GlobeNewswire Inc | Feb 22, 2021 04:01PM EST

February 22, 2021

ALACHUA, Fla., Feb. 22, 2021 (GLOBE NEWSWIRE) -- Axogen, Inc. (NASDAQ: AXGN), a global leader in developing and marketing innovative surgical solutions for peripheral nerve injuries, today reported financial results and business highlights for the fourth quarter and full year ended December 31, 2020.

Fourth Quarter 2020 Financial Results and Business Highlights

-- Net revenue was $32.5 million during the quarter, a 15% increase compared to fourth quarter 2019 revenue of $28.2 million. -- Gross margin was 83.2% for the quarter, compared to 82.7% in the fourth quarter of 2019. -- Net loss for the quarter was $6.0 million, or $0.15 per share, compared to a net loss of $7.0 million, or $0.18 per share, in the fourth quarter of 2019. -- Adjusted net loss was $3.3 million for the quarter, or $0.08 per share, compared with adjusted net loss of $4.0 million, or $0.10 per share, in the fourth quarter of 2019. -- Adjusted EBITDA loss was $2.1 million for the quarter, compared to an adjusted EBITDA loss of $4.2 million in the fourth quarter of 2019. -- The balance of cash, cash equivalents, and investments on December 31, 2020 was $110.8 million, compared to a balance of $106.7 million on September 30, 2020. The net increase includes $3.5 million of equity proceeds received from Oberland Capital related to the option exercise associated with their debt facility, positive operating cash flow in the quarter of $3.4 million, partially offset by capital expenditures of $2.8 million related to our new facilities in Tampa and Dayton. -- Active accounts in the fourth quarter were 893, a 12% increase compared to 797 in the fourth quarter a year ago, and revenue from the top 10% of our active accounts continued to represent approximately 35% of total revenue in the quarter.

Our fourth quarter and 2020 results are a testament to the resilience of our Axogen team and the ability to successfully execute our focused strategy while also managing the challenges associated with the COVID-19 pandemic, said Karen Zaderej, chairman, CEO, and president of Axogen, Inc. We adapted quickly and met each challenge with innovative thinking and a patient-first approach. As a result of the efficiencies and skills gained, we are now even better positioned to meet the growing surgeon demand for our evidence-based nerve repair solutions.

Full-Year 2020 Financial Results and Business Highlights

-- Full-year 2020 revenue was $112.3 million, a 5% increase compared to 2019 revenue of $106.7 million. -- Gross margin was 80.8% for the full year, compared to 83.7% in 2019. -- Net loss for the full year was $23.8 million, or $0.60 per share, compared to $29.1 million, or $0.74 per share, in 2019. -- Adjusted net loss was $15.3 million for the full year, or $0.38 per share, compared to $16.4 million, or $0.42 per share, in 2019 -- Adjusted EBITDA loss was $13.1 million for the full year, compared to an adjusted EBITDA loss of $17.7 million in 2019. -- Ended the year with 111 direct sales representatives, compared to 109 at the end of 2019. -- Ended the year with 147 peer-reviewed clinical publications featuring Axogens nerve repair product portfolio. -- Surpassed 50,000 Avance Nerve Grafts implanted since launch.

Conference CallThe 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 Companys 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 Companys website at www.axogeninc.com under Investors.

About AxogenAxogen (AXGN) is the leading company focused specifically on the science, development, and commercialization of technologies for peripheral nerve regeneration and repair. Axogen employees 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; Axoguard Nerve Cap, a porcine submucosa ECM product used to protect a peripheral nerve end and separate the nerve from the surrounding environment to reduce the development of symptomatic or painful neuroma; and AviveSoft 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, Germany, United Kingdom, Spain, South Korea, and several other countries.

Cautionary Statements Concerning Forward-Looking StatementsThispress 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 related to the expected impact of COVID-19 on our business,statements regarding our growth, 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, as amended on Form 10-K/A, for the fiscal year ended December 31, 2019, 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 and litigation and related expenses. We also use the non-GAAP financial measures of Adjusted Net Income or Loss and Adjusted Net Income or Loss Per Common Share - basic and diluted which excludes non-cash stock compensation expense and litigation and related expenses 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 Axogens 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 Officerpmariani@axogeninc.comInvestorRelations@AxogenInc.com

