Fuse Medical, Inc. Announces Third Quarter 2022 Financial Results

RICHARDSON, Texas--()--Fuse Medical, Inc. (OTCPINK: FZMD) (“Fuse” or the “Company”) an emerging manufacturer and distributor of innovative medical devices for the orthopedic and spine marketplace, announced for its third quarter ended September 30, 2022 and that it has filed its quarterly report on Form 10-Q for the quarter ended September 30, 2022 with the Securities and Exchange Commission (“SEC”) on November 14, 2022.

Third Quarter 2022 Financial Highlights

  • Net revenues for the quarter ended September 30, 2022 were $4.5 million, compared to $4.2 million for the quarter ended September 30, 2021 which was an increase of approximately 7%.
  • For the quarter ended September 30, 2022, gross profit was $3 million, or 67% of revenues, compared to $2.3 million, or 56% of revenues, for the quarter ended September 30, 2021 which was an increase of 11%.
  • Selling, general, administrative, and other expenses (“SG&A”) for the quarter ended September 30, 2022 was approximately $1.7 million compared to $1.5 million for the quarter ended September 30, 2021.
  • Commissions expense for the quarter ended September 30, 2022 decreased to $1.2 million from $1.4 million for the quarter ended September 30, 2021, a decrease of approximately $276,409.
  • For the quarter ended September 30, 2022, net loss was $9,376 compared to $697,036 for the quarter ended September 30, 2021, reflecting a reduction in our net loss of $687,660 or approximately 99%.
  • For the quarter ended September 30, 2022, Adjusted EBITDA was $131,241 compared to Adjusted EBITDA loss of $630,549 for the quarter ended September 30, 2021, reflecting a reduction in our Adjusted EBITDA loss of $761,790 or approximately 121%.

Christopher C. Reeg, Chief Executive Officer of Fuse Medical, commented, “We are pleased with our third quarter performance, as highlighted by a 7% increase in revenue, an 11% increase in gross profit, and a 121% increase in EBITDA over the prior-year period. Our implementation and achievement of strategic initiatives, which includes increasing our portfolio of Fuse branded and manufactured products, is evidenced by the third quarter initial launch of the Fuse PSS Pedicle Screw System with minimally invasive options, and reflected in our third quarter results.”

Mr. Reeg further added, “Our growth for the remainder of 2022, and into 2023 is focused on continued design and development of unique medical devices for commercialization, new product launches in the orthopedics and spine marketplace, investing in our direct sales force, and expansion of our national distribution footprint. We expect the execution of these strategic initiatives to drive growth in the near term, while increasing our visibility as an emerging manufacturer of relevant medical devices.”

About Fuse Medical, Inc.

Fuse is an emerging manufacturer and distributor of innovative medical devices for the orthopedic and spine marketplace. We provide a comprehensive portfolio of products in the orthopedic total joints, sports medicine, trauma, foot and ankle space, as well as, degenerative and deformity spine, osteobiologics, wound care, and regenerative products. For more information about the Company, or if you’re interested in becoming a distributor of any Fuse’s products, please contact us at info@fusemedical.com or visit: www.fusemedical.com.

Forward Looking Statements

Certain statements in this press release, constitute “forward-looking statements” within the meaning of the federal securities laws. Words such as “may,” “might,” “will,” “should,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” “predict,” “forecast,” “project,” “plan,” “intend,” or similar expressions or statements regarding intent, belief, or current expectations, are forward-looking statements. While the Company believes these forward-looking statements are reasonable, undue reliance should not be placed on any such forward-looking statements, which are based only on information available to the Company as of the date of this release. These forward-looking statements are based upon current estimates and assumptions and are subject to various risks and uncertainties, including, without limitation, those set forth in the Company’s filings with the Securities and Exchange Commission; the failure of the Company to close the transaction; and integration issues with the consolidated company. Thus, actual results could be materially different. The Company expressly disclaims any obligation to update or alter statements whether as a result of new information, future events, or otherwise, except as required by law.

Note Regarding Use of Non-GAAP Financial Measurements:

The financial data contained in this press release includes certain non-GAAP financial measures as defined by the Securities and Exchange Commission ("SEC"), including "Adjusted EBITDA". The Company is presenting Adjusted EBITDA because it believes that it provides useful information to investors about Fuse, its business and its financial condition. The Company defines Adjusted EBITDA as net income or loss from continuing operations before the effects of interest expense, taxes, depreciation and amortization, and excludes certain non-recurring and non-cash items. The Company believes Adjusted EBITDA is useful to investors because it is one of the measures used by the Company's Board of Directors and management to evaluate its business, including in internal management reporting, budgeting and forecasting processes, in comparing operating results across the business, as an internal profitability measure, as a component in evaluating the ability and the desirability of making capital expenditures and significant acquisitions, and as an element in determining executive compensation.

