SEC Filing | Venus Concept

View:

Download DOC

Download PDF

Download XLS

Download XBRL

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 14, 2023

VENUS CONCEPT INC.

(Exact name of registrant as specified in its charter)

Delaware	001-38238	06-1681204
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification Number)

235 Yorkland Blvd, Suite 900

Toronto, Ontario M2J 4Y8

(Address of principal executive offices, including Zip Code)

Registrant’s telephone number, including area code: (877) 848-8430

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.0001 par value per share		VERO		The Nasdaq Capital Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02.

Results of Operations and Financial Condition.

On August 14, 2023, Venus Concept Inc. issued a press release relating to its financial results for the three and six months ended June 30, 2023. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.

The information in this Item 2.02 of this Form 8-K and the Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01.

Financial Statements and Exhibits.

Exhibit No.		Description

99.1		Press release dated August 14, 2023.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	VENUS CONCEPT INC.

Date: August 14, 2023	By:	/s/ Domenic Della Penna
		Domenic Della Penna
		Chief Financial Officer

Exhibit 99.1

Venus Concept Announces Second Quarter of Fiscal Year 2023 Financial Results

TORONTO, August 14, 2023 (GLOBE NEWSWIRE) – Venus Concept Inc. (“Venus Concept” or the “Company”) (NASDAQ: VERO), a global medical aesthetic technology leader, announced financial results for the three and six months ended June 30, 2023.

Second Quarter 2023 Summary & Recent Progress:

•	Company continues to execute against Transformational Plan

➢

Total revenue of $20.1 million, down $7.2 million, or 26%, year-over-year

➢

Cash system revenue represented approximately 74% of total systems and subscriptions revenue, compared to 49% in the prior year period

➢

Operating expenses of $20 million, including approximately $0.4 million of costs related to restructuring activities, down $6.2 million, or 24%, year-over-year

➢

Cash used in operations of $2.1 million, down 71% year-over-year

➢

GAAP net loss attributable to stockholders of $7.4 million, down $3.2 million, or 30% year-over-year and down $2.3 million, or 24%, quarter-over-quarter

➢

Adjusted EBITDA loss of $4.0 million, down $1.5 million, or 27% year-over-year

•	On May 11, 2023, the Company announced a 1-for-15 reverse stock split of the Company’s issued and outstanding common stock, which began trading on The Nasdaq Capital Market on a split-adjusted basis at the open of trading on May 12, 2023.

•	On May 15, 2023, the Company announced that it entered into a stock purchase agreement with funds affiliated with EW Healthcare Partners for a multi-tranche private placement of senior convertible preferred stock for maximum gross proceeds of up to $9,000,000.

•

On July 13, 2023, the Company announced the establishment of a medical advisory board for AI.ME, its next generation robotic platform. The medical advisory board will provide strategic input, guidance, and clinical recommendation regarding AI.ME, which received its first 510(k) clearance from the U.S. Food and Drug Administration in December 2022 for fractional skin resurfacing.

Management Commentary:

“Our second quarter revenue results were in-line with the Company’s expectations,” said Rajiv De Silva, Chief Executive Officer of Venus Concept. “2023 is a year of re-focusing the business and repositioning Venus Concept to enhance the cash flow profile of the Company and to accelerate the path to long-term, sustainable, profitability and growth. To that end, we are encouraged by the continued progress towards our restructuring activities designed to improve our operations and cost structure, and our continued strategic shift to prioritize cash system sales which together drove a 73% year-over-year reduction in cash used in operations in Q2. We remain highly focused on maximizing our capital resources as we work to manage our near-to-intermediate-term debt obligations and to further enhance the Company’s foundation for achieving our longer-term goals. We value the constructive approach that our primary lenders are taking in supporting the company through this transition.”

