Venus cept (US:VERO)2025-08-14 20:16Part I. Financial Information Item 1. Condensed Consolidated Financial Statements (unaudited) Unaudited Q2 2025 financials report net losses, negative cash flow, and substantial doubt about going concern Condensed Consolidated Balance Sheets Balance sheet shows total assets at $63.1 million, liabilities at $60.3 million, and an accumulated deficit of $333.0 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $3,878 | $4,271 | | Total current assets | $45,108 | $48,512 | | Total Assets | $63,085 | $68,184 | | Liabilities & Equity | | | | Note payable (current) | $18,419 | $8,271 | | Total current liabilities | $41,118 | $30,287 | | Long-term debt | $15,866 | $31,437 | | Total Liabilities | $60,313 | $65,346 | | Accumulated deficit | $(332,983) | $(308,899) | | Total Stockholders' Equity | $2,772 | $2,838 | Condensed Consolidated Statements of Operations Q2 revenue $15.7 million (net loss $11.7 million); H1 revenue $29.3 million (net loss $24.1 million) Key Operating Results (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $15,692 | $16,582 | $29,335 | $34,061 | | Gross Profit | $9,431 | $11,849 | $18,186 | $23,496 | | Loss from Operations | $(9,041) | $(5,596) | $(18,569) | $(13,356) | | Loss on debt extinguishment | $1,865 | $10,901 | $2,914 | $10,901 | | Net Loss | $(11,742) | $(19,864) | $(24,108) | $(29,653) | | Net Loss Per Share (Basic) | $(8.03) | $(30.93) | $(22.18) | $(48.60) | Condensed Consolidated Statements of Cash Flows Operating cash outflow was $11.8 million, financing provided $12.5 million, ending cash at $4.9 million Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(11,758) | $(4,210) | | Net cash used in investing activities | $(197) | $(47) | | Net cash provided by financing activities | $12,549 | $4,593 | | Net change in cash | $594 | $336 | | Cash, cash equivalents and restricted cash - End of period | $4,865 | $5,732 | Notes to the Condensed Consolidated Financial Statements Notes detail strategic review, Venus Hair Business sale for $20 million, going concern warning, and debt restructurings - The company is evaluating strategic alternatives to maximize shareholder value, which may include mergers, sales of assets, or other transactions26 - On June 5, 2025, the company agreed to sell its Venus Hair Business (including ARTAS and NeoGraft technologies) to Meta Healthcare Group in an all-cash transaction valued at $20 million, expected to close in Q3 2025282931 - The financial statements were prepared on a going concern basis, but the company's recurring net operating losses, negative cash flows, and an accumulated deficit of $333.0 million as of June 30, 2025, raise substantial doubt about its ability to continue as a going concern323334 - The company has engaged in multiple complex debt restructurings, including exchanging portions of its MSLP Loan and Madryn Convertible Notes for newly created Series Y Convertible Preferred Stock, resulting in significant non-cash losses on debt extinguishment83104108 - A 1-for-11 reverse stock split was implemented on March 3, 2025146 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 and H1 revenue declines, gross margin decrease, liquidity challenges, and strategic initiatives - The company has recurring net operating losses and negative cash flows, with an accumulated deficit of $333.0 million as of June 30, 2025223 - The Board is reviewing strategic alternatives, and the company has entered into an agreement to sell its Venus Hair Business for $20 million in cash225226 - Management attributes the revenue decline in the first half of 2025 to a significant tightening in credit markets, higher interest rates impacting customer financing, the wind-down of underperforming international markets, and supply disruptions from the Israel-Iran conflict272 - The company's liquidity is a major concern, with cash used in operations increasing to $11.7 million in H1 2025. The company believes existing cash and proceeds from recent financings will be sufficient for at least the next 12 months, but acknowledges the need for additional capital328353 Results of Operations Q2 revenue down 5.4% to $15.7 million; H1 revenue down 13.9% to $29.3 million, with gross margin decline Revenue Comparison for Q2 (in thousands) | Revenue Type | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Venus Prime / Subscription | $4,681 | $4,517 | $164 | 3.6% | | Products—Systems | $7,939 | $8,588 | $(649) | (7.6)% | | Products—Other | $2,444 | $2,647 | $(203) | (7.7)% | | Services | $628 | $830 | $(202) | (24.3)% | | Total | $15,692 | $16,582 | $(890) | (5.4)% | Revenue Comparison for H1 (in thousands) | Revenue Type | H1 2025 | H1 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Venus Prime / Subscription | $7,330 | $8,048 | $(718) | (8.9)% | | Products—Systems | $15,842 | $19,123 | $(3,281) | (17.2)% | | Products—Other | $4,864 | $5,204 | $(340) | (6.5)% | | Services | $1,299 | $1,686 | $(387) | (23.0)% | | Total | $29,335 | $34,061 | $(4,726) | (13.9)% | - Gross margin decreased to 60.1% in Q2 2025 from 71.5% in Q2 2024, primarily due to supply disruptions causing an adverse sales mix and higher device system costs from lower manufacturing volumes307 - General and administrative expenses increased by 8.9% in Q2 2025, mainly due to higher bad debt expense and inflation, partially offset by savings from exiting unprofitable markets and proceeds from ERC claims310 Liquidity and Capital Resources Liquidity challenged with $4.9M cash, $11.7M operating cash use, and $34.3M total debt - The company's cash, cash equivalents, and restricted cash was $4.9 million as of June 30, 2025328352 - Total debt obligations were approximately $34.3 million as of June 30, 2025, down from $39.7 million at year-end 2024328 - Cash used in operating activities increased by $7.5 million to $11.7 million for the six months ended June 30, 2025, compared to the same period in 2024328359 - The company has engaged in numerous financing activities in 2024 and 2025, including a bridge financing agreement with Madryn for up to $21.0 million, multiple registered direct offerings, and debt-for-equity exchanges to manage its liquidity336345350 Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is not required to provide market risk disclosures - The company is a smaller reporting company and is not required to provide disclosure for this item383 Controls and Procedures Management concluded disclosure controls and internal controls over financial reporting were effective - Based on an evaluation as of June 30, 2025, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective384 - Management concluded that the company's internal controls over financial reporting were effective as of June 30, 2025385 Part II. Other Information Legal Proceedings The company was not a party to any material active or pending legal proceedings as of June 30, 2025 - The company was not a party to any material legal proceedings as of June 30, 2025389 Risk Factors Key risks include Middle East geopolitical instability, customer credit defaults, Nasdaq listing, and increased tariffs - The ongoing conflicts in the Middle East, including the Israel-Hamas war and the recent Israel-Iran conflict, may adversely affect the company's operations, as certain operations, employees, and contract manufacturers are located in Israel391393394 - The company is exposed to credit risk from its internal lease programs (Venus Prime and legacy subscription), which accounted for approximately 32% of system revenues in H1 2025. Customer defaults could negatively affect financial results398 - Although the company regained compliance with Nasdaq's minimum stockholders' equity and minimum bid price requirements, it is subject to a "Mandatory Panel Monitor" through June 4, 2025. Noncompliance during this period would result in a delist determination without the opportunity to submit a new compliance plan404405409 - Increased U.S. tariffs on goods imported from Israel (recently increased to 10%) will raise the cost of goods for the company's systems, which are primarily sourced from Israel, leading to modest margin erosion410 Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities occurred in Q2 2025, except as previously disclosed - There were no unregistered securities issued and sold during the three months ended June 30, 2025, other than those previously disclosed in Form 8-K filings414 Defaults Upon Senior Securities No defaults upon senior securities were reported - None417 Other Information No other information was reported for this item - None419 Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate documents and agreements