Asensus surgical, inc. reports operating and financial results for the fourth quarter and full year 2021
Research triangle park, n.c.--(business wire)--asensus surgical, inc. (nyse american: asxc), a medical device company that is digitizing the interface between the surgeon and the patient to pioneer a new era of performance-guided surgery™, today announced its operating and financial results for the fourth quarter and full year 2021. fourth quarter highlights over 500 procedures were performed globally during the quarter, representing growth of 30% over the fourth quarter 2020 six senhance surgical programs were initiated during the quarter fourth quarter revenue of $2.5 million year-end highlights over 2,100 procedures performed globally, representing 44% growth compared to 2020 10 senhance surgical programs were initiated received four regulatory clearances: fda 510(k) clearance for expansion of machine vision capabilities for the intelligent surgical unit™ (isu™) fda 510(k) clearance for articulating instruments expanded fda 510(k) clearance for general surgery indication ce mark approval for the isu fda 510(k) clearance for expansion of machine vision capabilities for the intelligent surgical unit™ (isu™) fda 510(k) clearance for articulating instruments expanded fda 510(k) clearance for general surgery indication ce mark approval for the isu full year 2021 revenue of $8.2 million, representing growth of 159% over the prior year the company had cash, cash equivalents, short-term and long-term investments, excluding restricted cash, of approximately $135.8 million at december 31, 2021 "despite the macro headwinds that persisted throughout the year, we were able to significantly grow our active installed base, drive the highest procedure volumes in senhance’s commercial history, and make great strides with the development and expansion of our portfolio. we continue to believe that there is a critical need to elevate the way surgery is performed globally by bringing clinical intelligence to the or, and the growth we achieved in 2021 validates the clinical utility senhance delivers to surgeons and hospitals,” said anthony fernando, asensus surgical president and ceo. “as we look towards 2022, we expect to continue to drive the global adoption of senhance through our market development and portfolio expansion efforts while at the same time focusing on the ongoing development of the platform’s innovative digital capabilities to deliver on the promise of performance-guided surgery." upcoming 2022 milestones for the full year 2022, the company expects to initiate 10 - 12 new senhance surgical systems. during the second half of 2022, the company expects to achieve the following commercial and regulatory milestones: full scale commercialization of articulating instruments globally file a 510(k) for fda clearance of senhance for pediatric indication receive ce mark for expanded machine vision capabilities for the isu market development 2021 senhance program initiations throughout 2021, the company completed 10 senhance surgical program initiations: one in the us, six in emea, and three in asia. during the fourth quarter of 2021, the company initiated six programs, one in the us, three in emea, and two in asia. procedure volumes in 2021, surgeons performed over 2,100 procedures utilizing the senhance system, representing a 44% increase over the previous year. compared to 2020, us-based procedure volumes increased 95%, emea increased 42%, and asia increased 18%. these procedures included general surgery, gynecology, urology, bariatric, and colorectal surgical cases. clinical validation during 2021, there were 21 peer-reviewed clinical papers published providing further support for the clinical utility of the senhance system across a variety of surgical specialties. portfolio expansion performance-guided surgery (pgs) as an organization, the company’s goal is to revolutionize the way surgery is performed. the fact that there are complications with one in five surgeries is unacceptable, and, more importantly, avoidable. the company is helping to unlock clinical intelligence and capabilities to reduce surgical variability and the complications associated with it. pgs builds upon the foundation of digital laparoscopy by adding machine vision, augmented intelligence, and deep learning capabilities. these capabilities shift the promise of consistently superior surgery into practice regardless of a surgeon’s experience or skill level by guiding improved decision making, enriching collaboration, and enhancing predictability. expanded global isu machine vision capabilities in september 2021, the company announced that it had received 510(k) clearance from the fda for an expansion of machine vision capabilities on the previously cleared isu. the isu is utilized with the senhance system which enables digital laparoscopy. the initial features of the isu enable machine vision-driven control of the camera for a surgeon by responding to commands and recognizing certain objects and locations