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CHF Solutions, Inc. Announces 49.5 Percent Increase in Revenue for Fourth Quarter 2020 and Provides Company Update

Mar 2, 2021

EDEN PRAIRIE, Minn., March 02, 2021 (GLOBE NEWSWIRE) -- CHF Solutions, Inc. (Nasdaq: CHFS) announced today its results for the fourth quarter ended December 31, 2020.

Recent Highlights

  • Revenue for the fourth quarter of 2020 was $2 million, an increase of 49.5% compared to the prior year period
  • Gross margin was 56.1% for the fourth quarter 2020, up from 50.8% in the corresponding period in 2019 and up from 46.1% in the third quarter of 2020
  • Critical Care revenue benefited in the quarter from increased utilization from hospitals treating COVID-19 patients with the Aquadex System.
  • Continued to see strong momentum in pediatric accounts, adding 5 new locations including Children’s Hospitals in Philadelphia, Houston, and the San Francisco Bay Area
  • Presented a 355 consecutive patient retrospective study 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
  • Successfully submitted CPT code application for ultrafiltration using Aquadex SmartFlow, which will provide access to heart failure patients in the outpatient setting
  • Cash and cash equivalents totaled $14.4 million with no debt as of December 31, 2020

“CHF Solutions built on its momentum over the last few quarters, having delivered solid fourth quarter results, most notably within critical care and pediatric accounts,” said Nestor Jaramillo, CEO of CHF Solutions. “We anticipate that when healthcare systems return to some level of the new normal, we are strongly positioned to see accelerating sales growth as a leading and primary provider of ultrafiltration therapy to cardiologists, nephrologists, hospitalists, intensivists, cardiac surgeons, and pediatricians who treat fluid overload.”

Fourth Quarter 2020 Financial Results
Revenue for the fourth quarter was $2.0 million, an increase of 49.5% compared to $1.4 million in the prior year period. For the fifth straight quarter, the Company achieved sequential revenue growth, with revenues in the fourth quarter having increased 7.4% sequentially compared to the third quarter of 2020. Revenue growth in the quarter was driven by increased utilization among established pediatric accounts, the addition of five new pediatric accounts, and strong performance in critical care accounts. As COVID-19 cases accelerated in the back half of the quarter, the Company saw an increase in the number of hospitals treating COVID-19 patients with the Aquadex SmartFlow. CHF Solutions ended the year with a total of 14 centers using the Aquadex SmartFlow to treat COVID-19 patients, up from three earlier in the pandemic.

Gross margin was 56.1% for the fourth quarter 2020, up from 50.8% in the corresponding period in 2019 and up from 46.1% in the third quarter of 2020. Gross margins for the quarter were favorably impacted by increased consumables volume and improved manufacturing efficiencies.

Operating expenses for the fourth quarter of 2020 were $5.4 million, an increase of 5.7% as compared to the prior year period. The increase in operating expenses was primarily due to fully staffed sales territories and increased R&D expenses, up 10% as compared to the prior year period in 2019.

The Company recognized a gain of $1.2 million in the fourth quarter of 2020 related to the dissolution of a foreign subsidiary in Australia. The gain relates to the realization of cumulative foreign exchange adjustments previously recorded on the balance sheet. Net loss for the fourth quarter of 2020 was $3.1 million, as compared to a loss of $4.4 million in the prior year period in 2019.

The Company used $3.4 million of cash in the fourth quarter of 2020 to finance operations. Cash and cash equivalents were $14.4 million with no debt as of December 31, 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: 5495878. 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
(In thousands, except per share amounts)

    Three months ended
December 31,
  Twelve months ended
December 31,
    2020   2019   2020   2019
Net sales   $ 2,044     $ 1,367     $ 7,441     $ 5,511  
Costs and expenses:                              
Cost of goods sold     897       673       3,384       2,660  
Selling, general and administrative     4,384       4,187       17,417       16,285  
Research and development     1,047       953       3,668       4,672  
Total costs and expenses     6,328       5,813       24,469       23,617  
Loss from operations     (4,284 )     (4,446 )     (17,028 )     (18,106 )
Realized foreign currency translation gain from dissolution of subsidiary     1,202       -       1,202       -  
Other income (expense), net     (2 )     1       (1 )     -  
Loss before income taxes     (3,084 )     (4,445 )     (15,827 )     (18,106 )
Income tax expense     (2 )     (3 )     (9 )     (8 )
Net loss   $ (3,086 )   $ (4,448 )   $ (15,836 )   $ (18,114 )
                               
