News Release Details

Itamar Medical Reports Record Fourth Quarter and Full Year 2020 Revenues

March 2, 2021 at 6:00 AM EST

- Record Fourth Quarter 2020 Revenues Increase 31% to $12.8 Million - 

- U.S. WatchPAT™ Revenues Increase 39% to $10.2 Million -

- Full Year 2021 Revenue Guidance of $52 Million and $53 Million -

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

CAESAREA, Israel, March 02, 2021 (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 fourth quarter and full year 2020 and provided full year 2021 guidance.

“2020 was transformational for Itamar, both financially and operationally. Throughout the year, we saw significant momentum in each of our key long term growth drivers, including core sleep, cardiology and international expansion,” said Gilad Glick, President and Chief Executive Officer of Itamar Medical. “While undoubtedly COVID-19 provided an opportunity for a shift to home-based healthcare options, we believe that physicians and patients alike are recognizing the many additional longer-term benefits of home-based sleep disorder testing over in lab diagnostics. We were pleased to see the fourth quarter sales of our multiuse WatchPAT probes surpass pre-COVID levels and WatchPAT ONE, our fully disposable HSAT, reach a record high. Orders for our WatchPAT Direct service also continued to demonstrate meaningful growth above the trends we saw prior to the start of the COVID-19 pandemic.” 

“In 2021, we anticipate continued revenue growth driven by our U.S. Core Sleep business and a return to pre-COVID level non-IFRS gross margin of approximately 75% by year end. With the proceeds from our recent U.S. offering, we will also now have greater leverage to grow organically with accelerated U.S. and international expansion, to pursue in-organic growth opportunities, and to benefit from improved liquidity in the U.S. market. We also plan to carefully manage our expenses to improve operating efficiencies and our bottom line performance,” concluded Glick.

Fourth Quarter 2020 Highlights, Full Year 2021 Revenue Guidance and Recent Achievements

  • Revenues in the fourth quarter of 2020 were $12.8 million, an increase of 31% year-over-year (and increase of 46%, excluding a one-time $1.0 million sale in the fourth quarter of 2019 to Kaiser Permanente).
     
  • U.S WatchPAT revenues in the fourth quarter of 2020 were $10.2   million, an increase of 39% year-over-year (and increase of 61%, excluding a one-time $1.0 million sale in the fourth quarter of 2019 to Kaiser Permanente).
     
  • Active centers using WatchPAT ONE reached a total of 628 after continuing to onboard approximately 40 new customers per month on average throughout the fourth quarter.
     
  • Completed an underwritten U.S. public offering in February 2021 with total gross proceeds to the Company of approximately $50.0 million.
     
  • Acquired assets of Spry Health providing opportunity to bring to market the first device for continuous Remote Patient Monitoring or RPM of sleep apnea.   
  • Full year 2021 revenue is expected to be in the range of $52 million to $53 million, reflecting growth of 27% to 29% over full year 2020 of $41.0 million.

Fourth Quarter 2020 Financial Results

Revenues for the fourth quarter of 2020 increased 31% (and 46% excluding a one-time $1.0 million sale in the fourth quarter of 2019 to Kaiser Permanente) to $12.8 million, compared to $9.8 million in the same quarter in 2019. Revenue growth was driven by an increase in WatchPAT sales in the U.S. and Europe.

WatchPAT revenues for the fourth quarter of 2020 increased 34% (and 51% excluding a one-time $1.0 million sale in the fourth quarter of 2019 to Kaiser Permanente) to $12.2 million, compared to $9.1 million in the same quarter in 2019.

