Sientra(SIEN) - 2023 Q3 - Quarterly Report

Product Developments - Sientra received FDA 510k clearance for the AlloX2 Pro Tissue Expander on June 8, 2023, which is the first tissue expander cleared for MRI exposure in the U.S.[140] - The company announced the commercial launch of the Viality Fat Transfer System on March 1, 2023, with interim clinical study results showing 80% fat retention at 3, 6, and 12 months[143] - Sientra entered into a partnership with Elutia Inc. on March 22, 2023, to expand the distribution of SimpliDerm ADM for reconstruction surgery, beginning commercial sales in Q2 2023[142] Financial Performance - Net sales decreased by approximately $3.0 million, or 13.4%, to $19.5 million for the three months ended September 30, 2023, compared to $22.6 million for the same period in 2022[166] - Gross profit for the three months ended September 30, 2023, was $10.0 million, down from $12.8 million in 2022, reflecting a gross margin decrease from 56.6% to 51.3%[168] - Total operating expenses decreased by approximately $5.9 million, or 23.3%, to $19.4 million for the three months ended September 30, 2023, compared to $25.3 million for the same period in 2022[175] - The company incurred a net loss of $14.8 million for the three months ended September 30, 2023, compared to a net loss of $14.9 million for the same period in 2022[165] - For the nine months ended September 30, 2023, net sales were $65.2 million, a slight decrease of $0.3 million, or 0.4%, from $65.5 million in 2022[176] - Cost of goods sold increased by approximately $3.3 million, or 12.3%, to $30.4 million for the nine months ended September 30, 2023, compared to $27.1 million in 2022[177] - The company reported a net loss of $37.1 million for the nine months ended September 30, 2023, down from a net loss of $51.3 million in 2022[175] Cash Flow and Liquidity - Cash and cash equivalents as of September 30, 2023, were $15.0 million, with the company using $11.0 million of cash from continuing operations during the nine months[184] - The company is evaluating various cost-saving measures to reduce operating expenses and cash outflows, while also seeking to generate significant increases in net sales[185] - As of September 30, 2023, the company did not meet the required minimum revenue financial covenant under the Restated Agreement, leading to potential acceleration of debt repayment[189] - Net cash used in investing activities decreased to $1.1 million for the nine months ended September 30, 2023, from $1.9 million in the same period of 2022[195] - Net cash provided by financing activities was $0.2 million during the nine months ended September 30, 2023, down from $2.7 million in the prior year, primarily due to the absence of borrowings under the Term Loan and Revolving Loan[196] - The company’s liquidity position and capital requirements are influenced by factors such as manufacturing capacity, sales generation, and costs associated with product development and regulatory compliance[198] - The company may need to sell additional equity or debt securities if cash generated from operations is insufficient to meet working capital and capital expenditure requirements[199] Market Conditions and Business Environment - The COVID-19 pandemic has had a lingering effect on Sientra's business, with uncertainty regarding the return of aesthetic procedures to pre-pandemic levels[144] - Sientra's net sales consist primarily of silicone gel breast implants, tissue expanders, and the Viality fat transfer system, with revenue recognition based on specific return policies[147] - The company expects fluctuations in net sales due to seasonality in breast augmentation procedures and macroeconomic conditions[148] - Sientra's overall gross margin is expected to fluctuate based on unit sales, manufacturing costs, and product mix[152] - Research and development expenses are anticipated to vary with new product development and clinical studies[154] - The company has made appropriate estimates regarding the impact of macroeconomic conditions on its financial results, which may change as new information becomes available[146] Regulatory and Compliance - There are currently no off-balance sheet arrangements as defined under SEC rules[200] - The company has not disclosed any quantitative and qualitative disclosures about market risk as it is classified as a smaller reporting company[202]