News Release Details

Itamar Medical Reports First Quarter 2020 Financial Results

May 27, 2020 at 6:00 AM EDT

- First Quarter 2020 Revenues Increase 38% to $8.4 Million -

- WatchPAT™ Revenues Increase 41% to $8.2 Million -

- Company to Host Conference Call Today at 8:00 am ET, 3:00 pm IT -

CAESAREA, Israel, May 27, 2020 (GLOBE NEWSWIRE) -- Itamar Medical Ltd. (Nasdaq and TASE: ITMR), a medical technology company focused on the development and commercialization of non-invasive medical devices and solutions to aid in the diagnosis of respiratory sleep disorders, today reported unaudited financial results for the first quarter of 2020.

“Our first quarter results illustrate a strong start to the year, which has persisted into the second quarter. Despite largely COVID-19 driven weakness in sales of our WatchPAT multiuse test, we have seen a dramatic increase in sales of our WatchPAT ONE device — the only commercially available, fully disposable home sleep apnea test (HSAT) currently available on the market,” said Gilad Glick, President and Chief Executive Officer of Itamar Medical.

“This is a difficult time for our customers and the patients they treat, but we are hopeful that we can continue to play a large role in supporting the accelerated evolution to home based care using digital health platforms. Importantly, as the healthcare world likely moves to a more virtual-based environment and infection risk management stays a key priority, we see a tremendous opportunity to reach the estimated 26% of adults worldwide suffering from sleep apnea with our comprehensive sleep disorder diagnostic platform,” concluded Glick.

First Quarter 2020 Highlights

  • Revenues in the first quarter of 2020 were $8.4 million, an increase of 38% year-over-year.
     
  • U.S. WatchPAT revenues in the first quarter of 2020 were $6.1 million, an increase of 42% year-over-year.
     
  • Gross margin in the first quarter of 2020 was 76%, compared to 77% in the first quarter of 2019.
     
  • Completed a U.S. public offering in February 2020 with total gross proceeds of $40.3 million, ending the first quarter 2020 with $50.4 million in cash and cash equivalents.

Recent Business Developments and COVID-19 Updates

  • While the overall sleep testing market has contracted significantly due to the impact of the COVID-19 outbreak, Itamar Medical continued to gain significant momentum in the period from April 1, 2020 through May 22 , 2020, compared to the same period in the prior year. While the Company does not expect to offer mid-quarter financial updates going forward, this momentum was reflected in the following Key Performance Indicators (KPIs):
     
    • Grew total value of sales orders in the U.S. approximately 48% year-over-year, including a material order in connection with our contract with Lunella LLC, a wholly owned subsidiary of SoClean Inc.  and their recent launch of our WatchPAT ONE through their DTC marketing channels. Excluding this order, year-over year growth was 23% for the same period, primarily driven by WatchPAT ONE orders.
       
    • Onboarded an average of 21 new WatchPAT ONE customers per week, reaching 210 active centers (mostly sleep centers) using WatchPAT ONE as of May 22, 2020.
       
    • Increased WatchPAT ONE backlog to approximately $850,000 as of May 22, 2020, compared to approximately $550,000 as of March 31, 2020 despite consistent increases in weekly units’ shipments.
       
    • Expanded WatchPAT ONE production output to approximately 3,000 units for the week ended May 22, 2020, representing an approximately 300% increase from the pre-COVID-19 baseline level.
       
  • Received CE mark approval in Europe for the WatchPAT ONE product.
     
  • Entered into an agreement with Sleep Data Diagnostic and its virtual-care platform BetterNight and Sleep Data Holdings to simplify the process by which both sleep and non-sleep referring physicians can refer patients for sleep apnea testing with WatchPAT through Itamar Medical and BetterNight’s platforms, providing a full care pathway.
     
  • Entered into an agreement to fund a clinical study conducted at Mount Sinai Hospital in New York City to evaluate the potential impact of CPAP therapy in both sleep apnea and non-sleep apnea patients in delaying or eliminating hospitalization and/or ventilation in patients suspected or diagnosed with COVID-19.