in the surgical field, and allow a surgeon to change the visualized field of view using the movement of their instruments. the newest isu features expanded upon these capabilities and introduced more advanced features including: real-time 3d measurement, digital tagging, image enhancement, and enhanced camera control based on real-time data from anatomical structures while performing surgery. this is the first time any of these features will be clinically available in soft-tissue abdominal surgery. articulating instrument clearance in july 2021, the company announced that it had received 510(k) clearance for 5mm articulating instruments, which offer better access to difficult-to-reach areas of the anatomy. general surgery indication expansion in march 2021, the company announced that it had received an additional fda clearance for the senhance surgical system which allows for indication expansion in general surgery in the us. ce mark for intelligent surgical unit in january 2021, the company announced that it had received ce mark approval for the isu that enables machine vision capabilities on the senhance system. this approval will provide senhance digital laparoscopy programs in europe access to this technology. fourth quarter financial results for the three months ended december 31, 2021, the company reported revenue of $2.5 million as compared to revenue of $1.1 million in the three months ended december 31, 2020. revenue in the fourth quarter of 2021 included $1.7 million in system revenue, $0.5 million in instruments and accessories, and $0.3 million in services. for the three months ended december 31, 2021, total operating expenses were $15.9 million, as compared to $14.2 million, in the three months ended december 31, 2020. for the three months ended december 31, 2021, net loss was $15.9 million, or $0.07 per share, as compared to a net loss of $13.8 million, or $0.13 per share, in the three months ended december 31, 2020. adjusted net loss is a non-gaap financial measure. see the reconciliation of gaap to non-gaap measures below. for the three months ended december 31, 2021, the adjusted net loss was $15.7 million, or $0.07 per share, as compared to an adjusted net loss of $9.7 million, or $0.9 per share in the three months ended december 31, 2020, after adjusting for the following charges: amortization of intangible assets, change in fair value of contingent consideration, change in fair value of warrant liabilities, and restructuring and other charges, all of which are non-cash charges. balance sheet updates the company had cash, cash equivalents, short-term and long-term investments, excluding restricted cash of approximately $135.8 million as of december 31, 2021. conference call asensus surgical, inc. will host a conference call on monday, february 28, 2022, at 4:30 pm et to discuss its fourth quarter and fiscal year 2021 operating and financial results. to listen to the conference call on your telephone, please dial 1-855-327-6837 for domestic callers and 1-631-891-4304 for international callers, and reference conference id 10017809 approximately ten minutes prior to the start time. to access the live audio webcast or archived recording, use the following link https://ir.asensus.com/events-and-presentations. the replay will be available on the company’s website. about asensus surgical, inc. asensus surgical, inc. is digitizing the interface between the surgeon and patient to pioneer a new era of performance-guided surgery by unlocking clinical intelligence for surgeons to enable consistently superior outcomes and a new standard of surgery. this builds upon the foundation of digital laparoscopy with the senhance surgical system powered by the intelligent surgical unit (isu) to increase surgeon control and reduce surgical variability. with the addition of machine vision, augmented intelligence, and deep learning capabilities throughout the surgical experience, we intend to holistically address the current clinical, cognitive and economic shortcomings that drive surgical outcomes and value-based healthcare. learn more about performance-guided surgery and digital laparoscopy with the senhance surgical system here: www.senhance.com. now available for sale in the us, eu, japan, russia, and select other countries. for a complete list of indications for use, visit: www.senhance.com/indications. for more information, visit www.asensus.com. forward-looking statements this press release includes statements relating to the senhance system and our 2021 results. these statements and other statements regarding our future plans and goals constitute "forward looking statements" within the meaning of section 27a of the securities act of 1933 and section 21e of the securities exchange act of 1934, and are intended to qualify for the safe harbor from liability established by the private securities litigation reform act of 1995. such statements are subject to risks and uncertainties that are often difficult to predict, are beyond our control and which may cause results