CERS 8-K
Cerus Corp (CERS)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
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Trading |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
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. ☐
Item 2.02 Results of Operations and Financial Condition.
On May 4, 2023, Cerus Corporation (the “Company”) announced its financial results for its first quarter ended March 31, 2023. A copy of the Company’s press release, entitled “Cerus Corporation Announces First Quarter 2023 Financial Results,” is furnished pursuant to Item 2.02 as Exhibit 99.1 hereto.
The information in this report, including the exhibit hereto, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of Section 11 and 12(a)(2) of the Securities Act of 1933, as amended. The information contained herein and in the accompanying exhibit shall not be incorporated by reference into any filing with the U.S. Securities and Exchange Commission made by the Company, whether made before or after the date hereof, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
The following exhibit is furnished with this report:
104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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CERUS CORPORATION |
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Date: |
May 4, 2023 |
By: |
/s/ Kevin D. Green |
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Kevin D. Green |
Exhibit 99.1
Cerus Corporation Announces First Quarter 2023 Financial Results
Reiterating Full-Year 2023 Product Revenue Guidance Range of $165-170 Million
CONCORD, CA, May 4, 2023 - Cerus Corporation (Nasdaq: CERS) today announced financial results for the first quarter ended March 31, 2023.
Recent highlights include:
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Three Months Ended |
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March 31, |
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Change |
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2023 |
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2022 |
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$ |
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% |
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Product Revenue |
$ 30,974 |
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$ 37,444 |
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$ (6,470) |
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-17% |
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Government Contract Revenue |
7,502 |
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5,576 |
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1,926 |
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35% |
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Total Revenue |
$ 38,476 |
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$ 43,020 |
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$ (4,544) |
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-11% |
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“With anticipated first-quarter headwinds largely behind us as more normalized customer order patterns resume, we continue to be optimistic about our return to growth for the duration of 2023, supporting our full-year product revenue guidance of $165-170 million,” said William “Obi” Greenman, Cerus’ president and chief executive officer. “The INTERCEPT Blood System continues to be the technology of choice in the U.S. for platelet safety, and we expect to see continued adoption in other geographies this year as well.”
“We have multiple commercial milestones on tap this year, including ongoing roll-out of INTERCEPT platelets in Canada as well as regulatory progress in China via our joint venture. We remain committed to achieving adjusted EBITDA breakeven this year which, combined with our strong balance sheet and recently completed debt refinancing, would put us in a strategically strong position. Accordingly, this would allow us to reinvest cash flows into continued growth, margin expansion and scale, and new product development,” Greenman continued.
Revenue
Product revenue during the first quarter of 2023 was $31.0 million, compared to $37.4 million during the prior year period. The decrease in product revenue was driven primarily by the anticipated short-term U.S. customer inventory drawdown, discussed during the Company’s fourth-quarter 2022 call. The Company expects that this dynamic has largely played out.
First-quarter 2023 government contract revenue was $7.5 million, compared to $5.6 million during the prior year period. Reported government contract revenue in the first quarter 2023 increased versus the prior year period primarily due to funding associated with development of a lyophilized INTERCEPT Fibrinogen Complex. In addition to this funding, our government contract revenue was comprised of funding associated with research and development (R&D) activities related to the INTERCEPT Blood System for Red Blood Cells as well as efforts related to the development of next-generation pathogen reduction technology to treat whole blood.
Product Gross Profit & Margin
Product gross profit for the first quarter of 2023 was $17.3 million, down by 11% over the prior year period. Product gross margin for the first quarter of 2023 was 55.8% compared to 51.7% for the first quarter of 2022. The first quarter of 2023 represents the fifth consecutive quarter of gross margin expansion. The Company expects that a number of initiatives aimed at lowering cost of goods sold will contribute to continued margin expansion over time.
Operating Expenses
Total operating expenses for the first quarter of 2023 were $38.9 million compared to $34.8 million for the same period of the prior year, reflecting a year-over-year increase of 12%.
