On August 24, 2023 EDAP TMS SA (Nasdaq: EDAP), the global leader in robotic energy-based therapies, reported unaudited financial results for the second quarter ending June 30, 2023, and announced the appointment of Ryan Rhodes to the Board of Directors of the Company (Press release, EDAP TMS, AUG 24, 2023, View Source [SID1234634686]).
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"Our record second quarter and first half revenues and strong system placements reflect continued business momentum, as Focal One HIFU is one of the fastest-growing technology platforms enabling urologists to ablate targeted tissue in low to intermediate-risk and salvage prostate cancer patients," said Ryan Rhodes, Chief Executive Officer of EDAP. "We also continue to make notable progress in the growth of our sales pipeline. We experienced strong year over year system placement growth in the quarter, with four Focal One units sold as compared to just one system in the second quarter of 2022. We are also pleased with strong U.S. Focal One HIFU procedure growth, which grew 85% during the second quarter of 2023 versus the second quarter of 2022. Though still in the early adoption phase, we believe there is a growing appreciation of Focal One amongst community urology practices, and we continue to make excellent progress in cultivating these relationships to help drive Focal One adoption across this large segment of the market.
"Looking ahead, our commercial success in prostate cancer and the expansion of our pipeline have created a strong foundation for growth. Increased adoption of Focal One HIFU is being driven by our state-of the-art technology platform that can be seamlessly integrated into urology practices. Further supporting growth and adoption are Focal One’s strong clinical outcomes that clearly demonstrate excellent oncologic control and faster patient recovery times. Additionally, ease of use, reduced procedure times and higher CMS reimbursement are also contributing to the adoption of Focal One HIFU technology. As we have referenced in the past, we are supporting a current Phase 3 clinical trial evaluating Focal One HIFU in the treatment of deep-infiltrating endometriosis. This trial supports Focal One HIFU as a potentially viable and less invasive treatment option for women suffering from this painful and debilitating condition. More than half of the patients are now enrolled in our 60-patient trial and we are encouraged by the progress and pace of enrollment."
On August 23rd, 2023, the Board of Directors appointed Ryan Rhodes as a new Director of EDAP TMS. Ryan replaces Robrecht Michiels, who has resigned. As previously announced, Ryan was appointed Chief Executive Officer of Company on May 1, 2023, to lead, strengthen and accelerate the Company’s corporate strategy and development. "We would like to thank Robrecht for his significant contribution and guidance to the Board and the Company over the last several years," said Marc Oczachowski, Chairman of the Board.
Business Update
Sold four Focal One units in the U.S. during the second quarter of 2023. The Company saw continued strong momentum in securing new placements across both academic medical centers and community hospitals, as clinicians and providers increasingly recognize Focal One as an essential option to effectively treat select prostate cancer patients.
In July, the Company announced reimbursement approval in Switzerland for the use of High-intensity Focused Ultrasound in the treatment of prostate cancer; reimbursement took effect on July 1, 2023. Switzerland is a member of the DACH market region (including Germany, Austria and Switzerland) with over 100 million combined total inhabitants. Switzerland has many hospitals ranked amongst the best 250 in the world according to Newsweek’s "The World’s Best Hospitals 2023". Included in this list is the University of Zurich, an active prominent Focal One site and the leading innovation center for HIFU in the country, and a member of the League of European Research Universities, placing it among Europe’s most prestigious research institutions.
In May, the Company initiated a double-blind, randomized controlled Phase 3 study to evaluate Focal One HIFU therapy for the treatment of deep-infiltrating rectal endometriosis. Patient recruitment has started at a strong pace, with more than 30 patients now enrolled across 6 different treatment centers. The Phase 3 study is expected to enroll a total of 60 patients.
In April, EDAP received approval from Japan’s Pharmaceutical and Medical Devices Agency for commercialization of ExactVuTM micro-ultrasound. ExactVu is a platform that enables urologists to gain unparalleled visualization of prostate ultrasound images, including detection of suspicious areas in real-time to better assess cancer aggressiveness during the performance of a precision biopsy. The Japanese market is the second largest global market for advanced medical device technology, with prostate cancer as the most common cancer diagnosis in Japanese men, with over 100,000 new prostate cancer diagnoses made annually.
In April, the Company hosted a webcast featuring a live broadcast of a Focal One procedure performed by Andre Abreu, MD and Amir H. Lebastchi, MD, Assistant Professors of Clinical Urology at Keck Medicine of the University of Southern California (USC), the first U.S. institution to acquire and adopt Focal One technology.
Several plenary presentations and instructional courses were delivered by leading academic urologists at the Annual Meeting of the American Urological Association (AUA), held April 28th to May 1st, showcasing the Focal One platform’s ability to meet accepted oncological standards for the management of prostate cancer, while preserving sexual function and urinary control. Additionally, ExactVu micro-ultrasound was featured in the AUA Accredited Hands-on Ultrasound Skills Training Course under the guidance of expert faculty.
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Second Quarter 2023 Results
Total revenue for the second quarter of 2023 was EUR 14.3 million (USD 15.5 million), an increase of 0.9% as compared to total revenue of EUR 14.2 million (USD 15.0 million) for the same period in 2022.
