Recent Highlights:
- Net revenues of
$8.1 million in the second quarter of 2023, up 12% year-over-year - Gross systems shipped of 5,098, up 14% year-over-year
- GAAP total operating loss
$25.8 million in the second quarter of 2023, compared to$31.4 million in the second quarter of 2022 - In connection with the implementation of the announced cost reduction plan, the Company expects to extend net operating cash runway into the second half of 2024
“Our core direct-to-consumer cash-pay segment has been stable through 2023 as compared to 2022. We continue to focus on lowering customer acquisition costs through further optimizing media spend and maintaining an efficient inside sales force. Meanwhile, demand from consumers interested in purchasing
Second Quarter 2023 Financial and Operating Results
During the second quarter of 2023, we announced a cost reduction plan intended to optimize our cost structure and operating model. We currently expect the cost reduction plan to be substantially implemented through the end of fiscal 2023 and estimate that we will incur one-time charges of approximately
Gross systems shipped for the second quarter of 2023 were 5,098, compared to 4,455 during the second quarter of 2022. The year-over-year increase in shipment volume was largely driven by sales of our
The sales returns rate for the second quarter of 2023 was 34.2%, compared to 33.3% in the second quarter of 2022. The year-over-year increase in the sales returns rate in the second quarter of 2023 was primarily due to a higher sales returns rate for systems sold to Victra.
Net revenue was
Gross profit for the second quarter of 2023 was
Total operating expenses were
Sales and marketing expenses were
Research and development expenses were
General and administrative expenses were
Excluding stock-based compensation expense, non-GAAP operating expenses for the second quarter of 2023 were
GAAP loss from operations was
Net loss attributable to common stockholders for the second quarter of 2023 was
Net operating cash burn, defined as cash used in operating and investment activities, for the second quarter of 2023 was approximately
Cash and cash equivalents were
2023 Financial Guidance
The Company is not providing financial guidance at this time.
Conference Call and Webcast Information
The Company will not be hosting a conference call and webcast to discuss second quarter 2023 results.
About
Eargo’s seventh generation device,
Related Links
http://eargo.com
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact contained in this press release are forward-looking statements, including but not limited to statements regarding the continued evolution of our omni-channel business; consumer demand for our products and our ability to satisfy demand; the efficiency of our customer acquisition and media spend; our partnerships with Victra and other third-party partners; our work with payors to establish insurance coverage for our products and to establish relationships with health plans, benefits managers, and managed care providers; the effects, timing and costs of our cost reduction plans; our ability to support our customers; our strategy and innovation priorities; and our expected net operating cash runway. Forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that could cause actual results and events to differ materially from those anticipated, including, but not limited to, risks, uncertainties and assumptions related to: our expectations regarding our omni-channel business, including partnerships with retailers, resellers and other distributors (whether brick and mortar or online); the extent to which we may be able to validate and establish processes to support the submission of claims for reimbursement from third-party payors or to otherwise establish relationships with health plans, benefits managers, and managed care providers, and our ability to maintain or increase insurance coverage of our hearing aids; the timing or results of ongoing claims audits and medical records reviews by third-party payors; estimates of our future capital needs and our ability to raise capital on favorable terms, if at all, including the timing of future capital requirements and the terms or timing of any future financings; the effects, timing and costs of our cost reduction plans; the impact of the regulatory landscape for hearing aid devices on our business and results of operations; our expectations concerning additional orders by existing customers; our expectations regarding the potential market size and size of the potential consumer populations for our products and any future products, including insurance coverage of our hearing aids; our ability to release new hearing aids and the anticipated features of any such hearing aids; the performance, differentiation and attractiveness to consumers of our products; developments and projections relating to our competitors and our industry, including competing products; our ability to maintain our competitive technological advantages against new entrants in our industry; the pricing of our hearing aids; our expectations regarding the ability to make certain claims related to the performance of our hearing aids relative to competitive products; our expectations with regard to changes in the regulatory landscape for hearing aid devices and related opportunities, including the implementation and effects of the new over-the-counter hearing aid regulatory framework; and our expectations regarding macroeconomic conditions, including but not limited to the impact of COVID-19, inflationary trends, uncertainty or volatility in the market (including recent and potential disruption in the banking system and financial markets and geopolitical events (such as the conflict in
Use of Non-GAAP Financial Measures
The Company reports non-GAAP results for gross profit, gross margin, total operating expenses, sales and marketing expenses, research & development expenses, general & administrative expenses, total operating loss, net loss, and net loss per share in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. The Company’s financial measures under GAAP include charges such as stock-based compensation, as listed in the itemized reconciliations between GAAP and non-GAAP financial measures included in this press release. Management has excluded the effects of stock-based compensation in its non-GAAP financial measures to assist investors in analyzing and assessing the Company’s operating performance. In addition, these non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles, and they may not be comparable with similarly named financial measures of other companies. The Company encourages investors to carefully consider its results under GAAP, as well as its supplemental non-GAAP financial measures and the reconciliation between these presentations, to more fully understand its business.
