Silk Road Medical Reports Second Quarter 2020 Financial Results

Rhea-AI Summary

Silk Road Medical (SILK) reported second-quarter 2020 revenues of $15.1 million, a 1% increase year-over-year, although underlying revenue declined by 8%. The company faced significant challenges due to COVID-19, with procedure volumes hitting lows in April before recovering in May and June. Gross profit fell to $9.8 million with a gross margin of 65%, down from 75% in the prior year. Operating expenses rose by 11% to $19.2 million, contributing to a net loss of $10.4 million. The company's cash position remains strong at $157.9 million.

Positive

• Revenue increased by 1% year-over-year.
• Successful follow-on offering bolstered the balance sheet.
• Improved net loss compared to the previous year.

Negative

• Revenue declined 8% excluding a one-time deferred revenue recognition.
• Gross margin decreased from 75% to 65%.
• Operating expenses rose by 11%, reflecting increased costs.

SUNNYVALE, Calif., Aug. 05, 2020 (GLOBE NEWSWIRE) -- Silk Road Medical, Inc. (Nasdaq: SILK), a company focused on reducing the risk of stroke and its devastating impact, today reported financial results for the three months ended June 30, 2020.

“While the second quarter posed several challenges, we are pleased with our performance and we remain unwavering in our commitment to change the standard of care in carotid artery disease. Our results are a testament to our team, our clinical outcomes and our commercial strategy, as well as reflective of the underlying demand for TCAR,” said Erica Rogers, President and Chief Executive Officer of Silk Road Medical. “As expected, procedure volumes were lowest in April, then recovered significantly in May and further in June. We have recently begun to experience more regional variability and procedure slowdowns due to the resurgence of COVID-19 cases and related restrictions, and as such, remain cautiously optimistic as we look to the second half of the year.”

Ms. Rogers continued, “Despite the challenging environment, we made meaningful progress on our strategic initiatives in the second quarter and strengthened our balance sheet with a successful follow-on offering. We are increasingly confident in our positioning as we continue with planned investments to drive durable, long term growth.”

Second Quarter 2020 Financial Results 
Revenue for the second quarter of 2020 was $15.1 million, an increase of $0.2 million or 1%, compared to the second quarter of 2019. Second quarter revenue in 2020 included the recognition of $1.3 million in deferred revenue due to a decrease in the provision for sales returns related to certain prior sales with a shorter shelf life, coupled with the downward trend in the company’s historical returns rate. Excluding the contribution of the $1.3 million, second quarter revenue declined 8% compared to the second quarter of 2019. The company does not anticipate future potential decreases in the sales return provision to materially impact subsequent quarters.

Gross profit for the second quarter of 2020 was $9.8 million compared to $11.2 million for the second quarter of 2019. Gross margin for the second quarter of 2020 declined to 65% compared to 75% in the second quarter of 2019, driven by unfavorable production variances as a result of temporarily idled manufacturing operations and lower demand, partially offset by the decrease in the provision for sales returns.

Operating expenses were $19.2 million for the second quarter of 2020, compared to $17.2 million in the corresponding prior year period, which represents an increase of 11%. The increase was driven primarily by selling, general and administrative expenses related to growth in our commercial team and marketing efforts as well as costs related to being a public company. Expense growth was modulated by cost control initiatives and the natural reduction in travel, tradeshow and other expenses due to the COVID-19 pandemic.

Net loss was $10.4 million in the second quarter of 2020, or a loss of $0.32 per share, as compared to $12.0 million, or a loss of $0.42 per share, in the corresponding period of the prior year. This metric for the second quarter of 2019 included a $5.3 million noncash charge resulting from the remeasurement of the fair value of our convertible preferred stock warrant liability.

Cash, cash equivalents, and short-term investments were $157.9 million as of June 30, 2020.

2020 Financial Guidance
Silk Road Medical is not providing annual guidance for 2020 given the uncertain scope and duration of the COVID-19 pandemic.

Conference Call
Silk Road Medical will host a conference call at 2:00 p.m. PT / 5:00 p.m. ET on Wednesday, August 5, 2020 to discuss its second quarter 2020 financial results. The call may be accessed through an operator by calling (844) 883-3861 for domestic callers and (574) 990-9820 for international callers using conference ID: 3681776. A live and archived webcast of the event will be available at https://investors.silkroadmed.com/. 

About Silk Road Medical
Silk Road Medical, Inc. (NASDAQ: SILK), is a medical device company located in Sunnyvale, California, that is focused on reducing the risk of stroke and its devastating impact. The company’s flagship procedure, TransCarotid Artery Revascularization (TCAR), is clinically proven to treat blockages in the carotid artery at risk of causing a stroke. For more information on how Silk Road Medical is delivering brighter patient outcomes through brighter clinical thinking, visit www.silkroadmed.com and connect on Twitter, LinkedIn and Facebook.   