U.S. WatchPAT revenues for the fourth quarter of 2020 increased 39% (and 61% excluding a one-time $1.0 million sale in the fourth quarter of 2019 to Kaiser Permanente) to $10.2 million, compared to $7.3 million in the same quarter in 2019, driven primarily by WatchPAT ONE sales, as well as WatchPAT Direct sales. Sales from disposables and renewable products, including WatchPAT ONE, comprised approximately 80% of WatchPAT revenues in the U.S. in the fourth quarter of 2020, compared to 50% (and 70% excluding a one-time sale in the fourth quarter of 2019 to Kaiser Permanente for WatchPAT 300, mostly for an upgrade and expansion of its current WatchPAT fleet) in the same quarter in 2019.

Gross profit for the fourth quarter of 2020 increased to $8.8 million, compared to $7.7 million in the same quarter in 2019. Gross margin for the fourth quarter of 2020 decreased to 69%, compared to 78% in the same quarter in 2019. Non-IFRS gross margin for the fourth quarter of 2020 decreased to 71%, compared to 79% in the same quarter in 2019) See “Use of Non-IFRS Measures” below(. Gross margin decline was mainly driven by the increase in WatchPAT ONE sales.

Operating loss for the fourth quarter of 2020 was $2.7 million, compared to $0.9 million in the same quarter in 2019. The increase in operating loss was primarily attributable to an increase in operating expenses, partially offset by the increase in revenues. Selling and marketing expenses increased 34% to $7.1 million, compared to $5.3 million in the same quarter in 2019, due to the planned expansion of the U.S. sales team into new geographical territories and verticals (33 territories and verticals as of December 31, 2020, compared to 27 territories and verticals as of December 31, 2019), as well as additional sales commissions resulting from the increase in revenues. Research and development expenses increased 43% to $1.9 million, compared to $1.4 million in the same quarter in 2019, driven by an increase in personnel to support product development, mainly related to our digital health platform. General and administrative expenses increased 32% to $2.5 million, compared to $1.9 million in the same quarter in 2019, mainly driven by an increase in directors’ and officers’ insurance premium, as well as increase in legal expenses, including a commercial dispute in defense of our intellectual property initiated by the Company.

Non-IFRS operating loss for the fourth quarter of 2020 was $1.8 million, compared to $0.2 million in the same quarter in 2019. Non-IFRS operating loss excludes approximately $0.8 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 $0.7 million of similar expenses for the same quarter in 2019 (see “Use of Non-IFRS Measures” below).

Net loss for the fourth quarter of 2020 was $2.9 million, compared to $1.0 million in the same quarter in 2019.

Non-IFRS net loss for the fourth quarter of 2020 was $2.1 million, compared to $0.3 million in the same quarter in 2019. Non-IFRS net loss excludes approximately $0.8 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 $0.7 million of similar expenses and gains for the same quarter in 2019 (see “Use of Non-IFRS Measures” below).   

As of December 31, 2020, the Company had cash, cash equivalents and short-term bank deposits of $39.7 million. This does not include the net proceeds of $46.2 million from the recently completed an underwritten public offering in February 2021.

Full Year 2020 Financial Results

Revenues for the full year ended December 31, 2020 increased 31% (and 36% excluding a one-time $1.0 million sale in the fourth quarter of 2019 to Kaiser Permanente) to $41.0 million, compared to $31.3 million for the full year ended December 31, 2019. Revenue growth was driven mainly by an increase in WatchPAT sales in the U.S., Europe and Japan.

WatchPAT revenues for the full year ended December 31, 2020 increased 34% (and 39% excluding a one-time $1.0 million sale in the fourth quarter of 2019 to Kaiser Permanente) to $38.8 million, compared to $29.0 million for the full year ended December 31, 2019.

U.S. WatchPAT revenues for the full year ended December 31, 2020 increased 42% (and 49% excluding a one-time $1.0 million sale in the fourth quarter of 2019 to Kaiser Permanente) to $31.8 million, compared to $22.4 million for the full year ended December 31, 2019. U.S. WatchPAT revenues increase was primarily driven by the increase of WatchPAT ONE, as well as WatchPAT Direct sales. Sales from disposables and renewable products, including WatchPAT ONE, comprised approximately 77% of WatchPAT revenues in the U.S. for the full year ended December 31, 2020, compared to 64% (and 71% excluding a one-time sale in the fourth quarter of 2019 to Kaiser Permanente for WatchPAT 300, mostly for an upgrade and expansion of its current WatchPAT fleet)) for the full year ended December 31, 2019.

