Full Press Release Details
Harold A. Hurwitz, Chief Financial Officer
INTERVENTIONS, INC. ANNOUNCES 2016 FOURTH QUARTER
2016 accomplishments include year-over-year increases in revenue of 25%, ClearPoint
procedures of 32% and disposable product revenue of 36%
CA, February 28, 2017 - MRI Interventions, Inc. (OTCQB: MRIC) today announced financial results for the fourth quarter and
full year ended December 31, 2016.
were very pleased with fourth quarter results, as well as our accomplishments in 2016. During the last year, we established a
solid foundation for the Company and a platform for continued growth. As we drive the adoption of our technology, we continue
to focus on adding new sites, growing procedures, and tightly managing expenses," said Frank Grillo, President and CEO of
MRI Interventions. "Real time intra-operative MRI guidance is a significant advance in neurosurgery, and we are proud to
be the leader in this field. The milestones we achieved include:
Key Accomplishments:
Quarter 2016 Key Accomplishments
will be an exciting year for the Company and our technology," Grillo continued. "Revenues are up, expenses are down,
and adoption of the ClearPoint Neuro Navigation System continues to expand."
Results - Year Ended December 31, 2016
disposable product sales for the year ended December 31, 2016 were $4.8 million, compared with $3.5 million for the year ended
December 31, 2015, representing an increase of $1.3 million, or 36%. This increase was due primarily to a greater number of procedures
in 2016, which, as previously reported, exceeded 500 procedures for the first time in the Company's history, using the ClearPoint
Neuro Navigation System.
reusable product sales in 2016 were $831,000, compared with $907,000 in 2015. Reusable products consist primarily of computer
hardware and software bearing sales prices that are appreciably higher than those for disposable products and sales volume has historically fluctuated from period to period.
revenues were $5.7 million in 2016, and $4.6 million in 2015, an increase of $1.2 million, or 25%.
margin on product revenues in 2016 was 53%, compared to gross margin of 55% in 2015. The decrease in gross margin was due primarily
to: (a) product mix differences between 2015 and 2016 in the equipment configuration of hardware and software in ClearPoint systems
sold during those respective periods; (b) an increase from 2015 to 2016 in charges to the provision for obsolete and expired product;
and (c) an increase in 2016, relative to 2015, in the allocation of indirect labor to production activities, commensurate with
the Company's transition from research and development to commercial activities. These factors were partially offset by
increases in 2016, relative to 2015, in average unit selling prices, and decreases in 2016, relative to 2015, in average unit
costs due to more favorable pricing from vendors resulting from higher order quantities.
and development costs were $2.6 million in 2016, compared to $2.0 million in 2015, an increase of $671,000, or 34%. The increase
was due primarily to increases in: (a) costs related to the Company's development of the next generation of the ClearPoint
operating system; (b) intellectual property costs; (c) professional fees and consultants; and (d) personnel costs. Partially offsetting
these factors was an increase in departmental costs allocated to production activities.
general and administrative expenses were $8.0 million in 2016, compared with $8.4 million in 2015, a decrease of $403,000, or
5%. The decrease was primarily attributable to: (a) a decrease in personnel costs; (b) an increase in the allocation of departmental
resources to production activities; (c) a decrease in medical device excise taxes, suspended by federal legislation for a two-year
period beginning January 1, 2016; and (d) a decrease in non-personnel related marketing expenses. Partially offsetting these factors
were increases in public company costs and professional fees. With respect to professional fees, in August 2016, the Company elected to
suspend efforts then underway to sell equity units through a public offering and instead commenced a private placement of equity
units that was completed in September 2016. Upon suspension of those public offering efforts, the Company capitalized certain
related legal and other costs, amounting to $459,000, in anticipation of resuming public offering efforts within an estimated
six-month time frame. In December 2016, the Company determined that a future public offering it might consider was not likely
to be commenced within this six-month time frame, and accordingly, in the fourth quarter of 2016, the Company recorded a charge
of $459,000 to general and administrative expense.
March 2015, the Company announced the consolidation of all major business functions into its Irvine, California headquarters. In connection with this consolidation, the Company closed its Memphis, Tennessee office in May 2015, and did not retain any of
its Memphis-based employees. A total of seven employees were impacted by the consolidation, including three executives. As a result, the Company incurred expense of $1.3 million primarily related to termination costs, including the modifications of option terms,
2016 and 2015, the Company recorded gains of $1.1 million and $1.5 million, respectively, resulting from changes in the fair value
of derivative liabilities. In 2016, such derivative liabilities related to: (a) the issuance of warrants in connection with 2012
and 2013 private placement transactions; and (b) amendments, in June and August 2016, of certain notes to add contingent conversion
terms and potential down round pricing protection of warrants issued in connection with such notes. In 2015, derivative liabilities
were limited to the issuance of warrants in connection with the 2012 and 2013 private placement transactions.
