Profound Medical Announces Second Quarter 2021 Financial Results

Rhea-AI Summary

Profound Medical Corp. (NASDAQ: PROF) reported a strong second quarter for 2021, with revenue of approximately $2.6 million, a 156% increase year-over-year. The growth was driven by a 145% rise in recurring revenues. Despite increased operational expenses totaling $7.6 million, net loss slightly widened to about $7.0 million, or $0.35 per share. The company maintains a solid liquidity position with $73.8 million in cash. CEO Arun Menawat remains optimistic about future performance, despite ongoing COVID-19 challenges in certain markets.

Positive

• Revenue increased 156% year-over-year, reaching $2.6 million.
• Recurring revenues rose 145% sequentially.
• Strong liquidity with $73.8 million cash on hand.

Negative

• Net loss increased to approximately $7.0 million, compared to $5.3 million in Q2 2020.
• Total operating expenses rose 74% to approximately $7.6 million.

TORONTO, Aug. 04, 2021 (GLOBE NEWSWIRE) -- Profound Medical Corp. (NASDAQ:PROF; TSX:PRN) (“Profound” or the “Company”), a commercial-stage medical device company that develops and markets customizable, incision-free therapies for the ablation of diseased tissue, today reported financial results for the second quarter ended June 30, 2021.

Recent Corporate Highlights

• On April 21, 2021, the Company participated in the 2021 Bloom Burton & Co. Virtual Healthcare Investor Conference.
• On May 6, 2021, Profound announced a multi-site imaging center agreement for TULSA-PRO^® with Akumin Inc. (NASDAQ/TSX:AKU), a leading provider of freestanding, fixed-site outpatient diagnostic imaging services in the United States.
• On May 19, 2021, the Company announced the voting results from its 2021 Annual General Meeting of Shareholders. Following the meeting, Rashed Dewan, Profound’s VP Finance, Manufacturing & Service, was appointed to the additional position of Chief Accounting Officer. As part of this transition, Aaron Davidson continues in the position of SVP Corporate Development, but no longer serves as Profound’s Chief Financial Officer.
• On June 1, 2021, Profound participated in the Jefferies Virtual Healthcare Conference.
• On June 22, the Company participated in the Virtual Raymond James Human Health Innovations Conference.
• On July 29, 2021, Profound participated in A.G.P.’s Virtual MedTech Summer Conference.

“The U.S. TULSA-PRO^® business rebound that started in March continued through the second quarter, driving a 145% sequential increase in recurring revenues over the previous quarter,” said Arun Menawat, Profound’s CEO. “Moving forward, while we remain cautious about the continuing impact of COVID-19, particularly in select international markets such as China and Japan, we believe that our overall Q2 financial performance bodes well for the second half of 2021.”

Summary Second Quarter 2021 Results

Effective December 31, 2020, Profound changed its presentation currency from the Canadian dollar to the United States dollar. The comparative figures disclosed in this press release have been retrospectively changed to reflect the change in presentation currency to the U.S. dollar, as if the U.S. dollar had been used as the presentation currency for the period ended June 30, 2020. Unless specified otherwise, all amounts in this press release are expressed in U.S. dollars and are presented in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

For the quarter ended June 30, 2021, the Company recorded revenue of approximately $2.6 million, with $1.4 million from the one-time sale of capital equipment and $1.2 million from recurring revenue (non-capital), which consists of the sale of consumables, lease of medical devices, procedures and services associated with extended warranties. Second quarter 2021 revenue increased approximately 156% from $1.0 million in the same three-month period a year ago.

Total operating expenses, which consist of research and development (“R&D”), general and administrative (“G&A”), and selling and distribution expenses, were approximately $7.6 million in the second quarter of 2021, an increase of 74% compared with approximately $4.4 million in second quarter of 2020.

Expenditures for R&D for the three months ended June 30, 2021 were approximately $3.4 million, an increase of 99% compared with approximately $1.7 million in the three months ended June 30, 2020, primarily driven by increased costs associated with new and existing clinical trials, increased spending for R&D initiatives and projects, travel restrictions being removed, options awarded to employees, additional headcount and overall increase to general expenses, partially offset by decreased consulting fees.

G&A expenses for the 2021 second quarter increased by 49% to approximately $2.5 million, compared with approximately $1.6 million in the same period in 2020, due to additional headcount, increased salaries and director fees, higher Nasdaq and TSX fees, increased legal and accounting fees, and options awarded to employees.

