Apyx Medical Corp
For the period ended Sep 30, 2024. Filed Nov 8, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 8, 2024
APYX$2.93-4.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0000719135-24-000038
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-08.
0001437749-24-034193
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 79 previous paragraphs and 83 current paragraphs.
48 unchanged; 24 reworded; 10 added; 3 removed; 4 previous and 1 current paragraphs rearranged.
Tables are not compared: 11 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (10)
Current report
We operate in two business segments: OEM and Advanced Energy. The OEM segment is primarily development and manufacturing contract and product driven. The Advanced Energy segment sells both capital equipment and consumables in the form of a single use handpiece. Sales of handpiece units are a substantial portion of our business and for the nine months ended September 30, 2024 and 2023, we sold approximately 64,000 and 59,000 units, respectively. In the third quarter, our handpiece revenue grew 9% overall and 15% in the United States and handpiece revenue now accounts for more than 60% of our total Advanced Energy revenue.
Current report
Recent activities:
Current report
Liquidity:
Current report
In addition to the organizational changes, we have identified other direct cost savings we anticipate achieving in 2025. The identified cost savings include reductions in professional fees, lower research and development costs as we complete the development of Ayon, credit card fees and stock-based compensation. We foresee, in totality, these cost savings will reduce our annual operating expenses below $40 million in 2025.
Current report
Total revenue decreased by 4.1%, or approximately $0.5 million, for the three months ended September 30, 2024 when compared with the three months ended September 30, 2023. Advanced Energy segment sales decreased 5.6%, or approximately $0.5 million, for the three months ended September 30, 2024 when compared with the three months ended September 30, 2023. The Advanced Energy sales decrease was driven by a lower average selling price of generators to domestic customers, fewer domestic customer upgrades to the Apyx One Console and a decrease in international sales of new generators. These decreases were partially offset by an increased volume of single-use handpieces domestically and sales of upgrades to the Apyx One Console internationally. OEM segment sales increased 2.8%, or approximately $0.1 million, for the three months ended September 30, 2024 when compared with the three months ended September 30, 2023. The increase in OEM sales was due to increases in sales volume to existing customers, including Symmetry Surgical under our 10-year generator manufacturing and supply agreement.
Current report
Research and development expenses decreased 1.8% for the nine months ended September 30, 2024, primarily due to lower compensation and benefits costs ($0.1 million).
Current report
During the three months ended September 30, 2024, salaries and related expenses decreased 22.6%, primarily due to a decrease in bonus expense ($0.8 million) as we, based on the continued impact to the business as a result of economic uncertainty in the capital equipment market that is being experienced in the aesthetic space, reversed our entire annual bonus accrual during the quarter and lower stock based compensation expense ($0.2 million).
Current report
On November 7, 2024, we entered into an amendment to the Perceptive Credit Agreement. The amendment reduced the financial covenant trailing twelve-month revenue targets relating to its Advanced Energy segment (tested quarterly), with amended year-end targets of $34.4 million, $37.0 million, $52.4 million and $60.3 million for 2024, 2025, 2026 and 2027, respectively, and a target of $38.3 million for the quarter ended September 30, 2024. The amendment also introduced a maximum operating expense financial covenant, with full year targets of $40.0 million and $45.0 million for 2025 and 2026, respectively. The Perceptive Credit Agreement, as amended, continues to contain customary affirmative and negative covenants, including covenants limiting the ability of us and our subsidiaries, among other things, to incur debt, grant liens, make distributions, enter certain restrictive agreements, pay or modify subordinated debt, dispose of assets, make investments and acquisitions, enter into certain transactions with affiliates, and undergo certain fundamental changes, in each case, subject to limitations and exceptions set forth in the Perceptive Credit Agreement. Additionally, we must maintain a balance of $3.0 million in cash and cash equivalents during the term of the Perceptive Credit Agreement. As of September 30, 2024, we were in compliance with the financial covenants contained within the Perceptive Credit Agreement, as amended. Our continued compliance with covenants is subject to meeting or exceeding forecasted Advanced Energy revenues, as amended and reducing operating expenses.
