News Release Details

Itamar Medical Reports Second Quarter 2020 Financial Results

August 11, 2020 at 6:00 AM EDT

- Second Quarter Revenues Increase 21% to $8.9 Million - 

- U.S. WatchPATTM Revenues Increase 31% to $6.6 Million - 

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

CAESAREA, Israel, Aug. 11, 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 second quarter of 2020.

“Our second quarter results reflect encouraging growth and we have taken several steps to capitalize on this momentum. The recent traction among both new and existing customers in the context of survey results from 300 centers indicating volumes of 70% Home Sleep Apnea Tests versus volumes of 30% in-lab1 is a testament to the advantage of our home-based and digital care pathway sleep solutions and our ability to reach the large undiagnosed patient population suffering from sleep apnea,” said Gilad Glick, President and Chief Executive Officer of Itamar Medical.

“While we are pleased with our solid results, there are still many macro factors that remain fluid as the pandemic unfolds, leading to our cautious near-term outlook as we approach the second half of the year. Nonetheless, this does not change our long-term value proposition or market opportunity,” concluded Glick.

Second Quarter 2020 Highlights

  • Revenues in the second quarter of 2020 were $8.9 million, an increase of 21% year-over-year.
     
  • U.S WatchPAT revenues in the second quarter of 2020 were $6.6 million, an increase of 31% year-over-year.

Recent Business and Production Updates

  • Doubled WatchPAT ONE production capacity from approximately 3,000 units per week in May to approximately 6,000 units per week in June to meet the overwhelming demand as seen in our backlog from the first quarter, which, as a result, is now normalized.
     
  • Active centers using WatchPAT ONE reached a total of 291 after onboarding over 10 new customers per week on average throughout the second quarter.

Second Quarter 2020 Financial Results

Revenues for the second quarter of 2020 increased 21% to $8.9 million, compared to $7.4 million in the same quarter in 2019. Revenue growth was driven by an increase in WatchPAT sales in the U.S. and Japan, offset by a decrease in WatchPAT sales in Europe and in the rest of the world.

WatchPAT revenues for the second quarter of 2020 increased 20% to $7.9 million, compared to $6.5 million in the same quarter in 2019.

U.S. WatchPAT revenues for the second quarter of 2020 increased 31% to $6.6 million, compared to $5.0 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 78% of WatchPAT revenues in the U.S. in the second quarter of 2020, compared to 65% in the same quarter in 2019.

Gross profit for the second quarter of 2020 increased to $6.0 million, compared to $5.7 million in the same quarter in 2019. Gross profit margin for the second quarter of 2020 decreased to 68%, compared to 78% in the same quarter in 2019. Non-IFRS gross profit margin for the second quarter of 2020 decreased to 70%, compared to 79% in the same quarter in 2019) See “Use of Non-IFRS Measures” below(. Gross margin decline was manly driven by the increase in WatchPAT ONE sales.

Operating loss for the second quarter of 2020 was $3.2 million, compared to $1.7 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 31% to $5.9 million, compared to $4.5 million in the same quarter in 2019, due to the planned expansion of the U.S. sales team into new geographical territories and verticals (32 territories and verticals as of June 30, 2020, compared to 27 territories and verticals as of June 30, 2019), as well as additional sales commissions resulting from the increase in revenues. Research and development expenses increased 22% to 1.4 million, compared to $1.1 million in the same quarter in 2019, driven by an increase in personnel to support product development (including the digital health platform).

Non-IFRS operating loss for the second quarter of 2020 was $2.4 million, compared to $0.9 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; change in provision for doubtful and bad debt; and expenses relating to reduction in manpower, compared to $0.8 million of similar expenses for the same quarter in 2019 (see “Use of Non-IFRS Measures” below).

Net loss for the second quarter of 2020 was $3.2 million, compared to $2.0 million in the same quarter in 2019.

Non-IFRS net loss for the second quarter of 2020 was $2.4 million, compared to $1.2 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; change in provision for doubtful and bad debt; expenses relating to reduction in manpower; and gain from reevaluation of derivatives, 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 June 30, 2020, the Company had cash, cash equivalents and a short-term bank deposit of $45.2 million.

First Half 2020 Financial Results

Revenues for the six months ended June 30, 2020 increased 29% to $17.3 million, compared to $13.4 million for the six months ended June 30, 2019. Revenue growth was driven by an increase in WatchPAT sales in the U.S. and Japan, offset by a decrease in WatchPAT sales in the rest of the world.

WatchPAT revenues for the six months ended June 30, 2020 increased 30% to $16.1 million, compared to $12.3 million for the six months ended June 30, 2019.

U.S. WatchPAT revenues for the six months ended June 30, 2020 increased 36% to $12.7 million, compared to $9.3 million for the six months ended June 30, 2019. U.S. WatchPAT revenues increase was primarily driven by the increase of WatchPAT ONE as well as WatchPAT Direct sales.

