SI-BONE(SIBN) - 2022 Q1 - Quarterly Report

PART I-FINANCIAL INFORMATION Presents the company's unaudited financial statements, management's discussion, market risk disclosures, and internal controls Item 1. Financial Statements Presents unaudited condensed consolidated financial statements for Q1 2022, showing increased revenue but a wider net loss Condensed Consolidated Balance Sheets Presents the company's financial position, detailing assets, liabilities, and equity at quarter-end Condensed Consolidated Balance Sheet Data (Unaudited) | Balance Sheet Item | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :--- | :--- | :--- | | Total Current Assets | $161,261 | $175,866 | | Total Assets | $176,849 | $190,506 | | Total Current Liabilities | $15,453 | $16,890 | | Total Liabilities | $54,411 | $56,086 | | Total Stockholders' Equity | $122,438 | $134,420 | - Cash and cash equivalents decreased significantly to $27.3 million from $63.4 million at the end of the previous year[15] Condensed Consolidated Statements of Operations and Comprehensive Loss Details the company's financial performance, including revenue, expenses, and net loss for the period Statement of Operations Highlights (Three Months Ended March 31) | Metric | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | | Revenue | $22,439 | $20,442 | | Gross Profit | $19,456 | $18,242 | | Total Operating Expenses | $36,324 | $29,817 | | Loss from Operations | $(16,868) | $(11,575) | | Net Loss | $(17,410) | $(12,242) | | Net Loss Per Share | $(0.52) | $(0.37) | Condensed Consolidated Statements of Cash Flows Summarizes cash inflows and outflows from operating, investing, and financing activities Cash Flow Summary (Three Months Ended March 31) | Cash Flow Activity | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | $(13,512) | $(9,359) | | Net cash used in investing activities | $(22,608) | $(7,122) | | Net cash provided by financing activities | $169 | $601 | | Net decrease in cash and cash equivalents | $(36,090) | $(16,217) | Notes to Condensed Consolidated Financial Statements Provides additional details and explanations for the financial statements, including accounting policies and significant transactions - The company operates as a single reportable and operating segment, deriving substantially all of its revenue from customers in the U.S.[32][33] - In August 2021, the company entered into a $35.0 million term loan with Silicon Valley Bank (SVB), using the proceeds to repay and terminate a previous loan. The SVB Term Loan has an effective interest rate of 6.3% for the quarter[57][58] - Stock-based compensation expense for the quarter was $5.5 million, an increase from $4.0 million in the prior-year period, with sales and marketing being the largest component[69] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses Q1 2022 financial performance, noting a 10% revenue increase, widened net loss, and sufficient liquidity Overview Provides a general introduction to the company's business, products, and market position - SI-BONE is a medical device company that pioneered the iFuse minimally invasive surgical implant system for sacropelvic disorders[80] - As of March 31, 2022, more than 65,000 procedures have been performed by over 2,700 surgeons in the U.S. and 36 other countries[80] - The company has expanded its product portfolio with iFuse-3D (2017), the Bedrock technique for spinal fusion (2019), and iFuse-TORQ for pelvic trauma (2021)[83][84][85] Impact of COVID-19 Pandemic Discusses the ongoing effects of the COVID-19 pandemic on the company's operations and financial results - The COVID-19 pandemic continues to impact business by reducing elective procedures, limiting hospital access for sales staff, and causing supply chain disruptions for instruments[88][89][91] - Periodic resurgences of COVID-19, such as the Omicron variant, negatively impacted revenues in 2021 and early 2022 through case deferrals[89][90] Results of Operations Analyzes the company's revenue, gross profit, operating expenses, and net loss for the reporting period Q1 2022 vs Q1 2021 Performance | Metric | Q1 2022 (in millions) | Q1 2021 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Revenue | $22.4M | $20.4M | 10% | | Gross Margin | 87% | 89% | (2) p.p. | | Sales & Marketing Expense | $25.6M | $20.9M | 22% | | Total Operating Expenses | $36.3M | $29.8M | 22% | | Net Loss | ($17.4M) | ($12.2M) | 42% | - The 10% revenue increase was driven by higher domestic and international case volumes and an increased number of active surgeons and sales personnel[118] - The 22% increase in operating expenses was primarily due to higher employee-related costs from increased headcount, and a rise in travel, marketing, and training activities as COVID-19 restrictions eased[120] Liquidity and Capital Resources Assesses the company's ability to meet its short-term and long-term financial obligations and fund operations - As of March 31, 2022, the company had cash and marketable securities of $130.7 million and an accumulated deficit of $313.3 million[125][126] - Management believes existing cash will be sufficient to fund operating expenses and capital expenditure requirements for the next 12 months and beyond[127] - Net cash used in operating activities was $13.5 million for the quarter, an increase from $9.4 million in the prior year period, mainly due to a higher net loss and changes in working capital[135][136] Item 3. Quantitative and Qualitative Disclosures About Market Risk Discusses exposure to market risks, including foreign currency and interest rate fluctuations, and their potential financial impact - The company has foreign currency risks related to revenue and expenses denominated in currencies other than the U.S. dollar, mainly the Euro[146] - Interest rate risk affects the market value of its cash equivalents and short-term investments, and the interest paid on its variable-rate long-term debt[148][149] - A hypothetical 100 basis point increase in interest rates would decrease the investment portfolio's fair value by $0.4 million and increase interest owed on debt by $0.1 million for the quarter ended March 31, 2022[150] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes in internal control over financial reporting - Management, including the CEO and CFO, concluded that as of March 31, 2022, the company's disclosure controls and procedures were effective at the reasonable assurance level[153] - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[154] PART II-OTHER INFORMATION Covers legal proceedings, risk factors, equity sales, and exhibits, providing additional context beyond financial statements Item 1. Legal Proceedings The company is involved in routine legal actions but reports no pending matters with a material adverse effect on its business - The company is not currently a party to any legal proceedings that it believes would have a material adverse effect on the company[155] Item 1A. Risk Factors Details significant risks including operating losses, COVID-19 impact, product reliance, competition, and reimbursement challenges - The company has a history of significant operating losses ($17.4 million in Q1 2022) and expects to continue incurring losses for the foreseeable future[159] - The COVID-19 pandemic continues to adversely affect business through reduced elective surgeries, limited hospital access, and supply chain disruptions, with the full long-term impact remaining uncertain[161][162][164] - The business is highly dependent on revenue from the iFuse family of products. Failure to grow the market for iFuse or any event impeding its sales could significantly harm financial results[193] - The business depends on adequate coverage and reimbursement from third-party payors; changes in policies or insufficient payment levels could hinder product adoption and reduce prices[168] - The company faces intense competition from major medical device companies with greater resources, such as Medtronic and Globus Medical, and the number of competitors has grown to more than 20[187][188][189] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Reports no unregistered equity sales in Q1 2022 and confirms all IPO proceeds were used for general corporate purposes - There were no sales of unregistered equity securities during the three months ended March 31, 2022[338] - As of March 31, 2022, all net proceeds from the October 2018 IPO had been used for general corporate purposes[341] Item 6. Exhibits Lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and XBRL data, incorporating previously filed documents - This section lists exhibits filed with the report, including CEO/CFO certifications (Exhibits 31.1, 31.2, 32.1) and XBRL data files[348]