TherapeuticsMD, Inc. — Q3 2021 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2021. TherapeuticsMD is a women’s healthcare company commercializing ANNOVERA, IMVEXXY and BIJUVA, alongside prescription prenatal vitamins. Amounts below are in millions of dollars except per-share data.
Financial performance
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue, net | $25.4 | $19.3 | $68.3 | $42.3 |
| Gross profit | $20.1 | $16.1 | $54.2 | $31.9 |
| Operating expenses | $60.0 | $41.0 | $158.6 | $152.8 |
| Loss from operations | $(39.9) | $(25.0) | $(104.4) | $(120.9) |
| Net loss | $(47.4) | $(32.6) | $(129.5) | $(141.4) |
| Loss per share, basic and diluted | $(0.11) | $(0.12) | $(0.33) | $(0.52) |
| Operating cash flow | Not provided for the quarter | $(103.1) | $(129.1) |
- Q3 revenue rose 31.6%; nine-month revenue rose 61.4%. Nine-month product revenue increased 66.5%, led by ANNOVERA ($30.1), IMVEXXY ($24.9) and BIJUVA ($7.9). Prescription vitamin revenue declined to $4.2 from $7.3; license revenue fell to $1.2 from $2.0, reflecting milestone timing.
- Product gross margin was 78.4% in Q3 versus 81.1%; for the nine months it was 79.0% versus 74.2%. Q3 margin was affected in part by $0.7 million of BIJUVA export sales made at cost.
- Q3 operating expenses included $7.3 million of cash and non-cash severance for former senior executives. Excluding those charges, management reported Q3 net loss of $40.1 million and nine-month net loss of $122.2 million.
- Cash was $104.8 million at September 30, compared with $80.5 million at December 31, 2020. Total assets were $209.6 million; stockholders’ deficit was $57.4 million.
- Debt principal was $200.0 million, versus $250.0 million at year-end; $15.0 million was classified as current and debt net of financing fees was $186.7 million. The term loan matures March 31, 2024. Interest expense and other financing costs were $25.3 million for the first nine months.
- Cash used in investing was $0.7 million; financing provided $128.2 million for the first nine months. Financing included $182.9 million of net common-stock proceeds and $50.0 million of debt repayment. Common shares outstanding increased to 424.9 million from 299.8 million at year-end.
Material changes and management commentary
- ANNOVERA Q3 revenue increased 83.9% year over year, driven by volume growth, partly offset by a lower average selling price. IMVEXXY revenue increased 17.2%; BIJUVA increased 100.4%, including $0.7 million of Theramex sales.
- Management attributed product growth partly to improved healthcare-provider access and consumer demand as the pandemic recovery progressed. It said operating losses are expected to continue in the near term; the filing gives no specific revenue or earnings guidance.
- The company planned a cost-saving initiative intended to reduce annual costs by at least $40 million in 2022. Separately, it described approximately $20 million in annualized savings associated with a potential sale of an interest in vitaCare Prescription Services and had commenced a sale process.
Liquidity, outlook and significant risks
- Going concern: The company stated it would need additional capital to remain compliant with its $60 million minimum unrestricted-cash covenant over the next 12 months. Management was pursuing financing and asset-sale alternatives, but stated that the circumstances and capital-market uncertainty raised substantial doubt about the company’s ability to continue as a going concern. The unaudited statements include no adjustments that might be required if it cannot continue as a going concern.
- The company was in material compliance with debt covenants at September 30, but failure to maintain minimum cash, meet product-revenue thresholds or satisfy other covenants could make some or all debt immediately due. Financing alternatives may dilute existing holders or have preferential terms.
- ANNOVERA supply: A contract manufacturer experienced batch failures and supply difficulties. The company filed an FDA supplement to modify manufacturing-testing specifications; approval was uncertain, with a December 12, 2021 PDUFA date. Insufficient supply could constrain sales and jeopardize revenue-covenant compliance.
- Regulatory: FDA review of the lower-dose BIJUVA supplement had a March 21, 2022 target action date. The filing also disclosed delays or deficiencies in certain ANNOVERA post-marketing studies being conducted by Population Council; the company said it was working to address them.
- Competition and litigation: Teva and Amneal challenged patents for generic versions of IMVEXXY and BIJUVA. Proceedings were temporarily stayed, extending the respective statutory FDA approval stays for the duration of litigation stays; outcomes remain uncertain.
- Listing and pandemic risks: Nasdaq notified the company that its share price had been below the $1 minimum for 30 consecutive business days. The compliance period ran through March 14, 2022; a reverse split was among the options under evaluation. COVID-19, supply-chain disruption, reimbursement and customer credit risks also remained uncertain.
Most important facts for investors to verify
- Whether the company raised sufficient capital or completed the vitaCare transaction to meet the cash covenant and address the disclosed going-concern uncertainty.
- FDA’s decision on the ANNOVERA manufacturing supplement and whether production can meet demand and debt revenue covenants.
- ANNOVERA, IMVEXXY and BIJUVA sales trends, product margins, payer coverage and the durability of revenue growth.
- Compliance with minimum cash and revenue covenants, debt repayment requirements and the cost of future financing.
- Nasdaq minimum-bid compliance, dilution from equity issuance, and developments in generic patent litigation and required post-marketing studies.