Press Releases

AxoGen, Inc. Reports 2017 Fourth Quarter and Full Year Financial Results

Record Q4 Revenue of $17.0 million, representing 49% growth over prior year
Record Full year 2017 Revenue of $60.4 million, representing 47% growth over prior year

ALACHUA, Fla., Feb. 28, 2018 (GLOBE NEWSWIRE) -- 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 fourth quarter and full year ended December 31, 2017.

Fourth Quarter 2017 Financial Results and Recent Business Highlights

  • Revenue of $17.0 million, up 49% compared to $11.4 million in the fourth quarter of 2016
  • Gross margin of 84.6% compared to 84.0% in the fourth quarter of 2016
  • Adjusted EBITDA loss of $531,000 compared to adjusted EBITDA loss of $2.2 million in Q4 2016
  • Announced expanded application in Breast Reconstruction Neurotization
  • Adjusted net loss for the fourth quarter of 2017 was $2.5 million, or $0.07 per share, compared with adjusted net loss of $3.2 million, or $0.10 per share, in the fourth quarter of 2016
  • Raised $15.6 million in net proceeds through a public offering of common stock on November 20

“We are pleased to report another successful quarter and a solid finish to 2017,” said Karen Zaderej, president and CEO of AxoGen. “These results reflect the strength of our growing platform for nerve repair where we see continued momentum in our core trauma, nerve protection and oral and maxillofacial markets. We enter 2018 with an expanding sales force that will allow us to continue growth in our core markets while also supporting our newest application in breast reconstruction neurotization.”

Additional Fourth Quarter and Recent Operational Highlights

  • Increased active accounts in the fourth quarter to 591, up 31% from 452 a year ago
  • Ended the quarter with 60 direct sales representatives and 20 independent distributors
  • Conducted four national education programs in the fourth quarter
  • Increased the number of clinical presentations related to our surgical portfolio by three to a total of 21 for the year
  • Announced FDA clearance for AxoGuard ® Nerve Cap and will begin a clinical study evaluating its application in the surgical management of pain 
  • Began training surgeons on the ReSensation™ technique for breast reconstruction neurotization
  • Ended the quarter with $36.5 million in cash compared to $22 million at the end of the Q3 2017. The $14.5 million net increase in cash was the result of the company’s $15.6 million equity raise in November, partially offset by net use of cash in Q4 of $1.1 million  
  • Ended the quarter with $25 million of total bank debt, equivalent to the end of Q3 2017

Full Year 2017 Summary Financial Results and Business Highlights

  • 2017 Revenue of $60.4 million, an increase of 47% compared to $41.1 million for the prior year
  • Gross margin of 84.6% compared to 84.3% in 2016
  • Adjusted EBITDA loss of $3.8 million compared to adjusted EBITDA loss of $6.3 million in 2016
  • Increased total addressable market across all current applications to $2.2 billion. The increase is a result of expanded use in oral and maxillofacial surgery and the addition of breast reconstruction neurotization.  
  • Total clinical publications increased by nine to 53, including important data in the areas of mixed and motor, and long gap nerve repair, as well as oral and maxillofacial surgery
  • Completed 15 national education programs in 2017 and expect to conduct 18 programs in 2018
  • Expanded leadership team with the appointment of Jon Gingrich as Chief Commercial Officer
  • Named Employee Engagement Best Practices Award Winner by DecisionWise International

“We continue to produce record revenues and are pleased with 2017 results that demonstrate our ability to consistently and successfully execute our strategy,” said Zaderej. “Our efforts to increase market awareness, provide quality surgeon education programs, expand our commercial presence and effectiveness, and further develop clinical data are helping surgeons develop confidence in the adoption of the AxoGen platform for nerve repair.”

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

Upcoming Investor Events
Members of the AxoGen senior management team will participate at the following upcoming conferences:

  • Canaccord Genuity Musculoskeletal Conference in New Orleans on March 6
  • 30th Annual ROTH Conference in Dana Point, CA on March 13

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 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.

