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VI

VAPOTHERM INC (VAPO)·Q4 2023 Earnings Summary

Executive Summary

  • Q4 2023 net revenue was $19.7M, up 5.7% year over year; gross margin expanded to 46.6% from 39.6% in Q3 and 27.5% in Q4 2022, driven by Mexico manufacturing transition and higher revenue/production levels. Adjusted EBITDA loss improved to $2.0M from $6.1M in Q3 and $12.0M in Q4 2022, reflecting cost actions under the Path to Profitability initiatives .
  • Mix and geography were bifurcated: U.S. revenue declined 5.4% while International rose 61.2%; disposables circuits sold increased 11.7% overall with strong growth internationally (+83.8%), partly offset by U.S. declines (-5.3%) .
  • FY 2023 revenue of $68.7M slightly missed Q3 guidance ($69–$71M), while FY gross margin (41.2%) and non-GAAP cash OpEx ($54.8M) delivered within (or better than) guidance; GAAP OpEx ($67.4M) came in better than guidance ($68–$70M) .
  • Unrestricted cash was $9.7M at Q4-end; management emphasized clinical validation (HYPERACT trial) and HVT 2.0 adoption as 2024/2025 catalysts (home market launch in early 2025), but noted capital needs and going-concern risks in forward-looking statements .

What Went Well and What Went Wrong

  • What Went Well

    • Gross margin expanded to 46.6% (Q4) from 27.5% (Q4’22) and 39.6% (Q3), primarily due to Mexico manufacturing transition benefits, volume, and absence of prior-year inventory charges; Adjusted EBITDA loss narrowed to $2.0M in Q4, the lowest since 2018 per management .
    • International momentum: revenue +61.2% YoY in Q4; disposables circuits sold internationally +83.8% YoY. Disposables revenue rose 10.4% YoY in Q4, and the HVT 2.0 installed base is “growing nicely” with increased disposables utilization .
    • Cost discipline: GAAP OpEx down $8.6M YoY in Q4; non-GAAP cash OpEx down $6.1M YoY. FY GAAP OpEx fell $50.3M, and non-GAAP cash OpEx fell $28.8M, reflecting Path to Profitability execution .

  • What Went Wrong

    • U.S. revenue declined 5.4% YoY in Q4; capital revenue fell 10.1% YoY. Total units sold/leased declined 15.3% YoY (United States -25.5%) in Q4, partially offset by international strength .
    • Leverage and interest burden remain high: Q4 interest expense was $4.932M; long-term loans payable increased to $107.059M; stockholders’ equity was negative ($55.334M) .
    • Sequential Q3 margin contraction (to 39.6% from 42.8% in Q2) due to capacity ramp inefficiencies at the Mexico facility ahead of respiratory season; FY revenue (68.7M) ended slightly below the Q3 guidance range ($69–$71M) .

Financial Results

MetricQ4 2022Q2 2023Q3 2023Q4 2023
Revenue ($USD Millions)$18.663 $16.037 $15.167 $19.734
Gross Margin (%)27.5% 42.8% 39.6% 46.6%
GAAP Operating Expenses ($USD Millions)$22.827 $17.016 $16.284 $14.227
Adjusted EBITDA ($USD Millions)$(12.022) $(6.381) $(6.076) $(1.974)
Net Loss per Share (EPS, $)$(6.28) $(0.29) $(2.38) $(1.60)
Cash & Equivalents ($USD Millions)$15.738 $18.000 $14.418 $9.725

Segment and Geography

Revenue Breakdown ($USD Thousands)Q4 2022Q2 2023Q3 2023Q4 2023
Capital (product & lease)$3,039 $3,646 $2,486 $2,733
Disposables$14,113 $10,927 $11,170 $15,586
Service & Other$1,511 $1,464 $1,511 $1,415
United States$15,531 $11,847 $11,231 $14,686
International$3,132 $4,190 $3,936 $5,048
Total Net Revenue$18,663 $16,037 $15,167 $19,734

KPIs

KPIQ4 2022Q2 2023Q3 2023Q4 2023
Units Sold/Leased – U.S.239 293 147 178
Units Sold/Leased – International75 146 128 88
Units Sold/Leased – Total314 439 275 266
Disposable Circuits Sold – U.S.104,302 69,323 70,420 98,749
Disposable Circuits Sold – International24,551 35,744 33,501 45,137
Disposable Circuits Sold – Total128,853 105,067 103,921 143,886
Installed Base – U.S. (end of period)24,327 24,563 24,548 24,617
Installed Base – International (end of period)12,439 12,729 12,889 12,892
Installed Base – Total (end of period)36,766 37,292 37,437 37,509

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($M)FY 2023$70–$73 $69–$71 Lowered
Gross Margin (%)FY 202343–45 (reduced from 48–50 earlier) 41–43 Lowered
GAAP Operating Expenses ($M)FY 2023$70–$72 $68–$70 Lowered
Non-GAAP Cash OpEx ($M)FY 2023$55–$57 $54–$56 Lowered
Unrestricted Cash ($M, year-end)FY 2023$10–$15 $10–$15 Maintained

