GlobeNewswire Inc | Sep 17, 2020 04:01PM EDT

September 17, 2020

CARLSBAD, Calif., Sept. 17, 2020 (GLOBE NEWSWIRE) -- Acutus Medical, Inc. (Acutus) (Nasdaq: AFIB), today reported financial results for its second quarter ended June 30, 2020.

Recent Highlights:

-- Reported revenue of $1.1 million in the second quarter of 2020, a 54% increase over the same quarter last year and within the preliminary range disclosed in our initial public offering (IPO) prospectus. -- Increased worldwide installed base of AcQMap consoles to 38 as of June 30, 2020, up from 31 at the end of the prior quarter. Of those 38 consoles, 21 were 2nd generation machines, up from 11 at the end of the prior quarter. -- During August, completed an initial public offering of 10.1 million shares, raising $163.3 million in net proceeds.

In light of the challenging circumstances experienced by medical device companies generally during the first half of 2020, Im very pleased with our second quarter results and the dedication demonstrated by our team to our mission of improving the efficiency and effectiveness of arrhythmia treatment, said Vince Burgess, President and Chief Executive Officer. While we did see widespread interruptions to hospital electrophysiology services in the US and Europe due to the COVID-19 pandemic, we nevertheless saw strong console placements in the second quarter. We also saw many of our EP customers begin to re-open their labs in the latter half of Q2, driving an encouraging trend toward recovery to procedure rates, so we feel well positioned as we look to continue our growth.

Second Quarter 2020 Financial ResultsRevenue was $1.1 million for the second quarter of 2020, compared to $1.6 million for the prior quarter and $0.7 million for the second quarter of 2019, and within the preliminary range disclosed in our IPO prospectus. Headwinds from the global pandemic drove a procedural decline during the second quarter of 2020 relative to the first quarter of 2020. The increase in revenue when compared to the second quarter of 2019 was driven by increased disposables sales associated with the expansion of our AcQMap console installed base as we initiated our full commercial launch.

Gross margin was negative 135% for the second quarter of 2020, compared with negative 232% in the same quarter last year. The improvement was driven by greater production volumes and efficiencies in labor and manufacturing overhead absorption when compared to the same period last year. Over time and in advance of our full commercial launch, we have made significant investments in our manufacturing infrastructure to support our commercial launch in order to position us to scale production in-house as our business grows. As volumes increase over time, we expect to see the benefit of these investments and improvements to our margin profile.

Operating expenses were $17.9 million for the second quarter of 2020, compared with $12.2 million in the same quarter last year. The increase was driven primarily due to the expansion of our commercial team in conjunction with our full commercial launch, various R&D projects related to console enhancements and catheter development programs, and increased G&A costs incurred in anticipation of our becoming a public company.

We effected a 1-for-9.724 reverse split of our capital stock on July 28, 2020 in anticipation of our IPO. We have retrospectively adjusted outstanding shares to reflect the impact of the reverse stock split for all periods presented. Net loss was $23.2 million for the second quarter of 2020 and net loss per share was $32.24 on a weighted-average basic and diluted outstanding share count of 0.72 million, compared to $30.3 million and a net loss per share of $45.70 on a weighted-average basic and diluted outstanding share count of 0.66 million in the same period of the prior year. It is important to note these figures are based on pre-IPO share counts and do not reflect the conversion of 16.6 million shares of convertible preferred stock to common nor the issuance of 10.1 million common shares at the IPO. Beginning in the third quarter of 2020, these 26.7 million shares will be included in our calculation of weighted-average basic and diluted share counts, which will significantly reduce our net loss per share for future reporting periods as compared to reporting periods prior to our IPO.

Cash, cash equivalents, marketable securities and restricted cash were $29.5 million as of June 30, 2020, which excludes the $163.3 million net proceeds from our IPO, which closed on August 10, 2020.

Outlook and COVID-19Due to uncertainty surrounding the COVID-19 pandemic, Acutus Medical will not provide financial guidance for the remainder of 2020 at this time. Management will continue to evaluate its guidance policies and anticipates providing an update at the time of its third quarter earnings announcement, to the extent practicable, based on available information at that time.