to differ materially from expectations and include whether we will be able to continue to progress our strategic plan in 2022, including achieving our commercial and regulatory milestones; whether the growth we achieved in 2021 validates the clinical utility the senhance system delivers to surgeons and hospitals; whether we can continue to drive the global adoption of senhance through our market development and portfolio expansion efforts while at the same time focusing on the ongoing development of the platform’s innovative digital capabilities to deliver on the promise of performance-guided surgery; whether we will initiate 10-12 new senhance surgical systems placements in 2022; whether we can continue to increase senhance system placements and sales; and whether we can continue to add foundational sites and receive regulatory clearances and approvals that we seek. for a discussion of the risks and uncertainties associated with the company’s business, please review our filings with the securities and exchange commission (sec). you are cautioned not to place undue reliance on these forward-looking statements, which are based on our expectations as of the date of this press release and speak only as of the origination date of this press release. we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. asensus surgical, inc. consolidated statements of operations and comprehensive loss (in thousands except per share amounts) (unaudited) three months ended years ended december 31, december 31, 2021 2020 2021 2020 revenue: product $ 2,136 $ 620 $ 6,712 $ 1,612 service 340 488 1,520 1,563 total revenue 2,476 1,108 8,232 3,175 cost of revenue: product 1,457 (99) 7,974 2,254 service 830 691 3,122 2,912 total cost of revenue 2,287 592 11,096 5,166 gross profit (loss) 189 516 (2,864 ) (1,991 ) operating expenses: research and development 6,575 3,752 19,348 16,621 sales and marketing 3,229 2,774 13,395 13,064 general and administrative 5,926 3,712 19,323 14,137 amortization of intangible assets 2,721 2,837 11,254 10,801 change in fair value of contingent consideration (2,578) 1,154 (1,565) 2,924 restructuring and other charges — (8) — 851 total operating expenses 15,873 14,221 61,755 58,398 operating loss (15,684 ) (13,705 ) (64,619 ) (60,389 ) other income (expense): gain on extinguishment of debt — — 2,847 — change in fair value of warrant liabilities — (130) (1,981 ) (336 ) interest income 337 2 590 35 interest expense (293 ) (19) (370 ) (19 ) employee retention tax credit — — 1,311 — other expense, net (12) (67) (15 ) (119 ) total other income (expense), net 32 (214) 2,382 (439 ) loss before income taxes (15,652 ) (13,919 ) (62,237 ) (60,828 ) income tax (expense) benefit (229 ) 130 (225 ) 1,516 net loss (15,881 ) (13,789 ) (62,462 ) (59,312 ) deemed dividend related to beneficial conversion feature of preferred stock — — — (412 ) deemed dividend related to conversion of preferred stock into common stock — — — (299 ) net loss attributable to common stockholders (15,881 ) (13,789 ) (62,462 ) (60,023 ) comprehensive loss: net loss (15,881 ) (13,789 ) (62,462 ) (59,312 ) foreign currency translation (loss) gain (588) 2,147 (2,985 ) 4,338 unrealized loss on available-for-sale investments (194) — (247 ) — comprehensive loss $ (16,663 ) $ (11,642 ) $ (65,694 ) $ (54,974 ) net loss per common share attributable to common stockholders – basic and diluted $ (0.07 ) $ (0.13 ) $ (0.28 ) $ (0.85 ) weighted average number of shares used in computing net loss per common share – basic and diluted 234,851 103,783 226,960 70,809 asensus surgical, inc. consolidated balance sheets (in thousands, except share amounts) (unaudited) december 31, december 31, 2021 2020 assets current assets: cash and cash equivalents $ 18,129 $ 16,363 short-term investments, available-for-sale 80,262 — accounts receivable, net 749 1,115 inventories 8,634 10,034 prepaid expenses 3,255 3,535 employee retention tax credit receivable 1,311 — other current assets 957 2,966 total current assets 113,297 34,013 restricted cash 1,154 1,166 long-term investments, available-for-sale 37,435 — inventories, net of current portion 7,074 8,813 property and equipment, net 10,971 10,342 intellectual property, net 9,892 22,267 net deferred tax assets 288 307 operating lease right-of-use assets, net 5,348 1,164 other long-term assets 1,014 186 total assets $ 186,473 $ 78,258 liabilities and stockholders’ equity current liabilities: accounts payable $ 3,448 $ 1,965 accrued expenses 5,176 5,615 operating lease liabilities – current portion 683 686 deferred revenue 543 789 notes payable – current portion, net of debt discount — 1,228 total current liabilities 9,850 10,283 long term liabilities: contingent consideration 2,371 3,936 noncurrent operating lease liabilities 5,006 628 notes payable, less current portion — 1,587 warrant liabilities — 255 total liabilities 17,227 16,689 commitments and contingencies stockholders’ equity common stock $0.001 par value, 750,000,000 shares authorized at december 31, 2021 and 2020; 235,218,552 and 