Sientra(SIEN) - 2021 Q3 - Quarterly Report

Financial Performance - Net sales increased by $4.3 million, or 28.0%, to $19.6 million for the three months ended September 30, 2021, compared to $15.3 million for the same period in 2020, primarily due to increased domestic sales volume of gel implants and expanders [137]. - Gross profit for the three months ended September 30, 2021, was $10.6 million, compared to $8.2 million for the same period in 2020 [136]. - Net income for the three months ended September 30, 2021, was $28.4 million, compared to a net loss of $5.8 million for the same period in 2020 [136]. - Net sales for the nine months ended September 30, 2021, rose by $20.9 million, or 56.4%, to $58.0 million compared to $37.1 million in the same period of 2020, attributed to increased sales volume of gel implants and BioCorneum [150]. Costs and Expenses - Cost of goods sold rose by $1.9 million, or 27.1%, to $9.0 million for the three months ended September 30, 2021, compared to $7.1 million for the same period in 2020, driven by higher sales volume [139]. - Total operating expenses increased to $22.3 million for the three months ended September 30, 2021, from $17.8 million for the same period in 2020 [136]. - Loss from operations was $11.7 million for the three months ended September 30, 2021, compared to a loss of $9.5 million for the same period in 2020 [136]. - Cost of goods sold for the nine months ended September 30, 2021, increased by $10.1 million, or 63.8%, to $26.0 million, primarily due to higher sales volume and increased distribution and production costs [151]. - Research and development expenses for the nine months ended September 30, 2021, increased by $0.8 million, or 13.4%, to $7.0 million, mainly due to higher employee payroll and product development expenses [155]. - General and administrative expenses for the nine months ended September 30, 2021, rose by $2.1 million, or 10.1%, to $23.3 million, driven by increased payroll and IT system implementation costs [156]. Cash Flow and Liquidity - Net cash used in operating activities for the nine months ended September 30, 2021, was $28.6 million, a decrease from $38.4 million in the same period of 2020, reflecting improved cash management [168]. - Net cash provided by financing activities for the nine months ended September 30, 2021, was $34.3 million, compared to $31.8 million in 2020, due to increased proceeds from common stock issuance [170]. - As of September 30, 2021, the company had $66.1 million in cash and cash equivalents, indicating a stable liquidity position [165]. - The company anticipates needing to raise additional equity or debt capital to fund ongoing operating and capital needs [166]. - The company holds cash primarily in checking accounts and interest-bearing money market accounts [175]. - An immediate 100 basis point change in interest rates would not have a material effect on the fair market value of cash equivalents due to their short-term maturities [175]. - The company has established guidelines for approved investments and maturities to maintain safety and liquidity [175]. Business Operations - The company completed the sale of the miraDry business on June 10, 2021, for an aggregate purchase price of $10.0 million, resulting in net cash proceeds of approximately $8.1 million [115]. - The company has one operating segment in continuing operations named Plastic Surgery, focusing on breast implants, tissue expanders, and scar management products [112]. - The company expects future net sales to fluctuate due to seasonality of breast augmentation procedures and the ongoing impact of the COVID-19 pandemic [123]. - Facilities expansion needs are identified as a priority for future investment [175]. - Investment in inventory is required to meet customer demands [175]. Profitability Metrics - Gross margins for the three months ended September 30, 2021, increased to 54.0% from 53.6% in 2020, driven by lower unit costs of gel implants and reduced inventory reserves [140]. - Income from continuing operations before income taxes was $28.5 million for the three months ended September 30, 2021, compared to a loss of $1.5 million for the same period in 2020 [136]. - Income from discontinued operations for the nine months ended September 30, 2021, increased by $22.1 million, reflecting a strategic shift prior to the sale of the miraDry business [160].