AxoGen, Inc. Reports Financial Results for Third Quarter 2016
November 02 2016 - 4:01PM
AxoGen, Inc. (NASDAQ:AXGN), a global leader in innovative surgical
solutions for peripheral nerve injuries, today announced financial
results for the third quarter ended September 30, 2016 and provided
a business update.
Third Quarter 2016 Financial and Recent
Business Highlights
- Third quarter revenue of $11.2 million up 37% compared to 2015
revenue of $8.2 million
- Year-to-date revenue of $29.7 million up 52% compared to 2015
of $19.5 million
- Gross margin of 84.9% compared to 2015 gross margin of
82.7%
- Improved EBITDA loss of $1.1 million compared to 2015 EBITDA
loss of $1.8 million
- Increasing awareness of nerve injury and repair seen in
multiple conference presentations at the Annual American Society
for Surgery of the Hand Meeting and American Association of Oral
and Maxillofacial Surgeons
- Appointed former Covidien executive Amy Wendell to the Board of
Directors
- Raised $18.6 million in net proceeds through a public offering
of common stock on October 13th
- Refinanced $25.0 million debt facility on October 25th which
will reduce annual interest costs by at least $1.5 million
“We are pleased with another successful quarter
including record revenues of $11.2 million, continued growth in
active and new accounts, and a significantly improved balance
sheet” commented Karen Zaderej, President and Chief Executive
Officer. “With a large presence at two recent medical meetings,
it’s particularly pleasing to see surgeons becoming more familiar
with the role of our portfolio of products for peripheral nerve
repair. Our recent equity raise and the refinancing of our
debt provide us with a solid capital structure as we continue to
drive awareness and growth in this emerging nerve repair
market.”
Additional Operational and Financial
Highlights
- Increased active accounts in the third quarter to 414 up 40%
from 296 a year ago
- Ended the quarter with 45 direct sales representatives as
compared to 38 a year ago; 23 independent agencies, consistent with
prior year
- Conducted 11 national education courses year to date and will
complete two more for a total of 13 courses by the end of this
calendar year
- Ended the quarter with $16.0 million in cash and $25.0 million
in debt
- Use of cash in the quarter was $2.3 million
- Seven peer reviewed publications year to date on the AxoGen
nerve repair portfolio
- After giving effect for the recent equity raise and debt
refinancing as of September 30, 2016, pro forma cash was
approximately $31.7 million and pro forma bank debt was
approximately $25.0 million
2016 Financial Guidance
Management maintains its full year 2016 revenue guidance of over
$40 million and full year 2016 gross margin guidance to exceed
80%.
Introducing 2017 Financial
Guidance Management expects 2017 annual revenue will grow
at least 40% over 2016 revenue and gross margins will remain above
80%.
Upcoming EventsThe Company will
be conducting its first Analyst and Investor Event on Monday,
November 21st in New York City. This event will include a
review of clinical data and best practices in the repair of
peripheral nerves from surgeons that use the AxoGen portfolio of
products and a business review from Company management. Those
interested in attending this event can register by sending an email
to AxoGenEvents@TroutGroup.com.
Conference CallThe Company will
host a conference call and webcast for the investment community
today at 4:30 PM 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 may 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 AxoGen AxoGen (AXGN) is a
global leader in innovative surgical solutions for peripheral nerve
injuries. 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, and 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. Along with these core
surgical products, AxoGen also offers AxoTouch™ Two-Point
Discriminator and AcroVal™ Neurosensory & Motor Testing System.
These evaluation and measurement tools assist healthcare
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 European and
international countries.
Cautionary Statements Concerning Forward-Looking
StatementsThis 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" 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 growth, our
2016 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.
About Non-GAAP Financial MeasuresTo supplement
our consolidated financial statements, we use the non-GAAP
financial measure of EBITDA, which measures earnings before
interest, income taxes, depreciation and amortization.
We use this non-GAAP financial measure for
financial and operational decision-making and as a means to
evaluate period-to-period comparisons. We believe that this
non-GAAP financial measure provides meaningful supplemental
information regarding our performance and liquidity and that both
management and investors benefit from referring this non-GAAP
financial measure in assessing our performance and when planning,
forecasting, and analyzing future periods. We believe this
non-GAAP financial measure is useful to investors because (1) it
allows for greater transparency with respect to key metrics used by
management in its financial and operational decision-making and (2)
it is used by our institutional investors and the analyst community
to help them analyze the performance of our business.