Forward-Looking Statements
This press 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 statements include statements regarding the impact of COVID-19 on our business, financial guidance, progress made on achieving our corporate goals, and the overall strength of our business and culture. 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 risks described in the section entitled Risk Factors and elsewhere in our filing made with the Securities and Exchange Commission in Silk Road’s Quarterly Report on Form 10-Q filing made with the Securities and Exchange Commission on May 15, 2020. These forward-looking statements speak only as of the date hereof and should not be unduly relied upon. Silk Road Medical disclaims any obligation to update these forward-looking statements.

Investors:
Lynn Lewis or Caroline Paul
Gilmartin Group
investors@silkroadmed.com

Media:
Michael Fanucchi
Silk Road Medical
mfanucchi@silkroadmed.com

SILK ROAD MEDICAL, INC.
Statements of Operations Data
(Unaudited, in thousands, except share and per share data)

							Three Months Ended June 30,								Six Months Ended June 30,
								2020				2019				2020				2019
Revenue							$	15,094			$	14,928			$	34,027			$	27,694
Cost of goods sold								5,336				3,697				10,586				7,035
					Gross profit			9,758				11,231				23,441				20,659
Operating expenses:
	Research and development							3,393				3,113				6,522				5,820
	Selling, general and administrative							15,758				14,135				35,450				28,001
					Total operating expenses			19,151				17,248				41,972				33,821
					Loss from operations			(9,393	)			(6,017	)			(18,531	)			(13,162	)
Interest income								299				598				702				650
Interest expense								(1,203	)			(1,207	)			(2,406	)			(2,560	)
Remeasurement of warrant liability and other income (expense), net								(56	)			(5,333	)			(59	)			(21,045	)
					Net loss			(10,353	)			(11,959	)			(20,294	)			(36,117	)
Other comprehensive loss:
	Unrealized gain (loss) on investments, net							(126	)			-				314				-
Net change in other comprehensive loss								(126	)			-				314				-
Net loss and comprehensive loss							$	(10,479	)		$	(11,959	)		$	(19,980	)		$	(36,117	)
Net loss per share, basic and diluted							$	(0.32	)		$	(0.42	)		$	(0.63	)		$	(2.42	)
Weighted average common shares used to compute net loss per share, basic and diluted								32,682,360				28,458,793				32,010,335				14,905,052

SILK ROAD MEDICAL, INC.
Balance Sheets Data
(Unaudited, in thousands)

						June 30, 2020				December 31, 2019
Assets
Current assets
	Cash and cash equivalents					$	73,442			$	39,181
	Short-term investments						84,416				51,508
	Accounts receivable, net						7,753				8,601
	Inventories						11,621				10,322
	Prepaid expenses and other current assets						3,863				2,878
					Total current assets		181,095				112,490
	Long-term investments						-				18,224
	Property and equipment, net						2,885				2,734
	Restricted cash						310				310
	Other non-current assets						3,233				3,644
					Total assets	$	187,523			$	137,402
Liabilities and stockholders' equity
Current liabilities
	Accounts payable					$	2,542			$	1,898
	Accrued liabilities						9,142				15,034
					Total current liabilities		11,684				16,932
	Long-term debt						45,066				44,879
	Other liabilities						3,693				3,700
					Total liabilities		60,443				65,511
Stockholders' equity
	Preferred stock, $0.001 par value						-				-
	Common stock, $0.001 par value						34				31
Additional paid-in capital							338,550				263,384
Accumulated other comprehensive income							316				2
Accumulated deficit							(211,820	)			(191,526	)
					Total stockholders' equity		127,080				71,891
					Total liabilities and stockholders' equity	$	187,523			$	137,402

FAQ

What were Silk Road Medical's Q2 2020 revenues?

Silk Road Medical reported revenues of $15.1 million for Q2 2020.

What is Silk Road Medical's net loss for the second quarter of 2020?

The net loss for Q2 2020 was $10.4 million, or $0.32 per share.

How did COVID-19 affect Silk Road Medical's procedure volumes?

Procedure volumes were lowest in April but showed significant recovery in May and June.

What is Silk Road Medical's current cash position?

As of June 30, 2020, Silk Road Medical has cash, cash equivalents, and short-term investments totaling $157.9 million.

Is Silk Road Medical providing annual guidance for 2020?

Silk Road Medical is not providing annual guidance for 2020 due to uncertainties related to the COVID-19 pandemic.