Second Quarter of 2023 Revenue by Region and by Product Type:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(dollars in thousands)				(dollars in thousands)
Revenues by region:
United States	$	9,757	$	13,416	$	20,498	$	26,545
International		10,318		13,850		20,108		27,127
Total revenue	$	20,075	$	27,266	$	40,606	$	53,672

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(dollars in thousands)				(dollars in thousands)
Revenues by product:
Subscription—Systems	$	4,311	$	11,874	$	10,072	$	22,297
Products—Systems		12,313		11,548		23,377		23,422
Products—Other (1)		2,586		3,080		5,533		6,577
Services		865		764		1,624		1,376
Total revenue	$	20,075	$	27,266	$	40,606	$	53,672

(1) Products-Other include ARTAS procedure kits, Viva tips and other consumables.

Second Quarter 2023 Financial Results:

	Three Months Ended June 30,
	2023				2022				Change
(in thousands, except percentages)	$		% of Total		$		% of Total		$			%
Revenues:
Subscription—Systems	$	4,311		21.5	$	11,874		43.5	$	(7,563	)		(63.7	)
Products—Systems		12,313		61.3		11,548		42.4		765			6.6
Products—Other		2,586		12.9		3,080		11.3		(494	)		(16.0	)
Services		865		4.3		764		2.8		101			13.2
Total	$	20,075		100.0	$	27,266		100.0	$	(7,191	)		(26.4	)

Total revenue for the second quarter of 2023 decreased $7.2 million, or 26%, to $20.1 million, compared to the second quarter of 2022. The decrease in total revenue, by region, was driven by a 27% decrease year-over-year in United States revenue and a 26% decrease year-over-year in international revenue. The decrease in total revenue, by product category, was driven by a 64% decrease in lease revenue and a 16% decrease in products - other revenue, offset partially by a 7% increase in products – systems revenue and a 13% increase in services revenue. The percentage of total systems revenue derived from the Company’s subscription model was approximately 26% in the second quarter of 2023, compared to 51% in the prior year period.

Gross profit for the second quarter of 2023 decreased $4.8 million, or 25%, to $14.2 million compared to the second quarter of 2022. The change in gross profit was driven primarily by the year-over-year decline in revenue in the United States and International markets driven by the strategic decision to deemphasize subscription sales and the exit from unprofitable direct markets. Gross margin was 70.8% of revenue, compared to 69.9% of revenue for the second quarter of 2022. The change in gross margin was primarily due to changes in product mix, including lower ARTAS systems sales which have a lower gross margin than our energy-based devices, and a $0.2 million foreign exchange headwind as a result of certain foreign currencies depreciating relative to the U.S. dollar.

Operating expenses for the second quarter of 2023 decreased $6.2 million, or 24%, to $20.0 million, compared to the second quarter of 2022. The change in total operating expenses was driven by a decrease of $3.3 million, or 26%, in general and administrative expenses and a decrease of $2.1 million, or 20%, in sales and marketing expenses. Second quarter of 2023 general and administrative expenses include approximately $0.4 million of costs related to restructuring activities designed to improve the Company's operations and cost structure.

Operating loss for the second quarter of 2023 was $5.8 million, compared to operating loss of $7.1 million for the second quarter of 2022.

Net loss attributable to stockholders for the second quarter of 2023 was $7.4 million, or $1.35 per share, compared to net loss of $10.6 million, or $2.47 per share for the second quarter of 2022. Adjusted EBITDA loss for the second quarter of 2023 was $4.0 million, compared to adjusted EBITDA loss of $5.5 million for the second quarter of 2022.

As of June 30, 2023, the Company had cash and cash equivalents of $6.1 million and total debt obligations of approximately $78.4 million, compared to $11.6 million and $77.7 million, respectively, as of December 31, 2022.

Fiscal Year 2023 Revenue Guidance:

The Company continues to expect total revenue for the twelve months ending December 31, 2023 in the range of $90.0 million to $95.0 million, representing a decrease in the range of approximately 9.5% to 4.5%, year-over-year, compared to total revenue of $99.5 million for the twelve months ended December 31, 2022.

