Full Press Release Details
Achieves Record Revenue and Product Sales Growth in 2018
was $22.5 million, with 2018 Product Sales surpassing $20M for the first time, representing 51% growth over 2017
MONMOUTH JUNCTION, N.J., March 7, 2019
- CytoSorbents Corporation (NASDAQ: CTSO) a
critical care immunotherapy leader commercializing its CytoSorb
blood purification technology to treat deadly inflammation in critically-ill and cardiac surgery patients around the world, achieves
record total revenue, CytoSorb sales, and product gross margins in 2018.
2018 Financial Highlights:
2018 and Recent Operational Highlights:
Dr. Phillip Chan, Chief Executive Officer
of CytoSorbents stated, "As highlighted in our January 7, 2019 stockholder letter, we had an outstanding 2018, with record
total revenue and product gross margins, and surpassed $20M in annual sales of CytoSorb for the first time. Although our progress
has been exciting, we believe there is a significant multi-year global growth story ahead of us, targeting the overall opportunity
in critical care and cardiac surgery. We see this daily, with so many new and different successful applications where CytoSorb
has been credited with helping to improve clinical outcomes in patients with major illnesses such as sepsis, shock, trauma, lung
injury, pancreatitis, endocarditits, and post-operative inflammation, with important new applications in the near future such as
acute liver disease, cytokine release syndrome in cancer immunotherapy, and many others."
Dr. Chan continued, "We believe
we have achieved a critical mass of revenue and gross margins, where faster top-line growth is expected to eventually generate
free cash flow, enabling further investments to accelerate even faster growth and driving greater value. Because of this, we are
making very calculated investments in our infrastructure and in clinical studies, with the goal of driving sales growth and GAAP
(generally accepted accounting principles) profitability. One of these investments was the expansion
of our direct sales efforts to 5 additional countries, including Poland, Sweden, Denmark, Norway, and the Netherlands.
We are fully staffed in these countries, with the exception of Poland, which will start with a full sales team in April of this
year. We believe these are countries that collectively serve a population similar in size to our major market Germany, ones that
we can easily support due to their geographic proximity to our direct sales territories, while leveraging our expertise in selling
direct and benefitting from significantly higher direct sale gross margins. We are very excited about the opportunities in front
of us, as we believe we are in the right place, with the right product, at the right time."
"We invite you to join us on our
earnings conference call, details below."
Conference Call Details:
Date: Thursday, March 7, 2019
Time: 4:45 PM Eastern Time
Participant Dial-In: 1-201-389-0879
Conference ID: 13687658
Live Presentation Webcast: http://public.viavid.com/index.php?id=133295
It is recommended that participants dial
in approximately 10 minutes prior to the start of the call. There will also be a simultaneous live webcast of the conference
call that can be accessed through the following audio feed link: http://public.viavid.com/index.php?id=133295
An archived recording and written transcript
of the conference call will be available under the Investor Relations section of the Company's website at http://cytosorbents.com/investor-relations/financial-results/.
Fiscal Year 2018 Financial Results:
For the year ended December 31, 2018, we
generated total revenue, which includes product revenue and grant income, of approximately $22,504,000 as compared to revenues
of approximately $15,151,000 for the year ended December 31, 2017, an increase of approximately $7,353,000, or 49%. Revenue from
product sales was approximately $20,252,000 for the year ended December 31, 2018, as compared to approximately $13,382,000 in the
year ended December 31, 2017, an increase of approximately $6,870,000 or 51%. This increase was primarily driven by increases in
both direct and distributor sales from both new customers and repeat orders from existing customers. In addition, approximately
$792,000 of this increase was due to the increase in the average Euro to U.S. dollar exchange rate for the year ended December
31, 2018 as compared to the year ended December 31, 2017.
Grant income increased by approximately
$483,000, or 27%, to approximately $2,251,000 in 2018 from $1,768,000 in 2017 as a result of increased revenue received from existing
grants and revenue received from a new grant awarded in 2018.
