Exhibit 99.1

 

Picture 2

 

Axogen, Inc. Reports  2019 Third Quarter Financial Results

 

ALACHUA, FL – November  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 third quarter ended September 30, 2019.

 

Third Quarter 2019 Financial Results:

·

Net sales were $28.6 million during the quarter,  an increase of 26.1% compared to third quarter 2018 revenue of $22.7 million.

·

Gross margin was 84.2% for the quarter, compared to 84.7% in the third quarter of 2018.

·

Net loss for the quarter was $5.6 million, or $0.14 per share, compared to net loss of $4.1 million, or $0.11 per share in the third quarter of 2018.

·

Adjusted net loss was $2.6  million for the quarter, or $0.07 per share, compared with adjusted net loss of $1.9 million, or $0.05 per share, in the third quarter of 2018.

·

Adjusted EBITDA loss was  $3.0 million for the quarter, compared to adjusted EBITDA loss of $2.4 million in the third quarter of 2018.

·

Ended the quarter with $106.1 million in cash, cash equivalents, and investments, compared to $109.1 million at the end of the second quarter of 2019.

 

“We delivered solid financial results during the quarter, and I am pleased with the progress we are making to improve our commercial operations,” commented Karen Zaderej, chairman, CEO, and president. “We  are rebalancing our efforts toward our largest market opportunity, extremity trauma,  which represents the most efficient and effective path to sustainable long-term growth. We will continue to invest in the breast reconstruction neurotization and oral and maxillofacial markets and expect to expand these efforts as these nascent markets continue to develop.  Additionally, we are slowing the rate of sales force expansion to enable further productivity gains across our existing commercial footprint.  We are encouraged with the early results of these initiatives and will continue to evaluate and build upon them throughout the remainder of the year and into 2020.”

 

Additional Third Quarter 2019 Operational and Clinical Updates:

·

Increased active accounts in the third  quarter to 791, up 16% from 679 a year ago.

·

Ended the quarter with 105 direct sales representatives and 19 independent agencies.

·

Conducted four national education programs in the third  quarter,  including one OMF specialty program, and expect to conduct 25 programs in total during 2019.

·

Added five peer reviewed clinical publications to our surgical portfolio for a total of 105.

·

Increased the number of presentations at clinical and scientific conferences related to our surgical portfolio by 14, for a total of 44 year-to-date.

·

The following updates were provided by clinical investigators at the 2019 American Society for Surgery of the Hand (ASSH) meeting:

oUpdated data from the RANGER® registry, including 511 upper extremity nerve repairs, demonstrate a consistent meaningful recovery rate for Avance®  Nerve Graft of 84%

oFindings from the MATCHSM study show Avance Nerve Graft had statistically significant improvements as compared to synthetic conduits in three essential areas: the rate of recovery,

the overall degree of recovery, and in average recovery of static two-point discrimination, a key sensory measure in the hand

 

2019 Financial Guidance

The Company continues to expect 2019 revenue will be between $106 million and $110 million. Management reiterates its expectation for gross margin to remain above 80%. Additionally, the Company now expects to have between 105 and 110 direct sales representatives by year-end, compared to its previous estimate of at least 115.

 

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 processed human umbilical cord intended for surgical use as a resorbable soft tissue barrier.  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.

 

Peter J. Mariani, Chief Financial Officer

 

pmariani@axogeninc.com

 

InvestorRelations@AxogenInc.com

 

 

 

 

AXOGEN, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

 

 

 

 

 

 

 

 

 

 

    

September 30,

    

December 31,

 

 

 

2019

 

2018

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

24,555 

 

$

24,294 

 

Restricted Cash

 

 

6,000 

 

 

6,000 

 

Short-term investments

 

 

75,511 

 

 

92,311 

 

Accounts receivable, net

 

 

15,451 

 

 

15,321 

 

Inventory

 

 

13,682 

 

 

11,982 

 

Prepaid expenses and other

 

 

2,144 

 

 

1,045 

 

Total current assets

 

 

137,343 

 

 

150,953 

 