Current report
In connection with the amendment to the Perceptive Credit Agreement, we issued Perceptive 150,000 shares of our common stock. We are in the process of determining the proper accounting treatment for the amendment to the Perceptive Credit Agreement, including the issuance of the shares of common stock.
Current report
On November 7, 2024, we closed a $7.0 million registered direct offering with a healthcare-focused fund and issued 3,000,000 shares of common stock and 2,934,690 of prefunded warrants to purchase common stock with an exercise price of $.001 per share.
Removed paragraphs (3)
Previous report
We continue to drive sales in our Advanced Energy business by increasing the adoption of our multifunction generator and utilization of our single-use handpieces in the U.S. cosmetic surgery market and fulfilling demand from distributors in our international markets. Management estimates that our products have been sold in more than 60 countries. As of June 30, 2024, we had a direct sales force of 31 field-based selling professionals and utilized 3 independent sales agencies. We also had 4 sales managers. This selling organization, along with our international network of distributors, is focused on the use of Renuvion and J-Plasma in the cosmetic and hospital surgical markets, supported by our global medical affairs team. This global team of clinical support specialists focuses on supporting our users to ensure optimal outcomes for their patients. In 2023, we also began our direct to consumer marketing efforts, and began to further enhance our marketing to surgeons. In addition, we have invested in training programs and marketing-related activities to support accelerated adoption of Renuvion into surgeons’ practices.
Previous report
Total revenue decreased by 10.5%, or approximately $1.4 million, for the three months ended June 30, 2024 when compared with the three months ended June 30, 2023. Total revenue decreased by 12.9%, or approximately $3.3 million, for the six months ended June 30, 2024 when compared with the six months ended June 30, 2023.
Previous report
On November 8, 2023, we entered into a Credit and Guaranty Agreement (the “Perceptive Credit Agreement”), by and among Apyx Medical (as borrower), Apyx China Holding Corp. and Apyx Bulgaria EOOD, our wholly-owned subsidiaries (as subsidiary guarantors), and Perceptive Credit Holdings IV, LP (as initial lender and administrative agent) (“Perceptive”), and the lenders from time to time party thereto. The Perceptive Credit Agreement provides for a facility of up to $45 million, consisting of senior secured term loans. The Perceptive Credit Agreement provides for (i) an initial loan of $37.5 million and (ii) a delayed draw loan of $7.5 million.
Reworded paragraphs (24)
Previous wording
Glucagon-like peptide -1 peptide receptor agonists (GLP-1’s), such as Mounjaro®, Wegov® and Ozempic®, are prescribed for the treatment of diabetes and or weight loss in combination with exercise to improve glycemic control. GLP-1’s have also been found to mimic the GLP-1 satiety hormone in our bodies. When one eats, GLP-1 is released in the small intestines regulating blood sugar and sending signals to the brain centers that control appetite. Studies have shown patients taking GLP-1’s have loss of body weight. Currently, two GLP-1’s are cleared by the FDA for weight loss, but we anticipate a number of additional drug candidates will be cleared as well as, oral versions of these injectable medications.
Current wording
Glucagon- like peptide -1 peptide receptor agonists (GLP-1’s), such as Mounjaro®, Wegovy® and Ozempic®, are prescribed for the treatment of diabetes and or weight loss in combination with exercise to improve glycemic control. GLP-1’s have also been found to mimic the GLP-1 satiety hormone in our bodies. When one eats, GLP-1 is released in the small intestines regulating blood sugar and sending signals to the brain centers that control appetite. Studies have shown patients taking GLP-1’s have experienced a loss of body weight. Currently, two GLP-1’s are cleared by the FDA for weight loss, but we anticipate a number of additional drug candidates will be cleared as well as, oral versions of these injectable medications.
