• Axogen, Inc Reports 2022 Fourth Quarter and Full-Year Financial Results

    Source: Nasdaq GlobeNewswire / 14 Mar 2023 07:00:01   America/New_York

    ALACHUA, Fla. and TAMPA, Fla., March 14, 2023 (GLOBE NEWSWIRE) -- 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 fourth quarter and full year ended December 31, 2022.

    Fourth Quarter 2022 Financial Results and Business Highlights

    • Fourth quarter revenue was $36.2 million, a 17% increase compared to fourth quarter of 2021.*
    • Gross margin was 83.0% for the fourth quarter compared to 82.8% in the fourth quarter of 2021.
    • Net loss for the quarter was $5.4 million, or $0.13 per share, compared to net loss of $5.3 million, or $0.13 per share in the fourth quarter of 2021.
    • Adjusted net loss for the quarter was $1.1 million, or $0.03 per share, compared to adjusted net loss of $3.3 million, or $0.08 per share, in the fourth quarter of 2021.
    • Adjusted EBITDA loss was $0.7 million for the quarter, compared to an adjusted EBITDA loss of $2.5 million in the fourth quarter of 2021.
    • The balance of all cash, cash equivalents, and investments on December 31, 2022 was $55.0 million, as compared to a balance of $59.4 million on September 30, 2022. The net change includes capital expenditures of $5.5 million related to the construction of the company's new processing facility in Dayton, OH, partially offset by approximately $1.1 million of positive cash flow.
    • Core Accounts totaled 332, an increase of 1% sequentially, and 18% over an adjusted* prior year level of 282. Revenue from Core Accounts continued to represent approximately 60% of total revenue.
    • Active Accounts totaled 968, up 2% sequentially, and 3% over an adjusted* prior year level of 941. Revenue from the top 10% of Active Accounts represents approximately 35% of total revenue.
    • Ended the fourth quarter with 115 direct sales representatives compared to 111 at the end of the third quarter and 115 as of December 31, 2021.
    • On January 5, 2023, the Company announced the independent publication of a comparative nerve gap repair meta-analysis of peer-reviewed studies of allograft, autograft, and conduits that included over 1,500 nerve repairs across 35 studies. The Company believes this provides the strongest clinical and economic evidence to-date of the performance of Avance® Nerve Graft across all gap lengths and nerve types.

    "We are pleased with our solid performance this quarter and the second half of 2022 which saw improved surgical capacity and predictability in hospitals," commented Karen Zaderej, chairman, CEO, and president of Axogen, Inc. “We believe the combination of an improved hospital operating environment and commercial execution, backed by our high-quality portfolio of clinical data provides a solid foundation for long term, sustainable growth.”

    Full-Year Financial Results and Business Highlights

    • Full-year 2022 revenue was $138.6 million, a 12% increase compared to 2021 revenue of $127.4 million.*
    • Gross margin was 82.6% for the full year, compared to 82.0% in 2021.
    • Adjusted net loss was $12.6 million for the full year, or $0.30 per share, compared to $13.7 million for the full year, or $0.33 per share in 2021.
    • Adjusted EBITDA loss was $9.3 million for the full year, compared to an adjusted EBITDA loss of $9.3 million for 2021.
    • In 2022, we surpassed 75,000 Avance Nerve Graft implants since 2007.
    • Ended the year with a total of 215 peer-reviewed clinical publications featuring Axogen’s nerve repair product portfolio, up from 181 the previous year.

    2023 Financial Guidance

    Management expects full-year 2023 revenue to be in the range of $154 million to $159 million. The company anticipates gross margin will be reduced in the first half of the year with the transition to the company’s new processing facility and expects gross margins will return to approximately 80% by the fourth quarter of 2023.

    *The Company voluntarily suspended market availability of Avive® Soft Tissue Membrane on June 1, 2021; and, therefore, no Avive revenue was recorded in 2022. Fourth quarter 2021 revenue included $0.5 million from the reversal of a sales return reserve recorded in the second quarter of 2021, and full-year 2021 Avive revenue was approximately $4.1 million. See table below for reconciliation of revenue as reported to revenue excluding the impact of Avive. For a reconciliation of adjusted Core and Active Account numbers, please see our Corporate Presentation on the investors page on www.axogeninc.com.

     For the three months ended For the full year ended
    Estimated Revenue 2022  2021 %  2022  2021 %
    As reported$36.2 $31.5 14% $138.6 $127.3 9%
    Avive —  0.5 —%  —  4.1 —%
    Excluding Avive$36.2 $31.0 16% $138.6 $123.2 12%


    Post Quarter Updates

    On March 12, 2023, the U.S. Federal Reserve, U.S. Department of Treasury and Federal Deposit Insurance Corporation (FDIC) issued a joint statement confirming that customers with deposits at Silicon Valley Bank, Santa Clara, California (SVB) “will have access to all of their money starting Monday, March 13.” The news came after SVB was closed by the California Department of Financial Protection and Innovation on March 10, 2023, which appointed the FDIC as receiver.

