VAPOTHERM INC [VAPO] Filings

10-Q 1 vapo-20230630.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number: 001-38740

Vapotherm, Inc.

(Exact name of registrant as specified in its charter)


Delaware	46-2259298
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
100 Domain Drive
Exeter, N.H. (Address of principal executive offices)	03833 (Zip Code)

(603) 658-0011

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value per share	VAPO	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 3, 2023, there were 49,071,682 outstanding shares of common stock of Vapotherm, Inc.

VAPOTHERM, INC.

FORM 10-Q

For the Quarterly Period Ended June 30, 2023

TABLE OF CONTENTS


		Page No.
Note Regarding Forward-Looking Statements		3

PART I. FINANCIAL INFORMATION
Item 1	Financial Statements (interim periods unaudited)	5
	Condensed Consolidated Balance Sheets – June 30, 2023 and December 31, 2022	5
	Condensed Consolidated Statements of Comprehensive Loss – Three and Six Months ended June 30, 2023 and 2022	6
	Condensed Consolidated Statements of Stockholders’ Deficit – Three and Six Months ended June 30, 2023 and 2022	7
	Condensed Consolidated Statements of Cash Flows – Six Months ended June 30, 2023 and 2022	9
	Notes to Condensed Consolidated Financial Statements	10
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3	Quantitative and Qualitative Disclosures About Market Risk	45
Item 4	Controls and Procedures	46

PART II. OTHER INFORMATION
Item 1	Legal Proceedings	47
Item 1A	Risk Factors	47
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	48
Item 6	Exhibits	50
Exhibit Index		50
Signatures		51

__________________

We use “Vapotherm,” “High Velocity Therapy,” “HVT,” “HVT 2.0,” “Precision Flow,” “Hi-VNI,” “OAM,” “Vapotherm UK,” “Vapotherm Access,” and other marks as trademarks in the United States and/or in other countries. This Quarterly Report on Form 10-Q contains references to our trademarks and service marks and to those belonging to other entities. Solely for convenience, trademarks and trade names referred to in this Quarterly Report on Form 10-Q, including logos, artwork and other visual displays, may appear without the ® or TM symbols, but such references are not intended to indicate in any way that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other entities’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other entity.

Unless otherwise indicated, information contained in this Quarterly Report on Form 10-Q concerning our industry and the markets in which we operate, including our general expectations, market position and market opportunity, is based on our management’s estimates and research, as well as industry and general publications and research, surveys and studies conducted by third parties. We believe that the information from these third-party publications, research, surveys and studies included in this Quarterly Report on Form 10-Q is reliable. Management’s estimates are derived from publicly available information, their knowledge of our industry and their assumptions based on such information and knowledge, which we believe to be reasonable. This data involves a number of assumptions and limitations which are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2022 as filed with the Securities and Exchange Commission (“SEC”) on February 23, 2023 and in our other subsequent filings with the SEC, including this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2023.

Unless the context requires otherwise, references to “Vapotherm,” the “Company,” “we,” “us,” and “our,” refer to Vapotherm, Inc. and our consolidated subsidiaries.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “would,” “could,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” and the negative of these terms and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these words and the use of future dates. Forward-looking statements include, but are not limited to, statements concerning:

•

estimates regarding the annual total addressable market for our High Velocity Therapy systems and other products and services, future results of operations, including restructuring charges, financial position, capital requirements and our needs for additional financing;

•

commercial success and market acceptance of our High Velocity Therapy systems, our Oxygen Assist Module, our digital solutions, and any future products we may seek to commercialize;

•

our ability to enhance our High Velocity Therapy technology, our Oxygen Assist Module, and our digital solutions to expand our indications and to develop and commercialize additional products and services, which next-generation products typically have higher average sale prices;

•

our business model and strategic plans for our products, technologies and business, including our implementation thereof;

•

the anticipated favorable effect of our recent transition of substantially all manufacturing operations to Mexico on our gross margins and costs and risks in connection therewith and risks associated with operations in Mexico;

•

the success of our current “path to profitability” goals for 2023, our strategy to grow existing customer accounts through education of our customers on the full capabilities of our technology, and our ability to return to historical disposable utilization or turn rates, increase our inventory turnover and reduce our inventory levels;

•

the impact of COVID-19 and labor and hospital staffing shortages on our business and operating results;

•

our ability to accurately forecast customer demand for our products, adjust our production capacity if necessary and manage our inventory, particularly in light of COVID-19, current global supply chain disruptions, the effect of inflation, rising interest rates and other recessionary indicators;

