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Axogen, Inc. Reports 2021 Fourth Quarter and Full-Year Financial Results

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Axogen, Inc.
Axogen, Inc.

ALACHUA, Fla. and TAMPA, Fla., Feb. 22, 2022 (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, 2021.

Fourth Quarter 2021 and Business Highlights

  • Net revenue was $31.5 million during the fourth quarter, a 3% decrease compared to fourth-quarter 2020 revenue of $32.5 million.

  • Fourth quarter revenue includes $0.5 million from the reversal of a sales return reserve recorded in the second quarter of 2021 for Avive® Soft Tissue Membrane, for which the company voluntarily suspended market availability on June 1, 2021. Avive revenue in the fourth quarter of 2020 was approximately $1.6 million.

  • Gross margin was 82.8% for the quarter compared to 83.2% in the fourth quarter of 2020.

  • Adjusted net loss was $3.3 million for the quarter, or $0.08 per share, for both the fourth quarter of 2021 and 2020.

  • Adjusted EBITDA loss was $1.7 million for the quarter, compared to an adjusted EBITDA loss of $1.3 million in the fourth quarter of 2020.

  • The balance of all cash, cash equivalents, and investments on December 31, 2021 was $90.3 million, compared to a balance of $98.1 million on September 30, 2021. The net change includes capital expenditures of $5.8 million related to the construction of our new processing facility in Dayton, OH, and $1.9 million of operating cash burn in the quarter.

  • Core Accounts as of December 31, 2021 were 294, a 9% increase compared to 269 as of December 31, 2020. Revenue from Core Accounts continued to represent approximately 60% of total revenue.

  • Active Accounts as of December 31, 2021 were 951, a 6% increase from 893 as of December 31, 2020. Revenue from the top 10% of Active Accounts continued to represent approximately 35% of total revenue.

“I am pleased with our full-year results in light of a difficult operating environment in the second half of the year,” commented Karen Zaderej, chairman, CEO, and president of Axogen, Inc. “We believe more surgeons and accounts are recognizing the value Axogen provides, and we enter 2022 with a strong commercial organization and a solid foundation of clinical evidence. We look forward to the release of the topline results of our RECON study in the second quarter and returning to a more normalized growth environment through the year.”

Full-Year 2021 Financial Results and Business Highlights

  • Full-year 2021 revenue was $127.4 million, a 13% increase compared to 2020 revenue of $112.3 million.

  • Avive revenue totaled approximately $4.1 million and $5.5 million for the years ended 2021 and 2020, respectively.

  • Gross margin was 82.0% for the full year, compared to 80.8% in 2020.

  • Adjusted net loss was $13.7 million for the full year, or $0.33 per share, compared to $15.3 million, or $0.38 per share, in 2020.

  • Adjusted EBITDA loss was $6.7 million for the full year, compared to an adjusted EBITDA loss of $11.1 million in 2020.

  • Ended the year with 115 direct sales representatives, compared to 111 at the end of 2020.

  • Ended the year with 181 peer-reviewed clinical publications featuring Axogen’s nerve repair product portfolio.

2022 Financial Guidance
Management expects 2022 revenue will be in the range of $135.0 million to $142.0 million. This represents approximately 10% to 15% growth over 2021 revenue excluding the impact of $4.1 million of Avive revenue in 2021. Full-year 2022 gross margin is expected to be above 80%.

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 at (201) 689-8795. Those interested in listening to the conference call live via the Internet may do so by visiting the Investors page of the company's website at www.axogeninc.com and clicking on the webcast link.

Following the conference call, a replay will be available in the Investors section of the company's website at www.axogeninc.com under Investors.

About the RECON Clinical Study
RECON is a multicenter, prospective, randomized, subject and evaluator blinded comparative clinical study of nerve cuffs (manufactured conduits) and Avance® Nerve Graft, evaluating recovery outcomes for the repair of nerve discontinuities. The phase 3 pivotal study is designed to test for non-inferiority between the static two-point discrimination outcomes for Avance Nerve Graft and manufactured conduit. The study design also allows for a sequential test for superiority of Avance Nerve Graft, following the non-inferiority analysis.