Previous wording
We believe the increased use of GLP-1’s may have an initial negative impact on the number of liposuction procedures, but in the long term, as these drugs have a ripple effect that will drive people towards plastic surgery, they will provide a tailwind for sales of our Renuvion products. The rapid weight loss from these drugs may cause what is known as “Ozempic Butt” characterized by sagging skin on the butt. Rapid weight loss can contribute to loose skin, particularly in the curvier areas of the body. To address this, the cosmetic surgery market is focusing on body contouring. Body contouring is a customizable treatment for patients to target specific fat deposits, engage in fat transfer, and treatments to address skin laxity. Renuvion is the only FDA approved device for the treatment of this issue post liposuction. Additionally, Renuvion may be used to treat skin laxity without the use of liposuction, potentially increasing the total available market for our products.
Current wording
We believe the increased use of GLP-1’s may have had an initial negative impact on the number of liposuction procedures and created uncertainty in the aesthetic space. However, we believe, as these drugs will have a ripple effect that will eventually drive people towards plastic surgery and will provide a tailwind for sales of our Renuvion products. Rapid weight loss caused by these drugs can contribute to loose skin, particularly in the curvier areas of the body. To address this, the cosmetic surgery market is focusing on body contouring. Body contouring is a customizable treatment for patients to target specific fat deposits, engage in fat transfer, and treatments to address loose or lax skin. Renuvion is the only FDA approved device for the treatment of this issue post liposuction. Additionally, Renuvion may be used to treat skin laxity without the use of liposuction, potentially increasing the total available market for our products.
Previous wording
Advanced Energy segment sales decreased 16.7%, or approximately$2.0 million, for the three months ended June 30, 2024 when compared with the three months ended June 30, 2023. Advanced Energy segment sales decreased 19.6%, or approximately$4.2 million, for thesix months ended June 30, 2024 when compared with thesix months ended June 30, 2023. The Advanced Energy sales decrease was driven by lower sales of our generators in both domestic and some international markets as a result of economic uncertainty in the capital equipment market that is being experienced in the aesthetic space. These decreases were partially offset by increased volume of single-use handpieces globally.
Current wording
Total revenue decreased by 10.1%, or approximately $3.8 million, for the nine months ended September 30, 2024 when compared with the nine months ended September 30, 2023. Advanced Energy segment sales decreased 15.2%, or approximately $4.7 million, for the nine months ended September 30, 2024 when compared with the nine months ended September 30, 2023. The Advanced Energy sales decrease was driven by lower sales of our generators in both domestic and some international markets as a result of economic uncertainty in the capital equipment market that is being experienced in the aesthetic space and a lower average selling price of generators to domestic customers as a result of this market. These decreases were partially offset by increased volume of single-use handpieces globally and sales of Apyx One Console upgrades internationally. OEM segment sales increased 14.5%, or approximately $0.9 million, for the nine months ended September 30, 2024 when compared with the nine months ended September 30, 2023. The increase in OEM sales was due to increases in sales volume to existing customers, including Symmetry Surgical under our 10-year generator manufacturing and supply agreement.
Previous wording
International sales represented approximately 28.5% and 30.0% of total revenues for the three andsix months ended June 30, 2024, respectively, as compared with 25.3% and 26.1% of total revenues for the same period in the prior year. Management estimates our products have been sold in more than 60 countries through local dealers coordinated by sales and marketing personnel through our facilities in Clearwater, Florida and Sofia, Bulgaria.
Current wording
International sales represented approximately 32.2% and 30.8% of total revenues for the three and nine months ended September 30, 2024, respectively, as compared with 27.8% and 26.6% of total revenues for the same period in the prior year. Management estimates our products have been sold in more than 60 countries through local dealers coordinated by sales and marketing personnel through our facilities in Clearwater, Florida and Sofia, Bulgaria.
Previous wording
Gross profit for the three months ended June 30, 2024, decreased (19.2)% to $7.5 million, compared to $9.3 million for the same period in the prior year. Gross margin for the three months ended June 30, 2024, was 61.7%, compared to 68.4% for the same period in 2023. The decrease in gross profit margins for the three months ended June 30, 2024 from the prior year period is primarily attributable to changes in the sales mix between our two segments, with our OEM segment comprising a higher percentage of total sales and geographic mix within our Advanced Energy segment, with international sales comprising a higher percentage of total sales.