Gross profit for the six months ended June 30, 2020 increased to $12.3 million, compared to $10.4 million for the six months ended June 30, 2019. Gross profit margin for the for the six months ended June 30, 2020 was 72%, compared to 77% for the six months ended June 30, 2019. Non-IFRS gross profit margin for six months ended June 30, 2020 decreased to 73%, compared to 79% for the six months ended June 30, 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 six months ended June 30, 2020 was $5.2 million, compared to $3.0 million for the six months ended June 30, 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 36% to $11.2 million, compared to $8.3 million in the first half of 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 29% to $2.7 million, compared to $2.1 million in the first half of 2019, driven by an increase in personnel to support product development (including the digital health platform).

Non-IFRS operating loss for the six months ended June 30, 2020 was $3.8 million, compared to $1.9 million for the six months ended June 30, 2019. Non-IFRS operating loss excludes approximately $1.4 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 $1.1 million of similar expenses for the six months ended June 30, 2019 (see “Use of Non-IFRS Measures” below).

Net loss for the six months ended June 30, 2020 was $5.2 million, compared to $3.1 million for the six months ended June 30, 2019.

Non-IFRS net loss for the for the six months ended June 30, 2020 was $3.9 million, compared to $2.4 million for the six months ended June 30, 2019. Non-IFRS net loss excludes approximately $1.3 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 $0.7 million of similar expenses and gains for the six months ended June 30, 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: 8798951

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 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 Annual Report on Form 20-F, 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.

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

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)


 
June 30,
2020
 December 31,
2019
    
 U.S. dollars in thousands
Assets  
Current assets  
Cash and cash equivalents$ 37,666  $15,115 
Short-term bank deposit 7,500   - 
Trade receivables 7,662   8,384 
Other receivables 2,015   1,404 
Inventories 4,727    3,363 
Total current assets 59,570   28,266 
   
Non-current assets  
Long-term restricted deposits and prepaid expenses 519   476 
Long-term trade receivables 263   156 
Property and equipment 1,924   1,472 
Intangible assets 687   395 
Right-of-use assets 1,961   2,442 
Total non-current assets 5,354   4,941 
Total assets$64,924  $33,207 
   
Liabilities  
Current liabilities  
Short-term bank loan$5,000  $5,000 
Current maturities of lease liabilities 883   890 
Trade payables 2,646   2,028 
Other accounts payable 3,248   3,455 
Accrued expenses 1,119   1,317 
Provisions 334   273 
Short-term employee benefits 593   352 
Total current liabilities 13,823   13,315 
   
Non-current liabilities  
Lease liabilities, net of current maturities 1,253   1,708 
Recognized liability for defined benefit plan, net 203   260 
Other long-term liabilities 1,262   1,260 
Total non-current liabilities 2,718   3,228 
Total liabilities 16,541   16,543 
   
Equity   
Ordinary share capital 1,133   878 
Additional paid-in capital 161,407   125,435 
Accumulated deficit (114,157)  (109,649)
Total equity  48,383   16,664 
Total liabilities and equity $64,924  $33,207 



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

 Three Months Ended
June 30,
 Six Months Ended
June 30,
 2020 2019 2020 2019
        
 U.S. dollars in thousands (except per share and ADS data)
     
Revenues$8,885  $7,353  $17,263  $13,409 
Cost of revenues 2,869   1,627   4,919   3,029 
Gross profit 6,016   5,726   12,344   10,380 
Selling and marketing expenses 5,943   4,546   11,206   8,268 
Research and development expenses 1,377   1,130   2,679   2,070 
General and administrative expenses 1,914   1,793   3,634   3,080 
Total operating expenses 9,234   7,469   17,519   13,418 
Operating loss (3,218)  (1,743)  (5,175)  (3,038)
                
Financial income (expenses):    
Financial income 152   101   387   193 
Financial expenses (166)  (298)  (400)  (596)
Gain from derivatives instruments, net -   78   -   442 
Financial income (expenses), net (14)  (119)  (13)  39 
Loss before taxes on income (3,232)  (1,862)  (5,188)  (2,999)
Taxes on income (10)  (96)  (52)  (123)
Net loss $(3,242) $(1,958) $(5,240) $(3,122)
                
                
                
                
     
Loss per share – basic and diluted (in U.S. dollars) $(0.01) $(0.01) $(0.01) $(0.01)
                
                
                
                
     
Weighted average number of shares used in computation of loss per shares (in thousands):    
Basic 423,137   333,951   406,624   331,087 
Diluted 423,137   335,149   406,624   331,087 
                
                
                
                
     
Loss per ADS – basic and diluted (in U.S. dollars) $(0.23) $(0.18) $(0.39) $(0.28)
                
                
                
                
     
Weighted average number of ADSs used in computation of loss per ADS (in thousands):     
Basic 14,105   11,132   13,554   11,036 
Diluted 14,105   11,172   13,554   11,036 



