Axogen, Inc Reports 2023 Fourth Quarter and Full-Year Financial Results

ALACHUA, Fla. and TAMPA, Fla., March 05, 2024 (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, 2023.

Fourth Quarter 2023 Financial Results and Business Highlights

  • Fourth quarter revenue was $42.9 million, an 18.7% increase compared to the fourth quarter of 2022.
  • The Company estimates that revenues from emergent trauma procedures represented approximately half of total revenues during the fourth quarter and grew mid-single digits versus the fourth quarter of 2022.
  • The Company estimates that revenues from scheduled non-trauma procedures represented approximately half of total revenues during the fourth quarter and grew more than 25% versus the fourth quarter of 2022.
  • Gross margin was 78.7% for the fourth quarter compared to 83.0% in the fourth quarter of 2022.
  • Net loss for the quarter was $3.9 million, or $0.09 per share, compared to net loss of $5.4 million, or $0.13 per share in the fourth quarter of 2022.
  • Adjusted net loss for the quarter was $2.6 million, or $0.06 per share, compared to adjusted net loss of $1.1 million, or $0.03 per share in the fourth quarter of 2022.
  • Adjusted EBITDA was $0.6 million for the quarter, compared to an adjusted EBITDA loss of $0.7 million in the fourth quarter of 2022.
  • The balance of all cash, cash equivalents, and investments on December 31, 2023 was $37.0 million, as compared to a balance of $38.6 million on September 30, 2023.

“We are pleased with our solid performance in the fourth quarter, and we are encouraged by the continued momentum we’ve seen in this first quarter,” commented Karen Zaderej, chairman, CEO, and president of Axogen, Inc. “Looking ahead, we remain focused on further penetrating core accounts by leveraging our growing body of clinical evidence and expanding use cases with our innovative new products and applications. Additionally, we are excited to expand our leadership position in nerve repair with the 2024 Q2 launch of Avive+ Sofit Tissue Matrix, supporting our mission of restoring nerve function and quality of life to patients with peripheral nerve injuries.”

Full-Year Financial Results and Business Highlights

  • Full-year 2023 revenue was $159.0 million, a 14.7% increase compared to 2022 revenue of $138.6 million.
  • Revenue from Core Accounts represents approximately 65% of total revenue.
  • Gross margin was 80.4% for the full-year, compared to 82.6% in 2022.
  • Net loss for the year was $21.7 million, or $0.51 per share, compared to net loss of $28.9 million, or $0.69 per share in 2022.
  • Adjusted net loss was $7.3 million for the full-year, or $0.17 per share, compared to 12.6 million for the full-year, or $0.30 per share in 2022.
  • Adjusted EBITDA loss was $1.1 million for the full-year, compared to an adjusted EBITDA loss of $9.3 million for 2022.
  • Core Accounts totaled 376, a 13.3% growth over the prior year level of 332.
  • Ended the fourth quarter with 116 direct sales representatives compared to 116 at the end of the third quarter and 115 on December 31, 2022.

Summary of Operational and Business Highlights

  • We recently completed a productive Pre-BLA meeting with FDA. We have aligned with FDA on a rolling submission process and the content of the modules for submission. We anticipate the filing to be completed in the third quarter of 2024. Subject to ongoing engagement with FDA, we currently believe the submission timetable will allow for a potential approval in mid-2025.
  • In August 2023, we began processing tissue in the new, state-of-the-art biologics processing facility, which provides for up to three times the previous capacity and was designed for long-term growth and expansion.
  • During 2023, we surpassed 100,000 Avance nerve graft implants since launch in 2007.
  • We are continuing to expand our offering in the nerve protection market with the national launch of Axoguard HA+ Nerve Protector™ in 2023 and expect to launch Avive+ Soft Tissue Matrix™ in the second quarter of 2024.
  • We launched Resensation® for implant-based reconstruction allowing us to access an additional 10-15% of the overall breast reconstruction market. As part of this launch, we have established a comprehensive training program to support the adoption of this innovative approach to bring sensation to more patients undergoing mastectomy.
  • We ended the year with 245 peer-reviewed clinical publications featuring Axogen’s nerve repair product portfolio.