•

our ability to manage and maintain our direct sales and marketing organizations in the United States, the United Kingdom, Germany, Belgium and Spain and any other jurisdictions in which we elect to pursue a direct sales model, and to market and sell our High Velocity Therapy systems globally and to market and sell our Oxygen Assist Module in the United States and throughout the world;

•

our ability to hire and retain our senior management and other highly qualified personnel;

•

our ability to comply with the terms and covenants of our amended credit facility;

•

our need for additional financing in the future despite our recent February 2023 private placement;

•

the volatility of the trading price of our common stock and our ability to maintain our listing on the New York Stock Exchange (the “NYSE”), including regaining compliance with the NYSE continued listing standards;

•

our ability to commercialize or obtain regulatory approvals for our products, the timing or likelihood of regulatory filings and approvals, or the effect of delays in commercializing or obtaining regulatory approvals;

•

U.S. Food and Drug Administration (“FDA”) or other United States or foreign regulatory actions affecting us or the healthcare industry generally, including healthcare reform measures in the United States and international markets;

•

our ability to establish, maintain, and use our intellectual property to protect our High Velocity Therapy technology, Oxygen Assist Module, and digital solutions, and to prevent infringement of our intellectual property and avoid third party infringement claims; and

•

our expectations about market trends and their anticipated effect on our business and operating results.

The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions and are based largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of known and unknown risks, uncertainties and assumptions, including those described in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2022 as filed with the SEC on February 23, 2023 and in our other subsequent filings with the SEC, including this Quarterly Report on Form 10-Q. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. Any forward-looking statements made herein speak only as of the date of this Quarterly Report on Form 10-Q, and you should not rely on forward-looking statements as predictions of future events. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

VAPOTHERM, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)


	June 30, 2023			December 31, 2022
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	18,000		$	15,738
Accounts receivable, net of expected credit losses of $193 and $227, respectively		8,918			9,102
Inventories, net		25,144			32,980
Prepaid expenses and other current assets		4,518			2,081
Total current assets		56,580			59,901
Property and equipment, net		24,444			26,636
Operating lease right-of-use assets		4,673			5,805
Restricted cash		1,109			1,109
Goodwill		562			536
Deferred income tax assets		128			96
Other long-term assets		2,588			2,112
Total assets	$	90,084		$	96,195
Liabilities and Stockholders’ Deficit
Current liabilities
Accounts payable	$	2,160		$	2,739
Contract liabilities		1,301			1,216
Accrued expenses and other current liabilities		11,661			15,609
Total current liabilities		15,122			19,564
Long-term loans payable, net		101,820			96,994
Other long-term liabilities		7,598			7,827
Total liabilities		124,540			124,385
Commitments and contingencies (Note 9)
Stockholders’ deficit
Preferred stock ($0.001 par value) 25,000,000 shares authorized; no shares issued and outstanding as of June 30, 2023 and December 31, 2022		-			-
Common stock ($0.001 par value) 175,000,000 shares authorized as of June 30, 2023 and December 31, 2022, 49,047,502 and 28,516,047 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively		49			29
Additional paid-in capital		488,419			461,940
Accumulated other comprehensive loss		(44	)		(157	)
Accumulated deficit		(522,880	)		(490,002	)
Total stockholders’ deficit		(34,456	)		(28,190	)
Total liabilities and stockholders’ deficit	$	90,084		$	96,195

The accompanying notes are an integral part of these condensed consolidated financial statements.

Vapotherm, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

(In thousands, except share and per share amounts)


	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Net revenue	$	16,037		$	12,971		$	33,768		$	34,593
Cost of revenue		9,177			10,606			20,696			24,336
Gross profit		6,860			2,365			13,072			10,257
Operating expenses
Research and development		3,723			6,310			7,710			11,859
Sales and marketing		8,276			11,833			17,868			25,155
General and administrative		5,019			5,323			10,789			14,277
Impairment of goodwill		-			14,701			-			14,701
Impairment of long-lived and intangible assets		-			4,036			432			4,036
(Gain) loss on disposal of property and equipment		(2	)		-			53			-
Total operating expenses		17,016			42,203			36,852			70,028
Loss from operations		(10,156	)		(39,838	)		(23,780	)		(59,771	)
Other (expense) income
Interest expense		(4,642	)		(2,849	)		(8,973	)		(4,596	)
Interest income		26			40			54			57
Foreign currency gain (loss)		9			(46	)		(145	)		(115	)
Loss on extinguishment of debt		-			-			-			(1,114	)
Net loss before income taxes	$	(14,763	)	$	(42,693	)	$	(32,844	)	$	(65,539	)
Provision (benefit) for income taxes		25			(10	)		34			82
Net loss	$	(14,788	)	$	(42,683	)	$	(32,878	)	$	(65,621	)
Other comprehensive income (loss):
Foreign currency translation adjustments		(22	)		(185	)		113			(240	)
Total other comprehensive (loss) income	$	(22	)	$	(185	)	$	113		$	(240	)
Total comprehensive loss	$	(14,810	)	$	(42,868	)	$	(32,765	)	$	(65,861	)
Net loss per share - basic and diluted	$	(0.29	)	$	(1.61	)	$	(0.72	)	$	(2.48	)
Weighted-average number of shares used in calculating net loss per share, basic and diluted		50,625,778			26,574,027			45,644,863			26,448,257

