Exhibit 99.1

axogen-inc-logo.jpg

 

AxoGen, Inc. Reports 2018 Second Quarter Financial Results

Q2 Revenue of $20.6 million, representing 36% growth over prior year; reiterates full year 2018 guidance

ALACHUA, FL – August 1, 2018 – AxoGen, Inc. (NASDAQ: AXGN), a global leader in developing and marketing innovative surgical solutions for peripheral nerves, today reported financial results and business highlights for the second quarter ended June 30, 2018.

Second Quarter 2018 Financial Results and Recent Business Highlights

·

Revenue of $20.6 million, up 36% compared to $15.2 million in the second quarter of 2017

·

Revenue from direct sales channel continues to grow above 40% and now accounts for approximately 80% of revenue

·

Gross margin of 84.9% compared to 85.0% in the second quarter of 2017

·

Net loss for the quarter was $7.4 million, or $0.20 per share, compared to net loss of $2.1 million, or $0.06 per share, in the second quarter of 2017

·

Adjusted net loss for the quarter was $3.2 million, or $0.09 per share, compared to adjusted net loss of $1.3 million, or $0.04 per share, in the second quarter of 2017 

·

Adjusted EBITDA loss of $2.6 million compared to adjusted EBITDA loss of $593,000 in Q2 2017

·

Raised $132.7 million in net proceeds through a public offering of common stock on May 9,2018

·

Repaid in full outstanding debt of $25.0 million with MidCap Financial on May 22, 2018

·

On July 31, 2018, the Company completed the acquisition of a facility near our current leased processing facility in Dayton, Ohio, where we will transition our existing processing to support our long-term capacity needs

“We are pleased to report another quarter of strong growth for AxoGen,” said Karen Zaderej, chairman, CEO and president  of AxoGen. “We continue to invest in our capabilities across all aspects of the business, including our commercial team.  Our direct sales channel continues to grow above 40% and now accounts for approximately 80% of revenue.  Given the continued expansion of sales representative productivity and increased penetration of our active accounts, we are confident in our full year guidance and our ability to continue to drive growth.”

Additional Second Quarter and Recent Operational Highlights

·

Increased active accounts in the second quarter to 634, up 24% from 510 a year ago

·

Ended the quarter with 72 direct sales representatives, an increase of four representatives in the quarter and 21 representatives in the last 12 months, and 19 independent sales agencies


 

·

Conducted five national education programs in the second quarter, one of which was a Fellows program, and eight programs year-to-date

·

Increased the number of clinical presentations related to our surgical portfolio by nine, for a total of 22 for the year

·

Added three peer reviewed clinical publications to our surgical portfolio for a total of 62

·

Ended the quarter with $133.6 million in cash compared to $30.6 million at the end of Q1 2018. Net cash burn in Q2, after adjustments for the public offering and debt repayment, was $2.8 million.

“We continue to see growth in our core trauma space, including improved penetration of our active accounts“, noted Zaderej.  “We are also seeing solid development and surgeon engagement with our OMF and breast neurotization applications, and believe we are building strong capability to grow our platform for nerve repair across an expanding set of applications.”

2018 Financial Guidance

Management reiterates 2018 revenue will grow at least 40% over 2017 revenue and gross margins will remain above 80%. Additionally, management continues to expect to have at least 80 direct sales representatives by year end.

Upcoming Investor Events

Members of the AxoGen senior management team will participate at the following upcoming events:

·

Canaccord Genuity 38th Annual Growth Conference in Boston (August 8)

·

Morgan Stanley 16th Annual Global Healthcare Conference in New York (September 12-14)

·

Cantor Fitzgerald Global Healthcare Conference in New York (October 1-3)

·

AxoGen Analyst and Investor Day in New York City (November 19)

Conference Call

The 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 (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 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 AxoGen

AxoGen (AXGN) is the leading company focused specifically on the science, development and commercialization of technologies for peripheral nerve regeneration and repair. We are passionate about helping to restore peripheral nerve function and quality of life to patients with physical damage or discontinuity 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, an 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 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 peripheral 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 2018 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 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.  We also use the non-GAAP financial measures of Adjusted Net Loss and Adjusted Net Loss Per Common Share - basic and diluted which excludes non-cash stock compensation expense and loss on extinguishment of debt 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 AxoGen’s GAAP financial measures to the corresponding non-GAAP measures 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 liquidity 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.