    The Company currently maintains approximately $8 million of cash with SVB, the Company’s sole depositor, which funds based on the announcement became available on Monday, March 13, 2023. The majority of the Company’s other cash, cash equivalents, and investments, consisting of a variety of short-term and high-credit treasury and corporate bonds and other liquid investments, is held in custodial accounts with U.S. Bank for which SVB Asset Management is the advisor. The Company has opened new brokerage accounts with JP Morgan Chase (“JP Morgan”) and has made arrangements to promptly move such cash, cash equivalents, and investments held by U.S. Bank into the new accounts with JP Morgan. The Company is in the process of opening other accounts with JP Morgan for operations.

    Conference Call

    The Company will host a conference call and webcast for the investment community today at 8:00 a.m. ET. Investors interested in participating in the conference call by phone may do so by dialing toll free at (877) 407-0993 or use the direct dial-in number at (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.

    Following the conference call, a replay will be available in the Investors section of the Company's website at www.axogeninc.com under Investors.

    About Axogen

    Axogen (AXGN) is the leading company focused specifically on the science, development, and commercialization of technologies for peripheral nerve regeneration and repair. Axogen employees are passionate about helping to restore peripheral nerve function and quality of life to patients with physical damage or transection to peripheral nerves 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. Physical damage to a peripheral nerve, or the inability to properly reconnect peripheral nerves, can result in the loss of muscle or organ function, the loss of sensory feeling, or the initiation of pain.

    Axogen's platform for peripheral nerve repair features a comprehensive portfolio of products, including Avance Nerve Graft, a biologically active off-the-shelf processed human nerve allograft for bridging severed peripheral 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 peripheral nerves; Axoguard Nerve Protector®, a porcine submucosa ECM product used to wrap and protect damaged peripheral nerves and reinforce the nerve reconstruction while preventing soft tissue attachments; and Axoguard Nerve Cap®, a porcine submucosa ECM product used to protect a peripheral nerve end and separate the nerve from the surrounding environment to reduce the development of symptomatic or painful neuroma. The Axogen portfolio of products is available in the United States, Canada, Germany, the United Kingdom, Spain, South Korea, and several other 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,” “goals,” and variations of such words and similar expressions are intended to identify such forward-looking statements. Forward-looking statements include Ms. Zaderej's statement that improved hospital operating environment, strong product demand, and the company’s portfolio of clinical data provide a solid foundation for long term, sustainable growth, as well as statements related to the 2023 financial outlook, including revenue range and gross margins. Actual results or events could differ materially from those described in any forward-looking statements as a result of various factors, including, without limitation, statements related to the continued impact of COVID-19, global supply chain issues, record inflation, the impacts of the failure of Silicon Valley Bank and recent turmoil in the banking industry, hospital staffing issues, product development, product potential, expected clinical enrollment timing and outcomes, regulatory process and approvals, APC renovation timing and expense, financial performance, sales growth, surgeon and product adoption, market awareness of our products, data validation, our visibility at and sponsorship of conferences and educational events, global business disruption caused by Russia’s invasion of Ukraine and related sanctions, as well as those risk factors described under Part I, Item 1A., “Risk Factors,” of our Annual Report on Form 10-K for the most recently ended fiscal year. Forward-looking statements are not a guarantee 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 applicable law, we assume no responsibility to publicly update or revise any forward-looking statements.

    About Non-GAAP Financial Measures

    To supplement our consolidated financial statements, we use the non-GAAP financial measures of EBITDA, which measures earnings before interest, income taxes, depreciation and amortization, and Adjusted EBITDA which further excludes non-cash stock compensation expense and litigation and related expenses. We also use the non-GAAP financial measures of Adjusted Net Income or Loss and Adjusted Net Income or Loss Per Common Share - basic and diluted which excludes non-cash stock compensation expense and litigation and related expenses from Net Loss and Net Loss Per Common Share - basic and diluted, respectively. These non-GAAP measures are not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures should be read in conjunction with our financial statements prepared in accordance with GAAP. The reconciliations of the non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP should be carefully evaluated.

    We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods. We believe these non-GAAP financial measures are useful to investors because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by our institutional investors and the analyst community to help them analyze the performance of our business, the Company’s cash available for operations, and the Company’s ability to meet future capital expenditure and working capital requirements.

