Allurion Technologies(ALUR) - 2024 Q4 - Annual Results

Revenue and Financial Performance - Revenue for the nine months ended September 30, 2024, was $26.519 million, compared to $45.232 million in the same period in 2023, reflecting a significant decrease[9] - Gross profit for the nine months ended September 30, 2024, was $18.970 million, compared to $35.067 million in the same period in 2023[9] - Total revenues for the three months ended September 30, 2024 were $5.367 million, a significant decrease from $18.2 million in the same period in 2023[75] - Revenue from Turkey dropped to $966,000 in Q3 2024 from $3.517 million in Q3 2023, representing a 72.5% decline[75] - All Other Countries contributed $3.347 million (62.4% of total revenue) in Q3 2024, down from $11.122 million (61.1% of total) in Q3 2023[75] - For the nine months ended September 30, 2024, total revenues were $26.519 million compared to $45.232 million in the same period in 2023, a 41.4% decrease[78] - No revenue was generated in the United States for both the three and nine months ended September 30, 2024[78] - The Company recognized a reduction to revenues of $1.2 million due to customer returns of the Allurion Balloon following its suspension in France[190] Net Loss and Profitability - Net loss for the nine months ended September 30, 2024, was $5.580 million, compared to a net loss of $61.427 million in the same period in 2023, showing a substantial improvement[9] - Net loss per share for the nine months ended September 30, 2024, was $2.62, compared to $50.01 in the same period in 2023[9] - Net loss for the nine months ended September 30, 2024 was $5.58 million, compared to a net loss of $61.43 million for the same period in 2023[17] - The company incurred losses from operations of $33.1 million and $53.3 million for the nine months ended September 30, 2024 and 2023, respectively[37] - Basic and diluted net loss per share for Q3 2024 was $(3.51), compared to $(13.56) in Q3 2023, showing a significant improvement[168] - Net loss attributable to common shareholders for Q3 2024 was $(9.004 million), compared to $(21.885 million) in Q3 2023[168] Cash Flow and Liquidity - Cash and cash equivalents decreased to $28.654 million as of September 30, 2024, from $38.037 million as of December 31, 2023[6] - Net cash used in operating activities for the nine months ended September 30, 2024 was $29.03 million, compared to $43.11 million for the same period in 2023[17] - Net cash provided by financing activities for the nine months ended September 30, 2024 was $20.26 million, compared to $116.39 million for the same period in 2023[17] - Cash and cash equivalents and restricted cash at the end of September 30, 2024 was $29.05 million, compared to $80.10 million at the end of September 30, 2023[17] - Cash outflows from operating activities were $29.0 million and $43.1 million for the nine months ended September 30, 2024 and 2023, respectively[37] - The company repaid $48 million for the Fortress Term Loan on April 16, 2024, including $43.1 million principal repayment and $4.6 million in fees[96] - The company recorded an $8.7 million loss on extinguishment of debt related to the Fortress Term Loan repayment in the nine months ended September 30, 2024[96] Assets and Liabilities - Accounts receivable decreased to $9.935 million as of September 30, 2024, from $18.194 million as of December 31, 2023[6] - Inventory decreased to $4.568 million as of September 30, 2024, from $6.171 million as of December 31, 2023[6] - Total current assets decreased to $44.829 million as of September 30, 2024, from $64.816 million as of December 31, 2023[6] - Total liabilities decreased to $114.510 million as of September 30, 2024, from $142.199 million as of December 31, 2023[6] - Inventory decreased to $4.568 million as of September 30, 2024 from $6.171 million at December 31, 2023, with finished goods inventory down 19.8%[79] - Property and equipment net value decreased to $3.08 million as of September 30, 2024 from $3.381 million at December 31, 2023[81] - Total accrued expenses and other current liabilities decreased to $7.973 million as of September 30, 2024 from $15.495 million at December 31, 2023[82] - Long-lived assets in the United States decreased from $5,381 thousand in 2023 to $4,690 thousand in 2024, while in France, they decreased from $1,010 thousand to $673 thousand[194] Stock and Equity Transactions - The company issued 2,260,159 shares of preferred stock in connection with a private placement, net of issuance costs, raising $979,000[15] - The company issued 653,351 shares of common stock in connection with a public offering, net of issuance costs, raising $5.07 million[15] - The company's total stockholders' deficit decreased from $70.49 million as of January 1, 2024 to $64.79 million as of September 30, 2024[15] - The company's accumulated deficit increased from $212.80 million as of January 1, 2024 to $218.38 million as of September 30, 2024[15] - The company's other comprehensive income increased from a loss of $700,000 as of January 1, 2024 to a gain of $2.89 million as of September 