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Evolus Reports Second Quarter 2022 Results and Provides Business Update

NEWPORT BEACH, Calif.–(BUSINESS WIRE)–$EOLS–Evolus, Inc. (NASDAQ: EOLS), a performance beauty company with a customer-centric approach focused on delivering breakthrough products, today reported financial results for the second quarter ended June 30, 2022 and provided a business update.

“We are very pleased to report another record quarter that reflected above-market growth, increased market share, and disciplined operating expense management,” said David Moatazedi, President and Chief Executive Officer. “Sales for the second quarter of 2022 grew 42% to $37.2 million and our lead sales and marketing metrics demonstrated growing brand awareness and the continued strong adoption of Jeuveau®. We remain confident that Evolus can continue to grow at a faster pace than the toxin market and gain share by leveraging our unique business model focused on the cash-pay aesthetic market and targeting the millennial consumer using our cost-effective digital platform.”

Moatazedi continued, “Based on our year-to-date performance which reflects increasing momentum, our Nuceiva® launch in Europe in the third quarter, and our confidence in a resilient and fundamentally strong aesthetic neurotoxin market, Evolus is on track for another very successful year. We continue to believe we can achieve the upper end of our full-year sales guidance range of $143 to $150 million, which equates to a year-over-year growth rate approaching 50%, and expect our gross margin to step up meaningfully in the fourth quarter when our royalty payment to our largest competitor will end.”

Second Quarter 2022 Highlights and Recent Developments

Second Quarter 2022 Financial Results

Outlook

Conference Call Information

Management will host a conference call and live webcast to discuss Evolus’ financial results today at 9:00 a.m. ET. To participate in the conference call, dial (877) 407-6184 (U.S.) or (201) 389-0877 (international) or connect to the live webcast via the link on the Investor Relations page of our website at www.evolus.com.

Following the completion of the call, an audio replay can be accessed for 48 hours by dialing (877) 660-6853 (U.S.) or (201) 612-7415 (international) and using conference number 13731355. An archived webcast, which will remain available for 30 days, can also be accessed on the Investor Relations page of our website at www.evolus.com.

About Evolus, Inc.

Evolus (Nasdaq: EOLS) is a performance beauty company evolving the aesthetic neurotoxin market for the next generation of beauty consumers through its unique, customer-centric business model and innovative digital platform. Our mission is to become a global, multi-product aesthetics company based on our flagship product, Jeuveau® (prabotulinumtoxinA-xvfs), the first and only neurotoxin dedicated exclusively to aesthetics and manufactured in a state-of-the-art facility using Hi-Pure™ technology. Visit us at www.evolus.com, and follow us on LinkedIn, Twitter, Instagram or Facebook.

Forward-Looking Statements

This press release contains forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties, including statements based on our current expectations, assumptions, estimates and projections about future events, our business, financial condition, results of operations and prospects, our industry and the regulatory environment in which we operate. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or the negative of those terms, or other comparable terms intended to identify statements about the future. The company’s forward-looking statements include, but are not limited to, statements related to the company’s financial outlook for 2022, expectations regarding the company’s cash position and expectations regarding share growth, market conditions, international product launches and our ongoing clinical trial.

The forward-looking statements included herein are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the forward-looking statements. These risks and uncertainties, all of which are difficult or impossible to predict accurately and many of which are beyond our control, include, but are not limited to uncertainties associated with our ability to comply with the terms and conditions in the Allergan/Medytox Settlement Agreements, our ability to fund our future operations or obtain financing to fund our operations, the continued impact of COVID-19 or other outbreaks of contagious diseases on our business, unfavorable global economic conditions and the impact on consumer discretionary spending, uncertainties related to customer and consumer adoption of Jeuveau®, the efficiency and operability of our digital platform, competition and market dynamics, our ability to successfully launch and commercialize our products in new markets, our ability to maintain regulatory approvals of Jeuveau® or obtain regulatory approvals for new product candidates or indications and other risks described in our filings with the Securities and Exchange Commission, including in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the Securities and Exchange Commission on March 3, 2022. These filings can be accessed online at www.sec.gov. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Except as required by law, we undertake no obligation to update or revise any forward-looking statements to reflect new information, changed circumstances or unanticipated events. If we do update or revise one or more of these statements, investors and others should not conclude that we will make additional updates or corrections.