116,231,072 shares issued and outstanding at december 31, 2021 and 2020, respectively 235 116 preferred stock, $0.01 par value, 25,000,000 shares authorized, no shares issued and outstanding at december 31, 2021 and 2020, respectively — — additional paid-in capital 954,649 781,397 accumulated deficit (785,374 ) (722,912 ) accumulated other comprehensive income (264 ) 2,968 total stockholders’ equity 169,246 61,569 total liabilities and stockholders’ equity $ 186,473 $ 78,258 asensus surgical, inc. consolidated statements of cash flows (in thousands) (unaudited) years ended december 31, 2021 2020 operating activities: net loss $ (62,462) $ (59,312) adjustments to reconcile net loss to net cash and cash equivalents used in operating activities: depreciation 2,857 2,898 amortization of intangible assets 11,254 10,801 amortization of discounts and premiums on investments, net 409 — stock-based compensation 9,429 7,911 gain on extinguishment of debt (2,847) — deferred tax expense (benefit) 225 (1,516) bad debt expense 144 — change in inventory reserves (492) (3,034) change in fair value of warrant liabilities 1,981 336 change in fair value of contingent consideration (1,565) 2,924 changes in operating assets and liabilities: accounts receivable 174 (447) inventories (611) (4,164) operating lease right-of-use assets (4,254) 1,106 prepaid expenses 146 824 employee retention tax credit receivable (1,311) — other current and long-term assets 902 366 accounts payable 1,614 (1,758) accrued expenses (475) (2,219) deferred revenue (229) (105) operating lease liabilities 4,452 (1,203) other long-term liabilities — (83) net cash and cash equivalents used in operating activities (40,659) (46,675) investing activities: purchase of available-for-sale investments (122,330) — proceeds from maturities of available-for-sale investments 4,030 — purchase of property and equipment (1,368) (3) net cash and cash equivalents used in investing activities (119,668) (3) financing activities: proceeds from issuance of common stock, preferred stock and warrants under 2020 financing, net of issuance costs — 13,478 proceeds from issuance of common stock, net of issuance costs 131,929 33,847 proceeds from notes payable, net of issuance costs — 2,815 taxes paid related to net share settlement of vesting of restricted stock units (1,063) (36) payment of contingent consideration — (74) proceeds from exercise of stock options and warrants 30,839 3,340 net cash and cash equivalents provided by financing activities 161,705 53,370 effect of exchange rate changes on cash and cash equivalents 376 270 net increase in cash, cash equivalents and restricted cash 1,754 6,962 cash, cash equivalents and restricted cash, beginning of period 17,529 10,567 cash, cash equivalents and restricted cash, end of period $ 19,283 $ 17,529 years ended december 31, 2021 2020 supplemental disclosure for cash flow information: cash paid for taxes $ 170 $ 82 supplemental schedule of non-cash investing and financing activities: transfer of inventories to property and equipment $ 3,244 $ 8,113 right-of-use assets recognized related to new lease obligations $ 5,119 $ — reclass of warrant liability to common stock and additional paid-in-capital $ 2,236 $ — exchange of common stock for series b warrants $ — $ 2,470 transfer of in-process research and development to intellectual property $ — $ 2,425 deemed dividend related to beneficial conversion feature of preferred stock $ — $ 412 deemed dividend related to conversion of preferred stock into common stock $ — $ 299 conversion of preferred stock to common stock $ — $ 79 asensus surgical, inc. reconciliation of non-gaap measures adjusted net loss and adjusted net loss per share (in thousands except per share amounts) (unaudited) three months ended years ended december 31, december 31, 2021 2020 2021 2020 net loss attributable to common stockholders (gaap) $ (15,881 ) $ (13,789 ) $ (62,462 ) $ (60,023 ) adjustments amortization of intangible assets 2,721 2,837 11,254 10,801 change in fair value of contingent consideration (2,578 ) 1,154 (1,565 ) 2,924 change in fair value of warrant liabilities — 130 1,981 336 restructuring and other charges — (8 ) — 851 gain on extinguishment of debt — — (2,847 ) — employee retention tax credit — — (1,311 ) — deemed dividend related to beneficial conversion feature of preferred stock — — — 412 deemed dividend related to conversion of preferred stock into common stock — — — 299 adjusted net loss attributable to common stockholders (non-gaap) $ (15,738 ) $ (9,676 ) $ (54,950 ) $ (44,400 ) three months ended years ended december 31, december 31, 2021 2020 2021 2020 net loss per share attributable to common stockholders (gaap) $ (0.07 ) $ (0.13 ) $ (0.28 ) $ (0.85 ) adjustments amortization of intangible assets 0.01 0.03 0.05 0.15 change in fair value of contingent consideration (0.01 ) 0.01 (0.01 ) 0.04 change in fair value of warrant liabilities — — 0.01 — restructuring and other charges — — — 0.01 gain on extinguishment of debt — — (0.01 ) — employee retention