In a release issued under the same headline earlier today
by Organogenesis Holdings Inc. (Nasdaq: ORGO), please note
that in the third bullet of the First Quarter 2021 Financial
Results Summary, the net revenue from the sale of non-PuraPly
products was $61.2 million, not $32.0 million. The corrected
release follows:
Organogenesis Holdings Inc. (Nasdaq: ORGO), a leading
regenerative medicine company focused on the development,
manufacture, and commercialization of product solutions for the
Advanced Wound Care and Surgical & Sports Medicine markets,
today reported financial results for the three months ended March
31, 2021.
First Quarter 2021 Financial Results
Summary:
- Net revenue of $102.6 million for the first quarter of 2021, up
66% compared to net revenue of $61.7 million for the first quarter
of 2020. Net revenue is based upon:
- Net revenue from Advanced Wound Care products for the first
quarter of 2021 of $90.7 million, an increase of 77% from the first
quarter of 2020.
- Net revenue from Surgical & Sports Medicine products for
the first quarter of 2021 of $11.8 million, an increase of 13% from
the first quarter of 2020.
- Net revenue from the sale of PuraPly products of $41.3 million
for the first quarter of 2021, an increase of 27% from the first
quarter of 2020.
- Net revenue from the sale of non-PuraPly products of $61.2
million, an increase of 109% from the first quarter of 2020.
- Net income of $9.9 million for the first quarter of 2021,
compared to a net loss of $16.3 million for the first quarter of
2020, an increase of $26.3 million.
- Adjusted EBITDA income of $16.0 million for the first quarter
of 2021, compared to Adjusted EBITDA loss of $10.9 million for the
first quarter of 2020, an increase of $27.0 million.
First Quarter 2021
Highlights:
- On January 11, 2021, the Company
announced that the U.S. Food and Drug Administration granted ReNu®,
a cryopreserved amniotic suspension allograft for the management of
symptoms associated with knee osteoarthritis, Regenerative Medicine
Advanced Therapy (RMAT) designation.
- On January 14, 2021, the Company
announced that the first patient was enrolled in its pivotal Phase
3 clinical trial evaluating the safety and efficacy of ReNu®, a
cryopreserved amniotic suspension allograft, for the management of
symptoms associated with knee osteoarthritis.
- On February 16, 2021, the Company
announced the appointment of David C. Francisco as the Company’s
Chief Financial Officer, effective February 15, 2021. In connection
with the hiring of Mr. Francisco, Henry Hagopian will serve as the
Company’s Senior Vice President of Finance and Treasurer.
“2021 is off to a strong start,” said Gary S.
Gillheeney, Sr., President and Chief Executive Officer of
Organogenesis. “We delivered significant year-over-year revenue
growth across both our Advanced Wound Care and Surgical and Sports
Medicine portfolios driven by strong sales of our amniotic and
PuraPly products. We are pleased that successful execution of our
PuraPly strategy generated PuraPly sales well ahead of our
expectations. With continued strong execution against our
commercial strategy, we also significantly improved our
profitability.”
Mr. Gillheeney, Sr. continued: “The fundamentals
of our business and strategy remain strong and we are well
positioned to continue to deliver strong operating and financial
performance over the balance of 2021. We remain confident in our
ability to execute our long-term strategic plan as we deliver on
our mission to provide integrated healing solutions that
substantially improve medical outcomes while lowering the overall
cost of care.”
First Quarter 2021 Results:
The following table represents net revenue by
product grouping for the three months ended March 31, 2021 and
March 31, 2020, respectively:
|
|
Three Months EndedMarch
31, |
|
Change |
|
|
2021 |
|
2020 |
|
$ |
|
% |
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except for percentages) |
|
Advanced Wound Care |
|
$ |
90,708 |
|
|
$ |
51,288 |
|
|
$ |
39,420 |
|
|
|
77 |
% |
Surgical & Sports
Medicine |
|
|
11,844 |
|
|
|
10,444 |
|
|
|
1,400 |
|
|
|
13 |
% |
Net revenue |
|
$ |
102,552 |
|
|
$ |
61,732 |
|
|
$ |
40,820 |
|
|
|
66 |
% |
Net revenue for the first quarter of 2021 was $102.6 million,
compared to $61.7 million for the first quarter of 2020, an
increase of $40.8 million, or 66%. The increase in net revenue was
driven by a $39.4 million increase, or 77%, in net revenue of
Advanced Wound Care products and a $1.4 million increase, or 13%,
in net revenue of Surgical & Sports Medicine products, compared
to the first quarter of 2020.
