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CHF Solutions, Inc. Announces 21% Revenue Growth for its Third Quarter, 2017 and Provides Company Update

EDEN PRAIRIE, Minn., Oct. 31, 2017 (GLOBE NEWSWIRE) -- CHF Solutions, Inc. (NASDAQ:CHFS) announced today its third quarter 2017 results, for the period ending September 30, 2017, which included the following highlights:

  • Revenue for third quarter ended September 30, 2017 increased 21% compared to the same period in 2016 on a proforma basis.
  • Hired and trained 6 additional experienced sales professionals and increased the US sales team to 10 territories, up from 4 territories in Q2.
  • Initiated international distribution by signing a distribution agreement with APC Cardiovascular Ltd., a distributor based in the United Kingdom.
  • Held a scientific advisory board meeting with 6 key physician opinion leaders that provided guidance on protocol design for a mechanistic study and a registry study expected to begin in early 2018.
  • Transition of Aquadex FlexFlow System manufacturing from Baxter to in-house operations going as planned and on schedule. In-house manufacturing expected to commence in the fourth quarter of 2017.
  • Reduced operating expenses by 31% and operating cash utilization by 35% from same quarter last year.
  • Subsequent to quarter end, received NASDAQ notification that Company is in compliance with minimum bid price requirements and the listing matter has been closed.

“We are pleased with our performance during the third quarter 2017 as we realized substantive revenue growth as compared to the same period in 2016 and versus last quarter,” said John Erb, CEO of CHF Solutions. “We are pleased to have initiated our international distribution and continue to make progress in the execution of our growth strategy with the addition of 6 new experienced sales representatives, while continuing to make progress on manufacturing, product enhancements, market positioning and clinical evidence development,” Mr. Erb added.

FINANCIALS

CHF SOLUTIONS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited and in thousands, except per share amounts)


Three months ended
September 30,
Nine months ended
September 30,
2017 2016 2017 2016
Net sales$957 $543 $2,722 $543
Costs and expenses:
Cost of goods sold 782 187 1,912 187
Selling, general and administrative 2,671 2,683 7,478 5,444
Research and development 367 1,735 1,002 7,511
Total costs and expenses 3,820 4,605 10,392 13,142
Loss from operations (2,863) (4,062) (7,670) (12,599)
Other income (expense):
Interest expense - (68) - (504)
Loss on early retirement of long-term debt - (500) - (500)
Other income, net 17 2 28 2
Warrant valuation expense - - (67) -
Change in fair value of warrant liability 4 646 1,470 646
Total other income (expense) 21 80 1,431 (356)
Loss before income taxes (2,842) (3,982) (6,239) (12,955)
Income tax benefit (expense), net (5) 65 (6) 64
Net loss$(2,847)$(3,917)$(6,245)$(12,891)
Basic and diluted loss per share$(4.55)$(117.66)$(25.36)$(409.02)
Weighted average shares outstanding – basic and diluted 626 33 359 32
Other comprehensive loss:
Foreign currency translation adjustments$(1)$(6)$(7)$(12)
Total comprehensive loss$(2,848)$(3,923)$(6,252)$(12,903)


CHF SOLUTIONS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands, except share and per share amounts)
September 30,
2017 (unaudited)
December 31, 2016
ASSETS
Current assets
Cash and cash equivalents $2,513 $ 1,323
Accounts receivable 780 282
Inventory 1,337 677
Other current assets 108 137
Total current assets 4,738 2,419
Property, plant and equipment, net 575 540
Intangible assets, net 3,817 4,302
Goodwill 189 189
Other assets 21 21
TOTAL ASSETS$9,340 $7,471
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued expenses$1,412 $2,351
Accrued compensation 815 909
Total current liabilities 2,227 3,260
Common stock warrant liability 6 1,843
Other liabilities 126 126
Total liabilities 2,359 5,229
Commitments and contingencies
Temporary Stockholders’ Equity
Series D convertible preferred stock as of September 30, 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 September 30, 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 September 30, 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 September 30, 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
Preferred stock as of September 30, 2017 and December 31, 2016, par value
$0.0001 per share; authorized 39,970,000 and 39,964,375.6 shares, respectively, none outstanding
Common stock as of September 30, 2017 and December 31, 2016, par value
$0.0001 per share; authorized 100,000,000 shares, issued and outstanding
625,844 and 38,862, respectively
Additional paid‑in capital 180,972 169,496
Accumulated other comprehensive income:
Foreign currency translation adjustment 1,228 1,235
Accumulated deficit (175,219) (168,974)
Total stockholders’ equity 6,981 1,757
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$9,340 $7,471


CHF SOLUTIONS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
Nine months ended
September 30,
2017 2016
Operating Activities:
Net loss$(6,245)$(12,891)
Adjustments to reconcile net loss to cash flows used in operating activities:
Depreciation and amortization expense 656 457
Stock-based compensation expense, net 391 764
Amortization of debt discount and financing fees - 187
Loss on early retirement of long-term debt - 500
Change in fair value of warrant liability (1,470) (646)
Warrant valuation expense 67 -
Changes in operating assets and liabilities:
Accounts receivable (498) (111)
Inventory (660) (202)
Other current assets 28 256
Other assets - (471)
Accounts payable and accrued expenses (1,038) (1,406)
Net cash used in operations (8,769) (13,563)
Investing Activities:
Purchases of property and equipment (206) (110)
Acquisition of Aquadex product line - (4,000)
Net cash used in investing activities (206) (4,110)
Financing Activities:
Net proceeds from public stock offering 8,002 -
Net proceeds from exercise of warrants 1,981 -
Net proceeds from the sale of common stock, preferred stock, and warrants 184 3,362
Repayments on borrowings on long-term debt - (8,000)
Net cash (used in) provided by financing activities 10,167 (4,638)
Effect of exchange rate changes on cash (2) (10)
Net increase (decrease) in cash and cash equivalents 1,190 (22,321)
Cash and cash equivalents - beginning of period 1,323 23,113
Cash and cash equivalents - end of period$2,513 $792
Supplement schedule of non-cash activities
Warrants issued as inducement to warrant exercise$509 $-
Conversion of temporary equity to permanent equity$485 $-
Common stock issued for business acquisition$- $950
Supplemental cash flow information
Cash paid for interest$- $840
Cash paid for income taxes$8 $47

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. Alternatively, you may access the live conference call by dialing (877) 303-9826 (U.S.) or (224) 357-2194 (international) and using conference ID 2559289. An audio archive of the webcast and a transcript of the call will be available following the call on the Investor page at www.chf-solutions.com.

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 objective is to improve the quality of life for patients with heart failure and related conditions. CHF Solutions, Inc. 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 within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation, statements regarding expectations to commence in-house manufacturing in the fourth quarter of 2017, and expectations to begin a mechanistic study and a registry study in early 2018. 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.

For further information, please contact:

Claudia Napal Drayton
Chief Financial Officer
CHF Solutions, Inc.
T: +1-952-345-4205

Investor Relations
CHF Solutions, Inc.
ir@chf-solutions.com

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

Source:CHF Solutions, Inc.