Second quarter 2021 selling and distribution expenses increased by 74% to approximately $1.7 million, compared with $993,000 in the second quarter of 2020. While selling and distribution expenses have historically been lower than R&D expenses, Profound continues to expect that, in the future, selling and distribution expenses will exceed R&D expenses as the Company continues to commercialize the TULSA-PRO^® system in the United States.

Net finance costs for the three months ended June 30, 2021 were approximately $602,000, compared with approximately $1.2 million in the three months ended June 30, 2020.

Second quarter 2021 net loss was approximately $7.0 million, or $0.35 per common share, compared to approximately $5.3 million, or $0.33 per common share, in the three months ended June 30, 2020.

Liquidity and Outstanding Share Capital

As at June 30, 2021, Profound had cash of approximately $73.8 million.

As at August 4, 2021, Profound had 20,386,802 common shares issued and outstanding.

For complete financial results, please see Profound’s filings at www.sedar.com, www.sec.gov and on the Company’s website at www.profoundmedical.com under “Financial” in the Investors section.

Conference Call Details

Profound Medical is pleased to invite all interested parties to participate in a conference call today, August 4, 2021, at 4:30 pm ET during which time the results will be discussed.

Live Call:	1-833-710-1825 (Canada and the United States)
	1-929-517-0404 (International)
Replay:	1-404-537-3406
Conference ID:	2181037

The call will also be broadcast live and archived on the Company's website at www.profoundmedical.com under "Webcasts" in the Investors section.

About Profound Medical Corp.

Profound is a commercial-stage medical device company that develops and markets customizable, incision-free therapies for the ablation of diseased tissue.

Profound is commercializing TULSA-PRO^®, a technology that combines real-time MRI, robotically-driven transurethral ultrasound and closed-loop temperature feedback control. TULSA-PRO^® is designed to provide customizable and predictable radiation-free ablation of a surgeon-defined prostate volume while actively protecting the urethra and rectum to help preserve the patient’s natural functional abilities. TULSA-PRO^® has the potential to be a flexible technology in customizable prostate ablation, including intermediate stage cancer, localized radio-recurrent cancer, retention and hematuria palliation in locally advanced prostate cancer, and the transition zone in large volume benign prostatic hyperplasia (BPH). TULSA-PRO^® is CE marked, Health Canada approved, and 510(k) cleared by the U.S. Food and Drug Administration (“FDA”).

Profound is also commercializing Sonalleve^®, an innovative therapeutic platform that is CE marked for the treatment of uterine fibroids and palliative pain treatment of bone metastases. Sonalleve^® has also been approved by the China National Medical Products Administration for the non-invasive treatment of uterine fibroids and has FDA approval under a Humanitarian Device Exemption for the treatment of osteoid osteoma. The Company is in the early stages of exploring additional potential treatment markets for Sonalleve^® where the technology has been shown to have clinical application, such as non-invasive ablation of abdominal cancers and hyperthermia for cancer therapy.

Forward-Looking Statements

This release includes forward-looking statements regarding Profound and its business which may include, but is not limited to, the expectations regarding the efficacy of Profound’s technology in the treatment of prostate cancer, uterine fibroids, palliative pain treatment and osteoid osteoma. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "is expected", "expects", "scheduled", "intends", "contemplates", "anticipates", "believes", "proposes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Such statements are based on the current expectations of the management of Profound. The forward-looking events and circumstances discussed in this release, may not occur by certain specified dates or at all and could differ materially as a result of known and unknown risk factors and uncertainties affecting the company, including risks regarding the medical device industry, regulatory approvals, reimbursement, economic factors, the equity markets generally and risks associated with growth and competition. Although Profound has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. No forward-looking statement can be guaranteed. In addition, there is uncertainty about the spread of the COVID-19 virus and the impact it will have on Profound’s operations, the demand for its products, global supply chains and economic activity in general. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and Profound undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, other than as required by law.

For further information, please contact:

Stephen Kilmer
Investor Relations
skilmer@profoundmedical.com
T: 647.872.4849

Profound Medical Corp. 
Interim Condensed Consolidated Balance Sheets 
(Unaudited)

	June 30,  2021  $			December 31, 2020  $
Assets
Current assets
Cash	73,771			83,913
Trade and other receivables	7,535			7,431
Inventory	7,386			5,331
Prepaid expenses and deposits	446			1,067
Total current assets	89,138			97,742
Property and equipment	888			859
Intangible assets	1,754			1,898
Right-of-use assets	1,310			1,424
Goodwill	2,751			2,678
Total assets	95,841			104,601
Liabilities
Current liabilities
Accounts payable and accrued liabilities	2,307			3,382
Deferred revenue	852			358
Provisions	187			195
Other liabilities	-			99
Derivative financial instrument	316			450
Lease liabilities	407			312
Income taxes payable	-			13
Total current liabilities	4,069			4,809
Deferred revenue	723			1,078
Lease liabilities	1,168			1,364
Total liabilities	5,960			7,251
Shareholders’ Equity
Share capital	219,056			211,527
Contributed surplus	13,708			11,250
Accumulated other comprehensive loss	1,653			4,567
Deficit	(144,536	)		(129,994	)
Total Shareholders’ Equity	89,881			97,350
Total Liabilities and Shareholders’ Equity	95,841			104,601

