Exhibit 99.1

Picture 5

 

Axogen, Inc. Reports  2019 Second Quarter Financial Results

 

Second Quarter Revenue of $26.7 million, Representing 30%  Growth Versus Second Quarter 2018

 

ALACHUA, FL – August 6, 2019 – Axogen, Inc. (NASDAQ: AXGN), a global leader in developing and marketing innovative surgical solutions for  damage or transection to peripheral nerves, today reported financial results and business highlights for the second quarter ended June 30, 2019.

 

Second Quarter 2019 Financial Results and Recent Business Highlights

·

Revenue of $26.7 million, an increase of 30% compared to second quarter 2018 revenue of $20.6 million

·

Gross margin of 84.1% compared to 84.9% in the second quarter of 2018

·

Net loss for the quarter was $7.0 million, or $0.18 per share, compared to net loss of $7.4 million, or $0.20 per share in the second quarter of 2018

·

Adjusted net loss for the second quarter of 2019 was $3.7 million, or $0.10 per share, compared with adjusted net loss of $3.2 million, or $0.09 per share, in the second quarter of 2018

·

Adjusted EBITDA loss of $4.1 million compared to Adjusted EBITDA loss of $2.6 million in the second quarter of 2018

·

Announced milestone of 100 peer-reviewed clinical publications featuring Axogen’s nerve repair product portfolio

·

Completed enrollment of the pilot phase of REPOSESM, a study evaluating the effectiveness of Axoguard Nerve Cap® in the management of painful neuroma

 

“We are pleased with the progress we’ve made strengthening our commercial execution,” said Karen Zaderej, chairman, chief executive officer, and president of Axogen.  “The investments we’ve made position us for continued success and productivity improvements as we develop the peripheral nerve repair market.”

 

Additional Second Quarter and Recent Operational Highlights

·

Increased active accounts in the second quarter to 762, up 20% from 634 a year ago

·

Ended the quarter with 100 direct sales representatives and 19 independent agencies

·

Conducted seven national education courses in the second quarter,  including one Fellows program, and expect to conduct 25 programs in total during 2019

·

Ended the quarter with $109.1 million in cash, cash equivalents, and investments compared to $113.8 million at the end of the first quarter of 2019.

 

“Research findings published over the past 10 years have provided evidence of positive outcomes with Axogen’s portfolio of products in sensory, mixed and motor nerves, and in both short and long gap nerve repairs,” noted Zaderej. “Clinical evidence plays a critical role in surgeon decision making. The breadth and depth of our clinical evidence is unique in peripheral nerve repair and strengthens our position as the leader in this developing market.”

 

2019 Financial Guidance

The Company is updating its previous revenue guidance range for the full-year 2019 and now anticipates revenue of approximately $106 million to $110 million. Management reiterates its expectation for gross margin to remain above 80%. Additionally, the Company continues to expect to have at least 115 direct sales representatives by year-end.

 

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 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 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 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 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,” “goals,” 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 growth, our 2019 guidance, product development, product potential, financial performance, sales growth, product adoption, market awareness of our products, data validation, our assessment of our internal controls over financial reporting, our visibility at and sponsorship of conferences and educational events. The forward-looking statements are and will be subject to risks and uncertainties, which may cause actual results to differ materially from those expressed or implied in such forward-looking statements. Forward-looking statements contained in this press release should be evaluated together with the many uncertainties that affect our business and our market, particularly those discussed under Part I, Item 1A., “Risk Factors,” of our Annual Report on Form 10-K for the fiscal year ended December 31,  2018, as well as other risks and cautionary statements set forth in our filings with the U.S. Securities and Exchange Commission. 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, whether as a result of new information, future events, changed circumstances, 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 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.

 

Contact:

Axogen, Inc.

