UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 3, 2017
ENTELLUS MEDICAL, INC.
(Exact name of registrant as specified in its charter)
| | | | |
| Delaware | | 001-36814 | | 20-4627978 |
(State or other jurisdiction of incorporation) | | (Commission File Number) | | (I.R.S. Employer Identification No.) |
| | | | | | | | |
| | 3600 Holly Lane North, Suite 40 Plymouth, Minnesota | | | | 55447 | | |
| | (Address of principal executive offices) | | | | (Zip Code) | | |
(763)463-1595
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule14a-12 under the Exchange Act (17 CFR240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule14d-2(b) under the Exchange Act (17 CFR240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule13e-4(c) under the Exchange Act (17 CFR240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule12b-2 of the Securities Exchange Act of 1934 (17 CFR240.12b-2).
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 August 3, 2017, Entellus Medical, Inc. (“Entellus”) announced its financial results for the quarter ended June 30, 2017. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report onForm 8-K.
The information in this report (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly provided by specific reference in such a filing.
To supplement its consolidated financial statements prepared in accordance with United States generally accepted accounting principles (“GAAP”), Entellus uses certainnon-GAAP financial measures, two of which are included in the press release furnished as Exhibit 99.1 to this report. The press release includesnon-GAAP adjusted EBITDA guidance andnon-GAAP adjusted gross margin guidance for third quarter and full year 2017. Entellus’snon-GAAP adjusted EBITDA is calculated by adding back to anticipated net loss charges for interest, income taxes, depreciation and amortization expenses,non-cash stock-based compensation,non-operating income and expense,non-cash contingent consideration adjustments associated with business combinations,non-cash inventorystep-up amortization and special charges, including transaction and integration-related expenses. Entellus’snon-GAAP adjusted gross margin is calculated by excluding the impact of purchase accounting in connection with Entellus’s recent acquisition of Spirox, Inc. (“Spirox”).
Entellus uses adjusted EBITDA and adjusted gross margin in making operating decisions because it believes these measures provide meaningful supplemental information regarding its core operational performance and gives the company a better understanding of how it should invest in research and development activities and how it should allocate resources to both ongoing and prospective business initiatives. Entellus uses these measures to help make budgeting and spending decisions, for example, among research and development expenses, selling and marketing expenses, and general and administrative expenses. Additionally, Entellus believes thesenon-GAAP financial measures facilitate management’s internal comparisons to historical operating results by factoring out potential differences caused by charges not related to its regular, ongoing business, including without limitation,non-cash charges, certain large and unpredictable charges, acquisitions and dispositions, and tax positions.
As described above, Entellus intends to exclude the impact of purchase accounting in connection with the Spirox acquisition from its adjusted gross margin calculation and intends to exclude the impact of certain items by adding back in, among others, the following items to its adjusted EBITDA calculation for the following reasons:
Contingent consideration. Entellus intends to exclude the impact from its contingent consideration from itsnon-GAAP measures, primarily because it is not reflective of its ongoing operating results and is not used by management to assess the core profitability of its business operations. Entellus further believes that excluding this item from itsnon-GAAP results is useful to investors in that it will allow for period-over-period comparability.
Non-cash inventorystep-up amortization. Entellus intends to exclude the impact from inventorystep-up amortization associated with its acquisitions from itsnon-GAAP measures, primarily because it is not reflective of its ongoing operating results, and is not used by management to assess the core profitability of its business operations. Additionally, because this is anon-cash expense, it does not impact its operational performance, liquidity, or its ability to invest in research and development and to fund acquisitions and capital expenditures. Entellus further believes that excluding this item from itsnon-GAAP results is useful to investors in that it will allow for period-over-period comparability.
Transaction and integration-related costs. Entellus intends to exclude the impact from transaction and integration-related costs associated with acquisitions and mergers, including the acquisition of Spirox, Inc., from itsnon-GAAP financial measures, primarily because such costs are not reflective of its ongoing operating results and are not used by management to assess the core profitability of its business operations. Entellus further believes that excluding this item from itsnon-GAAP results is useful to investors in that it will allow for period-over-period comparability.
In its press release, Entellus provided no historicalnon-GAAP financial measures and therefore provided no quantitative reconciliations to the most directly comparable GAAP measures. With respect to Entellus’s third quarter and full year 2017 financial guidance regardingnon-GAAP adjusted EBITDA andnon-GAAP adjusted gross margin in its press release, Entellus cannot provide a quantitative reconciliation to the most directly comparable GAAP measure without unreasonable effort due to its inability to make accurate projections and estimates related to certain information needed to calculate some of the adjustments as described above. Entellus has described, however, how net loss differs qualitatively from itsnon-GAAP adjusted EBITDA and how GAAP gross margin differs qualitatively from itsnon-GAAP adjusted gross margin.
Non-GAAP financial measures are not in accordance with, or an alternative for, GAAP measures and may be different fromnon-GAAP financial measures used by other companies. In addition,non-GAAP financial measures are not based on any comprehensive or standard set of accounting rules or principles. Accordingly, the calculation of Entellus’snon-GAAP financial measures may differ from the definitions of other companies using the same or similar names limiting, to some extent, the usefulness of such measures for comparison purposes.Non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with Entellus’s financial results as determined in accordance with GAAP.Non-GAAP financial measures should only be used to evaluate Entellus’s financial results in conjunction with the corresponding GAAP measures. Accordingly, Entellus qualifies its use ofnon-GAAP financial information in a statement whennon-GAAP financial information is presented.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| | |
Exhibit No. | | Description |
| |
| 99.1 | | Press Release issued August 3, 2017 (furnished herewith) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Date: August 3, 2017 | | | | | | ENTELLUS MEDICAL, INC. |
| | | | | | By: | | /s/ Brent A. Moen |
| | | | | | Name: | | Brent A. Moen |
| | | | | | Title: | | Chief Financial Officer |
ENTELLUS MEDICAL, INC.
CURRENT REPORT ON FORM8-K
EXHIBIT INDEX
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Exhibit No. | | Description | | Method of Filing |
| | |
| 99.1 | | Press Release issued August 3, 2017 | | Furnished herewith |
