# EDGAR Filing Document

**Accession Number:** 0001253176
**File Stem:** 0000950170-23-004122
**Filing Date:** 2023-2
**Character Count:** 41075
**Document Hash:** 465cd3eaaadda6d29d8b9c3aab1671f6
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000950170-23-004122.hdr.sgml**: 20230223

**ACCESSION NUMBER**: 0000950170-23-004122

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 14

**CONFORMED PERIOD OF REPORT**: 20230223

**ITEM INFORMATION**: Results of Operations and Financial Condition

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20230223

**DATE AS OF CHANGE**: 20230223

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** VAPOTHERM INC
- **CENTRAL INDEX KEY:** 0001253176
- **STANDARD INDUSTRIAL CLASSIFICATION:** SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841]
- **IRS NUMBER:** 462259298
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-38740
- **FILM NUMBER:** 23659873

**BUSINESS ADDRESS:**
- **STREET 1:** 100 DOMAIN DRIVE
- **CITY:** EXETER
- **STATE:** NH
- **ZIP:** 03833
- **BUSINESS PHONE:** 603-658-0411

**MAIL ADDRESS:**
- **STREET 1:** 100 DOMAIN DRIVE
- **CITY:** EXETER
- **STATE:** NH
- **ZIP:** 03833

?xml version="1.0" encoding="ASCII"? 8-K

**UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549**

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**FORM** 8-K

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**CURRENT REPORT**

**Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934**

**Date of Report (Date of earliest event reported):** February 23, 2023<br>

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Vapotherm, Inc.

**(Exact name of Registrant as Specified in Its Charter)**

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| | | |
|:---|:---|:---|
| Delaware | 001-38740 | 46-2259298 |
| **(State or Other Jurisdiction<br>of Incorporation)** | **(Commission File Number)** | **(IRS Employer<br>Identification No.)** |
| 100 Domain Drive |  |  |
| Exeter**,** New Hampshire |  | 03833 |
| **(Address of Principal Executive Offices)** |  | **(Zip Code)** |

---

**Registrant's Telephone Number, Including Area Code:** 603 658-0011<br>

Not Applicable

**(Former Name or Former Address, if Changed Since Last Report)**

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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:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

**Securities registered pursuant to Section 12(b) of the Act:**

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| | | |
|:---|:---|:---|
| **<br>Title of each class** | **Trading<br>Symbol(s)** | **<br>Name of each exchange on which registered** |
| Common Stock, $0.001 par value per share | VAPO | New York Stock Exchange |

---

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. ☐

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**Item 2.02 Results of Operations and Financial Condition.**

On February 23, 2023, Vapotherm, Inc. announced its financial results for the fourth quarter and the full year ended December 31, 2022. A full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information contained in this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed filed for any purpose, and shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as expressly set forth by specific reference in such filing.

**Item 9.01 Financial Statements and Exhibits.**

(d) <u>Exhibits.</u>

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| | |
|:---|:---|
| **Exhibit**<br>**Number** | <br>**Description** |
| 99.1 | [<u>Press Release Issued by Vapotherm, Inc. on February 23, 2023</u>](vapo-ex99_1.htm) |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |

---

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**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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| | | | |
|:---|:---|:---|:---|
|  |  |  | Vapotherm, Inc. |
| Date: | February 23, 2023 | By:  | /s/ John Landry |
|  |  |  | John Landry<br>Senior Vice President and Chief Financial Officer |

---

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## Ex-99

**Exhibit 99.1**

![img168988987_0.jpg](img168988987_0.jpg)

**Vapotherm Reports Fourth Quarter and Fiscal Year 2022 Financial Results**

EXETER, New Hampshire, February 23, 2023 / Business Wire / -- Vapotherm, Inc. (NYSE: VAPO), ("Vapotherm" or the "Company"), today announced fourth quarter and fiscal year 2022 financial results.

**Fourth Quarter 2022 Summary**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Total revenue for the fourth quarter of 2022 was $18.7 million

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Gross margin was 27.5% in the fourth quarter of 2022

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Substantially completed move of manufacturing operations from New Hampshire to Mexico

**Fiscal Year 2022 Summary**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Total revenue for 2022 was $66.8 million

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Launched next generation High Velocity Therapy platform, HVT 2.0

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Cost structure has been streamlined which resulted in a decrease in non-GAAP cash operating expenses from $100.8 million in 2021 to $83.6 million in 2022

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Worldwide installed base of High Velocity Therapy systems grew by approximately 1,600 units in 2022, now at over 36,700 units

"2022 was a year of transition as we repositioned the business given the significant decrease in COVID-related hospitalizations as compared to 2020 and 2021," said Joseph Army, President and CEO. "We executed on our path to profitability initiatives while still making investments in future growth drivers including the launch of our next generation platform, HVT 2.0. Recently, we completed a $23 million equity raise which has strengthened our balance sheet. We believe these initiatives will allow us to achieve our goals in 2023 and beyond. I'd like to thank our Team for all their hard work in executing on our Path to Profitability initiatives which we launched in early 2022 in response to a rapidly changing environment."

