MONMOUTH JUNCTION, N.J., Jan. 7, 2019 /PRNewswire/ -- CytoSorbents Corporation (NASDAQ: CTSO), a critical care immunotherapy leader commercializing its CytoSorb® blood purification technology to treat deadly inflammation in critically-ill and cardiac surgery patients around the world, issues a stockholder letter from Dr. Phillip Chan, Chief Executive Officer of CytoSorbents, and pre-announces preliminary unaudited fourth quarter 2018 and full-year 2018 results ahead of filing its Form 10-K.
Preliminary 2018 Financial Highlights:
The Company expects to announce record results including:
Dear Stockholders and Friends,
By most measures, 2018 was another outstanding year for CytoSorbents. Cumulative worldwide usage of CytoSorb grew by 60%, with CytoSorb credited in helping to save the lives of many patients around the world in a rapidly expanding library of peer-reviewed medical journal publications. This resulted in annual product sales growth in excess of 50%, helping to establish CytoSorb as an important therapeutic option for critically-ill and high-risk cardiac surgery patients in many hospitals across our geographic footprint of 53 countries. Reflecting our rapid growth, CytoSorbents was once again recognized as one of the fastest growing companies in North America across all industries, as named by the Deloitte 2018 Fast 500™ in November 2018.
During the year, the Company achieved many notable milestones, among them:
In addition to saving lives, an important theme for 2018 was achieving quarterly operating breakeven, excluding non-cash expenses and clinical trial costs. This was to remind investors how inherently profitable our high margin, disposable "razorblade" business model can be at a relatively modest revenue number. In fact, we were very close to achieving quarterly operating breakeven, as defined, in the past several quarters, with an operating loss of $300K and $380K in Q2 and Q3 2018, respectively, with Q4 results pending. As stated earlier, our business model becomes even more attractive as improved manufacturing efficiencies from our new plant are expected to drive blended product gross margins to at least 80% on a quarterly basis this year, while helping to keep the cost of CytoSorb to hospitals and patients at a very affordable level.
Having demonstrated the growth and profit potential of our business model, with a solid base of revenue, and strong product gross margins, we are now well-positioned to generate significant gross profit that can be utilized to fund some combination of growth, clinical studies, and profitability. For example, on a base of $20 million in product sales and 72% blended product gross margins, our gross profit was approximately $14 million in 2018. But at $30 million in sales and 80% blended gross margins, gross profit would be $24 million. And at $50 million in sales, and 82% blended gross margins, gross profit would be $41 million. If we can drive faster growth, these economics have the potential to generate significant excess cash to not only fund all of our operating needs, but also to drive true GAAP (generally accepted accounting principles) profitability over the next couple of years, where potentially 50 cents or more on every dollar in sales will drop to EBITDA (Earnings Before Interest, Tax, Depreciation, and Amortization). This would solidly place our company among an elite group of profitable companies generating significant cash flow.
To this point, in late 2018, we began to implement an aggressive growth strategy to drive accelerated long-term growth in 2019 and beyond. We are making additional investments in clinical studies, adding resources to better support our customers and partners, strengthening our distribution network, and making internal organizational changes that will better align the company for future rapid growth. Though this may result in some near-term fluctuations of our financial performance, we firmly believe these changes will result in solid 2019 year-over-year performance and a continued multi-year growth trajectory.
As we reflect upon the meaning of the holiday season and are energized by the New Year, on behalf of our Board of Directors and management team, let me once again thank the broader CytoSorbents family, including patients and their families, physicians and healthcare workers, hospitals and administrators, scientific and clinical researchers, our distributors and strategic partners, our service providers, our shareholders, and especially our employees and their families in Europe and in the U.S. for all of your hard work and dedication, and sharing our collective vision of saving lives, one person at a time. Best wishes to you and your families for a happy, healthy, and prosperous New Year!
Dr. Phillip Chan, MD, PhD
Chief Executive Officer
About CytoSorbents Corporation (NASDAQ: CTSO)
CytoSorbents Corporation is a leader in critical care immunotherapy, specializing in blood purification. Its flagship product, CytoSorb® is approved in the European Union with distribution in 53 countries around the world, as an extracorporeal cytokine adsorber designed to reduce the "cytokine storm" or "cytokine release syndrome" that could otherwise cause massive inflammation, organ failure and death in common critical illnesses. These are conditions where the risk of death is extremely high, yet no effective treatments exist. CytoSorb® is also being used during and after cardiac surgery to remove inflammatory mediators that can lead to post-operative complications, including multiple organ failure. CytoSorbents is conducting its pivotal REFRESH 2-AKI trial – a multi-center, randomized controlled, clinical trial intended to support U.S. regulatory approval of CytoSorb for use in a heart-lung machine during complex cardiac surgery to reduce organ injury. CytoSorb® has been used in more than 56,000 human treatments to date.
CytoSorbents' purification technologies are based on biocompatible, highly porous polymer beads that can actively remove toxic substances from blood and other bodily fluids by pore capture and surface adsorption. Its technologies have received non-dilutive grant, contract, and other funding of nearly $26 million from DARPA, the U.S. Army, the U.S. Department of Health and Human Services, the National Institutes of Health (NIH), National Heart, Lung, and Blood Institute (NHLBI), U.S. Special Operations Command (USSOCOM), and others. The Company has numerous products under development based upon this unique patented blood purification technology including CytoSorb-XL™, HemoDefend™, VetResQ™, K+ontrol™, ContrastSorb, DrugSorb, and others. For more information, please visit the Company's websites at www.cytosorbents.com and www.cytosorb.com and follow us on Facebook and Twitter
This press release includes forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements about our plans, objectives, representations and contentions and are not historical facts and typically are identified by use of terms such as "may," "should," "could," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential," "continue" and similar words, although some forward-looking statements are expressed differently. You should be aware that the forward-looking statements in this press release represent management's current judgment and expectations, but our actual results, events and performance could differ materially from those in the forward-looking statements. Factors which could cause or contribute to such differences include, but are not limited to, the risks discussed in our Annual Report on Form 10-K, filed with the SEC on March 8, 2018, as updated by the risks reported in our Quarterly Reports on Form 10-Q, and in the press releases and other communications to shareholders issued by us from time to time which attempt to advise interested parties of the risks and factors which may affect our business. We caution you not to place undue reliance upon any such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, other than as required under the Federal securities laws.
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