TherapeuticsMD, Inc. — 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. The filing was signed March 23, 2022. TherapeuticsMD is a women’s healthcare company selling ANNOVERA (contraceptive vaginal system), IMVEXXY and BIJUVA (menopause hormone therapies), and prescription prenatal vitamins.
Financial performance and liquidity
| Metric | 2021 | 2020 | Change |
|---|---|---|---|
| Total revenue | $87.0 million | $64.9 million | Up 34.0% |
| Product revenue, net | $85.8 million | $62.9 million | Up 36.4% |
| Gross profit | $68.1 million | $48.9 million | Up 39.3% |
| Operating expenses | $207.9 million | $204.4 million | Up 1.7% |
| Operating loss | $(139.8) million | $(155.5) million | Loss narrowed |
| Net loss | $(172.4) million | $(183.5) million | Loss narrowed |
| Net loss per share, basic and diluted | $(0.43) | $(0.67) | |
| Net cash used in operating activities | $(142.7) million | $(159.5) million |
- Product gross margin increased to 78.1% from 74.6%, primarily reflecting lower inventory obsolescence charges; the filing says product margins otherwise decreased 1.8%.
- By product, 2021 revenue was ANNOVERA $37.9 million (up 93.5%), IMVEXXY $31.5 million (up 16.2%), BIJUVA $10.6 million (up 66.5%, including $1.4 million of Theramex sales), and prescription vitamins $5.7 million (down 41.4%). License revenue fell to $1.2 million from $2.0 million.
- Cash was $65.1 million at year-end, compared with $80.5 million a year earlier. Current liabilities were $252.9 million versus current assets of $119.5 million; total liabilities exceeded total assets by $93.6 million.
- Debt principal outstanding was $200 million at year-end. The amended loan was due June 1, 2022; after the March 2022 amendment, the company added a $30 million paid-in-kind fee to principal, with $16 million potentially waivable. The filing states existing cash was insufficient to repay the debt in full.
- 2021 financing cash flow was $129.6 million, including $184.1 million net proceeds from common-stock sales and $50 million of debt repayments. Common shares outstanding rose from 299.8 million at year-end 2020 to 429.9 million at year-end 2021.
- The company reported a $1.1 billion accumulated deficit and $885.1 million of federal net operating loss carryforwards. No income tax provision was recorded; deferred tax assets were fully offset by a valuation allowance.
Material changes versus 2020
- Revenue growth reflected higher ANNOVERA, IMVEXXY, and BIJUVA sales, while prenatal vitamin revenue declined. Management attributed improved product revenue partly to better healthcare-provider access and consumer demand as the pandemic recovery progressed.
- Operating expenses included $12.4 million of senior-executive severance, including accelerated share-based compensation. Excluding severance, operating expenses were $195.5 million, down 4.4% from 2020.
- Non-operating expense rose to $32.6 million from $28.0 million, driven by prepayment fees and financing-cost amortization, partly offset by lower interest expense.
- Operating cash use improved by $16.8 million, but remained substantial. The company continued to rely on external financing and equity issuance.
Outlook, risks and unusual items
- Going concern and debt: The auditor’s report and management both state that substantial doubt exists about the company’s ability to continue as a going concern. The company needed additional capital to repay its June 2022 debt maturity and fund operations. The March 2022 amendment waived certain covenant breaches, including the year-end 2021 revenue covenant and a minimum-cash breach, and removed the first-quarter 2022 revenue covenant.
- vitaCare sale: A March 2022 agreement provides for a $150 million cash payment, subject to adjustments and holdbacks, plus up to $7 million in earn-out consideration. Closing was expected in the second quarter of 2022, subject to customary conditions and regulatory approvals. The company agreed to use the first $120 million of net proceeds and all net proceeds above $135 million to prepay its loans. These proceeds were not cash on hand at year-end.
- Cost reductions: Management targeted at least $40 million of annual cost savings in 2022, excluding estimated annualized savings of approximately $20 million associated with the vitaCare divestiture. Achievement was not assured.
- ANNOVERA supply and FDA review: Manufacturing difficulties caused intermittent supply, including raw-material variability and process variation. The FDA issued a complete response letter in December 2021 on a requested manufacturing-specification change; the company resubmitted information in January 2022 and expected an FDA response by the end of the second quarter of 2022. Until then, supply remained under existing specifications. The FDA also cited deficiencies and late reports in Population Council post-marketing studies.
- Competition and litigation: Teva’s challenge to IMVEXXY patents remained in litigation. A settlement with Amneal permits a royalty-free BIJUVA generic license beginning in May 2032, or earlier under specified circumstances. Generic competition, coverage and reimbursement, and payer access remain material commercial risks.
- Concentration and execution: Four customers accounted for 55% of 2021 revenue. The company depends on third-party manufacturers, including for all three pharmaceutical products. COVID-19 effects, supply disruptions, management turnover, and the company’s Nasdaq minimum-bid-price deficiency add uncertainty.
- Management outlook: No numerical revenue or profitability guidance is provided. Management expected operating losses to continue in the near term and said future results depend on commercialization, financing, payer coverage, supply, and the pandemic’s effects.
Important facts for investors to verify
- Whether the vitaCare sale closed, how much net cash was received, and how much was applied to debt.
- The current loan principal, fees, maturity or refinancing status, covenant compliance, and any subsequent financing or dilution.
- Actual 2022 cost savings and the continuing cash burn relative to available liquidity.
- Whether ANNOVERA manufacturing capacity stabilized and the FDA approved the requested specification changes; also, the status of required post-marketing studies.
- Product-level sales, pricing and volume trends, payer coverage, and the impact of generic competition and the IMVEXXY litigation.
- The outcome of the Nasdaq listing appeal and any reverse stock split or other actions taken to regain compliance.