tax credit — — — — deemed dividend related to beneficial conversion feature of preferred stock — — — 0.01 deemed dividend related to conversion of preferred stock into common stock — — — 0.01 adjusted net loss per share attributable to common stockholders (non-gaap) $ (0.07 ) $ (0.09 ) $ (0.24 ) $ (0.63 ) the non-gaap financial measures for the three months and year ended december 31, 2021 and 2020, provide management with additional insight into the company’s results of operations from period to period without non-recurring and non-cash charges, and are calculated using the following adjustments: a) intangible assets that are amortized consist of developed technology and purchased patent rights recorded at cost and amortized over 5 to 10 years. b) contingent consideration in connection with the acquisition of the senhance system in 2015 is recorded as a liability and is the estimate of the fair value of potential milestone payments related to business acquisitions. contingent consideration is measured at fair value using a monte-carlo simulation utilizing significant unobservable inputs including the probability of achieving each of the potential milestones, revenue volatility, and an estimated discount rate associated with the risks of the expected cash flows attributable to the various milestones. significant increases or decreases in any of the probabilities of success or changes in expected timelines for achievement of any of these milestones would result in a significantly higher or lower fair value of these milestones, respectively, and commensurate changes to the associated liability. the contingent consideration is revalued at each reporting period and changes in fair value are recognized in the consolidated statements of operations and comprehensive loss. c) the company’s series b warrants are measured at fair value using a simulation model which takes into account, as of the valuation date, factors including the current exercise price, the expected life of the warrant, the current price of the underlying stock, its expected volatility, holding cost and the risk-free interest rate for the term of the warrant. the warrant liability is revalued at each reporting period or upon exercise and changes in fair value are recognized in the consolidated statements of operations and comprehensive loss. d) beginning in the fourth quarter of 2019 and continuing into the first quarter of 2020, we implemented a restructuring plan to reduce operating expenses as we continue the global market development of the senhance platform. during the first quarter of 2020, the company continued the restructuring efforts with additional headcount reductions, which resulted in $0.9 million in severance costs in the year ended december 31, 2020. e) during the second quarter of 2021, the company received notification from the u.s. small business administration (the “sba”) that the principal amount of its paycheck protection program loan (“ppp loan”) of $2.8 million and related interest had been forgiven. gain on extinguishment of debt of $2.8 million was recognized for the year ended december 31, 2021, in the consolidated statement of operations and comprehensive loss. f) during the third quarter of 2021, the company submitted a refund for incurred employee payroll taxes of $1.3 million under the employee retention tax credit provision as part of the coronavirus aid, relief, and economic security act (the “cares act”). a corresponding tax credit receivable of $1.3 million was recorded on the consolidated balance sheet at december 31, 2021. g) during the first quarter of 2020, the company closed an underwritten public offering under which it issued, as part of units and the exercise of an over-allotment option, 25,367,646 series c warrants, each to acquire one share of common stock at an exercise price of $0.68 per share, and 25,367,646 series d warrants, each to acquire one share of common stock at an exercise price of $0.68 per share. the company concluded that the series c warrants and series d warrants are considered equity instruments. the fair value of the series c and series d warrants on the issuance date was determined using a black-scholes merton model. the unit proceeds were then allocated to the series a preferred stock, series c warrants, and series d warrants, respectively, based on their relative fair values. as a result, the company determined that a beneficial conversion feature was created by the difference between the effective conversion price of the series a preferred stock of $0.37 and the fair value of the company's common stock as of the issuance date of $0.42. the company therefore recorded a beneficial conversion charge of $0.4 million as an immediate charge to loss available to common stockholders for the year ended december 31, 2020. upon conversion of the series a preferred stock to common stock, an additional deemed dividend of $0.3 million was recorded as an immediate charge to loss available to common stockholders for the year ended december 31, 2020.