**Results for the Three Months December 31, 2022**

The following table reflects the Company's net revenue for the three months ended December 31, 2022 and 2021:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Three Months Ended December 31,** |  |
|  | **2022** | **2022** | **2021** | **2021** | **2021**<br>**Change** | **Change** |
|  | **(in thousands, except percentages)** | **(in thousands, except percentages)** | **(in thousands, except percentages)** | **(in thousands, except percentages)** | **(in thousands, except percentages)** | **(in thousands, except percentages)** |
|  | **Amount** | **% of Revenue** | **Amount** | **% of Revenue** | **% of Revenue** | **%** |
| **Revenue** |  |  |  |  |  |  |
| Capital (product & lease revenue) | $3039 | 16.3% | $5357 |  | 24.1%) | (43.3)% |
| Disposables | 14113 | 75.6% | 15007 |  | 67.5%) | (6.0)% |
| Service and other | 1511 | 8.1% | 1880 |  | 8.4%) | (19.6)% |
| **Total net revenue** | $18663 | 100.0% | $22244 |  | 100.0%) | (16.1)% |

---

Net revenue for the fourth quarter of 2022 was $18.7 million, representing a 16.1% decrease from fourth quarter of 2021. Capital and disposables revenue were lower in the fourth quarter of 2022 due to lower demand for our products that was driven by a decrease in patient acuity from COVID infections as COVID variants transitioned from a lower respiratory disease to an upper respiratory disease.

Revenue information by geography is summarized as follows:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Three Months Ended December 31,** |  |
|  | **2022** | **2022** | **2021** | **2021** | **2021**<br>**Change** | **Change** |
|  | **(in thousands, except percentages)** | **(in thousands, except percentages)** | **(in thousands, except percentages)** | **(in thousands, except percentages)** | **(in thousands, except percentages)** | **(in thousands, except percentages)** |
|  | **Amount** | **% of Revenue** | **Amount** | **% of Revenue** | **% of Revenue** | **%** |
| United States | $15531 | 83.2% | $17798 |  | 80.0%) | (12.7)% |
| International | 3132 | 16.8% | 4446 |  | 20.0%) | (29.6)% |
| **Total net revenue** | $18663 | 100.0% | $22244 |  | 100.0%) | (16.1)% |

---

Gross profit and gross margin for the fourth quarter of 2022 was $5.1 million and 27.5%, respectively. In the fourth quarter of 2022, gross margin was negatively impacted by increases in our inventory and equipment reserves, under-absorption of labor and overhead

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costs due to lower production levels and non-recurring charges related to the transfer of our manufacturing operations from New Hampshire to Mexico.

Total operating expenses were $22.8 million in the fourth quarter of 2022, a decrease of $2.9 million as compared to the same period last year. Non-GAAP cash operating expenses, excluding impairment charges, loss on disposal of property and equipment, depreciation and amortization, stock-based compensation expense, severance accruals and loss from deconsolidation were $18.0 million in the fourth quarter of 2022 compared to $23.8 million in the fourth quarter of 2021. The decreases in operating expenses and non-GAAP cash operating expenses were primarily due to cost saving measures in connection with the Company's path-to-profitability initiatives. Operating expenses in the fourth quarter of 2022 include a non-cash impairment charge of $1.5 million related to the operating lease right-of-use assets and leasehold improvements recorded in connection with our plan to sublease unused spaced in New Hampshire as a result of the relocation of manufacturing operations to Mexico.

Net loss for the fourth quarter of 2022 was $21.4 million, or $0.78 per share, compared to $18.6 million, or $0.71 per share, in the fourth quarter of 2021. Net loss per share was based on 27,328,746 and 26,073,243 weighted average shares outstanding for the fourth quarter of 2022 and 2021, respectively. Net loss for the fourth quarter of 2022 includes a non-cash impairment charge of $1.5 million related to the long-lived assets record in connection with our operating lease and leasehold improvements in New Hampshire.

