GlobeNewswire Inc | May 5, 2021 04:00PM EDT

May 05, 2021

ALACHUA, Fla. and TAMPA, Fla., May 05, 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 first quarter ended March 31, 2021.

First Quarter 2021 Financial Results and Business Highlights

-- Net revenue was $31.0 million during the quarter, a 28% increase compared to first quarter 2020 revenue of $24.3 million. -- Gross margin was 83.3% for the quarter, compared to 80.1% in the first quarter of 2020. -- Net loss for the quarter was $6.7 million, or $0.16 per share, compared to a net loss of $8.2 million, or $0.21 per share, in the first quarter of 2020. -- Adjusted net loss was $3.1 million for the quarter, or $0.08 per share, compared with adjusted net loss of $7.6 million, or $0.19 per share, in the first quarter of 2020. -- Adjusted EBITDA loss was $1.9 million for the quarter, compared to an adjusted EBITDA loss of $7.6 million in the first quarter of 2020. -- The balance of cash, cash equivalents, and investments on March 31, 2021 was $97.2 million, compared to a balance of $110.8 million on December 31, 2020.

I am pleased with our first quarter performance, commented Karen Zaderej, chairman, CEO, and president of Axogen, Inc. Surgeon demand for our products remains strong, supported by our substantial investment in clinical studies over the past decade. These studies continue to generate meaningful evidence, driving further surgeon adoption and reinforcing our confidence in the long-term growth potential of our business.

Additional Operational and Business Highlights

-- Active accounts in the first quarter were 919, an 11% increase compared to 825 in the first 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. -- Ended the quarter with 106 direct sales representatives, compared to 108 currently, 111 at year end, and 109 one year ago. -- Ended the quarter with 157 peer-reviewed clinical publications featuring Axogens nerve repair product portfolio. -- Reinitiated clinical study activities for the Rethink Painand Sensation-NOW registries and are actively engaged in six sponsored studies currently enrolling across our four primary market applications.

2021 Financial Guidance Management is reinitiating financial guidance and believes that full-year 2021 revenue will be in the range of $133 million to $136 million. Additionally, full-year 2021 gross margin is expected to remain above 80%.

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, our 2021 financial 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, 2020, 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 condensed 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, Executive Vice President and Chief Financial OfficerInvestorRelations@AxogenInc.com