About Axogen
Axogen (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; and 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. The Axogen portfolio of products is available in the United States, Canada, Germany, the United Kingdom, Spain, South Korea, and several other 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 related to the impact of COVID-19 on our business, hospital staffing challenges and its impact on our business, statements regarding our growth, our financial guidance and performance, product development, product potential, regulatory process and approvals, APC renovation timing and expense, sales growth, product adoption, market awareness of our products, anticipated capital requirements, including the potential of future financings, data validation, expected clinical study enrollment, timing and outcomes, our assessment of our internal controls over financial reporting, our visibility at and sponsorship of conferences and our educational events, regulatory process and approvals and other factors, including legislative, regulatory, political and economic developments not within our control. 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 risk factors described under Part I, Item 1A., “Risk Factors,” of our Annual Report on Form 10-K for the most recently ended fiscal year, 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

Contact:
Axogen, Inc.
Ed Joyce, Director, Investor Relations
ejoyce@axogeninc.com
InvestorRelations@axogeninc.com

AXOGEN, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(In Thousands, Except Share and Per Share Amounts)

December 31,

December 31,

2021

2020

Assets

Current assets:

Cash and cash equivalents

$

32,756

$

48,767

Restricted cash

6,251

6,842

Investments

51,330

55,199

Accounts receivable, net

18,158

17,618

Inventory

16,693

12,529

Prepaid expenses and other

1,861

4,296

Total current assets

127,049

145,251

Property and equipment, net

62,881

38,398

Operating lease right-of-use assets

15,193

15,614

Finance lease right-of-use assets

42

64

Intangible assets, net

2,859

2,054

Total assets

$

208,024

$

201,381

Liabilities and shareholders’ equity

Current liabilities:

Accounts payable and accrued expenses

$

22,459

$

21,968

Current maturities of long-term lease obligations

1,834

863

Total current liabilities

24,293

22,831

Long-term debt, net of financing fees

44,821

32,027

Debt derivative liabilities

5,562

2,497

Long-term lease obligations

20,798

20,874

Other long-term liabilities

3

Total liabilities

95,474

78,232

Shareholders’ equity:

Common stock, $.01 par value per share; 100,000,000 shares authorized

417

406

Additional paid-in capital

342,765

326,390

Accumulated deficit

(230,632

)

(203,647

)

Total shareholders’ equity

112,550

123,149

Total liabilities and shareholders' equity

$

208,024

$

201,381


AXOGEN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months and Years Ended December 31, 2021 and 2020

(unaudited)

(In Thousands, Except Per Share Amounts)

Three Months Ended

Year Ended

December 31,

December 31,

December 31,

December 31,

2021

2020

2021

2020

Revenues

$

31,537

$

32,495

$

127,358

$

112,300

Cost of goods sold

5,428

5,463

22,931

21,581

Gross profit

26,109

27,032

104,427

90,719

Costs and expenses:

Sales and marketing

17,734

19,805

73,328

69,659

Research and development

6,302

4,931

24,177

17,846

General and administrative

7,426

7,670

32,338

26,396

Total costs and expenses

31,462

32,406

129,843

113,901

Loss from operations

(5,353

)

(5,374

)

(25,416

)

(23,182

)

Other (expense) income:

Investment income

13

29

93

605

Interest expense

71

(595

)

(1,356

)

(1,054

)

Change in fair value of derivatives

124

(46

)

(28

)

(117

)

Other expense

(141

)

(24

)

(278

)

(38

)

Total other (expense) income, net

67

(636

)

(1,569

)

(604

)

Net loss

$

(5,286

)

$

(6,010

)

$

(26,985

)

$

(23,786

)

Weighted average common shares outstanding – basic and diluted

41,593

40,246

41,215

39,967

Loss per common share – basic and diluted

$

(0.13

)

$

(0.15

)

$

(0.65

)

$

(0.60

)

Adjusted net loss - non GAAP

$

(3,272

)

$

(3,265

)

$

(13,697

)

$

(15,281

)

Adjusted loss per common share – basic and diluted

$

(0.08

)

$

(0.08

)

$

(0.33

)

$

(0.38

)


AXOGEN, INC.

RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES

Three Months and Years Ended December 31, 2021 and 2020

(unaudited)

(In Thousands, Except Per Share Amounts)

Three Months Ended

Year Ended

December 31,

December 31,

December 31,

December 31,

2021

2020

2021

2020

Gross profit

$

26,109

$

27,032

$

104,427

$

90,719

Avive inventory write-down and production costs

-

-

1,429

-

Adjusted gross profit

$

26,109

$

27,032

$

105,856

$

90,719

Net loss

$

(5,286

)

$

(6,010

)

$

(26,985

)

$

(23,786

)

Depreciation and amortization expense

1,563

1,284

(1)

5,572

3,692

Investment income

(13

)

(29

)

(93

)

(605

)

Income tax expense

138

77

205

77

Interest expense

(71

)

595

1,356

1,054

EBITDA - non GAAP

$

(3,669

)

$

(4,083

)

(1)

$

(19,945

)

$

(19,568

)

Non cash stock-based compensation expense

1,509

2,745

10,919

8,470

Litigation and related costs

505

2,369

35

Adjusted EBITDA - non GAAP

$

(1,655

)

$

(1,338

)

(1)

$

(6,657

)