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.      
CONSOLIDATED BALANCE SHEETS  
           
December 31, December 31,    
  2017     2016      
Assets          
           
Current assets:        
Cash and cash equivalents $   36,506,624     $   30,014,405      
Accounts receivable, net     11,064,720         8,052,203      
Inventory     7,315,942         5,458,840      
Prepaid expenses and other     853,381         511,804      
Total current assets     55,740,667         44,037,252      
         
Property and equipment, net     2,197,039         1,494,247      
Intangible assets     936,992         828,979      
  $   58,874,698     $   46,360,478      
           
           
Liabilities and Shareholders’ Equity          
           
Current liabilities:    
Borrowings under revolving loan agreement $   4,000,000     $   4,025,023      
Accounts payable and accrued expenses     8,952,061         7,002,165      
Current maturities of long term obligations     735,017         20,899      
Deferred revenue, current     31,668         33,282      
Total current liabilities     13,718,746         11,081,369      
Long Term Obligations, net of current maturities and deferred financing fees     19,905,286         20,265,745      
Deferred revenue     68,631       92,215      
Total liabilities     33,692,663       31,439,329      
Shareholders’ equity:     343,503         330,088      
Common stock, $.01 par value; 50,000,000 shares authorized;  34,350,329 and 33,008,865 shares issued and outstanding      
Additional paid-in capital     153,167,817       132,474,884      
Accumulated deficit     (128,329,285 )       (117,883,823 )    
Total shareholders’ equity      25,182,035       14,921,149      
  $   58,874,698     $   46,360,478      
           
           
AXOGEN, INC.
CONSONLIDATED STATEMENTS OF OPERATIONS 
Three Months and Years ended December 31, 2017 and 2016
   
           
  Three Months Ended   Years Ended
  December 31,   December 31,   December 31,   December 31,
  2017       2016       2017       2016  
Revenues $   16,971,005     $   11,408,672     $   60,426,395     $   41,107,538  
Cost of goods sold     2,614,458         1,829,804         9,311,585         6,467,250  
Gross profit     14,356,547         9,578,868         51,114,810         34,640,288  
Costs and expenses:              
Sales and marketing     10,120,605         8,349,206         37,635,871         28,425,503  
Research and development     1,971,569         1,178,502         6,699,120         4,212,023  
General and administrative     4,071,349         2,770,561         14,731,105         10,132,624  
Total costs and expenses     16,163,523         12,298,269         59,066,096         42,770,150  
Loss from operations     (1,806,976 )       (2,719,401 )       (7,951,286 )       (8,129,862 )
Other income (expense):              
Interest expense     (576,971 )       (2,130,694 )       (2,216,845 )       (5,386,268 )
Interest expense—deferred financing costs     (109,846 )       (780,135 )       (246,557 )       (875,389 )
Other income (expense)     (5,386 )       3,246         (30,774 )       (19,625 )
Total other income (expense)     (692,203 )       (2,907,583 )       (2,494,176 )       (6,281,282 )
Net loss $   (2,499,179 )   $   (5,626,984 )   $   (10,445,462 )   $   (14,411,144 )
Weighted Average Common Shares outstanding – basic and diluted     33,845,684         32,567,893         33,322,767         30,702,164  
Loss Per Common share - basic and diluted $   (0.07 )   $   (0.17 )   $   (0.31 )   $   (0.47 )
               
  Adjusted net loss $   (2,499,179 )   $   (3,176,379 )   $   (10,445,462 )   $   (11,960,539 )
Adjusted net loss per Common share $   (0.07 )   $   (0.10 )   $   (0.31 )   $   (0.39 )
               
           
AXOGEN, INC.
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
Three Months and Years ended December 31, 2017 and 2016
 