Current wording
Gross profit for the three months ended September 30, 2024, decreased 12.8% to $7.0 million, compared to $8.0 million for the same period in the prior year. Gross margin for the three months ended September 30, 2024, was 60.5%, compared to 66.6% for the same period in 2023. The decrease in gross profit margins for the three months ended September 30, 2024 from the prior year period is primarily attributable to a decrease in the average selling price of generators to domestic customers, changes in the sales mix between our two segments, with our OEM segment comprising a higher percentage of total sales and geographic mix within our Advanced Energy segment, with international sales comprising a higher percentage of total sales.
Previous wording
Gross profit for thesix months ended June 30, 2024, decreased (20.2)% to $13.4 million, compared to $16.9 million for the same period in the prior year. Gross margin for thesix months ended June 30, 2024, was 60.0%, compared to 65.5% for the same period in 2023. The decrease in gross profit margins for the six months ended June 30, 2024 from the prior year period is primarily attributable to changes in the sales mix between our two segments, with our OEM segment comprising a higher percentage of total sales and geographic mix within our Advanced Energy segment, with international sales comprising a higher percentage of total sales.
Current wording
Gross profit for the nine months ended September 30, 2024, decreased 17.9% to $20.4 million, compared to $24.8 million for the same period in the prior year. Gross margin for the nine months ended September 30, 2024, was 60.2%, compared to 65.9% for the same period in 2023. The decrease in gross profit margins for the nine months ended September 30, 2024 from the prior year period is primarily attributable to a decrease in the average selling price of generators to domestic customers, changes in the sales mix between our two segments, with our OEM segment comprising a higher percentage of total sales and geographic mix within our Advanced Energy segment, with international sales comprising a higher percentage of total sales.
Previous wording
Research and development expenses increased 4.9% for the three months ended June 30, 2024, primarily due to higher spending on our product development initiatives and clinical studies ($0.1 million).
Current wording
Research and development expenses decreased 18.9% for the three months ended September 30, 2024, primarily due to lower compensation and benefits costs ($0.2 million) and lower spending on our product development initiatives and clinical studies ($0.1 million).
Previous wording
Professional services expense increased 31.5% for the three months ended June 30, 2024, primarily attributable to increases in legal expenses ($0.4 million), as a result of the reversal of a legal loss contingency in the prior year period, and physician and marketing consulting ($0.2 million). These decreases were partially offset by a decrease in board of director’s option expense ($0.1 million).
Current wording
Professional services expense decreased 10.0% for the three months ended September 30, 2024, primarily due to decreases in accounting and audit fees ($0.1 million), board of director’s stock-based compensation expense ($0.1 million) and recruiting expenses ($0.2 million). These decreases were partially offset by an increase in physician and marketing consulting ($0.2 million).
Previous wording
Professional services expense increased 10.1% for the six months ended June 30, 2024, primarily attributable to increases in legal expenses ($0.4 million), as a result of the reversal of a legal loss contingency in the prior year period, and physician and marketing consulting ($0.2 million). These decreases were partially offset by a decrease in board of director’s stock-based compensation expense ($0.3 million).
Current wording
Professional services expense increased 3.0% for the nine months ended September 30, 2024, primarily due to increases in physician and marketing consulting ($0.4 million) and legal expenses ($0.4 million), as a result of the reversal of a legal loss contingency in the prior year period. These decreases were partially offset by decreases in board of director’s stock-based compensation expense ($0.4 million), accounting and audit fees ($0.2 million) and recruiting expenses ($0.1 million).
Previous wording
During the six months ended June 30, 2024, salaries and related expenses decreased (4.3)%, primarily driven by lower stock based compensation expense ($0.4 million) and temporary labor expenses ($0.2 million). These decreases were partially offset by an increase in salaries and related taxes and benefits ($0.1 million) and bonus expense ($0.1 million).
Current wording
During the nine months ended September 30, 2024, salaries and related expenses decreased 10.1%, primarily due to a decrease in bonus expense ($0.7 million) as we, based on the continued impact to the business as a result of economic uncertainty in the capital equipment market that is being experienced in the aesthetic space, reversed our entire annual bonus accrual during the third quarter, lower stock based compensation expense ($0.6 million) and temporary labor expenses ($0.2 million). These decreases were partially offset by an increase in salaries and related taxes and benefits ($0.1 million).
