AxoGen, Inc. Reports 2017 First Quarter Financial Results
May 04 2017 - 4:02PM
AxoGen, Inc. (NASDAQ:AXGN), a global leader in developing and
marketing innovative surgical solutions for peripheral nerve
injuries, today reported financial results and business highlights
for the first quarter ended March 31, 2017.
First Quarter 2017 Financial Results and
Recent Business Highlights
- Revenue of $12.2 million, up 51% compared to $8.1 million in
the first quarter of 2016
- Gross margin of 84.4% compared to 82.7% in the first quarter of
2016
- Net loss for the first quarter of 2017 is $3.8 million, or
$0.11 per share, compared with a net loss of $3.7 million, or $0.12
per share, in the first quarter of 2016
- Adjusted EBITDA loss of $2.2 million compared to Adjusted
EBITDA loss of $2.3 million in Q1 2016
"We are pleased to complete another successful
quarter, with record revenues of $12.2 million and growth of 51
percent,” stated Karen Zaderej, President and Chief Executive
Officer. ”We are successfully executing against our strategic
initiatives and driving awareness and growth in the emerging
peripheral nerve repair market.” Additional
First Quarter and Recent Operational Highlights
- Increased active accounts in the first quarter to 465, up 37%
from 340 in Q1 2016
- We ended the quarter with 49 direct sales reps and have 50 as
of today's call; we also have 20 independent distributors
- Conducted three national education courses in the first
quarter, and four year-to-date
- Increased the number of peer reviewed clinical publications for
our surgical portfolio by six to a total of 50 year to date
- Conducted a second clinical advisory panel with leading
reconstructive breast surgeons - the panel reviewed patient,
surgeon, and health care stakeholder perspectives and needs, as
well as how the AxoGen portfolio of products may help surgeons
overcome current clinical challenges related to restoring breast
sensation for women who choose autologous reconstruction following
a mastectomy
- Ended the quarter with $25.9 million in cash compared to $30
million at the end of 2016. Net cash burn in Q1 was $4.1 million
and includes $1.2 million payment of the 2016 all-employee annual
performance bonus
- Ended the quarter with $25 million of total bank debt, compared
to $25 million at the end of 2016
“We continue to focus on surgeon education and
growing the body of clinical evidence for our nerve repair
solutions,” added Zaderej. “As a result we are building awareness
of peripheral nerve repair and expanding usage of our products with
innovator and early adopter surgeons, while also working to develop
the middle adopter market.”
2017 Financial GuidanceManagement
reiterates 2017 annual revenue will grow at least 40% over 2016
revenue and gross margins will remain above 80%.
Upcoming Investor EventsMembers of
the AxoGen senior management team will participate at the following
upcoming conferences and events:
- Jefferies Global Healthcare Conference in New York City on June
6
- JMP Securities Conference in New York City on June 21-22
Conference CallThe Company will
host a conference call and webcast for the investment community
today at 4:30 p.m. ET. Investors interested in participating by
phone are invited to call toll free at 1-877-407-0993 or use the
direct dial-in number 1-201-689-8795. Those interested in listening
to the conference call live via the Internet can do so by visiting
the Investors page of the Company’s website at www.axogeninc.com
and clicking on the webcast link on the Investors home page.
Following the conference call, a replay will be
available on the Company’s website at www.axogeninc.com under
Investors.
About AxoGenAxoGen (AXGN) is a
global leader in innovative surgical solutions for peripheral nerve
injuries. AxoGen is the only company focused specifically on the
science, development and commercialization of technologies for
peripheral nerve regeneration and repair. We are passionate about
restoring nerve function and quality of life to patients with
peripheral nerve injuries by providing innovative, clinically
proven and economically effective repair solutions for surgeons and
health care providers. Peripheral nerves provide the pathways for
both motor and sensory signals throughout the body. Every day,
people suffer traumatic injuries or undergo surgical procedures
that impact the function of their peripheral nerves. Damage to
a peripheral nerve can result in the loss of muscle or organ
function, the loss of sensory feeling, or the initiation of
pain.
AxoGen's portfolio of products includes Avance®
Nerve Graft, an off-the-shelf processed human nerve allograft for
bridging severed nerves without the comorbidities associated with a
second surgical site, AxoGuard® Nerve Connector, a porcine
submucosa extracellular matrix (ECM) coaptation aid for tensionless
repair of severed nerves, AxoGuard® Nerve Protector, a porcine
submucosa ECM product used to wrap and protect injured peripheral
nerves and reinforce the nerve reconstruction while preventing soft
tissue attachments, and Avive® Soft Tissue Membrane, a
minimally processed human umbilical cord membrane that may be used
as a resorbable soft tissue covering to separate tissue layers and
modulate inflammation in the surgical bed. Along with these core
surgical products, AxoGen also offers AcroVal™ Neurosensory &
Motor Testing System and AxoTouch™ Two-Point Discriminator. These
evaluation and measurement tools assist health care professionals
in detecting changes in sensation, assessing return of sensory,
grip, and pinch function, evaluating effective treatment
interventions, and providing feedback to patients on nerve
function. The AxoGen portfolio of products is available in the
United States, Canada, the United Kingdom, and several other
European and international countries.