Total revenue in the HIFU business for the second quarter of 2023 was EUR 4.9 million (USD 5.3 million), as compared to EUR 3.0 million (USD 3.2 million) for the second quarter of 2022. The increase was driven by four Focal One units sold in the second quarter 2023 versus one unit sold in the second quarter of 2022.
Total revenue in the LITHO business for the second quarter of 2023 was EUR 2.2 million (USD 2.4 million), as compared to EUR 3.6 million (USD 3.8 million) for the second quarter of 2022. The decline in LITHO revenue was driven by two lithotripsy units sold in the second quarter of 2023 as compared to eight units sold in the second quarter of 2022.
Total revenue in the Distribution business for the second quarter of 2023 was EUR 7.2 million (USD 7.8 million), as compared to EUR 7.6 million (USD 8.1 million) for the second quarter of 2022. The decline in Distribution revenue was driven primarily by nine ExactVu units sold during the second quarter of 2023 as compared to fifteen units sold during the second quarter of 2022.
Gross profit for the second quarter of 2023 was EUR 5.7 million (USD 6.1 million), compared to EUR 6.2 million (USD 6.6 million) for the year-ago period. Gross profit margin on net sales was 39.6% in the second quarter of 2023, compared to 43.8% in the year-ago period. The decrease in gross profit margin year-over-year was primarily due to three main factors: Distribution product mix, global inflationary price pressure on components which increased manufacturing costs, and continued investments in our U.S. service and clinical application organizations to support HIFU and long-term revenue growth.
Operating expenses were EUR 9.9 million (USD 10.7 million) for the second quarter of 2023, compared to EUR 6.6 million (USD 7.0 million) for the same period in 2022. The increase in operating expenses was primarily due to the strategic and planned build-out of the U.S. team and commercial infrastructure, variable compensation, and increased marketing activities.
Operating loss for the second quarter of 2023 was EUR 4.2 million (USD 4.6 million), compared to an operating loss of EUR 0.4 million (USD 0.5 million) in the second quarter of 2022.
Net loss for the second quarter of 2023 was EUR 4.7 million (USD 5.1 million), or EUR 0.13 per diluted share, as compared to net income of EUR 1.8 million (USD 1.9 million), or EUR 0.05 per diluted share in the year-ago period.
Year-to-Date Results
Total revenue for the six months ended June 30, 2023, was EUR 29.1 million (USD 31.5 million), an increase of 7.1% from total revenue of EUR 27.1 million (USD 29.5 million) for the same period in 2022.
Total revenue in the HIFU business for the six months ended June 30, 2023, was EUR 10.1 million (USD 11.0 million), an increase of 49.0% as compared to EUR 6.8 million (USD 7.4 million) for the six months ended June 30, 2022.
Total revenue in the LITHO business for the six months ended June 30, 2023, was EUR 5.0 million (USD 5.4 million), a decrease of 13.9% from EUR 5.8 million (USD 6.3 million) for the six months ended June 30, 2022.
Total revenue in the Distribution business for the six months ended June 30, 2023, was EUR 14.0 million (USD 15.1 million), a 4.1% decrease compared to EUR 14.6 million (USD 15.9 million) for the six months ended June 30, 2022.
Gross profit for the six months ended June 30, 2023, was EUR 11.7 million (USD 12.7 million), compared to EUR 12.0 million (USD 13.0 million), for the year-ago period. Gross profit margin on net sales was 40.2% for the six months ended June 30, 2023, compared to 44.0% for the comparable period in 2022. The decrease in gross profit margin year-over-year was primarily due to three main factors: Distribution product mix, global inflationary price pressure on components which increased manufacturing costs, and continued investments in our U.S. service and clinical application organizations to support HIFU and long-term revenue growth.
Operating expenses were EUR 22.5 million (USD 24.3 million) for the six months ended June 30, 2023, compared to EUR 12.5 million (USD 13.6 million) for the same period in 2022. The increase in operating expenses is mainly due to the strategic and planned build-out of the U.S. team and commercial infrastructure, and non-recurring expenses linked to the leadership succession plan.
Operating loss for the six months ended June 30, 2023, was EUR 10.8 million (USD 11.7 million), compared to an operating loss of EUR 0.5 million (USD 0.6 million) for the six months ended June 30, 2022.
Net loss for the six months ended June 30, 2023, was EUR 12.2 million (USD 13.2 million), or EUR 0.33 per diluted share, as compared to a net income of EUR 2.2 million (USD 2.4 million), or EUR 0.06 per diluted share in the year-ago period.
As of June 30, 2023, the Company held cash and cash equivalents of EUR 51.3 million (USD 56.0 million) as compared to EUR 63.1 million (USD 67.5 million) as of December 31, 2022.
Conference Call
A conference call and webcast to discuss second quarter 2023 financial results will be hosted Ryan Rhodes, Chief Executive Officer, François Dietsch, Chief Financial Officer and Ken Mobeck, Chief Financial Officer of the U.S. subsidiary, today, Thursday, August 24th, 2023 at 8:30am EDT. Please refer to the information below for conference call dial-in information and webcast registration.
Date: Thursday, August 24th @ 8:30am Eastern Time
Domestic: 1-877-451-6152
International: 1-201-389-0879
Passcode: 13740016
CallMe: LINK (active 15 minutes prior to conference call)
Webcast: View Source;tp_key=5f05cd313e