First Quarter 2020 Financial Results

Revenues for the first quarter of 2020 increased 38% to $8.4 million, compared to $6.1 million in the same quarter in 2019. Revenue growth was driven by an increase in WatchPAT sales in the U.S. and Japan.

WatchPAT revenues for the first quarter of 2020 increased 41% to $8.2 million, compared to $5.8 million in the same quarter in 2019.

U.S. WatchPAT revenues for the first quarter of 2020 increased 42% to $6.1 million, compared to $4.3 million in the same quarter in 2019. Sales from disposables and renewable products, including WatchPAT ONE, comprised approximately 75% of WatchPAT revenues in the U.S. in the first quarter of 2020, compared to 77% in the same quarter in 2019.

Gross profit for the first quarter of 2020 increased to $6.3 million, compared to $4.7 million in the same quarter in 2019. Gross profit margin for the first quarter of 2020 was approximately 76%, compared to 77% in the same quarter in 2019. Gross margin decline was mainly driven by the increase in WatchPAT ONE sales.

Operating loss for the first quarter of 2020 was $2.0 million, compared to $1.3 million in the same quarter in 2019. The increase in operating loss was mainly due to an increase of $1.5 million in selling and marketing expenses associated with the expansion of the U.S. sales team into new geographical territories and verticals (32 territories and verticals as of March 31, 2020, compared to 23 territories and verticals as of March 31, 2019) as well as additional sales commissions resulting from the increase in revenues; an increase of $0.4 million in research and development expenses associated with an increase in personnel to support product development and clinical study programs and reimbursement consulting; and an increase of $0.4 million in general and administrative expenses mainly attributable to expenses of a publicly listed company in the U.S., partially offset by the increase in revenues.

Non-IFRS operating loss for the first quarter of 2020 was $1.4 million, compared to $1.0 million in the same quarter in 2019. Non-IFRS operating loss excludes approximately $0.6 million in share-based payments; depreciation and amortization of property and equipment and intangible assets; and change in provision for doubtful and bad debt, compared to $0.3 million of similar expenses for the same quarter in 2019 (see “Use of Non-IFRS Measures” below).

Net loss for the first quarter of 2020 was $2.0 million, compared to $1.2 million in the same quarter in 2019.

Non-IFRS net loss for the first quarter of 2020 was $1.4 million, compared to $1.2 million in the same quarter in 2019. Non-IFRS net loss excludes approximately $0.6 million in share-based payments; depreciation and amortization of property and equipment and intangible assets; change in provision for doubtful and bad debt; and gain from reevaluation of derivatives, compared to ($0.1) million of similar expenses and gains for the same quarter in 2019 (see “Use of Non-IFRS Measures” below).    

As of March 31, 2020, the Company had cash and cash equivalents of $50.4 million. This amount includes the net proceeds from the public offering completed in February 2020 of $37.1 million.

Conference Call and Webcast Information

The Company will host a conference call today at 8:00 a.m. Eastern Time, 3:00 p.m. Israel Time to review financial results and provide a corporate update.

To listen live via webcast, please visit https://www.itamar-medical.com/, or by clicking here.

To participate via phone, please use the dial in information:

U.S. toll-free: 877-407-8037
International: 201-689-8037
Israel toll-free: 1-809-406-247

Please log in approximately 10 minutes prior to the scheduled start time. An archived webcast also will be provided in the Events and Presentations section of the Company’s website.

Use of Non-IFRS Measures*

In addition to disclosing financial results prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standard Board (IASB), this press release contains Non-IFRS financial measures for operating loss, net loss and diluted loss per ADS, which are adjusted from results based on IFRS to exclude: (i) share-based payments; (ii) depreciation and amortization of property and equipment and intangible assets; (iii) change in provision for doubtful and bad debt; and, in the case of net loss (iv) gain from reevaluation of derivatives. Management believes that the Non-IFRS financial measures provided in this press release are useful to investors’ understanding and assessment of the Company’s performance. Management uses both IFRS and Non-IFRS measures when operating and evaluating the Company’s business internally and therefore decided to make these Non-IFRS adjustments available to investors. The presentation of this Non-IFRS financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with IFRS. For further details, see a reconciliation of operating loss and net loss on an IFRS basis to a Non-IFRS basis that is provided in the table that accompanies this press release.

