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CHF Solutions, Inc. Announces Third Quarter Financial Results and Provides Company Update

Nov 5, 2019

EDEN PRAIRIE, Minn., Nov. 05, 2019 (GLOBE NEWSWIRE) -- CHF Solutions, Inc. (Nasdaq: CHFS), a medical device company focused on developing, manufacturing and commercializing a clinically proven solution for diuretic-resistant patients suffering from fluid overload, announced today its results for the third quarter ended September 30, 2019, which included the following highlights:

  • Submitted 510(k) application for pediatric label modification on September 30, 2019. Expect regulatory clearance early Q1 2020.
  • Announced publication of a multi-center, retrospective clinical study titled “Kidney Support in Children Using an Ultrafiltration Device” in the Clinical Journal of the American Society of Nephrology, highlighting the use of Aquadex FlexFlow® system in pediatric patients, showing positive survival outcomes across all pediatric populations.
  • Hosted an investor call with principal investigators of pediatric study, Stuart Goldstein, MD (Cincinnati Children’s Hospital Center), David Askenazi, MD (Children’s of Alabama), and Shina Menon, MD (Seattle Children’s Hospital).
  • Announced that Abington Hospital of the Jefferson Health System has initiated a retrospective 344 patient study to evaluate the use of Aquadex FlexFlow in fluid overloaded patients.
  • Opened 4 new accounts in large hospital systems in Texas and Tennessee, and 2 pediatric accounts in Pennsylvania and Delaware. In Q4 expect to continue to open new hospital systems in Ohio, Georgia, Tennessee, and New York, and 5 pediatric accounts.
  • Announced sales force realignment to increase focus on cardiac surgery and eventually pediatrics. Revenue for third quarter ended September 30, 2019 was $1.3 million, a decrease of 8 percent from Q3 2018. Gross margin percentages increased to 57 percent from 33 percent for the same period a year ago.
  • Ended the quarter with $3.6 million in cash and no debt. Subsequent to quarter end, announced financing transactions totaling approximately $1.7 million in net proceeds, for total pro forma cash balance of approximately $5.3 million.

“We continue to execute on our strategy of finding new clinical applications for our therapy including new applications in critical care and eventually pediatrics,” said John Erb, chairman and CEO of CHF Solutions. “We will continue to develop and refine our strategic focus toward driving revenue, which is the key metric our employees, shareholders and potential investors use to measure performance.”

FINANCIALS

CHF SOLUTIONS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations and Comprehensive Loss
 (Unaudited and in thousands, except per share amounts)

 

 
  Three months ended
September 30,
Nine months ended
September 30,
    2019      2018
      2019
    2018   
Net sales $ 1,252   $ 1,363   $ 4,144   $ 3,499  
Costs and expenses:                        
  Cost of goods sold   540     915     1,987     2,686  
  Selling, general and administrative   4,107     3,713     12,098     11,489  
  Research and development   1,112     985     3,719       2,107  
  Total costs and expenses   5,759     5,613     17,804     16,282  
  Loss from operations   (4,507 )   (4,250 )   (13,660 )   (12,783 )
  Other income (loss), net   (1 )   10     (1 )   10  
  Loss before income taxes   (4,508 )   (4,240 )   (13,661 )   (12,773 )
  Income tax expense   (1 )   (1 )   (5 )   (3 )
Net loss $ (4,509 ) $ (4,241 ) $ (13,666 ) $ (12,776 )
                         
Basic and diluted loss per share $ (1.70 ) $ (8.50 ) $ (9.49 ) $ (34.59 )
                         
Weighted average shares outstanding – basic and diluted   2,646     499     1,915     369  
                         
Other comprehensive loss:                        
  Foreign currency translation adjustments $ 1   $ (1 ) $ (4 ) $ (2 )
Total comprehensive loss $ (4,508 ) $ (4,242 ) $ (13,670 ) $ (12,778 )


CHF SOLUTIONS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except share and share amounts)