Gross profit for the full year ended December 31, 2020 increased to $28.7 million, compared to $24.3 million for the full year ended December 31, 2019. Gross margin for the full year ended December 31, 2020 decreased to 70%, compared to 78% for the full year ended December 31, 2019. Non-IFRS gross margin for the full year ended December 31, 2020 decreased to 72%, compared to 79% for the full year ended December 31, 2019 (See “Use of Non-IFRS Measures” below(.  Gross margin decline was mainly driven by the increase in WatchPAT ONE sales.

Operating loss for the full year ended December 31, 2020 was $10.3 million, compared to $4.9 million for the full year ended December 31, 2019. The increase in operating loss was primarily attributable to an increase in operating expenses, partially offset by the increase in revenues. Selling and marketing expenses increased 34% to $24.6 million, compared to $18.3 million in the full year ended December 31, 2019, due to the planned expansion of the U.S. sales team into new geographical territories and verticals, as well as additional sales commissions resulting from the increase in revenues. Research and development expenses increased 33% to $6.0 million, compared to $4.5 million in the full year ended December 31, 2019, driven by an increase in personnel to support product development, mainly related to our digital health platform. General and administrative expenses increased 34% to $8.5 million, compared to $6.4 million in the full year ended December 31, 2019, mainly driven by an increase in directors’ and officers’ insurance premium, as well as legal expenses including a commercial dispute in defense of our intellectual property initiated by the Company.

Non-IFRS operating loss for the full year ended December 31, 2020 was $7.5 million, compared to $2.6 million for the full year ended December 31, 2019. Non-IFRS operating loss excludes approximately $2.8 million in share-based payments; depreciation and amortization of property and equipment and intangible asset; change in provision for doubtful and bad debt; and expenses relating to reduction in manpower, compared to $2.3 million of similar expenses for the full year ended December 31, 2019 (see “Use of Non-IFRS Measures” below).

Net loss for the full year ended December 31, 2020 was $10.9 million, compared to $5.3 million for the full year ended December 31, 2019.

Non-IFRS net loss for the for the full year ended December 31, 2020 was $8.1 million, compared to $3.4 million for the full year ended December 31, 2019. Non-IFRS net loss excludes approximately $2.8 million in share-based payments; depreciation and amortization of property and equipment and intangible assets; change in provision for doubtful and bad debt; expenses relating to reduction in manpower; and gain from reevaluation of derivatives, compared to $1.9 million of similar expenses and gains for the full year ended December 31, 2019 (see “Use of Non-IFRS Measures” below).

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: 833-519-1272
International: 914-800-3844
Israel toll-free: 1-809-315-362
Conference ID: 7976547

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 and net loss, 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; (iv) expenses relating to reduction in manpower; and (v) 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 2021 revenue guidance range, 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 Annual Report on Form 20-F to be filed with the SEC, which is 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.

Itamar Medical Investor Relations Contact (U.S.)
Leigh Salvo or Caroline Paul
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)

 December 31,
  2020   2019 
        
 U.S. dollars in thousands
Assets  
Current assets  
Cash and cash equivalents$ 9,670  $15,115 
Short-term bank deposits 30,000   - 
Trade receivables 8,354   8,384 
Other receivables 2,251   1,404 
Inventories 7,164    3,363 
Total current assets 57,439   28,266 
        
   
Non-current assets  
Long-term restricted deposits and prepaid expenses 547   476 
Long-term trade receivables 412   156 
Property and equipment 2,904   1,472 
Intangible assets 1,037   395 
Right-of-use assets 1,801   2,442 
Total non-current assets 6,701   4,941 
Total assets$64,140  $33,207 
        