Kaila Krum, Vice President, Investor Relations and Corporate Development

kkrum@axogeninc.com

InvestorRelations@AxogenInc.com

 

 

AXOGEN, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

 

 

 

 

 

 

 

 

 

 

    

June 30,

    

December 31,

 

 

 

2019

 

2018

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

24,878 

 

$

24,294 

 

Restricted Cash

 

 

6,000 

 

 

6,000 

 

Short-term investments

 

 

78,185 

 

 

92,311 

 

Accounts receivable, net

 

 

16,285 

 

 

15,321 

 

Inventory

 

 

13,587 

 

 

11,982 

 

Prepaid expenses and other

 

 

2,357 

 

 

1,045 

 

Total current assets

 

 

141,292 

 

 

150,953 

 

Property and equipment, net

 

 

9,757 

 

 

8,039 

 

Operating lease right-of-use assets

 

 

4,051 

 

 

— 

 

Finance lease right-of-use assets

 

 

99 

 

 

— 

 

Intangible assets

 

 

1,404 

 

 

1,181 

 

Total assets

 

$

156,603 

 

$

160,173 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

14,382 

 

$

12,998 

 

Current maturities of long term obligations

 

 

1,832 

 

 

28 

 

Contract liabilities, current

 

 

19 

 

 

18 

 

Total current liabilities

 

 

16,233 

 

 

13,044 

 

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

 

 

2,381 

 

 

35 

 

Other long-term liabilties

 

 

— 

 

 

70 

 

Contract liabilities

 

 

29 

 

 

42 

 

Total liabilities

 

 

18,643 

 

 

13,191 

 

Shareholders’ equity:

 

 

 

 

 

 

 

Common stock, $.01 par value; 100,000,000 shares authorized; 39,252,294 and 38,900,875 shares issued and outstanding

 

 

393 

 

 

389 

 

Additional paid-in capital

 

 

304,819 

 

 

297,319 

 

Accumulated deficit

 

 

(167,252)

 

 

(150,726)

 

Total shareholders’ equity

 

 

137,960 

 

 

146,982 

 

Total liabilities and shareholders' equity

 

$

156,603 

 

$

160,173 

 

 

AXOGEN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three and Six Months ended June 30, 2019 and 2018

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

    

June 30,

    

June 30,

    

June 30,

    

June 30,

 

 

 

2019

 

2018

 

2019

 

2018

 

Revenues

 

$

26,701 

 

$

20,584 

 

$

49,986 

 

$

37,844 

 

Cost of goods sold

 

 

4,244 

 

 

3,106 

 

 

7,958 

 

 

5,818 

 

Gross profit

 

 

22,457 

 

 

17,478 

 

 

42,028 

 

 

32,026 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

18,467 

 

 

14,026 

 

 

34,901 

 

 

26,495 

 

Research and development

 

 

4,282 

 

 

2,601 

 

 

8,421 

 

 

4,660 

 

General and administrative

 

 

7,380 

 

 

5,669 

 

 

16,581 

 

 

10,681 

 

Total costs and expenses

 

 

30,129 

 

 

22,296 

 

 

59,903 

 

 

41,836 

 

Loss from operations

 

 

(7,672)

 

 

(4,818)

 

 

(17,875)

 

 

(9,810)

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

654 

 

 

156 

 

 

1,370 

 

 

157 

 

Interest expense

 

 

(11)

 

 

(544)

 

 

(25)

 

 

(1,130)

 

Interest expense – deferred financing costs

 

 

— 

 

 

(21)

 

 

— 

 

 

(81)

 

Loss on extinguishment of debt

 

 

— 

 

 

(2,186)

 

 

— 

 

 

(2,186)

 

Other expense

 

 

 

 

(15)

 

 

 

 

(16)

 

Total other expense

 

 

649 

 

 

(2,610)

 

 

1,349 

 

 

(3,256)

 

Net loss

 

$

(7,023)

 

$

(7,428)

 

$

(16,526)

 

$

(13,066)

 

Weighted Average Common Shares outstanding – basic and diluted

 

 

39,175 

 

 

36,677 

 

 

39,055 

 

 

35,605 

 

Loss Per Common share – basic and diluted

 

$

(0.18)

 

$

(0.20)

 

$

(0.42)

 

$

(0.37)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Loss - non GAAP

 

 

(3,738)

 

 

(3,201)

 

 

(9,741)

 

 

(7,110)

 

Adjusted Net Loss Per Common Share - basic and diluted

 

$

(0.10)

 

$

(0.09)

 

$

(0.25)

 

$

(0.20)

 

 

AXOGEN, INC.

RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES

Three and Six Months ended June 30, 2019 and 2018

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

June 30,

 

June 30,

 

 

    

2019

    

2018

    

2019

    

2018

 

Net loss

 

$

(7,023)

 

$

(7,428)

 

$

(16,526)

 

$

(13,066)

 

Depreciation and amortization expense

 

 

264 

 

 

215 

 

 

514 

 

 

415 

 

Investment income

 

 

(654)

 

 

(156)

 

 

(1,370)

 

 

(157)

 

Income tax

 

 

(12)

 

 

— 

 

 

(12)

 

 

13 

 

Interest expense

 

 

11 

 

 

2,751 

 

 

25 

 

 

3,397 

 

EBITDA - non GAAP

 

$

(7,414)

 

$

(4,618)

 

$

(17,369)

 

$

(9,398)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non cash stock compensation expense

 

 

2,674 

 

 

2,041 

 

 

4,989 

 

 

3,770 

 

Litigation and related costs

 

 

611 

 

 

— 

 

 

1,796 

 

 

— 

 

Adjusted EBITDA - non GAAP

 

$

(4,129)

 

$

(2,577)

 

$

(10,584)

 

$

(5,628)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(7,023)

 

$

(7,428)

 

$

(16,526)

 

$

(13,066)

 

Non cash stock compensation expense

 

 

2,674 

 

 

2,041 

 

 

4,989 

 

 

3,770 

 

Litigation and related costs

 

 

611 

 

 

— 

 

 

1,796 

 

 

— 

 

Loss on extinguishment of debt

 

 

— 

 

 

2,186 

 

 

— 

 

 

2,186 

 

Adjusted Net Loss - non GAAP

 

$

(3,738)

 

$

(3,201)

 

$

(9,741)

 

$

(7,110)

 

Weighted Average Common Shares outstanding – basic and diluted

 

 

39,175 

 

 

36,677 

 

 

39,055 

 

 

35,605 

 

Adjusted Net Loss Per Common Share - basic and diluted

 

$

(0.10)

 

$

(0.09)

 

$

(0.25)

 

$

(0.20)

 

 

AXOGEN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

Six Months Ended June 30, 2019 and 2018

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Common Stock

    

Additional Paid-in
Capital

    

Accumulated Deficit

    

Total Shareholders'
Equity

 

For the Three Months Ended June 30, 2019:

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2019

 

$

391 

 

$

300,582 

 

$

(160,229)

 

$

140,744 

 

Net Loss

 

 

— 

 

 

— 

 

 

(7,023)

 

 

(7,023)

 

Stock-based compensation

 

 

— 

 

 

2,674 

 

 

— 

 

 

2,674 

 

Exercise of stock options and employee stock purchase plan

 

 

 

 

1,563 

 

 

— 

 

 

1,565 

 

Balance at June 30, 2019

 

$

393 

 

$

304,819 

 

$

(167,252)

 

$

137,960 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Six Months Ended June 30, 2019:

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2018

 

$

389 

 

$

297,319 

 

$

(150,726)

 

$

146,982 

 

Net Loss

 

 

— 

 

 

— 

 

 

(16,526)

 

 

(16,526)

 

Stock-based compensation

 

 

— 

 

 

4,989 

 

 

— 

 

 

4,989 

 

Exercise of stock options and employee stock purchase plan

 

 

 

 

2,511 

 

 

— 

 

 

2,515 

 

Balance at June 30, 2019

 

$

393 

 

$

304,819 

 

$

(167,252)

 

$

137,960 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended June 30, 2018:

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2018

 

$

346 

 

$

155,313 

 

$

(133,967)

 

$

21,692 

 

Net Loss

 

 

— 

 

 

— 

 

 

(7,428)

 

 

(7,428)

 

Issuance of common stock

 

 

35 

 

 

132,671 

 

 

— 

 

 

132,706 

 

Stock-based compensation

 

 

— 

 

 

2,041 

 

 

— 

 

 

2,041 

 

Exercise of stock options and employee stock purchase plan

 

 

 

 

1,490 

 

 

— 

 

 

1,492 

 

Balance at June 30, 2018

 