Property and equipment, net

 

 

11,673 

 

 

8,039 

 

Operating lease right-of-use assets

 

 

3,595 

 

 

— 

 

Finance lease right-of-use assets

 

 

93 

 

 

— 

 

Intangible assets

 

 

1,488 

 

 

1,181 

 

Total assets

 

$

154,192 

 

$

160,173 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

14,970 

 

$

12,998 

 

Current maturities of long term obligations

 

 

1,773 

 

 

28 

 

Contract liabilities, current

 

 

14 

 

 

18 

 

Total current liabilities

 

 

16,757 

 

 

13,044 

 

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

 

 

2,002 

 

 

35 

 

Other long-term liabilties

 

 

-

 

 

70 

 

Contract liabilities

 

 

22 

 

 

42 

 

Total liabilities

 

 

18,781 

 

 

13,191 

 

Shareholders’ equity:

 

 

 

 

 

 

 

Common stock, $.01 par value; 100,000,000 shares authorized; 39,461,318 and 38,900,875 shares issued and outstanding

 

 

395 

 

 

389 

 

Additional paid-in capital

 

 

307,839 

 

 

297,319 

 

Accumulated deficit

 

 

(172,823)

 

 

(150,726)

 

Total shareholders’ equity

 

 

135,411 

 

 

146,982 

 

Total liabilities and shareholders' equity

 

$

154,192 

 

$

160,173 

 

 

 

AXOGEN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three and Nine Months ended September 30, 2019 and 2018

(unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

    

September 30,

    

September 30,

    

 

September 30,

    

 

September 30,

 

 

 

2019

 

2018

 

2019

 

2018

 

Revenues

 

$

28,564 

 

$

22,660 

 

$

78,550 

 

$

60,504 

 

Cost of goods sold

 

 

4,510 

 

 

3,464 

 

 

12,468 

 

 

9,282 

 

Gross profit

 

 

24,054 

 

 

19,196 

 

 

66,082 

 

 

51,222 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

18,245 

 

 

14,653 

 

 

53,146 

 

 

41,149 

 

Research and development

 

 

4,181 

 

 

3,307 

 

 

12,602 

 

 

7,967 

 

General and administrative

 

 

7,740 

 

 

6,071 

 

 

24,321 

 

 

16,751 

 

Total costs and expenses

 

 

30,166 

 

 

24,031 

 

 

90,069 

 

 

65,867 

 

Loss from operations

 

 

(6,112)

 

 

(4,835)

 

 

(23,987)

 

 

(14,645)

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

555 

 

 

727 

 

 

1,925 

 

 

884 

 

Interest expense

 

 

(7)

 

 

 

 

(32)

 

 

(1,124)

 

Interest expense – deferred financing costs

 

 

— 

 

 

— 

 

 

— 

 

 

(81)

 

Loss on extinguishment of debt

 

 

— 

 

 

— 

 

 

— 

 

 

(2,186)

 

Other expense

 

 

(7)

 

 

— 

 

 

(3)

 

 

(16)

 

Total other expense

 

 

541 

 

 

733 

 

 

1,890 

 

 

(2,523)

 

Net loss

 

$

(5,571)

 

$

(4,102)

 

$

(22,097)

 

$

(17,168)

 

Weighted average common shares outstanding – basic and diluted

 

 

39,340 

 

 

38,505 

 

 

39,151 

 

 

36,582 

 

Loss per common share – basic and diluted

 

$

(0.14)

 

$

(0.11)

 

$

(0.56)

 

$

(0.47)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net loss - non GAAP

 

 

(2,644)

 

 

(1,891)

 

 

(12,386)

 

 

(9,001)

 

Adjusted net loss per common share - basic and diluted

 

$

(0.07)

 

$

(0.05)

 

$

(0.32)

 

$

(0.25)

 

 

AXOGEN, INC.

RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES

Three and Nine Months ended September 30, 2019 and 2018

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

    

September 30,

    

September 30,

    

September 30,

    

September 30,

 

 

 

2019

 

2018

 

2019

 

2018

 

Net loss

 

$

(5,571)

 

$

(4,102)

 

$

(22,097)

 

$

(17,168)

 

Depreciation and amortization expense

 

 

244 

 

 

219 

 

 

757 

 

 

634 

 

Investment income

 

 

(555)

 

 

(727)

 

 

(1,925)

 

 

(884)

 

Income tax

 

 

(3)

 

 

— 

 

 

(15)

 

 

13 

 

Interest expense

 

 

 

 

(6)

 

 

32 

 

 

3,391 

 

EBITDA - non GAAP

 

$

(5,878)

 

$

(4,616)

 

$

(23,248)

 

$

(14,014)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non cash stock compensation expense

 

$

2,395 

 

$

2,211 

 

$

7,384 

 

$

5,981 

 

Litigation and related costs

 

 

532 

 

 

— 

 

 

2,327 

 

 

— 

 

Adjusted EBITDA - non GAAP

 

$

(2,951)

 

$

(2,405)

 

$

(13,537)

 

$

(8,033)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(5,571)

 

$

(4,102)

 

$

(22,097)

 

$

(17,168)

 

Non cash stock compensation expense

 

 

2,395 

 

 

2,211 

 

 

7,384 

 

 

5,981 

 

Litigation and related costs

 

 

532 

 

 

— 

 

 

2,327 

 

 

— 

 

Loss on extinguishment of debt

 

 

— 

 

 

— 

 

 

— 

 

 

2,186 

 

Adjusted Net Loss - non GAAP

 

$

(2,644)

 

$

(1,891)

 

$

(12,386)

 

$

(9,001)

 

Weighted average common shares outstanding – basic and diluted

 

 

39,340 

 

 

38,505 

 

 

39,151 

 

 

36,582 

 

Adjusted net loss per common share - basic and diluted

 

$

(0.07)

 

$

(0.05)

 

$

(0.32)

 

$

(0.25)

 

 

 

 

AXOGEN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

Nine Months Ended September 30, 2019 and 2018

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Common Stock

    

Additional Paid-in Capital

    

Accumulated Deficit

    

Total Shareholders' Equity

 

For the Three Months Ended September 30, 2019:

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2019

 

$

393 

 

$

304,819 

 

$

(167,252)

 

$

137,960 

 

Net loss

 

 

— 

 

 

— 

 

 

(5,571)

 

 

(5,571)

 

Issuance of common stock

 

 

— 

 

 

— 

 

 

— 

 

 

— 

 

Stock-based compensation

 

 

— 

 

 

2,397 

 

 

— 

 

 

2,397 

 

Exercise of stock options and employee stock purchase plan

 

 

 

 

623 

 

 

— 

 

 

625 

 

Balance at September 30, 2019

 

$

395 

 

$

307,839 

 

$

(172,823)

 

$

135,411 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Nine Months Ended September 30, 2019:

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2018

 

$

389 

 

$

297,319 

 

$

(150,726)

 

$

146,982 

 

Net loss

 

 

— 

 

 

— 

 

 

(22,097)

 

 

(22,097)

 

Stock-based compensation

 

 

— 

 

 

7,384 

 

 

— 

 

 

7,384 

 

Exercise of stock options and employee stock purchase plan

 

 

 

 

3,136 

 

 

— 

 

 

3,142 

 

Balance at September 30, 2019

 

$

395 

 

$

307,839 

 

$

(172,823)

 

$

135,411 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended September 30, 2018:

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2018

 

$

383 

 

$

291,515 

 

$

(141,395)

 

$

150,503 

 

Net loss

 

 

— 

 

 

— 

 

 

(4,102)

 

 

(4,102)

 

Issuance of common stock

 

 

— 

 

 

— 

 

 

— 

 

 

— 

 

Stock-based compensation

 

 

— 

 

 

2,211 

 

 

— 

 

 

2,211 

 

Exercise of stock options and employee stock purchase plan

 

 

 

 

863 

 

 

— 

 

 

867 

 

Balance at September 30, 2018

 