    September 30,
2019
    December 31,
2018
 
ASSETS   (unaudited)        
Current assets            
  Cash and cash equivalents   $ 3,634   $ 5,480  
  Accounts receivable   528     786  
  Inventory   1,612     1,658  
  Other current assets   277     203  
Total current assets   6,051     8,127  
  Property, plant and equipment, net   1,025     536  
  Operating lease right-of-use asset, net   487      
  Other assets   21     113  
TOTAL ASSETS $ 7,584   $ 8,776  
             
LIABILITIES AND STOCKHOLDERS’ EQUITY            
Current liabilities            
  Accounts payable $ 1,427   $ 1,133  
  Accrued compensation   1,242     1,498  
  Current portion of operating lease liability   181      
  Other current liabilities   87     209  
Total current liabilities   2,937     2,840  
  Operating lease liability   309      
Total liabilities   3,246     2,840  
             
Commitments and contingencies     —       —  
             
Stockholders’ equity            
Series A junior participating preferred stock as of September 30, 2019 and December 31, 2018, par value $0.0001 per share; authorized 30,000 shares, none outstanding     —       —  
Series F convertible preferred stock as of September 30, 2019 and December 31, 2018, par value $0.0001 per share; authorized 535 and 535 shares, respectively, issued and outstanding 535 and 535, respectively     —       —  
Series G convertible preferred stock as of September 30, 2019 and December 31, 2018, par value $0.0001 per share; authorized 0 and 0 shares, respectively, issued and outstanding 0 and 0, respectively            
Preferred stock as of September 30, 2019 and December 31, 2018, par value
$0.0001 per share; authorized 39,969,465 and 39,969,465 shares, respectively, none outstanding
    —       —  
Common stock as of September 30, 2019 and December 31, 2018, par value
$0.0001 per share; authorized 100,000,000 shares, issued and outstanding
2,879,162 and 513,445, respectively
    —       —  
Additional paid‑in capital   216,173     204,101  
Accumulated other comprehensive income:            
  Foreign currency translation adjustment   1,219     1,223  
Accumulated deficit   (213,054 )   (199,388 )
Total stockholders’ equity   4,338     5,936  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 7,584   $ 8,776  


CHF SOLUTIONS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited, In thousands, except share amounts)

    Outstanding
Shares of Common Stock
  Common
Stock
  Additional
Paid in
Capital
  Accumulated
Other

Comprehensive
Income
  Accumulated
Deficit
  Stockholders’
Equity
 
Balance December 31, 2017   271,357   $   $ 197,367   $ 1,227   $ (182,356 ) $ 16,238  
Net loss           (4,354 ) (4,354 )
Foreign currency translation adjustment         1     1  
Stock-based compensation, net   3     501       501  
Conversion of preferred stock into common stock   32,365            
Balance March 31, 2018   303,725   $   $ 197,868   $ 1,228   $ (186,710 ) $ 12,386  
Net loss                    (4,181 )   (4,181 )
Foreign currency translation adjustment                (2 )       (2 )
Stock-based compensation and stock awards, net    3         606             606  
Conversion of preferred stock into common stock   18,127                      
Balance June 30, 2018   321,855   $   $ 198,474   $ 1,226   $ (190,891 ) $ 8,809  
Net loss                   (4,241 )   (4,241 )
Foreign currency translation adjustment               (1 )       (1 )
Stock-based compensation and stock awards, net   3         437             437  
Issuance of common stock, net   181,941         4,649             4,649  
Conversion of preferred stock into common stock   1,516                      
Balance September 30, 2018   505,315   $   $ 203,560   $ 1,225   $ (195,132 ) $ 9,653  
                                     
    Outstanding
Shares of Common Stock
  Common
Stock
  Additional
Paid in
Capital
  Accumulated
Other