    Contact:
    Axogen, Inc.
    Ed Joyce, Director, Investor Relations
    ejoyce@axogeninc.com



    AXOGEN, INC.
    CONSOLIDATED BALANCE SHEETS
    (unaudited)
    December 31, 2022 and 2021
    (In Thousands, Except Share and Per Share Amounts)
     December 31, December 31,
     2022 2021
    Assets​ ​
    Current assets:​ ​
    Cash and cash equivalents$15,284  $32,756 
    Restricted cash 6,251   6,251 
    Investments 33,505   51,330 
    Accounts receivable, net of allowance for doubtful accounts of $650 and $276, respectively 22,186   18,158 
    Inventory 18,905   16,693 
    Prepaid expenses and other 1,944   1,861 
    Total current assets 98,075   127,049 
    Property and equipment, net 79,294   62,923 
    Operating lease right-of-use assets 14,369   15,193 
    Intangible assets, net 3,649   2,859 
    Total assets$195,387  $208,024 
    ​   
    Liabilities and shareholders’ equity   
    Current liabilities:   
    Accounts payable and accrued expenses$22,443  $22,459 
    Current maturities of long-term lease obligations 1,310   1,834 
    Total current liabilities 23,753   24,293 
    ​   
    Long-term debt, net of debt discount and financing fees 45,712   44,821 
    Long-term lease obligations 20,405   20,798 
    Debt derivative liabilities 4,518   5,562 
    Total liabilities 94,388   95,474 
    ​   
    Commitments and contingencies - see Note 14   
    ​   
    Shareholders’ equity:   
    Common stock, $0.01 par value per share; 100,000,000 shares authorized; 42,445,517 and 41,736,950 shares issued and outstanding 424   417 
    Additional paid-in capital 360,155   342,765 
    Accumulated deficit (259,580)  (230,632)
    Total shareholders’ equity 100,999   112,550 
    Total liabilities and shareholders’ equity$195,387  $208,024 


    ​

    AXOGEN, INC.
    CONSOLIDATED STATEMENTS OF OPERATIONS
    Years ended December 31, 2022, 2021 and 2020
    (In Thousands, Except Share and Per Share Amounts)
    ​ 2022   2021   2020 
    Revenues$138,584  $127,358  $112,300 
    Cost of goods sold 24,147   22,931   21,581 
    Gross profit 114,437   104,427   90,719 
    Costs and expenses:     
    Sales and marketing 80,228   73,328   69,659 
    Research and development 27,158   24,177   17,846 
    General and administrative 36,758   32,338   26,396 
    Total costs and expenses 144,144   129,843   113,901 
    Loss from operations (29,707)  (25,416)  (23,182)
    Other (expense) income:     
    Investment income 569   93   605 
    Interest expense (624)  (1,356)  (1,054)
    Change in fair value of derivatives 1,044   (28)  (117)
    Other expense (230)  (278)  (38)
    Total other income (expense), net 759   (1,569)  (604)
    Net loss$(28,948) $(26,985) $(23,786)
          
    Weighted average common shares outstanding — basic and diluted 42,083,125   41,214,889   39,966,937 
    Loss per common share — basic and diluted$(0.69) $(0.65) $(0.60)

    ​


    Axogen, Inc.
    RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
    Three Months and Year Ended December 31, 2022 and 2021
    (unaudited)
    (In Thousands, Except Per Share Amounts)
      Three Months Ended  Year Ended
      December 31, December 31, December 31, December 31,
      2022 2021 2022 2021
             
    Net loss $(5,415) $(5,286) $(28,948) $(26,985)
    Depreciation and amortization expense  713   716   3,093   2,923 
    Investment income  (397)  (13)  (569)  (93)
    Income tax expense  125   138   189   205 
    Interest expense  (40)  (70)  624   1,356 
    EBITDA - non GAAP $(5,014) $(4,515) $(25,611) $(22,594)
             
    Non cash stock-based compensation expense  4,154   1,509   15,591   10,919 
    Litigation and related costs  177   505   761   2,369 
    Adjusted EBITDA - non GAAP $(683) $(2,501) $(9,259) $(9,306)
             
    Net loss $(5,415) $(5,286) $(28,948) $(26,985)
    Non cash stock-based compensation expense  4,154   1,509   15,591   10,919 
    Litigation and related costs  177   505   761   2,369 
    Adjusted net loss - non GAAP $(1,083) $(3,272) $(12,596) $(13,697)
             
    Weighted average common shares outstanding basic and diluted   42,306   41,593   42,083   41,215 
             
    Loss per common share — basic and diluted $(0.13) $(0.13) $(0.69) $(0.65)
    Non cash stock-based compensation expense $0.10  $0.04  $0.37  $0.26 
    Litigation and related costs $—  $0.01  $0.02  $0.06 
    Adjusted net loss per common share - basis and diluted - non GAAP $(0.03) $(0.08) $(0.30) $(0.33)
             