However, Adjusted EBITDA is not a measure of financial performance under generally accepted accounting principles in the United States of America ("GAAP"), and the items excluded from Adjusted EBITDA are significant components in understanding and assessing financial performance. Therefore, Adjusted EBITDA should not be considered a substitute for net income (loss) or cash flows from operating, investing, or financing activities. Because Adjusted EBITDA is calculated before recurring cash charges including interest expense and taxes, and is not adjusted for capital expenditures or other recurring cash requirements of the business, it should not be considered as a measure of discretionary cash available to invest in the growth of the business. There are a number of material limitations to the use of Adjusted EBITDA as an analytical tool, including the following:

  • Adjusted EBITDA does not reflect the Company's interest expense;
  • Adjusted EBITDA does not reflect the Company's tax expense or the cash requirements to pay its taxes; and
  • Although depreciation and amortization are non-cash expenses in the period recorded, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect the cash requirements for such replacement.

The Company compensates for these limitations by relying primarily on its GAAP financial measures and by using Adjusted EBITDA only as supplemental information. The Company believes that consideration of Adjusted EBITDA, together with a careful review of its GAAP financial measures, is the most informed method of analyzing Fuse Medical, Inc.

The Company reconciles Adjusted EBITDA to net income, and that reconciliation is set forth below. Because Adjusted EBITDA is not a measurement determined in accordance with GAAP and is susceptible to varying calculations, Adjusted EBITDA, as presented, may not be comparable to other similarly titled measures of other companies. Revenues and expenses are measured in accordance with the policies and procedures described in the Company's Annual Report on Form 10-K for the year ended December 31, 2021.

FUSE MEDICAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in dollars, except share data)

 

 

 

September 30,

2022

 

 

December 31,

2021

 

 

 

(Unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash

 

$

505,989

 

 

$

553,190

 

Accounts receivable, net of allowance of $392,135 and $498,261, respectively

 

 

2,625,949

 

 

 

3,528,992

 

Inventories

 

 

9,850,682

 

 

 

8,736,474

 

Prepaid expenses and other current assets

 

 

33,712

 

 

 

5,921

 

Total current assets

 

 

13,016,332

 

 

 

12,824,577

 

Property and equipment, net

 

 

399,948

 

 

 

7,251

 

Long term accounts receivable, net of allowance of $3,937,568 and $3,355,391, respectively

 

 

2,570,554

 

 

 

2,182,437

 

Intangible assets, net

 

 

1,223,695

 

 

 

1,317,341

 

Goodwill

 

 

1,972,886

 

 

 

1,972,886

 

Total assets

 

$

19,183,415

 

 

$

18,304,492

 

Liabilities and Stockholders' Equity (Accumulated Deficit)

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

4,822,278

 

 

$

4,461,641

 

Accrued expenses

 

 

4,244,400

 

 

 

2,898,068

 

Convertible notes payable - related parties

 

 

150,000

 

 

 

150,000

 

Notes payable - related parties

 

 

200,000

 

 

 

200,000

 

Senior secured revolving credit facility

 

 

2,044,606

 

 

 

2,432,770

 

Total current liabilities

 

 

11,461,284

 

 

 

10,142,479

 

Earn-out liability

 

 

11,593,832

 

 

 

11,593,832

 

Total liabilities

 

 

23,055,116

 

 

 

21,736,311

 

Commitments and contingencies

 

 

-

 

 

 

-

 

Stockholders' equity (accumulated deficit)

 

 

 

 

 

 

 

 

Preferred stock, $0.01 par value; 20,000,000 shares authorized, no shares issued and

outstanding

 

 

-

 

 

 

-

 

Common stock, $0.01 par value; 100,000,000 shares authorized, 72,895,793 shares issued and outstanding as of June 30, 2022 and December 31, 2021.

 

 

728,958

 

 

 

728,958

 

Additional paid-in capital

 

 

1,476,516

 

 

 

1,455,422

 

Accumulated deficit

 

 

(6,077,175

)

 

 

(5,616,199

)

Total stockholders' equity (accumulated deficit)

 

 

(3,871,701

)

 

 

(3,431,819

)

Total liabilities and stockholders' equity (accumulated deficit)

 

$

19,183,415

 

 

$

18,304,492

 

FUSE MEDICAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in dollars, except share data)

 

 

For the Three Months Ended

September 30,

 

 

For the Nine Months Ended

September 30,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net revenues

$

4,536,595

 

 

$

4,250,554

 

 

$

13,759,223

 

 

$

14,356,328

 

Cost of revenues

 

1,481,648

 

 

 

1,861,620

 

 

 

4,830,480

 

 

 

5,935,093

 

Gross profit

 

3,054,947

 

 

 

2,388,934

 

 

 

8,928,743

 

 

 

8,421,235

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general, administrative and other

 

1,708,543

 

 

 

1,559,708

 

 

 

4,840,852

 

 

 

5,016,594

 

Commissions

 

1,219,311

 

 

 

1,495,720

 

 

 

4,188,841

 

 

 

4,894,845

 

Depreciation and amortization

 