Adjusted EBITDA was negative $12.0 million for the fourth quarter of 2022 as compared to negative $14.9 million for the fourth quarter of 2021. The decrease in Adjusted EBITDA loss was primarily due to cost saving measures in connection with the Company's path-to-profitability initiatives, partially offset by lower revenue and gross margin on a year over year basis.

**Results for the Year Ended December 31, 2022**

The following table reflects the Company's net revenue for the years ended December 31, 2022 and 2021:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |  |
|  | **2022** | **2022** | **2021** | **2021** | **2021**<br>**Change** | **Change** |
|  | **(in thousands, except percentages)** | **(in thousands, except percentages)** | **(in thousands, except percentages)** | **(in thousands, except percentages)** | **(in thousands, except percentages)** | **(in thousands, except percentages)** |
|  | **Amount** | **% of Revenue** | **Amount** | **% of Revenue** | **% of Revenue** | **%** |
| **Revenue** |  |  |  |  |  |  |
| Capital Equipment (product & lease revenue) | $11650 | 17.4% | $40096 |  | 35.4%) | (70.9)% |
| Disposable | 46368 | 69.4% | 66631 |  | 58.8%) | (30.4)% |
| Service and Other | 8783 | 13.2% | 6565 |  | 5.8% | 33.8% |
| **Net revenue** | $66801 | 100.0% | $113292 |  | 100.0%) | (41.0)% |

---

Net revenue for 2022 was $66.8 million, representing a 41.0% decrease from 2021. Total capital equipment revenue, including product and lease revenue, decreased 70.9% and total disposables revenue decreased 30.4%, each on a year over year basis. The decrease in demand for our products was driven by a decrease in patient acuity from COVID infections as COVID variants transitioned from a lower respiratory disease to an upper respiratory disease.

Revenue information by geography is summarized as follows:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |  |
|  | **2022** | **2022** | **2021** | **2021** | **2021**<br>**Change** | **Change** |
|  | **(in thousands, except percentages)** | **(in thousands, except percentages)** | **(in thousands, except percentages)** | **(in thousands, except percentages)** | **(in thousands, except percentages)** | **(in thousands, except percentages)** |
|  | **Amount** | **% of Revenue** | **Amount** | **% of Revenue** | **% of Revenue** | **%** |
| United States | $52591 | 78.7% | $84147 |  | 74.3%) | (37.5)% |
| International | 14210 | 21.3% | 29145 |  | 25.7%) | (51.2)% |
| **Net Revenue** | $66801 | 100.0% | $113292 |  | 100.0%) | (41.0)% |

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Gross profit for the year ended December 31, 2022 was $17.2 million, a decrease of $35.9 million from 2021. Gross margin was 25.8% in 2022 in comparison to 46.9% in 2021. Gross margin was negatively impacted by lower revenue and production levels, non-recurring charges related to the transfer of certain activities to our contract manufacturer and our manufacturing facility in Mexico, increased reserves for excess and obsolete inventory, and increased termination costs.

Operating expenses were $117.6 million for the year ended December 31, 2022, an increase of $7.2 million as compared to $110.4 million in 2021. Operating expenses for 2022 include non-cash charges of $14.7 million and $7.7 million related to the impairment of goodwill and long-lived and intangibles, and to a lesser extent, loss on disposal of property and equipment of $0.6 million. These non-cash charges were record in connection with our decision to cease future commercial investments in Vapotherm Access and RespirCare in the third quarter of 2022, and to a lesser extent relocate our manufacturing operations from New Hampshire to Mexico. Non-GAAP cash operating expenses, excluding impairment charges, loss on disposal of property and equipment, depreciation and amortization, stock-based compensation expense, severance accruals, loss from deconsolidation and change in the value of contingent consideration, were $83.6 million for the year ended December 31, 2022 compared to $100.8 million in 2021. The decrease in non-GAAP cash operating expenses was primarily due to cost saving measures in connection with the Company's path-to-profitability initiatives.

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Net loss for the year ended December 31, 2022 was $113.3 million, or $4.24 per share, compared to $59.8 million, or $2.31 per share, in 2021. Net loss per share was based on 26,732,940 and 25,936,970 weighted average shares outstanding for 2022 and 2021, respectively. Net loss for the year ended December 31, 2022 includes non-cash impairment charges of $22.4 million primarily related to the goodwill and long-lived assets recorded in connection with the acquisitions of HGE and RespirCare.

