Osprey Medical Inc. (ASX:OSP) (Osprey or the Company) today released its Appendix 4C – Quarterly Cash Flow Report for the period ending 31 March 2021 (1Q 2021 or the Quarter).
• Group: COVID recovery continues with worldwide units sold up 14% and revenue up 21% on previous quarter
• US: Lean expansion with 7 Independent Sales Agency Agreements (ISAs) signed this quarter. Osprey now has 8 ISAs providing access to 26 new states, with first sales via an ISA received
• ANZ: First orders received under the ANZ Regional Health Care Group distribution agreement
• EMEA: Repeat orders received from GE Healthcare following first order in the previous quarter (4Q 2020)
• Cash balance: Business remains well capitalised with a cash balance of US$13.6m/A$17.7m1 on 31 March 2021
Osprey Medical CEO, Mr Mike McCormick commented:
“This quarter, we have maintained the positive momentum from the previous quarter as we continue to rebound from COVID, achieving double digit growth in units sold and revenues. In the US, we pressed forward with our lean expansion strategy and successfully added 7 new ISAs in regions outside of our direct salesforce. We also received our first order from an ISA and we expect this to ramp up in the coming months, as we finalise onboarding and training the ISAs, which now comprises 8 ISAs covering 26 new states. Most pleasingly, we made significant progress with our distributors in EMEA and ANZ, with GE Healthcare continuing to order units following their first order in the previous quarter, as well as our first ever order by our ANZ distributor, Regional Health Care Group. These sales, from outside of the US is a strong step towards Osprey’s global commercialisation strategy.”
Recovery during COVID progressing strongly with growth from 4Q 2020 continuing through this quarter
In 1Q 2021, Osprey continued its rebound from COVID, with ~1,900 units sold worldwide (up 14% on the previous quarter) and net revenue of ~US$586k (up 21% on the previous quarter). In the US, Osprey sold ~1,450 units which represents a 6% increase compared to the previous quarter. Outside US (OUS), Osprey pleasingly sold ~450 units via its distributor agreements in EMEA and ANZ. Considering the ongoing disruptions to elective heart procedures due to COVID, growth in unit sales and revenue in both US and OUS, is impressive.
The positive momentum is also seen with respect to cashflows, where Osprey reported receipts from customers of $501k this Quarter, an increase of $20k from 4Q 2020 and an increase of $216k from 3Q 2020. In terms of outflows, Osprey reported operating cash outflows of US$4.0m and net cash used in operations of US$3.5m. The increase of 33% in operating cash outflows and 39% in net cash used in operations compared to the previous quarter is largely driven by some staff returning to full-time working hours to drive future growth as well as yearly one-off costs, which are typically incurred in first quarter each year. Therefore, on a prior corresponding period (pcp) basis, it is pleasing to see a 43% reduction in operating cash outflows and a 35% reduction in net cash used in operations.
Osprey accelerates US ISA expansion and achieves first orders through an ISA
Osprey has continued its lean and cost-effective expansion in US with multiple additional Independent Sales Agency (ISA) agreements signed. Osprey currently has a total of 8 ISA agreements in place, covering 26 states in the US which Osprey did not previously have access to. Combined with the 16 states currently serviced by Osprey’s direct salesforce, the Company now has an active presence in 42 US states. Osprey’s sales representation now covers the majority of the US including the areas with strong prevalence of Chronic Kidney Disease as indicated in the images below. (See here)
In addition, Osprey received its first order from an ISA, through the Company’s first ISA, BioCore Inc. (see announcement on 26 November 2020). In the near-term, Osprey expects to achieve further sales through the 8 ISAs once onboarding and training has been completed.
The addition of new ISAs is consistent with Osprey’s broader vision to increase geographic coverage while maintaining a lean business model. Under the agreement, Osprey will ship to and invoice hospitals in the ISAs’ area and pay commissions to the ISA based on total revenues. Osprey is in active discussions with a number of ISA firms and hopes to continue to expand its geographic coverage across the US.
Further orders in EMEA and first order received in ANZ
OUS, Osprey pleasingly sold ~450 units via its distributor agreements in EMEA and ANZ. These sales from OUS is a significant milestone as it is the first time, since both agreements were signed last year, where OUS sales have provided a material contribution to group revenues and units sold.