Use of Non-GAAP Financial Measures

Evolus’ financial results are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). This press release and the reconciliation tables included in the financial schedules below include adjusted gross profit, adjusted gross profit margin, non-GAAP operating expenses and non-GAAP loss from operations. Adjusted gross profit is calculated as gross profit excluding amortization of an intangible asset and, as applicable, the one-time settlement payment from Daewoong. Adjusted gross profit margin is defined as adjusted gross profit as a percentage of total net revenues. Non-GAAP operating expenses and non-GAAP loss from operations exclude (i) product cost of sales, in the case of non-GAAP operating expenses only, (ii) in-process research and development, (iii) one-time settlement payment from Daewoong, (iv) the revaluation of contingent royalty obligations, (v) stock-based compensation expense, and (vi) depreciation and amortization. Beginning in the fourth quarter of 2021, Evolus began excluding product cost of sales from its presentation of non-GAAP operating expenses; prior period amounts have been revised to conform to the current presentation. Management believes that adjusted gross profit margin is an important measure for investors because management uses adjusted gross profit margin as a key performance indicator to evaluate the profitability of sales without giving effect to costs that are not core to our cost of sales, such as the settlement payment from Daewoong, and the amortization of an intangible asset. Management believes that non-GAAP operating expenses and non-GAAP loss from operations are useful in helping to identify the company’s core operating performance and enables management to consistently analyze the period-to-period financial performance of the core business operations. Management also believes that non-GAAP operating expenses and non-GAAP loss from operations will enable investors to assess the company in the same way that management has historically assessed the company’s operating expenses against comparable companies with conventional accounting methodologies. The company’s definitions of adjusted gross profit, adjusted gross profit margin, non-GAAP operating expenses and non-GAAP loss from operations have limitations as analytical tools and may differ from other companies reporting similarly named measures. Non-GAAP measures should not be considered measures of financial performance under GAAP, and the items excluded from such non-GAAP measures should not be considered in isolation or as alternatives to financial statement data presented in the financial statements as an indicator of financial performance or liquidity. Non-GAAP measures should be considered in addition to results prepared in accordance with GAAP but should not be considered a substitute for or superior to GAAP results.

For a reconciliation of our historical adjusted gross profit margin, non-GAAP operating expenses and non-GAAP loss from operations presented herein to gross profit margin, GAAP operating expenses and GAAP loss from operations, the most directly comparable GAAP financial measures, please see “Reconciliation of Gross Profit Margin to Adjusted Gross Profit Margin,” “Reconciliation of GAAP Operating Expenses to Non-GAAP Operating Expenses” and “Reconciliation of GAAP (Loss) from Operations to Non-GAAP (Loss) from Operations” in the financial schedules below. In addition, this press release includes information regarding the company’s expected adjusted gross profit margin and non-GAAP operating expenses for full year 2022. Evolus has not provided a reconciliation of such forward-looking non-GAAP adjusted gross profit margin or non-GAAP operating expenses because a reconciliation of such measures to GAAP gross profit margin and GAAP operating expenses, respectively, the most directly comparable GAAP financial measures, is not available without unreasonable efforts. This is due to the inherent difficulty of forecasting the timing or amount of various reconciling items that would impact the forward-looking adjusted gross profit margin and non-GAAP operating expenses outlook that have not yet occurred and/or cannot be reasonably predicted. Such unavailable information could have a significant impact on Evolus’ GAAP financial results.

Jeuveau® and Nuceiva® are registered trademarks of Evolus, Inc.

Hi-Pure is a trademark of Daewoong Pharmaceutical Co, Ltd.

1 Represents cumulative statistics from the launch of Jeuveau® in May 2019 through June 30, 2022.

Evolus, Inc.

