CHF Solutions, Inc. Announces 52 Percent Increase in Revenue for Third Quarter 2020 and Provides Company Update

EDEN PRAIRIE, Minn., Nov. 10, 2020 (GLOBE NEWSWIRE) -- CHF Solutions, Inc. (Nasdaq: CHFS) announced today its results for the third quarter ended September 30, 2020.

Recent Highlights

  • Revenue for the third quarter of 2020 was $1.9 million, an increase of 52% compared to the prior year period
  • Increased Aquadex™ therapy utilization in existing pediatric hospital accounts; opened 6 new pediatric hospital accounts
  • Partnered with Acute Kidney Injury Critical Care Research Foundation and Watermark Research Partners to initiate a pediatric registry to collect real-world evidence for the use of Aquadex SmartFlow™
  • Announced the Aquadex product line was added to the Federal Supply Schedule, expanding access to all federal agencies and eliminating months of fulfillment process time
  • Hosted two webinars during the quarter, led by:
    - Dr. David Askenazi, M.D. MSPH on treatment of fluid overload on pediatric patients and clinical benefits of Aquadex therapy
    - Dr. John Jefferies, M.D. on the use of precision medicine for the treatment of fluid overload in heart failure patients utilizing the Aquadex SmartFlow system
  • A 355-patient retrospective study was presented 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
  • On November 3, 2020, received notification from Nasdaq that the company had regained compliance with NASDAQ’s minimum bid price requirement, after effecting a 1-for-30 reverse stock split to remain in compliance
  • Cash and cash equivalents totaled $17.9 million with no debt as of September 30, 2020

“CHF Solutions achieved very solid performance in the third quarter, most notably within pediatric accounts,” said John Erb, chairman and CEO of CHF Solutions. “The pediatric opportunity is growing, as more children’s hospitals acquire our Aquadex SmartFlow product and complete training. In the third quarter, we had twelve children’s hospitals purchase product, reinforcing our strategic focus in this area.”

Third Quarter 2020 Financial Results
Revenue for the third quarter was $1.9 million, an increase of 52% compared to $1.3 million in the prior year period. Revenue growth in the quarter was driven by increased utilization among established pediatric accounts, and the addition of six new pediatric accounts.

The Company offered incentives to existing customers to upgrade consoles to Aquadex SmartFlow which impacted third quarter gross margins. The Company believes these upgrades will improve the customer experience with the therapy and increase utilization. Additionally, the Company experienced a higher mix of international distributor revenue which normally carries a lower sales price than in the U.S. Gross margin was 46.1% in the third quarter, compared to 56.9% in the prior year period.

Operating expenses for the third quarter of 2020 were $5.1 million, a decrease of 1.6% compared to the prior year period. The slight decrease in operating expenses was primarily due reduced product development costs compared to the prior year period.

Net loss from operations for the third quarter of 2020 was $4.3 million, compared to a loss of $4.5 million in the prior year period.

Cash and cash equivalents were $17.9 million with no debt as of September 30, 2020. During the quarter, the Company announced the closing of a public offering for net proceeds of $13 million. The Company also received $1.8 million in cash proceeds from the exercise of warrants in the third quarter of 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: 6097367. 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
(Unaudited)
(In thousands, except per share amounts)

  Three months ended
September 30,
Nine months ended
September 30,
  2020 2019   2020 2019 
Net sales$1,904 $1,252 $5,397 $4,144 
Costs and expenses:            
Cost of goods sold 1,026  540  2,486  1,987 
Selling, general and administrative 4,264  4,107  13,034  12,098 
Research and development 871  1,112  2,620  3,719 
Total costs and expenses 6,161  5,759  18,140  17,804 
Loss from operations (4,257) (4,507) (12,743) (13,660)
Other income (loss), net   (1)   (1)
Loss before income taxes (4,257) (4,508) (12,743) (13,661)
Income tax expense (3) (1) (7) (5)
Net loss$(4,260)$(4,509)$(12,750)$(13,666)
             
Basic and diluted loss per share$(2.08)$(51.12)$(11.27)$(284.70)
             
Weighted average shares outstanding – basic and diluted 2,049  88  1,287  64 
             
Other comprehensive loss:            
Foreign currency translation adjustments$(7)$1 $(12)$(4)
Total comprehensive loss$(4,267)$ (4,508)$(12,762)$(13,670)
             



CHF Solutions, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets
(In thousands, except share and per share amounts)

  September 30,
2020
  December 31,
2019
 
ASSETS (unaudited)    
Current assets      
Cash and cash equivalents$17,947 $1,279 
Accounts receivable 1,048  799 
Inventory 2,921  1,797 
Other current assets 235  161 
Total current assets 22,151  4,036 
Property, plant and equipment, net 1,244  991 
Operating lease right-of-use asset 303  442 
Other assets 21  133 
TOTAL ASSETS$23,719 $5,602 
       
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current liabilities      
Accounts payable$929 $1,488 
Accrued compensation 2,012  1,592 
Current portion of operating lease liability 201  186 
Current portion of finance lease liability 24   
Other current liabilities 57  85 
Total current liabilities 3,223  3,351 
Operating lease liability 108  261 
Finance lease liability 60   
Total liabilities 3,391  3,612 
       
Commitments and contingencies      
       
Stockholders’ equity      
Series A junior participating preferred stock as of September 30, 2020 and December 31, 2019, par value $0.0001 per share; authorized 30,000 shares, none outstanding    
Series F convertible preferred stock as of September 30, 2020 and December 31, 2019, par value $0.0001 per share; authorized 127 and 535 shares, respectively, issued and outstanding 127 and 535, respectively    
Preferred stock as of September 30, 2020 and December 31, 2019, par value
$0.0001 per share; authorized 39,969,873 and 39,969,465 shares, none outstanding
    
Common stock as of September 30, 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 249,378  218,278 
Accumulated other comprehensive income:      
Foreign currency translation adjustment 1,202  1,214 
Accumulated deficit (230,252) (217,502)
Total stockholders’ equity 20,328  1,990 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$23,719 $5,602 
       



CHF SOLUTIONS, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)

  Nine months ended
September 30,
  2020
  2019 
Operating Activities:      
Net loss$(12,750)$(13,666)
Adjustments to reconcile net loss to cash flows used in operating activities:      
Depreciation and amortization 253  179 
Stock-based compensation expense, net 1,036  1,113 
Loss on disposal of property and equipment 46   
Changes in operating assets and liabilities:      
Accounts receivable (249) 258 
Inventory (1,371) (158)
Other current assets (74) (74)
Other assets 112  (27)
Accounts payable and accrued expenses (166) 38 
Net cash used in operating activities (13,163) (12,337)
       
Investing Activities:      
Purchases of property and equipment (207) (464)
Net cash used in investing activities (207) (464)
       
Financing Activities:      
Proceeds from public stock offerings, net 25,949  10,959 
Proceeds from warrant exercises 4,115   
Payments on finance lease liability (14)  
Net cash provided by financing activities 30,050  10,959 
       
Effect of exchange rate changes on cash (12) (4)
Net increase in cash and cash equivalents 16,668  (1,846)
Cash and cash equivalents - beginning of period 1,279  5,480 
Cash and cash equivalents - end of period$17,947 $3,634 
       
Supplemental cash flow information      
Cash paid for income taxes$ $ 
Inventory transferred to property, plant and equipment$247 $204 
Equipment acquired through finance lease liability$98 $ 
CONTACTS:

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

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

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

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