Cautionary Statements Concerning
Forward-Looking Statements This Press Release contains
"forward-looking" statements as defined in the Private Securities
Litigation Reform Act of 1995. These statements are based on
management's current expectations or predictions of future
conditions, events, or results based on various assumptions and
management's estimates of trends and economic factors in the
markets in which we are active, as well as our business plans.
Words such as "expects," "anticipates," "intends," "plans,"
"believes," "seeks," "estimates," "projects," "forecasts,"
"continue," "may," "should," "will," and variations of such words
and similar expressions are intended to identify such
forward-looking statements. The forward-looking statements may
include, without limitation, statements regarding our assessment on
our internal control over financial reporting, our growth, our 2017
guidance, product development, product potential, financial
performance, sales growth, product adoption, market awareness of
our products, data validation, our visibility at and sponsorship of
conferences and educational events. The forward-looking statements
are subject to risks and uncertainties, which may cause results to
differ materially from those set forth in the statements.
Forward-looking statements in this release should be evaluated
together with the many uncertainties that affect AxoGen's business
and its market, particularly those discussed in the risk factors
and cautionary statements in AxoGen's filings with the Securities
and Exchange Commission. Forward-looking statements are not
guarantees of future performance, and actual results may differ
materially from those projected. The forward-looking statements are
representative only as of the date they are made and, except as
required by law, AxoGen assumes no responsibility to update any
forward-looking statements, whether as a result of new information,
future events, or otherwise.
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AXOGEN, INC. |
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CONDENSED CONSOLIDATED BALANCE
SHEETS |
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March 31, |
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2017 |
December 31, |
|
(unaudited) |
2016 |
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Assets |
|
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|
|
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Current assets: |
|
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|
|
|
|
|
|
Cash and
cash equivalents |
$ |
25,913,765 |
|
|
|
|
$ |
30,014,405 |
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|
|
Accounts
receivable, net |
|
8,383,925 |
|
|
|
|
|
8,052,203 |
|
|
|
Inventory |
|
5,850,730 |
|
|
|
|
|
5,458,840 |
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Prepaid
expenses and other |
|
749,437 |
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|
|
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|
511,804 |
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Total current assets |
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40,897,857 |
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|
44,037,252 |
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Property and equipment, net |
|
1,484,279 |
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|
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|
1,494,247 |
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Intangible assets |
|
890,688 |
|
|
|
|
|
828,979 |
|
|
|
|
$ |
43,272,824 |
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$ |
46,360,478 |
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Liabilities and Shareholders’ Equity
(Deficit) |
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Current liabilities: |
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Borrowings under revolving loan agreement |
$ |
3,976,320 |
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$ |
4,025,023 |
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Accounts
payable and accrued expenses |
|
6,660,267 |
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|
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|
7,002,165 |
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Current
maturities of long term obligations |
|
22,913 |
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|
20,899 |
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Deferred
revenue, current |
|
35,250 |
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|
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|
33,282 |
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Total current liabilities |
|
10,694,750 |
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|
11,081,369 |
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Long Term Obligations, net of current maturities and
deferred financing fees |
|
20,276,634 |
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|
20,265,745 |
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Deferred lease |
|
89,888 |
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|
-- |
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Deferred revenue |
|
86,818 |