Basic and diluted loss per share   $ (1.13 )   $ (33.46 )   $ (10.67 )   $ (278.90 )
                               
Weighted average shares outstanding – basic and diluted     2,736       133       1,649       81  
                               
Other comprehensive loss:                              
Realized foreign currency translation gain from dissolution of subsidiary   $ (1,202 )   $ -     $ (1,202 )   $ -  
Unrealized foreign currency translation adjustments   $ (12 )   $ (5 )   $ (19 )   $ (9 )
Total comprehensive loss   $ (4,300 )   $ (4,453 )   $ (17,057 )   $ (18,123 )


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

    December 31,
2020
  December 31,
2019
ASSETS            
Current assets            
Cash and cash equivalents   $ 14,437     $ 1,279  
Accounts receivable     905       799  
Inventories     2,957       1,797  
Other current assets     237       161  
Total current assets     18,536       4,036  
Property, plant and equipment, net     1,200       991  
Operating lease right-of-use asset, net     255       442  
Other assets     21       133  
TOTAL ASSETS   $ 20,012     $ 5,602  
             
LIABILITIES AND STOCKHOLDERS’ EQUITY            
Current liabilities            
Accounts payable   $ 1,097     $ 1,488  
Accrued compensation     2,192       1,592  
Current portion of operating lease liability     206       186  
Current portion of finance lease liability     24       -  
Other current liabilities     66       85  
Total current liabilities     3,585       3,351  
Operating lease liability     55       261  
Finance lease liability     54       -  
Total liabilities     3,694       3,612  
Commitments and contingencies            
             
Stockholders’ equity            
Series A junior participating preferred stock as of December 31, 2020 and December 31, 2019, par value $0.0001 per share; authorized 30,000 shares, none outstanding            
Series F convertible preferred stock as of December 31, 2020 and December 31, 2019, par value $0.0001 per share; authorized 127 and 535 shares, respectively, issued and outstanding 127 and 535 shares, respectively            
Preferred stock as of December 31, 2020 and December 31, 2019, par value $0.0001 per share; authorized 39,969,873 and 39,969,465 shares, respectively, none outstanding            
Common stock as of December 31, 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     249,663       218,278  
Accumulated other comprehensive income:            
Foreign currency translation adjustment     (7 )     1,214  
Accumulated deficit     (233,338 )     (217,502 )
Total stockholders’ equity     16,318       1,990  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY   $ 20,012     $ 5,602  


CHF SOLUTIONS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)

    For the years ended
December 31,
    2020   2019
Operating Activities            
Net loss   $ (15,836 )   $ (18,114 )
Adjustments to reconcile net loss to cash flows from operating activities:            
Depreciation and amortization   376     239  
Stock-based compensation expense   1,349     1,512  
Loss on disposal of property and equipment   40      
Realized foreign currency translation gain from dissolution of subsidiary   (1,202)      
Changes in operating assets and liabilities:            
Accounts receivable   (106 )   (13 )
Inventories   (1,420 )   (343 )
Other current assets   (76 )   42  
Other assets and liabilities   112     18  
Accounts payable and accrued compensation   191     292  
Net cash used in operations   (16,572 )   (16,367 )
             
Investing activities:            
Purchase of property and equipment   (298 )   (490 )
Proceeds from the sale of property and equipment   31      
Net cash used in investing activities   (267 )   (490 )
             
Financing activities:            
Proceeds from public stock offerings, net   25,921     12,665  
Proceeds from warrant exercises   4,115      
Payments on finance lease liability   (20 )    
Net cash provided by financing activities   30,016     12,665  
             
Effect of exchange rate changes on cash   (19 )   (9 )
Net increase (decrease) in cash and cash equivalents   13,158     (4,201 )
Cash and cash equivalents—beginning of year   1,279     5,480  
Cash and cash equivalents—end of year   $ 14,437     $ 1,279  
             
Supplemental schedule of non-cash activities            
Financing fees incurred for subsequent equity financing included in other assets and accounts payable   $     $ 111  
Inventory transferred to property, plant and equipment   $ 260     $ 204  
Equipment acquired through finance lease liability   $ 98     $  
                 
Supplemental cash flow information                
Cash paid for income taxes   $ 10     $ 4  
                 

 

 
CONTACTS:

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

Matt Bacso, CFA
Gilmartin Group LLCMatt.bacso@gilmartinir.com

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

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Source: CHF Solutions, Inc.