Financial Performance - As of September 30, 2024, the company reported an accumulated deficit of $300.9 million, up from $261.9 million as of December 31, 2023[185]. - Revenues for the three months ended September 30, 2024, were $15.0 million, a decrease of 14.8% compared to $17.6 million for the same period in 2023[214]. - Net loss attributable to the Company for the three months ended September 30, 2024, was $9.3 million, compared to a net loss of $9.1 million for the same period in 2023[214]. - Total revenue decreased by $2.6 million, or 14.8%, to $15.0 million for the three months ended September 30, 2024, compared to $17.6 million for the same period in 2023[257]. - Gross profit decreased by $2.3 million, or 18.6%, to $9.9 million for the three months ended September 30, 2024, compared to $12.2 million in the same period in 2023[261]. - The net loss for the nine months ended September 30, 2024, was $39.0 million, compared to a net loss of $25.9 million for the same period in 2023[312][313]. - Total revenue decreased by $9.2 million, or 15.7%, to $49.1 million for the nine months ended September 30, 2024, compared to $58.2 million for the same period in 2023[271]. Cash Flow and Liquidity - The company had cash and cash equivalents of $4.5 million as of September 30, 2024, compared to $5.4 million as of December 31, 2023[185]. - Cash used in operations for the third quarter of 2024 was $4.8 million lower, or 40%, than the same period in 2023[226]. - Cash used in operating activities during the nine months ended September 30, 2024 was $7.3 million, representing a 39.9% reduction compared to the same period in 2023[285]. - Cash provided by financing activities for the nine months ended September 30, 2024, was $6,395,000, an increase from $5,531,000 in the same period of 2023[311]. - The company anticipates that existing capital resources will support operations for at least the next 12 months, but there are no assurances regarding future capital raising[304]. Debt and Financing - The company entered into a Loan and Security Agreement on April 23, 2024, providing $2.2 million in bridge financing, with additional delayed draws of up to $3.0 million[201][202]. - Total debt obligations decreased to approximately $34.6 million as of September 30, 2024, down from approximately $74.9 million as of December 31, 2023[285]. - The company issued $26.7 million in Secured Subordinated Convertible Notes with an interest rate of 8.0% per annum, convertible at an initial price of $48.75 per share[287]. - The company executed a $50.0 million Main Street Priority Lending Program Term Loan, which was modified on October 4, 2023[289]. - The company is restricted by covenants in its loan agreements, which may limit its ability to incur additional debt[306]. Revenue Sources and Trends - Approximately 28% of the company's aesthetic system revenues were derived from internal lease programs in the nine months ended September 30, 2024[208]. - For the three and nine months ended September 30, 2024, approximately 23% and 28% of total system revenues were derived from internal financing programs, a decline from 31% and 30% in the same periods of 2023[234]. - Approximately 61% and 59% of total system revenues for the three and nine months ended September 30, 2024, were derived from traditional sales, consistent with the previous year[235]. - Distributor sales increased to approximately 16% and 13% of total system revenues for the three and nine months ended September 30, 2024, compared to 8% and 9% in 2023, reflecting a focus on international growth[239]. Operating Expenses - Adjusted EBITDA loss for the three months ended September 30, 2024, was $5.9 million, compared to a loss of $4.6 million for the same period in 2023[214]. - Selling and marketing expenses are expected to increase but at a rate slightly below revenue growth as the business environment improves[245]. - Selling and marketing expenses decreased by $2.2 million or 9.6% in the nine months ended September 30, 2024, with a percentage of total revenues increasing from 40.1% to 43.0%[276]. - General and administrative expenses decreased by $3.3 million or 10.6% in the nine months ended September 30, 2024, with a percentage of total revenues increasing from 53.1% to 56.3%[277]. - Research and development expenses decreased by $1.3 million or 20.1% in the nine months ended September 30, 2024, with a percentage of total revenues decreasing from 11.2% to 10.6%[281]. Market and Economic Conditions - The global economy has experienced extreme volatility, impacting consumer confidence and economic growth, which poses uncertainty for the company's business[186]. - The company is adapting to macroeconomic challenges, including inflation and rising interest rates, which have impacted customer financing capabilities[226]. Product Development and Strategy - The company launched the Venus Prime program in January 2024, replacing its legacy subscription program, offering competitive financing rates and technology upgrades[209]. - The company is focused on expanding its ARTAS hair restoration business and robotics offerings through the AI.ME™ platform[184]. - The company plans to introduce and commercialize new products, which may increase expenses related to sales, marketing, and research and development[308]. - The company has developed and received regulatory clearance for twelve novel aesthetic technology platforms, including ARTAS and NeoGraft systems[211]. Other Financial Metrics - The allowance for expected credit losses as of September 30, 2024, was $4.1 million, representing 16.4% of gross outstanding accounts receivable, down from 27.3% in the same period of 2023[224]. - The company recognized a $10.9 million non-cash loss due to the extinguishment of $52.1 million in principal under the MSLP Loan Agreement in May 2024[252]. - The company recorded a non-cash operating expense of $20.8 million for the nine months ended September 30, 2024[312]. - The company does not grant rights of return or early termination rights to customers under traditional sales or internal lease programs[238].
Venus cept (VERO) - 2024 Q3 - Quarterly Report