Adjusted EBITDA was negative $65.2 million for the year ended December 31, 2022 as compared to negative $43.1 million for 2021. The increase in Adjusted EBITDA loss was primarily due to lower revenue and gross margin on a year over year basis, and to a lesser extent increased termination costs.

**Cash Position**

Cash and cash equivalents were $15.7 million as of December 31, 2022 compared to $57.1 million as of December 31, 2021. The decrease in cash in 2022 was due to the net loss, partial offset from proceeds from our debt facility.

**Fiscal 2023 Outlook**

For fiscal 2023, the Company expects net revenue to be in the range of $77 million to $79 million. The Company anticipates that 75% of revenue will come from U.S. revenue and 25% from International revenue. The Company anticipates that 75% of the revenue will come from disposables revenue and that the remainder will come from capital equipment and service.

For fiscal 2023, gross margin is expected to be in the range of 48% and 50%.

For fiscal 2023, operating expenses are expected to be in the range of $76 million to $78 million.

For fiscal 2023, non-GAAP cash operating expenses excluding additional items as detailed below are expected to be in the range of $60 million to $62 million.

**Conference Call Information**

Management will host a conference call at 4:30 p.m. Eastern Time on February 23, 2023 to discuss the results of the quarter with a question and answer session. To listen to the conference call on your telephone, please dial +1 (888) 330-2391 for U.S. callers, or +1 (240) 789-2702 for international callers, approximately ten minutes prior to the start time and reference conference code 6585549. To listen to a live webcast, please visit the Investors section of the Vapotherm website at: http://investors.vapotherm.com/events-and-presentations/events. The webcast replay will be available on the Vapotherm website for 12 months following completion of the call. A replay of this conference call will be available by telephone through March 2, 2023 by dialing +1 (800) 770-2030 in the U.S. or +1 (647) 362-9199 outside of the U.S. The replay access code is 6585549.

**Website Information**

Vapotherm routinely posts important information for investors on the Investor Relations section of its website, http://investors.vapotherm.com/. Vapotherm intends to use this website as a means of disclosing material, non-public information and for complying with Vapotherm's disclosure obligations under Regulation FD. Accordingly, investors should monitor the Investor Relations section of Vapotherm's website, in addition to following Vapotherm's press releases, Securities and Exchange Commission ("SEC") filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through, Vapotherm's website is not incorporated by reference into, and is not a part of, this document.

**Non-GAAP Financial Measures**

This press release includes non-GAAP financial measures, including EBITDA, Adjusted EBITDA, non-GAAP operating expenses excluding impairment of long-lived assets, impairment of goodwill and loss on disposal of property and equipment, and non-GAAP cash operating expenses excluding additional items, including stock-based compensation expense, depreciation and amortization, severance accruals recorded, loss from deconsolidation, and change in fair value of contingent consideration, which differ from operating expenses calculated in accordance with U.S. generally accepted accounting principles ("GAAP"). EBITDA represents net loss less interest expense, net, income tax provision or benefit, and depreciation and amortization, and Adjusted EBITDA represents EBITDA as adjusted for the impact of foreign currency loss or gain, change in fair value of contingent consideration, stock-based compensation expense, and impairment of long lived and intangible assets. Since these adjustments to the GAAP measures are highly variable, difficult to predict and of a size that could have substantial impact on Vapotherm's reported results of operations for a period, Vapotherm cannot provide without unreasonable effort a quantitative reconciliation to the most directly comparable GAAP measures for its 2023 financial guidance regarding non-GAAP cash operating expenses excluding impairment of goodwill, impairment of long-lived assets, loss on disposal of property and equipment and other additional items as detailed below, or non-GAAP cash operating expenses. The Company has reconciled all historical non-GAAP financial measures with the most directly comparable GAAP financial measures in tables accompanying this release.

These non-GAAP financial measures are presented because the Company believes they are useful indicators of its operating performance. Management uses these non-GAAP financial measures, as measures of the Company's operating performance and for planning purposes, including the preparation of the Company's annual operating budget and financial projections. The Company

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believes these measures are useful to investors as supplemental information because they are frequently used by analysts, investors and other interested parties to evaluate companies in its industry. The Company believes Adjusted EBITDA is useful to its management and investors as a measure of comparative operating performance from period to period.

