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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 8-K

Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  March 20, 2018

CHF Solutions, Inc.
(Exact name of registrant as specified in its charter)
 

Delaware
 001-35312
68-0533453
 (State or other jurisdiction of incorporation)  (Commission File Number)  (IRS Employer Identification No.)
 
12988 Valley View Road
Eden Prairie, Minnesota  55344
(Address of principal executive offices) (Zip Code)

(952) 345-4200
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 
Item 2.02
Results of Operations and Financial Condition.

On March 20, 2018, CHF Solutions, Inc. (the “Company”) issued a press release reporting its financial results for the quarter and year ended December 31, 2017.  A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

In accordance with General Instruction B.2 of Form 8-K, the information included in this Current Report on Form 8-K (including Exhibit 99.1) is furnished pursuant to Item 2.02 and shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.

Item 9.01
Financial Statements and Exhibits.
 
(d)
Exhibits

Exhibit No.
  
Description
 
Press Release, dated March 20, 2018, reporting the Company’s financial results for the quarter and year ended December 31, 2017
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
Date: March 20, 2018
CHF SOLUTIONS, INC.
  
       
 
By:
/s/ Claudia Drayton
  
 
Name:
Claudia Drayton
  
 
Title:
Chief Financial Officer
  
 
 
Exhibit 99.1
 
 
 
CHF Solutions, Inc. Announces 11.4 Percent Revenue Growth for its Fourth Quarter and Provides Company Update

Eden Prairie, MN: March 20, 2018: (GLOBE NEWSWIRE) CHF Solutions, Inc. (Nasdaq: CHFS) announced today its results for the fourth quarter and year ended December 31, 2017, which included the following highlights:

•
Revenue for fourth quarter ended December 31, 2017 increased 11.4 percent compared to the same period in 2016. Revenue growth for the year 2017 was 12.4 percent compared to the prior year on a pro forma basis.
 
•
Continued onboarding of six experienced sales professionals hired in the prior quarter. Subsequent to quarter end, announced the addition of three new field clinical specialists for a total of five who will assist in training and supporting hospital accounts.
 
•
Continued international expansion by signing a distribution agreement with TransMedic Plc, a southeast Asia distributor.
 
•
Meta-analysis on role of ultrafiltration in reducing hospital readmissions published in the November 2017 issue of peer-reviewed publication Heart Failure Reviews.
 
•
Initiated manufacturing consoles and disposables following a successful transition from Baxter to in-house operations.
 
•
Completed an underwritten public offering for net proceeds of $16.2 million.
 
•
Completed annual impairment review of intangible assets and goodwill. Recorded a non-cash write off of $4.0 million to reflect the difference between fair market valuation of the Company’s net assets with its recorded book values.
 
•
Reduced operating cash utilization by 27 percent in 2017 compared to the same period in 2016.
 
“We are pleased with our fourth quarter and year performance, as we achieved double-digit revenue growth over 2016,” said John Erb, CEO of CHF Solutions. “I’m particularly proud with the execution of our business plan that drove the last quarter of the year, setting us up for continued progress into 2018.  We are committed to increasing our footprint in the market, and the hiring of sales staff as well as the expansion of our international distribution channels, will go a long way toward that goal.”
 
The Company will host a conference call and webcast at 9:00 AM ET today to discuss its financial results and provide an update on the Company’s performance.
 
To access the live webcast, please visit the Investors page of the CHF Solutions website at www.chf-solutions.com or access the webcast directly at https://edge.media-server.com/m6/p/dxgvnn8x. Alternatively, investors may access the live conference call by dialing (877) 303-9826 (U.S.) or (224) 357-2194 (international) and using conference ID 9684909.  An audio archive of the webcast and the call script will be available following the call on the Investor page at www.chf-solutions.com.
 
 FINANCIALS
 
CHF SOLUTIONS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations and Comprehensive Loss
 (in thousands, except per share amounts)

   
Three months ended
December 31
    
Twelve months ended
December 31,
  
   
2017
    
2016
    
2017
    
2016
  
Net sales
  
$
831
    
$
746
    
$
3,553
    
$
1,289
  
Costs and Expenses:
                                
Cost of goods sold
    
851
      
526
      
2,763
      
713
  
Selling, general and administrative
    
2,692
      
2,685
      
10,170
      
8,129
  
Research and development
    
479
      
598
      
1,481
      
8,109
  
Goodwill and intangibles impairment
    
3,951
      
—
      
3,951
      
—
  
Total costs and expenses
    
7,973
      
3,809
      
18,365
      
16,951
  
Loss from operations
    
(7,142
)
    