Previous wording
During the three months ended June 30, 2024, selling, general and administrative expense decreased (10.0)%, primarily driven by decreases in commissions ($0.7 million), advertising expense, including trade show fees and related costs ($0.2 million) and bad debt expense ($0.1 million). These decreases were partially offset by higher meeting and training costs ($0.4 million) and travel expense ($0.1 million).
Current wording
During the three months ended September 30, 2024, selling, general and administrative expense decreased 11.4%, primarily due to decreases in commissions ($0.3 million), advertising expense, including trade show fees and related costs ($0.1 million), insurance expense, including claims on our policies ($0.1 million) and foreign currency gains and losses ($0.1 million). These decreases were partially offset by higher meeting and training costs ($0.1 million).
Previous wording
During thesix months ended June 30, 2024, selling, general and admi nistrative expense decreased (8.4)%, primarily driven by decreases in commissions ($1.4 million), advertising expense, including trade show fees and related costs ($0.2 million), insurance expense, including claims on our policies ($0.1 million) and travel expense ($0.1 million). These decreases were partially offset by higher meeting and training costs ($0.7 million) and building lease expense ($0.2 million).
Current wording
During the nine months ended September 30, 2024, selling, general and administrative expense decreased 9.4%, primarily due to decreases in commissions ($1.6 million), advertising expense, including trade show fees and related costs ($0.3 million), insurance expense, including claims on our policies ($0.2 million), travel expense ($0.1 million) and payment processing fees ($0.1 million). These decreases were partially offset by higher meeting and training costs ($0.7 million) and building lease expense ($0.2 million).
Previous wording
Gain on sale-leaseback for the three and six months ended June 30, 2023 was approximately $2.7 million as a result of the gain on the sale and leaseback of our Clearwater, FL facility in May 2023.
Current wording
Gain on sale-leaseback for the nine months ended September 30, 2023 was approximately $2.7 million as a result of the gain on the sale and leaseback of our Clearwater, FL facility in May 2023.
Previous wording
Interest income increased approximately$0.3 million and$0.7 million, respectively, for the three and six months ended June 30, 2024, when compared with the same periods the prior year. These increases are due to a higher average balance in ourinvestments in money market funds and U.S. Treasury securities included in cash and cash equivalents.
Current wording
Interest income increased approximately $0.1 million and $0.8 million, respectively, for the three and nine months ended September 30, 2024, when compared with the same periods the prior year. These increases are due to a higher average balance in our investments in money market funds and U.S. Treasury securities included in cash and cash equivalents.
Previous wording
Interest expense increased approximately$0.9 million and$2.0 million, respectively, for the three and six months ended June 30, 2024, when compared with the same periods in the prior year. These increases are due to cash and noncash interest expense on the Perceptive Credit Agreement.
Current wording
Interest expense increased approximately $0.8 million and $2.9 million, respectively, for the three and nine months ended September 30, 2024, when compared with the same periods in the prior year. These increases are due to cash and noncash interest expense on the Perceptive Credit Agreement.
Previous wording
Other (expense) income, net decreased approximately$0.6 million and$0.7 millionfor the three and six months ended June 30, 2024, compared with the same periods in the prior year. These decreases were primarily attributable to a small insurance recovery in 2023 ($0.2 million) and the release of our joint and several payroll liability due to the lapse of the statute of limitations in the prior year ($0.4 million).
Current wording
Other income, net decreased approximately $0.6 million for the nine months ended September 30, 2024, compared with the same period in the prior year. These decreases were primarily attributable to an insurance recovery in 2023 ($0.2 million) and the release of our joint and several payroll liability due to the lapse of the statute of limitations in the prior year ($0.4 million).
Previous wording
Our income tax expense was approximately $50,000 and $66,000 with effective tax rates of (0.8)% and (6.9)% for the three months ended June 30, 2024 and 2023, respectively. For the three months ended June 30, 2024 and 2023, the effective rate differs from the statutory rate primarily due to the full valuation allowance recorded on the net operating loss (“NOL”) and net deferred tax assets generated during the period.