These non-GAAP financial measures should not be considered alternatives to, or superior to, net income or loss as a measure of financial performance or cash flows from operations as a measure of liquidity, or any other performance measure derived in accordance with GAAP. They should not be construed to imply that the Company's future results will be unaffected by unusual or non-recurring items. In addition, Adjusted EBITDA is not intended to be a measure of free cash flow for management's discretionary use, as it does not reflect certain cash requirements such as tax payments, debt service requirements, capital expenditures and certain other cash costs that may recur in the future. Adjusted EBITDA contains certain other limitations, including the failure to reflect our capital expenditures, cash requirements for working capital needs and cash costs to replace assets being depreciated and amortized. In evaluating Adjusted EBITDA, you should be aware that in the future the Company may incur expenses that are the same as or similar to some of the adjustments in this presentation. The Company's presentation of Adjusted EBITDA should not be construed to imply that its future results will be unaffected by any such adjustments. Management compensates for these limitations by primarily relying on the Company's GAAP results in addition to using Adjusted EBITDA and other non-GAAP financial measures on a supplemental basis. The Company's definitions of Adjusted EBITDA and non-GAAP operating expenses excluding impairment of long-lived assets, impairment of goodwill and loss on disposal of property and equipment and non-GAAP cash operating expenses excluding the additional items detailed below, are not necessarily comparable to other similarly titled captions of other companies due to different methods of calculation.

**About Vapotherm**

Vapotherm, Inc. (NYSE: VAPO) is a publicly traded developer and manufacturer of advanced respiratory technology based in Exeter, New Hampshire, USA. The Company develops innovative, comfortable, non-invasive technologies for respiratory support of patients with chronic or acute breathing disorders. Over 3.8 million patients have been treated with the use of Vapotherm high velocity therapy® systems. For more information, visit www.vapotherm.com.

Vapotherm high velocity therapy is mask-free non-invasive ventilatory support and is a front-line tool for relieving respiratory distress—including hypercapnia, hypoxemia, and dyspnea. It allows for the fast, safe treatment of undifferentiated respiratory distress with one tool. The HVT 2.0 and Precision Flow systems' mask-free interface delivers optimally conditioned breathing gases, making it comfortable for patients and reducing the risks and care complexities associated with mask therapies. While being treated, patients can talk, eat, drink and take oral medication.

**Legal Notice Regarding Forward-Looking Statements**

This press release contains forward-looking statements under the Private Securities Litigation Reform Act of 1995, including statements about the Company's expected net revenue, gross margin, operating expenses and non-GAAP cash operating expenses for fiscal year 2023 and its expectations to execute on its path-to-profitability initiative, which the Company believes will allow it to achieve its goals in 2023 and beyond. In some cases, you can identify forward-looking statements by terms such as "expect," "continue," "plan," "intend," "will," "outlook," "guidance," or "typically," or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words, and the use of future dates. Each forward-looking statement is subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such statement. Applicable risks and uncertainties include, but are not limited to the following: Vapotherm has incurred losses in the past and may be unable to achieve or sustain profitability in the future or achieve its 2023 financial guidance; risks associated with the move of its manufacturing operations to Mexico; Vapotherm's ability to raise additional capital to fund its existing commercial operations, develop and commercialize new products, and expand its operations; Vapotherm's ability to comply with its $5 million minimum cash covenant, execute on its path-to-profitability initiative, convert $17 million of excess inventory into cash, fund its business through 2023 and get it to Adjusted EBITDA positive in the fourth quarter of 2023; Vapotherm's dependence on sales generated from its High Velocity Therapy systems, competition from multi-national corporations who have significantly greater resources than Vapotherm and are more established in the respiratory market; the ability for Precision Flow systems to gain increased market acceptance; Vapotherm's inexperience directly marketing and selling its products; the potential loss of one or more suppliers and dependence on its new third party manufacturer; Vapotherm's susceptibility to seasonal fluctuations; Vapotherm's failure to comply with applicable United States and foreign regulatory requirements; the failure to obtain U.S. Food and Drug Administration or other regulatory authorization to market and sell future products or its inability to secure, maintain or enforce patent or other intellectual property protection for its products; the impact of COVID on its business, including its supply chain, and the other risks and uncertainties included under the heading "Risk Factors" in Vapotherm's Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as filed with the SEC on February 23, 2023, and in any subsequent filings with the SEC. The forward-looking statements contained in this press release reflect Vapotherm's views as of the date hereof, and Vapotherm does not assume and specifically disclaims any obligation to update any forward-looking statements whether as a result of new information, future events or otherwise, except as required by law.