April 2016, the Company entered into a securities purchase agreement with Brainlab AG ("Brainlab") under which a note
payable to Brainlab in the principal amount of $4.3 million (the "Brainlab Note") was restructured and, among other
items, the Company: (i) entered into a patent and technology license agreement with Brainlab for software relating to the Company's
SmartFrame device, in consideration for the cancellation of $1.0 million of the principal amount of the Brainlab
Note; and (ii) issued to Brainlab, in consideration for the cancellation of approximately $1.3 million of the principal amount
of the Brainlab Note, equity units, consisting of shares of the Company's common stock and warrants to purchase shares of
common stock. As a result of the foregoing, the Company recorded a debt restructuring gain of $941,000 representing the difference
between (a) the aggregate fair value of the license agreement, which had no cost basis on the Company's consolidated balance
sheets, and the equity units, and (b) the aggregate principal amount of the Brainlab Note cancelled as consideration.
On June 30, 2016, the Company
entered into amendments (the "Amendments") with Brainlab, with respect to the Brainlab Note, and with two holders of
secured notes payable we executed in 2014 (the "2014 Secured Notes"). Pursuant to the Amendments, the parties agreed
that, in the event the Company closes a qualified public offering: (i) $2,000,000 of the principal balance of those notes, plus
all unpaid accrued interest on that amount, will automatically convert into the security offered in the qualified public offering;
and (ii) the exercise price for 46,207 shares of common stock underlying warrants issued in connection with those notes will be
reduced as provided in the Amendments. Based on the provisions of the Amendments, on June 30, 2016, the Company recorded a non-cash
loss of $820,000 resulting from the restructuring of the Brainlab Note and those 2014 Secured Notes.
August 31, 2016, the Company entered into second amendments with the two holders of the 2014 Secured Notes that provided, in the
event the Company closes a private equity offering, for: (a) the conversion to equity of an aggregate of $1.75 million of principal
based on the private offering price; and (b) a reduction in the exercise price for shares of common stock that may be purchased
upon exercise of warrants issued in connection with the issuance of such notes based the private offering's terms for warrant
exercise pricing. Execution of the second amendments constituted a debt extinguishment under generally accepted accounting principles,
necessitating the Company to record a non-cash loss on debt restructuring of approximately $933,000, representing the aggregate
difference in the fair value of the derivative liabilities between the points in time (i) immediately preceding, and (ii) immediately
subsequent to, the execution of the second amendments.
Results - Quarter Ended December 31, 2016
disposable product sales for the three months ended December 31, 2016 were $1.4 million, compared with $1.0 million for the same
period in 2015, representing an increase of $354,000, or 35%. This increase was due primarily to a greater number of procedures
performed using the ClearPoint Neuro Navigation System in the fourth quarter of 2016, relative to the same period in 2015.
reusable product sales for the three months ended December 31, 2016 were $224,000, and $438,000 for the same period in 2015.
revenues were $1.6 million for the three months ended December 31, 2016, and $1.5 million for the same period in 2015, an increase
margin on product revenues was 59% for the three months ended December 31, 2016, compared to 57% for the same period in 2015.
The improvement was attributable primarily to: (a) a greater portion in the fourth quarter of 2016, compared to the same period
in 2015, of revenues represented by ClearPoint disposable products, which generally have higher gross margins relative to ClearPoint
reusable products; and (b) a decrease in the fourth quarter of 2016, relative to the same period in 2015, in average unit costs
due to more favorable pricing from vendors resulting from higher order quantities; partially offset by (c) an increase in charges
to the provision for obsolete and expired product.
and development costs of $530,000 for the three months ended December 31, 2016, were substantially unchanged from $523,000 for
the same period in 2015. Decreases in the fourth quarter of 2016, relative to the same period in 2015, in personnel costs and
third-party testing costs, were offset by increases in intellectual property costs and consulting expenses.
general and administrative expenses were $2.2 million for the three months ended December 31, 2016, compared to $1.8 million in
the same period in 2015, an increase of $457,000, or 21%. This increase was due primarily to the Company's decision, in
December 2016, to write off the previously capitalized public offering costs, amounting to $459,000, discussed above.
the three months ended December 31, 2016 and 2015, the Company recorded gains of $318,000 and $559,000, respectively, from changes
in the fair value of derivative liabilities.
previously announced, on July 21, 2016, the Company's Board of Directors approved a 1-for-40 reverse stock split of its
issued common stock, which was effectuated on July 26, 2016. All disclosure of common shares and per share data in the accompanying
condensed consolidated financial statements have been adjusted retroactively to reflect the reverse stock split for all periods