2024 Financial Guidance

We expect revenue to be in the range of $177 million to $181 million, which represents an annual growth rate of approximately 11% to 14%. Additionally, we anticipate gross margin for the full year to be in the range of 76% to 79%.

Conference Call

The Company will host a conference call and webcast for the investment community today at 8:00 a.m. ET. Investors interested in participating in the conference call by phone may do so by dialing toll free at (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 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 that are used across two primary application categories: scheduled, non-trauma procedures and emergent trauma procedures. Scheduled procedures are generally characterized as those where a patient is seeking relief from conditions caused by a nerve defect or surgical procedure. These procedures include providing sensation for women seeking breast reconstruction following a mastectomy, nerve reconstruction following the surgical removal of painful neuromas, oral and maxillofacial procedures, and nerve decompression. Emergent procedures are generally characterized as procedures resulting from injuries that are initially present in an ER. These procedures are typically referred to and completed by a specialist either immediately or within a few days following the initial injury.

Axogen’s product portfolio includes 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 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 HA+ Nerve Protector™, a porcine submucosa ECM base layer coated with a proprietary hyaluronate-alginate gel, a next-generation technology designed to enhance nerve gliding and provide short- and long-term protection for peripheral nerve injuries; 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.

For more information, visit www.axogeninc.com.

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. Forward-looking statements include the Company’s estimates regarding the revenues from scheduled non-trauma procedures and emergent trauma procedures as a portion of the total revenues, Ms. Zaderej’s statements on the Company’s future focus, the Company’s portfolio of clinical data supports the products’ efficacy, cost and time savings, the anticipated timing of the full BLA submission and our expectations that the BLA will be approved in mid-2025, the expected timing of the launch of Avive+ Soft Tissue Matrix, our expectations regarding our ability to access an additional 10-15% of the overall breast reconstruction market, as well as statements related to the 2024 financial outlook, including revenue range and gross margins. Actual results or events could differ materially from those described in any forward-looking statements as a result of various factors, including, without limitation, global supply chain issues, hospital staffing issues, product development, product potential, clinical outcomes, regulatory process and approvals, financial performance, sales growth, surgeon and product adoption, market awareness of our products, data validation, our visibility at and sponsorship of conferences and educational events, global business disruption caused by Russia’s invasion of Ukraine and related sanctions, recent geopolitical conflicts in the Middle East, potential disruptions due to management transitions, as well as 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. 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.

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 the non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP 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, the Company’s cash available for operations, and the Company’s ability to meet future capital expenditure and working capital requirements.

Contact:
Axogen, Inc.
Harold D. Tamayo, Vice President of Finance and Investor Relations
htamayo@axogeninc.com

AXOGEN, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
December 31, 2023 and 2022
(In Thousands, Except Share and Per Share Amounts)
 
December 31, 2023   December 31, 2022
Assets  
Current assets:  
Cash and cash equivalents $ 31,024     $ 15,284  
Restricted cash   6,002       6,251  
Investments         33,505  
Accounts receivable, net of allowance for doubtful accounts of $337 and $650, respectively   25,147       22,186  
Inventory   23,020       18,905  
Prepaid expenses and other   2,811       1,944  
Total current assets   88,004       98,075  
Property and equipment, net   88,730       79,294  
Operating lease right-of-use assets   15,562       14,369  
Intangible assets, net   4,531       3,649  
Total assets $ 196,827     $ 195,387  
     
Liabilities and shareholders’ equity      
Current liabilities:      
Accounts payable and accrued expenses   28,883       22,443  
Current maturities of long-term lease obligations   1,547       1,310  
Total current liabilities   30,430       23,753  
     