    ​AXOGEN, INC.
    CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
    Years ended December 31, 2022, 2021 and 2020
    (In Thousands)
    ​Common Stock Additional
    Paid-in
    Capital
    		 Accumulated
    Deficit
    		 Total
    Shareholders’
    Equity
    ​Shares Amount   
    Balance, December 31, 201939,590  $396  $311,618  $(179,861) $132,153 
    ​         
    Stock-based compensation—   —   8,470   —   8,470 
    Issuance of restricted and performance stock units249   2   (2)  —   — 
    Shares surrendered by employees to pay tax withholdings(40)  —   (670)  —  $(670)
    Exercise of stock options and employee stock purchase plan572   6   3,294   —  $3,300 
    Exercise of Credit Facility Option, net of settlement248   2   3,680   —  $3,682 
    Net loss—   —   —   (23,786)  (23,786)
    ​         
    Balance, December 31, 202040,619   406   326,390   (203,647)  123,149 
    ​         
    Stock-based compensation—   —   10,919   —   10,919 
    Issuance of restricted and performance stock units254   2   (2)  —   — 
    Exercise of stock options and employee stock purchase plan864   9   5,458   —   5,467 
    Net loss—   —   —   (26,985)  (26,985)
    ​         
    Balance, December 31, 202141,737   417   342,765   (230,632)  112,550 
    ​         
    Stock-based compensation—   —   15,591   —   15,591 
    Issuance of restricted and performance stock units343   3   (3)  —   — 
    Exercise of stock options and employee stock purchase plan365   4   1,802   —   1,806 
    Net loss—   —   —   (28,948)  (28,948)
              
    Balance, December 31, 202242,445  $424  $360,155  $(259,580) $100,999 

    ​





    AXOGEN, INC.
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    Years ended December 31, 2022, 2021 and 2020
    (In Thousands)
    ​ 2022   2021   2020 
    Cash flows from operating activities:     
    Net loss$(28,948) $(26,985) $(23,786)
    Adjustments to reconcile net loss to net cash used in operating activities:     
    Depreciation and amortization 2,827   2,744   1,530 
    Amortization of right-of-use assets 1,761   1,795   1,777 
    Amortization of intangible assets 265   202   153 
    Amortization of debt discount and deferred financing fees 891   831   232 
    Loss on disposal of equipment —   —   3 
    Provision for bad debt 612   (41)  (105)
    Provision for inventory write-down 1,769   3,314   2,242 
    Investment losses (gains) (228)  68   (47)
    Change in fair value of derivatives (1,044)  28   117 
    Stock-based compensation 15,591   10,919   8,470 
    Change in operating assets and liabilities:     
    Accounts receivable (4,639)  (499)  (635)
    Inventory (3,656)  (7,478)  (910)
    Prepaid expenses and other (84)  2,435   (2,524)
    Accounts payable and accrued expenses 660   (270)  4,958 
    Operating lease obligations (1,841)  (463)  (1,086)
    Cash paid for interest portion of finance leases (2)  (2)  (3)
    Contract and other liabilities —   (3)  (12)
    Net cash used in operating activities (16,066)  (13,405)  (9,626)
          
    Cash flows from investing activities:     
    Purchase of property and equipment (20,078)  (27,811)  (21,905)
    Economic development grant proceeds —   950   — 
    Purchase of investments (39,247)  (68,699)  (77,806)
    Proceeds from sale of investments 57,300   72,500   83,440 
    Cash payments for intangible assets (1,175)  (589)  (692)
    Net cash used in investing activities (3,200)  (23,649)  (16,963)
          
    Cash flows from financing activities:     
    Proceeds from issuance of long-term debt —   15,000   35,000 
    Proceeds from the paycheck protection program loan —   —   7,820 
    Repayment of the paycheck protection program loan —   —   (7,820)
    Proceeds from issuance of common stock —   —   3,500 
    Payments for debt issuance costs —   —   (642)
    Cash paid for debt portion of finance leases (12)  (15)  (14)
    Proceeds from exercise of stock options and ESPP stock purchases 1,806   5,467   3,300 
    Payments of employee tax withholdings in exchange of common stock awards —   —   (670)
    Net cash provided by financing activities 1,794   20,452   40,474 
    Net (decrease) increase in cash, cash equivalents, and restricted cash (17,472)  (16,602)  13,885 
    Cash, cash equivalents, and restricted cash, beginning of period 39,007   55,609   41,724 
    Cash, cash equivalents, and restricted cash, end of period$21,535  $39,007  $55,609 

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