Gross profit for the first quarter of 2021 was $77.1 million, or
75% of net revenue, compared to $42.9 million, or 70% of net
revenue, for the first quarter of 2020, an increase of $34.1
million, or 79%. The increase in gross profit resulted primarily
from increased sales volume due to the strength in our Advanced
Wound Care and Surgical & Sports Medicine products as well as a
shift in product mix to our higher gross margin products.
Operating expenses for the first quarter of 2021 were $64.4
million, compared to $58.0 million for the first quarter of 2020,
an increase of $6.4 million, or 11%. R&D expense was $6.2
million for the first quarter of 2021, compared to $5.4 million in
the first quarter of 2020, an increase of $0.8 million, or 15%.
Selling, general and administrative expenses were $58.2 million,
compared to $52.6 million in the first quarter of 2020, an increase
of $5.6 million, or 11%.
Operating income for the first quarter of 2021 was $12.6
million, compared to an operating loss of $15.1 million for the
first quarter of 2020, an increase of $27.7 million.
Total other expenses, net, for the first quarter of 2021 were
$2.5 million, compared to $1.2 million for the first quarter of
2020, an increase of $1.3 million, or 107%. The increase was
primarily due to a $1.3 million gain for the three months ended
March 31, 2020 related to the settlement of the deferred
acquisition consideration dispute with the sellers of NuTech
Medical.
Net income for the first quarter of 2021 was $9.9 million, or
$0.07 per share, compared to a net loss of $16.3 million, or $0.16
per share, for the first quarter of 2020, an increase of $26.3
million, or $0.23 per share.
Adjusted EBITDA of $16.0 million for the first quarter of 2021,
compared to Adjusted EBITDA loss of $10.9 million for the first
quarter of 2020, an increase of $27.0 million.
As of March 31, 2021, the Company had $78.0 million in cash and
restricted cash and $88.1 million in debt obligations, of which
$18.4 million were capital lease obligations, compared to $84.8
million in cash and restricted cash and $84.8 million in debt
obligations, of which $15.1 million were capital lease obligations
as of December 31, 2020.
Fiscal Year 2021 Guidance:
For the twelve months ended December 31, 2021, the Company now
expects:
- Net revenue of between $438 million and $454 million,
representing an increase of approximately 29% to 34%
year-over-year, as compared to net revenue of $338.3 million for
the twelve months ended December 31, 2020.
- The 2021 net revenue guidance range assumes:
- Net revenue from Advanced Wound Care products of between $409
million and $422 million, representing an increase of approximately
39% to 43% year-over-year as compared to net revenue of $294.6
million for the twelve months ended December 31, 2020.
- Net revenue from Surgical & Sports Medicine products of
between $29 million and $32 million, representing a decrease of
approximately 27% to 34% year-over-year as compared to net revenue
of $43.7 million for the twelve months ended December 31,
2020.
- Net revenue from the sale of PuraPly products of between $179
million and $187 million, representing an increase of approximately
22% to 27% year-over-year, as compared to net revenue of $147.3
million for the twelve months ended December 31, 2020.
- GAAP net income positive for the twelve months ended December
31, 2021.
- Adjusted EBITDA positive for the twelve months ended December
31, 2021.
First Quarter 2021 Earnings Conference
Call:
Financial results will be reported after the
market closes on Monday, May 10. Management will host a conference
call at 5:00 p.m. Eastern Time on May 10 to discuss the results of
the quarter, and provide a corporate update with a question and
answer session. Those who would like to participate may dial
866-795-3142 (409-937-8908 for international callers) and provide
access code 9199306. A live webcast of the call will also be
provided on the investor relations section of the Company's website
at investors.organogenesis.com.