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|
|
|
|
92,215 |
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Total liabilities |
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31,148,090 |
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|
31,439,329 |
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Shareholders’ equity (deficit): |
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Common
stock, $.01 par value; 50,000,000 shares authorized; 33,063,960 and
33,008,865 shares issued and outstanding |
|
330,639 |
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|
330,088 |
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Additional paid-in capital |
|
133,439,943 |
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|
132,474,884 |
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Accumulated deficit |
|
(121,645,848 |
) |
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(117,883,823 |
) |
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Total shareholders’
equity |
|
12,124,734 |
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|
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|
14,921,149 |
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$ |
43,272,824 |
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$ |
46,360,478 |
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AXOGEN, INC. |
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CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
|
Three Months ended March 31, 2017 and
2016 |
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(unaudited) |
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2017 |
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2016 |
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Revenues |
$ |
12,241,073 |
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$ |
8,111,759 |
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Cost of goods sold |
|
1,915,648 |
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|
1,405,591 |
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Gross profit |
|
10,325,425 |
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|
6,706,168 |
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Costs and expenses: |
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Sales and
marketing |
|
8,610,482 |
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|
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|
6,205,875 |
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Research
and development |
|
1,411,136 |
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|
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|
978,340 |
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General
and administrative |
|
3,504,039 |
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|
2,144,757 |
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Total costs and expenses |
|
13,525,657 |
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|
|
|
|
9,328,972 |
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Loss from operations |
|
(3,200,232 |
) |
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|
(2,622,804 |
) |
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Other expense: |
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|
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|
|
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Interest
expense |
|
(507,549 |
) |
|
|
|
|
|
(1,003,027 |
) |
|
|
Interest
expense – deferred financing costs |
|
(44,491 |
) |
|
|
|
|
|
(30,810 |
) |
|
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Other
expense |
|
(9,753 |
) |
|
|
|
|
|
(19,450 |
) |
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Total other expense |
|
(561,793 |
) |
|
|
|
|
|
(1,053,287 |
) |
|
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Net loss |
$ |
(3,762,025 |
) |
|
|
|
|
$ |
(3,676,091 |
) |
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|
Weighted
Average Common Shares outstanding – basic and diluted |
|
33,026,433 |
|
|
|
|
|
|
29,994,066 |
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Loss Per
Common share – basic and diluted |
$ |
(0.11 |
) |
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|
$ |
(0.12 |
) |
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AXOGEN, INC. |
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RECONCILIATION OF GAAP FINANCIAL MEASURES TO
NON-GAAP FINANCIAL MEASURES |
|
Three Months ended March 31, 2017 and
2016 |
|
(unaudited) |
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Three Months Ended |
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|
March 31, |
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|
March 31, |
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|
2017 |
|
|
|
2016 |
|
|
|
Net loss |
$ |
(3,762,025 |
) |
|
|
|
|
$ |
(3,676,091 |
) |
|
|
Depreciation and amortization expense |
|
108,359 |
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|
|
|
|
|
78,856 |
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|
|
Amortization expense of intangible assets |
|
23,189 |
|
|
|
|
|
|
16,016 |
|
|
|
Income Taxes |
|
9,801 |
|
|
|
|
|
|
21,427 |
|
|
|
Interest expense |
|
507,549 |
|
