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): November 10, 2020
CHF Solutions, Inc.
(Exact Name of Registrant as Specified in its Charter)
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001-35312
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No. 68-0533453
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|
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(State or Other Jurisdiction of Incorporation or Organization)
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(Commission File Number)
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(I.R.S. Employer Identification No.)
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12988 Valley View Road, Eden Prairie, MN 55344
(Address of Principal Executive Offices) (Zip Code)
(952) 345-4200
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, par value $0.0001 per share
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CHFS
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Nasdaq Capital Market
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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)
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| ☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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| ☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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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.
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On November 10, 2020, CHF Solutions, Inc. (the “Company”) issued a press release reporting its financial results for the period ended September 30, 2020. 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.
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| (d) |
Exhibits
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Description
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Press Release, dated November 10, 2020, reporting the financial results of CHF Solutions, Inc. for the period ended September 30, 2020
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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.
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Date: November 10, 2020
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CHF SOLUTIONS, INC.
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By:
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/s/ Claudia Drayton
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Name:
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Claudia Drayton
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Title:
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Chief Financial Officer
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Exhibit 99.1
CHF Solutions, Inc. Announces 52 Percent Increase in Revenue for Third Quarter 2020 and Provides Company Update
Eden Prairie, MN: November 10, 2020: (GLOBE NEWSWIRE) CHF Solutions, Inc. (Nasdaq: CHFS) announced today its results for the third quarter ended September 30, 2020.
Recent Highlights
| • |
Revenue for the third quarter of 2020 was $1.9 million, an increase of 52% compared to the prior year period
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| • |
Increased Aquadex™ therapy utilization in existing pediatric hospital accounts; opened 6 new pediatric hospital accounts
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| • |
Partnered with Acute Kidney Injury Critical Care Research Foundation and Watermark Research Partners to initiate a pediatric registry to collect real-world evidence for the use of Aquadex SmartFlow™
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| • |
Announced the Aquadex product line was added to the Federal Supply Schedule, expanding access to all federal agencies and eliminating months of fulfillment process time
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| • |
Hosted two webinars during the quarter, led by:
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| o |
Dr. David Askenazi, M.D. MSPH on treatment of fluid overload on pediatric patients and clinical benefits of Aquadex therapy
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| o |
Dr. John Jefferies, M.D. on the use of precision medicine for the treatment of fluid overload in heart failure patients utilizing the Aquadex SmartFlow system
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| • |
A 355-patient retrospective study was presented at the Annual Scientific Meeting of Heart Failure Society of America, which showed substantial mean fluid removal with no negative changes in renal function and
reduced rehospitalization rates in patients treated with Aquadex therapy
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| • |
On November 3, 2020, received notification from Nasdaq that the company had regained compliance with NASDAQ’s minimum bid price requirement, after effecting a 1-for-30 reverse stock split to remain in
compliance
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| • |
Cash and cash equivalents totaled $17.9 million with no debt as of September 30, 2020
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“CHF Solutions achieved very solid performance in the third quarter, most notably within pediatric accounts,” said John Erb, chairman and CEO of CHF Solutions. “The pediatric opportunity is growing, as more
children’s hospitals acquire our Aquadex SmartFlow product and complete training. In the third quarter, we had twelve children’s hospitals purchase product, reinforcing our strategic focus in this area.”
Third Quarter 2020 Financial Results
Revenue for the third quarter was $1.9 million, an increase of 52% compared to $1.3 million in the prior year period. Revenue growth in the quarter was driven by increased utilization among established
pediatric accounts, and the addition of six new pediatric accounts.
The Company offered incentives to existing customers to upgrade consoles to Aquadex SmartFlow which impacted third quarter gross margins. The Company believes these upgrades will improve the customer experience
with the therapy and increase utilization. Additionally, the Company experienced a higher mix of international distributor revenue which normally carries a lower sales price than in the U.S. Gross margin was 46.1% in the third quarter, compared
to 56.9% in the prior year period.
Operating expenses for the third quarter of 2020 were $5.1 million, a decrease of 1.6% compared to the prior year period. The slight decrease in operating expenses was primarily due reduced product development
costs compared to the prior year period.
Net loss from operations for the third quarter of 2020 was $4.3 million, compared to a loss of $4.5 million in the prior year period.
Cash and cash equivalents were $17.9 million with no debt as of September 30, 2020. During the quarter, the Company announced the closing of a public offering for net proceeds
of $13 million. The Company also received $1.8 million in cash proceeds from the exercise of warrants in the third quarter of 2020.
