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Avinger Announces Second Quarter 2018 Financial Results

REDWOOD CITY, Calif., Aug. 13, 2018 (GLOBE NEWSWIRE) -- Avinger, Inc. (Nasdaq: AVGR), a leading developer of innovative treatments for peripheral artery disease (PAD), today reported results for the second quarter ended June 30, 2018.

Second Quarter and Recent Highlights

  • Revenue of $2.1 million for the second quarter of 2018, an increase of 14% from $1.8 million in the prior quarter
  • Received FDA clearance of next generation Pantheris image-guided atherectomy device and announced successful treatment of patients in several centers throughout the US
  • Ocelot and Pantheris Lumivascular products featured at multiple clinical conferences in live cases, abstracts, and presentations, including New Cardiovascular Horizons 2018 (NCVH), CVC Arterial and Venous Endovascular Conference, Complex Cardiovascular Catheter Therapeutics (C3) 2018, and Charing Cross International Symposium 2018
  • Announced the first patients enrolled in post-market study comparing Pantheris OCT imaging to intravascular ultrasound, with results intended to support CPT code application for incremental diagnostic reimbursement
  • Raised an additional $3.55 million in July 2018 from the sale of securities under a registered direct offering
  • Made significant new hires to the senior management team, including the appointment of Jaafer Golzar, MD, a key opinion leader in the treatment of peripheral artery disease as Chief Medical Officer, and Mark Weinswig, a seasoned finance leader, as Chief Financial Officer

“Receiving FDA clearance for our next generation Pantheris 3.0 was a key highlight of the second quarter and a significant milestone for Avinger. Following successful cases and positive physician feedback in initial US sites, we are now focused on the commercial rollout of this next generation device to our installed base of accounts,” said Jeff Soinski, Avinger’s president and CEO. “We delivered strong sequential quarter revenue growth and made significant progress on the development of our pipeline products and in our clinical programs during the second quarter. We also added new capital to our balance sheet and made important new additions to our senior leadership team in recent months. I am pleased with the progress we are making as we return the company to growth and excited about our prospects for the future.”

Second Quarter 2018 Financial Results
Total revenue was $2.1 million for the second quarter ended June 30, 2018, a 14% decrease from the second quarter of 2017 and a 14% increase from the first quarter of 2018. These results reflect the first commercial sales of the next generation Pantheris 3.0 device in the United States and the continuing focus on disposable device utilization in existing accounts.

Gross margin for the second quarter of 2018 was -5%, compared to -59% in the second quarter of 2017 and 22% in the first quarter of 2018. Gross margin in the second quarter would have been 25%, excluding excess and obsolete inventory charges and stock-based compensation charges as defined under non-GAAP measures in this press release. 

Operating expenses for the second quarter of 2018 were $5.4 million, a 45% decrease compared to $9.8 million in the second quarter of 2017 and a 10% decrease compared to $6.0 million in the first quarter of 2018.

Operating loss for the second quarter of 2018 was $5.5 million, a 51% improvement compared to $11.3 million for the second quarter of 2017 and a 2% improvement compared to $5.6 million in the first quarter of 2018.  Net loss attributable to common stockholders for the second quarter of 2018 was $6.6 million, compared to $12.8 million for the second quarter of 2017 and compared to $15.9 million for the first quarter of 2018.

Adjusted EBITDA, as defined under non-GAAP measures in this press release, was a loss of $4.0 million for the second quarter of 2018, an improvement of $2.7 million compared to a loss of $6.7 million for the second quarter of 2017 and an improvement of $0.8 million compared to the first quarter of 2018.

Cash and cash equivalents totaled $10.1 million as of June 30, 2018, compared to $14.4 million as of March 31, 2018.  The cash levels at June 30, 2018 do not include the $3.55 million capital fundraising completed in July 2018.

As of June 30, 2018, there were approximately 9.3 million shares of common stock, 41,800 shares of Series A preferred stock and 1,701 shares of Series B preferred stock outstanding. Each share of the Series A preferred stock is convertible into 500 shares of the Company’s common stock at a conversion price of $2.00 per share and each share of Series B preferred stock, after taking into account the effect of the July 2018 registered direct offering, is convertible into approximately 633 shares of the Company’s common stock at a conversion price of $1.58. Assuming conversion of all outstanding shares of preferred stock and the current conversion prices, the Company would have approximately 31.3 million shares of common stock outstanding at June 30, 2018, excluding outstanding warrants.

Conference Call
Avinger will hold a conference call today, August 13, 2018 at 5:00pm ET to discuss its second quarter 2018 financial results.

Individuals interested in listening to the conference call may do so by dialing (877) 407-8293  for domestic callers or (201) 689-8349 for international callers. To listen to a live webcast, please visit; https://hd.choruscall.com/InComm/?callme=true&passcode=13679774&h=true&info=company&r=true&B=6 .

A replay of the call will be available beginning August 13, 2018 at approximately 7:30pm PT/10:30pm ET through August 27, 2018. To access the replay, dial (877) 660-6853 or (201) 612-7415 and reference Conference ID: 13682440. The webcast will also be available on Avinger's website for 3 months following the completion of the call at: www.avinger.com.

About Avinger, Inc.
Avinger is a commercial-stage medical device company that designs and develops the first-ever image-guided, catheter-based system that diagnoses and treats patients with peripheral artery disease (PAD). Avinger is dedicated to radically changing the way vascular disease is treated through its Lumivascular platform, which currently consists of the Lightbox imaging console, the Ocelot family of chronic total occlusion (CTO) catheters, and the Pantheris® family of atherectomy devices. Avinger is based in Redwood City, California. For more information, please visit www.avinger.com. 

Forward-Looking Statements
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding the FDA clearance and commercial introduction of the next generation Pantheris, future product development milestones and regulatory approvals, financial performance, and the sufficiency of the Company’s current financial resources. Such statements are based on current assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties, many of which are beyond our control, include our dependency on a limited number of products; our ability to demonstrate the benefits of our Lumivascular platform; the resource requirements related to Pantheris; the outcome of clinical trial results; potential exposure to third-party product liability, intellectual property and other litigation; lack of long-term data demonstrating the safety and efficacy of our Lumivascular platform products; experiences of high-volume users of our products may lead to better patient outcomes than those of physicians that are less proficient; reliance on third-party vendors; dependency on physician adoption; reliance on key personnel; and requirements to obtain regulatory approval to commercialize our products; as well as the other risks described in the section entitled “Risk Factors” and elsewhere in our annual Form 10-K filing made with the Securities and Exchange Commission on March 30, 2018. These forward-looking statements speak only as of the date hereof and should not be unduly relied upon. Avinger disclaims any obligation to update these forward-looking statements.

Non-GAAP Financial Measures
Avinger has provided in this press release financial information that has not been prepared in accordance with generally accepted accounting principles in the United States (GAAP). The Company uses these non-GAAP financial measures internally in analyzing its financial results and believes that the use of these non-GAAP financial measures is useful to investors as an additional tool to evaluate ongoing operating results and trends and in comparing the Company’s financial results with other companies in its industry, many of which present similar non-GAAP financial measures.

The presentation of these non-GAAP financial measures is not meant to be considered in isolation or as a substitute for comparable GAAP financial measures, and should be read only in conjunction with the Company’s financial statements prepared in accordance with GAAP. A reconciliation of the Company’s non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included in this press release, and investors are encouraged to review these reconciliations.

Adjusted EBITDA. Avinger defines Adjusted EBITDA as Loss from Operations plus Stock-based Compensation expense plus charges for our excess and obsolete inventory plus Depreciation and Amortization expense plus charges related to our organizational and facilities restructuring activities and litigation settlement expense.

Non-GAAP Gross Profit. Avinger defines Non-GAAP Gross Profit as Gross Profit plus Stock-based Compensation expense included in Gross Profit plus charges for our excess and obsolete inventory.

Investors are cautioned that there are a number of limitations associated with the use of non-GAAP financial measures as analytical tools. Furthermore, these non-GAAP financial measures are not based on any standardized methodology prescribed by GAAP, and the components that Avinger excludes in its calculation of non-GAAP financial measures may differ from the components that its peer companies exclude when they report their non-GAAP results of operations. Avinger compensates for these limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP financial measures. In the future, the Company may also exclude other non-recurring expenses and other expenses that do not reflect the Company’s core business operating results.

Public Relations Contact:
Phil Preuss
VP of Marketing & Business Operations
Avinger, Inc.
(650) 241-7900
pr@avinger.com

Investor Contact:

Mark Weinswig
Chief Financial Officer
Avinger, Inc.
(650) 241-7916
ir@avinger.com

                   
Condensed Statements of Operations and Comprehensive Loss                  
(in thousands) (unaudited)  
   
  For the Three Months Ended   For the Six Months Ended  
  June 30,   March 31,   June 30,   June 30,   June 30,  
   2018      2018      2017      2018      2017    
                     
Revenue $   2,058   $   1,809   $   2,459   $   3,867   $   5,950    
Cost of revenue     2,169         1,415         3,919         3,584         7,994    
Gross profit (loss)     (111 )       394         (1,460 )       283         (2,044 )  
                     
Operating expense   
Research and development     1,159         1,777         3,097         2,936         7,020    
Selling, general, and administrative     4,204         4,260         6,189         8,464         15,507    
Restructuring charges     -          -          519         -          519    
Total operating expense      5,363         6,037         9,805         11,400         23,046    
                     