For those unable to participate, a replay of the
call will be available for two weeks at 855-859-2056 (404-537-3406
for international callers); access code 9199306. The webcast will
be archived at investors.organogenesis.com.
|
ORGANOGENESIS HOLDINGS INC.CONSOLIDATED
BALANCE SHEETS(amounts in thousands, except share
and per share data) |
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
|
2021 |
|
2020 |
Assets |
|
|
|
|
Current
assets: |
|
|
|
|
Cash |
|
$ |
77,458 |
|
|
$ |
84,394 |
|
Restricted cash |
|
|
500 |
|
|
|
412 |
|
Accounts receivable, net |
|
|
72,003 |
|
|
|
56,804 |
|
Inventory |
|
|
29,721 |
|
|
|
27,799 |
|
Prepaid expenses and other current assets |
|
|
5,557 |
|
|
|
4,935 |
|
Total current assets |
|
|
185,239 |
|
|
|
174,344 |
|
Property and
equipment, net |
|
|
62,431 |
|
|
|
60,068 |
|
Intangible
assets, net |
|
|
29,379 |
|
|
|
30,622 |
|
Goodwill |
|
|
28,772 |
|
|
|
28,772 |
|
Operating
lease right-of-use assets, net |
|
|
12,706 |
|
|
|
- |
|
Deferred tax
asset, net |
|
|
18 |
|
|
|
18 |
|
Other
assets |
|
|
636 |
|
|
|
670 |
|
Total assets |
|
$ |
319,181 |
|
|
$ |
294,494 |
|
Liabilities and Stockholders’ Equity |
|
|
|
|
Current
liabilities: |
|
|
|
|
Deferred acquisition consideration |
|
$ |
- |
|
|
$ |
483 |
|
Current portion of term loan |
|
|
16,875 |
|
|
|
16,666 |
|
Current portion of finance lease obligations |
|
|
3,870 |
|
|
|
3,619 |
|
Current portion of operating lease obligations |
|
|
4,004 |
|
|
|
- |
|
Current portion of deferred rent and lease incentive
obligation |
|
|
- |
|
|
|
95 |
|
Accounts payable |
|
|
23,877 |
|
|
|
23,381 |
|
Accrued expenses and other current liabilities |
|
|
25,383 |
|
|
|
23,973 |
|
Total current liabilities |
|
|
74,009 |
|
|
|
68,217 |
|
Line of
credit |
|
|
10,000 |
|
|
|
10,000 |
|
Term loan,
net of current portion |
|
|
42,876 |
|
|
|
43,044 |
|
Deferred
acquisition consideration, net of current portion |
|
|
1,436 |
|
|
|
1,436 |
|
Earnout
liability |
|
|
3,689 |
|
|
|
3,985 |
|
Deferred
rent and lease incentive obligation, net of current portion |
|
|
- |
|
|
|
2,315 |
|
Finance
lease obligations, net of current portion |
|
|
10,516 |
|
|
|
11,442 |
|
Operating
lease obligations, net of current portion |
|
|
11,031 |
|
|
|
- |
|
Other
liabilities |
|
|
8,332 |
|
|
|
7,971 |
|
Total liabilities |
|
|
161,889 |
|
|
|
148,410 |
|
Commitments
and contingencies (Note 18) |
|
|
|
|
Stockholders’ equity: |
|
|
|
|
Total stockholders’ equity |
|
|
157,292 |
|
|
|
146,084 |
|
Total liabilities and stockholders’ equity |
|
$ |
319,181 |
|
|
$ |
294,494 |
|
|
|
|
|
|
|
ORGANOGENESIS HOLDINGS INC.CONSOLIDATED
STATEMENTS OF OPERATIONS(amounts in thousands,
except share and per share data) |
|
|
|
|
|
Three Months EndedMarch 31, |
|
|
2021 |
|
2020 |
Net revenue |
|
$ |
102,552 |
|
|
$ |
61,732 |
|
Cost of
goods sold |
|
|
25,495 |
|
|
|
18,793 |
|
Gross
profit |
|
|
77,057 |
|
|
|
42,939 |
|
Operating
expenses: |
|
|
|
|
Selling, general and administrative |
|
|
58,232 |
|
|
|
52,613 |
|
Research and development |
|
|
6,209 |
|
|
|
5,410 |
|
Total operating expenses |
|
|
64,441 |
|
|
|
58,023 |
|
Income
(loss) from operations |
|
|
12,616 |
|
|
|
(15,084 |
) |
Other
expense, net: |