   
Liabilities  
Current liabilities  
Short-term bank loan$5,000  $5,000 
Current maturities of long-term loan 135   - 
Current maturities of lease liabilities 700   890 
Trade payables 4,418   2,028 
Other payables 5,973   3,455 
Accrued expenses 1,091   1,317 
Provisions 321   273 
Short-term employee benefits 354   352 
Total current liabilities 17,992   13,315 
        
   
Non-current liabilities  
Long-term loan 154   - 
Long-term lease liabilities 1,380   1,708 
Recognized liability for defined benefit plan, net 271   260 
Other long-term liabilities 1,271   1,260 
Total non-current liabilities 3,076   3,228 
Total liabilities 21,068   16,543 
        
   
Equity   
Ordinary share capital 1,140   878 
Additional paid-in capital 161,006   125,435 
Accumulated deficit (119,074)  (109,649)
Total equity  43,072   16,664 
Total liabilities and equity $64,140  $33,207 
        
   



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

    
 Three Months Ended
December 31,
  Year Ended
December 31,
     
                
  2020   2019   2020   2019 
                
                
                
 U.S. dollars in thousands (except per share and ADS data)
          
Revenues$    12,772  $    9,765  $    41,034  $    31,258 
Cost of revenues 3,933   2,115   12,323   6,984 
Gross profit 8,839   7,650   28,711   24,274 
                
Operating expenses:    
Selling and marketing expenses 7,104   5,309   24,550   18,294 
Research and development expenses 1,938    1,355   6,002   4,520 
General and administrative expenses 2,452   1,863   8,503   6,354 
Total operating expenses 11,494   8,527   39,055   29,168 
Operating loss  (2,655)   (877)   (10,344)   (4,894)
                
Financial income (expenses):    
Financial income 317   118   847   454 
Financial expenses (622)   (338)  (1,315)   (1,233)
Gain from derivatives instruments, net -   -   -   442 
Financial expenses, net (305)  (220)  (468)  (337)
Loss before taxes on income  (2,960)   (1,097)   (10,812)   (5,231)
Tax benefit (taxes on income) 20   98    (127)   (37)
Net loss $    (2,940) $   (999) $   (10,939) $   (5,268)
                
     
Loss per share – basic and diluted (in U.S. dollars) $      (0.01) $      (0.00) $     (0.03) $     (0.02)
                
     
Weighted average number of shares used in computation of loss per shares (in thousands):    
Basic 424,235   334,124   415,443   332,648 
Diluted 424,235   334,124   415,443   346,195 
                
     
Loss per ADS (in U.S. dollars)     
Basic$      (0.21) $      (0.09) $      (0.79) $             (0.48)
Diluted$      (0.21) $      (0.09) $      (0.79) $      (0.49)
                
     
Weighted average number of ADSs used in computation of loss per ADS (in thousands):     
Basic 14,141   11,137   13,848   11,088 
Diluted 14,141   11,137   13,848   11,540 
                
     



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

  Three Months Ended
December 31,

  Year Ended
December 31,
  2020
 2019  2020
  2019
           
 U.S. dollars in thousands
Cash flows from operating activities    
Net loss$(2,940) $(999) $(10,939) $(5,268)
Adjustments for:    
Depreciation and amortization 473   387   1,818   1,446 
Share-based payment 452   373   1,495   1,259 
Change in provision for doubtful and bad debt 116   157   322   349 
Net financial cost (income) 72   321   (145)  490 
Gain from reevaluation of derivatives -   -   -   (442)
Increase in trade receivables (137)  (2,426)  (548)  (2,097)
Increase in other receivables (304)  (161)  (845)  (410)
Increase in inventories (775)  (426)  (4,548)  (1,579)
Increase (decrease) in trade payables 786   (187)  2,148   537 
Increase in other payables 1,939   1,066   2,267   1,650 
Increase (decrease) in provisions (62)  41   48   58 
Increase (decrease) in employee benefits (278)  35   32   137 
Income tax expenses (benefit) (20)  (98)  127   37 
Taxes refunded (paid) during the period (49)  22   (98)  (22)
Interest paid during the period (101)  (239)  (450)  (519)
Interest received during the period 66   59   498   142 
Net cash used in operating activities (762)  (2,075)  (8,818)  (4,232)
                
