NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICES
– Gross margin improves to 41%, revealing company on track with FY20 strategy of selling more proprietary products –CARLSBAD, Calif., Aug. 31, 2020 (GLOBE NEWSWIRE) — Aurora Spine Corporation (“Aurora Spine” or the “Company”) (TSXV: ASG) (US: AROSF), a company focused on bringing new solutions to the spinal implant market through a series of innovative, minimally invasive, regenerative spinal implant technologies, today announced the financial results for the second quarter ended June 30, 2020. All figures are in U.S. dollars.Business HighlightsSequential improvement of gross margin to 40.9% in Q2, up from 34.6% in Q1, due to sales mix that included more proprietary productsAdjusted EBITDA (a non-GAAP figure) was $(0.05) million for the second quarter of 2020, compared to $0.26 million in the second quarter of 2019, despite 52% decrease in revenuesStrong cash retention, company ended Q2 with $1.9 million in cashAppointed Chad Clouse as Chief Financial OfficerManagement CommentaryMr. Trent Northcutt, President and Chief Executive Officer of Aurora Spine, commented, “While the second quarter was a difficult one as most elective surgeries were not conducted during April due to the Covid-19 shutdown, we still were able to produce promising results by advancing our strategy of converting more sales over to Aurora products. This was evidenced in the second quarter’s gross margin which was 41%, an improvement from 35% in the first quarter. This improvement was accomplished as nearly half of revenue was derived from our proprietary products, up from 38% in the first quarter of 2020. I’m pleased to report that this trend has continued into the third quarter.”Mr. Northcutt continued, “While elective surgeries were minimal the first half of Q2, Aurora was productive by having discussions with surgeons using Aurora products and getting them updated with new products. On the topic of new products, the engineering team finalized product designs for a Posterior SI Joint fusion product made from cortical bone (SILO) and the ZIP-Flex interlamar fixation device. These products are an important part of our longer-term growth strategy through the remainder of 2020 and into 2021, with the SILO commencing limited in-patient surgeries during the third quarter of this year.”Mr. Northcutt concluded, “I’m proud of the Aurora team during these trying times. We were prudent in managing expenses and have preserved our capital that was raised earlier in the year. This leaves the company in good financial standing and able to implement our strategy of introducing more proprietary products to the marketplace. This strategy is well underway and anticipate continued progress for the remainder of 2020 and preparing for renewed growth into 2021 and beyond.”Financial ResultsTotal revenues for the second quarter of 2020 were $1.58 million compared to $3.26 million for the second quarter of 2019, a decrease of 52%. As previously reported, due to cancellations of elective surgeries during the shutdown from Covid-19, procedures in the month of April were minimal and was the prime cause of the decrease in revenues during the second quarter compared to the prior year period.Gross margins on total revenues were 40.9% for the second quarter of 2020, compared to 34.6% in Q1 of fiscal 2020 and 39.5% during the second quarter of 2019. The improvement in gross margins is attributable to the company’s strategy of converting third party product sales to more proprietary, Aurora Spine products.Total operating expenses were $0.83 million for the second quarter of 2020, which included $0.13 million of non-cash expenses, compared to $1.33 million, which included $0.3 million of non-cash expenses for the second quarter of 2019. The change in operating expenses were lower due to a decrease in expenses due to the shutdown. The company continues to maintain cost controls to preserve its capital for growth initiatives.Net income was $0.03 million for the second quarter of 2020, compared to a loss of $(0.04) million in the second quarter of 2019.Adjusted EBITDA (a non-GAAP figure) was $(0.05) million for the second quarter of 2020, compared to $0.26 million in the second quarter of 2019.Full financial statements can be found on SEDAR at (www.sedar.com).SELECTED BALANCE SHEET INFORMATIONThe following table summarizes selected key financial data.SELECTED QUARTERLY INFORMATIONThe Company’s functional currency is the US dollar (USD). The functional currency of the Company’s US subsidiary Aurora is USD.Operating results for each quarter for the last two fiscal years are presented in the table below. * Adjusted by gains and (losses) on sale of equipment.
** Excludes gain and (losses) from Other income (expense) of $219,322. These are anticipated to be non-recurring.
*** EBITDAC is a non GAAP, non IFRS measure defined as Earnings before Interest, Tax, Depreciation, Amortization and Stock based compensation. This amount includes Gains (losses) on sale of property and equipment and Other income (expense).
**** Outstanding options and warrants have not been included in the calculation of the diluted loss per share as they would have the effect of being anti-dilutive.COVID-19 Impact to Q2 2020As mentioned in Q1 financial results, due to Covid-19, many elective surgeries were cancelled during the national shutdown in mid-March through early-May. The Q2 was impacted as very little procedures occurred in the month of April.During May and June, elective surgeries resumed to approximately 80% of pre-covid-19 levels and have resumed at that level or better starting into the third quarter of 2020. If covid-19 levels remain low, the company anticipates further resumption of elective surgeries throughout the country, until another wave/spike in cases occur, if at all.While the company cannot predict what elective surgery capacity levels will be at any given time, the company has seen that most elective surgeries that were cancelled due to covid-19 were rescheduled for another date once elective surgeries were allowed to resume and some were shifted out of hospitals into surgery centers. This is due to the patient scheduling a surgery due to severe back pain, which disables the patient from normal activities and doesn’t improve unless a procedure is performed.About Aurora SpineAurora Spine is focused on bringing new solutions to the spinal implant market through a series of innovative, minimally invasive, regenerative spinal implant technologies.Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.Forward-Looking StatementsThis news release contains forward-looking information that involves substantial known and unknown risks and uncertainties, most of which are beyond the control of Aurora Spine, including, without limitation, those listed under “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Information” in Aurora Spine’s final prospectus (collectively, “forward-looking information”). Forward-looking information in this news release includes information concerning the proposed use and success of the company’s products in surgical procedures. Aurora Spine cautions investors of Aurora Spine’s securities about important factors that could cause Aurora Spine’s actual results to differ materially from those projected in any forward-looking statements included in this news release. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and may be forward-looking and may involve estimates, assumptions and uncertainties which could cause actual results or outcomes to differ unilaterally from those expressed in such forward-looking statements. No assurance can be given that the expectations set out herein will prove to be correct and, accordingly, prospective investors should not place undue reliance on these forward-looking statements. These statements speak only as of the date of this press release and Aurora Spine does not assume any obligation to update or revise them to reflect new events or circumstances.Contact:Aurora Spine CorporationTrent Northcutt
President and Chief Executive Officer
(760) 424-2004Chad Clouse
Chief Financial Officer
(760) 424-2004
www.aurora-spine.comAdam Lowensteiner
LYTHAM PARTNERS, LLC
Phoenix | New York
Telephone: 646-829-9700
arosf@lythampartners.com
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