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Sunshine Heart Announces Fourth Quarter 2016 Financial Results and Provides Company Update

EDEN PRAIRIE, Minn., March 02, 2017 (GLOBE NEWSWIRE) -- Sunshine Heart, Inc. (NASDAQ:SSH) announced today its financial results for the fourth quarter ended December 31, 2016. 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 and financing transactions.

To access the live webcast, please visit the Investors page of the Sunshine Heart website at ir.sunshineheart.com. Alternatively, you may access the live conference call by dialing (877) 303-9826 (U.S.) or (224) 357-2194 (international) and using conference ID 77588684. An audio archive of the webcast and a transcript of the call will be available following the call at ir.sunshineheart.com.

Business Highlights

  • The Company continues to execute near-term strategy to drive growth with the recently acquired Aquadex FlexFlow business.

  • Direct field organization providing service to the top 55 hospital accounts that have purchased Aquadex over the past 12 months; expanding sales efforts to re-engage an additional 110 hospital accounts. The Company is on track and currently has 115 active hospital accounts ordering products.

  • Pursuing growth strategies in 4 primary areas: i) identifying diagnostic technologies to optimize utilization, ii) data generation to optimize reimbursement, iii) application expansion into other areas of the hospital, and iv) expanding use to outpatient setting.

  • Completed a registered direct offering and a private placement of convertible preferred shares and stock warrants during the quarter for total gross proceeds of approximately $3.6 million.

  • Reduced total costs and expenses by 40% and operating cash utilization by 43% from same quarter last year.

  • Received NASDAQ notification that Company is in compliance with minimum bid price requirement; the Company has until March 20th to evidence compliance with the $2.5M minimum shareholder equity requirement.

“Our focus remains on serving the large number of heart failure patients in the U.S. with fluid overload who could benefit from our Aquadex therapy,” said John Erb, Chairman and CEO. “We are confident that our strategies will drive sustained growth.”

FINANCIALS

SUNSHINE HEART, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited and in thousands, except per share amounts)
Three months ended
December 31
Twelve months ended
December 31,
2016 2015 2016 2015
Net sales$746 $ $1,289 $59
Costs and Expenses:
Cost of goods sold 526 713
Selling, general and administrative 2,685 2,086 8,129 8,345
Research and development 598 4,268 8,109 17,672
Total costs and expenses 3,809 6,354 16,951 26,017
Loss from operations (3,063) (6,354) (15,662) (25,958)
Other income (expense):
Interest expense (245) (504) (743)
Loss on early retirement of long-term debt (500)
Other income (expense), net (5) 2 (6)
Change in fair value of warrant liability 172 818
Total other income (expense) 172 (250) (184) (749)
Loss before income taxes (2,891) (6,604) (15,846) (26,707)
Income tax benefit (expense), net (10) 54 124
Net loss$(2,901)$(6,604)$(15,792)$(26,583)
Basic and diluted loss per share$(4.64)$(10.81)$(27.06)$(44.01)
Weighted average shares outstanding – basic and diluted 726 611 654 604
Other comprehensive income:
Foreign currency translation adjustments$1 $(4)$(11)$(26)
Total comprehensive loss$(2,900)$(6,608)$(15,803)$(26,609)