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**Financial Statements:**

VAPOTHERM, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

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| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
| **Assets** |  |  |
| Current assets |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | $15738 | $57071 |
| &nbsp;&nbsp;&nbsp;Accounts receivable, net | 9102 | 10909 |
| &nbsp;&nbsp;&nbsp;Inventories | 32980 | 36562 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 2081 | 5205 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 59901 | 109747 |
| Property and equipment, net | 26636 | 22157 |
| Operating lease right-of-use assets | 5805 | 7045 |
| Restricted cash | 1109 | 253 |
| Goodwill | 536 | 15300 |
| Intangible assets, net | - | 4398 |
| Deferred income tax assets | 96 | 78 |
| Other long-term assets | 2112 | 1107 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets | $96195 | $160085 |
| **Liabilities and Stockholders' (Deficit) Equity** |  |  |
| Current liabilities |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | $2739 | $5923 |
| &nbsp;&nbsp;&nbsp;Contract liabilities | 1216 | 2081 |
| &nbsp;&nbsp;&nbsp;Accrued expenses and other current liabilities | 15609 | 28559 |
| &nbsp;&nbsp;&nbsp;Revolving loan facility | - | 6608 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | 19564 | 43171 |
| Long-term loans payable, net | 96994 | 39726 |
| Other long-term liabilities | 7827 | 10521 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | 124385 | 93418 |
| Commitments and contingencies |  |  |
| Stockholders' (deficit) equity |  |  |
| &nbsp;&nbsp;&nbsp;Preferred stock ($0.001 par value) 25,000,000 shares authorized; no shares issued<br> and outstanding as of December 31, 2022 and 2021 | - | - |
| &nbsp;&nbsp;&nbsp;Common stock ($0.001 par value) 175,000,000 shares authorized as of<br> December 31, 2022 and 2021, 28,516,047 and 26,126,253 shares <br> issued and outstanding as of December 31, 2022 and 2021, respectively | 29 | 26 |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | 461940 | 443358 |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive (loss) income | (157) | 26 |
| &nbsp;&nbsp;&nbsp;Accumulated deficit | (490002) | (376743) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total stockholders' (deficit) equity | (28190) | 66667 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and stockholders' (deficit) equity | $96195 | $160085 |

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VAPOTHERM, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended<br>December 31,** | **Three Months Ended<br>December 31,** | **Year Ended<br>December 31,** | **Year Ended<br>December 31,** |
|  | **2022** | **2021** | **2022** | **2021** |
|  | **(unaudited)** | **(unaudited)** |  |  |
| Net revenue | $18663 | $22244 | $66801 | $113292 |
| Cost of revenue | 13540 | 14455 | 49558 | 60104 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross profit | 5123 | 7789 | 17243 | 53188 |
| Operating expenses |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Research and development | 4561 | 4944 | 20802 | 18410 |
| &nbsp;&nbsp;&nbsp;Sales and marketing | 9476 | 12971 | 46091 | 60140 |
| &nbsp;&nbsp;&nbsp;General and administrative | 7042 | 7427 | 27796 | 31375 |
| &nbsp;&nbsp;&nbsp;Impairment of goodwill | - | - | 14701 | - |
| &nbsp;&nbsp;&nbsp;Impairment of long-lived and intangible assets | 1501 | 323 | 7676 | 323 |
| &nbsp;&nbsp;&nbsp;Loss on disposal of property and equipment | 247 | 105 | 568 | 105 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 22827 | 25770 | 117634 | 110353 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss from operations | (17704) | (17981) | (100391) | (57165) |
| Other (expense) income |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Interest expense | (3771) | (635) | (11643) | (2595) |
| &nbsp;&nbsp;&nbsp;Interest income | 26 | 17 | 139 | 91 |
| &nbsp;&nbsp;&nbsp;Foreign currency loss | (51) | (37) | (239) | (225) |
| &nbsp;&nbsp;&nbsp;Loss on extinguishment of debt | - | - | (1114) | - |
| &nbsp;&nbsp;&nbsp;Other | - | - | - | 18 |
| Net loss before income taxes | $(21500) | $(18636) | $(113248) | $(59876) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Benefit) provision for income taxes | (63) | (76) | 11 | (76) |
| Net loss | $(21437) | $(18560) | $(113259) | $(59800) |
| Other comprehensive loss: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Foreign currency translation adjustments | 229 | 7 | (183) | (15) |
| Total other comprehensive loss | 229 | 7 | (183) | (15) |
| Total comprehensive loss | $(21208) | $(18553) | $(113442) | $(59815) |
| Net loss per share basic and diluted | $(0.78) | $(0.71) | $(4.24) | $(2.31) |
| Weighted-average number of shares used in calculating net<br> loss per share, basic and diluted | 27328746 | 26073243 | 26732940 | 25936970 |