AXOGEN, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (In Thousands, Except Share Amounts) March 31, December31, 2021 2020 Assets Current assets:Cash and cash $ 39,843 $ 48,767 equivalentsRestricted 6,333 6,842 cashInvestments 51,062 55,199 Accountsreceivable, 19,825 17,618 netInventory 13,388 12,529 Prepaidexpenses and 4,694 4,296 otherTotal current 135,145 145,251 assetsProperty and 44,395 38,398 equipment, netOperatinglease 15,442 15,614 right-of-useassetsFinance leaseright-of-use 59 64 assetsIntangible 2,328 2,054 assetsTotal assets $ 197,369 $ 201,381 Liabilitiesand Shareholders?EquityCurrent liabilities:Accountspayable and $ 20,831 $ 21,968 accruedexpensesCurrentmaturities oflong-term 1,442 863 leaseobligationsTotal current 22,273 22,831 liabilitiesLong-termdebt, net of 32,140 32,027 financing feesDebtderivative 2,519 2,497 liabilityLong-termlease 20,731 20,874 obligationsOtherlong-term 2 3 liabilitiesTotal 77,665 78,232 liabilitiesShareholders? equity:Common stock,$.01 par valueper share;100,000,000sharesauthorized; 408 406 40,842,717 and40,618,766shares issuedandoutstandingAdditionalpaid-in 329,603 326,390 capitalAccumulated (210,307 ) (203,647 ) deficitTotalshareholders? 119,704 123,149 equityTotalliabilitiesand $ 197,369 $ 201,381 shareholders'equity AXOGEN, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Three Months ended March 31, 2021 and 2020 (In Thousands) (unaudited) Three Months Ended Mar 31, Mar 31, 2021 2020 Revenues $ 31,037 $ 24,261 Cost of goods 5,172 4,816 soldGross profit 25,865 19,445 Costs and expenses:Sales and 17,973 17,838 marketingResearch and 5,748 4,614 developmentGeneral and 8,364 5,502 administrativeTotal costs 32,085 27,954 and expensesLoss from (6,220 ) (8,509 ) operationsOther income (expense):Interest 34 311 incomeInterest (444 ) (31 ) expenseOther income (30 ) 37 (expense)Total otherincome (440 ) 317 (expense)Net loss $ (6,660 ) $ (8,192 ) Weightedaverage commonshares 40,706 39,698 outstanding ?basic anddilutedLoss percommon share ? $ (0.16 ) $ (0.21 ) basic anddiluted Adjusted netloss - non (3,129 ) (7,636 ) GAAPAdjusted netloss percommon share - $ (0.08 ) $ (0.19 ) basic anddiluted AXOGEN, INC. RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURESThree Months ended March 31, 2021 and 2020 (In Thousands) (unaudited) Three Months Ended Mar 31, Mar 31, 2021 2020 Net loss $ (6,660 ) $ (8,192 ) Depreciationand 818 343 amortizationexpenseInvestment (34 ) (311 ) incomeIncome tax (5 ) (10 ) Interest 444 31 expenseEBITDA - non $ (5,437 ) $ (8,139 ) GAAP Non cash stockcompensation $ 2,694 $ 556 expenseLitigation and 837 ? related costsAdjustedEBITDA - non $ (1,906 ) $ (7,583 ) GAAP Net loss $ (6,660 ) $ (8,192 ) Non cash stockcompensation 2,694 556 expenseLitigation and 837 ? related costsAdjusted NetLoss - non $ (3,129 ) $ (7,636 ) GAAP Weightedaverage commonshares $ (0.16 ) $ (0.21 ) outstanding ?basic anddilutedNon cash stockcompensation 0.07 0.01 expenseLitigation and 0.02 - related costsAdjusted netloss percommon share - $ (0.08 ) $ (0.19 ) basic anddiluted Weightedaverage commonshares 40,706 39,698 outstanding ?basic anddiluted AXOGEN, INC.CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITYThree Months ended March 31, 2021 and 2020(unaudited)(In Thousands, Except Share Amounts) Common Stock Total Additional Accumulated Shareholders' Shares Amount Paid- Deficit Equity in CapitalFor the ThreeMonths Ended March 31,2021:Balance atDecember 31, 40,618,766 $ 406 $ 326,390 $ (203,647 ) $ 123,149 2020Net Loss - - - (6,660 ) (6,660 )Issuance ofrestricted/ 94,533 1 (1 ) - - performanceservice awardsStock-based - - 2,694 - 2,694 compensationExercise ofstock optionsand employee 129,418 1 520 - 521 stock purchaseplanBalance at 40,842,717 $ 408 $ 329,603 $ (210,307 ) $ 119,704 March 31, 2021 For the ThreeMonths Ended March 31,2020:Balance atDecember 31, 39,589,755 $ 396 $ 311,618 $ (179,861 ) $ 132,153 2019Net Loss - - - (8,192 ) (8,192 )Issuance ofrestricted/ 137,634 1 (1 ) - - performanceservice awardsStock-based - - 556 - 556 compensationSharessurrendered by (36,963 ) - (639 ) - (639 )employees topay taxesExercise ofstock optionsand employee 48,341 - 316 - 316 stock purchaseplanBalance at 39,738,767 $ 397 $ 311,850 $ (188,053 ) $ 124,194 March 31, 2020 AXOGEN, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months ended March 31, 2021 and 2020 (In Thousands) (unaudited) Fiscal Year Mar 31, Mar 31, 2021 2020 Cash flowsfrom operating activities:Net loss $ (6,660 ) $ (8,192 ) Adjustments toreconcile netloss to net cash used inoperatingactivities:Depreciation 772 307 Amortizationof 500 470 right-of-useassetsAmortizationof intangible 46 36 assetsAmortizationof deferred 112 ? financingcostsProvision for (26 ) 22 bad debtProvision forinventory 783 924 write downChange in fairvalue of 22 ? derivativesChange ininvestment 15 (49 ) gains andlossesShare-based 2,694 556 compensationChange inassets and liabilities:Accounts (2,153 ) 3,902 receivableInventory (1,642 ) (1,626 ) Prepaidexpenses and (342 ) (2,024 ) otherAccountspayable and (4,896 ) (1,903 ) accruedexpensesOperatingLease 119 (472 ) ObligationsContract andother (1 ) (3 ) liabilitiesNet cash usedin operating (10,657 ) (8,052 ) activities Cash flowsfrom investing activities:Purchase ofshort-term (15,278 ) (11,760 ) investmentsPurchase ofproperty and (3,095 ) (5,021 ) equipmentSale/Maturities of 19,400 25,450 short-terminvestmentsCash paymentsfor intangible (321 ) (119 ) assetsNet cashprovided by 706 8,550 investingactivities Cash flowsfrom financing activities:Payments forrepurchase ofcommon stock ? (639 ) for employeetaxwithholdingCash paid fordebt portion (4 ) (5 ) of financeleasesProceeds fromexercise of 521 316 stock optionsand warrantsNet cashprovided by /(used in) 517 (328 ) financingactivities Net increasein cash, cashequivalents (9,434 ) 170 and restrictedcashCash, cashequivalentsand restricted 55,609 41,724 cash,beginning ofyearCash, cashequivalentsand restricted $ 46,175 $ 41,894 cash, end ofperiod Supplementaldisclosures of cash flowactivity:Cash paid for $ 312 $ 11 interestSupplementaldisclosure ofnon-cash investing andfinancingactivitiesAcquisition offixed assetsin accounts $ 4,836 $ 3,674 payable andaccruedexpensesRight-of-useasset andoperating $ 321 $ 120 leaseliabilityAcquisition ofintangibleassets inaccounts $ 166 $ - payable andaccruedexpenses