$

387 

 

$

294,589 

 

$

(145,497)

 

$

149,479 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Nine Months Ended September 30, 2018:

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2018

 

$

343 

 

$

153,169 

 

$

(128,329)

 

$

25,183 

 

Net loss

 

 

— 

 

 

— 

 

 

(17,168)

 

 

(17,168)

 

Issuance of common stock

 

 

35 

 

 

132,670 

 

 

— 

 

 

132,705 

 

Stock-based compensation

 

 

— 

 

 

5,981 

 

 

— 

 

 

5,981 

 

Exercise of stock options and employee stock purchase plan

 

 

 

 

2,769 

 

 

— 

 

 

2,778 

 

Balance at September 30, 2018

 

$

387 

 

$

294,589 

 

$

(145,497)

 

$

149,479 

 

 

AXOGEN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months ended September 30, 2019 and 2018

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

 

Sept 30,

 

Sept 30,

 

 

    

2019

    

2018

 

Cash flows from operating activities:

 

 

 

 

 

Net loss

 

$

(22,097)

 

$

(17,168)

 

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

 

 

 

 

 

 

 

Depreciation

 

 

631 

 

 

575 

 

Amortization of right-of-use assets

 

 

1,352 

 

 

— 

 

Amortization of intangible assets

 

 

89 

 

 

59 

 

Amortization of deferred financing costs

 

 

— 

 

 

81 

 

Loss on extinguishment of debt

 

 

— 

 

 

2,186 

 

Provision for bad debt

 

 

(150)

 

 

298 

 

Provision for inventory write down

 

 

(44)

 

 

877 

 

Change in investment gains and losses

 

 

(957)

 

 

(375)

 

Share-based compensation

 

 

7,384 

 

 

5,981 

 

Change in assets and liabilities:

 

 

— 

 

 

— 

 

Accounts receivable

 

 

20 

 

 

(3,223)

 

Inventory

 

 

(1,657)

 

 

(4,510)

 

Prepaid expenses and other

 

 

(1,099)

 

 

(624)

 

Accounts payable and accrued expenses

 

 

1,288 

 

 

3,005 

 

Operating Lease Obligations

 

 

(1,276)

 

 

— 

 

Cash paid for interest portion of Finance Leases

 

 

(3)

 

 

— 

 

Contract and other liabilities

 

 

(23)

 

 

(48)

 

Net cash used in operating activities

 

 

(16,542)

 

 

(12,886)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Purchase of short-term investments

 

 

(104,314)

 

 

(103,865)

 

Purchase of property and equipment

 

 

(3,676)

 

 

(6,052)

 

Sale/Maturities of short-term investments

 

 

122,071 

 

 

3,500 

 

Cash payments for intangible assets

 

 

(396)

 

 

(320)

 

Net cash provided by/ (used for) investing activities

 

 

13,685 

 

 

(106,737)

 

 

 

 

 

 

 

 

 

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

 

 

— 

 

 

(22,503)

 

Cash paid for debt portion of finance leases

 

 

(24)

 

 

— 

 

Proceeds from exercise of stock options and warrants

 

 

3,142 

 

 

2,778 

 

Net cash provided by financing activities

 

 

3,118 

 

 

108,745 

 

 

 

 

 

 

 

 

 

Net increase in cash, cash equivalents and restricted cash

 

 

261 

 

 

(10,878)

 

Cash, cash equivalents and restricted cash, beginning of year

 

 

30,294 

 

 

36,507 

 

Cash, cash equivalents and restricted cash, end of period

 

$

30,555 

 

$

25,629 

 

 

 

 

 

 

 

 

 

Supplemental disclosures of cash flow activity:

 

 

 

 

 

 

 

Cash paid for interest

 

 

31 

 

 

1,322 

 

Supplemental disclosure of non-cash investing and financing activities

 

 

 

 

 

 

 

Acquisition of fixed assets in accounts payable and accrued expenses

 

 

684 

 

 

— 

 

Right-of-use asset and operating lease liability

 

 

26 

 

 

—