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VAPOTHERM, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

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| | | |
|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2022** | **2021** |
| **Cash flows from operating activities** |  |  |
| Net loss | $(113259) | $(59800) |
| Adjustments to reconcile net loss to net cash used in operating activities |  |  |
| &nbsp;&nbsp;Stock-based compensation expense | 10385 | 9766 |
| &nbsp;&nbsp;Depreciation and amortization | 5180 | 5648 |
| &nbsp;&nbsp;Provision for bad debts | 224 | (161) |
| &nbsp;&nbsp;Provision for inventory valuation | 3083 | 70 |
| &nbsp;&nbsp;Non-cash lease expense | 2127 | 1764 |
| &nbsp;&nbsp;Change in fair value of contingent consideration | (3351) | (1813) |
| &nbsp;&nbsp;Impairment of goodwill | 14701 | - |
| &nbsp;&nbsp;Impairment of long-lived and intangible assets | 7676 | 323 |
| &nbsp;&nbsp;Loss on disposal of property and equipment | 568 | 105 |
| &nbsp;&nbsp;Placed unit reserve | 646 | 155 |
| &nbsp;&nbsp;Amortization of discount on debt | 686 | 128 |
| &nbsp;&nbsp;Loss from deconsolidation | 35 | - |
| &nbsp;&nbsp;Deferred income taxes | 11 | (76) |
| &nbsp;&nbsp;Loss on extinguishment of debt | 1114 | - |
| &nbsp;&nbsp;Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | 1162 | 12400 |
| &nbsp;&nbsp;&nbsp;&nbsp;Inventories | 449 | (16759) |
| &nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other assets | (1771) | 1458 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | (3347) | 798 |
| &nbsp;&nbsp;&nbsp;&nbsp;Contract liabilities | (844) | (892) |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses and other liabilities | (3285) | (6724) |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating lease liabilities, current and long-term | (2347) | (1761) |
| &nbsp;&nbsp;Net cash used in operating activities | (80157) | (55371) |
| **Cash flows from investing activities** |  |  |
| Purchases of property and equipment | (11610) | (5895) |
| Acquisition of business, net of cash acquired | - | (1304) |
| &nbsp;&nbsp;Net cash used in investing activities | (11610) | (7199) |
| **Cash flows from financing activities** |  |  |
| Proceeds from loans, net of discount | 99094 | - |
| Proceeds from revolving loan facility | - | 4882 |
| Repayment of loans | (40000) | - |
| Payments of debt extinguishment costs | (817) | - |
| Payment of debt issuance costs | (1567) | - |
| Repayments on revolving loan facility | (6608) | (3162) |
| Payment of contingent consideration | (135) | - |
| Proceeds from issuance of common stock in connection with at-the-market offerings, net | 1064 | - |
| Proceeds from issuance of common stock under Employee Stock Purchase Plan | 228 | 1139 |
| Proceeds from exercise of stock options | 65 | 1511 |
| &nbsp;&nbsp;Net cash provided by financing activities | 51324 | 4370 |
| &nbsp;&nbsp;Effect of exchange rate changes on cash, cash equivalents and restricted cash | (34) | (12) |
| &nbsp;&nbsp;Net decrease in cash, cash equivalents and restricted cash | (40477) | (58212) |
| **Cash, cash equivalents and restricted cash** |  |  |
| Beginning of period | 57324 | 115536 |
| End of period | $16847 | $57324 |
| **Supplemental disclosures of cash flow information** |  |  |
| Interest paid during the period | $8834 | $2466 |
| Property and equipment purchases in accounts payable and accrued expenses | $702 | $422 |
| Issuance of common stock to satisfy contingent consideration | $5630 | $- |
| Issuance of common stock warrants in conjunction with long term debt | $1201 | $- |
| Issuance of common stock for services | $360 | $413 |
| Issuance of common stock upon vesting of restricted stock units | $12 | $161 |

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**Non-GAAP Financial Measures**

The following tables contain a reconciliation of net loss to Adjusted EBITDA for the three months and years ended December 31, 2022 and 2021, respectively.