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

 Three Months Ended
June 30,
 Six Months Ended
June 30,
    
        
 2020 2019 2020 2019
    
        
 U.S. dollars in thousands
Cash flows from operating activities    
Net loss$(3,242) $(1,958) $(5,240) $(3,122)
Adjustments for:    
Depreciation and amortization 479   343   889   674 
Share-based payment 309   355   671   531 
Change in provision for doubtful and bad debt 126   207   158   194 
Net financial cost (income) (102)  148   (199)  172 
Gain from reevaluation of derivatives -   (78)  -   (442)
Decrease (increase) in trade receivables (728)  (251)  456   (59)
Increase in other accounts receivable (832)  (318)  (604)  (190)
Increase in inventories (1,054)  (247)  (1,815)  (520)
Increase in trade payables 151   147   580   525 
Increase (decrease) in other accounts payable and accrued expenses 866   78   (426)  314 
Increase in employee benefits 166   39   245   129 
Increase in provisions 10   3   61   7 
Income tax expenses 10   96   52   123 
Taxes paid during the period (29)  (17)  (30)  (44)
Net interest received (paid) during the period 127   (166)  53   (174)
                
                
                
                
Net cash used in operating activities (3,743)  (1,619)  (5,149)  (1,882)
                
                
                
                
Cash flows from investing activities    
Investment in short-term bank deposits (7,500)  (9,000)  (7,500)  (9,000)
Investment in restricted long-term deposits (50)  -   (50)  - 
Purchase of property and equipment, intangible assets and capitalization of development expenditure (478)  (116)  (709)  (262)
                
                
                
                
Net cash provided by (used in) investing activities (8,028)  (9,116)  (8,259)  (9,262)
                
                
                
                
Cash flows from financing activities    
Proceeds from issuance of shares, net of share issuance costs (share issuance costs) (876)  -   36,185   13,968 
Repayment of principal of lease liabilities (220)  (215)  (445)  (439)
Issuance of shares due to the exercise of stock options 81   14   81   25 
Net cash provided by (used in) financing activities (1,015)  (201)  35,821   13,554 
Increase (decrease) in cash and cash equivalents (12,786)  (10,936)  22,413   2,410 
Cash and cash equivalents at beginning of period 50,442   19,887   15,115   6,471 
Effect of exchange rate fluctuations on balances of cash and cash equivalents 10   65   138   135 
Cash and cash equivalent balance at end of period$37,666  $9,016  $37,666  $9,016 
Non-cash financing activity- share issuance costs$38  $-  $38  $- 



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

 Three Months Ended
June 30,
 Six Months Ended
June 30,
    
        
 2020 2019 2020 2019
    
        
 U.S. dollars in thousands (except per share and ADS data)
     
IFRS operating loss$(3,218) $(1,743) $(5,175) $(3,038)
IFRS net loss$(3,242) $(1,958) $(5,240) $(3,122)
                
                
                
                
     
Cost of revenues:    
Share-based payment 5   2   7   4 
Depreciation and amortization of property and equipment and intangible assets 162   90   264   169 
Expenses relating to reduction of manpower 27   -   27   - 
  194   92   298   173 
                
                
                
                
Operating expenses:    
Selling and marketing:    
Share-based payment 80   169   199   168 
Depreciation and amortization of property and equipment and intangible assets 37   30   68   59 
Expenses relating to reduction of manpower 63   -   63   - 
  180   199   330   227 
                
                
                
                
Research and development:    
Share-based payment 71   25   142   54 
Depreciation and amortization of property and equipment and intangible assets 31   16   50   28 
Expenses relating to reduction of manpower 18   115   18   115 
  120   156   210   197 
                
                
                
                
General and administrative:    
Share-based payment 147   153   310   293 
Depreciation and amortization of property and equipment and intangible assets 18   14   34   26 
Change in provision for doubtful and bad debt 126   207   158   194 
Expenses relating to reduction of manpower 9   -   9   - 
  300   374   511   513 
                
Financial income (expenses), net:    
Share-based payment 6   6   13   12 
Gain from reevaluation of derivatives -   (78)  -   (442)
  6   (72)  13   (430)
                
     
Non-IFRS operating loss$(2,424) $(922) $(3,826) $(1,928)
Non-IFRS net loss$(2,442) $(1,209) $(3,878) $(2,442)
                
                
     
IFRS loss per ADS – basic and diluted (in U.S. dollars)$(0.23) $(0.18) $(0.39) $(0.28)
Non-IFRS loss per ADS – basic and diluted (in U.S. dollars)$(0.17) $(0.11) $(0.29) $(0.22)
                
                
     


1 COVID-19 sleep center impact study. EnsoData. 2020. Available at https://www.ensodata.com/landing-pages/covid-19-sleep-center-impact-study.