Selling, general, and administrative (SG&A) expenses for the first quarter of 2023 totaled $21.6 million, compared to $20.7 million for the first quarter of 2022. The year-over-year increase in SG&A expenses for the first quarter was tied to investments in field-based personnel in support of commercial growth, costs of attracting and retaining our employees, legal fees, and non-cash stock-based compensation.
R&D expenses for the first quarter of 2023 were $17.4 million, compared to $14.1 million for the first quarter of 2022. The year-over-year increase in R&D expenses in the first quarter was tied to the development of our next-generation illuminator and increased clinical research activities.
Net Loss Attributable to Cerus Corporation
Net loss attributable to Cerus Corporation for the first quarter of 2023 was $15.6 million, or $0.09 per basic and diluted share, compared to a net loss attributable to Cerus Corporation of $12.3 million, or $0.07 per basic and diluted share, for the first quarter of 2022.
Non-GAAP Adjusted EBITDA
Non-GAAP Adjusted EBITDA for the first quarter of 2023 was negative $9.8 million, compared to non-GAAP Adjusted EBITDA of negative $3.7 million for the first quarter of 2022. For additional information, please see definitions and the reconciliation of this non-GAAP measure to net loss attributable to Cerus Corporation accompanying this release.
Balance Sheet & Cash Use
At March 31, 2023, the Company had cash, cash equivalents and short-term investments of $94.7 million, compared to $102.2 million at December 31, 2022.
As of March 31, 2023, the Company had $55.0 million outstanding on its term loan and $18.0 million drawn on its revolving credit facility. The Company has access to $17 million under its revolving line of credit.
For the first quarter of 2023, net cash used in operating activities totaled $8.5 million as compared to $21.5 million during the prior year period, primarily due to the timing of cash collections and payments, offset by continued inventory related purchases.
Reiterating 2023 Product Revenue Guidance
The Company expects full-year 2023 product revenue will be in the range of $165-$170 million, underscoring a return to growth with the short-term customer inventory drawdown largely complete.
Quarterly Conference Call
The Company will host a conference call at 4:30 P.M. EDT this afternoon, during which management will discuss the Company’s financial results and provide a general business overview and outlook. To listen to the live webcast, please visit the Investor Relations page of the Cerus website at http://www.cerus.com/ir.
A replay will be available on Cerus’ website approximately three hours after the call through May 18, 2023.
ABOUT CERUS
Cerus Corporation is dedicated solely to safeguarding the world’s blood supply and aims to become the preeminent global blood products company. Headquartered in Concord, California, the company develops and supplies vital technologies and pathogen-protected blood components to blood centers, hospitals, and ultimately patients who rely on safe blood. The INTERCEPT Blood System for platelets and plasma is available globally and remains the only pathogen reduction system with both CE Mark and FDA approval for these two blood components. The INTERCEPT red blood cell system is under regulatory review in Europe, and in late-stage clinical development in the US. Also in the US, the INTERCEPT Blood System for Cryoprecipitation is approved for the production of INTERCEPT Fibrinogen Complex, a therapeutic product for the treatment and control of bleeding, including massive hemorrhage, associated with fibrinogen deficiency. For more information about Cerus, visit www.cerus.com and follow us on LinkedIn.
INTERCEPT and the INTERCEPT Blood System are trademarks of Cerus Corporation.