Conference Call Details:

Management will host a conference call at 5:00 p.m. Eastern Time on August 14, 2023 to discuss the results of the quarter with a question-and-answer session. Those who would like to participate may dial 877-407-2991 (201-389-0925 for international callers) and provide access code 13739854. A live webcast of the call will also be provided on the investor relations section of the Company's website at ir.venusconcept.com.

For those unable to participate, a replay of the call will be available for two weeks at: 877-660-6853 (201-612-7415 for international callers); access code 13739854. The webcast will be archived at ir.venusconcept.com.

About Venus Concept

Venus Concept is an innovative global medical aesthetic technology leader with a broad product portfolio of minimally invasive and non-invasive medical aesthetic and hair restoration technologies and reach in over 60 countries and 14 direct markets. Venus Concept’s product portfolio consists of aesthetic device platforms, including Venus Versa, Venus Legacy, Venus Velocity, Venus Fiore, Venus Viva, Venus Glow, Venus Bliss, Venus BlissMAX, Venus Epileve, Venus Viva MD and AI.ME. Venus Concept’s hair restoration systems include NeoGraft^® and the ARTAS iX^® Robotic Hair Restoration system. Venus Concept has been backed by leading healthcare industry growth equity investors including EW Healthcare Partners (formerly Essex Woodlands), HealthQuest Capital, Longitude Capital Management, Aperture Venture Partners, and Masters Special Situations.

Cautionary Statement Regarding Forward-Looking Statements

This communication 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. Any statements contained herein that are not of historical facts may be deemed to be forward-looking statements. In some cases, you can identify these statements by words such as such as “anticipates,” “believes,” “plans,” “expects,” “projects,” “future,” “intends,” “may,” “should,” “could,” “estimates,” “predicts,” “potential,” “continue,” “guidance,” and other similar expressions that are predictions of or indicate future events and future trends. These forward-looking statements include, but are not limited to, statements about our financial performance and metrics; the growth in demand for our systems and other products and sustainability thereof; and the efficacy of the restructuring plan, workforce reduction and management transition. These forward-looking statements are based on current expectations, estimates, forecasts, and projections about our business and the industry in which the Company operates and management's beliefs and assumptions and are not guarantees of future performance or developments and involve known and unknown risks, uncertainties, and other factors that are in some cases beyond our control. As a result, any or all of our forward-looking statements in this communication may turn out to be inaccurate. Factors that could materially affect our business operations and financial performance and condition include, but are not limited to, general economic conditions and involve risks and uncertainties that may cause results to differ materially from those set forth in the statements and those risks and uncertainties described under Part II Item 1A—“Risk Factors” in our Quarterly Reports on Form 10-Q and Part I Item 1A—“Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. You are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on the forward-looking statements. The forward-looking statements are based on information available to us as of the date of this communication. Unless required by law, the Company does not intend to publicly update or revise any forward-looking statements to reflect new information or future events or otherwise.

Investor Relations Contact:

ICR Westwicke on behalf of Venus Concept:

Mike Piccinino, CFA

VenusConceptIR@westwicke.com

Venus Concept Inc.

Condensed Consolidated Balance Sheets

(In thousands of U.S. dollars, except share and per share data)