82,199

 

 

 

14,493

 

 

 

226,243

 

 

 

46,751

 

Total operating expenses

 

3,010,053

 

 

 

3,069,921

 

 

 

9,255,936

 

 

 

9,958,190

 

Operating loss

 

44,894

 

 

 

(680,987

)

 

 

(327,193

)

 

 

(1,536,955

)

Other (income) expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

46,992

 

 

 

12,512

 

 

 

116,477

 

 

 

47,561

 

Gain on Payroll Protection Loan extinguishment

 

-

 

 

 

-

 

 

 

-

 

 

 

(361,400

)

Total other (income) expense

 

46,992

 

 

 

12,512

 

 

 

116,477

 

 

 

(313,839

)

Net loss before income tax

 

(2,098

)

 

 

(693,499

)

 

 

(443,670

)

 

 

(1,223,116

)

Income tax expense

 

7,278

 

 

 

3,537

 

 

 

17,305

 

 

 

12,723

 

Net loss

$

(9,376

)

 

$

(697,036

)

 

$

(460,975

)

 

$

(1,235,839

)

Net loss per common share - basic

$

(0.00

)

 

$

(0.01

)

 

$

(0.01

)

 

$

(0.02

)

Weighted average number of common shares outstanding - basic

 

70,321,566

 

 

 

70,221,566

 

 

 

70,321,566

 

 

 

70,221,566

 

Supplemental Non-GAAP Disclosure

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(unaudited)

 

 

 

 

 

 

Three Months Ended

September 30,

 

 

For the Nine Months Ended

September 30,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss)

$

(9,376

)

 

$

(697,036

)

 

$

(460,975

)

 

$

(1,235,839

)

Add (Deduct):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense (benefit)

 

7,278

 

 

 

3,537

 

 

 

17,305

 

 

 

12,723

 

Interest expense

 

46,992

 

 

 

12,512

 

 

 

116,477

 

 

 

47,561

 

Depreciation and amortization

 

82,199

 

 

 

14,493

 

 

 

226,243

 

 

 

46,751

 

EBITDA

 

127,093

 

 

 

(666,494

)

 

 

(100,950

)

 

 

(1,128,804

)

Non-cash stock-based compensation expense

 

4,148

 

 

 

35,945

 

 

 

21,094

 

 

 

221,968

 

Gain on Payroll Protection Program Loan extinguishment

 

-

 

 

 

-

 

 

 

-

 

 

 

(361,400

)

Adjusted EBITDA

$

131,241

 

 

$

(630,549

)

 

$

(79,856

)

 

$

(1,268,236

)

FUSE MEDICAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 

 

 

For the Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(460,976

)

 

$

(1,235,839

)

Adjustments to reconcile net loss to net cash provided by operating

activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

226,243

 

 

 

46,751

 

Stock based compensation

 

 

21,094

 

 

 

221,968

 

Provision for bad debts and discounts

 

 

(106,127

)

 

 

95,889

 

Provision for long term accounts receivable

 

 

582,175

 

 

 

578,503

 

Provision for slow moving inventory

 

 

(220,608

)

 

 

(486,611

)

Gain on Payroll Protection Program Loan extinguishment

 

 

-

 

 

 

(361,400

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

1,009,170

 

 

 

1,872,936

 

Inventories

 

 

(893,600

)

 

 

(1,099,828

)

Prepaid expenses and other current assets

 

 

(27,791

)

 

 

(42,258

)

Long term accounts receivable

 

 

(970,292

)

 

 

(984,058

)

Accounts payable

 

 

360,637

 

 

 

1,172,261

 

Accrued expenses

 

 

1,346,332

 

 

 

453,165

 

Net cash provided by operating activities

 

 

866,257

 

 

 

231,479

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(520,794

)

 

 

-

 

Net cash (used in) investing activities

 

 

(520,794

)

 

 

-

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

Net payments on CNH senior secured revolving credit facility

 

 

(392,664

)

 

 

-

 

Payments from Economic Injury Disaster Loan, net

 

 

-

 

 

 

(3,655

)

Proceeds on Economic Injury Disaster Loan

 

 

-

 

 

 

350,000

 

Net cash (used in) financing activities

 

 

(392,664

)

 

 

346,345

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash

 

 

(47,201

)

 

 

577,824

 

Cash and cash equivalents - beginning of period

 

 

553,190

 

 

 

1,187,458

 

Cash and cash equivalents - end of period

 

$

505,989

 

 

$

1,765,282

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

94,978

 

 

$

32,091

 

 

Contacts

Fuse Medical, Inc.
Kenneth Walker, Sr. Investor Relations Analyst
Office (469) 862-3030
Facsimile (469) 862-3035
info@Fusemedical.com

Social Media Profiles

Contacts

Fuse Medical, Inc.
Kenneth Walker, Sr. Investor Relations Analyst
Office (469) 862-3030
Facsimile (469) 862-3035
info@Fusemedical.com