash Flow  
(In thousands)  
(Unaudited)  
                         
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2023     2022     2023     2022  
                         
Net cash flow used in operating activities - continuing operations   $ (525 )   $ (12,986 )   $ (6,793 )   $ (30,845 )
Purchases of property and equipment     (168 )     (246 )     (786 )     (813 )
Free cash flow   $ (693 )   $ (13,232 )   $ (7,579 )   $ (31,658 )

 


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