The accompanying notes are an integral part of these condensed consolidated financial statements.

VAPOTHERM, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(Unaudited)

(In thousands, except share amounts)


					Additional		Accumulated Other
	Common Stock				Paid-in		Comprehensive			Accumulated			Stockholders'
	Shares		Amount		Capital		Loss			Deficit			Deficit
Balance at December 31, 2022		28,516,047	$	29	$	461,940	$	(157	)	$	(490,002	)	$	(28,190	)
Issuance of common stock and pre-funded warrants and accompanying warrants in private placement, net		17,502,244		17		20,926		-			-			20,943
Issuance of common stock upon exercise of options		228		-		-		-			-			-
Issuance of common stock with restricted stock units		175,732		-		-		-			-			-
Issuance of common stock for services		21,687		-		59		-			-			59
Issuance of common stock warrants		-		-		28		-			-			28
Stock-based compensation expense		-		-		2,761		-			-			2,761
Foreign currency translation adjustments		-		-		-		135			-			135
Net loss		-		-		-		-			(18,090	)		(18,090	)
Balance at March 31, 2023		46,215,938	$	46	$	485,714	$	(22	)	$	(508,092	)	$	(22,354	)

Issuance of common stock upon exercise of pre-funded warrants		2,592,121		3		-		-			-			3
Issuance of common stock with restricted stock units		11,844		-		-		-			-			-
Issuance of common stock under the Employee Stock Purchase Plan		204,099		-		77		-			-			77
Issuance of common stock for services		23,500		-		58		-			-			58
Issuance of common stock warrants		-		-		43		-			-			43
Stock-based compensation expense		-		-		2,527		-			-			2,527
Foreign currency translation adjustments		-		-		-		(22	)		-			(22	)
Net loss		-		-		-		-			(14,788	)		(14,788	)
Balance at June 30, 2023		49,047,502	$	49	$	488,419	$	(44	)	$	(522,880	)	$	(34,456	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

VAPOTHERM, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

(In thousands, except share amounts)


					Additional		Accumulated Other
	Common Stock				Paid-in		Comprehensive			Accumulated			Stockholders'
	Shares		Amount		Capital		Income (Loss)			Deficit			Equity
Balance at December 31, 2021		26,126,253	$	26	$	443,358	$	26		$	(376,743	)	$	66,667
Issuance of common stock upon exercise of options		1,227		-		12		-			-			12
Issuance of common stock with restricted stock units and awards		60,488		-		10		-			-			10
Issuance of common stock for services		3,683		-		76		-			-			76
Issuance of common stock to satisfy contingent and consideration		368,168		1		5,629		-			-			5,630
Issuance of common stock warrants		-		-		1,157		-			-			1,157
Stock-based compensation expense		-		-		3,370		-			-			3,370
Foreign currency translation adjustment		-		-		-		(55	)		-			(55	)
Net loss		-		-		-		-			(22,938	)		(22,938	)
Balance at March 31, 2022		26,559,819	$	27	$	453,612	$	(29	)

VAPOTHERM INC [VAPO] Filings
10-Q	[2023-08-08]
10-Q	[2023-05-03]
10-K	[2023-02-23]
10-Q	[2022-11-02]
10-Q	[2022-08-03]
10-Q	[2022-05-04]
10-K	[2022-02-24]
10-Q	[2021-11-03]
10-Q	[2021-08-09]
10-Q	[2021-05-05]
10-K	[2021-02-24]
10-Q	[2020-11-04]
10-Q	[2020-08-04]
10-Q	[2020-05-05]
10-K	[2020-03-04]
10-Q	[2019-11-05]
S-1	[2019-07-30]
10-Q	[2019-07-29]
10-Q	[2019-05-10]
10-K	[2019-03-22]
S-1	[2018-10-19]