For the years ended December 31, 2018 and
2017, cost of revenue was approximately $7,489,000 and $5,518,000, respectively, an increase of approximately $1,971,000, or 36%.
This increase is related to an increase in product cost of revenue of approximately $1,482,000 attributable to increased sales
in 2018. Product gross margins were approximately 74% for the year ended December 31, 2018, as compared to approximately 71% for
the year ended December 31, 2017, due to a reduction in the cost of devices manufactured as a result of production efficiencies
achieved and, to a lesser extent, the impact of the increase in the exchange rate of the Euro. Grant income related expenses increased
by approximately $489,000 during the year ended December 31, 2018 as compared to the year ended December 31, 2017 due to an increase
in direct labor and other costs being deployed toward grant-funded activities during the year ended December 31, 2018 as compared
to the year ended December 31, 2017.
Gross profit was approximately $15,015,000
for the year ended December 31, 2018, an increase of approximately $5,383,000 or 56%, over gross profit of $9,632,000 in 2017.
This increase is primarily attributed to an increase in CytoSorb product sales during 2018, and, to a lesser extent, a result of
the increase in product gross margins.
Research and Development Expenses:
Our research and development costs were
approximately $7,723,000 and $3,221,000 for the years ended December 31, 2018 and 2017, respectively, an increase of approximately
$4,502,000, or 140%. This increase in research and development expenditures was due to an increase in our clinical trial costs
of approximately $4,179,000, which is primarily related to our REFRESH 2-AKI trial, an increase in non-clinical research and development
salary related costs of approximately $329,000 and an increase in new product development costs of approximately $164,000 and increases
in other non-grant related research and development costs of approximately $319,000. These increases were offset by an increase
in direct labor and other costs being deployed toward grant-funded activities of approximately $489,000, which had the effect of
decreasing the amount of our non-reimbursable research and development costs.
Legal, Financial and Other Consulting
Our legal, financial and other consulting
costs were approximately $2,002,000 and $1,339,000 for the years ended December 31, 2018 and 2017, respectively, an increase of
approximately $663,000, or 50%. This increase was due to an increase in employment agency fees of approximately $271,000 related
to the recruitment of senior level personnel, an increase in legal fees of approximately $254,000 related to certain corporate
initiatives, an increase in accounting fees of approximately $39,000 related to fees in Germany and an increase in other professional
fees of approximately $99,000.
Selling, General and Administrative
Our selling, general and administrative
expenses were approximately $20,874,000 and $14,914,000 for the years ended December 31, 2018 and 2017, respectively, an increase
of approximately $5,960,000, or 40%. The increase in selling, general, and administrative expenses was due to an increase
in non-cash stock compensation expense of approximately $1,379,000 primarily based upon achievement of the 2018 operating milestones,
increases in salaries, commissions and related costs of approximately $2,831,000 due to headcount additions, an increase in royalty
expenses of approximately $555,000 due to the increase in product sales, additional sales and marketing costs, which include advertising
and conferences of approximately $343,000, an increase in travel and entertainment costs and other expenses of approximately $453,000,
an increase in occupancy cost of approximately $237,000 related to our manufacturing facility expansion, an increase in public
relations expense of approximately $98,000 and an increase in other G&A expenses of approximately $64,000.
Interest Expense, Net:
For the year ended December 31, 2018, interest
expense, net was approximately $1,461,000, as compared to interest expense, net of approximately $749,000 for the year ended December
31, 2017. This increase in net interest expense of approximately $712,000 is directly related to the settlement of the Success
Fee with Bridge Bank in the amount of $637,000 that became due in May 2018 in accordance with the terms of the 2016 Success Fee
Letter with Bridge Bank and the additional interest related to the drawdown of the Term B Loan (as defined in the Loan and Security
Agreement dated June 30, 2016 with Bridge Bank) on June 30, 2017 in the amount of $5,000,000.
Gain (Loss) on Foreign Currency Transactions: