Axogen, Inc. Reports 2021 Second Quarter Financial Results

ALACHUA, Fla. and TAMPA, Fla., Aug. 04, 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 second quarter ended June 30, 2021.

Second Quarter 2021 Financial Results and Recent Business Highlights

  • Net revenue was $33.6 million during the quarter, a 52% increase compared to second quarter 2020 revenue of $22.1 million.
  • Gross margin was 78.9% for the quarter, compared to 74.7% one year ago. Gross margin would have been approximately 83.1% excluding the impact of a one-time charge of approximately $1.4 million reflecting the write-down of inventory and production costs related to the previously disclosed suspension of market availability of Avive® Soft Tissue Membrane pending ongoing discussions with the FDA.
  • Net loss for the quarter was $7.9 million, or $0.19 per share, compared to a net loss of $8.1 million, or $0.20 per share, in the second quarter of 2020.
  • Adjusted net loss was $3.7 million for the quarter, or $0.09 per share, compared with adjusted net loss of $5.9 million, or $0.15 per share, in the second quarter of 2020.
  • Adjusted EBITDA loss was $2.4 million for the quarter, compared to an adjusted EBITDA loss of $5.7 million in the second quarter of 2020.
  • The balance of cash, cash equivalents, and investments on June 30, 2021 was $106.2 million, compared to a balance of $97.2 million on March 31, 2021. The net increase includes $15.0 million of additional debt proceeds drawn from the Company’s debt facility with Oberland Capital, and net operating cash flow in the quarter of $1.2 million, partially offset by facilities capital expenditures of $7.2 million.
  • Appointed John H. Johnson to the Axogen, Inc. Board of Directors on July 19, 2021. Mr. Johnson has more than 30 years of experience in the biopharma industry, currently serves on the board of directors of Strongbridge Biopharma, Verastem Oncology, and BioAgilytix and is the CEO of Strongbridge Biopharma.

“I am pleased with our Q2 performance, as our team continued to execute in a dynamic healthcare market,” commented Karen Zaderej, chairman, CEO, and president of Axogen, Inc. “Surgeon demand for our products continued to increase as we drove deeper penetration in our customer accounts. Despite the ongoing impact of the pandemic, the success of our commercial strategy, supported by our ten-year investment in meaningful clinical data, provides us with increasing confidence in the long-term growth outlook for our business.”  

Additional Operational and Business Highlights

  • Core accounts in the second quarter were 306, a 34% increase compared to 228 in the second quarter of 2020 and continue to represent approximately 60% of total revenue.
  • Active accounts were 959, a 22% increase compared to 789 in the second quarter a year ago. Revenue from the top 10% of our active accounts continued to represent approximately 35% of total revenue in the quarter.
  • Ended the quarter with 109 direct sales representatives, an increase of three from the prior quarter and compared to 112 one year ago.
  • Ended the quarter with 164 peer-reviewed clinical publications featuring Axogen’s nerve repair product portfolio.

Updating 2021 Financial Guidance
Management is updating financial guidance, expecting full-year 2021 revenue will be in the range of $134.5 million to $137.5 million versus the prior range of $133.0 million to $136.0 million. Additionally, management continues to expect full-year 2021 gross margin to remain 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 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 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 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, 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, the United Kingdom, South Korea, 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,” “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, regulatory process and approvals, APC renovation timing and expense, 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 Axogen’s 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.

Axogen, Inc.
Peter J. Mariani, Executive Vice President and Chief Financial Officer

 (In Thousands, Except Share Amounts)

   June 30,December 31,
    2021  2020 
 Current assets:     
 Cash and cash equivalents $53,078  $48,767 
 Restricted cash  6,333   6,842 
 Investments  46,839   55,199 
 Accounts receivable, net  18,182   17,618 
 Inventory  13,415   12,529 
 Prepaid expenses and other  3,948   4,296 
 Total current assets  141,795    145,251 
 Property and equipment, net  50,952   38,398 
 Operating lease right-of-use assets  15,272   15,614 
 Finance lease right-of-use assets  53   64 
 Intangible assets  2,460   2,054 
 Total assets $210,532   $201,381 
 Liabilities and Shareholders’ Equity    
 Current liabilities:    
 Accounts payable and accrued expenses $19,839  $21,968 
 Current maturities of long-term lease obligations  1,789   863 
 Total current liabilities  21,628   22,831 
 Long-term debt, net of financing fees  46,081   32,027 
 Debt derivative liability  3,776   2,497 
 Long-term lease obligations  20,344   20,874 
 Other long-term liabilities     3 
 Total liabilities  91,829   78,232 
 Shareholders’ equity:    
 Common stock, $.01 par value per share; 100,000,000 shares authorized; 40,842,717 and 40,618,766 shares issued and outstanding  413   406 
 Additional paid-in capital  336,495   326,390 
 Accumulated deficit  (218,205)  (203,647)
 Total shareholders’ equity   118,703   123,149 
 Total liabilities and shareholders' equity $210,532  $201,381 

