Third Quarter and Recent Highlights:
- Net revenues of
$18.2 million , up 135.3% year-over-year - Gross systems shipped of 10,077, up 91.7% year-over-year
- Return accrual rate of 25.2%, a 10.1 percentage point improvement year-over-year
- Gross margin of 70.1%, up 16.5 percentage points year-over-year
- Sales and marketing expense as a percent of net revenues of 67.9%, a 52.3 percentage point improvement year-over-year
- Loss from operations of
($7.6) million , compared to($12.0) million in the third quarter of 2019 - Completed initial public offering of 9,029,629 shares of common stock on
October 20, 2020 , raising approximately$148 million in net proceeds
“During the third quarter, we executed our strategy of efficient revenue growth through multi-channel marketing targeted at a diverse mix of consumers across cash pay, insurance and repeat customers. We expanded our national TV advertising, which built increased consumer awareness of
“We were also pleased to see hearing aid volumes sold through traditional brick and mortar clinics return to year-over-year growth in the third quarter, but even more pleased to see continued acceleration in our year-over-year gross systems shipped growth even as the clinics’ operations began to recover. We expect strong demand for
According to data collected by the
Third Quarter 2020 Financial Results
Net revenue was
Gross profit for the third quarter of 2020 was
Total operating expenses were
Sales and marketing expenses were
Research and development expenses were
General and administrative expenses were
Total stock-based compensation expenses were
Loss from operations was
Cash and cash equivalents were
Initial Public Offering
Full Year 2020 Financial Guidance
Conference Call and Web Cast Information
About
The company’s 4th generation product, the Eargo Neo HiFi, was launched in January and features improved capabilities across audio fidelity and bandwidth. The Eargo Neo HiFi is available for purchase here.
Related Links
http://eargo.com
Forward Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “design,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “positioned,” “potential,” “predict,” “seek,” “should,” “target,” “will,” “would” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology. All statements other than statements of historical fact contained in this press release are forward-looking statements. These forward-looking statements include, but are not limited to, statements about: our 2020 revenue guidance; consumer adoption of our hearing loss solution and telecare model; the continued scalability of our business; expectations regarding strong demand for
Investor Contact
Vice President of Investor Relations
ir@eargo.com
Media Contact
eargo@edelman.com
Condensed Consolidated Statements of Operations and Comprehensive Loss | |||||||||||||||||
(Unaudited) | |||||||||||||||||
(In thousands, except share and per share amounts) | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||
Revenue, net | $ | 18,186 | $ | 7,730 | $ | 46,776 | $ | 22,175 | |||||||||
Cost of revenue | 5,434 | 3,583 | 15,295 | 11,033 | |||||||||||||
Gross profit | 12,752 | 4,147 | 31,481 | 11,142 | |||||||||||||
Operating expenses: | |||||||||||||||||
Research and development | 2,871 | 3,219 | 7,888 | 8,781 | |||||||||||||
Sales and marketing | 12,354 | 9,290 | 34,041 | 24,698 | |||||||||||||
General and administrative | 5,163 | 3,683 | 14,498 | 8,781 | |||||||||||||
Total operating expenses | 20,388 | 16,192 | 56,427 | 42,260 | |||||||||||||
Loss from operations | (7,636 | ) | (12,045 | ) | (24,946 | ) | (31,118 | ) | |||||||||
Other income (expense), net: | |||||||||||||||||
Interest income | 3 | 136 | 26 | 555 | |||||||||||||
Interest expense | (279 | ) | (218 | ) | (1,422 | ) | (492 | ) | |||||||||
Other income (expense), net | (187 | ) | (30 | ) | (87 | ) | (84 | ) | |||||||||
Loss on extinguishment of debt | (1,627 | ) | — | (1,627 | ) | — | |||||||||||
Total other income (expense), net | (2,090 | ) | (112 | ) | (3,110 | ) | (21 | ) | |||||||||
Loss before income taxes | (9,726 | ) | (12,157 | ) | (28,056 | ) | (31,139 | ) | |||||||||
Income tax provision | — | — | — | — | |||||||||||||
Net loss and comprehensive loss | $ | (9,726 | ) | $ | (12,157 | ) | $ | (28,056 | ) | $ | (31,139 | ) | |||||
Net income (loss) attributable to common stockholders, basic and diluted | $ | — | $ | (12,157 | ) | $ | (18,216 | ) | $ | (31,139 | ) | ||||||
Net income (loss) per share attributable to common stockholders, basic and diluted | $ | — | $ | (46.26 | ) | $ | (57.73 | ) | $ | (122.74 | ) | ||||||
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, basic and diluted | 398,895 | 262,785 | 315,546 | 253,701 |
Condensed Consolidated Balance Sheets | |||||||||
(Unaudited) | |||||||||
(In thousands, except share and per share amounts) | |||||||||
2020 | 2019 | ||||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | 70,224 | 13,384 | |||||||
Accounts receivable, net | 2,576 | 2,051 | |||||||
Inventories | 3,289 | 2,880 | |||||||
Prepaid expenses and other current assets | 1,379 | 1,598 | |||||||
Total current assets | 77,468 | 19,913 | |||||||