AXOGEN, INC. |
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CONDENSED CONSOLIDATED BALANCE
SHEETS |
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September 30, |
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December 31, |
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2016 |
2015 |
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(unaudited) |
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Assets |
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Current assets: |
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Cash and
cash equivalents |
$ |
16,003,245 |
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$ |
25,909,500 |
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Accounts
receivable |
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7,004,756 |
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4,782,989 |
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Inventory |
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4,970,819 |
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3,933,960 |
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Prepaid
expenses and other |
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685,711 |
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424,925 |
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Total current assets |
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28,664,531 |
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35,051,374 |
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Property and equipment, net |
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1,320,711 |
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970,870 |
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Intangible assets |
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787,523 |
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678,082 |
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$ |
30,772,765 |
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$ |
36,700,326 |
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Liabilities and Shareholders’ Equity
(Deficit) |
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Current liabilities: |
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Accounts
payable and accrued expenses |
$ |
4,559,394 |
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$ |
3,695,127 |
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Current
deferred revenue |
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36,032 |
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|
14,118 |
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Total current liabilities |
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4,595,426 |
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3,709,245 |
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Note Payable - Revenue Interest Purchase
Agreement |
|
24,996,070 |
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|
24,701,693 |
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Long Term Deferred Revenue |
|
77,610 |
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|
93,797 |
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Total liabilities |
|
29,669,106 |
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28,504,735 |
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Shareholders’ equity: |
|
302,090 |
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|
299,846 |
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Common
stock, $.01 par value; 50,000,000 shares authorized;
30,209,036 and 29,984,591 shares issued and outstanding |
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Additional
paid-in capital |
|
113,058,408 |
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|
111,368,424 |
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Accumulated
deficit |
|
(112,256,839 |
) |
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(103,472,679 |
) |
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Total shareholders’
equity |
|
1,103,659 |
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|
8,195,591 |
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$ |
30,772,765 |
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$ |
36,700,326 |
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AXOGEN, INC. |
CONDENSED CONSONLIDATED STATEMENTS OF
OPERATIONS |
Three and Nine Months ended September 30, 2016
and 2015 |
(unaudited) |
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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September 30, |
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September 30, |
2016 |
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2015 |
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2016 |
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2015 |
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Revenues |
$ |
11,205,224 |
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$ |
8,153,675 |
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$ |
29,698,866 |
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$ |
19,522,244 |
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Cost of goods sold |
|
1,697,443 |
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1,410,416 |
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4,637,446 |
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3,433,138 |
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Gross profit |
|
9,507,781 |
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|
6,743,259 |
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|
25,061,420 |
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|
16,089,106 |
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Costs and expenses: |
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Sales and
marketing |
|
7,090,059 |
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5,512,613 |
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|
20,076,297 |
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|
14,257,397 |
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Research and
development |
|
1,118,358 |
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|
936,015 |
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|
3,033,521 |
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2,343,450 |
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General and
administrative |
|
2,481,051 |
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2,212,457 |
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7,362,063 |
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|
6,103,058 |
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Total costs and expenses |
|
10,689,468 |
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|
8,661,085 |
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|
30,471,881 |
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|
22,703,905 |