Long-term debt, net of debt discount and financing fees   46,603       45,712  
Long-term lease obligations   21,142       20,405  
Debt derivative liabilities   2,987       4,518  
Total liabilities   101,162       94,388  
     
Commitments and contingencies - see Note 14      
     
Shareholders’ equity:      
Common stock, $0.01 par value per share; 100,000,000 shares authorized; 43,124,496 and 42,445,517 shares issued and outstanding   431       424  
Additional paid-in capital   376,530       360,155  
Accumulated deficit   (281,296 )     (259,580 )
Total shareholders’ equity   95,665       100,999  
Total liabilities and shareholders’ equity $ 196,827     $ 195,387  

AXOGEN, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended December 31, 2023 , 2022 and 2021
(In Thousands, Except Share and Per Share Amounts)
 
  2023       2022       2021  
Revenues $ 159,012     $ 138,584     $ 127,358  
Cost of goods sold   31,138       24,147       22,931  
Gross profit   127,874       114,437       104,427  
Costs and expenses:          
Sales and marketing   86,060       80,228       73,328  
Research and development   28,333       27,158       24,177  
General and administrative   34,943       36,758       32,338  
Total costs and expenses   149,336       144,144       129,843  
Loss from operations   (21,462 )     (29,707 )     (25,416 )
Other (expense) income:          
Investment income   1,487       569       93  
Interest expense   (2,835 )     (624 )     (1,356 )
Change in fair value of derivatives   1,531       1,044       (28 )
Other expense   (437 )     (230 )     (278 )
Total other income (expense), net   (254 )     759       (1,569 )
Net loss $ (21,716 )   $ (28,948 )   $ (26,985 )
           
Weighted average common shares outstanding — basic and diluted   42,879,000       42,083,000       41,215,000  
Loss per common share — basic and diluted $ (0.51 )   $ (0.69 )   $ (0.65 )
AXOGEN, Inc.
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
Three Months and Year Ended December 31, 2023 and 2022
(unaudited)
(In Thousands, Except Per Share Amounts)​
 
    Three Months Ended   Year Ended
    December 31,
2023
  December 31,
2022
  December 31,
2023
  December 31,
2022
                 
Net loss   $ (3,893 )   $ (5,415 )   $ (21,716 )   $ (28,948 )
Depreciation and amortization expense     1,617       713       4,491       3,093  
Investment income     (336 )     (397 )     (1,487 )     (569 )
Income tax expense     9       125           189  
Interest expense     1,843       (40 )     2,835       624  
EBITDA - non GAAP   $ (760 )   $ (5,014 )   $ (15,538 )   $ (25,611 )
                 
Non cash stock-based compensation expense     1,327       4,154       14,418       15,591  
Litigation and related costs           177             761  
Adjusted EBITDA - non GAAP   $ 567     $ (683 )     (1,120 )   $ (9,259 )
                 
Net loss   $ (3,893 )   $ (5,415 )   $ (21,716 )   $ (28,948 )
Non cash stock-based compensation expense     1,327       4,154       14,418       15,591  
Litigation and related costs           177             761  
Adjusted net loss - non GAAP   $ (2,566 )   $ (1,083 )   $ (7,298 )   $ (12,596 )
                 
Weighted average common shares outstanding basic and diluted     43,048,446       42,306,012       42,878,542       42,083,125  
                 
Loss per common share — basic and diluted   $ (0.09 )   $ (0.13 )   $ (0.51 )   $ (0.69 )
Non cash stock-based compensation expense   $ 0.03     $ 0.10     $ 0.34     $ 0.37  
Litigation and related costs   $     $     $     $ 0.02  
Adjusted net loss per common share - basis and diluted - non GAAP   $ (0.06 )   $ (0.03 )   $ (0.17 )   $ (0.30 )
                 