           
  Three Months Ended   Years Ended
  December 31,   December 31,   December 31,   December 31,
  2017       2016       2017       2016  
Net loss $   (2,499,179 )   $   (5,626,984 )   $   (10,445,462 )   $   (14,411,144 )
  Depreciation and amortization expense   140,772       98,484       487,611       361,617  
  Amortization expense of intangible assets   18,534       26,821       78,993       74,871  
  Income Taxes     5,347         -         29,321         21,426  
  Interest expense   576,971       2,130,694       2,216,845       5,386,268  
  Interest expense - deferred financing costs   109,846       780,135       246,557       875,389  
  EBITDA - non GAAP $   (1,647,709 )   $   (2,590,850 )   $   (7,386,135 )   $   (7,691,573 )
               
  Non Cash Stock Compensation Expense   1,116,926       343,913       3,608,918       1,390,277  
  Adjusted EBITDA - non GAAP $   (530,783 )   $   (2,246,937 )   $   (3,777,217 )   $   (6,301,296 )
                       
           
AXOGEN, INC.
RECONCILIATION OF NET LOSS TO ADJUSTED NET LOSS 
Three Months and Years ended December 31, 2017 and 2016
 
           
  Three Months Ended   Years Ended
  December 31,   December 31,   December 31,   December 31,
  2017       2016       2017       2016  
Net loss $   (2,499,179 )       (5,626,984 )   $   (10,445,462 )       (14,411,144 )
  Prepayment fees net of accrued interest     -       1,700,131         -       1,700,131  
  Write off of deferred financing fees     -       750,474         -       750,474  
  Adjusted Net Loss $   (2,499,179 )   $   (3,176,379 )   $   (10,445,462 )   $   (11,960,539 )
Adjusted net loss per Common share $   (0.07 )   $   (0.10 )   $   (0.31 )   $   (0.39 )
           
           
AXOGEN, INC.  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
Years ended December 31, 2017 and 2016  
   
           
  2017     2016      
Cash flows from operating activities:          
Net loss $   (10,445,462 )   $   (14,411,144 )    
Adjustments to reconcile net loss to net cash used for operating activities:          
Depreciation      487,611         361,617      
Amortization of intangible assets     78,993         74,871      
Amortization of deferred financing costs     246,557         124,915      
Write off of deferred financing costs     -         750,474      
Provision for bad debts     223,323         79,593      
Stock-based compensation     3,608,918         1,390,277      
Interest added to note     -         1,924,279      
Change in assets and liabilities:          
Accounts receivable     (3,235,840 )       (3,348,807 )    
Inventory     (1,857,102 )       (1,524,880 )    
Prepaid expenses and other     (341,577 )       (86,879 )    
Accounts payable and accrued expenses     1,926,664         3,411,507      
Deferred liabilities     70,316         17,582      
Net cash used for operating activities     (9,237,599 )       (11,236,595 )    
           
  Cash flows from investing activities:          
Purchase of property and equipment     (1,105,212 )       (931,634 )    
Acquisition of intangible assets     (187,006 )       (225,768 )    
Net cash used for investing activities     (1,292,218 )       (1,157,402 )    
  Cash flows from financing activities:          
Proceeds from issuance of common stock     15,662,905         18,668,092      
Borrowing on revolving loan     57,599,165         6,684,894      
Payments on revolving loan     (57,624,188 )       (6,684,894 )    
Repayments of long term debt     (20,899 )       (2,446,676 )    
Debt issuance costs     (29,472 )       (800,847 )    
Proceeds from exercise of stock options     1,434,524         1,078,333      
Net cash provided by financing activities     17,022,035         16,498,902      
Net increase in cash and cash equivalents     6,492,218         4,104,905      
Cash and cash equivalents, beginning of year     30,014,405         25,909,500      
Cash and cash equivalents, end of period $   36,506,623     $   30,014,405      
Supplemental disclosures of cash flow activity:          
Cash paid for interest $   2,198,286     $   5,769,372      
Supplemental disclosure of non-cash investing and financing activities:          
Payments of fixed assets in accounts payable $   55,385     $   32,153      
Payments of long term debt with proceeds from term loan of $21,000,000 and revolver loan of $4,000,000 $   -     $   25,000,000      
Capital lease additions $   61,959     $   -      
   

 

 

 


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Source: AxoGen, Inc.