Webcast and Conference Call Information
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 http://ir.chf-solutions.com/events. Alternatively, you may access the live conference call by dialing (877) 303-9826 (U.S.) or (224) 357-2194 (international) and using conference ID: 6097367. An audio archive of the webcast will be available
following the call at http://ir.chf-solutions.com/events.
CHF Solutions, Inc. (Nasdaq: CHFS) is a medical device company dedicated to changing the lives of patients suffering from fluid overload through science, collaboration and innovation. The company is focused on
developing, manufacturing and commercializing the Aquadex SmartFlow™ system for ultrafiltration therapy. CHF Solutions is headquartered in Minneapolis, Minn., with wholly-owned subsidiaries in Australia and
Ireland. The company has been listed on the Nasdaq Capital Market since February 2012.
About the Aquadex SmartFlow System
The Aquadex SmartFlow system delivers clinically proven therapy using a simple, flexible and smart method of removing excess fluid from patients suffering from hypervolemia
(fluid overload). The Aquadex SmartFlow system is indicated for temporary (up to 8 hours) or extended (longer than 8 hours in patients who require hospitalization) use in adult and pediatric patients weighing 20 kg or more whose fluid overload is unresponsive to medical management, including diuretics. All treatments must be administered by a health care provider, within an outpatient or inpatient clinical setting, under physician prescription,
both having received training in extracorporeal therapies.
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 value that the company brings to its
customers. 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 commercialization strategy, the impact of the COVID-19
pandemic, 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.
Financials
CHF SOLUTIONS, INC. AND SUBSIDIARIES
(Unaudited)
(In thousands, except per share amounts)
|
Three months ended
September 30,
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Nine months ended
September 30,
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|||||||||||||||
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2020
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2019
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2020
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2019
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|||||||||||||
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Net sales
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$
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1,904
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$
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1,252
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$
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5,397
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$
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4,144
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||||||||
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Costs and expenses:
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||||||||||||||||
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Cost of goods sold
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1,026
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540
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2,486
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1,987
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||||||||||||
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Selling, general and administrative
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4,264
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4,107
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13,034
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12,098
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||||||||||||
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Research and development
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871
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1,112
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2,620
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3,719
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||||||||||||
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Total costs and expenses
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6,161
|
5,759
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18,140
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17,804
|
||||||||||||
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Loss from operations
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(4,257
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)
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(4,507
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)
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(12,743
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)
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(13,660
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)
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||||||||
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Other income (loss), net
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—
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(1
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)
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—
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(1
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)
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||||||||||
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Loss before income taxes
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(4,257
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)
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(4,508
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)
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(12,743
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)
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(13,661
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)
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||||||||
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Income tax expense
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(3
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)
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(1
|
)
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(7
|
)
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(5
|
)
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||||||||
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Net loss
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$
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(4,260
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)
|
$
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(4,509
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)
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$
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(12,750
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)
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$
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(13,666
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)
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||||
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Basic and diluted loss per share
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$
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(2.08
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)
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$
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(51.12
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)
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$
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(11.27
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)
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$
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(284.70
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)