Operating lease right-of-use assets | 1,369 | — | |||||||
Property and equipment, net | 6,946 | 5,400 | |||||||
Other assets | 2,304 | 1,992 | |||||||
Total assets | $ | 88,087 | $ | 27,305 | |||||
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | 6,658 | $ | 5,428 | |||||
Accrued expenses | 10,809 | 9,939 | |||||||
Long-term debt, current portion | — | 4,800 | |||||||
Other current liabilities | 2,079 | 1,717 | |||||||
Deferred revenue, current | 441 | 406 | |||||||
Lease liability, current portion | 1,097 | — | |||||||
Total current liabilities | 21,084 | 22,290 | |||||||
Lease liability, noncurrent portion | 412 | — | |||||||
Deferred revenue, noncurrent portion | 17 | 269 | |||||||
Long-term debt, noncurrent portion | 14,502 | 7,446 | |||||||
Convertible preferred stock warrant liability | 544 | 396 | |||||||
Other liabilities | — | 127 | |||||||
Total liabilities | 36,559 | 30,528 | |||||||
Commitments and contingencies (Note 5) | |||||||||
Convertible preferred stock, | 223,125 | 152,880 | |||||||
Stockholders’ deficit: | |||||||||
Common stock; | — | — | |||||||
Additional paid in capital | 15,662 | 3,100 | |||||||
Accumulated deficit | (187,259 | ) | (159,203 | ) | |||||
Total stockholders’ deficit | (171,597 | ) | (156,103 | ) | |||||
Total liabilities, convertible preferred stock and stockholders’ deficit | $ | 88,087 | $ | 27,305 | |||||
Condensed Consolidated Statements of Cash Flows | |||||||||||
(Unaudited) | |||||||||||
(In thousands) | |||||||||||
Nine months ended | |||||||||||
2020 | 2019 | ||||||||||
Operating activities: | |||||||||||
Net loss | $ | (28,056 | ) | $ | (31,139 | ) | |||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
Depreciation and amortization | 1,805 | 1,011 | |||||||||
Stock-based compensation | 2,363 | 997 | |||||||||
Non-cash interest expense and amortization of debt discount | 1,178 | 200 | |||||||||
Non-cash operating lease expense | 838 | — | |||||||||
Bad debt expense | 2,135 | 44 | |||||||||
Loss on extinguishment of debt | 1,627 | — | |||||||||
Change in fair value of warrant liability | (122 | ) | 84 | ||||||||
Change in fair value of derivative liability | 206 | — | |||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | (2,660 | ) | (113 | ) | |||||||
Inventories | (409 | ) | (1,110 | ) | |||||||
Prepaid expenses and other current assets | 219 | (199 | ) | ||||||||
Other assets | 963 | (311 | ) | ||||||||
Accounts payable | 579 | (585 | ) | ||||||||
Accrued expenses | 147 | 1,750 | |||||||||
Other current liabilities | 362 | (172 | ) | ||||||||
Deferred revenue | (217 | ) | 409 | ||||||||
Operating lease liabilities | (883 | ) | — | ||||||||
Other liabilities | (127 | ) | (59 | ) | |||||||
Net cash used in operating activities | (20,052 | ) | (29,193 | ) | |||||||
Investing activities: | |||||||||||
Purchases of property and equipment | (844 | ) | (1,616 | ) | |||||||
Capitalized software development costs | (2,601 | ) | (1,017 | ) | |||||||
Net cash used in investing activities | (3,445 | ) | (2,633 | ) | |||||||
Financing activities: | |||||||||||
Proceeds from stock options exercised | 359 | 40 | |||||||||
Proceeds from debt financing | 15,000 | 5,000 | |||||||||
Proceeds from convertible preferred stock issuance, net of issuance costs | 67,867 | 865 | |||||||||
Proceeds from issuance of convertible notes, net of issuance costs | 10,053 | — | |||||||||
Proceeds from PPP loan | 4,574 | — | |||||||||
Repayment of PPP loan | (4,574 | ) | — | ||||||||
Debt repayments | (12,720 | ) | — | ||||||||
Payments of deferred offering costs | (222 | ) | — | ||||||||
Net cash provided by financing activities | 80,337 | 5,905 | |||||||||
Net increase (decrease) in cash and cash equivalents and restricted cash | 56,840 | (25,921 | ) | ||||||||
Cash and cash equivalents and restricted cash at beginning of period | 13,384 | 51,201 | |||||||||
Cash and cash equivalents and restricted cash at end of period | $ | 70,224 | $ | 25,280 | |||||||
Supplemental disclosure of cash flow information: | |||||||||||
Cash paid for interest | $ | 253 | $ | 275 | |||||||
Non-cash operating activities: | |||||||||||
Lease liability obtained in exchange for right-of-use asset | $ | 2,392 | $ | — | |||||||
Non-cash investing and financing activities: | |||||||||||
Property and equipment and capitalized software costs in accounts payable and accrued liabilities | $ | 421 | $ | 307 | |||||||
Deferred offering costs in accounts payable and accrued liabilities | $ | 1,053 | $ | — | |||||||
Convertible preferred stock issuance costs included in accounts payable | $ | 600 | $ | — | |||||||
Derivative liability in connection with issuance of convertible promissory notes on issuance | $ | 2,879 | $ | — | |||||||
Issuance of Series E convertible preferred stock upon extinguishment of convertible notes | $ | 12,818 | $ | — | |||||||
Settlement of derivative liability in connection with extinguishment of convertible notes | $ | 3,085 | $ | — | |||||||
Issuance of convertible preferred stock warrants in connection with debt financing | $ | 270 | $ | 41 | |||||||
Source:
2020 GlobeNewswire, Inc., source