SAN FRANCISCO – Tivic Health Systems, Inc. (‘Tivic Health‘, Nasdaq: TIVC), a commercial-phase health technology company that develops and commercializes bioelectronic medicine, today announced its financial results for the year ending December 31, 2022.
Year over Year Highlights
46% growth in revenue
114% growth in direct to consumer channels
9X improvement in gross marginJennifer Ernst, CEO of Tivic Health, commented, ‘We executed our 2022 strategy of increasing our direct-to-consumer sales, reducing the overall manufacturing costs of ClearUP, and seeding our product pipeline. However, supply chain shortages, market volatility and economic uncertainty left us, along with others, with challenges to overcome. With the changes we are making to improve product economics and streamline operations, as well as partnerships under development, I believe that Tivic is positioned to manage the challenges and deliver growth in 2023.’
Comparison of the Years Ended December 31, 2022 and 2021
Revenue
Revenue (net of return reserve) increased $583 thousand (46%) to $1.8 million for the year ended December 31, 2022 from $1.3 million for the year ended December 31, 2021, primarily attributable to increased unit sales of 22% and a moderate price increase late in the third quarter.
Direct-to-consumer product revenue increased $871 thousand (114%) to $1.6 million for the year ended December 31, 2022 from $764 thousand for the year ended December 31, 2021, primarily attributable to increased unit sales (104%) and average selling price increase (6%) over the prior year.
Reseller channel product revenue decreased $194 thousand (32%) to $416 thousand for the year ended December 31, 2022 from $610 thousand for the year ended December 31, 2021, primarily attributable to decreased unit sales of 43%, offset by increased average selling price of 19%. The decrease in unit sales and the increase in average selling price were due to the termination of less profitable reseller channels in 2022.
Cost of Sales
Cost of sales for the year ended December 31, 2022 was $1.5 million compared to $1.3 million for the year ended December 31, 2021, an increase of $246 thousand, or 19%. The increase was primarily attributable to the 22% increase in overall unit sales.
Variable cost of goods sold was $1.3 million, or $87.04 per unit, for the year ended December 31, 2022, as compared to $1.0 million, or $82.46 per unit, for the year ended December 31, 2021. The increase in variable costs of goods sold was primarily due to dramatic price increases in several electronic components, during the summer of 2022, due to the global supply chain shortage phenomenon.
Fixed cost of goods sold decreased to $203 thousand for the year ended December 31, 2022, as compared to $256 thousand for the year ended December 31, 2021, primarily due to lower indirect overhead costs as the Company refined its production management process.
Gross profit for the year ended December 31, 2022 was $299 thousand compared to a gross loss of $38 thousand for the year ended December 31, 2021.
Research and Development Expenses
Research and development expenses increased by $852 thousand to $1.7 million for the year ended December 31, 2022 from $878 thousand for the year ended December 31, 2021. The emphasis of research and development activities in 2022 was primarily related to product research and design in the migraine therapeutic area, initiation of a double-blind randomized controlled trial for post-operative pain relief following sinus surgery, and enhancement of our intellectual property protection. Activities in 2021 were primarily focused on seeking FDA approval for a second indication for our ClearUP product line.
Sales and Marketing Expenses
Sales and marketing expenses increased to $2.8 million for the year ended December 31, 2022, compared to $1.8 million for the year ended December 31, 2021. The increase is primarily related to the expansion of sales and marketing efforts, including (i) expanding advertising platforms, (ii) upgrading and optimizing ecommerce infrastructure, online/website design, and (iii) other marketing initiatives.
General and Administrative Expenses
General and administrative expenses increased to $5.9 million for the year ended December 31, 2022, compared to $2.9 million for the year ended December 31, 2021, primarily due to increases in D&O insurance, professional fees, salaries and regulatory and filing fees that are required for public companies and legal and professional fees associated with the attempted acquisition of Reliefband Technologies.
As of December 31, 2022, we had cash and cash equivalents of $3.5 million, with no debt on the balance sheet.
About Tivic Health
Tivic Health Systems, Inc. is a commercial-phase health technology company delivering non-invasive bioelectronic treatments that provide consumers with a choice in the treatment of inflammation and related conditions.
Forward-Looking Statements
This press release may contain ‘forward-looking statements’ that are subject to substantial risks and uncertainties. All statements, other than statements of historical fact, contained in this press release are forward-looking statements. Forward-looking statements contained in this press release may be identified by the use of words such as ‘anticipate,’ ‘believe,’ ‘contemplate,’ ‘could,’ ‘estimate,’ ‘expect,’ ‘intend,’ ‘seek,’ ‘may,’ ‘might,’ ‘plan,’ ‘potential,’ ‘predict,’ ‘project,’ ‘target,’ ‘aim,’ ‘should,’ ‘will’ ‘would,’ or the negative of these words or other similar expressions, although not all forward-looking statements contain these words. Forward-looking statements are based on Tivic Health Systems, Inc.’s current expectations and are subject to inherent uncertainties, risks, and assumptions that are difficult to predict. Further, certain forward-looking statements are based on assumptions as to future events that may not prove to be accurate. Actual results could differ materially from those contained in any forward-looking statement as a result of various factors, including, without limitation: market, economic and other conditions; supply chain constraints; macroeconomic factors, including inflation; the company’s ability to raise additional capital on favorable terms; changes in regulatory requirements and unexpected costs, charges or expenses that reduce Tivic’s capital resources. Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. Forward-looking statements contained in this press release are made as of this date, and Tivic Health Systems, Inc. undertakes no duty to update such information except as required by applicable law.
Contact:
Email: ir@tivichealth.com
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