AXOGEN, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
Years ended December 31, 2023, 2022 and 2021
(In Thousands)
Common Stock   Additional
Paid-in
Capital
  Accumulated
Deficit
  Total
Shareholders’
Equity
Shares     Amount      
Balance, December 31, 2020 40,619     $ 406     $ 326,390     $ (203,647 )   $ 123,149  
                     
Stock-based compensation             10,919             10,919  
Issuance of restricted and performance stock units 254       2       (2 )            
Shares surrendered by employees to pay tax withholdings                          
Exercise of stock options and employee stock purchase plan 864       9       5,458             5,467  
Net loss                   (26,985 )     (26,985 )
                     
Balance, December 31, 2021 41,737       417       342,765       (230,632 )     112,550  
                     
Stock-based compensation             15,591             15,591  
Issuance of restricted and performance stock units 343       3       (3 )            
Exercise of stock options and employee stock purchase plan 365       4       1,802             1,806  
Net loss                   (28,948 )     (28,948 )
                   
Balance, December 31, 2022 42,445       424       360,155       (259,580 )     100,999  
                   
Stock-based compensation             14,418             14,418  
Issuance of restricted and performance stock units 369       4       (4 )            
Exercise of stock options and employee stock purchase plan 310       3       1,961             1,964  
Net loss                 (21,716 )     (21,716 )
                     
Balance, December 31, 2023 43,124     $ 431     $ 376,530     $ (281,296 )   $ 95,665  
AXOGEN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 2023, 2022 and 2021
(In Thousands)
 
  2023       2022       2021  
Cash flows from operating activities:          
Net loss $ (21,716 )   $ (28,948 )   $ (26,985 )
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation   4,218       2,827       2,744  
Amortization of right-of-use assets   1,062       1,761       1,795  
Amortization of intangible assets   273       265       202  
Amortization of debt discount and deferred financing fees   891       891       831  
Loss on disposal of equipment   56              
Loss on extinguishment of debt          
Provision for bad debt   (271 )     612       (41 )
Provision for inventory write-down   1,939       1,769       3,314  
Investment losses (gains)   (666 )     (228 )     68  
Change in fair value of derivatives   (1,531 )     (1,044 )     28  
Stock-based compensation   14,418       15,591       10,919  
Change in operating assets and liabilities:          
Accounts receivable   (2,691 )     (4,639 )     (499 )
Inventory   (6,054 )     (3,656 )     (7,478 )
Prepaid expenses and other   (867 )     (84 )     2,435  
Accounts payable and accrued expenses   6,509       660       (270 )
Operating lease obligations   (1,269 )     (1,841 )     (463 )
Cash paid for interest portion of finance leases   (3 )     (2 )     (2 )
Contract and other liabilities   (14 )           (3 )
Net cash used in operating activities   (5,716 )     (16,066 )     (13,405 )
           
Cash flows from investing activities:          
Purchase of property and equipment   (13,872 )     (20,078 )     (27,811 )
Economic development grant proceeds               950  
Purchase of investments   (10,203 )     (39,247 )     (68,699 )
Proceeds from sale of investments   44,374       57,300       72,500  
Cash payments for intangible assets   (1,046 )     (1,175 )     (589 )
Net cash provided by (used in) investing activities   19,253       (3,200 )     (23,649 )
           
Cash flows from financing activities:          
Proceeds from issuance of long-term debt               15,000  
Cash paid for debt portion of finance leases   (10 )     (12 )     (15 )
Proceeds from exercise of stock options and ESPP stock purchases   1,964       1,806       5,467  
Net cash provided by financing activities   1,954       1,794       20,452  
Net increase (decrease) in cash, cash equivalents, and restricted cash   15,491       (17,472 )     (16,602 )
Cash, cash equivalents, and restricted cash, beginning of period   21,535       39,007       55,609  
Cash, cash equivalents, and restricted cash, end of period $ 37,026     $ 21,535     $ 39,007  


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