Comprehensive
Income
  Accumulated
Deficit
  Stockholders’
Equity
 
Balance December 31, 2018   513,445   $   $ 204,101   $ 1,223   $ (199,388 ) $ 5,936  
Net loss            (4,727 ) (4,727 )
Foreign currency translation adjustment          (2 )   (2 )
Stock-based compensation, net    3     362       362  
Issuance of common and preferred stock, net    455,178     10,959       10,959  
Conversion of preferred stock into common stock   1,100,394            
Balance March 31, 2019   2,069,020   $   $ 215,422   $ 1,221   $ (204,115 ) $ 12,528  
Net loss            (4,430 ) (4,430 )
Foreign currency translation adjustment          (3 )   (3 )
Stock-based compensation, net        339       339  
Conversion of preferred stock into common stock   259,300            
Balance June 30, 2019   2,328,320   $   $ 215,761   $ 1,218   $ (208,545 ) $ 8,434  
Net loss                    (4,509 )   (4,509 )
Foreign currency translation adjustment               1         1  
Stock-based compensation, net            412             412  
Conversion of preferred stock into common stock   550,842                      
Balance September 30, 2019   2,879,162   $   $ 216,173   $ 1,219   $ (213,054 ) $ 4,338  


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

    Nine months ended
September 30,
    2019

 
  2018  
Operating Activities:     

 
     
Net loss $ (13,666 ) $ (12,776 )
Adjustments to reconcile net loss to cash flows used in operating activities:            
  Depreciation and amortization   179     174  
  Stock-based compensation expense, net   1,113     1,544  
Changes in operating assets and liabilities:            
  Accounts receivable   258     (242 )
  Inventory   (158 )   (360 )
  Other current assets   (74 )   (104 )
  Other assets and liabilities   (27 )    
  Accounts payable and accrued expenses   38     (79 )
Net cash used in operating activities   (12,337 )   (11,843 )
             
Investing Activities:            
  Purchases of property, plant and equipment   (464 )   (177 )
Net cash used in investing activities   (464 )   (177 )
             
Financing Activities:            
  Net proceeds from public stock offering, net   10,959     4,649  
Net cash provided by financing activities   10,959     4,649  
             
Effect of exchange rate changes on cash   (4 )   (2 )
Net decrease in cash and cash equivalents   (1,846 )   (7,373 )
Cash and cash equivalents - beginning of period   5,480     15,595  
Cash and cash equivalents - end of period $ 3,634   $ 8,222  
             
Supplemental schedule of non-cash activities:            
  Inventory transferred to property, plant and equipment $ 204    $  

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 the Investors page of the CHF Solutions website at http://ir.chf-solutions.com or access the webcast directly at 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: 5258206. An audio archive of the webcast will be available following the call on the Investor page 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 innovative technology. The company is focused on developing, manufacturing, and commercializing the Aquadex FlexFlow system for ultrafiltration therapy. CHF Solutions is a Delaware corporation headquartered in Minneapolis, Minnesota with wholly owned subsidiaries in Australia and Ireland. The company has been listed on the Nasdaq Capital Market since February 2012.

About Aquadex FlexFlow® System
The Aquadex FlexFlow system is a clinically proven therapy that provides a safe, effective, and predictable method of removing excess fluid from patients suffering from fluid overload. The Aquadex FlexFlow system is indicated for temporary (up to eight hours) ultrafiltration treatment of patients with fluid overload who have failed diuretic therapy, and for extended (longer than 8 hours) ultrafiltration treatment of patients with fluid overload who have failed diuretic therapy and require hospitalization. The company has submitted an application to the FDA requesting for 510(k) clearance of the Aquadex FlexFlow system to include pediatric patients who weigh 20kg or more. All treatments must be administered by a healthcare provider, under physician prescription, both of whom 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 Company’s ability to grow revenue and add new accounts in future quarters and the timing of the regulatory clearance for an expanded label in pediatrics. 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 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.

CONTACTS:

INVESTORS:
Claudia Napal Drayton
Chief Financial Officer
CHF Solutions, Inc.
952-345-4205
ir@chf-solutions.com

-or-

Bret Shapiro
Managing Partner
CORE IR
516-222-2560
brets@coreir.com
www.coreir.com

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Source: CHF Solutions, Inc.