Investor Contact
Chief Financial Officer
ir@eargo.com
Consolidated Balance Sheets (Unaudited) (In thousands, except share and per share amounts) | ||||||||
2023 | 2022 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 60,779 | $ | 101,238 | ||||
Accounts receivable, net | 961 | 1,910 | ||||||
Inventories | 5,360 | 5,036 | ||||||
Prepaid expenses and other current assets | 5,835 | 7,846 | ||||||
Total current assets | 72,935 | 116,030 | ||||||
Operating lease right-of-use assets | 7,582 | 5,765 | ||||||
Property and equipment, net | 4,586 | 7,441 | ||||||
Intangible assets, net | 850 | 1,063 | ||||||
873 | 873 | |||||||
Other assets | 724 | 906 | ||||||
Total assets | $ | 87,550 | $ | 132,078 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 3,729 | $ | 6,504 | ||||
Accrued expenses | 9,665 | 12,715 | ||||||
Sales returns reserve | 5,070 | 3,942 | ||||||
Other current liabilities | 1,457 | 1,462 | ||||||
Lease liability, current portion | 602 | 628 | ||||||
Total current liabilities | 20,523 | 25,251 | ||||||
Lease liability, noncurrent portion | 7,210 | 5,973 | ||||||
Total liabilities | 27,733 | 31,224 | ||||||
Stockholders’ equity: | ||||||||
Preferred stock, | — | — | ||||||
Common stock; | 2 | 2 | ||||||
Additional paid-in capital | 621,188 | 615,151 | ||||||
Accumulated deficit | (561,373 | ) | (514,299 | ) | ||||
Total stockholders’ equity | 59,817 | 100,854 | ||||||
Total liabilities and stockholders’ equity | $ | 87,550 | $ | 132,078 | ||||
Consolidated Statements of Operations and Comprehensive Loss (Unaudited) (In thousands, except share and per share amounts) | ||||||||||||||||
Three months ended | Six Months Ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Revenue, net | $ | 8,108 | $ | 7,247 | $ | 19,921 | $ | 16,423 | ||||||||
Cost of revenue | 6,477 | 4,733 | 13,168 | 10,224 | ||||||||||||
Gross profit (loss) | 1,631 | 2,514 | 6,753 | 6,199 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 5,364 | 3,879 | 9,969 | 9,726 | ||||||||||||
Sales and marketing | 12,627 | 12,734 | 26,028 | 26,024 | ||||||||||||
General and administrative | 9,446 | 17,344 | 19,354 | 32,278 | ||||||||||||
Total operating expenses | 27,437 | 33,957 | 55,351 | 68,028 | ||||||||||||
Loss from operations | (25,806 | ) | (31,443 | ) | (48,598 | ) | (61,829 | ) | ||||||||
Other income (expense), net: | ||||||||||||||||
Interest income | 654 | 56 | 1,524 | 61 | ||||||||||||
Interest expense | — | (285 | ) | — | (549 | ) | ||||||||||
Loss on extinguishment of debt | — | (772 | ) | — | (772 | ) | ||||||||||
Total other income (expense), net | 654 | (1,001 | ) | 1,524 | (1,260 | ) | ||||||||||
Loss before income taxes | (25,152 | ) | (32,444 | ) | (47,074 | ) | (63,089 | ) | ||||||||
Income tax provision | — | — | — | — | ||||||||||||
Net loss and comprehensive loss | $ | (25,152 | ) | $ | (32,444 | ) | $ | (47,074 | ) | $ | (63,089 | ) | ||||
Net income (loss) attributable to common stockholders, basic and diluted | $ | (25,152 | ) | $ | (32,444 | ) | $ | (47,074 | ) | $ | (63,089 | ) | ||||
Net income (loss) per share attributable to common stockholders, basic and diluted | $ | (1.21 | ) | $ | (16.48 | ) | $ | (2.27 | ) | $ | (32.07 | ) | ||||
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, basic and diluted | 20,745,838 | 1,968,201 | 20,740,152 | 1,967,175 | ||||||||||||
Results of Operations – Reconciliation between GAAP and Non-GAAP (Unaudited) (In thousands, except per share amounts) | ||||||||||||||||||