AXOGEN, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) December31, December31, 2020 2019 Assets Current assets: Cash and cash $ 48,767 $ 35,724 equivalentsRestricted Cash 6,842 6,000 Investments 55,199 60,786 Accounts 17,618 16,944 receivable, netInventory 12,529 13,861 Prepaid expenses 4,296 1,706 and otherTotal current 145,251 135,021 assetsProperty and 38,398 14,887 equipment, netOperating leaseright-of-use 15,614 3,133 assetsFinance leaseright-of-use 64 87 assetsIntangible assets 2,054 1,515 Total assets $ 201,381 $ 154,643 Liabilities andShareholders? EquityCurrent liabilities:Accounts payableand accrued $ 21,968 $ 19,144 expensesCurrent maturitiesof lease 863 1,736 liabilitiesTotal current 22,831 20,880 liabilitiesLong-term debt,net of financing 32,027 ? feesDebt derivative 2,497 ? liabilityLong-term lease 20,874 1,595 obligationsOther long-term 3 15 liabilitiesTotal liabilities 78,232 22,490 Shareholders? equity:Common stock, $.01par value;100,000,000 sharesauthorized; 406 396 40,618,766 and39,589,775 sharesissued andoutstandingAdditional paid-in 326,390 311,618 capitalAccumulated (203,647 ) (179,861 ) deficitTotalshareholders? 123,149 132,153 equityTotal liabilitiesand shareholders' $ 201,381 $ 154,643 equity AXOGEN, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSThree and Twelve Months ended December 31, 2020 and 2019(unaudited) Three Months Ended Fiscal Year Ended Dec 31, Dec 31, Dec 31, Dec 31, 2020 2019 2020 2019 Revenues $ 32,495 $ 28,162 $ 112,300 $ 106,712 Cost of goods 5,463 4,881 21,581 17,349 soldGross profit 27,032 23,281 90,719 89,363 Costs and expenses:Sales and 19,805 18,804 69,659 71,950 marketingResearch and 4,931 4,912 17,846 17,514 developmentGeneral and 7,670 6,984 26,396 31,305 administrativeTotal costs and 32,406 30,700 113,901 120,769 expensesLoss from (5,374 ) (7,419 ) (23,182 ) (31,406 )operationsOther income (expense):Interest income 29 439 605 2,364 Interest expense (595 ) (8 ) (1,054 ) (40 )Change in fairvalue of (46 ) ? (117 ) ? derivativeliabilitiesOther expense (24 ) (50 ) (38 ) (53 )Total other (636 ) 381 (604 ) 2,271 expenseNet loss $ (6,010 ) $ (7,038 ) $ (23,786 ) $ (29,135 ) Weighted averagecommon shares 40,246 39,485 39,967 39,235 outstanding ?basic and dilutedLoss per commonshare ? basic and $ (0.15 ) $ (0.18 ) $ (0.60 ) $ (0.74 )diluted Adjusted net loss (3,265 ) (3,978 ) (15,281 ) (16,364 )- non GAAPAdjusted net lossper common share - $ (0.08 ) $ (0.10 ) $ (0.38 ) $ (0.42 )basic and diluted AXOGEN, INC.RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURESThree and Twelve Months ended December 31, 2020 and 2019(unaudited) Three Months Ended Fiscal Year Ended Dec 31, Dec 31, Dec 31, Dec 31, 2020 2019 2020 2019 Net loss $ (6,010 ) $ (7,038 ) $ (23,786 ) $ (29,135 )Depreciation andamortization 556 299 1,660 1,056 expenseInvestment income (29 ) (439 ) (605 ) (2,364 )Income tax 77 (52 ) 77 (67 )Interest expense 595 8 1,054 40 EBITDA - non GAAP $ (4,811 ) $ (7,222 ) $ (21,600 ) $ (30,470 ) Non cash stockcompensation 2,745 2,920 8,470 10,304 expenseLitigation and ? 140 35 2,467 related costsAdjusted EBITDA - $ (2,066 ) $ (4,162 ) $ (13,095 ) $ (17,699 )non GAAP Net loss $ (6,010 ) $ (7,038 ) $ (23,786 ) $ (29,135 )Non cash stockcompensation 2,745 2,920 8,470 10,304 expenseLitigation and ? 140 35 2,467 related costsAdjusted Net Loss $ (3,265 ) $ (3,978 ) $ (15,281 ) $ (16,364 )- non GAAP Weighted averagecommon shares 40,246 39,485 39,967 39,235 outstanding ?basic and diluted Adjusted net lossper common share - $ (0.08 ) $ (0.10 ) $ (0.38 ) $ (0.42 )basic and diluted AXOGEN, INC.CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITYFiscal Year Ended December 31, 2020 and 2019(unaudited) Additional Accumulated Total Common Stock Paid-in Deficit Shareholders' Capital EquityFor the ThreeMonths Ended December 31, 2020:Balance at $ 401 $ 318,949 $ (197,637 ) $ 121,713 September 30, 2020Net Loss - - (6,010 ) (6,010 )Stock-based - 2,745 - 2,745 compensationShares surrenderedby employees to 1 (6 ) (5 )pay