|
|
|
|
Interest expense, net |
|
|
(2,470 |
) |
|
|
(2,510 |
) |
Gain on settlement of deferred acquisition consideration |
|
|
- |
|
|
|
1,295 |
|
Other income (expense), net |
|
|
(3 |
) |
|
|
21 |
|
Total other expense, net |
|
|
(2,473 |
) |
|
|
(1,194 |
) |
Net income
(loss) before income taxes |
|
|
10,143 |
|
|
|
(16,278 |
) |
Income tax
expense |
|
|
(200 |
) |
|
|
(35 |
) |
Net income
(loss) |
|
$ |
9,943 |
|
|
$ |
(16,313 |
) |
|
|
|
|
|
Net income
(loss), per share: |
|
|
|
|
Basic |
|
$ |
0.08 |
|
|
$ |
(0.16 |
) |
Diluted |
|
$ |
0.07 |
|
|
$ |
(0.16 |
) |
Weighted-average common shares outstanding |
|
|
|
|
Basic |
|
|
127,870,065 |
|
|
|
104,486,924 |
|
Diluted |
|
|
133,451,950 |
|
|
|
104,486,924 |
|
|
|
|
|
|
|
ORGANOGENESIS HOLDINGS INC.CONSOLIDATED
STATEMENT OF CASH FLOWS(amounts in thousands,
except share and per share data) |
|
|
|
|
|
Three Months EndedMarch 31, |
|
|
2021 |
|
2020 |
Cash
flows from operating activities: |
|
|
|
|
Net income (loss) |
|
$ |
9,943 |
|
|
$ |
(16,313 |
) |
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities: |
|
|
|
|
Depreciation |
|
|
1,010 |
|
|
|
902 |
|
Amortization of intangible assets |
|
|
1,243 |
|
|
|
817 |
|
Amortization of operating lease right-of-use assets |
|
|
1,129 |
|
|
|
- |
|
Non-cash interest expense |
|
|
72 |
|
|
|
46 |
|
Deferred interest expense |
|
|
525 |
|
|
|
470 |
|
Deferred rent expense and lease incentive obligation |
|
|
- |
|
|
|
92 |
|
Gain on settlement of deferred acquisition consideration |
|
|
- |
|
|
|
(1,295 |
) |
Recovery of certain notes receivable from related parties |
|
|
(179 |
) |
|
|
- |
|
Provision recorded for sales returns and doubtful accounts |
|
|
1,103 |
|
|
|
217 |
|
Loss on disposal of property and equipment |
|
|
239 |
|
|
|
201 |
|
Adjustment for excess and obsolete inventories |
|
|
2,290 |
|
|
|
769 |
|
Stock-based compensation |
|
|
698 |
|
|
|
209 |
|
Change in fair value of Earnout liability |
|
|
(296 |
) |
|
|
- |
|
Changes in operating assets and liabilities: |
|
|
|
|
Accounts receivable |
|
|
(16,301 |
) |
|
|
6,325 |
|
Inventory |
|
|
(4,212 |
) |
|
|
(4,287 |
) |
Prepaid expenses and other current assets |
|
|
(622 |
) |
|
|
(2,099 |
) |
Operating leases |
|
|
(1,210 |
) |
|
|
- |
|
Accounts payable |
|
|
1,842 |
|
|
|
(1,910 |
) |
Accrued expenses and other current liabilities |
|
|
1,411 |
|
|
|
(1,274 |
) |
Other liabilities |
|
|
(164 |
) |
|
|
(153 |
) |
Net cash used in operating activities |
|
|
(1,479 |
) |
|
|
(17,283 |
) |
Cash
flows from investing activities: |
|
|
|
|
Purchases of
property and equipment |
|
|
(4,957 |
) |
|
|
(4,243 |
) |
Proceeds
from the repayment of notes receivable from related parties |
|
|
179 |
|
|
|
- |
|
Net cash used in investing activities |
|
|
(4,778 |
) |
|
|
(4,243 |
) |
Cash
flows from financing activities: |
|
|
|
|
Proceeds
from term loan |
|
|
- |
|
|
|
10,000 |
|
Payments of
withholding taxes in connection with RSUs vesting |
|
|
(417 |
) |
|
|
- |
|
Proceeds
from the exercise of stock options |
|
|
984 |
|
|
|
816 |
|
Principal
repayments of finance lease obligations |
|
|
(675 |
) |
|
|
(544 |
) |
Payment of
deferred acquisition consideration |
|
|
(483 |
) |
|
|
