Press Releases

AxoGen, Inc. Reports 2017 Third Quarter Financial Results

Record Q3 Revenue of $16.0 million, representing 43% growth over prior year

ALACHUA, Fla., Nov. 01, 2017 (GLOBE NEWSWIRE) -- AxoGen, Inc. (NASDAQ:AXGN), a global leader in developing and marketing innovative surgical solutions for the repair of peripheral nerve damage, today reported financial results and business highlights for the third quarter ended September 30, 2017.

Third Quarter 2017 Financial Results and Recent Business Highlights

  • Revenue of $16.0 million, up 43% compared to $11.2 million in the third quarter of 2016
  • Gross margin of 84.4% compared to 84.9% in the third quarter of 2016
  • Net loss for the third quarter of 2017 is $2.1 million, or $0.06 per share, compared with a net loss of $2.3 million, or $0.08 per share, in the third quarter of 2016
  • Adjusted EBITDA loss of $433,000 compared to Adjusted EBITDA loss of $779,000 in Q3 2016

“We are pleased with another successful quarter, including record revenue of 16.0 million,” said Karen Zaderej, President and Chief Executive Officer. “It is gratifying to see surgeons expanding use of our product portfolio in oral and maxillofacial procedures. In addition, we see increased adoption by hand surgeons in response to data in mixed and motor nerve repair, as well as long gap nerve repair.”

Additional Third Quarter and Recent Operational Highlights

  • Increased active accounts in the third quarter to 563, up 36% from 414 in Q3 2016
  • Ended the quarter with 53 direct sales reps and 20 independent distributors
  • A RANGER® Registry data subset presented at the American Society for Surgery of the Hand (ASSH) annual meeting demonstrated favorable results for the Avance® Nerve Graft in mixed, motor, and long gap nerve repairs when compared to historical autograft outcomes
  • Surgeon demonstrations at the American Association of Oral and Maxillofacial Surgeons (AAOMS) meeting increased OMF surgeon awareness of AxoGen’s comprehensive platform for nerve repair, including solutions to address nerve damage in the jaw resulting from either surgical injuries or reconstruction following benign tumor removal or similar procedures. Recent clinical data show that repair of these injuries with the AxoGen portfolio can provide meaningful recovery in 87 to 94 percent of these patients
  • Conducted four national education symposia in the third quarter, and 12 year-to-date; these surgeon lead symposia highlight recent data and emerging best practices in peripheral nerve repair
  • Increased the number of clinical presentations related to our surgical portfolio by three to a total of 21 year-to-date
  • Added one peer reviewed clinical publication to our surgical portfolio for a total of 53
  • Continued market development activities in potential expansion applications, including breast reconstruction neurotization and neuropathic pain associated with lower limb total joint replacement
  • Ended the quarter with $22.0 million in cash, a reduction of $1.8 million from the end of Q2 2017.
  • Ended the quarter with $25 million of total bank debt, unchanged from the end of Q2 2017

“We are encouraged by the increasing number of peripheral nerve repair data presentations at scientific meetings,” added Zaderej. “The clinical evidence supporting meaningful recovery associated with our Avance® Nerve Graft is compelling. This data, along with the library of evidence on the full AxoGen portfolio, help build awareness and surgeon confidence in our platform for nerve repair.”

2017 Financial Guidance
Management reiterates 2017 annual revenue will grow at least 40% over 2016 revenue and gross margins will remain above 80%.

Introducing 2018 Financial Guidance
Management expects that 2018 revenue will grow at least 40% over 2017 revenue and gross margins will remain above 80%.

Upcoming Events
Members of the AxoGen management team will participate at the following upcoming conferences and events:

  • Second Annual AxoGen Analyst and Investor Day in New York City on November 20
  • 29th Annual Piper Jaffray Healthcare Conference in New York City on November 28
  • Guggenheim 5th Annual Healthcare Conference in Boston on December 13
  • The Trout Group Annual 1-on-1 Management Access Event in San Francisco, January 9–11, 2018 (to request a meeting, please contact axogenevents@troutgroup.com). 
  • 2018 Combined Meeting of the American Association for Hand Surgery, American Society for Peripheral Nerve, and American Society of Reconstructive Microsurgery in Phoenix, January 10-16, 2018

The Company will host its second annual Analyst and Investor Day on Monday, November 20 in New York City. Join AxoGen executives and surgeon thought leaders for a discussion of the company’s comprehensive platform for nerve repair and the emerging nerve repair market. Those interested in attending the event can RSVP at axogenevents@troutgroup.com.

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 nerve function and quality of life to patients with peripheral nerve injuries 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. Damage to a peripheral nerve can result in the loss of muscle or organ function, the loss of sensory feeling, or the initiation of pain.

AxoGen's platform for nerve repair features a comprehensive portfolio of products, including Avance® Nerve Graft, an off-the-shelf processed human nerve allograft for bridging severed 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 nerves, AxoGuard® Nerve Protector, a porcine submucosa ECM product used to wrap and protect injured 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 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 2017 and 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.  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 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.
Peter J. Mariani, Chief Financial Officer
InvestorRelations@AxoGenInc.com

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

 