$

383 

 

$

291,515 

 

$

(141,395)

 

$

150,503 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Six Months Ended June 30, 2018:

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2018

 

$

343 

 

$

153,168 

 

$

(128,329)

 

$

25,182 

 

Net Loss

 

 

— 

 

 

— 

 

 

(13,066)

 

 

(13,066)

 

Issuance of common stock

 

 

35 

 

 

132,671 

 

 

— 

 

 

132,706 

 

Stock-based compensation

 

 

— 

 

 

3,770 

 

 

— 

 

 

3,770 

 

Exercise of stock options and employee stock purchase plan

 

 

 

 

1,906 

 

 

— 

 

 

1,911 

 

Balance at June 30, 2018

 

$

383 

 

$

291,515 

 

$

(141,395)

 

$

150,503 

 

 

 

AXOGEN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months ended June 30, 2019 and 2018

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

    

June 30,

    

June 30,

 

 

 

2019 

 

2018 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net loss

 

$

(16,526)

 

$

(13,066)

 

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

 

 

 

 

 

 

 

Depreciation

 

 

439 

 

 

375 

 

Amortization of right-of-use assets

 

 

891 

 

 

— 

 

Amortization of intangible assets

 

 

56 

 

 

40 

 

Amortization of deferred financing costs

 

 

— 

 

 

81 

 

Loss on extinguishment of debt

 

 

— 

 

 

2,186 

 

Provision for bad debt

 

 

(159)

 

 

130 

 

Provision for inventory write down

 

 

(95)

 

 

582 

 

Change in investment gains and losses

 

 

(602)

 

 

— 

 

Share-based compensation

 

 

4,989 

 

 

3,770 

 

Change in assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

 

(805)

 

 

(1,424)

 

Inventory

 

 

(1,510)

 

 

(2,948)

 

Prepaid expenses and other

 

 

(1,312)

 

 

(454)

 

Accounts payable and accrued expenses

 

 

816 

 

 

839 

 

Operating Lease Obligations

 

 

(846)

 

 

— 

 

Cash paid for interest portion of Finance Leases

 

 

(2)

 

 

— 

 

Contract and other liabilities

 

 

(12)

 

 

(31)

 

Net cash used in operating activities

 

 

(14,678)

 

 

(9,920)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Purchase of short-term investments

 

 

(84,142)

 

 

— 

 

Purchase of property and equipment

 

 

(1,685)

 

 

(654)

 

Sale/Maturities of short-term investments

 

 

98,871 

 

 

— 

 

Cash payments for intangible assets

 

 

(280)

 

 

(260)

 

Net cash provided by/ (used for) investing activities

 

 

12,764 

 

 

(914)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Proceeds from the issuance of common stock

 

 

— 

 

 

132,963 

 

Cash paid for equity offering

 

 

— 

 

 

(257)

 

Borrowing on revolving loan

 

 

— 

 

 

26,253 

 

Payments on revolving loan and prepayment penalties

 

 

— 

 

 

(30,489)

 

Repayments of long term debt and prepayment penalties

 

 

— 

 

 

(22,492)

 

Cash paid for debt portion of finance leases

 

 

(17)

 

 

— 

 

Proceeds from exercise of stock options and warrants

 

 

2,515 

 

 

1,911 

 

Net cash provided by financing activities

 

 

2,498 

 

 

107,889 

 

 

 

 

 

 

 

 

 

Net increase in cash, cash equivalents and restricted cash

 

 

584 

 

 

97,055 

 

Cash, cash equivalents and restricted cash, beginning of year

 

 

30,294 

 

 

36,507 

 

Cash, cash equivalents and restricted cash, end of period

 

$

30,878 

 

$

133,562 

 

 

 

 

 

 

 

 

 

Supplemental disclosures of cash flow activity:

 

 

 

 

 

 

 

Cash paid for interest

 

 

25 

 

 

1,328 

 

Supplemental disclosure of non-cash investing and financing activities

 

 

 

 

 

 

 

Acquisition of fixed assets in accounts payable and accrued expenses

 

 

567 

 

 

— 

 

Right-of-use asset and operating lease liability

 

 

26 

 

 

—