	June 30, 2023			December 31, 2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	6,122		$	11,569
Accounts receivable, net of allowance of $13,233 and $13,619 as of June 30, 2023, and December 31, 2022, respectively		37,520			37,262
Inventories		22,936			23,906
Prepaid expenses		1,481			1,688
Advances to suppliers		5,749			5,881
Other current assets		1,984			3,702
Total current assets		75,792			84,008
LONG-TERM ASSETS:
Long-term receivables, net		12,082			20,044
Deferred tax assets		876			947
Severance pay funds		586			741
Property and equipment, net		1,640			1,857
Operating right-of-use assets, net		4,983			5,862
Intangible assets		10,197			11,919
Total long-term assets		30,364			41,370
TOTAL ASSETS	$	106,156		$	125,378
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Trade payables	$	8,293		$	8,033
Accrued expenses and other current liabilities		13,063			16,667
Current portion of long-term debt		7,735			7,735
Income taxes payable		434			117
Unearned interest income		1,915			2,397
Warranty accrual		880			1,074
Deferred revenues		1,050			1,765
Operating lease liabilities		1,571			1,807
Total current liabilities		34,941			39,595
LONG-TERM LIABILITIES:
Long-term debt		70,683			70,003
Income tax payable		385			374
Deferred tax liabilities		6			—
Accrued severance pay		696			867
Unearned interest revenue		552			957
Warranty accrual		377			408
Operating lease liabilities		3,666			4,221
Other long-term liabilities		392			215
Total long-term liabilities		76,757			77,045
TOTAL LIABILITIES		111,698			116,640
Commitments and Contingencies (Note 9)
STOCKHOLDERS’ EQUITY (Note 14):
Common Stock, $0.0001 par value: 300,000,000 shares authorized as of June 30, 2023 and December 31, 2022; 5,526,481 and 5,141,689 issued and outstanding as of June 30, 2023, and December 31, 2022, respectively		30			29
Additional paid-in capital		235,468			232,169
Accumulated deficit		(241,719	)		(224,105	)
TOTAL STOCKHOLDERS’ EQUITY		(6,221	)		8,093
Non-controlling interests		679			645
		(5,542	)		8,738
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	106,156		$	125,378

The accompanying notes are an integral part of these consolidated financial statements.

Venus Concept Inc.

Condensed Consolidated Statements of Operations

(In thousands of U.S. dollars, except per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Revenue
Leases	$	4,311		$	11,874		$	10,072		$	22,297
Products and services		15,764			15,392			30,534			31,375
		20,075			27,266			40,606			53,672
Cost of goods sold:
Leases		721			2,761			2,450			5,461
Products and services		5,134			5,459			10,237			11,402
		5,855			8,220			12,687			16,863
Gross profit		14,220			19,046			27,919			36,809
Operating expenses:
Selling and marketing		8,380			10,523			16,412			21,607
General and administrative		9,633			12,937			20,818			24,409
Research and development		1,965			2,712			4,602			5,355
Total operating expenses		19,978			26,172			41,832			51,371
(Loss) from operations		(5,758	)		(7,126	)		(13,913	)		(14,562	)
Other expenses:
Foreign exchange loss (gain)		(178	)		2,370			(530	)		2,375
Finance expenses		1,553			1,034			3,061			1,957
(Gain) loss on disposal of subsidiaries		(1	)		-			76			-
Loss before income taxes		(7,132	)		(10,530	)		(16,520	)		(18,894	)
Income tax (benefit) expense		189			(18	)		424			254
Net loss		(7,321	)		(10,512	)		(16,944	)		(19,148	)
Net loss attributable to stockholders of the Company		(7,409	)		(10,559	)		(17,066	)		(19,178	)
Net income attributable to non-controlling interest		88			47			122			30

Net loss per share:
Basic	$	(1.35	)	$	(2.47	)	$	(3.19	)	$	(4.49	)
Diluted	$	(1.35	)	$	(2.47	)	$	(3.19	)	$	(4.49	)
Weighted-average number of shares used in per share calculation:
Basic		5,471			4,276			5,355			4,271
Diluted		5,471			4,276			5,355			4,271

