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CHF Solutions, Inc. Announces 52 Percent Increase in Revenue for Third Quarter 2020 and Provides Company Update

Nov 10, 2020

EDEN PRAIRIE, Minn., Nov. 10, 2020 (GLOBE NEWSWIRE) -- CHF Solutions, Inc. (Nasdaq: CHFS) announced today its results for the third quarter ended September 30, 2020.

Recent Highlights

  • Revenue for the third quarter of 2020 was $1.9 million, an increase of 52% compared to the prior year period
  • Increased Aquadex™ therapy utilization in existing pediatric hospital accounts; opened 6 new pediatric hospital accounts
  • Partnered with Acute Kidney Injury Critical Care Research Foundation and Watermark Research Partners to initiate a pediatric registry to collect real-world evidence for the use of Aquadex SmartFlow™
  • Announced the Aquadex product line was added to the Federal Supply Schedule, expanding access to all federal agencies and eliminating months of fulfillment process time
  • Hosted two webinars during the quarter, led by:
    - Dr. David Askenazi, M.D. MSPH on treatment of fluid overload on pediatric patients and clinical benefits of Aquadex therapy
    - Dr. John Jefferies, M.D. on the use of precision medicine for the treatment of fluid overload in heart failure patients utilizing the Aquadex SmartFlow system
  • A 355-patient retrospective study was presented at the Annual Scientific Meeting of Heart Failure Society of America, which showed substantial mean fluid removal with no negative changes in renal function and reduced rehospitalization rates in patients treated with Aquadex therapy
  • On November 3, 2020, received notification from Nasdaq that the company had regained compliance with NASDAQ’s minimum bid price requirement, after effecting a 1-for-30 reverse stock split to remain in compliance
  • Cash and cash equivalents totaled $17.9 million with no debt as of September 30, 2020

“CHF Solutions achieved very solid performance in the third quarter, most notably within pediatric accounts,” said John Erb, chairman and CEO of CHF Solutions. “The pediatric opportunity is growing, as more children’s hospitals acquire our Aquadex SmartFlow product and complete training. In the third quarter, we had twelve children’s hospitals purchase product, reinforcing our strategic focus in this area.”

Third Quarter 2020 Financial Results
Revenue for the third quarter was $1.9 million, an increase of 52% compared to $1.3 million in the prior year period. Revenue growth in the quarter was driven by increased utilization among established pediatric accounts, and the addition of six new pediatric accounts.

The Company offered incentives to existing customers to upgrade consoles to Aquadex SmartFlow which impacted third quarter gross margins. The Company believes these upgrades will improve the customer experience with the therapy and increase utilization. Additionally, the Company experienced a higher mix of international distributor revenue which normally carries a lower sales price than in the U.S. Gross margin was 46.1% in the third quarter, compared to 56.9% in the prior year period.

Operating expenses for the third quarter of 2020 were $5.1 million, a decrease of 1.6% compared to the prior year period. The slight decrease in operating expenses was primarily due reduced product development costs compared to the prior year period.

Net loss from operations for the third quarter of 2020 was $4.3 million, compared to a loss of $4.5 million in the prior year period.

Cash and cash equivalents were $17.9 million with no debt as of September 30, 2020. During the quarter, the Company announced the closing of a public offering for net proceeds of $13 million. The Company also received $1.8 million in cash proceeds from the exercise of warrants in the third quarter of 2020.

Webcast and Conference Call Information
The Company will host a conference call and webcast at 9:00 AM ET today to discuss its financial results and provide an update on the Company’s performance. To access the live webcast, please visit http://ir.chf-solutions.com/events. Alternatively, you may access the live conference call by dialing (877) 303-9826 (U.S.) or (224) 357-2194 (international) and using conference ID: 6097367. An audio archive of the webcast will be available following the call at http://ir.chf-solutions.com/events.

About CHF Solutions 
CHF Solutions, Inc. (Nasdaq: CHFS) is a medical device company dedicated to changing the lives of patients suffering from fluid overload through science, collaboration and innovation. The company is focused on developing, manufacturing and commercializing the Aquadex SmartFlow™ system for ultrafiltration therapy. CHF Solutions is headquartered in Minneapolis, Minn., with wholly-owned subsidiaries in Australia and Ireland. The company has been listed on the Nasdaq Capital Market since February 2012.

About the Aquadex SmartFlow System
The Aquadex SmartFlow system delivers clinically proven therapy using a simple, flexible and smart method of removing excess fluid from patients suffering from hypervolemia (fluid overload). The Aquadex SmartFlow system is indicated for temporary (up to 8 hours) or extended (longer than 8 hours in patients who require hospitalization) use in adult and pediatric patients weighing 20 kg or more whose fluid overload is unresponsive to medical management, including diuretics. All treatments must be administered by a health care provider, within an outpatient or inpatient clinical setting, under physician prescription, both having received training in extracorporeal therapies.