Consolidated Statements of Operations and Comprehensive Loss

(Unaudited, in thousands, except loss per share data)

 

 

Three Months Ended
June 30,

 

Six Months Ended

June 30,

 

2022

 

2021

 

2022

 

2021

Revenue:

 

 

 

 

 

 

 

Product revenue, net

$

37,163

 

 

$

25,396

 

 

$

70,389

 

 

$

37,637

 

Service revenue

 

 

 

 

702

 

 

 

682

 

 

 

702

 

Total net revenues

 

37,163

 

 

 

26,098

 

 

 

71,071

 

 

 

38,339

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Product cost of sales (excludes amortization of intangible assets)

 

15,819

 

 

 

11,302

 

 

 

29,027

 

 

 

16,210

 

Settlement payment from Daewoong

 

 

 

 

 

 

 

 

 

 

(25,500

)

Selling, general and administrative

 

36,875

 

 

 

26,463

 

 

 

70,317

 

 

 

47,128

 

Research and development

 

1,550

 

 

 

499

 

 

 

2,018

 

 

 

1,340

 

In-process research and development

 

2,000

 

 

 

 

 

 

2,000

 

 

 

 

Revaluation of contingent royalty obligation payable to Evolus Founders

 

1,414

 

 

 

1,381

 

 

 

2,730

 

 

 

2,649

 

Depreciation and amortization

 

853

 

 

 

1,746

 

 

 

1,775

 

 

 

3,779

 

Total operating expenses

 

58,511

 

 

 

41,391

 

 

 

107,867

 

 

 

45,606

 

Loss from operations

 

(21,348

)

 

 

(15,293

)

 

 

(36,796

)

 

 

(7,267

)

Other income (expense):

 

 

 

 

 

 

 

Interest income

 

4

 

 

 

1

 

 

 

4

 

 

 

1

 

Interest expense

 

(2,075

)

 

 

(300

)

 

 

(4,123

)

 

 

(945

)

Loss from extinguishment of debts, net

 

 

 

 

 

 

 

 

 

 

(968

)

Other expense, net

 

(24

)

 

 

 

 

 

(31

)

 

 

 

Loss before income taxes:

 

(23,443

)

 

 

(15,592

)

 

 

(40,946

)

 

 

(9,179

)

Income tax expense

 

28

 

 

 

9

 

 

 

26

 

 

 

21

 

Net loss

$

(23,471

)

 

$

(15,601

)

 

$

(40,972

)

 

$

(9,200

)

Other comprehensive gain (loss):

 

 

 

 

 

 

 

Unrealized gain (loss)

 

(62

)

 

 

 

 

 

(165

)

 

 

 

Comprehensive loss

$

(23,533

)

 

$

(15,601

)

 

$

(41,137

)

 

$

(9,200

)

Net loss per share, basic and diluted

$

(0.42

)

 

$

(0.31

)

 

$

(0.73

)

 

$

(0.21

)

Weighted-average shares outstanding used to compute basic and diluted net loss per share

 

56,080

 

 

 

51,150

 

 

 

55,906

 

 

 

44,164

 

Evolus, Inc.

Summary of Consolidated Balance Sheet Data

(Unaudited, in thousands)

 

 

June 30, 2022

 

December 31, 2021

Cash and cash equivalents

$

84,484

 

$

146,256

Accounts receivable, net

 

21,026

 

 

14,657

Inventories

 

12,289

 

 

1,762

Prepaid expenses and other current assets

 

16,148

 

 

16,124

Total current assets

 

133,947

 

 

178,799

Noncurrent assets

 

76,972

 

 

78,684

Total assets

$

210,919

 

$

257,483

Accounts payable and accrued expenses

 

39,023

 

 

36,084

Accrued litigation settlement

 

5,000

 

 

15,000

Other current liabilities

 

7,508

 

 

6,579

Total current liabilities

 

51,531

 

 

57,663

Accrued litigation settlement

 

 

 

5,000

Term loan, net of discount and issuance costs

 

71,545

 

 

71,222

Other noncurrent liabilities

 

40,982

 

 

41,722

Total liabilities

$

164,058

 

$

175,607

Total stockholders’ equity

$

46,861

 

$

81,876

Evolus, Inc.

Summary of Consolidated Cash Flows

(Unaudited, in thousands)

 

 

 

Six Months Ended June 30,

 

2022

 

2021

Net cash (used in) provided by:

 

 

 

Operating activities

$

(59,087

)

*

$

7,781

Investing activities

 

(649

)

 

 

4,399

Financing activities

 

(1,871

)

 

 

16,995

Effect of exchange rates on cash

 

(165

)

 

 

Change in cash and cash equivalents

 

(61,772

)

 

 

29,175

Cash and cash equivalents, beginning of period

 

146,256

 

 

 

102,562

Cash and cash equivalents, end of period

$

84,484

 

 

$

131,737

*includes a settlement payment of $15.0 million to Allergan/Medytox.

Evolus, Inc.