30, 2024[15] - The company completed a 1-for-25 reverse stock split effective January 3, 2025[31][32] - Following the reverse stock split, each public warrant is exercisable for 0.056818 shares of common stock at an exercise price of $202.50 per share[33] - Legacy Allurion common stock holders received Allurion Common Stock at an exchange ratio of approximately 0.9780[52] - The total number of Allurion Common Stock shares outstanding after the Business Combination and Reverse Stock Split was 1,892,058[56] - PIPE Investors purchased 215,468 shares of Allurion Common Stock at $176.00 per share, totaling $37.9 million[58] - Legacy Allurion convertible notes totaling $21.8 million were converted into 132,049 shares of Allurion Common Stock[72] - The company assumed 528,277 public warrants to purchase 750,394 shares of Allurion Common Stock at $202.50 per share, valued at $13.8 million[73] - Earn-Out liabilities for potential issuance of additional shares were initially valued at $53.0 million[74] - The company issued 2,260,159 shares of Series A Preferred Stock and 90,407 Private Placement Warrants, raising net proceeds of $2.5 million after deducting $0.2 million in offering costs[147] - The company issued 576,261 shares of Common Stock and 662,701 Public Offering Warrants, raising net proceeds of $15.2 million after deducting $1.0 million in underwriting discounts and $1.0 million in offering costs[156] - As of September 30, 2024, the company had 2,574,783 shares of Common Stock outstanding, up from 1,907,529 shares as of December 31, 2023[155] - The company has 769,257 warrants outstanding to purchase Common Stock, with a weighted average exercise price of $30.00[162] - The company entered into a Chardan Equity Facility, allowing it to sell up to $100 million in Common Stock, with 5,730 shares sold for $0.4 million as of September 30, 2024[166][167] - The company has 528,269 outstanding Public Warrants exercisable for 750,383 shares of Common Stock, with no redemptions as of September 30, 2024[165] - The company has reserved 2,294,777 shares of Common Stock for potential conversion or exercise of its securities as of September 30, 2024[159] Debt and Financing - The company borrowed $60.0 million under the Fortress Term Loan, used to repay the 2021 Term Loan[63] - Interest expense for the three months ended September 30, 2023 related to the Fortress Term Loan was $1.7 million, with an average interest rate of 14.94%[97] - Interest expense for the nine months ended September 30, 2024 related to the Fortress Term Loan was $2.3 million, with no interest expense for the three months ended September 30, 2024 due to loan extinguishment[98] - The 2021 Convertible Notes were converted into 5,345 shares of Allurion Common Stock with a corresponding recognition of APIC of $2.2 million on August 1, 2023[101] - The 2022 Convertible Notes were converted into 3,329 shares of Allurion Common Stock with a corresponding recognition of APIC of $1.2 million on August 1, 2023[104] - The 2023 Convertible Notes were issued for gross proceeds of $28.7 million with a stated interest rate of 7.0% per annum[105] - Interest expense for the nine months ended September 30, 2023 related to the 2023 Convertible Notes was $0.5 million[107] - The RTW Convertible Notes were issued for $48.0 million with an annual interest rate of 6% and a maturity date of April 16, 2031[115] - The fair value of the RTW Convertible Notes at issuance was $49.1 million, with a corresponding $1.1 million loss recognized in Other income, net[116] - RTW paid Allurion an aggregate of $40.0 million Investment Amount, with revenue interest payments up to 6.0% of annual net sales prior to December 31, 2026, and up to 10.0% thereafter until December 31, 2030[120] - If RTW has not received at least 100% of the Investment Amount by December 31, 2027, the company must make a cash payment to catch up to 100%, and if not 240% by December 31, 2030, a payment to reach 240%, with a Hard Cap of 260%[121] - The company has made $3.6 million in royalty payments to RTW as of September 30, 2024[122] - The RIFA Amendment increased the rate of revenue interest payments to 12% for net sales ≤ $100 million prior to December 31, 2026, and after January 1, 2027[123] - The fair value of the Revenue Interest Financing and PIPE Conversion Option were $38.5 million and $9.9 million, respectively, as of September 30, 2024[126] - For the three months ended September 30, 2024, the company recorded a $6.7 million loss and a $5.8 million gain on the Revenue Interest Financing[127] - The fair value of RTW Convertible Notes was $36.09 million as of September 30, 2024, classified under Level 3[128] Stock-Based Compensation and Employee Benefits - Stock-based compensation expense for the nine months ended September 30, 2024 was $2.22 million, compared to $6.35 million for the same period in 2023[17] - Total stock-based compensation expense for Q3 2024 was $860,000, compared to $5.539 million in Q3 2023[172] - As of September 30, 2024, 284,332 stock options were outstanding with a weighted average exercise price of $57.00 