(3,063
)
    
(14,812
)
    
(15,662
)
Other income (expense):
                                
Interest expense
    
—
      
—
      
—
      
(504
)
Loss on early retirement of long-term debt
    
—
      
—
      
—
      
(500
)
Other income (expense), net
    
—
      
—
      
28
      
2
  
Warrant valuation expense
    
—
      
—
      
(67
)
    
—
  
Change in fair value of warrant liability
    
5
      
172
      
1,475
      
818
  
Total other income (expense)
    
5
      
172
      
1,436
      
(184
)
Loss before income taxes
    
(7,137
)
    
(2,891
)
    
(13,376
)
    
(15,846
)
Income tax (expense) benefit, net
    
—
      
(10
)
    
(6
)
    
54
  
Net loss
  
$
(7,137
)
  
$
(2,901
)
  
$
(13,382
)
  
$
(15,792
)
                                 
Basic and diluted loss per share
  
$
(10.00
)
  
$
(133.36
)
  
$
(37.51
)
  
$
(536.12
)
                                 
Weighted average shares outstanding – basic and diluted
    
1,587
      
36
      
665
      
33
  
                                 
Other comprehensive income:
                                
Foreign currency translation adjustment
  
$
(1
)
  
$
1
    
$
(8
)
  
$
(11
)
Total comprehensive loss
  
$
(7,138
)
  
$
(2,900
)
  
$
(13,390
)
  
$
(15,803
)
 
CHF SOLUTIONS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except share and per share amounts)

   
December 31,
2017
    
December 31,
2016
  
ASSETS
            
Current assets
            
Cash and cash equivalents
  
$
15,595
    
$
1,323
  
Accounts receivable
    
545
      
282
  
Inventories
    
1,588
      
677
  
Other current assets
    
136
      
137
  
Total current assets
    
17,864
      
2,419
  
Property, plant and equipment, net
    
570
      
540
  
Intangible assets, net
    
-
      
4,302
  
Goodwill
    
-
      
189
  
Other assets
    
21
      
21
  
TOTAL ASSETS
  
$
18,455
    
$
7,471
  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
                
Current liabilities
                
Accounts payable
  
$
862
    
$
1,987
  
Accrued compensation
    
1,021
      
909
  
Other current liabilities
    
208
      
364
  
Total current liabilities
    
2,091
      
3,260
  
Common stock warrant liability
    
—
      
1,843
  
Other liabilities
    
126
      
126
  
Total liabilities
    
2,217
      
5,229
  
Commitments and contingencies
    
—
      
—
  
                 
Temporary Stockholders’ Equity
                
Series D convertible preferred stock as of December 31, 2017 and December 31, 2016, par value $0.0001 per share; authorized 0 and 900 shares, respectively, issued and outstanding 0 and 700, respectively
    
—
      
485
  
                 
Stockholders’ equity
                
Series A junior participating preferred stock as of December 31, 2017 and December 31, 2016, par value $0.0001 per share; authorized 30,000 shares, none outstanding
    
—
      
—
  
Series B-1 convertible preferred stock as of December 31, 2017 and December 31, 2016, par value $0.0001 per share; authorized 0 and 1,824.4 shares, respectively, issued and outstanding 0 and 1,824.4, respectively
    
—
      
—
  
Series C convertible preferred stock as of December 31, 2017 and December 31, 2016, par value $0.0001 per share; authorized 0 and 2,900 shares, respectively, issued and outstanding 0 and 2,900, respectively
    
—
      
—
  
Series F convertible preferred stock as of December 31, 2017 and December 31, 2016, par value $0.0001 per share; authorized 3,780 and 0 shares, respectively, issued and outstanding 3,780 and 0, respectively
                
Preferred stock as of December 31, 2017 and December 31, 2016, par value
$0.0001 per share; authorized 39,966,220 and 39,964,375.6 shares, respectively, none outstanding
    
—
      
—
  
Common stock as of December 31, 2017 and December 31, 2016, par value $0.0001 per share; authorized 100,000,000 shares, issued and outstanding 3,798,929 and 38,862, respectively
    
—
      
—
  
Additional paid‑in capital
    
197,367
      
169,496
  
Accumulated other comprehensive income:
                
Foreign currency translation adjustment
    
1,227
      
1,235
  
Accumulated deficit
    
(182,356
)
    
(168,974
)
Total stockholders’ equity
    
16,238
      
1,757
  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
  
$
18,455
    
$
7,471
  
 
CHF SOLUTIONS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(in thousands)