Forward Looking Statements
Except for the historical statements contained herein, this press release contains forward-looking statements concerning Cerus’ products, prospects and expected results, including statements relating to Cerus’ 2023 annual product revenue guidance; Cerus’ ability to return to growth for the duration of 2023; Cerus’ expectations regarding continued adoption of its products in non-US geographies in 2023; Cerus’ ability to meet commercial milestones in 2023, including the ongoing roll-out of INTERCEPT platelets in Canada and regulatory progress in China via its joint venture; Cerus’ ability to reinvest in continued growth, including margin expansion and scale and new product development; Cerus’ expectations regarding the U.S. customer inventory drawdown having been largely completed; Cerus’ expectations regarding continued margin expansion; Cerus’ access to $17 million under its revolving line of credit; and other statements that are not historical fact. Actual results could differ materially from these forward-looking statements as a result of certain factors, including, without limitation: risks associated with the commercialization and market acceptance of, and customer demand for, the INTERCEPT Blood System, including the risks that Cerus may not (a) meet its 2023 annual product revenue guidance, (b) effectively continue to launch and commercialize the INTERCEPT Blood System for Cryoprecipitation, (c) grow sales globally, including in its U.S. and European markets, and/or realize expected revenue contribution resulting from its U.S. and European market agreements, (d) realize meaningful and/or increasing revenue contributions from U.S. customers in the near term or at all, particularly since Cerus cannot guarantee the volume or timing of commercial purchases, if any, that its U.S. customers may make under Cerus’ commercial agreements with these customers, (e) effectively expand its commercialization activities into additional geographies and/or (f) realize any revenue contribution from its pipeline product candidates, whether due to Cerus’ inability to obtain regulatory approval of its pipeline programs, or otherwise; risks associated with the ultimate duration and severity of the COVID-19 pandemic and resulting global economic and financial disruptions, and the current and potential future negative impacts to Cerus’ business operations and financial results such as the current and potential additional disruptions to the U.S. and EMEA blood supply resulting from the evolving effects of the COVID-19 pandemic; risks associated with Cerus’ lack of longer-term commercialization experience with the INTERCEPT Blood System for Cryoprecipitation and in the United States generally, and its ability to develop and maintain an effective and qualified U.S.-based commercial organization, as well as the resulting uncertainty of its ability to achieve market acceptance of and otherwise successfully commercialize the INTERCEPT Blood System in the United States, including as a result of licensure requirements that must be satisfied by U.S. customers prior to their engaging in interstate transport of blood components processed using the INTERCEPT Blood System; risks related to the highly concentrated market for the INTERCEPT Blood System; risks related to how any future platelet additive solution (PAS) supply disruption could affect INTERCEPT’s acceptance in the marketplace; risks related to how any future PAS supply disruption might affect current commercial contracts; risks related to Cerus’ ability to demonstrate to the transfusion medicine community and other health care constituencies that pathogen reduction, including IFC for the treatment and control of bleeding, and the INTERCEPT Blood System is safe, effective and economical; risks related to the uncertain and time-consuming development and regulatory process, including the risks that (a) Cerus may be unable to comply with the FDA’s post-approval requirements for the INTERCEPT Blood System, including by successfully completing required post-approval
studies, which could result in a loss of U.S. marketing approval(s) for the INTERCEPT Blood System, (b) additional manufacturing site Biologics License Applications necessary for Cerus to more broadly distribute the INTERCEPT Blood System for Cryoprecipitation may not be obtained in a timely manner or at all, (c) Cerus may be unable to complete enrollment in its ReCePI and RedeS studies in a timely manner or at all, and (d) Cerus may be unable to obtain the requisite regulatory approvals to advance its pipeline programs and bring them to market in a timely manner or at all; risks related to product safety, including the risk that the septic platelet transfusions may not be avoidable with the INTERCEPT Blood System; risks related to adverse market and economic conditions, including continued or more severe adverse fluctuations in foreign exchange rates and/or continued or more severe weakening in economic conditions resulting from the evolving effects of the COVID-19 pandemic, rising interest rates, inflation or otherwise in the markets where Cerus currently sells and is anticipated to sell its products; Cerus’ reliance on third parties to market, sell, distribute and maintain its products; Cerus’ ability to maintain an effective, secure manufacturing supply chain, including the risks that (a) Cerus’ supply chain could be negatively impacted as a result of the evolving impact of macroeconomic developments, including the ongoing conflict in Ukraine and the evolving effects of the COVID-19 pandemic, (b) Cerus’ manufacturers could be unable to comply with extensive FDA and foreign regulatory agency requirements, and (c) Cerus may be unable to maintain its primary kit manufacturing agreement and its other supply agreements with its third party suppliers; Cerus’ ability to identify and obtain additional partners to manufacture the INTERCEPT Blood System for Cryoprecipitation; risks associated with Cerus’ ability to access additional funds under its revolving line of credit and to meet its debt service obligations, and its need for additional funding; the impact of legislative or regulatory healthcare reforms that may make it more difficult and costly for Cerus to produce, market and distribute its products; risks related to future opportunities and plans, including the uncertainty of Cerus’ future capital requirements and its future revenues and other financial performance and results, as well as other risks detailed in Cerus’ filings with the Securities and Exchange Commission, including under the heading “Risk Factors” in Cerus’ Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 1, 2023. Cerus disclaims any obligation or undertaking to update or revise any forward-looking statements contained in this press release.