(unaudited)

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended<br>December 31,** | **Three Months Ended<br>December 31,** | **Year Ended<br>December 31,** | **Year Ended<br>December 31,** |
|  | **2022** | **2021** | **2022** | **2021** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
| Net loss | $(21437) | $(18560) | $(113259) | $(59800) |
| Interest expense, net | 3745 | 618 | 11504 | 2504 |
| (Benefit) provision for income taxes | (63) | (76) | 11 | (76) |
| Depreciation and amortization | 1174 | 1467 | 5180 | 5648 |
| EBITDA | $(16581) | $(16551) | $(96564) | $(51724) |
| Foreign currency | 51 | 37 | 239 | 225 |
| Loss on extinguishment of debt | - | - | 1114 | - |
| Change in fair value of contingent consideration | - | (1356) | (3351) | (1813) |
| Stock-based compensation | 2760 | 2569 | 10385 | 9766 |
| Impairment of goodwill | - | - | 14701 | - |
| Impairment of long-lived and intangible assets | 1501 | 323 | 7676 | 323 |
| Loss on disposal of property and equipment | 247 | 105 | 568 | 105 |
| Adjusted EBITDA | $(12022) | $(14873) | $(65232) | $(43118) |

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The following tables contain a reconciliation of operating expenses to non-GAAP operating expenses and non-GAAP cash operating expenses for the three months and years ended December 31, 2022 and 2021, respectively.

(unaudited)

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended<br>December 31,** | **Three Months Ended<br>December 31,** | **Years Ended<br>December 31,** | **Years Ended<br>December 31,** |
|  | **2022** | **2021** | **2022** | **2021** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
| GAAP operating expenses | $22827 | $25770 | $117634 | $110353 |
| Impairment of goodwill | - | - | (14701) | - |
| Impairment of long-lived and intangible assets | (1501) | (323) | (7676) | (323) |
| Loss on disposal of property and equipment | (247) | (105) | (568) | (105) |
| Non-GAAP operating expenses | 21079 | 25342 | 94689 | 109925 |
| Stock-based compensation | (2663) | (2377) | (9668) | (9037) |
| Depreciation and amortization | (342) | (484) | (1709) | (1915) |
| Termination benefits | (30) | - | (3060) | - |
| Loss from deconsolidation | (35) | - | (35) | - |
| Change in fair value of contingent consideration | - | 1356 | 3351 | 1813 |
| Non-GAAP cash operating expenses | $18009 | $23837 | $83568 | $100786 |

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**Supplemental Operating Metrics**

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31,** | **December 31,** |  |  |
|  | **2022** | **2021** | **Change** | **Change** |
|  | **Amount** | **Amount** | **Amount** | **%** |
| **HVT 2.0 and precision flow units installed base** |  |  |  |  |
| United States | 24327 | 23368 | 959 | 4.1% |
| International | 12439 | 11848 | 591 | 5.0% |
| Total | 36766 | 35216 | 1550 | 4.4% |
|  | **Three Months Ended December 31,** | **Three Months Ended December 31,** |  |  |
|  | **2022** | **2021** | **Change** | **Change** |
|  | **Amount** | **Amount** | **Amount** | **%** |
| **HVT 2.0 and precision flow units sold and leased** |  |  |  |  |
| United States | 239 | 419 | (180) | (43.0)% |
| International | 75 | 194 | (119) | (61.3)% |
| Total | 314 | 613 | (299) | (48.8)% |
| **Disposable patient circuits sold** |  |  |  |  |
| United States | 104302 | 108200 | (3898) | (3.6)% |
| International | 24551 | 34395 | (9844) | (28.6)% |
| Total | 128853 | 142595 | (13742) | (9.6)% |
|  | **Year Ended December 31,** | **Year Ended December 31,** |  |  |
|  | **2022** | **2021** | **Change** | **Change** |
|  | **Amount** | **Amount** | **Amount** | **%** |
| **HVT 2.0 and precision flow units sold and leased** |  |  |  |  |
| United States | 813 | 3600 | (2787) | (77.4)% |
| International | 531 | 2972 | (2441) | (82.1)% |
| Total | 1344 | 6572 | (5228) | (79.5)% |
| **Disposable patient circuits sold** |  |  |  |  |
| United States | 331044 | 452605 | (121561) | (26.9)% |
| International | 118226 | 200901 | (82675) | (41.2)% |
| Total | 449270 | 653506 | (204236) | (31.3)% |

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**SOURCE:** Vapotherm, Inc.

**Investor Relations Contacts:** 

Mark Klausner or Mike Vallie, Westwicke, an ICR Company, <u>ir@vtherm.com</u>, +1 (603) 658-0011

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