Note: Actual FY 2023 results were Revenue $68.669M, Gross Margin 41.2%, GAAP OpEx $67.363M, Non-GAAP Cash OpEx $54.760M—revenue slightly below guidance, margins/OpEx within or better than guidance .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2, Q-1)Current Period (Q4 2023)Trend
Manufacturing Mexico & MarginsQ2: GM 42.8% with 780 bps QoQ improvement from Mexico transition; Q3: GM 39.6% with temporary inefficiencies from capacity ramp GM 46.6%; benefits from Mexico transition, higher volumes, and absence of prior-year inventory charges Improving
HVT 2.0 Adoption & DisposablesQ2: HVT 2.0 sales strong; U.S. disposables trends encouraging; Q3: capital +24.7% on HVT 2.0; “upper teens” non-GAAP revenue growth Installed base “growing nicely,” increased disposables utilization; disposables revenue +10.4% YoY Positive
International DemandQ2: International revenue +20.6%; Q3: +58.6% YoY +61.2% YoY; circuits sold +83.8% Strengthening
Cash Burn & CovenantsQ2: net cash burn reduced, EoQ cash $18.0M; Q3: covenant met, unrestricted cash $14.4M Unrestricted cash $9.7M; forward-looking risks include capital needs/going concern Mixed (lower liquidity, execution focus)
Clinical Evidence (HYPERACT)Q3: accepted for Jan 2024 presentation (non-inferiority vs BiPAP) Results presented Jan 23, 2024: therapy as effective as gold standard; superior patient tolerance Positive validation
FY23 Outlook RevisionsQ2: lowered revenue/GM/OpEx outlook; Q3: further lowered ranges FY actual slightly below revenue range; margins/OpEx delivered within/improved Stabilizing operational metrics

Management Commentary

  • “We made significant progress on our Path to Profitability Initiatives in 2023… our Adjusted EBITDA loss in the fourth quarter of 2023 was the lowest it’s been since 2018… HVT 2.0 installed base is growing nicely and is showing increased disposables utilization… We believe the combination of the HVT 2.0 platform with these clinical results will allow us to become the standard of care” — Joseph Army, President & CEO .
  • “We delivered a good second quarter… nearly 800 basis point sequential improvement in gross margin… significant progress in reducing cash operating expenses, inventory and cash burn” — Joseph Army (Q2) .
  • “We are pleased to deliver Non-GAAP net revenue growth in the upper teens… significant progress in reducing our cash burn… excited to share the results of the HYPERACT clinical trial” — Joseph Army (Q3) .

Q&A Highlights

  • The Q4 2023 earnings call transcript was not available in our document catalog and targeted searches returned no Vapotherm transcript for Feb–Mar 2024; Q&A highlights are therefore unavailable based on primary sources [Search attempted with earnings-call-transcript filter; no VAPO results returned in period].

Estimates Context

  • S&P Global analyst consensus estimates could not be retrieved for VAPO due to missing CIQ mapping in the SPGI dataset; as a result, comparisons to Wall Street consensus for Q4 2023 EPS and revenue are unavailable. Values would have been retrieved from S&P Global if accessible. We attempted fetching “Primary EPS Consensus Mean” and “Revenue Consensus Mean” for Q2–Q4 2023, but the call failed due to mapping absence (SpgiEstimatesError: Missing CIQ mapping for ticker ‘VAPO’) [GetEstimates error].

Key Takeaways for Investors

  • Gross margin trajectory is favorable; Q4 at 46.6% reflects structural cost progress in Mexico and volume leverage—this supports multiple expansion if sustained through seasonality .
  • International momentum and disposables strength are key growth levers; monitoring U.S. demand recovery and disposables utilization will be critical near term .
  • Liquidity remains tight (cash $9.7M) against high interest expense and ~$107M long-term debt; forward-looking risks include capital needs and going-concern language—equity/debt events are a potential overhang/catalyst .
  • Operational execution is improving: GAAP OpEx down materially; Adjusted EBITDA loss narrowed; continued discipline can bridge to break-even as HVT 2.0 adoption scales .
  • Clinical validation (HYPERACT) enhances therapy positioning vs mask-based ventilation; this may drive ED standard-of-care ambitions and disposables pull-through, supporting medium-term thesis .
  • FY revenue modestly missed lowered guidance while margins/OpEx delivered in-range—expect 2024 narrative to center on sustaining margin gains and converting installed base growth into recurring disposables .
  • Near-term trading implications: stock may react to liquidity/headline risk and any financing updates, while positive newsflow on HVT 2.0 adoption, international orders, and margin durability could offset; medium-term thesis hinges on recurring disposables growth and clinical differentiation .