Operating (loss)      (5,474 )     (5,643 )     (11,265 )     (11,117 )     (25,090 )  
                     
Other income (expense):                    
Interest expense, net     (312 )       (4,639 )       (1,540 )       (4,951 )       (3,058 )  
Other income (expense), net     (13 )       1         6         (12 )       9    
Net loss and comprehensive loss     (5,799 )       (10,281 )       (12,799 )       (16,080 )       (28,139 )  
Accretion of preferred stock dividends     (836 )       (410 )       -          (1,246 )       -     
Deemed dividend arising from beneficial conversion                    
  feature of convertible preferred stock     -          (5,216 )       -          (5,216 )       -     
Net loss attributable to common stockholders $   (6,635 )   $   (15,907 )   $   (12,799 )   $   (22,542 )   $   (28,139 )  
                     
                     
Net loss per share attributable to common stockholders                    
  basic and diluted $   (0.98 )   $   (7.99 )   $   (21.40 )   $   (5.18 )   $   (47.13 )  
                                         
Weighted average common shares used to compute  
  net loss per share, basic and diluted   6,755       1,992       598       4,354       597    
                                         


                   
Condensed Balance Sheets                  
(in thousands, except per share amounts) (unaudited)                  
                       
        June 30,   December 31,    March 31,   Increase   
Assets        2018      2017      2018     (decrease)  
Current assets:                  
    Cash and cash equivalents   $   10,144     $   5,389     $   14,418     $   (4,274 )  
    Accounts receivable, net of allowance for doubtful accounts of $191 and $146                   
      at June 30, 2018 and December 31, 2017, respectively       1,675         1,127         1,354         321    
    Inventories       3,651         4,295         4,007         (356 )  
    Prepaid expenses and other current assets       1,079         640         1,163         (84 )  
  Total current assets       16,549         11,451         20,942         (4,393 )  
                       
Property and equipment, net       2,098         2,950         2,431         (333 )  
Other assets       584         687         590         (6 )  
  Total assets   $   19,231     $   15,088     $   23,963     $   (4,732 )  
                       
Liabilities and stockholders' equity (deficit)                  
                       
Current liabilities:                  
    Accounts payable   $   1,373     $   1,273     $   2,160     $   (787 )  
    Accrued compensation       1,197         863         955         242    
    Accrued expenses and other current liabilities       812         3,597         907         (95 )  
    Borrowings       7,823         44,744         7,521         302    
    Preferred stock dividends payable       1,246         -          410         836    
  Total current liabilities       12,451         50,477         11,953         498    
Other long-term liabilities       188         301         111         77    
  Total liabilities       12,639         50,778         12,064         575    
                       
Stockholders' equity (deficit):                  
Common stock, par value $0.001       8         1         3         5    
Additional paid-in capital       323,991         265,636         323,504         487    
Accumulated deficit       (317,407 )       (301,327 )       (311,608 )       (5,799 )  
  Total stockholders' equity (deficit)       6,592         (35,690 )       11,899         (5,307 )  
  Total liabilities and stockholders' equity (deficit)   $   19,231     $   15,088     $   23,963     $   (4,732 )  
                       


           
Avinger, Inc.          
Non-GAAP Gross Profit (Loss) and gross margin          
(in thousands)          
(unaudited)          
        Three Months Ended   Six Months Ended  
        June 30,   March 31,   June 30,   June 30,   June 30,  
         2018     2018     2017     2018     2017   
                           
Gross profit (loss) $   (111 )   $   394     $   (1,460 )   $   283     $   (2,044 )  
Add: Stock-based compensation     16         19         105         35         256    
Add: Excess and obsolete inventory     607         (79 )       2,320         528         3,577    
  Non-GAAP gross profit (loss) $   512     $   334     $   965     $   846     $   1,789    
  Non-GAAP gross margin   25%       18%       39%       22%       30%    
                     


           
Avinger, Inc.          
Adjusted EBITDA          
(in thousands)          
(unaudited)          
        Three Months Ended   Six Months Ended  
        June 30,   March 31,   June 30,   June 30,   June 30,  
         2018     2018     2017     2018     2017   
                           
Loss from operations $   (5,474 )   $   (5,643 )   $   (11,265 )   $   (11,117 )   $   (25,090 )  
Add: Stock-based compensation     641         619         1,335         1,260         2,877    
Add: Restructuring charges     -          -          519         -          519    
Add: Excess and obsolete inventory     607         (79 )       2,320         528         3,577    
Add: Depreciation and amortization     241         277         426         518         854    
  Adjusted EBITDA $   (3,985 )   $   (4,826 )   $   (6,665 )   $   (8,811 )   $   (17,263 )  
                     

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Avinger, Inc.