Reconciliation between GAAP and non-GAAP net loss per share attributable to common stockholders: | ||||||||||||||||||
Three months ended | Six Months Ended | |||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||
GAAP net loss per share to common stockholders, basic and diluted | $ | (1.21 | ) | $ | (16.48 | ) | $ | (2.27 | ) | $ | (32.07 | ) | ||||||
Stock-based compensation | 0.13 | 0.77 | 0.29 | 2.31 | ||||||||||||||
Non-GAAP net loss per share to common stockholders, basic and diluted | $ | (1.08 | ) | $ | (15.71 | ) | $ | (1.98 | ) | $ | (29.76 | ) | ||||||
Reconciliation between GAAP and non-GAAP net loss attributable to common stockholders: | ||||||||||||||||||
Three months ended | Six Months Ended | |||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||
GAAP net loss attributable to common stockholders, basic and diluted | $ | (25,152 | ) | $ | (32,444 | ) | $ | (47,074 | ) | $ | (63,089 | ) | ||||||
Stock-based compensation | 2,629 | 1,511 | 6,037 | 4,535 | ||||||||||||||
Non-GAAP net loss attributable to common stockholders, basic and diluted | $ | (22,523 | ) | $ | (30,933 | ) | $ | (41,037 | ) | $ | (58,554 | ) | ||||||
Reconciliation between GAAP and non-GAAP gross profit and gross margin: | ||||||||||||||||||
Three months ended | Six Months Ended | |||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||
GAAP gross profit | $ | 1,631 | $ | 2,514 | $ | 6,753 | $ | 6,199 | ||||||||||
Stock-based compensation | 48 | 37 | 90 | 59 | ||||||||||||||
Non-GAAP gross profit | $ | 1,679 | $ | 2,551 | $ | 6,843 | $ | 6,258 | ||||||||||
GAAP gross margin | 20.1 | % | 34.7 | % | 33.9 | % | 37.7 | % | ||||||||||
Stock-based compensation | 0.6 | % | 0.6 | % | 0.5 | % | 0.4 | % | ||||||||||
Non-GAAP gross margin | 20.7 | % | 35.3 | % | 34.4 | % | 38.1 | % | ||||||||||
Reconciliation between GAAP and non-GAAP operating expenses and operating loss: | ||||||||||||||||||
Three months ended | Six Months Ended | |||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||
GAAP research and development expense | $ | 5,364 | $ | 3,879 | $ | 9,969 | $ | 9,726 | ||||||||||
Stock-based compensation | (714 | ) | 585 | (1,366 | ) | (435 | ) | |||||||||||
Non-GAAP research and development expense | $ | 4,650 | $ | 4,464 | $ | 8,603 | $ | 9,291 | ||||||||||
GAAP sales and marketing expense | $ | 12,627 | $ | 12,734 | $ | 26,028 | $ | 26,024 | ||||||||||
Stock-based compensation | (1,075 | ) | (693 | ) | (1,965 | ) | (1,333 | ) | ||||||||||
Non-GAAP sales and marketing expense | $ | 11,552 | $ | 12,041 | $ | 24,063 | $ | 24,691 | ||||||||||
GAAP general and administrative expense | $ | 9,446 | $ | 17,344 | $ | 19,354 | $ | 32,278 | ||||||||||
Stock-based compensation | (792 | ) | (1,366 | ) | (2,616 | ) | (2,708 | ) | ||||||||||
Non-GAAP general and administrative expense | $ | 8,654 | $ | 15,978 | $ | 16,738 | $ | 29,570 | ||||||||||
GAAP total operating expense | $ | 27,437 | $ | 33,957 | $ | 55,351 | $ | 68,028 | ||||||||||
Stock-based compensation | (2,581 | ) | (1,474 | ) | (5,947 | ) | (4,476 | ) | ||||||||||
Non-GAAP total operating expense | $ | 24,856 | $ | 32,483 | $ | 49,404 | $ | 63,552 | ||||||||||
GAAP operating loss | $ | (25,806 | ) | $ | (31,443 | ) | $ | (48,598 | ) | $ | (61,829 | ) | ||||||
Stock-based compensation | 2,629 | 1,511 | 6,037 | 4,535 | ||||||||||||||
Non-GAAP operating loss | $ | (23,177 | ) | $ | (29,932 | ) | $ | (42,561 | ) | $ | (57,294 | ) | ||||||
Source:
2023 GlobeNewswire, Inc., source