$

(11,063

)

Net loss

$

(5,286

)

$

(6,010

)

$

(26,985

)

$

(23,786

)

Non cash stock-based compensation expense

1,509

2,745

10,919

8,470

Litigation and related costs

505

2,369

35

Adjusted net loss - non GAAP

$

(3,272

)

$

(3,265

)

$

(13,697

)

$

(15,281

)

Weighted average common shares outstanding – basic and diluted

41,593

40,246

41,215

39,967

Adjusted loss per common share – basic and diluted

$

(0.08

)

$

(0.08

)

$

(0.33

)

$

(0.38

)

(1) The Company has revised its definition of EBITDA and Adjusted EBITDA to include amortization of its right-of-use assets and amortization of debt discount and deferred financing fees. See Reconciliation of Revised EBITDA, Adjusted EBITDA, and Depreciation and Amortization.


AXOGEN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

Three Months and Years Ended December 31, 2021 and 2020

(unaudited)

(In Thousands)

Common Stock

Total

Shares

Amount

Additional Paid-
in Capital

Accumulated
Deficit

Shareholders'
Equity

For the Three Months Ended December 31, 2021:

Balance at September 30, 2021

41,559

$

415

$

340,212

$

(225,346

)

$

115,281

Net loss

-

-

-

(5,286

)

(5,286

)

Stock-based compensation

-

-

1,509

-

1,509

Issuance of restricted and performance stock units

48

-

-

-

-

Exercise of stock options and employee stock purchase plan

130

2

1,044

-

1,046

Balance at December 31, 2021

41,737

$

417

$

342,765

$

(230,632

)

$

112,550

For the Year Ended December 31, 2021:

Balance at December 31, 2020

40,619

$

406

$

326,390

$

(203,647

)

$

123,149

Net loss

-

-

-

(26,985

)

(26,985

)

Stock-based compensation

-

-

10,919

-

10,919

Issuance of restricted and performance stock units

254

2

(2

)

-

-

Exercise of stock options and employee stock purchase plan

864

9

5,458

-

5,467

Balance at December 31, 2021

41,737

$

417

$

342,765

$

(230,632

)

$

112,550

For the Three Months Ended December 31, 2020:

Balance at September 30, 2020

40,124

$

401

$

318,949

$

(197,637

)

$

121,713

Net loss

-

-

-

(6,010

)

(6,010

)

Stock-based compensation

-

-

2,745

-

2,745

Issuance of restricted and performance stock units

81

-

-

-

-

Shares surrendered by employees to pay tax withholdings

(2

)

1

(6

)

-

(5

)

Exercise of stock options and employee stock purchase plan

168

2

1,022

-

1,024

Exercise of Oberland option, net of settlement

248

2

3,680

-

3,682

Balance at December 31, 2020

40,619

$

406

$

326,390

$

(203,647

)

$

123,149

For the Year Ended December 31, 2020:

Balance at December 31, 2019

39,590

$

396

$

311,618

$

(179,861

)

$

132,153

Net loss

-

-

-

(23,786

)

(23,786

)

Stock-based compensation

-

-

8,470

-

8,470

Issuance of restricted and performance stock units

249

2

(2

)

-

-

Shares surrendered by employees to pay tax withholdings

(40

)

-

(670

)

-

(670

)

Exercise of stock options and employee stock purchase plan

572

6

3,294

-

3,300

Exercise of Oberland option, net of settlement

248

2

3,680

-

3,682

Balance at December 31, 2020

40,619

$

406

$

326,390

$

(203,647

)

$

123,149


AXOGEN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31, 2021 and 2020

(unaudited)

(In Thousands)

Year Ended

December 31,

December 31,

2021

2020

Cash flows from operating activities:

Net loss

$

(26,985

)

$

(23,786

)

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

Depreciation and amortization

2,721

1,507

Amortization of right-of-use assets

1,818

1,800

Amortization of intangible assets

202

153

Amortization of debt discount and deferred financing fees

831

232

Loss on disposal of equipment

-

3

Provision for bad debt

(41

)

(105

)

Provision for inventory write-down

3,314

2,242

Change in fair value of deriviatives

28

117

Investment (gains) losses

68

(47

)

Stock-based compensation

10,919

8,470

Change in operating assets and liabilities:

Accounts receivable

(499

)

(635

)

Inventory

(7,478

)

(910

)

Prepaid expenses and other

2,435

(2,524

)

Accounts payable and accrued expenses

(270

)

4,958

Operating lease obligations

(463

)

(1,086

)

Cash paid for interest portion of finance leases

(2

)

(3

)

Contract and other liabilities

(3

)

(12

)

Net cash used in operating activities

(13,405

)

(9,626

)

Cash flows from investing activities:

Purchase of property and equipment

(27,811

)

(21,905

)

Economic development grant proceeds

950

Purchase of investments

(68,699

)

(77,806

)

Proceeds from sale of investments

72,500

83,440

Cash payments for intangible assets

(589

)

(692

)

Net cash used in investing activities

(23,649

)

(16,963

)

Cash flows from financing activities:

Proceeds from issuance of long-term debt

15,000

35,000

Proceeds from the paycheck protection program loan

7,820

Repayment of the paycheck protection program loan

(7,820

)

Proceeds from issuance of common stock

3,500

Payments for debt issuance costs

(642

)

Payments of employee tax withholding in exchange of common stock awards

(670

)

Cash paid for debt portion of finance leases

(15

)

(14

)

Proceeds from exercise of stock options and ESPP stock purchases

5,467

3,300

Net cash provided by financing activities

20,452

40,474

Net (decrease) increase in cash, cash equivalents and restricted cash

(16,602

)

13,885

Cash, cash equivalents and restricted cash, beginning of period

55,609

41,724

Cash, cash equivalents and restricted cash, end of period

$

39,007

$

55,609

Supplemental disclosures of cash flow activity:

Cash paid for interest, net of capitalized interest

$

495

$

822

Supplemental disclosure of non-cash investing and financing activities

Acquisition of fixed assets in accounts payable and accrued expenses

$

1,420

$

1,077

Obtaining a right-of-use asset in exchange for a lease liability

$

1,375

$

14,259

Acquisition of leasehold asset

$

-

$

5,250

Embedded derivative associated with the long-term debt

$

3,037

$

2,563

Acquisition of intangible assets in accounts payable and accrued expenses

$

418

$

-

Conversion of the Oberland option

$

-

$

182


AXOGEN, INC.

RECONCILIATION OF REVISED EBITDA, ADJUSTED EBITDA, and DEPRECIATION AND AMORTIZATION

Three Months Ended September 30, 2021 and 2020; June 30, 2021 and 2020; March 31, 2021 and 2020; December 31, 2020 and

Year Ended December 31, 2020

(unaudited)

(In Thousands)

The Company has revised its definition of EBITDA and Adjusted EBITDA to include amortization of its right-of-use assets and amortization of debt discount and deferred financing fees.

The tables below provide a reconciliation of EBITDA and Adjusted EBITDA as previously reported to the amounts calculated using the new definition.

Three Months Ended

March 31,

June 30,

September 30,

2021

2021

2021

Depreciation and amortization expense, as previously reported

$

818

$

661

$

706

Amortization of ROU assets

500

460

458

Amortization of debt discount and deferred financing fees

112

115

157

Revised depreciation and amortization expense

$

1,430

$

1,236

$

1,321

EBITDA - non GAAP, as previously reported

$

(5,437

)

$

(6,639

)

$

(6,035

)

Amortization of ROU assets

500

460

458

Amortization of debt discount and deferred financing fees

112

115

157

Revised EBITDA - non GAAP

$

(4,825

)

$

(6,064

)

$

(5,420

)

Adjusted EBITDA - non GAAP, as previously reported

$

(1,906

)

$

(2,435

)

$

(2,496

)

Amortization of ROU assets

500

460

458

Amortization of debt discount and deferred financing fees

112

115

157

Revised Adjusted EBITDA - non GAAP

$

(1,294

)

$

(1,860

)

$

(1,881

)

Three Months Ended

Year Ended

March 31,

June 30,

September 30,

December 31,

December 31,

2020

2020

2020

2020

2020

Depreciation and amortization expense, as previously reported

$

343

$

346

$

439

$

556

$

1,660

Amortization of ROU assets

470

332

480

518

1,800

Amortization of debt discount and deferred financing fees

-

-

22

210

232

Revised depreciation and amortization expense

$

813

$

678

$

941

$

1,284

$

3,692

EBITDA - non GAAP, as previously reported

$

(8,139

)

$

(7,907

)

$

(671

)

$

(4,811

)

$

(21,600

)

Amortization of ROU assets

470

332

480

518

1,800

Amortization of debt discount and deferred financing fees

-

-

22

210

232

Revised EBITDA - non GAAP

$

(7,669

)

$

(7,575

)

$

(169

)

$

(4,083

)

$

(19,568

)

Adjusted EBITDA - non GAAP, as previously reported

$

(7,583

)

$

(5,685

)

$

2,276

$

(2,066

)

$

(13,095

)

Amortization of ROU assets

470

332

480

518

1,800

Amortization of debt discount and deferred financing fees

-

-

22

210

232

Revised Adjusted EBITDA - non GAAP

$

(7,113

)

$

(5,353

)

$

2,778

$

(1,338

)

$

(11,063

)