(2,042 |
) |
Net cash (used in) provided by financing activities |
|
|
(591 |
) |
|
|
8,230 |
|
Change in cash and restricted cash |
|
|
(6,848 |
) |
|
|
(13,296 |
) |
Cash and
restricted cash, beginning of period |
|
|
84,806 |
|
|
|
60,370 |
|
Cash and
restricted cash, end of period |
|
$ |
77,958 |
|
|
$ |
47,074 |
|
Supplemental disclosure of cash flow
information: |
|
|
|
|
Cash paid
for interest |
|
$ |
1,937 |
|
|
$ |
2,244 |
|
Cash paid
for income taxes |
|
$ |
- |
|
|
$ |
- |
|
Supplemental disclosure of non-cash investing and financing
activities: |
|
|
|
|
Purchases of
property and equipment included in accounts payable and accrued
expenses |
|
$ |
306 |
|
|
$ |
2,942 |
|
Right-of-use
assets obtained through operating lease obligations |
|
$ |
310 |
|
|
$ |
- |
|
|
|
|
|
|
Non-GAAP Financial Measures
Our management uses financial measures that are not in
accordance with generally accepted accounting principles in the
United States, or GAAP, in addition to financial measures in
accordance with GAAP to evaluate our operating results. These
non-GAAP financial measures should be considered supplemental to,
and not a substitute for, our reported financial results prepared
in accordance with GAAP. Our management uses Adjusted EBITDA to
evaluate our operating performance and trends and make planning
decisions. Our management believes Adjusted EBITDA helps identify
underlying trends in our business that could otherwise be masked by
the effect of the items that we exclude. Accordingly, we believe
that Adjusted EBITDA provides useful information to investors and
others in understanding and evaluating our operating results,
enhancing the overall understanding of our past performance and
future prospects, and allowing for greater transparency with
respect to key financial metrics used by our management in its
financial and operational decision-making.
The following is a reconciliation of GAAP net income (loss) to
non-GAAP EBITDA and non-GAAP Adjusted EBITDA for each of the
periods presented:
|
|
Three Months EndedMarch 31, |
|
|
2021 |
|
2020 |
|
|
|
|
|
|
|
(in
thousands) |
Net income (loss) |
|
$ |
9,943 |
|
|
$ |
(16,313 |
) |
Interest expense, net |
|
|
2,470 |
|
|
|
2,510 |
|
Income tax expense |
|
|
200 |
|
|
|
35 |
|
Depreciation |
|
|
1,010 |
|
|
|
902 |
|
Amortization |
|
|
1,243 |
|
|
|
817 |
|
EBITDA |
|
|
14,866 |
|
|
|
(12,049 |
) |
Stock-based compensation expense |
|
|
698 |
|
|
|
209 |
|
Gain on settlement of deferred acquisition consideration (1) |
|
|
- |
|
|
|
(1,295 |
) |
Recovery of certain notes receivable from related parties (2) |
|
|
(179 |
) |
|
|
- |
|
Change in fair value of Earnout (3) |
|
|
(296 |
) |
|
|
- |
|
Restructuring charge (4) |
|
|
927 |
|
|
|
- |
|
Transaction cost (5) |
|
|
- |
|
|
|
243 |
|
Cancellation fee (6) |
|
|
- |
|
|
|
1,950 |
|
Adjusted
EBITDA |
|
$ |
16,016 |
|
|
$ |
(10,942 |
) |
|
|
|
|
|
(1) Amount reflects the gain recognized related to the
settlement of the deferred acquisition consideration dispute with
the sellers of NuTech Medical in February 2020. See Note 18 to the
unaudited financial statements included in our quarterly report on
Form 10-Q for the quarter ended March 31, 2021 (the “Form 10-Q”).
