20 Mar 2019
Excimer laser maker hampered by product issues around scale-up and hiring challenges, but CEO hails “exciting opportunity”.Ra Medical Systems, Carlsbad, Ca, a medical device company making excimer laser systems to treat vascular and dermatological diseases, has reported financial results for the three months (“Q4”)and 12 months (“FY”) ended December 31, 2018, and provided a business update. Generally, Ra's sales have crept up but earnings have been depressed by significant cost increases.
Q4, 2018 figures
Ra’s net loss for Q4, 2018, was $14.9million, compared with a net loss of $3.1m for Q4, 2017. Adjusted EBITDA for Q4, 2018, was negative $7.0m (negative $1.8m for Q4, 2017).
Net revenue for Q4, 2018, was $2.0m, which consisted of product sales of $1.2m and service and other revenue of $0.8m. In Q4, 2017, net revenue was $1.9m based on product sales of $1.2m and service and other revenue of $0.7m.
Net revenue from the vascular segment for Q4, 2018, was $0.6m ($0.2m for Q4, 2017). Net revenue for Q4, 2018, from the dermatology segment was $1.4m ($1.7m for Q4, 2017). Gross profit margin for Q4, 2018, was 40% (14% for Q4, 2017). Selling, general and administrative (SGA) expenses for Q4, 2018, were $14.8m ($3.0m for Q4, 2017). Research and development costs for Q4, 2018, were $1.2m ($0.4m for Q4, 2017).
Full 2018 figures
Ra’s statement showed that net revenue for 2018 was $6.3m, a 7% increase from $5.9m for 2017. Product sales for 2018 were $3.2m, up 3% from $3.1m in 2017, and service and other revenue was $3.1m, up 11% from $2.8m in the prior year.
Net revenue from the vascular segment for 2018 was $1.6m ($0.3m for 2017). Net revenue for 2018 from dermatology was $4.7m ($5.6m for 2017). Gross profit margin for 2018 was 33% compared with 29% for 2017.
SGA expenses for 2018 were $30.4m ($14.9m for 2017). R&D expenses for 2018 were $2.8m ($4.5m in 2017). The net loss for 2018 was $30.8m ($17.8m for 2017). Adjusted EBITDA for 2018 was negative $15.8m compared to adjusted EBITDA of negative $4.8m for 2017.
Commentary and outlook
“We face an exciting market opportunity with the DABRA system as a safe, versatile, easy-to-use and cost-effective solution to treat patients with PAD, supported by a growing body of compelling results from physician studies,” said Dean Irwin, CEO of Ra Medical.
“In June 2018 we completed the initial commercial launch of the DABRA laser system and are now transitioning to the next phase in promoting long-term adoption by our customers,” he continued. “This strategic shift is being executed under the leadership of Tom Fogarty, our newly appointed CCO.”
“During our steep ramp in the back half of 2018, we experienced certain issues that had an impact on our fourth quarter revenue and into 2019. In particular, the hiring and training of qualified sales personnel was dependent on the appointment of our CCO and we also found that we needed a more robust training program for our newly hired sales personnel,” Irwin added.
“In addition, we experienced production limitations in our manufacturing process as we scaled up catheter production. We believe we addressed those issues and will begin to see the positive impact on revenue beginning in the second quarter of 2019.”
While the company said it did not intend to provide quarterly guidance at this time, Ra Medical is expecting total revenue of between $1.0m and $1.4m in the first quarter of 2019, which includes revenue in the vascular segment of between $0.3m and $0.4m.
Ra Medical has also just announced study results from Athar Ansari, MD, Director of the California Heart & Vascular Clinic, in El Centro, Ca, who stated, “DABRA is fundamentally changing the way I practice medicine.”
Dr. Ansari’s study demonstrated a 94% success rate treating peripheral artery disease (PAD) by ablating arterial blockages. He presented his findings at this year’s Joint Interventional Meeting in Milan, Italy, between February 14-16.
In the study, 292 lesions were treated in 200 patients at Ansari’s outpatient office-based lab in El Centro, an area with high diabetes, peripheral artery disease, and amputation rates.
“In my experience, DABRA delivers results rapidly and safely, even in challenging cases,” he commented. “DABRA can treat all types of plaques in arteries above and below the knee. Patients are discharged in two to three hours, allowing them to quickly return to their daily lives.
“Most importantly, DABRA meets the need for safe, high-quality tools in smaller-scale settings, including office-based labs, allowing me to spare patients from hospital stays and reduce costs.”
DABRA (Destruction of Arteriosclerotic Blockages by laser Radiation Ablation) is a novel, minimally invasive excimer laser system that non-thermally, photochemically ablates channels in vascular blockages. Unlike many treatments for PAD that may damage the arterial wall, DABRA treats blockages with minimal vascular trauma.
“We believe Dr. Ansari’s study and experience are further evidence that DABRA benefits patients, physicians, and the healthcare system as a whole,” added Ra's CEO Dean Irwin. “We are delivering on our mission to provide physicians a better treatment to save limbs and lives.”