Forward-Looking Statements
Certain statements in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation, statements regarding the value that the company brings to its customers. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this release, including, without limitation, those risk associated with our ability to execute on our commercialization strategy, the impact of the COVID-19 pandemic, the possibility that we may be unable to raise sufficient funds necessary for our anticipated operations, our post-market clinical data collection activities, benefits of our products to patients, our expectations with respect to product development and commercialization efforts, our ability to increase market and physician acceptance of our products, potentially competitive product offerings, intellectual property protection, our ability to integrate acquired businesses, our expectations regarding anticipated synergies with and benefits from acquired businesses, and other risks and uncertainties described in our filings with the SEC. Forward-looking statements speak only as of the date when made. CHF Solutions does not assume any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Financials

CHF SOLUTIONS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
(In thousands, except per share amounts)

    Three months ended
September 30,
Nine months ended
September 30,
    2020   2019     2020 2019  
Net sales $ 1,904   $ 1,252   $ 5,397   $ 4,144  
Costs and expenses:                        
Cost of goods sold   1,026     540     2,486     1,987  
Selling, general and administrative   4,264     4,107     13,034     12,098  
Research and development   871     1,112     2,620     3,719  
Total costs and expenses   6,161     5,759     18,140     17,804  
Loss from operations   (4,257 )   (4,507 )   (12,743 )   (13,660 )
Other income (loss), net       (1 )       (1 )
Loss before income taxes   (4,257 )   (4,508 )   (12,743 )   (13,661 )
Income tax expense   (3 )   (1 )   (7 )   (5 )
Net loss $ (4,260 ) $ (4,509 ) $ (12,750 ) $ (13,666 )
                         
Basic and diluted loss per share $ (2.08 ) $ (51.12 ) $ (11.27 ) $ (284.70 )
                         
Weighted average shares outstanding – basic and diluted   2,049     88     1,287     64  
                         
Other comprehensive loss:                        
Foreign currency translation adjustments $ (7 ) $ 1   $ (12 ) $ (4 )
Total comprehensive loss $ (4,267 ) $ (4,508 ) $ (12,762 ) $ (13,670 )
                         



CHF Solutions, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets
(In thousands, except share and per share amounts)

    September 30,
2020
    December 31,
2019
 
ASSETS   (unaudited)        
Current assets            
Cash and cash equivalents $ 17,947   $ 1,279  
Accounts receivable   1,048     799  
Inventory   2,921     1,797  
Other current assets   235     161  
Total current assets   22,151     4,036  
Property, plant and equipment, net   1,244     991  
Operating lease right-of-use asset   303     442  
Other assets   21     133  
TOTAL ASSETS $ 23,719   $ 5,602  
             
LIABILITIES AND STOCKHOLDERS’ EQUITY            
Current liabilities            
Accounts payable $ 929   $ 1,488  
Accrued compensation   2,012     1,592  
Current portion of operating lease liability   201     186  
Current portion of finance lease liability   24      
Other current liabilities   57     85  
Total current liabilities   3,223     3,351  
Operating lease liability   108     261  
Finance lease liability   60      
Total liabilities   3,391     3,612  
             
Commitments and contingencies            
             
Stockholders’ equity            
Series A junior participating preferred stock as of September 30, 2020 and December 31, 2019, par value $0.0001 per share; authorized 30,000 shares, none outstanding        
Series F convertible preferred stock as of September 30, 2020 and December 31, 2019, par value $0.0001 per share; authorized 127 and 535 shares, respectively, issued and outstanding 127 and 535, respectively        
Preferred stock as of September 30, 2020 and December 31, 2019, par value
$0.0001 per share; authorized 39,969,873 and 39,969,465 shares, none outstanding
       
Common stock as of September 30, 2020 and December 31, 2019, par value
$0.0001 per share; authorized 100,000,000 shares, issued and outstanding
2,736,060 and 155,802, respectively
       
Additional paid in capital   249,378     218,278  
Accumulated other comprehensive income:            
Foreign currency translation adjustment   1,202     1,214  
Accumulated deficit   (230,252 )   (217,502 )
Total stockholders’ equity   20,328     1,990  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 23,719   $ 5,602  
             



CHF SOLUTIONS, INC. 
AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)

    Nine months ended
September 30,
    2020
    2019  
Operating Activities:            
Net loss $ (12,750 ) $ (13,666 )
Adjustments to reconcile net loss to cash flows used in operating activities:            
Depreciation and amortization   253     179  
Stock-based compensation expense, net   1,036     1,113  
Loss on disposal of property and equipment   46      
Changes in operating assets and liabilities:            
Accounts receivable   (249 )   258  
Inventory   (1,371 )   (158 )
Other current assets   (74 )   (74 )
Other assets   112     (27 )
Accounts payable and accrued expenses   (166 )   38  
Net cash used in operating activities   (13,163 )   (12,337 )
             
Investing Activities:            
Purchases of property and equipment   (207 )   (464 )
Net cash used in investing activities   (207 )   (464 )
             
Financing Activities:            
Proceeds from public stock offerings, net   25,949     10,959  
Proceeds from warrant exercises   4,115      
Payments on finance lease liability   (14 )    
Net cash provided by financing activities   30,050     10,959  
             
Effect of exchange rate changes on cash   (12 )   (4 )
Net increase in cash and cash equivalents   16,668     (1,846 )
Cash and cash equivalents - beginning of period   1,279     5,480  
Cash and cash equivalents - end of period $ 17,947   $ 3,634  
             
Supplemental cash flow information            
Cash paid for income taxes $   $  
Inventory transferred to property, plant and equipment $ 247   $ 204  
Equipment acquired through finance lease liability $ 98   $  

CONTACTS:

INVESTORS:
Claudia Napal Drayton
Chief Financial Officer
CHF Solutions, Inc.
952-345-4205
ir@chf-solutions.com Matt Bacso, CFA
Gilmartin Group LLC Matt.bacso@gilmartinir.com

MEDIA:
Jessica Stebing
Health+Commerce
260-336-6202
jstebing@healthandcommerce.com

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Source: CHF Solutions, Inc.