Conformis’ Third-Quarter Revenue Down 12 Percent

The Delta variant took quite a toll on Conformis Inc.’s Q3 finances.  

Total revenue fell 12 percent to $14.3 million, and product revenue fell 12 percent to $14.1 million. Hip system sales plummeted 16 percent to $700,000.

“I am pleased with the progress we made on our growth strategy over the last three months. As COVID-19’s Delta variant became more pronounced during the quarter, the impact on elective procedures and our business was greater than expected,” said Mark Augusti, president and CEO. “This resulted in a number of deferred procedures, many of which have already been rescheduled. The disruption caused by the Delta variant has had minimal affect on the limited market releases of our new Identity Imprint knee offering and our manufacturing partnership with Stryker. Both are progressing and we are positioned to capitalize on the shift in procedures to the ASC in 2022 and beyond.”

Total gross profit decreased $1.7 million to $6 million, or 42 percent of revenue, in the third quarter of 2021 (ended Sept. 30), compared to $7.7 million, or 48 percent of revenue, in the third quarter of 2020. The 540 basis-point decrease in gross margin year-over-year was driven primarily by lower volume, increased material, labor, and other manufacturing costs, higher cancelled case inventory expense, and a reduction in product selling price.

Total operating expenses grew 18 percent to $17.4 million, while sales and marketing expenses increased $700,000 primarily due to higher tradeshow, surgeon training, and travel expenses, which were partially offset by lower commission expenses.
 
Research and development expenses climbed $700,000 million primarily driven by personnel and project-related costs to support the company’s new product pipeline. General and administrative expenses increased $1.3 million primarily driven by higher planned professional fees related to the ongoing protection of our intellectual property.
 
Net loss was $13 million, or $0.07 per basic and diluted share in Q3 compared to a net loss of $6.2 million, or $0.09 per basic and diluted share, in the same period last year. Foreign currency exchange transaction loss was $1 million compared to foreign currency exchange transaction income of $1.5 million in the same period last year. Weighted average basic and diluted shares outstanding was 178.5 million for the third quarter, compared to 71.2 million for the same period last year.
 
Cash and cash equivalents totaled $97.1 million as of Sept. 30, compared to $28.7 million as of Dec. 31, 2020.

During the third quarter, Conformis successfully completed the first procedures using Identity Imprint knee replacement system and also successfully completed procedures under the Stryker¹ partnership program for the Triathlon knee utilizing patient-specific instrumentation.
 
Conformis expects fourth quarter product revenue to improve sequentially from the third quarter and to be in the range of $15 million to $17 million. The wider-than-usual range is due to the unpredictable recovery from the Delta variant and its potential impact on existing scheduled fourth quarter surgeries.

Reference
¹ Stryker and Triathlon are registered trademarks of Stryker Corporation or affiliated entities in the United States and other countries.