Cash flows from investing activities    
Redemption of (investment in) short-term bank deposits (14,000)  9,000   (30,000)  - 
Investment in restricted long-term deposits -   -   (50)  (68)
Purchase of property and equipment, intangible assets, and capitalization of development expenditure (626)  (141)  (2,230)  (547)
Net cash provided by (used in) investing activities (14,626)  8,859   (32,280)  (615)
                
Cash flows from financing activities    
Proceeds from issuance of shares, net of share issuance costs (share issuance costs) (241)  -   35,906   13,966 
Repayment of principal of lease liabilities (227)  (204)  (892)  (787)
Long-term loan received 296   -   296   - 
Repayment of long-term loan (21)  -   (21)  - 
Issuance of shares due to the exercise of stock options 37   88   169   113 
Net cash provided by (used in) financing activities (156)  (116)  35,458   13,292 
Increase (decrease) in cash and cash equivalents (15,544)  6,668   (5,640)  8,445 
Cash and cash equivalents at beginning of period 25,153   8,426   15,115   6,471 
Effect of exchange rate fluctuations on balances of cash and cash equivalents 61   21   195   199 
Cash and cash equivalent balance at end of period$9,670  $15,115  $9,670  $15,115 
                
     



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


 Three Months Ended
December 31,  
  Year Ended
 December 31,
   2020   2019   2020   2019 
              
 U.S. dollars in thousands (except per share and ADS data)
     
IFRS operating loss$    (2,655) $      (877) $    (10,344) $    (4,894)
IFRS net loss$    (2,940) $      (999) $    (10,939) $    (5,268)
                
     
Cost of revenues:    
Share-based payment 16   3   33   10 
Depreciation and amortization of property and equipment and intangible assets 169   110   585   384 
Expenses relating to reduction of manpower -   -   27   - 
                
                
                
                
  185   113   645   394 
                
Operating expenses:    
Selling and marketing:    
Share-based payment 195   84   536   382 
Depreciation and amortization of property and equipment and intangible assets 32   54   134   126 
Expenses relating to reduction of manpower -   -   63   - 
  227   138   733   508 
                
Research and development:    
Share-based payment 77   70   289   171 
Depreciation and amortization of property and equipment and intangible assets 34   -   113   62 
Expenses relating to reduction of manpower -   -   18   115 
  111   70   420   348 
                
General and administrative:    
Share-based payment 157   209   611   671 
Depreciation and amortization of property and equipment and intangible assets 18   3   71   44 
Change in provision for doubtful and bad debt 116   157   322   349 
Expenses relating to reduction of manpower -   -   9   - 
  291   369   1,013   1,064 
                
Financial income (expenses), net:    
Share-based payment 7   7   26   25 
Gain from reevaluation of derivatives -   -   -   (442)
  7   7   26   (417)
                
     
Non-IFRS operating loss$    (1,841) $     (187) $    (7,533) $    (2,580)
Non-IFRS net loss$    (2,119) $     (302) $    (8,102) $    (3,371)
                
     
IFRS loss per ADS (in U.S. dollars):    
Basic$      (0.21) $      (0.09) $      (0.79) $      (0.48)
Diluted$      (0.21) $      (0.09) $      (0.79) $      (0.49)
                
     
Non-IFRS loss per ADS – basic and diluted (in U.S. dollars)    
Basic$      (0.15) $      (0.03) $     (0.59) $     (0.28)
Diluted$      (0.15) $      (0.03) $      (0.59) $     (0.29)