Notably, Osprey received another order from GE Healthcare this Quarter following their first order in the previous quarter. Under the agreement, GE Healthcare will exclusively distribute Osprey’s product portfolio in Europe, Russia, Middle East, Africa, Central Asia and Turkey. Osprey looks forward to building its partnership with GE Healthcare to support the sale of its DyeVert™ product offering to customers across the EMEA region.
In Australia and New Zealand, Osprey is pleased to report that the first orders under the Regional Health Care Group (RHCG) distribution agreement have been received this quarter. These orders mark a significant milestone as it represents the first commercial use of the DyeVert technology in the region where the technology was developed.
As of 31 March 2021, Osprey had a cash balance of US$13.6m/A$17.7m1. As flagged previously, going forward, the Company will continue to demonstrate appropriate fiscal restraint such that it can continue its current activities during these uncertain times.
As part of last year’s capital raising, 1.1bn unquoted options were issued at an option exercise price of 1.4c and with an expiry date of 15 February 2021. In total, the exercise of all Options issued under the prospectus resulted in A$14.9m being raised by the Company before costs, of which A$13.2m was raised in the most recent issue of CDIs. Furthermore, Osprey received a second loan under the US Paycheck Protection Program (PPP) of $US1.1m. The Company expects a significant portion of this loan to be forgiven, with the remaining amount subject to a 1% interest rate. These proceeds will go towards funding the ongoing commercial growth of Osprey.
Payments made to related parties as described in item 6.1 of the Appendix 4C were for executive director remuneration.
Conference call details
Investors are invited to join a conference call hosted by CEO, Mike McCormick and CFO, Nancy Ness on Thursday, 22 April 2021 at 9:00am Australian Eastern Standard Time (7:00am Hong Kong/Singapore, 6:00pm Wednesday, 21 April 2021 Minneapolis, MN).
To pre-register, please follow this link: https://s1.c-conf.com/DiamondPass/10013514-kg08s6.html Call details: Australia Toll Free 1800 455 963 Australia Local +61 7 3145 4005 Hong Kong 800 968 273 Singapore 800 101 2702 United States 1 855 624 0077 Conference ID: 10013514
This release has been authorised for lodgement to ASX by Mike McCormick, CEO of Osprey Medical and lodged by Brendan Case, Company Secretary.
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T: (61) 3 8582 4800
M: (61) 410 442 393
About Osprey Medical (ASX: OSP)
Osprey Medical’s vision is to make heart imaging procedures safer for patients with poor kidney function. The amount of dye (contrast) used during angiographic imaging procedures increases the patient’s risk for dye-related kidney damage known as Contrast-Induced Acute Kidney Injury (CI-AKI). The Company’s core technologies originated from research conducted by Dr David Kaye at Melbourne’s Baker Institute. Its proprietary dye reduction and monitoring technologies are designed to help physicians minimize dye usage and monitor the dose of dye real time throughout the procedure. The Company’s DyeVert™ System reduces contrast while maintaining image quality in a self-adjusting easy-to-use design that monitors dye usage. Osprey Medical’s Board and Management are comprised of experienced and successful personnel with established track records covering medical device development, regulatory approvals, sales and marketing, and mergers-acquisitions. Osprey Medical’s advisory board comprises world-recognised experts in heart and kidney diseases.
This announcement contains or may contain forward-looking statements that are based on management’s beliefs, assumptions, and expectations and on information currently available to management. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future are forward-looking statements, including without limitation our expectations with respect to our ability to commercialize our products including our estimates of potential revenues, costs, profitability and financial performance; our ability to develop and commercialize new products including our ability to obtain reimbursement for our products; our expectations with respect to our clinical trials, including enrolment in or completion of our clinical trials and our associated regulatory submissions and approvals; our expectations with respect to the integrity or capabilities of our intellectual property position. Management believes that these forward-looking statements are reasonable as and when made. You should not place undue reliance on forward-looking statements because they speak only as of the date when made. Osprey 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. Osprey 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 forwardlooking statements.
Foreign Ownership Restriction
Osprey’s CHESS Depositary Interests (CDIs) are issued in reliance on the exemption from registration contained in Regulation S of the US Securities Act of 1933 (Securities Act) for offers or sales which are made outside the US. Accordingly, the CDIs have not been, and will not be, registered under the Securities Act or the laws of any state or other jurisdiction in the US. The holders of Osprey’s CDIs are unable to sell the CDIs into the US or to a US person unless the re-sale of the CDIs is registered under the Securities Act or an exemption is available. Hedging transactions with regard to the CDIs may only be conducted in accordance with the Securities Act.