Current wording
Our income tax expense (benefit) was approximately $60,000 and $(318,000) with effective tax rates of (1.3)% and 6.4% for the three months ended September 30, 2024 and 2023, respectively. For the three months ended September 30, 2024, the effective rate differs from the statutory rate primarily due to the full valuation allowance recorded on the net operating loss (“NOL”) and net deferred tax assets generated during the period. For the three months ended September 30, 2023, the effective rate differs from the statutory rate primarily due to interest income on our income tax refund that we received during the quarter, partially offset by the full valuation allowance recorded on the NOL generated during the period.
Previous wording
Our income tax expense (benefit) was approximately $103,000 and $(2,201,000) with effective tax rates of (0.7)% and 32.6% for the six months ended June 30, 2024 and 2023, respectively. For the six months ended June 30, 2024, the effective rate differs from the statutory rate primarily due to the full valuation allowance recorded on the NOL and net deferred tax assets generated during the period. For the six months ended June 30, 2023, the effective rate differs from the statutory rate primarily due to the reversal of the Company’s liability for uncertain tax positions, including accrued interest and penalties of approximately $2.1 million which were sustained upon the completion in January 2023 of the IRS examination of the Company's 2018 through 2020 income tax returns, partially offset by a valuation allowance on the NOL and net deferred tax assets generated during the period.
Current wording
Our income tax expense (benefit) was approximately $163,000 and $(2,519,000) with effective tax rates of (0.9)% and 21.4% for the nine months ended September 30, 2024 and 2023, respectively. For the nine months ended September 30, 2024, the effective rate differs from the statutory rate primarily due to the full valuation allowance recorded on the NOL and net deferred tax assets generated during the period. For the nine months ended September 30, 2023, the effective rate differs from the statutory rate primarily due to the reversal of our liability for uncertain tax positions, including accrued interest and penalties, of approximately $2.1 million, which were sustained upon the completion in January 2023 of the IRS examination of our 2018 through 2020 income tax returns and interest income on our income tax refund, partially offset by the valuation allowance on the NOL and net deferred tax assets generated during the period.
Previous wording
At June 30, 2024, we had approximately$32.7 million in cash and cash equivalents as compared to approximately$43.7 million in cash and cash equivalents at December 31, 2023. Our working capital at June 30, 2024 was approximately $46.0 million compared with $57.6 million at December 31, 2023.
Current wording
At September 30, 2024, we had approximately $28.0 million in cash and cash equivalents as compared to approximately $43.7 million in cash and cash equivalents at December 31, 2023. Our working capital at September 30, 2024 was approximately $42.6 million compared with $57.6 million at December 31, 2023.
Previous wording
For thesix months ended June 30, 2024, net cash used in operating activities was approximately$10.7 million, which principally funded our loss from operations of $12.2 million, compared with net cash used in operating activities of approximately $6.7 million in the six months ended June 30, 2023. The increase in cash used in operations is primarily due to the payment of accrued bonuses in the first quarter of 2024, no bonuses were paid in 2023, and the increase in operating loss driven by lower Advanced Energy sales compared to the same period in the prior year. These decreases were partially offset by improvements in our accounts receivable and inventory positions.
Current wording
For the nine months ended September 30, 2024, net cash used in operating activities was approximately $15.1 million, which principally funded our loss from operations of $15.8 million, compared with net cash used in operating activities, exclusive of the receipt of our $8.1 million final income tax refund, of approximately $11.1 million in the nine months ended September 30, 2023. The increase in cash used in operations is primarily due to the payment of accrued bonuses in the first quarter of 2024, no bonuses were paid in 2023, higher cash interest expense, net of interest income, and the increase in operating loss driven by lower Advanced Energy sales compared to the same period in the prior year. These decreases were partially offset by improvements in our accounts receivable, prepaid expenses and inventory positions.
Previous wording
Net cash used in investing activities six months ended June 30, 2024 was$0.3 million related to investments in property and equipment. Net cash provided by investing activities for the six months ended June 30, 2023 was $7.0 million related to the sale of our Clearwater, FL facility ($7.3 million), partially offset by investments in property and equipment ($0.3 million).
