Aurora Spine Corporation Announces Financial Results for Third Quarter
NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICESGross margin improves to 48%, revealing company on track with FY20 strategy of selling more proprietary productsCARLSBAD, Calif., Nov. 19, 2020 (GLOBE NEWSWIRE) — Aurora Spine Corporation (“Aurora Spine” or the “Company”) (TSXV: ASG) (US: AROSF), a company focused on bringing new solutions to the spinal implant market through a series of innovative, minimally invasive, regenerative spinal implant technologies, today announced the financial results for the third quarter ended September 30, 2020. All figures are in U.S. dollars.
Financial and Business HighlightsReported revenues of $2.4 million in Q3 2020, compared to $1.6M in Q2 and $2.3M in Q1. Compared to Q3 2019, it represents a decrease of 6%.Sequential improvement of gross margin to 48.0% in Q3, up from 40.9% in Q2, and 34.6% in Q1, due to sales mix that included more proprietary products.EBITDAC during Q3 2020 was approximately $132k before including $345k of Personal Payroll Protection funds brought into income during the period. EBITDAC is a non-GAAP, non IFRS measure defined as earnings before interest, taxes, depreciation, amortization, stock-based compensation and other income.Strong cash retention, company ended Q3 with $2.1 million in cash.Aurora Spine was issued United States Patent No: 10,779,954 entitled “Body Density Scan Result-Matched Orthopedic Implants and Methods of Use” for The World’s First DEXA Technology™ Patient-Matched Implant Technology.
Management CommentaryMr. Trent Northcutt, President and C.E.O. of Aurora Spine, stated, “Third quarter financial results rebounded nicely as elective surgeries in the U.S. resumed. The quarter also demonstrated that our strategy implemented earlier in the year, converting third-party products into proprietary products, is well underway as gross profit margins improved to 48%. During the third quarter, proprietary products were 63% of revenue and we are on track to convert nearly all revenues to proprietary products, with the exception of lumbar screws, by the end of the year.”Mr. Northcutt continued, “During the quarter we received notice from the USPTO regarding the issuance of a patent entitled “Body Density Scan Result-Matched Orthopedic Implants and Methods of Use” for the world’s first DEXA Technology™ Patient-Matched Implant Technology. This patent will be utilized to create implants that match the patient’s specific bone density based on a DEXA Scan/T-score allowing for the best bone fusion treatment and most favorable outcome based on that patient’s bone density. We believe that in the coming years this patent will add tremendous value to Aurora and we have begun to lay the groundwork, including clinical trial work, to develop new cervical interbody cages based on the DEXA technology and may consider out-licensing the technology to other companies.”Mr. Northcutt concluded, “I continue to be proud of the Aurora team during these challenging times and thank them for their hard work and dedication. Throughout the pandemic our team has been able to continue progressing Aurora’s new product strategy in trialing the SOLOTM and SiLOTM product launches. We also continue to be prudent in preserving the capital that was raised earlier in the year and this puts the company in a solid financial position to launch more proprietary products, which we plan to do throughout the remainder of the year and during 2021. Thankfully, our strategy is in motion and the company is positioned for renewed growth into 2021 and beyond.”Mr. Chad Clouse, Chief Financial Officer of Aurora Spine, added, “The third quarter was a financially strong and profitable one for Aurora. This was accomplished by improved gross profit margin, which has continued to improve since the company implemented a shift into producing more proprietary products. Expense controls were also a contributing factor to a profitable quarter as the company incurred lower employee costs and marketing expenses. We expect operating expenses to increase to more normalized levels in the coming quarters to support the company’s launch of several new products and initiatives, which should also lead to continued revenue and gross profit margin improvements.”Financial ResultsTotal revenues for the third quarter of 2020 were $2.37 million compared to $2.53 million for the third quarter of 2019, a decrease of 6.3%, but a sequential increase of 50.0% from second quarter 2020 of $1.58 million, as elective surgeries resumed from the Covid-19 shutdown in the first half of the second quarter. Revenues continued to increase throughout the third quarter 2020, with revenue in August and September being slightly higher than the same periods of 2019.Gross margins on total revenues were 48.0% for the third quarter of 2020, compared to 40.0% during the third quarter of 2019. The improvement in gross margins is attributable to the company’s strategy of converting third party product sales to more proprietary, Aurora Spine products.Total operating expenses were $1.147 million for the third quarter of 2020 compared to $1.43 million for the third quarter of 2019. The lower operating expenses were a result of a decrease in expenses due to the Covid-19 crisis, particularly in the area of employee costs. Marketing expenses also decreased due to the cancelation of tradeshows and less travel expenses due to travel restrictions. The company continues to maintain cost controls to preserve its capital for growth initiatives.EBITDAC (a non-GAAP figure non IFRS measure defined as Earnings before Interest, Tax, Depreciation, Amortization and Stock based compensation) was $0.48 million for the third quarter of 2020, compared to $(0.12) million in the third quarter of 2019.Net income was $0.34 million for the third quarter of 2020, compared to a loss of $(0.42) million in the third quarter of 2019. Basic and diluted net income per share was $0.01 per share in the third quarter of 2020 and $(0.01) per share for the third quarter of 2019.Full financial statements can be found on SEDAR at (www.sedar.com).SELECTED BALANCE SHEET INFORMATION
The following table summarizes selected key financial data.SELECTED QUARTERLY INFORMATIONThe Company’s functional currency is the US dollar (USD). The functional currency of the Company’s US subsidiary Aurora is USD.Operating results for each quarter for the last two fiscal years are presented in the table below.* Adjusted by gains and (losses) on sale of equipment.
** Excludes gain and (losses) from Other income (expense) of $219,322 in June 30, 2020 and $344,967 in September 2020. These are anticipated to be non-recurring.
*** EBITDAC is a non GAAP, non IFRS measure defined as Earnings before Interest, Tax, Depreciation, Amortization and Stock based compensation. This amount includes Gains (losses) on sale of property and equipment and Other income (expense).
**** Outstanding options and warrants have not been included in the calculation of the diluted loss per share as they would have the effect of being anti-dilutive.About Aurora SpineAurora Spine is focused on bringing new solutions to the spinal implant market through a series of innovative, minimally invasive, regenerative spinal implant technologies.Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.Forward-Looking StatementsThis news release contains forward-looking information that involves substantial known and unknown risks and uncertainties, most of which are beyond the control of Aurora Spine, including, without limitation, those listed under “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Information” in Aurora Spine’s final prospectus (collectively, “forward-looking information”). Forward-looking information in this news release includes information concerning the proposed use and success of the company’s products in surgical procedures. Aurora Spine cautions investors of Aurora Spine’s securities about important factors that could cause Aurora Spine’s actual results to differ materially from those projected in any forward-looking statements included in this news release. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and may be forward-looking and may involve estimates, assumptions and uncertainties which could cause actual results or outcomes to differ unilaterally from those expressed in such forward-looking statements. No assurance can be given that the expectations set out herein will prove to be correct and, accordingly, prospective investors should not place undue reliance on these forward–looking statements. These statements speak only as of the date of this press release and Aurora Spine does not assume any obligation to update or revise them to reflect new events or circumstances.Contact:
Aurora Spine CorporationTrent Northcutt
President and Chief Executive Officer
(760) 424-2004Chad Clouse
Chief Financial Officer
LYTHAM PARTNERS, LLC
Phoenix | New York