Dear Kelyniam Shareholders,
After a record sales year in 2018, revenue from sales of our PEEK implants slowed somewhat in the first half of the year, decreasing 17% to $931,894 from $1,118,512 over the same period in the previous year.
Unit volume was down 15% due to lost volume from one of our top distributors. The average selling price was down slightly due to a higher percentage of units sold under more aggressive contract rates.
FDA clearance for our new integrated fixation system did not come through until June so we did not see an associated increase in sales in Q2. Our user base remains relatively small, making Kelyniam dependent upon the activities of a few large distributors. We are aggressively working to increase the number of distributor relationships.
Gross profit declined 30% to $469, 234 from $637,818 through June. This decline was driven by increased commission payouts to sales representatives and our fixed costs relative to sales. General and
Administrative expenses were flat over the same period last year. We are just beginning to see the results from investments in sales and marketing.
Nearly 10% of all sales are from new representatives. We expect the integrated fixation system to have a positive impact on sales as surgeons begin to experience the benefits of not having to use separate plates and additional screws to secure the device.
I apologize for the delay in publishing the financials. This was due to an administrative error on my part that will not happen again.
Chairman and CEO
Forward Looking Statements
As a cautionary note to investors, certain matters discussed in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
Such matters involve risks and uncertainties that may cause actual results to differ materially, including the following: changes in economic conditions; general competitive factors; the Company’s ability to execute its service and product sales plans; changes in the status of ability to market products; and the risks described from time to time in the Company’s SEC reports.