Current wording
Net cash used in investing activities nine months ended September 30, 2024 was $0.5 million related to investments in property and equipment. Net cash provided by investing activities for the nine months ended September 30, 2023 was $6.8 million related to proceeds from the sale of our Clearwater, FL facility ($7.3 million), partially offset by investments in property and equipment ($0.4 million).
Previous wording
Net cash provided by financing activities for the six months ended June 30, 2023 was$8.1 million related to proceeds received upon the execution of the prior debt agreement ($9.9 million) less debt issuance costs incurred in the transaction ($1.8 million). This prior debt was paid off in November 2023 with proceeds from the Perceptive Credit Agreement.
Current wording
Net cash provided by financing activities for the nine months ended September 30, 2023 was $8.3 million and was primarily related to proceeds received upon the execution of the prior debt agreement ($9.9 million) less debt issuance costs incurred in the transaction ($1.8 million). This prior debt was paid off in November 2023 with proceeds from the Perceptive Credit Agreement.
Previous wording
For a more in-depth description of the terms of the Perceptive Credit Agreement, see Note 11 in Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2023.
Current wording
For a more in-depth description of the terms of the Perceptive Credit Agreement, as amended, see Note 11 in Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2023 and Note 5 of Notes to Condensed Consolidated Financial Statements in Item 1 of this Quarterly Report on Form 10-Q.
Previous wording
At June 30, 2024, we had purchase commitments totaling approximately$3.3 million, substantially all of which is expected to be purchased within the next twelve months.
Current wording
At September 30, 2024, we had purchase commitments totaling approximately $2.7 million, substantially all of which is expected to be purchased within the next twelve months.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
We have incurred recurring net losses and cash outflows from operations and we anticipate that losses will continue in the near term. We plan to continue to fund our operations and capital funding needs through existing cash, sales of our products and, if necessary, additional equity and/or debt financing. However, we cannot be certain that additional financing will be available when needed or that, if available, financing will be obtained on terms acceptable to us. The sale of additional equity would result in dilution to our stockholders. Incurring additional debt financing would result in further debt service obligations, and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations. If we are unable to raise additional capital in sufficient amounts or on acceptable terms, we may be required to delay, limit, reduce, or terminate our sales, marketing and product development. Any of these actions could harm our business, results of operations and prospects. In November 2024, we undertook a cost saving restructuring which included an organizational reduction in force to better focus, optimize and streamline operations. As a result of the organizational changes, we reduced our workforce by nearly 25%. We estimate the annualized future cost savings from the reduction in force to be approximately $4.3 million which we expect to contribute to our goal of decreasing loss and achieving cash-flow breakeven. We will incur pre-tax charges of approximately $0.6 million in the fourth quarter of 2024 representing, for the most part, one-time cash expenditures for severance and other employee termination benefits. In addition, to the reduction in force, we have eliminated bonuses in 2024, reduced the board of directors from eight to five members and reduced board cash compensation from $0.5 million annually to $0.1 million.
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Previous report — wording carried elsewhere
OEM segment sales increased 29.0%, or approximately$0.5 million, for thethree months ended June 30, 2024 when compared with thethree months ended June 30, 2023. OEM segment sales increased 20.4%, or approximately $0.9 million, for the six months ended June 30, 2024 when compared with the six months ended June 30, 2023. The increase in OEM sales was due to increases in sales volume to existing customers, including Symmetry Surgical under our 10-year generator manufacturing and supply agreement.
Previous report — wording carried elsewhere
Research and development expenses increased 7.3% for the six months ended June 30, 2024, primarily due to higher spending on our product development initiatives and clinical studies ($0.2 million).
Previous report — wording carried elsewhere
During the three months ended June 30, 2024, salaries and related expenses decreased (4.0)%, primarily driven by lower stock based compensation expense ($0.2 million) and temporary labor expenses ($0.1 million). These decreases were partially offset by an increase in salaries and related taxes and benefits ($0.1 million).