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||||
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Weighted average shares outstanding – basic and diluted
|
2,049
|
88
|
1,287
|
64
|
||||||||||||
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Other comprehensive loss:
|
||||||||||||||||
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Foreign currency translation adjustments
|
$
|
(7
|
)
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$
|
1
|
$
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(12
|
)
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$
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(4
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)
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|||||
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Total comprehensive loss
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$
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(4,267
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)
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$
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(4,508
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)
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$
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(12,762
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)
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$
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(13,670
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)
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||||
Condensed Consolidated Balance Sheets
(In thousands, except share and per share amounts)
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September
30,
2020
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December 31,
2019
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|||||||
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ASSETS
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(unaudited)
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|||||||
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Current assets
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||||||||
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Cash and cash equivalents
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$
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17,947
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$
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1,279
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||||
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Accounts receivable
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1,048
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799
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||||||
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Inventory
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2,921
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1,797
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||||||
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Other current assets
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235
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161
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||||||
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Total current assets
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22,151
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4,036
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||||||
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Property, plant and equipment, net
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1,244
|
991
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||||||
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Operating lease right-of-use asset
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303
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442
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||||||
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Other assets
|
21
|
133
|
||||||
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TOTAL ASSETS
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$
|
23,719
|
$
|
5,602
|
||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
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Current liabilities
|
||||||||
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Accounts payable
|
$
|
929
|
$
|
1,488
|
||||
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Accrued compensation
|
2,012
|
1,592
|
||||||
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Current portion of operating lease liability
|
201
|
186
|
||||||
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Current portion of finance lease liability
|
24
|
—
|
||||||
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Other current liabilities
|
57
|
85
|
||||||
|
Total current liabilities
|
3,223
|
3,351
|
||||||
|
Operating lease liability
|
108
|
261
|
||||||
|
Finance lease liability
|
60
|
—
|
||||||
|
Total liabilities
|
3,391
|
3,612
|
||||||
|
Commitments and contingencies
|
||||||||
|
Stockholders’ equity
|
||||||||
|
Series A junior participating preferred stock as of September 30, 2020 and December 31, 2019, par value $0.0001 per share; authorized 30,000 shares, none outstanding
|
—
|
—
|
||||||
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Series F convertible preferred stock as of September 30, 2020 and December 31, 2019, par value $0.0001 per share; authorized 127 and 535 shares, respectively, issued and
outstanding 127 and 535, respectively
|
—
|
—
|
||||||
|
Preferred stock as of September 30, 2020 and December 31, 2019, par value
|
—
|
—
|
||||||
|
—
|
—
|
|||||||
|
Additional paid‑in capital
|
249,378
|
218,278
|
||||||
|
Accumulated other comprehensive income:
|
||||||||
|
Foreign currency translation adjustment
|
1,202
|
1,214
|
||||||
|
Accumulated deficit
|
(230,252
|
)
|
(217,502
|
)
|
||||
|
Total stockholders’ equity
|
20,328
|
1,990
|
||||||
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
23,719
|
$
|
5,602
|
||||
CHF SOLUTIONS, INC. AND SUBSIDIARIES
(Unaudited)
(in thousands)
|
Nine months ended
September 30,
|
||||||||
|
2020
|
2019
|
|||||||
|
Operating Activities:
|
||||||||
|
Net loss
|
$
|
(12,750
|
)
|
$
|
(13,666
|
)
|
||
|
Adjustments to reconcile net loss to cash flows used in operating activities:
|
||||||||
|
Depreciation and amortization
|
253
|
179
|
||||||
|
Stock-based compensation expense, net
|
1,036
|
1,113
|
||||||
|
Loss on disposal of property and equipment
|
46
|
—
|
||||||
|
Changes in operating assets and liabilities:
|
||||||||
|
Accounts receivable
|
(249
|
)
|
258
|
|||||
|
Inventory
|
(1,371
|
)
|
(158
|
)
|
||||
|
Other current assets
|
(74
|
)
|
(74
|
)
|
||||
|
Other assets
|
112
|
(27
|
)
|
|||||
|
Accounts payable and accrued expenses
|
(166
|
)
|
38
|
|||||
|
Net cash used in operating activities
|
(13,163
|
)
|
(12,337
|
)
|
||||
|
Investing Activities:
|
||||||||
|
Purchases of property and equipment
|
(207
|
)
|
(464
|
)
|
||||
|
Net cash used in investing activities
|
(207
|
)
|
(464
|
)
|
||||
|
Financing Activities:
|
||||||||
|
Proceeds from public stock offerings, net
|
25,949
|
10,959
|
||||||
|
Proceeds from warrant exercises
|
4,115
|
—
|
||||||
|
Payments on finance lease liability
|
(14
|
)
|
—
|
|||||
|
Net cash provided by financing activities
|
30,050
|
10,959
|
||||||
|
Effect of exchange rate changes on cash
|
(12
|
)
|
(4
|
)
|
||||
|
Net increase in cash and cash equivalents
|
16,668
|
(1,846
|
)
|
|||||
|
Cash and cash equivalents - beginning of period
|
1,279
|
5,480
|
||||||
|
Cash and cash equivalents - end of period
|
$
|
17,947
|
$
|
3,634
|
||||
|
Supplemental cash flow information
|
||||||||
|
Cash paid for income taxes
|
$
|
—
|
$
|
—
|
||||
|
Inventory transferred to property, plant and equipment
|
$
|
247
|
$
|
204
|
||||
|
Equipment acquired through finance lease liability
|
$
|
98
|
$
|
—
|
||||
CONTACTS:
INVESTORS:
Claudia Napal Drayton
Chief Financial Officer
CHF Solutions, Inc.
952-345-4205
ir@chf-solutions.com
Gilmartin Group LLC
Matt.bacso@gilmartinir.com
MEDIA:
Jessica Stebing
Health+Commerce
260-336-6202
jstebing@healthandcommerce.com