Reconciliation of Gross Profit Margin to Adjusted Gross Profit Margin

(Unaudited, in thousands)

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

2022

 

2021

 

2022

 

2021

Total net revenues

$

37,163

 

 

$

26,098

 

 

$

71,071

 

 

$

38,339

 

Cost of sales:

 

 

 

 

 

 

 

Product cost of sales (excludes amortization of intangible assets)

 

15,819

 

 

 

11,302

 

 

 

29,027

 

 

 

16,210

 

Settlement payment from Daewoong

 

 

 

 

 

 

 

 

 

 

(25,500

)

Amortization of distribution right intangible asset

 

739

 

 

 

739

 

 

 

1,478

 

 

 

1,462

 

Total cost of sales

 

16,558

 

 

 

12,041

 

 

 

30,505

 

 

 

(7,828

)

Gross profit

 

20,605

 

 

 

14,057

 

 

 

40,566

 

 

 

46,167

 

Gross profit margin

 

55.4

%

 

 

53.9

%

 

 

57.1

%

 

 

120.4

%

Add: Settlement payment from Daewoong

 

 

 

 

 

 

 

 

 

 

(25,500

)

Add: Amortization of distribution right intangible asset

 

739

 

 

 

739

 

 

 

1,478

 

 

 

1,462

 

Adjusted gross profit

$

21,344

 

 

$

14,796

 

 

$

42,044

 

 

$

22,129

 

Adjusted gross profit margin

 

57.4

%

56.7

%

 

59.2

%

 

57.7

%

Evolus, Inc.

Reconciliation of GAAP Operating Expenses to

Non-GAAP Operating Expenses

(Unaudited, in thousands)

 

 

Three Months Ended

June 30,

 

Six Months Ended
June 30,

 

2022

2021

 

2022

 

2021

GAAP operating expense

$

58,511

 

$

41,391

 

$

107,867

 

$

45,606

 

Adjustments:

 

 

 

 

 

 

 

Product cost of sales (excludes amortization of intangible assets)

 

15,819

 

 

11,302

 

 

29,027

 

 

16,210

 

Settlement payment from Daewoong

 

 

 

 

 

 

 

(25,500

)

In-process research and development

 

2,000

 

 

 

 

2,000

 

 

 

Revaluation of contingent royalty obligation

 

1,414

 

 

1,381

 

 

2,730

 

 

2,649

 

Stock-based compensation:

 

 

 

 

 

 

 

Included in selling, general and administrative

 

2,924

 

 

2,810

 

 

5,838

 

 

4,385

 

Included in research and development

 

55

 

 

52

 

 

100

 

 

66

 

Depreciation and amortization

 

853

 

 

1,746

 

 

1,775

 

 

3,779

 

Non-GAAP operating expense

$

35,446

 

$

24,100

 

$

66,397

 

$

44,017

 

Evolus, Inc.

Reconciliation of GAAP (Loss) from Operations to

Non-GAAP (Loss) from Operations

(Unaudited, in thousands)

 

 

Three Months Ended

June 30,

 

Six Months Ended
June 30,

 

2022

 

2021

 

2022

 

2021

GAAP (loss) from operations

$

(21,348

)

 

$

(15,293

)

 

$

(36,796

)

 

$

(7,267

)

Adjustments:

 

 

 

 

 

 

 

Settlement payment from Daewoong

 

 

 

 

 

 

 

 

 

 

(25,500

)

Revaluation of contingent royalty obligation

 

1,414

 

 

 

1,381

 

 

 

2,730

 

 

 

2,649

 

In-process research and development

 

2,000

 

 

 

 

 

 

2,000

 

 

 

 

Stock-based compensation:

 

 

 

 

 

 

 

Included in selling, general and administrative

 

2,924

 

 

 

2,810

 

 

 

5,838

 

 

 

4,385

 

Included in research and development

 

55

 

 

 

52

 

 

 

100

 

 

 

66

 

Depreciation and amortization

 

853

 

 

 

1,746

 

 

 

1,775

 

 

 

3,779

 

Non-GAAP (loss) from operations

$

(14,102

)

 

$

(9,304

)

 

$

(24,353

)

 

$

(21,888

)

 

Contacts

David K. Erickson, Evolus, Inc.

Vice President, Investor Relations

Tel: 949-966-1798

Email: david.erickson@evolus.com

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