Use of Non-GAAP Financial Measures
Cerus has presented in this release certain financial information in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and also on a non-GAAP basis, including adjusted EBITDA. We define adjusted EBITDA as net income (loss) attributable to Cerus Corporation as reported on the consolidated statement of operations, as adjusted to exclude (i) net income (loss) attributable to noncontrolling interest, (ii) provision for (benefit from) income taxes, (iii) foreign exchange (loss)/gain, (iv) interest expense, (v) other income (expense), net (vi) depreciation and amortization, (vii) share-based compensation, (viii) goodwill and asset impairments, (ix) costs associated with our noncontrolling interest in our joint venture in China, and (x) revenue and direct costs associated with our government contracts. We are presenting this non-GAAP financial measure to assist investors in assessing our operating results. Management believes this non-GAAP information is useful for investors, when considered in conjunction with Cerus’ GAAP financial statements, because management uses such information internally for its operating, budgeting and financial planning purposes. Non-GAAP information is not prepared under a comprehensive set of accounting rules and should only be used to supplement an understanding of Cerus’ operating results as reported under GAAP. These non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. These non-GAAP financial measures are not necessarily comparable to similarly-titled measures presented by other companies. A reconciliation between GAAP and non-GAAP financial information is provided immediately following the financial tables.
Contact:
Jessica Hanover – Vice President, Corporate Affairs
Cerus Corporation
925-288-6137
Supplemental Tables
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Three Months Ended |
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March 31, |
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2023 vs. 2022 |
Platelet Kit Growth |
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North America |
-28% |
International |
-5% |
Worldwide |
-21% |
Change in Calculated Number of Treatable Platelet Doses* |
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North America |
-30% |
International |
-7% |
Worldwide |
-22% |
* Dose treatable calculation based on the number of kits sold and the product configuration (single, double, and triple dose kits)
Cerus Corporation
REVENUE BY REGION
(in thousands, except percentages)
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Three Months Ended |
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March 31, |
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Change |
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2023 |
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2022 |
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$ |
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North America |
$ 16,618 |
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$ 22,198 |
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$ (5,580) |
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-25% |
Europe, Middle East and Africa |
14,028 |
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14,802 |
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(774) |
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-5% |
Other |
328 |
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444 |
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(116) |
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-26% |
Total product revenue |
$ 30,974 |
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$ 37,444 |
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$ (6,470) |
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-17% |
CERUS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share information)
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Three Months Ended |
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March 31, |
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2023 |
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2022 |
Product revenue |
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$ 30,974 |
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$ 37,444 |
Cost of product revenue |
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13,687 |
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18,076 |
Gross profit on product revenue |
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17,287 |
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19,368 |
Government contract revenue |
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7,502 |
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5,576 |
Operating expenses: |
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Research and development |
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17,384 |
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14,057 |
Selling, general and administrative |
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21,551 |
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20,735 |
Total operating expenses |
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38,935 |
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34,792 |
Loss from operations |
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(14,146) |
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(9,848) |
Total non-operating expense, net |
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(1,418) |
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(2,360) |
Loss before income taxes |
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(15,564) |
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(12,208) |
Provision for income taxes |
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77 |
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76 |
Net loss |
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(15,641) |
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(12,284) |
Net loss attributable to noncontrolling interest |
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(22) |
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— |
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Net loss attributable to Cerus Corporation |
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$ (15,619) |
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$ (12,284) |
Net loss per share attributable to Cerus Corporation: |
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Basic and diluted |
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$ (0.09) |
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$ (0.07) |
Weighted average shares outstanding: |
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Basic and diluted |
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178,273 |
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174,478 |
Cerus Corporation
Condensed Consolidated Balance Sheets
(in thousands)
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March 31, |
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December 31, |
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2023 |
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2022 |
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(unaudited) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ 27,604 |