per option[173] - The company has $5.6 million of unrecognized compensation costs related to unvested stock options, expected to be recognized over 3.0 years[173] - Total stock compensation expense related to RSUs for Q3 2024 was $0.2 million, with $1.0 million of unrecognized compensation costs remaining[178] - The company's 2023 ESPP reserves 89,045 shares of Common Stock for issuance, with no shares issued as of September 30, 2024[180] - The company's 401(k) retirement plan matching contributions were less than $0.1 million for both Q3 2024 and Q3 2023[181] Leases and Real Estate - The company has 51,000 square feet of leased office, manufacturing, and laboratory space across six leases, expiring between March 2025 and March 2028[184] - Operating lease costs for Q3 2024 were $259,000, compared to $285,000 in Q3 2023[186] - Future commitments under non-cancelable operating lease agreements total $2,810 thousand, with a present value adjustment of $354 thousand, resulting in total lease liabilities of $2,456 thousand[187] - The weighted-average remaining lease term decreased from 3.7 years in 2023 to 2.9 years in 2024, while the weighted-average discount rate remained at 9.9%[187] Fair Value Measurements - The fair value of Public Warrants was $531,000 as of September 30, 2024, based on a Level 1 input[128] - The fair value of Legacy Allurion Common Stock Warrant Liabilities was $71,000 as of September 30, 2024, classified under Level 3[128] - The fair value of the PIPE Conversion Option was $9.85 million as of September 30, 2024, classified under Level 3[128] - The fair value of Preferred Stock Warrants decreased from $2,679 thousand to $715 thousand from June 30, 2023, to September 30, 2023, a decline of 73.3%[132] - The fair value of Common Stock Warrants decreased from $1,351 thousand to $207 thousand from June 30, 2023, to September 30, 2023, a decline of 84.7%[132] - The fair value of Public Offering Warrants was $5,970 thousand as of September 30, 2024, following a fair value issuance of $13,157 thousand and a change in fair value of $(7,187) thousand[132] - The fair value of Private Placement Warrants was $810 thousand as of September 30, 2024, following a fair value issuance of $1,670 thousand and a change in fair value of $(860) thousand[132] - The fair value of the Revenue Interest Financing was remeasured as of September 30, 2024, using a discount rate of 23.5%[136] - The fair value of the PIPE Conversion Option was measured using a stock price of $15.25 and an expected volatility of 130.0% as of September 30, 2024[137] - The fair value of the Earn-Out Liability was measured using a stock price of $15.25 and an expected volatility of 105.0% as of September 30, 2024[138] - The fair value of the RTW Convertible Notes was remeasured as of September 30, 2024, using a stock price of $15.25 and an expected volatility of 90.0%[142] Taxes - The company recorded income tax expense of $0.1 million for the three months ended September 30, 2024, representing an effective tax rate of (0.8%)[144] - The company maintained a full valuation allowance against its net deferred tax assets as of September 30, 2024, due to significant operating losses[145] Customer Concentration - Customer A accounted for 18% and 19% of total revenue for the three months ended September 30, 2024 and 2023, respectively[46] - Customer A accounted for 15% and 16% of accounts receivable as of September 30, 2024 and December 31, 2023, respectively[46] - Customer B accounted for 11% of total revenue for the three months ended September 30, 2023[46] Going Concern and Future Outlook - The company has concluded there is substantial doubt about its ability to continue as a going concern for one year from the date of the financial statements[38] - The company expects to continue generating significant operating losses for the foreseeable future[37] - As of September 30, 2024, the company had an accumulated deficit of $218.4 million[37] Other Transactions and Agreements - The company incurred $22.7 million in transaction costs, including $15.2 million recorded to additional paid-in capital and $5.0 million as general and administrative expenses[54] - Net proceeds from the Business Combination were $61.652 million after deducting transaction costs and other liabilities[56] - RTW paid $40.0 million for revenue interest payments, with rates up to 6.0% of annual net sales before December 31, 2026, and up to 10.0% thereafter[59] - The Company recorded gains of $1.8 million and $3.1 million for the three months ended September 30, 2024 through the condensed consolidated statements of operations and other comprehensive income (loss), respectively[117] - The Company is in compliance with the financial maintenance covenants in the Amended Note Purchase Agreement as of September 30, 2024[118] - The Company entered into a consulting agreement with KKG Enterprises and Remus Group Management, paying $0.2 million and $0.3 million respectively, which were terminated in June 2023[196] - Allurion sold $13 million of 2023 Convertible Notes to Hunter Ventures Limited, a related party