SUNSHINE HEART, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited and in thousands, except share and per share amounts)
December 31,
2016
December 31, 2015
ASSETS
Current assets
Cash and cash equivalents$1,323 $23,113
Accounts receivable 282
Inventory 677
Other current assets 137 479
Total current assets 2,419 23,592
Property, plant and equipment, net 540 535
Intangible assets, net 4,392
Goodwill 99
Other assets 21 323
TOTAL ASSETS$7,471 $24,450
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Current portion of long-term debt$ $3,798
Accounts payable and accrued expenses 2,351 2,832
Accrued compensation 909 1,368
Total current liabilities 3,260 7,998
Long-term debt, net of discount and financing fees 3,881
Common stock warrant liability 1,843
Other liabilities 126 400
Total liabilities 5,229 12,279
Commitments and contingencies
Temporary Stockholders’ equity
Series D convertible preferred stock as of December 31, 2016 and December 31, 2015, par value $0.0001 per share; authorized 900 shares, issued and outstanding 700 and 0, respectively 485
Stockholders’ equity
Series A junior participating preferred stock as of December 31, 2016 and December 31, 2015, par value $0.0001 per share; authorized 30,000 shares, none outstanding
Series B-1 convertible preferred stock as of December 31, 2016 and December 31, 2015, par value $0.0001 per share; authorized 1,824.4 and 0 shares, respectively, issued and outstanding 1,824.4 and 0, respectively
Series C convertible preferred stock as of December 31, 2016 and December 31, 2015, par value $0.0001 per share; authorized 2,900 and 0 shares, respectively, issued and outstanding 2,900 and 0, respectively
Preferred stock as of December 31, 2016 and December 31, 2015, par value $0.0001 per share; authorized 39,964,375 and 39,970,000 shares, respectively, none outstanding
Common stock as of December 31, 2016 and December 31, 2015, par value $0.0001 per share; authorized 100,000,000 shares, issued and outstanding 777,238 and 611,483, respectively
Additional paid‑in capital 169,496 164,107
Accumulated other comprehensive income:
Foreign currency translation adjustment 1,235 1,246
Accumulated deficit (168,974) (153,182)
Total stockholders’ equity 1,757 12,171
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$7,471 $24,450


SUNSHINE HEART, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
For the years ended December 31,
In thousands 2016 2015
Operating Activities
Net loss $(15,792)$(26,583)
Adjustments to reconcile net loss to cash flows from operating activities:
Depreciation and amortization 697 325
Stock based compensation expense, net 949 2,154
Amortization of debt discount and financing fees 187 263
Loss on retirement of long-term debt 500
Change in fair value of warrant liability (818)
Changes in assets and liabilities:
Accounts receivable (282)59
Inventory (677)
Other current assets 342 (181)
Other assets and liabilities (464)(92)
Accounts payable and accrued expenses (934)1,066
Net cash used in operations (16,292)(22,989)
Investing activities:
Purchase of property and equipment (117)(199)
Purchase of Aquadex product line (4,000)
Net cash used in investing activities (4,117)(199)
Financing activities:
Net proceeds from the sale of preferred stock, common stock and warrants 6,636 7,055
Proceeds from borrowings on long-term debt 8,000
Repayments of long-term debt (8,000)
Net cash provided by (used in) financing activities (1,364)15,055
Effect of exchange rate changes on cash (17)(47)
Net decrease in cash and cash equivalents (21,790)(8,180)
Cash and cash equivalents—beginning of period 23,113 31,293
Cash and cash equivalents—end of period $1,323 $23,113
Supplemental schedule of non-cash activities
Warrants issued in connection with debt financing $ $355
Common stock issued for business acquisition $950 $400
Supplemental cash flow information
Interest paid on debt borrowings $840 $388
Cash paid for income taxes $47 $

About Sunshine Heart

Sunshine Heart, Inc. (Nasdaq:SSH) is an early-stage medical device company focused on commercializing the Aquadex FlexFlow® System. The Company's commercial product, the Aquadex 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. Our objective is to improve the quality of life for patients with heart failure and related conditions. Sunshine Heart is a Delaware corporation headquartered in Minneapolis 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 that are based on management’s beliefs, assumptions, expectations, and information currently available to management. All statements that address future operating performance, events or developments that we expect or anticipate will occur in the future are forward-looking statements, including without limitation, our ability to execute on our recently announced strategic realignment, 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. The risk factors described in our filings with the SEC could cause actual events to adversely differ from the expectations indicated in these forward-looking statements. Management believes that these forward-looking statements are reasonable as and when made. However, you should not place undue reliance on forward-looking statements because they speak only as of the date when made. Sunshine Heart 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. Sunshine Heart may not actually achieve the plans, projections or expectations disclosed in forward-looking statements, and actual results, developments or events could differ materially from those disclosed in the forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, including without limitation, the possibility that regulatory authorities do not accept our application or approve the marketing of our therapy, the possibility we may be unable to raise the funds necessary for the development and commercialization of our therapy and other risks and uncertainties described in our filings with the SEC. We do not assume any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

For further information, please contact: Claudia Napal Drayton Chief Financial Officer Sunshine Heart, Inc. T: +1-952-345-4205 Investor Relations Sunshine Heart Inc. ir@sunshineheart.com

Source:Sunshine Heart, Inc.