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Loss
from operations |
|
(1,181,687 |
) |
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|
(1,917,826 |
) |
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|
(5,410,461 |
) |
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|
(6,614,799 |
) |
Other income (expense): |
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Interest
expense |
|
(1,089,134 |
) |
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|
(1,042,258 |
) |
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|
(3,255,574 |
) |
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|
(3,060,779 |
) |
Interest
expense—deferred financing costs |
|
(31,748 |
) |
|
|
|
(31,419 |
) |
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|
(95,254 |
) |
|
|
(96,375 |
) |
Other income
(expense) |
|
(2,804 |
) |
|
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|
12,645 |
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|
(22,871 |
) |
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|
27,021 |
|
Total other income (expense) |
|
(1,123,686 |
) |
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|
(1,061,032 |
) |
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|
(3,373,699 |
) |
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|
(3,130,133 |
) |
Net
loss |
$ |
(2,305,373 |
) |
|
|
$ |
(2,978,858 |
) |
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$ |
(8,784,160 |
) |
|
$ |
(9,744,932 |
) |
Weighted Average Common
Shares outstanding – basic and diluted |
|
30,152,279 |
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26,841,060 |
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|
30,075,715 |
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|
24,778,123 |
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Loss Per Common share -
basic and diluted |
$ |
(0.08 |
) |
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$ |
(0.11 |
) |
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$ |
(0.29 |
) |
|
$ |
(0.39 |
) |
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AXOGEN, INC. |
RECONCILIATION OF GAAP FINANCIAL MEASURES TO
NON-GAAP FINANCIAL MEASURES |
Three and Nine Months ended September 30, 2016
and 2015 |
(unaudited) |
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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September 30, |
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September 30, |
2016 |
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2015 |
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2016 |
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2015 |
|
Net
loss |
$ |
(2,305,373 |
) |
|
|
$ |
(2,978,858 |
) |
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$ |
(8,784,160 |
) |
|
$ |
(9,744,932 |
) |
Depreciation
and amortization expense |
|
95,543 |
|
|
|
|
54,428 |
|
|
|
|
263,133 |
|
|
|
142,038 |
|
Amortization
expense of intangible assets |
|
16,017 |
|
|
|
|
11,299 |
|
|
|
|
48,050 |
|
|
|
34,009 |
|
Interest
expense |
|
1,089,134 |
|
|
|
|
1,042,258 |
|
|
|
|
3,255,574 |
|
|
|
3,060,779 |
|
Interest
expense - deferred financing costs |
|
31,748 |
|
|
|
|
31,419 |
|
|
|
|
95,254 |
|
|
|
96,375 |
|
EBITDA - non
GAAP |
$ |
(1,072,931 |
) |
|
|
$ |
(1,839,454 |
) |
|
|
$ |
(5,122,149 |
) |
|
$ |
(6,411,731 |
) |
|
|
|
|
|
|
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|
|
|
|
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|
AXOGEN, INC. |
|
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|
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
|
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|
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|
Nine Months ended September 30, 2016 and
2015 |
|
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|
|
|
|
|
|
(unaudited) |
|
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|
|
|
|
|
|
|
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|
|
|
|
|
|
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|
2016 |
2015 |
|
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|
|
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|
Cash flows from operating activities: |
|
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|
Net
loss |
$ |
(8,784,160 |
) |
|
|
$ |
(9,744,932 |
) |
|
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|
Adjustments
to reconcile net loss to net cash used for operating
activities: |
|
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|
|
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|
|
|
|
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|
Depreciation |
|
263,133 |
|
|
|
|
142,038 |
|
|
|
|
|
|
|
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|
|
Amortization
of intangible assets |
|
48,050 |
|
|
|
|
34,009 |
|
|
|
|
|
|
|
|
|
|
Amortization
of deferred financing costs |
|
95,253 |
|
|
|
|
96,375 |
|
|
|
|
|
|
|
|
|
|
Provision
for bad debts |
|
80,934 |
|
|
|
|
-- |
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation |
|
1,046,364 |
|
|
|
|
1,031,218 |
|
|
|
|
|
|
|
|
|
|
Interest
added to note |
|
199,124 |
|
|
|
|
451,590 |
|
|
|
|
|
|
|
|
|
|
Change in
assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable |
|
(2,302,701 |
) |
|
|
|
(1,770,494 |
) |
|
|
|
|
|
|
|
|
|
Inventory |
|
(1,036,859 |
) |
|
|
|
(488,135 |
) |
|
|
|
|
|
|
|
|
|
Prepaid
expenses and other |
|
(260,786 |
) |
|
|
|
(180,862 |
) |
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses |
|
864,267 |
|
|
|
|
1,655,114 |
|
|
|
|
|
|
|
|
|
|
Deferred
Revenue |
|
5,727 |
|
|
|
|
(16,187 |
) |
|
|
|
|
|
|
|
|
|
Net
cash used for operating activities |
|
(9,781,654 |
) |
|
|
|
(8,790,266 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
Cash flows from
investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of
property and equipment |
|
(612,974 |
) |
|
|
|
(353,093 |
) |
|
|
|
|
|
|
|
|
|
Acquisition
of intangible assets |
|
(157,491 |
) |
|
|
|
(92,184 |
) |
|
|
|
|
|
|
|
|
|
Net
cash used for investing activities |
|
(770,465 |
) |
|
|
|
(445,277 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from issuance of common stock |
|
-- |
|
|
|
|
30,970,735 |
|
|
|
|
|
|
|
|
|
|
Debt
issuance costs |
|
-- |
|
|
|
|
(180,142 |
) |
|
|
|
|
|
|
|
|
|
Proceeds
from exercise of stock options |
|
645,864 |
|
|
|
|
164,626 |
|
|
|
|
|
|
|
|
|
|
Net
cash provided by financing activities |
|
645,864 |
|
|
|
|
30,955,219 |
|
|
|
|
|
|
|
|
|
|
Net
increase / (decrease) in cash and cash equivalents |
|
(9,906,255 |
) |
|
|
|
21,719,676 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of year |
|
25,909,500 |
|
|
|
|
8,215,791 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period |
$ |
16,003,245 |
|
|
|
$ |
29,935,467 |
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow
activity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid
for interest |
$ |
3,031,528 |
|
|
|
$ |
1,949,381 |
|
|
|
|
|
|
|
|
|
|
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
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