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$ 35,585 |
Short-term investments |
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67,076 |
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66,569 |
Accounts receivable |
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25,242 |
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34,426 |
Inventories |
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36,614 |
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29,003 |
Prepaid and other current assets |
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5,680 |
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4,561 |
Total current assets |
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162,216 |
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170,144 |
Non-current assets: |
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Property and equipment, net |
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10,831 |
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10,969 |
Operating lease right-of-use assets |
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12,313 |
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12,512 |
Goodwill |
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1,316 |
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1,316 |
Restricted cash and other assets |
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22,660 |
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23,151 |
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Total assets |
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$ 209,336 |
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$ 218,092 |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable and accrued liabilities |
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$ 55,723 |
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$ 58,205 |
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Debt – current |
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18,000 |
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56,159 |
Operating lease liabilities – current |
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2,157 |
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2,105 |
Deferred product revenue – current |
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1,693 |
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589 |
Total current liabilities |
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77,573 |
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117,058 |
Non-current liabilities: |
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Debt – non-current |
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54,827 |
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13,644 |
Operating lease liabilities – non-current |
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14,960 |
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15,329 |
Other non-current liabilities |
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2,414 |
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3,499 |
Total liabilities |
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149,774 |
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149,530 |
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Stockholders' equity: |
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58,632 |
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67,610 |
Non-controlling interest |
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930 |
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952 |
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Total liabilities and stockholders' equity |
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$ 209,336 |
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$ 218,092 |
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CERUS CORPORATION
UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTED EBITDA
(in thousands)
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Three Months Ended |
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March 31, |
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2023 |
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2022 |
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Net loss attributable to Cerus Corporation |
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$ (15,619) |
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$ (12,284) |
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Adjustments to net loss attributable to Cerus Corporation: |
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Net loss attributable to noncontrolling interest |
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(22) |
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— |
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Provision for income taxes |
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77 |
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76 |
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Total non-operating expense, net (i) |
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1,418 |
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2,360 |
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Loss from operations |
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(14,146) |
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(9,848) |
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Adjustments to loss from operations: |
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Operating depreciation and amortization |
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1,006 |
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1,079 |
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Government contract revenue (ii) |
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(7,502) |
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(5,576) |
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Direct expenses attributable to government contracts (iii) |
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5,176 |
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4,258 |
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Share-based compensation (iv) |
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5,669 |
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6,426 |
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Costs attributable to noncontrolling interest (v) |
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43 |
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— |
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Non-GAAP adjusted EBITDA |
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$ (9,754) |
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$ (3,661) |
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i. Includes interest income/expense and foreign exchange gains/losses.
ii. Represents revenue related to the cost reimbursement provisions under our government contracts.
iii. Represents the direct expenses attributable to work supporting government contracts, which are reimbursed and reflect
under government contract revenue in the condensed consolidated statement of operations.
iv. Represents non-cash stock-based compensation.
v. Represents costs associated with the noncontrolling interest in Cerus Zhongbaokang (Shandong) Biomedical Co., LTD.