Profound Medical Corp. 
Interim Condensed Consolidated Statements of Loss and Comprehensive Loss 
(Unaudited)

	Three months ended June 30, 2021 $			Three months ended June 30, 2020 $			Six months ended June 30, 2021 $			Six months ended June 30, 2020 $
Revenue
Capital equipment	1,459			426			1,693			1,166
Non-capital - recurring	1,168			600			1,645			1,020
	2,627			1,026			3,338			2,186
Cost of sales	1,411			610			1,870			1,328
Gross profit	1,216			416			1,468			858
Operating expenses
Research and development	3,419			1,721			6,524			3,832
General and administrative	2,453			1,642			4,585			3,912
Selling and distribution	1,728			993			3,315			1,926
Total operating expenses	7,600			4,356			14,424			9,670
Operating Loss	6,384			3,940			12,956			8,812
Net finance costs/(income)	602			1,225			1,502			(1,056	)
Loss before taxes	6,986			5,165			14,458			7,756
Income taxes	57			138			84			230
Net loss attributed to shareholders for the period	7,043			5,303			14,542			7,986
Other comprehensive loss
Item that may be reclassified to loss
Foreign currency translation adjustment	(1,929	)		(3,998	)		(2,914	)		4,808
Net loss and comprehensive loss for the period	8,972			9,301			17,456			3,178
Loss per share
Basic and diluted loss per common share	0.35			0.33			0.72			0.52

Profound Medical Corp. 
Interim Condensed Consolidated Statements of Cashflows 
(Unaudited)

	Six months ended June 30, 2021 $		Six months ended June 30, 2020 $
Operating activities
Net loss for the period	(14,542	)	(7,986	)
Adjustments to reconcile net loss to net cash flows from operating activities:
Depreciation of property and equipment	229		180
Amortization of intangible assets	502		423
Depreciation of right-of-use assets	165		149
Share-based compensation	2,798		1,092
Interest and accretion expense	46		517
Deferred revenue	107		26
Change in fair value of derivative financial instrument	(149	)	170
Change in fair value of contingent consideration	-		8
Changes in non-cash working capital balances
Trade and other receivables	56		(393	)
Prepaid expenses and deposits	640		551
Inventory	(2,135	)	(1,616	)
Accounts payable and accrued liabilities	(1,168	)	(693	)
Provisions	(12	)	3
Income taxes payable	(13	)	(7	)
Foreign exchange on cash	1,188		(1,250	)
Total cash used in operating activities	(12,288	)	(8,826	)
Investing activities
Purchase of property and equipment	(32	)	-
Purchase of intangible assets	(313	)	-
Total cash used in investing activities	(345	)	-
Financing activities
Issuance of common shares	-		39,523
Transaction costs paid	-		(3,150	)
Payment of other liabilities	(99	)	(141	)
Payment of long-term debt and interest	-		(9,293	)
Proceeds from share options exercised	342		1,128
Proceeds from warrants exercised	1,511		7,802
Payment of lease liabilities	(197	)	(128	)
Total cash from financing activities	1,557		35,741
Net change in cash during the period	(11,076	)	26,915
Foreign exchange on cash	934		(649	)
Cash – Beginning of period	83,913		14,800
Cash – End of period	73,771		41,066

FAQ

What were Profound Medical's Q2 2021 financial results?

Profound Medical reported approximately $2.6 million in revenue for Q2 2021, a 156% increase year-over-year.

How much did Profound Medical lose in Q2 2021?

The net loss for Q2 2021 was approximately $7.0 million, or $0.35 per share.

What is Profound Medical's cash position as of June 30, 2021?

Profound Medical had approximately $73.8 million in cash as of June 30, 2021.

What drove the revenue growth for Profound Medical in Q2 2021?

The revenue growth was driven by a significant increase in recurring revenues and a one-time capital equipment sale.

What impacts does COVID-19 have on Profound Medical's business outlook?

Profound Medical remains cautious about the ongoing impact of COVID-19, particularly in international markets like China and Japan.