About Itamar Medical Ltd.

Itamar Medical is a medical technology company focused on the development and commercialization of non-invasive medical devices and solutions to aid in the diagnosis of respiratory sleep disorders. Itamar Medical commercializes a digital healthcare platform to facilitate the continuum of care for effective sleep apnea management with a focus on the core sleep, cardiology and direct to consumer markets. Itamar Medical offers a Total Sleep Solution to help physicians provide comprehensive sleep apnea management in a variety of clinical environments to optimize patient care and reduce healthcare system costs. The Company’s key product, WatchPAT, is commercially available within major markets including the U.S., Japan and Europe. Itamar Medical is a public company traded on the Nasdaq and on the Tel Aviv Stock Exchanges, and is based in Caesarea, Israel with U.S. headquarters based in Atlanta, GA. For additional information visit www.itamar-medical.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and other applicable securities laws. Statements preceded by, followed by, or that otherwise include the words "believes", "expects", "anticipates", "intends", "estimates", "plans", and similar expressions or future or conditional verbs such as "will", "should", "would", "may" and "could" are generally forward-looking in nature and not historical facts. For example, when we discuss the potential increase in patients’ access to WatchPAT or the momentum gained by our business we are using forward-looking statements. Because such statements deal with future events, they are subject to various risks, uncertainties and assumptions, including events and circumstances out of Itamar Medical's control and actual results, expressed or implied by such forward-looking statements, could differ materially from Itamar Medical's current expectations. Factors that could cause or contribute to such differences include, but are not limited to, risks, uncertainties and assumptions discussed from time to time by Itamar Medical in reports filed with, or furnished to, the U.S. Securities and Exchange Commission (SEC) and the Israel Securities Authority (ISA), including the Company’s latest Form F-1 and Annual Report on Form 20-F, which are on file with the SEC (accessible at www.sec.gov) and the ISA. Except as otherwise required by law, Itamar Medical undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Company Contact
Itamar Medical Ltd.
Shy Basson
Chief Financial Officer and U. S. Chief Executive Officer
Phone: +972-4-617-7700
bshy@itamar-medical.com

Itamar Medical Investor Relations Contact (U.S.)
Leigh Salvo
Gilmartin Group
Phone: +1-415-937-5412
investors@itamar-medical.com

*   The contents of any website or hyperlinks mentioned in this press release are for informational purposes and the contents thereof are not part of this press release.


ITAMAR MEDICAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited)

 March 31, 2020
 December 31, 2019
    
 U.S. dollars in thousands
Assets     
Current assets     
Cash and cash equivalents$ 50,442  $15,115 
Trade receivables 7,106   8,384 
Other receivables 1,187   1,404 
Inventories 3,906    3,363 
Total current assets 62,641   28,266 
        
Non-current assets       
Long-term restricted deposits and prepaid expenses 457   476 
Long-term trade receivables 218   156 
Property and equipment 1,626   1,472 
Intangible assets 522   395 
Right-of-use assets 2,193   2,442 
Total non-current assets 5,016   4,941 
Total assets$67,657  $33,207 
        
Liabilities       
Current liabilities       
Short-term bank loan$5,000  $5,000 
Current maturities of lease liabilities 868   890 
Trade payables 2,968   2,028 
Other accounts payable 2,559   3,455 
Accrued expenses 964   1,317 
Provisions 324   273 
Short-term employee benefits 433   352 
Total current liabilities 13,116   13,315 
        
Non-current liabilities       
Lease liabilities, net of current maturities 1,443   1,708 
Recognized liability for defined benefit plan, net 197   260 
Other long-term liabilities 1,262   1,260 
Total non-current liabilities 2,902   3,228 
Total liabilities 16,018   16,543 
        
Equity        
Ordinary share capital 1,132   878 
Additional paid-in capital 161,731   125,435 
Accumulated deficit (111,224)  (109,649)
Total equity  51,639   16,664 
Total liabilities and equity $67,657  $33,207 


ITAMAR MEDICAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

 Three Months Ended March 31,
 2020 2019
    
 U.S. dollars in thousands (except per share and ADS data)
        