taxwithholdingsIssuance of commonstock from 2 3,680 - 3,682 exercise of option(Oberland)Exercise of stockoptions and 2 1,022 - 1,024 employee stockpurchase planBalance at $ 406 $ 326,390 $ (203,647 ) $ 123,149 December 31, 2020 For the FiscalYear Ended December 31, 2020:Balance at $ 396 $ 311,618 $ (179,861 ) $ 132,153 December 31, 2019Net Loss - - (23,786 ) (23,786 )Stock-based 8,470 - 8,470 compensationShares surrenderedby employees to - (670 ) - (670 )pay taxwithholdingsIssuance of commonstock from exerciseof option 2 3,680 - 3,682 (Oberland), net ofderivativeIssuance ofrestricted and 2 (2 ) - - performance stockunitsExercise of stockoptions and 6 3,294 - 3,300 employee stockpurchase planBalance at $ 406 $ 326,390 $ (203,647 ) $ 123,149 December 31, 2020 For the ThreeMonths Ended December 31, 2019:Balance at $ 395 $ 307,839 $ (172,823 ) $ 135,411 September 30, 2019Net Loss - - (7,038 ) (7,038 )Issuance of common - - - - stockStock-based - 2,919 - 2,919 compensationExercise of stockoptions and 1 860 - 861 employee stockpurchase planBalance at $ 396 $ 311,618 $ (179,861 ) $ 132,153 December 31, 2019 For the FiscalYear Ended December 31, 2019:Balance at $ 389 $ 297,319 $ (150,726 ) $ 146,982 December 31, 2018Net Loss - - (29,135 ) (29,135 )Stock-based - 10,304 - 10,304 compensationExercise of stockoptions and 7 3,995 - 4,002 employee stockpurchase planBalance at $ 396 $ 311,618 $ (179,861 ) $ 132,153 December 31, 2019 AXOGEN, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Fiscal Year Ended December 31, 2020 and 2019 (unaudited) Fiscal Year December 31, December 31, 2020 2019 Cash flows fromoperating activities:Net loss $ (23,786 ) $ (29,135 ) Adjustments toreconcile net lossto net cash used in operatingactivities:Depreciation 1,507 933 Amortization ofright-of-use 1,800 1,821 assetsAmortization of 153 123 intangible assetsWrite-down of - 104 trademarkLoss on disposal 3 ? of assetsAmortization ofdeferred financing 232 ? costsChange in fairvalue of 117 ? derivativesProvision for bad (105 ) 514 debtProvision forinventory write 2,242 1,887 downChange ininvestment gains (47 ) (972 ) and lossesShare-based 8,470 10,304 compensationChange in assets and liabilities:Accounts (635 ) (2,136 ) receivableInventory (910 ) (3,767 ) Prepaid expenses (2,524 ) (661 ) and otherAccounts payableand accrued 4,958 2,920 expensesOperating Lease (1,086 ) (1,773 ) ObligationsCash paid forinterest portion (3 ) (4 ) of Finance LeasesContract and other (12 ) (30 ) liabilitiesNet cash used inoperating (9,626 ) (19,872 ) activities Cash flows frominvesting activities:Purchase ofproperty and (21,905 ) (4,664 ) equipmentPurchase ofshort-term (77,806 ) (121,074 ) investmentsSale/Maturities ofshort-term 83,440 153,571 investmentsCash payments for (692 ) (562 ) intangible assetsNet cash providedby/ (used for) (16,963 ) 27,271 investingactivities Cash flows fromfinancing activities:Proceeds from theissuance of common 3,500 ? stockProceeds from theissuance of 35,000 ? long-term debtProceeds from thepaycheck 7,820 ? protection programRepayment of thepaycheck (7,820 ) ? protection programPayment of debt (642 ) ? issuance costsPayments ofemployee taxwithholding in (670 ) ? exchange of commonstock awardsCash paid for debtportion of finance (14 ) 29 leasesProceeds fromexercise of stock 3,300 4,002 options andwarrantsNet cash providedby financing 40,474 4,031 activities Net increase incash, cash 13,885 11,430 equivalents andrestricted cashCash, cashequivalents and 41,724 30,294 restricted cash,beginning of yearCash, cashequivalents and $ 55,609 $ 41,724 restricted cash,end of period Supplementaldisclosures of cash flowactivity:Cash paid for $ 822 $ 34 interestSupplementaldisclosure ofnon-cash investing and financingactivitiesAcquisition offixed assets inaccounts payable $ 1,077 $ 3,212 and accruedexpensesAcquisition of $ 5,250 $ - leasehold assetRight-of-use assetand operating $ 14,259 $ 26 lease liabilityEmbeddedderivative $ 2,563 $ - associated withthe long term debtConversion of the $ 182 $ - Oberland Option