Contacts:

AxoGen, Inc.
Kaila Krum, VP, Investor Relations and Corporate Development
kkrum@AxoGenInc.com

The Trout Group – Investor Relations
Brian Korb
646.378.2923
bkorb@troutgroup.com


 

AXOGEN, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

 

 

 

 

 

 

 

 

 

    

June 30,

    

December 31,

 

 

 

2018

 

2017

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

133,562,319 

 

$

36,506,624 

 

Accounts receivable, net

 

 

12,358,984 

 

 

11,064,720 

 

Inventory

 

 

9,682,119 

 

 

7,315,942 

 

Prepaid expenses and other

 

 

1,307,028 

 

 

853,381 

 

Total current assets

 

 

156,910,450 

 

 

55,740,667 

 

Property and equipment, net

 

 

2,475,763 

 

 

2,197,039 

 

Intangible assets

 

 

1,157,521 

 

 

936,992 

 

Total assets

 

$

160,543,734 

 

$

58,874,698 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Borrowings under revolving loan agreement

 

$

— 

 

$

4,000,000 

 

Accounts payable and accrued expenses

 

 

9,790,987 

 

 

8,952,061 

 

Current maturities of long term obligations

 

 

39,028 

 

 

735,017 

 

Contract liabilities, current

 

 

27,338 

 

 

31,668 

 

Total current liabilities

 

 

9,857,353 

 

 

13,718,746 

 

Long-term obligations, net of current maturities and deferred financing fees

 

 

45,240 

 

 

19,809,772 

 

Other long-term liabilties

 

 

82,506 

 

 

95,514 

 

Contract liabilities

 

 

55,340 

 

 

68,631 

 

Total liabilities

 

 

10,040,439 

 

 

33,692,663 

 

Shareholders’ equity:

 

 

 

 

 

 

 

Common stock, $.01 par value; 100,000,000 shares authorized; 38,310,884 and 34,350,329 shares issued and outstanding

 

 

383,109 

 

 

343,503 

 

Additional paid-in capital

 

 

291,515,330 

 

 

153,167,817 

 

Accumulated deficit

 

 

(141,395,144)

 

 

(128,329,285)

 

Total shareholders’ equity

 

 

150,503,295 

 

 

25,182,035 

 

Total liabilities and shareholders' equity

 

$

160,543,734 

 

$

58,874,698 

 

 


 

AXOGEN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three and Six Months ended June 30, 2018 and 2017

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

    

June 30,

    

June 30,

    

June 30,

    

June 30,

 

 

 

2018

 

2017

 

2018

 

2017

 

Revenues

 

$

20,584,498 

 

$

15,168,064 

 

$

37,844,357 

 

$

27,409,137 

 

Cost of goods sold

 

 

3,106,215 

 

 

2,277,201 

 

 

5,818,595 

 

 

4,192,849 

 

Gross profit

 

 

17,478,283 

 

 

12,890,863 

 

 

32,025,762 

 

 

23,216,288 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

14,025,909 

 

 

9,438,288 

 

 

26,495,260 

 

 

18,048,770 

 

Research and development

 

 

2,601,237 

 

 

1,521,123 

 

 

4,659,679 

 

 

2,932,259 

 

General and administrative

 

 

5,668,764 

 

 

3,377,105 

 

 

10,680,491 

 

 

6,881,144 

 

Total costs and expenses

 

 

22,295,910 

 

 

14,336,516 

 

 

41,835,430 

 

 

27,862,173 

 

Loss from operations

 

 

(4,817,627)

 

 

(1,445,653)

 

 

(9,809,668)

 

 

(4,645,885)

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

156,411 

 

 

— 

 

 

156,550 

 

 

— 

 

Interest expense

 

 

(544,207)

 

 

(554,384)

 

 

(1,129,825)

 

 

(1,061,933)

 

Interest expense – deferred financing costs

 

 

(20,666)

 

 

(46,110)

 

 

(81,329)

 

 

(90,601)

 

Loss on extinguishment of debt

 

 

(2,186,114)

 

 

— 

 

 

(2,186,114)

 

 

— 

 

Other expense

 

 

(15,237)

 

 

(14,032)

 

 

(15,472)

 

 

(23,785)

 

Total other expense

 

 

(2,609,813)

 

 

(614,526)

 

 

(3,256,190)

 

 

(1,176,319)

 

Net loss

 

$

(7,427,440)

 

$

(2,060,179)

 

$

(13,065,858)

 

$

(5,822,204)

 

Weighted Average Common Shares outstanding – basic and diluted

 

 

36,677,074 

 

 

33,124,139 

 

 

35,605,054 

 

 

33,075,555 

 

Loss Per Common share – basic and diluted

 

$

(0.20)

 

$

(0.06)

 

$

(0.37)

 

$

(0.18)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Loss non GAAP

 

$

(3,200,685)

 

$

(1,335,802)

 

$

(7,109,988)

 

$

(4,249,238)

 

Adjusted Net Loss Per Common Share – basic and diluted

 

$

(0.09)

 

$

(0.04)

 

$

(0.20)

 

$

(0.13)

 

 


 

AXOGEN, INC.

RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES

Three and Six Months ended June 30, 2018 and 2017

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

    

June 30,

    

June 30,

    

June 30,

    

June 30,

 

 

 

2018

 

2017

 

2018

 

2017

 

Net loss

 

$

(7,427,440)

 

$

(2,060,179)

 

$

(13,065,858)

 

$

(5,822,204)

 

Depreciation and amortization expense

 

 

195,016 

 

 

109,517 

 

 

374,954 

 

 

217,876 

 

Amortization expense of intangible assets

 

 

20,115 

 

 

18,517 

 

 

39,715 

 

 

41,706 

 

Income taxes

 

 

— 

 

 

14,173 

 

 

12,656 

 

 

23,974 

 

Interest income

 

 

(156,411)

 

 

— 

 

 

(156,550)

 

 

— 

 

Interest expense

 

 

2,057,550 

 

 

554,384 

 

 

2,643,168 

 

 

1,061,933 

 

Interest expense deferred financing costs

 

 

693,437 

 

 

46,110 

 

 

754,100 

 

 

90,601 

 

EBITDA non GAAP

 

$

(4,617,733)

 

$

(1,317,478)

 

$

(9,397,815)

 

$

(4,386,114)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non cash stock compensation expense

 

 

2,040,641 

 

 

724,377 

 

 

3,769,756 

 

 

1,572,966 

 

Adjusted EBITDA non GAAP

 

$

(2,577,092)

 

$

(593,101)

 

$

(5,628,059)

 

$

(2,813,148)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(7,427,440)

 

$

(2,060,179)

 

$

(13,065,858)

 

$

(5,822,204)

 

Loss on extinguishment of debt

 

 

2,186,114 

 

 

— 

 

 

2,186,114 

 

 

— 

 

Non cash stock compensation expense

 

 

2,040,641 

 

 

724,377 

 

 

3,769,756 

 

 

1,572,966 

 

Adjusted Net Loss non GAAP

 

$

(3,200,685)

 

$

(1,335,802)

 

$

(7,109,988)

 

$

(4,249,238)

 

Weighted Average Common Shares outstanding – basic and diluted

 

 

36,677,074 

 

 

33,124,139 

 

 

35,605,054 

 

 

33,075,555 

 

Adjusted Net Loss Per Common Share – basic and diluted

 

$

(0.09)

 

$

(0.04)

 

$

(0.20)

 

$

(0.13)

 

 


 

AXOGEN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months ended June 30, 2018 and 2017

(unaudited)

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

    

June 30,

    

June 30,

 

 

 

2018

 

2017

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net loss

 

$

(13,065,858)

 

$

(5,822,204)

 

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

Depreciation

 

 

374,954 

 

 

217,876 

 

Amortization of intangible assets

 

 

39,715 

 

 

41,706 

 

Amortization of deferred financing costs

 

 

81,329 

 

 

90,601 

 

Loss on extinguishment of debt

 

 

2,186,114 

 

 

— 

 

Provision for bad debt

 

 

130,013 

 

 

99,834 

 

Provision for inventory write down

 

 

582,034 

 

 

680,851 

 

Share-based compensation

 

 

3,769,756 

 

 

1,572,966 

 

Change in assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

 

(1,424,277)

 

 

(1,470,098)

 

Inventory

 

 

(2,948,211)

 

 

(1,526,108)

 

Prepaid expenses and other

 

 

(453,647)

 

 

(73,286)

 

Accounts payable and accrued expenses

 

 

838,926 

 

 

55,666 

 

Contract and other liabilities

 

 

(30,629)

 

 

104,657 

 

Net cash used in operating activities

 

 

(9,919,781)

 

 

(6,027,539)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(653,678)

 

 

(366,886)

 

Acquisition of intangible assets

 

 

(260,244)

 

 

(153,321)

 

Net cash used for investing activities

 

 

(913,922)

 

 

(520,207)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Proceeds from the issuance of common stock

 

 

132,963,000 

 

 

— 

 

Cash paid for equity offering

 

 

(256,770)

 

 

— 

 

Borrowing on revolving loan

 

 

26,253,043 

 

 

26,119,539 

 

Payments on revolving loan and prepayment penalties

 

 

(30,488,886)

 

 

(26,314,797)

 

Repayments of long term debt and prepayment penalties

 

 

(22,492,122)

 

 

(8,572)

 

Debt issuance costs

 

 

— 

 

 

(29,472)

 

Proceeds from exercise of stock options and warrants

 

 

1,911,133 

 

 

636,843 

 

Net cash provided by financing activities

 

 

107,889,398 

 

 

403,541 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

 

97,055,695 

 

 

(6,144,205)

 

Cash and cash equivalents, beginning of year

 

 

36,506,624 

 

 

30,014,405 

 

Cash and cash equivalents, end of period

 

$

133,562,319 

 

$

23,870,200 

 

 

 

 

 

 

 

 

 

Supplemental disclosures of cash flow activity:

 

 

 

 

 

 

 

Cash paid for interest

 

$

1,327,884 

 

$

1,058,599