|
|
|
|
|
1,003,027 |
|
|
|
Interest expense - deferred financing costs |
|
44,491 |
|
|
|
|
|
|
30,810 |
|
|
|
EBITDA - non GAAP |
$ |
(3,068,636 |
) |
|
|
|
|
$ |
(2,525,955 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non Cash Stock
Compensation Expense |
|
848,589 |
|
|
|
|
182,955 |
|
|
|
Adjusted EBITDA - non GAAP |
$ |
(2,220,047 |
) |
|
|
$ |
(2,343,000 |
) |
|
|
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|
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AXOGEN, INC. |
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
|
Three Months ended March 31, 2017 and
2016 |
|
(unaudited) |
|
|
|
|
2017 |
|
2016 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
Net
loss |
$ |
(3,762,025 |
) |
|
|
|
|
$ |
(3,676,091 |
) |
|
|
Adjustments to reconcile net loss to net cash used for operating
activities: |
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
108,359 |
|
|
|
|
|
|
78,856 |
|
|
|
Amortization of intangible assets |
|
23,189 |
|
|
|
|
|
|
16,016 |
|
|
|
Amortization of deferred financing costs |
|
44,491 |
|
|
|
|
|
|
30,810 |
|
|
|
Provision
for bad debt |
|
34,747 |
|
|
|
|
|
|
80,651 |
|
|
|
Share-based compensation |
|
848,589 |
|
|
|
|
|
|
182,955 |
|
|
|
Interest
added to note payable |
|
-- |
|
|
|
|
|
|
71,950 |
|
|
|
Change in
assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
Accounts
receivable |
|
(366,469 |
) |
|
|
|
|
|
(588,243 |
) |
|
|
Inventory |
|
(391,890 |
) |
|
|
|
|
|
(581,980 |
) |
|
|
Prepaid
expenses and other |
|
(237,633 |
) |
|
|
|
|
|
(274,114 |
) |
|
|
Accounts
payable and accrued expenses |
|
(341,899 |
) |
|
|
|
|
|
55,479 |
|
|
|
Deferred
revenue |
|
86,459 |
|
|
|
|
|
|
(5,396 |
) |
|
|
Net cash used for operating activities |
|
(3,954,082 |
) |
|
|
|
|
|
(4,609,107 |
) |
|
|
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|
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|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
Purchase
of property and equipment |
|
(98,391 |
) |
|
|
|
|
|
(402,927 |
) |
|
|
Acquisition of intangible assets |
|
(84,898 |
) |
|
|
|
|
|
(85,416 |
) |
|
|
Net cash used for investing activities |
|
(183,289 |
) |
|
|
|
|
|
(488,343 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
Borrowing
on revolving loan |
|
11,247,114 |
|
|
|
|
|
|
-- |
|
|
|
Payments
on revolving loan |
|
(11,295,817 |
) |
|
|
|
|
|
-- |
|
|
|
Repayments of long term debt |
|
(5,158 |
) |
|
|
|
|
|
-- |
|
|
|
Debt
issuance costs |
|
(26,429 |
) |
|
|
|
|
|
-- |
|
|
|
Proceeds
from exercise of stock options |
|
117,021 |
|
|
|
|
|
|
136,702 |
|
|
|
Net cash provided by financing activities |
|
36,731 |
|
|
|
|
|
|
136,702 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash and cash equivalents |
|
(4,100,640 |
) |
|
|
|
|
|
(4,960,748 |
) |
|
|
Cash and cash equivalents, beginning of year |
|
30,014,405 |
|
|
|
|
|
|
25,909,500 |
|
|
|
Cash and cash equivalents, end of period |
$ |
25,913,765 |
|
|
|
|
|
$ |
20,948,752 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow
activity: |
|
|
|
|
|
|
|
|
|
|
Cash paid
for interest |
$ |
505,020 |
|
|
|
|
|
$ |
900,410 |
|
|
AXOGEN, INC. |
|
|
|
|
|
|
|
|
RECONCILIATION OF GAAP FINANCIAL MEASURES TO
NON-GAAP FINANCIAL MEASURES |
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
|
|
Quarter Ended |
|
|
|
Quarter Ended |
|
|
|
Quarter Ended |
|
|
|
Year Ended |
|
|
|
Quarter Ended |
|
|
|
March 31, |
|
|
June 30, |
|
|
September 30, |
|
|
December 31, |
|
|
December 31, |
|
|
March 31, |
2016 |
|
2016 |
|
|
2016 |
|
2016 |
|
|
2016 |
|
2017 |
|
Net loss |
$ |
(3,676,091 |
) |
|
|
$ |
(2,802,696 |
) |
|
|
$ |
(2,305,373 |
) |
|
|
$ |
(5,626,984 |
) |
|
|
$ |
(14,411,144 |
) |
|
|
$ |
(3,762,025 |
) |
|
Depreciation and amortization expense |
|
78,856 |
|
|
|
|
88,734 |
|
|
|
|
95,543 |
|
|
|
|
98,484 |
|
|
|
|
361,617 |
|
|
|
|
108,359 |
|
|
Amortization expense of intangible assets |
|
16,016 |
|
|
|
|
16,017 |
|
|
|
|
16,017 |
|
|
|
|
26,821 |
|
|
|
|
74,871 |
|
|
|
|
23,189 |
|
|
Income
Taxes |
|
21,427 |
|
|
|
|
-- |
|
|
|
|
-- |
|
|
|
|
-- |
|
|
|
|
-- |
|
|
|
|
9,801 |
|
|
Interest
expense |
|
1,003,027 |
|
|
|
|
1,163,413 |
|
|
|
|
1,089,134 |
|
|
|
|
2,130,694 |
|
|
|
|
5,386,268 |
|
|
|
|
507,549 |
|
|
Interest
expense - deferred financing costs |
|
30,810 |
|
|
|
|
32,696 |
|
|
|
|
31,748 |
|
|
|
|
780,135 |
|
|
|
|
875,389 |
|
|
|
|
44,491 |
|
|
EBITDA - non GAAP |
$ |
(2,525,955 |
) |
|
|
$ |
(1,501,836 |
) |
|
|
$ |
(1,072,931 |
) |
|
|
$ |
(2,590,850 |
) |
|
|
$ |
(7,712,999 |
) |
|
|
$ |
(3,068,636 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non Cash
Stock Compensation Expense |
|
182,955 |
|
|
|
|
569,834 |
|
|
|
|
293,575 |
|
|
|
|
343,913 |
|
|
|
|
1,390,277 |
|
|
|
|
848,589 |
|
|
Adjusted EBITDA - non GAAP |
$ |
(2,343,000 |
) |
|
|
$ |
(932,002 |
) |
|
|
$ |
(779,356 |
) |
|
|
$ |
(2,246,937 |
) |
|
|
$ |
(6,322,722 |
) |
|
|
$ |
(2,220,047 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contacts:
AxoGen, Inc.
Peter J. Mariani, Chief Financial Officer
InvestorRelations@AxoGenInc.com
The Trout Group – Investor Relations
Brian Korb
646.378.2923
bkorb@troutgroup.com
Axogen (NASDAQ:AXGN)
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