Venus Concept Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

	Six Months Ended June 30,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(16,944	)	$	(19,148	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		2,032			2,212
Stock-based compensation		850			1,001
Provision for expected credit losses		977			3,521
Provision for inventory obsolescence		343			862
Finance expenses and accretion		680			182
Deferred tax expense (recovery)		78			(283	)
Loss on sale of subsidiary		76			-
Loss on disposal of property and equipment		-			31
Changes in operating assets and liabilities:
Accounts receivable short-term and long-term		6,153			(2,492	)
Inventories		627			(2,682	)
Prepaid expenses		207			568
Advances to suppliers		132			(3,797	)
Other current assets		1,642			(115	)
Operating right-of-use assets, net		879			6,057
Other long-term assets		(268	)		(79	)
Trade payables		259			2,361
Accrued expenses and other current liabilities		(4,185	)		(1,969	)
Current operating lease liabilities		(236	)		(1,764	)
Severance pay funds		154			2
Unearned interest income		(887	)		284
Long-term operating lease liabilities		(554	)		(4,293	)
Other long-term liabilities		(25	)		(172	)
Net cash used in operating activities		(8,010	)		(19,713	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(92	)		(251	)
Net cash used in investing activities		(92	)		(251	)
CASH FLOWS FROM FINANCING ACTIVITIES:
2023 Multi-Tranche Private Placement, net of costs of $367		1,633			—
Proceeds from exercise of options		—			23
Proceeds from issuance of common stock		1,109			272
Repayment of government assistance loans		—			(543	)
Dividends from subsidiaries paid to non-controlling interest		(87	)		(124	)
Net cash (used in) provided by financing activities		2,655			(372	)
NET DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		(5,447	)		(20,336	)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH — Beginning of period		11,569			30,876
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH — End of period	$	6,122		$	10,540
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for income taxes	$	18		$	224
Cash paid for interest	$	2,381		$	1,775

Use of Non-GAAP Financial Measures

Adjusted EBITDA is a non-GAAP measure defined as net income (loss) before foreign exchange loss (gain), financial expenses, income tax expense (benefit), depreciation and amortization, stock-based compensation and non-recurring items for a given period. Adjusted EBITDA is not a measure of our financial performance under U.S. GAAP and should not be considered an alternative to net income or any other performance measures derived in accordance with U.S. GAAP. Accordingly, you should consider Adjusted EBITDA along with other financial performance measures, including net income, and our financial results presented in accordance with U.S. GAAP. Other companies, including companies in our industry, may calculate Adjusted EBITDA differently or not at all, which reduces its usefulness as a comparative measure. We understand that although Adjusted EBITDA is frequently used by securities analysts, lenders and others in their evaluation of companies, Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under U.S. GAAP. Some of these limitations are: Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments; Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; and although depreciation and amortization are non-cash charges, the assets being depreciated will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements.

We believe that Adjusted EBITDA is a useful measure for analyzing the performance of our core business because it facilitates operating performance comparisons from period to period and company to company by backing out potential differences caused by changes in foreign exchange rates that impact financial assets and liabilities denominated in currencies other than the U.S. dollar, tax positions (such as the impact on periods or companies of changes in effective tax rates), the age and book depreciation of fixed assets (affecting relative depreciation expense), amortization of intangible assets, stock-based compensation expense (because it is a non-cash expense) and non-recurring items as explained below.

The following reconciliation of net (loss) income to Adjusted EBITDA for the periods presented:

Venus Concept Inc.

Reconciliation of Net loss to Non-GAAP Adjusted EBITDA

	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Reconciliation of net loss to adjusted EBITDA	(in thousands)						(in thousands)
Net loss	$	(7,321	)	$	(10,512	)	$	(16,944	)	$	(19,148	)
Foreign exchange loss (gain)		(178	)		2,370			(530	)		2,375
(Gain) loss on disposal of subsidiaries		(1	)		—			76			—
Finance expenses		1,553			1,034			3,061			1,957
Income tax expense (benefit)		189			(18	)		424			254
Depreciation and amortization		1,010			1,111			2,032			2,212
Stock-based compensation expense		369			558			850			1,001
Other adjustments (1)		412			—			1,330			—
Adjusted EBITDA	$	(3,967	)	$	(5,457	)	$	(9,701	)	$	(11,349	)

(1) For the three and six months ended June 30, 2023, the other adjustments primarily represent restructuring activities designed to improve the Company's operations and cost structure.