On August 26, 2020 EDAP TMS SA (Nasdaq: EDAP) (the "Company"), the global leader in robotic energy based therapies, reported financial results for the second quarter of 2020 and provided an update on strategic and operational developments (Press release, EDAP TMS, AUG 26, 2020, View Source [SID1234564097]).

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Marc Oczachowski, EDAP’s Chairman and Chief Executive Officer, said: "Notwithstanding the significant physician and hospital outreach challenges posed by the COVID-19 pandemic during the second quarter, we continued to advance late-stage discussions, resulting in the completion of several notable deals toward the end of the period. Of particular note, our recent sales momentum, which carried into the current quarter, was characterized by a healthy mix of stand-alone Focal One sales, stand-alone Exact-Vu sales, and bundled sales of both complementary technologies that represent the industry’s first true ‘end-to-end’ solution for the urology suite. These are exactly the types of sales synergies that we envisioned when we announced our worldwide distribution agreement with Exact Imaging in May, and the traction we are seeing continues to exceed our internal forecasts. In parallel with these recent sales announcements, we continue to build our pipeline, assisted by highly regarded reference hospitals that were early adopters of Ablatherm and continue to champion our Focal One HIFU technology.

"Regarding our financial results, as with the first quarter, we did see an impact on revenue, driven mostly by lower procedure volumes as hospitals focused on treating COVID patients. This was in line with our expectations. However, because of the essential nature of timely prostate cancer screenings and treatments, it is anticipated these procedures must ultimately resume and continue, and we do see signs that our key markets in the U.S. and elsewhere are returning to a more normalized environment. We are optimistic that a gradual return to pre-pandemic procedure volumes, coupled with continued sales successes, will set the stage for improved financial results in the back half of the year and a strong 2021," Mr. Oczachowski concluded.

As a result of the company’s recent strategic shift toward current and emerging opportunities in HIFU, as well as its recently announced exclusive worldwide distribution agreement with Exact Imaging, beginning with the second quarter of 2020, EDAP is reporting its financial results in three segments: (1) HIFU, which includes sales of Focal One, Ablatherm and related consumables and services, (2) Lithotripsy, which includes revenue generated from the existing Sonolith range, and (3) Distribution, which includes the sale of complementary products such as lasers and micro-ultrasound systems and products from third parties.
EDAP’s new reporting segments align with organizational changes implemented within the company to better support the expansion of its HIFU development and sales activities as well as to maximize the potential of its distribution activities. This improved reporting format will allow for an unbiased comparative analysis of our past, current and future operational results.

Second Quarter 2020 Results

Total revenue for the second quarter 2020 was EUR 9.3 million (USD 10.3 million), a decrease of 26% compared to total revenue of EUR 12.5 million (USD 14.0 million) for the same period in 2019. Second quarter 2020 revenue reflects the impact of the ongoing COVID-19 pandemic on both procedure volumes and equipment sales.

Total revenue in the HIFU business for the second quarter 2020 was EUR 2.6 million (USD 2.8 million), a 44.2% decrease compared to EUR 4.6 million (USD 5.1 million) for the second quarter of 2019.

Total revenue in the LITHO business for the second quarter 2020 was EUR 2.9 million (USD 3.3 million), a 22.8% decrease compared to EUR 3.8 million (USD 4.3 million) for the second quarter of 2019

Total revenue in the Distribution business for the second quarter 2020 was EUR 3.8 million (USD 4.2 million), a 8.3% decrease compared to EUR 4.1 million (USD 4.6 million) for the second quarter of 2019.

Gross profit for the second quarter 2020 was EUR 4.3 million (USD 4.8 million), compared to EUR 6.3 million (USD 7.1 million) for the year-ago period. Gross profit margin on net sales was 46.8% in the second quarter of 2020, compared to 50.7% in the year-ago period. The decline in gross profit year-over-year was due to in part to lower sales in HIFU business as compared to the year-ago period driven primary by COVID-19.

Operating expenses were EUR 4.0 million (USD 4.5 million) for the second quarter of 2020, compared to EUR 4.7 million (USD 5.3 million) for the same period in 2019.

Operating profit for the second quarter of 2020 was EUR 0.3 million (USD 0.3 million), compared to an operating profit of EUR 1.7 million (USD 1.9 million) in the second quarter of 2019.

Net loss for the second quarter of 2020 was EUR 0.2 million (USD 0.2 million), or EUR (0.01) per diluted share, as compared to net income of EUR 1.4 million (USD 1.6 million), or EUR 0.05 per diluted share in the year-ago period.

For the first six months 2020 Results

Total revenue for the first half of 2020 was EUR 16.9 million (USD 18.7 million), a decrease of 25% compared to total revenue of EUR 22.6 million (USD 25.6 million) for the same period in 2019. As mentioned, first half 2020 revenue reflects the impact of the ongoing COVID-19 pandemic on the company’s activities.

Total revenue in the HIFU business for the first six months of 2020 was EUR 4.5 million (USD 5.0 million), a 47.0% decrease compared to EUR 8.4 million (USD 9.5 million) for the first six months of 2019.

Total revenue in the LITHO business for the first six months of 2020 was EUR 5.9 million (USD 6.5 million), a 13.0% decrease compared to EUR 6.7 million (USD 7.6 million) for the first six months of 2019.

Total revenue in the Distribution business for the first six month of 2020 was EUR 6.5 million (USD 7.2 million), a 12.3% decrease compared to EUR 7.4 million (USD 8.4 million) for the first six month of 2019.

Gross profit for the first six months of 2020 was EUR 7.4 million (USD 8.2 million), compared to EUR 11.2 million (USD 12.6 million) for the year-ago period. Gross profit margin on net sales was 43.9% for the first six months of 2020, compared to 49.5% in the year-ago period. The decline in gross profit year-over-year was due in part to lower sales in the HIFU business driven by COVID-19.

Operating expenses were EUR 8.5 million (USD 9.5 million) for the first six months of 2020, compared to EUR 9.3 million (USD 10.5 million) for the same period in 2019.

Operating loss for the first six months of 2020 was EUR 1.2 million (USD 1.3 million), compared to an operating profit of EUR 1.9 million (USD 2.1 million) for the same period of 2019.

Net loss for the first six months of 2020 was EUR 1.5 million (USD 1.6 million), or EUR (0.05) per diluted share, as compared to a net income of EUR 1.7 million (USD 1.9 million), or EUR 0.06 per diluted share in the year-ago period.

As of June 30, 2020, the Company recorded a strong cash position of EUR 15.7 million (USD 17.6 million).

Conference Call

An accompanying conference call and webcast will be conducted by management to review the results. The call will be held at 8:30am EDT on Thursday, August 27, 2020. Please refer to the information below for conference call dial-in information and webcast registration.

Following the live call, a replay will be available on the Company’s website, www.edap-tms.com under "Investors Information."