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, 2022.
Second Quarter 2022 Summary & Operating Highlights:
- Total revenue of $27.3 million, up $1.4 million, or 6%, year-over-year.
- U.S. revenue up 7% year-over-year.
- Total subscription and system revenue up 9% year-over-year.
- GAAP net loss attributable to stockholders of $10.6 million, compared to net income of $0.4 million last year.
- Second quarter 2021 GAAP net loss attributable to stockholders included approximately $6 million of non-cash gain and bad debt recovery which did not benefit GAAP net loss attributable to stockholders in the second quarter of 2022.
- Adjusted EBITDA loss of $5.5 million, compared to Adjusted EBITDA income of $0.5 million last year.
- On April 25, 2022, the Company announced the first patient treatment in a U.S. Investigational Device Exemption (IDE) clinical study evaluating the safety and efficacy of the Company’s Aime™ next generation robotic technology for the treatment of moderate to severe facial wrinkles. Aime is a robotic platform designed to provide micro-coring for medical aesthetic applications.
- On April 28, 2022, the Company announced that it received a 510(k) clearance from the U.S. Food and Drug Administration (“FDA”) to market the Venus BlissMAX device (“BlissMAX”) with an expanded indication for use in new areas of the body and an increase in RF energy output.
Management Commentary:
“Second quarter total revenue results were below expectations driven by significant sales force disruption in a key market in the U.S.,” said Domenic Serafino, Chief Executive Officer of Venus Concept. “We experienced continued strong demand for Bliss and BlissMAX in our ‘Body Franchise’ and our ARTAS iX and Neograft in our ‘Hair Restoration Franchise’, and our sales team in the rest of the U.S. executed our focused sales strategy well, delivering 24% growth in subscription and system sales to U.S. customers in their respective regions in Q2.”
Mr. Serafino continued: “We have implemented a series of strategic initiatives and expect our focused commercial strategy, including prioritizing cash sales, and streamlined global operations to enhance the cash flow profile of our business and accelerate our path to long term profitability. We are also evaluating non-dilutive financing opportunities to enhance our cash position and balance sheet in the near term.”
Second Quarter and First Six Months of 2022 Revenue by Region and by Product Type:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||||||
| (dollars in thousands) | (dollars in thousands) | |||||||||||||||||||||||||||||
| Revenues by region: | ||||||||||||||||||||||||||||||
| United States | $ | 13,417 | $ | 12,571 | $ | 26,546 | $ | 23,086 | ||||||||||||||||||||||
| International | 13,849 | 13,257 | 27,126 | 25,339 | ||||||||||||||||||||||||||
| Total revenue | $ | 27,266 | $ | 25,828 | $ | 53,672 | $ | 48,425 | ||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||||||||
| (dollars in thousands) | (dollars in thousands) | |||||||||||||||||||||||||||||||
| Revenues by product: | ||||||||||||||||||||||||||||||||
| Subscription—Systems | $ | 11,874 | $ | 12,787 | $ | 22,297 | $ | 21,324 | ||||||||||||||||||||||||
| Products—Systems | 11,548 | 8,694 | 23,422 | 18,504 | ||||||||||||||||||||||||||||
| Products—Other (1) | 3,080 | 3,314 | 6,577 | 6,369 | ||||||||||||||||||||||||||||
| Services (2) | 764 | 1,033 | 1,376 | 2,228 | ||||||||||||||||||||||||||||
| Total revenue | $ | 27,266 | $ | 25,828 | $ | 53,672 | $ | 48,425 | ||||||||||||||||||||||||
| (1) | Products-Other include ARTAS procedure kits and other consumables. | |
| (2) | Services include extended warranty sales and VeroGrafters technician services. VeroGrafters technician services were discontinued in the fourth quarter of 2021. |
Second Quarter 2022 Financial Results:
| Three Months Ended June 30, | ||||||||||||||||||||||||
| 2022 | 2021 | Change | ||||||||||||||||||||||
| (in thousands, except percentages) | $ | % of Total | $ | % of Total | $ | % | ||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||
| Subscription—Systems | $ | 11,874 | 43.5 | $ | 12,787 | 49.5 | $ | (913 | ) | (7.1 | ) | |||||||||||||
| Products—Systems | 11,548 | 42.4 | 8,694 | 33.7 | 2,854 | 32.8 | ||||||||||||||||||
| Products—Other | 3,080 | 11.3 | 3,314 | 12.8 | (234 | ) | (7.1 | ) | ||||||||||||||||
| Services | 764 | 2.8 | 1,033 | 4.0 | (269 | ) | (26.0 | ) | ||||||||||||||||
| Total | $ | 27,266 | 100.0 | $ | 25,828 | 100.0 | $ | 1,438 | 5.6 | |||||||||||||||
Total revenue for the second quarter of 2022 increased $1.4 million, or 5.6%, to $27.3 million, compared to the second quarter of 2021. The increase in total revenue, by region, was driven by a 7% increase year-over-year in United States revenue and a 5% year-over-year increase in international revenue. The increase in total revenue, by product category, was driven by a 33% increase in systems revenue, partially offset by a 7% decrease in lease revenue, a 26% decrease in services revenue and a 7% decrease in products revenue. The percentage of total systems revenue derived from the Company’s subscription model was approximately 51% this quarter, compared to 60% in the prior year period.
Gross profit for the second quarter of 2022 increased $0.3 million, or 2%, to $19.0 million compared to the second quarter of 2021. Gross margin was 69.9%, compared to 72.5% of revenue for the second quarter of 2021. The change in gross profit was primarily driven by an increase in revenue in the United States driven by the Company’s hair restoration business. The change in gross margin was driven by changes in foreign currencies which depreciated relative to the U.S. dollar in the period.
Operating expenses for the second quarter of 2022 were $26.2 million, compared to $17.2 million for the second quarter of 2021. The change in total operating expenses was driven by an increase of $6.4 million, or 82%, in general and administrative expenses and an increase of $0.4 million, or 20%, in research and development expenses, offset partially by a decrease of $0.6 million, or 6%, in sales and marketing expenses. In addition, in the three months ended June 30, 2021, operating expenses included a bad debt recovery of $3.2 million due to a reactivation of accounts impacted by COVID-19 which did not repeat in the three months ended June 30, 2022. The prior year period also included a $2.8 million non-cash gain on forgiveness of government assistance loans which did not repeat in the three months ended June 30, 2022.
Operating loss for the second quarter of 2022 was $7.1 million, compared to operating income of $1.5 million for the second quarter of 2021.
Net loss attributable to stockholders for the second quarter of 2022 was $10.6 million, or $0.16 per share, compared to net income of $0.4 million for the second quarter of 2021. Adjusted EBITDA loss for the second quarter of 2022 was $5.5 million, compared to adjusted EBITDA income of $0.5 million for the second quarter of 2021.
Fiscal Year 2022 Revenue Guidance:
The Company now expects total revenue for the twelve months ending December 31, 2022 in the range of $110 million to $113 million, representing an increase of approximately 4% to 7%, year-over-year, compared to total revenue of $105.6 million for the twelve months ended December 31, 2021.