   
For the years ended December 31,
  
In thousands
  
2017
    
2016
  
Operating Activities
      
Net loss          
  
$
(13,382
)
  
$
(15,792
)
Adjustments to reconcile net loss to cash flows from operating activities:
                
Depreciation and amortization          
    
769
      
697
  
Stock based compensation expense, net          
    
499
      
949
  
Amortization of debt discount and financing fees          
    
—
      
187
  
Goodwill and intangibles impairment
    
3,951
      
—
  
Loss on retirement of long-term debt          
    
—
      
500
  
Change in fair value of warrant liability          
    
(1,475
)
    
(818
)
Warrant valuation expense          
    
67
      
—
  
Changes in assets and liabilities:
                
Accounts receivable          
    
(263
)
    
(282
)
Inventory          
    
(911
)
    
(677
)
Other current assets          
    
1
      
342
  
Other assets and liabilities          
    
—
      
(464
)
Accounts payable and accrued expenses          
    
(1,176
)
    
(934
)
Net cash used in operations          
    
(11,920
)
    
(16,292
)
                 
Investing activities:
                
Purchase of property and equipment          
    
(259
)
    
(117
)
Purchase of Aquadex product line          
    
—
      
(4,000
)
Net cash used in investing activities          
    
(259
)
    
(4,117
)
                 
Financing activities:
                
Net proceeds from public stock offering          
    
24,281
      
—
  
Net proceeds from exercise of warrants          
    
1,989
      
—
  
Net proceeds from the sale of preferred stock, common stock and warrants
    
184
      
6,636
  
Repayments of long-term debt          
    
—
      
(8,000
)
Net cash provided by (used in) financing activities          
    
26,454
      
(1,364
)
                 
Effect of exchange rate changes on cash          
    
(3
)
    
(17
)
Net increase (decrease) in cash and cash equivalents          
    
14,272
      
(21,790
)
Cash and cash equivalents—beginning of period          
    
1,323
      
23,113
  
Cash and cash equivalents—end of period          
  
$
15,595
    
$
1,323
  
                 
Supplemental schedule of non-cash activities
                
    Warrants issued as inducement to warrant exercise
  
$
509
     $
—
  
    Conversion of temporary equity to permanent equity
  
$
485
     $
—
  
Common stock issued for business acquisition
  
$
—
    
$
950
  
                 
Supplemental cash flow information
                
Interest paid on debt borrowings          
  
$
—
    
$
840
  
Cash paid for income taxes
  
$
6
    
$
47
  
 
About CHF Solutions
 
CHF Solutions, Inc. (NASDAQ:CHFS) is a medical device company focused on commercializing the Aquadex FlexFlow system for Aquapheresis® therapy. The Aquadex FlexFlow system is indicated for temporary (up to eight hours) ultrafiltration treatment of patients with fluid overload who have failed diuretic therapy, and extended (longer than 8 hours) ultrafiltration treatment of patients with fluid overload who have failed diuretic therapy and require hospitalization. All treatments must be administered by a healthcare provider, under physician prescription, both of whom having received training in extracorporeal therapies. The company's mission is to predict, measure, and control patient fluid balance through science, collaboration, and innovative medical technology. CHF Solutions is a Delaware corporation headquartered in Minneapolis, Minnesota with wholly owned subsidiaries in Australia and Ireland. The company has been listed on the NASDAQ Capital Market since February 2012.

Forward-Looking Statements

Certain statements in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation, statements regarding the impact of hiring sales staff and expansion of our distribution channels.  Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this release, including, without limitation, those risk associated with our ability to execute on our recently announced strategic realignment, the possibility that we may be unable to raise sufficient funds necessary for our anticipated operations, our post-market clinical data collection activities, benefits of our products to patients, our expectations with respect to product development and commercialization efforts, our ability to increase market and physician acceptance of our products, potentially competitive product offerings, intellectual property protection, our ability to integrate acquired businesses, our expectations regarding anticipated synergies with and benefits from acquired businesses, and other risks and uncertainties described in our filings with the SEC. Forward-looking statements speak only as of the date when made. CHF Solutions does not assume any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
 
CONTACTS:

INVESTORS:
Claudia Napal Drayton
Chief Financial Officer
CHF Solutions, Inc.
952-345-4205
ir@chf-solutions.com

-or-
Bret Shapiro
Managing Partner
CORE IR
516-222-2560
brets@coreir.com
www.coreir.com

MEDIA
Jules Abraham
JQA Partners, Inc.
917-885-7378
jabraham@jqapartners.com