Webcast and Conference Call InformationAcutus Medical will host a conference call to discuss the second quarter financial results after market close on Thursday, September 17, 2020 at 1:30 p.m. Pacific Time / 4:30 p.m. Eastern Time. The conference call can be accessed live over the phone (833) 570-1131 for U.S. callers or (914) 987-7078 for international callers, using conference ID: 9767216. The live webinar can be accessed at https://ir.acutusmedical.com.

About Acutus Medical, Inc. Acutus Medical is an arrhythmia management company focused on improving the way cardiac arrhythmias are diagnosed and treated. Acutus is committed to advancing the field of electrophysiology with a unique array of products and technologies which will enable more physicians to treat more patients more efficiently and effectively. Through internal product development, acquisitions, and global partnerships, Acutus has established a global sales presence delivering a broad portfolio of highly differentiated electrophysiology products. Acutus Medicals goal is to provide its customers with a complete solution for catheter-based treatment of cardiac arrhythmias in each of its geographic markets. Founded in 2011, Acutus is based in Carlsbad, California.

Caution Regarding Forward-Looking StatementsThis press release includes statements that may constitute forward-looking statements, usually containing the words believe, estimate, project, expect or similar expressions. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, the Company's ability to continue to manage expenses and cash burn rate at sustainable levels, continued acceptance of the Company's products in the marketplace, the effect of global economic conditions on the ability and willingness of customers to purchase its systems and the timing of such purchases, competitive factors, changes resulting from healthcare policy in the United States, including changes in government reimbursement of procedures, dependence upon third-party vendors and distributors, timing of regulatory approvals, the impact of the recent coronavirus (COVID-19) pandemic and our response to it, and other risks discussed in the Company's periodic and other filings with the Securities and Exchange Commission. By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release, except as required by law.

Investor Contact:Caroline CornerWestwicke ICRD: 415-314-1725Caroline.corner@westwicke.com

Holly WindlerM: 619-929-1275media@acutusmedical.com

Acutus Medical, Inc. and SubsidiariesCondensed Consolidated Balance Sheets(in thousands)

June 30, December 31, 2020 2019 (unaudited) ASSETS: Current assets: Cash and cash equivalents $ 24,295 $ 9,452 Marketable securities 5,037 62,351 Restricted cash 150 150 Accounts receivable 860 263 Inventory 12,266 8,424 Deferred offering costs 2,506 - Prepaid expenses and other current assets 1,323 1,816 Total current assets 46,437 82,456 Property and equipment, net 7,584 4,427 Right-of-use asset, net 2,005 2,341 Intangible assets, net 3,890 4,110 Goodwill 12,026 12,026 Other assets 87 95 Total assets $ 72,029 $ 105,455 LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICITCurrent liabilities: Accounts payable $ 9,084 $ 3,882 Accrued liabilities 7,036 10,076 Contingent consideration, short-term 3,500 8,200 Operating lease liabilities, short-term 882 833 Common and preferred stock warrant 10,791 8,919 liabilityTotal current liabilities 31,293 31,910 Operating lease liabilities, long-term 1,594 2,054 Long-term debt 38,558 38,244 Contingent consideration, long-term 4,000 5,700 Total liabilities 75,445 77,908 Commitments and contingencies Convertible preferred stock Series A convertible preferred stock 3,059 3,059 Series B convertible preferred stock 40,685 40,685 Series C convertible preferred stock 74,575 74,575 Series D convertible preferred stock 142,236 135,039 Stockholders' deficit Common stock 1 1 Additional paid-in capital 36,355 33,252 Accumulated deficit (300,325 ) (259,034 )Accumulated other comprehensive loss (2 ) (30 )Total stockholders' deficit (263,971 ) (225,811 )Total liabilities, convertible preferred $ 72,029 $ 105,455 stock and stockholders' deficit

