News

Entellus Medical Announces Fourth Quarter and Full Year 2014 Financial Results

Mar 17 2015

PLYMOUTH, Minnesota—Entellus Medical, Inc. (“Entellus Medical” or the “Company”) (NASDAQ: ENTL), a medical technology company focused on the design, development and commercialization of products for the minimally invasive treatment of chronic and recurrent sinusitis patients in the physician office setting or operating room, today reported its financial results for the three months and year ended December 31, 2014.

Recent Highlights and Accomplishments

• Achieved net revenue of $48.8 million in 2014, an increase of 50% year-over-year
• Released XprESS™ Ultra Multi-Sinus Dilation System, the third device in the XprESS family of balloon sinus dilation systems
• On January 29, 2015 Entellus Medical’s common stock began trading on the NASDAQ Global Market following the pricing of its initial public offering of approximately 5.3 million shares raising net proceeds of approximately $81.2 million
• Expanded field sales organization to 103 persons as of December 31, 2014
• Surpassed halfway enrollment point for IDE clinical study to treat pediatric patients with the XprESS device
• Enrolled first patient in IDE clinical study to treat Eustachian tube dysfunction with the XprESS device

“The fourth quarter capped off a very productive year for Entellus Medical. Physician awareness and utilization of our XprESS family of products continued to grow throughout the year, resulting in strong revenue growth in the fourth quarter and for the full year 2014,” said Brian Farley, Chairman and Chief Executive Officer. “After recently completing a successful initial public offering, we believe we are well-positioned to grow the market for physician office-based treatment of patients suffering from sinusitis and to provide our highly efficacious solution that reduces costs to the healthcare system and to patients.”

Fourth Quarter 2014 Financial Results

Revenue for the three months ended December 31, 2014 increased 35% to $14.5 million from $10.7 million during the same period of the prior year. The growth in revenue was primarily attributable to an increase of approximately $3.5 million in sales of the XprESS family of products.

Gross margin for the fourth quarter of 2014 increased to 77.6%, compared to 76.4% for the same period in 2013. Operating expenses for the fourth quarter of 2014 were $12.0 million, an increase of 21% compared to $9.9 million for the same period of the prior year. The increase in gross margin was primarily due to increased unit sales, which allowed the Company to spread the fixed portion of manufacturing overhead costs over more production units. The increase in operating expenses was primarily due to compensation and other employee-related expenses resulting from increased headcount in our sales and marketing organizations.

Net loss for the three months ended December 31, 2014 was $1.2 million, or $0.73 per share, compared with net loss of $2.2 million, or $1.71 per share, for the three months ended December 31, 2013.

Full Year 2014 Financial Results

Revenue increased $16.3 million, or 50%, to $48.8 million during the year ended December 31, 2014, compared to $32.5 million during the year ended December 31, 2013. The growth in revenue was primarily attributable to an increase of approximately $15.7 million in sales of the XprESS family of products and $0.9 million in sales of XeroGel products offset in part by a decrease of $0.3 million from all other products.
Gross Margin increased to 78.0% for the year ended December 31, 2014, compared to 76.0% for the year ended December 31, 2013. The increase in gross margin was primarily due to increased unit sales, which allowed the Company to spread the fixed portion of manufacturing overhead costs over more production units.
Total operating expenses were $43.2 million during the year ended December 31, 2014, an increase of 16%, compared to $37.1 million during the year ended December 31, 2013. The primary driver of this increase was compensation and other employee-related expenses due to increased headcount in our sales and marketing organizations.

Net loss for the year ended December 31, 2014 was $6.9 million, or $4.62 per share, compared with net loss of $13.4 million, or $11.82 per share, for the year ended December 31, 2013.

Entellus Medical ended the fourth quarter of 2014 with $3.5 million in cash and cash equivalents. In February 2015, the Company completed the initial public offering of its common stock, which raised net proceeds of approximately $81.2 million, after deducting underwriting discounts and commissions and offering expenses.

2015 Financial Outlook

Entellus Medical estimates that first quarter 2015 revenue will range from approximately $12.9 million to $13.4 million, which would represent annual growth of 27% to 32%. The Company expects that gross margin for the first quarter of 2015 will range from 77% to 78% compared to 77.4% in the first quarter of 2014. First quarter operating expenses are expected to increase by approximately $3.0 to $3.5 million from the fourth quarter of 2014, primarily due to sales and marketing expenses related to the expansion of the U.S. sales organization, and from general and administrative expenses associated with the expense of operating as a public company. First-quarter net loss is estimated to range from approximately $5.0 million to $6.2 million, or an estimated loss of $0.40 to $0.49 per share. The estimated net loss for the first quarter includes estimated non-cash stock-based compensation of $0.5 million to $0.6 million. The number of weighted average shares outstanding used to calculate estimated earnings per share for the first quarter is currently expected to range from approximately 12.5 million to 12.6 million.

Entellus Medical expects that full year 2015 revenue will range from approximately $58.5 million to $61.0 million, which would represent annual growth ranging from 20% to 25%. The Company expects gross margin for the full year 2105 to range from 77% to 78%, compared to 78.0% for the full year 2014. Operating expenses for the full year 2015 are expected to range from $60 million to $63 million, including estimated charges for stock-based compensation expenses of $2.5 million to $2.7 million. Full year 2015 net loss is expected to range from approximately $14.6 million to $20.0 million, or a loss of $0.84 to $1.17 per share. This expected loss per share assumes approximately 17.2 million to 17.4 million weighted average shares outstanding for the full year.

About Entellus Medical, Inc.

Entellus Medical is a medical technology company focused on the design, development and commercialization of products for the minimally invasive treatment of chronic and recurrent sinusitis patients in the physician office setting or operating room. Its XprESS family of products is used by ENT physicians to open narrowed or obstructed sinus drainage pathways using balloon sinus dilation. When used as a stand-alone therapy, Entellus Medical’s balloon sinus dilation products are proven in a sufficiently powered prospective, multicenter, randomized, controlled trial to be as effective as functional endoscopic sinus surgery, or FESS. Patients treated with Entellus Medical’s products in this trial in the ENT physician office also experienced faster recovery outcomes and fewer post-procedure debridements than patients receiving FESS. Entellus Medical currently markets its products in the United States and Canada and sells its products through a direct sales force in the United States.