SI-BONE, Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021. SI-BONE is a medical-device company focused primarily on its iFuse system for sacroiliac joint fusion; substantially all revenue comes from iFuse-related products, and the company reports one operating segment.
Financial performance and position
| Metric | Q1 2021 | Q1 2020 / comparison |
|---|---|---|
| Revenue | $20.4 million | $16.8 million; up 22% |
| Gross profit / margin | $18.2 million / 89% | $14.9 million / 89% |
| Operating expenses | $29.8 million | $26.8 million; up 11% |
| Operating loss | $11.6 million | $11.9 million |
| Net loss | $12.2 million; $0.37 per share | $12.8 million; $0.47 per share |
| Cash used in operating activities | $9.4 million | $9.4 million |
- Revenue growth was driven mainly by higher U.S. case volumes; U.S. revenue was $18.8 million versus $15.3 million, while international revenue was $1.7 million versus $1.5 million.
- Gross margin was unchanged. Higher operating costs reflected increased headcount, commissions, stock-based compensation, and R&D activity; lower travel and other pandemic-related costs partly offset sales and marketing increases.
- At March 31, 2021, cash and cash equivalents were $37.4 million and short-term investments were $147.7 million, totaling $185.1 million, compared with $196.4 million at December 31, 2020. Current assets were $208.1 million and current liabilities were $13.7 million.
- Long-term borrowings, net of issuance costs and final-fee accretion, were $39.5 million. The $40.0 million Solar term loan bears interest at 9.40% plus LIBOR, has an interest-only period through June 2023, and matures in June 2025. It is secured by substantially all company assets.
- Accumulated deficit was $251.5 million. Stock-based compensation was $4.0 million, up from $2.6 million. Weighted-average shares were 32.7 million versus 27.3 million.
Changes, outlook, and risks
- Management attributed March’s improved case volumes to rescheduled procedures deferred during the prior COVID-19 resurgence. January and February 2021 still experienced procedure deferrals. The pandemic’s continuing effects on elective procedures, customer access, and supply and demand remain uncertain.
- The company received FDA clearance for iFuse-TORQ in February 2021, expanding its offerings for pelvic trauma and sacroiliac fusion applications. It reported more than 55,000 iFuse procedures performed by over 2,300 surgeons in the U.S. and 36 other countries as of quarter-end.
- U.S. payors representing 311.6 million covered lives reimbursed for iFuse at March 31, 2021; 37 payors had positive exclusive iFuse coverage policies. Management cited broader reimbursement coverage, greater sales-force productivity, and more active surgeons as growth contributors.
- Management said existing cash and marketable securities were expected to fund operating expenses and capital expenditures for at least the next 12 months. It also expects continued losses and plans investment in sales-force expansion, surgeon training, and product development; the filing provides no specific revenue or earnings guidance.
- The company had not achieved positive operating cash flow. It was in compliance with debt covenants at March 31, 2021; covenant liquidity thresholds depend on trailing 12-month product revenue. Management stated it believed liquidity was sufficient to meet the applicable requirement in the foreseeable periods.
- Key risks include renewed COVID-19 disruption to elective procedures, reimbursement changes or reversals of exclusive coverage, competition and pricing pressure, reliance on a concentrated product family and limited or single-source suppliers, regulatory and clinical uncertainty, and continuing operating losses. U.S. patents covering the original iFuse triangular design expire in August 2024.
- Contractual obligations included $41.0 million of debt principal and final fee, $12.7 million of estimated future interest, $4.1 million of lease payments, and $0.5 million of purchase commitments. Lease and indemnification arrangements are disclosed; the maximum potential indemnification payments are not determinable, and no related liability was recorded.
Important facts for investors to verify
- Whether procedure volumes and revenue growth persist as pandemic-related deferrals change, rather than relying on rescheduled cases.
- Whether increased covered lives and exclusive payer policies translate into sustained surgeon adoption and reimbursed procedures.
- Cash, investment balances, operating cash burn, and ongoing compliance with revenue-linked loan liquidity covenants.
- Commercial uptake and supply requirements for iFuse-TORQ, including the effect of inventory investment on cash flow.
- Progress toward profitability amid rising operating expenses, stock-based compensation, and continued dependence on the iFuse product family.
- Clinical and regulatory developments, supplier continuity, and the commercial implications of the August 2024 patent expiry for the original iFuse design.