                 
AXOGEN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 
   
  September 30,      
2017 December 31,
(unaudited) 2016
Assets            
Current assets:            
Cash and cash equivalents   22,041,097         $   30,014,405  
Accounts receivable, net     10,200,560             8,052,203  
Inventory     6,698,943             5,458,840  
Prepaid expenses and other     571,912             511,804  
Total current assets     39,512,512             44,037,252  
Property and equipment, net     1,763,840             1,494,247  
Intangible assets     951,473             828,979  
   $   42,227,825         $   46,360,478  
Liabilities and Shareholders’ Equity (Deficit)              
Current liabilities:              
Borrowings under revolving loan agreement   4,000,000           $   4,025,023  
Accounts payable and accrued expenses     7,072,530               7,002,165  
Current maturities of long term obligations     21,596               20,899  
Deferred revenue, current     43,576             33,282  
Total current liabilities     11,137,702             11,081,369  
Long Term Obligations, net of current maturities and deferred financing fees     20,356,698               20,265,745  
Deferred lease     105,261              --   
Deferred revenue     76,027             92,215  
Total liabilities     31,675,688             31,439,329  
Shareholders’ equity (deficit):              
Common stock, $.01 par value; 50,000,000 shares authorized;                   
33,393,804 and 33,008,865 shares issued and outstanding     333,938             330,088  
               
Additional paid-in capital     136,048,305             132,474,884  
Accumulated deficit     (125,830,106 )           (117,883,823 )
Total shareholders’ equity      10,552,137             14,921,149  
  $   42,227,825         $   46,360,478  
                 


AXOGEN, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 
Three and Nine Months ended September 30, 2017 and 2016 
(unaudited) 
                 
  Three Months Ended   Nine Months Ended
  September 30,       September 30,   September 30,   September 30,
  2017   2016   2017   2016
Revenues    16,046,253         $   11,205,224     $   43,455,390     $   29,698,866  
Cost of goods sold     2,504,278             1,697,443         6,697,127         4,637,446  
Gross profit     13,541,975             9,507,781         36,758,263         25,061,420  
Costs and expenses:                          
Sales and marketing     9,466,496             7,090,059         27,515,266         20,076,297  
Research and development     1,795,292             1,118,358         4,727,551         3,033,521  
General and administrative     3,778,612             2,481,051         10,659,756         7,362,063  
Total costs and expenses     15,040,400             10,689,468         42,902,573         30,471,881  
Loss from operations     (1,498,425 )           (1,181,687 )       (6,144,310 )       (5,410,461 )
Other expense:                          
Interest expense     (577,941 )           (1,089,134 )       (1,639,874 )       (3,255,574 )
Interest expense – deferred financing costs     (46,110 )           (31,748 )       (136,711 )       (95,254 )
Other expense     (1,603 )           (2,804 )       (25,388 )       (22,871 )
Total other expense      (625,654 )           (1,123,686 )       (1,801,973 )       (3,373,699 )
Net loss   (2,124,079 )       $   (2,305,373 )   $   (7,946,283 )   $   (8,784,160 )
Weighted Average Common Shares outstanding – basic and diluted     33,286,211             30,152,279         33,146,546         30,075,715  
Loss Per Common share – basic and diluted $   (0.06 )   $ (0.08 )   $ (0.24 )   $ (0.29 )
                               
 
AXOGEN, INC. 
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES 
Three and Nine Months ended September 30, 2017 and 2016 
(unaudited) 
                   
    Three Months Ended     Nine Months Ended
  September 30,       September 30,     September 30,   September 30,
2017       2016     2017   2016
Net loss $   (2,124,079 )       $   (2,305,373 )     $   (7,946,283 )   $   (8,784,160 )
  Depreciation and amortization expense     128,963             95,543           346,839         263,133  
  Amortization expense of intangible assets     18,753             16,017           60,459         48,050  
  Income Taxes    --             --            23,974         21,427  
  Interest expense     577,941             1,089,134           1,639,874         3,255,574  
  Interest expense - deferred financing costs     46,110             31,748           136,711         95,254  
  EBITDA - non GAAP $   (1,352,312 )       $   (1,072,931 )     $   (5,738,426 )   $   (5,100,722 )
                             
  Non Cash Stock Compensation Expense     919,026         293,575         2,491,992         1,046,364  
  Adjusted EBITDA - non GAAP $   (433,286 )   $   (779,356 )   $   (3,246,434 )   $   (4,054,358 )
 


AXOGEN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months ended September 30, 2017 and 2016
(unaudited)
   
  2017   2016
Cash flows from operating activities:            
Net loss $   (7,946,283 )     $   (8,784,160 )
Adjustments to reconcile net loss to net cash used for operating activities:            
Depreciation     346,839           263,133  
Amortization of intangible assets     60,459           48,050  
Amortization of deferred financing costs     136,711           95,253  
Provision for bad debt     83,733           80,934  
Share-based compensation     2,491,992           1,046,364  
Interest added to note payable    --            199,124  
Change in assets and liabilities:            
Accounts receivable     (2,232,090 )         (2,302,701 )
Inventory     (1,240,103 )         (1,036,859 )
Prepaid expenses and other     (60,108 )         (260,786 )
Accounts payable and accrued expenses     70,365           864,267  
Deferred liabilities     99,367           5,727  
Net cash used for operating activities     (8,189,118 )         (9,781,654 )
             
Cash flows from investing activities:            
Purchase of property and equipment     (616,432 )         (612,974 )
Acquisition of intangible assets     (182,953 )         (157,491 )
Net cash used for investing activities     (799,385 )         (770,465 )
             
Cash flows from financing activities:            
Borrowing on revolving loan     41,553,210          --   
Payments on revolving loan     (41,578,233 )        --   
Repayments of long term debt     (15,589 )        --   
Debt issuance costs     (29,472 )        --   
Proceeds from exercise of stock options     1,085,279           645,864  
Net cash provided by financing activities     1,015,195           645,864  
             
Net decrease in cash and cash equivalents     (7,973,308 )         (9,906,255 )
Cash and cash equivalents, beginning of year     30,014,405           25,909,500  
Cash and cash equivalents, end of period $   22,041,097       $   16,003,245  
             
Supplemental disclosures of cash flow activity:            
Cash paid for interest $   1,631,795       $   3,031,528  

Source: AxoGen, Inc.