(2) Amount reflects the collection of certain notes receivable from
related parties previously reserved. See Note 19 to the unaudited
financial statements included in our Form 10-Q. (3) Amount reflects
the change in the fair value of the Earnout liability in connection
with the CPN acquisition. See Note 3 to the unaudited financial
statements included in our Form 10-Q. (4) Amount reflects employee
retention and other benefit-related costs related to the Company’s
restructuring activities. See Note 12 to the unaudited financial
statements included in our Form 10-Q.(5) Amount reflects the legal,
advisory and other professional fees incurred in the three months
ended March 31, 2020 related directly to the CPN acquisition.
See Note 3 to the unaudited financial statements included in our
Form 10-Q.(6) Amount reflects the cancellation fee for terminating
certain product development and consulting agreements the Company
inherited from NuTech Medical. See Note 18 to the unaudited
financial statements included in our Form 10-Q.
Forward-Looking Statements
This release contains forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements relate to expectations or
forecasts of future events. Forward-looking statements may be
identified by the use of words such as “forecast,” “intend,”
“seek,” “target,” “anticipate,” “believe,” “expect,” “estimate,”
“plan,” “outlook,” and “project” and other similar expressions that
predict or indicate future events or trends or that are not
statements of historical matters. Such forward-looking statements
include statements relating to the Company’s expected revenue for
fiscal 2021 and the breakdown of such revenue in both its Advanced
Wound Care and Surgical & Sports Medicine categories as well as
the estimated revenue contribution of its PuraPly products.
Forward-looking statements with respect to the operations of the
Company, strategies, prospects and other aspects of the business of
the Company are based on current expectations that are subject to
known and unknown risks and uncertainties, which could cause actual
results or outcomes to differ materially from expectations
expressed or implied by such forward-looking statements. These
factors include, but are not limited to: (1) the impact of any
changes to the reimbursement levels for the Company’s products and
the impact to the Company of the loss of preferred “pass through”
status for PuraPly AM and PuraPly in 2020; (2) the Company faces
significant and continuing competition, which could adversely
affect its business, results of operations and financial condition;
(3) rapid technological change could cause the Company’s products
to become obsolete and if the Company does not enhance its product
offerings through its research and development efforts, it may be
unable to effectively compete; (4) to be commercially successful,
the Company must convince physicians that its products are safe and
effective alternatives to existing treatments and that its products
should be used in their procedures; (5) the Company’s ability to
raise funds to expand its business; (6) the Company has incurred
significant losses since inception and may incur losses in the
future; (7) changes in applicable laws or regulations; (8) the
possibility that the Company may be adversely affected by other
economic, business, and/or competitive factors; (9) the Company’s
ability to maintain production of Affinity in sufficient quantities
to meet demand; (10) the COVID-19 pandemic and its impact, if any,
on the Company’s fiscal condition and results of operations; and
(11) other risks and uncertainties described in the Company’s
filings with the Securities and Exchange Commission, including Item
1A (Risk Factors) of the Company’s Form 10-K for the year ended
December 31, 2020 and its subsequently filed periodic reports. You
are cautioned not to place undue reliance upon any forward-looking
statements, which speak only as of the date made. Although it may
voluntarily do so from time to time, the Company undertakes no
commitment to update or revise the forward-looking statements,
whether as a result of new information, future events or otherwise,
except as required by applicable securities laws.
About Organogenesis Holdings Inc. Organogenesis
Holdings Inc. is a leading regenerative medicine company offering a
portfolio of bioactive and acellular biomaterials products in
advanced wound care and surgical biologics, including orthopedics
and spine. Organogenesis’s comprehensive portfolio is designed to
treat a variety of patients with repair and regenerative needs. For
more information, visit www.organogenesis.com.
Investor Inquiries:
Westwicke Partners
Mike Piccinino, CFA
OrganoIR@westwicke.com
443-213-0500
Press and Media Inquiries:
Organogenesis
Lori Freedman
LFreedman@organo.com
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