Revenues$8,378  $6,056 
Cost of revenues 2,050   1,402 
Gross profit 6,328   4,654 
Operating expenses:       
Selling and marketing 5,263   3,722 
Research and development 1,302   940 
General and administrative 1,720   1,287 
Total operating expenses 8,285   5,949 
Operating loss (1,957)  (1,295)
Financial income (expenses):  
Financial income 235   92 
Financial expenses (234)  (298)
Gain from derivatives instruments -   364 
Financial income, net 1   158 
Loss before taxes on income (1,956)  (1,137)
Taxes on income (42)  (27)
Net loss  $(1,998) $(1,164)
        
Loss per share (in U.S. dollars):       
Basic$(0.01) $(0.00)
Diluted$(0.01) $(0.00)
        
Weighted average number of shares used in computation of loss per shares (in thousands):       
Basic 389,927   328,190 
Diluted 389,927   368,067 
        
Loss per ADS (in U.S. dollars):       
Basic$  (0.15) $  (0.11)
Diluted$  (0.15) $  (0.12)
        
Weighted average number of ADSs used in computation of loss per ADS (in thousands):       
Basic 12,998   10,940 
Diluted 12,998   12,269 


ITAMAR MEDICAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 Three Months Ended March 31,
 2020 2019
    
 U.S. dollars in thousands
Cash flows from operatin5g activities:  
Net loss$(1,998) $(1,164)
Adjustments for:  
Depreciation and amortization 410   331 
Share-based payment 362   176 
Change in provision for doubtful and bad debt 32   (13)
Net financial cost (income) (97)  24 
Gain from reevaluation of derivatives -   (364)
Decrease in trade receivables 1,184   192 
Decrease in other accounts receivable 228   128 
Increase in inventories (761)  (273)
Increase in trade payables 429   378 
Increase (decrease) in other accounts payable and accrued expenses (1,292)  236 
Increase in provisions 51   4 
Increase in employee benefits 79   90 
Income tax expenses 42   27 
Taxes paid during the period (1)  (27)
Net interest paid during the period (74)  (8)
Net cash used in operating activities (1,406)  (263)
        
Cash flows from investing activities:       
Purchase of property and equipment, intangible assets and capitalization of development expenditure (231)  (146)
Net cash used in investing activities (231)  (146)
        
Cash flow from financing activities:       
Proceeds from issuance of shares, net of share issuance costs 37,061   13,968 
Repayment of principal of lease liabilities (225)  (224)
Issuance of shares due to the exercise of stock options -   11 
Net cash provided by financing activities 36,836   13,755 
Increase in cash and cash equivalents 35,199   13,346 
Cash and cash equivalents at beginning of period 15,115   6,471 
Effect of exchange rate fluctuations on balances of cash and cash equivalents 128   70 
Cash and cash equivalent at end of period$50,442  $19,887 
        
Non-cash financing activity- share issuance costs$511  $- 


ITAMAR MEDICAL LTD.
RECONCILIATIONS OF IFRS TO NON-IFRS FINANCIAL MEASURES
(Unaudited)

 Three Months Ended
March 31,
  2020   2019 
    
 U.S. dollars in thousands (except per ADS data)
        
IFRS operating loss$  (1,957) $  (1,295)
Share-based payment 356   170 
Depreciation and amortization of property and equipment and intangible assets 168   132 
Change in provision for doubtful and bad debt 32   (13)
Non-IFRS operating loss$  (1,401) $  (1,006)
        
IFRS net loss$  (1,998) $  (1,164)
Share-based payment 362   176 
Depreciation and amortization of property and equipment and intangible assets 168   132 
Change in provision for doubtful and bad debt 32   (13)
Gain from reevaluation of derivatives -   (364)
Non-IFRS net loss$  (1,436) $  (1,233)
        
IFRS loss per ADS - diluted (in U.S. dollars)$  (0.15) $  (0.12)
Share-based payment 0.03   0.01 
Depreciation and amortization of property and equipment and intangible assets 0.01   0.01 
Change in provision for doubtful and bad debt -   - 
Non-IFRS loss per ADS - diluted (in U.S. dollars)$  (0.11) $  (0.10)