Acutus Medical, Inc. and SubsidiariesCondensed Consolidated Statements of Operations and Comprehensive Loss(in thousands, except share and per share amounts)(Unaudited)

Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Revenue $ 1,134 $ 734 $ 2,717 $ 1,521 Costs andoperating expenses:Cost of products 2,663 2,435 5,857 4,611 soldResearch and 8,176 5,247 16,149 9,624 developmentSelling, generaland 9,125 6,927 19,360 11,020 administrativeChange in fairvalue of 635 - (1,584 ) - contingentconsiderationTotal costs andoperating 20,599 14,609 39,782 25,255 expensesLoss from (19,465 ) (13,875 ) (37,065 ) (23,734 )operations Other income (expense):Change in fairvalue of warrantliability and (2,453 ) (1,446 ) (1,872 ) (605 )embeddedderivativeLoss on debt - (1,398 ) - (1,398 )extinguishmentInterest income 95 143 370 208 Interest expense (1,370 ) (13,769 ) (2,724 ) (19,511 )Total other (3,728 ) (16,470 ) (4,226 ) (21,306 )expense, netNet loss $ (23,193 ) $ (30,345 ) $ (41,291 ) $ (45,040 ) Othercomprehensive income (loss)Unrealized(loss) gain on (14 ) 6 (41 ) 7 marketablesecuritiesForeign currencytranslation 96 2 69 (12 )adjustmentComprehensive $ (23,111 ) $ (30,337 ) $ (41,263 ) $ (45,045 )loss Net loss percommon share, $ (32.24 ) $ (45.70 ) $ (58.16 ) $ (68.21 )basic anddilutedWeighted-averagesharesoutstanding, 719,421 663,972 709,961 660,333 basic anddiluted

Acutus Medical, Inc. and SubsidiariesCondensed Consolidated Statements of Cash Flows(in thousands)(Unaudited)

Six Months Ended June 30, 2020 2019 Cash flows from operating activities Net loss $ (41,291 ) $ (45,040 )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation expense 978 1,142 Amortization of intangible assets 220 - Stock-based compensation expense 2,898 1,362 Accretion of discounts/(amortization of 5 (19 )premiums) on marketable securities, netAmortization of debt issuance costs 314 17,309 Amortization of right-of-use assets 336 312 Loss on debt extinguishment - 1,398 Change in fair value of warrant liability and 1,872 605 embedded derivativeChange in fair value of contingent (1,584 ) - considerationChanges in operating assets and liabilities, net of effect from business combination:Accounts receivable (597 ) (280 )Inventory (3,616 ) (1,961 )Prepaid expenses and other current assets 666 (43 )Other assets 8 (12 )Accounts payable 5,286 1,682 Accrued liabilities 155 1,810 Operating lease liabilities (411 ) (349 )Net cash used in operating activities (34,761 ) (22,084 ) Cash flows from investing activities Purchases of available-for-sale marketable - (22,208 )securitiesSales of available-for-sale marketable 17,095 - securitiesMaturities of available-for-sale marketable 40,000 8,100 securitiesPurchases of property and equipment (4,445 ) (316 )Cash paid, net of cash acquired for the - (3,000 )Rhythm Xience AcquisitionNet cash provided by (used in) investing 52,650 (17,424 )activities Cash flows from financing activities Proceeds from issuance of debt and warrants - 77,000 Repayment of debt - (15,000 )Payment of issuance and extinguishment costs - (2,332 )related to debtPayment of contingent consideration (2,619 ) - Proceeds from issuance of convertible - 38,226 preferred stock, net of issuance costsPayment of deferred offering costs (701 ) - Proceeds from stock options exercises 205 57 Net cash (used in) provided by financing (3,115 ) 97,951 activities Effect of exchange rate changes on cash, cash 69 (12 )equivalents and restricted cash Net change in cash, cash equivalents and 14,843 58,431 restricted cashCash, cash equivalents and restricted cash, 9,602 9,775 at the beginning of the periodCash, cash equivalents and restricted cash, $ 24,445 $ 68,206 at the end of the period