Three and Six Months ended June 30, 2021 and 2020
  Three Months Ended Six Months Ended
  June 30, June 30, June 30, June 30,
   2021   2020   2021   2020 
Revenues  $33,580  $22,116  $64,617  $46,377 
Cost of goods sold  7,092   5,605   12,264   10,421 
Gross profit  26,488   16,511   52,353   35,956 
Costs and expenses:        
Sales and marketing  19,250   14,290   37,224   32,128 
Research and development  5,723   4,071   11,471   8,685 
General and administrative  8,669   6,404   17,032   11,906 
Total costs and expenses  33,642   24,765   65,727   52,719 
Loss from operations  (7,154)  (8,254)  (13,374)  (16,763)
Other income (expense):        
Interest income  29   237   63   548 
Interest expense  (565)  (31)  (1,010)  (62)
Change in fair value of derivatives  (84)     (105)   
Other expense  (124)  (57)  (132)  (20)
Total other expense   (744)  149   (1,184)  466 
Net loss $(7,898) $(8,105) $(14,558) $(16,297)
Weighted average common shares outstanding – basic and diluted  41,081   39,823   40,894   39,761 
Loss per common share – basic and diluted $(0.19) $(0.20) $(0.36) $(0.41)
Adjusted net loss - non GAAP  (3,694)  (5,883)  (6,823)  (13,519)
Adjusted loss per common share – basic and diluted $(0.09) $(0.15) $(0.17) $(0.34)

Three and Six Months ended June 30, 2021 and 2020
  Three Months Ended Six Months Ended
  June 30, June 30, June 30, June 30,
   2021   2020   2021   2020 
Gross profit $26,488  $16,511  $52,353  $35,956 
Avive inventory write-down and production costs  1,429   -   1,429   - 
Adjusted gross Profit $27,917  $16,511  $53,782  $35,956 
Net loss $(7,898) $(8,105) $(14,558) $(16,297)
Depreciation and amortization expense  661   346   1,501   665 
Investment income  (29)  (237)  (63)  (548)
Income tax  62   58   67   38 
Interest expense  565   31   1,010   62 
EBITDA - non GAAP $(6,639) $(7,907) $(12,043) $(16,080)
Non cash stock compensation expense  3,804   2,222   6,499   2,778 
Litigation and related costs  400      1,236   - 
Adjusted EBITDA - non GAAP $(2,435) $(5,685) $(4,308) $(13,302)
Net loss $(7,898) $(8,105) $(14,558) $(16,297)
Non cash stock compensation expense  3,804   2,222   6,499   2,778 
Litigation and related costs  400      1,236    
 Adjusted Net Loss - non GAAP $(3,694) $(5,883) $(6,823) $(13,519)
Weighted average common shares outstanding – basic and diluted  41,081   39,823   40,894   39,761 
Adjusted loss per common share – basic and diluted $(0.09) $(0.15) $(0.17) $(0.34)


 Six Months Ended June 30, 2021 and 2020  
   Common Stock     Total
   Shares Amount Additional Paid-
in Capital
 For the Three Months Ended June 30, 2021:          
 Balance at March 31, 2021 40,842,717  $408  $329,603  $(210,307) $119,704 
 Net loss -   -   -   (7,898)  (7,898)
 Stock-based compensation -   -   3,804   -   3,804 
 Issuance of restricted /performance service awards 44,411         - 
 Exercise of stock options and employee stock purchase plan 449,980   5   3,088   -   3,093 
 Balance at June 30, 2021 41,337,108  $413  $336,495  $(218,205) $118,703 
 For the Six Months Ended June 30, 2021:          
 Balance at December 31, 2020 40,618,766  $406  $326,390  $(203,647) $123,149 
 Net loss -   -   -   (14,558)  (14,558)
 Stock-based compensation -   -   6,499   -   6,499 
 Issuance of restricted /performance service awards 138,944   1   (1)  -   - 
 Shares surrendered by employees to pay taxes -   -   -   -   - 
 Exercise of stock options and employee stock purchase plan 579,398   6   3,607   -   3,613 
 Balance at June 30, 2021 41,337,108  $413  $336,495  $(218,205) $118,703 
 For the Three Months Ended June 30, 2020:          
 Balance at March 31, 2020 39,738,767  $397  $311,850  $(188,053) $124,194 
 Net loss -   -   -   (8,105)  (8,105)
 Stock-based compensation -   -   2,222   -   2,222 
 Issuance of restricted and performan stock units 10,021   -       - 
 Shares surrendered by employees to pay taxes (1,766)  -   (17)  -   (17)
 Exercise of stock options and employee stock purchase plan 273,758   3   1463     1,466 
 Balance at June 30, 2020 40,020,780  $400  $315,518  $(196,158) $119,760 
 For the Six Months Ended June 30, 2020:          
 Balance at December 31, 2019 39,589,755  $396  $311,618  $(179,861) $132,153 
 Net loss -   -   -   (16,297)  (16,297)
 Stock-based compensation -   -   2,778   -   2,778 
 Issuance of restricted /performance service awards 145,943   1   (1)  -   - 
 Shares surrendered by employees to pay taxes (38,736)  (1)  (657)  -   (658)
 Exercise of stock options and employee stock purchase plan 323,818   4   1,780   -   1,784 
 Balance at June 30, 2020 40,020,780  $400  $315,518  $(196,158) $119,760 

 Six Months ended June 30, 2021 and 2020
   Six Months Ended
   June 30, June 30,
    2021   2020 
 Cash flows from operating activities:    
 Net loss $(14,558) $(16,297)
 Adjustments to reconcile net loss to net cash used in operating activities:    
 Depreciation  1,405   618 
 Amortization of right-of-use assets  960   802 
 Amortization of intangible assets  96   72 
 Amortization of deferred financing fees  227    
 Provision for bad debt  (65)  (115)
 Provision for inventory write down  2,455   1,624 
 Change in fair value of derivatives  105    
 Change in investment gains and losses  31   (141)
 Share-based compensation  6,499   2,778 
 Change in assets and liabilities:    
 Accounts receivable  (498)  3,010 
 Inventory  (3,341)  (600)
 Prepaid expenses and other  199   (1,699)
 Accounts payable and accrued expenses  (5,061)  (4,212)
 Operating Lease Obligations  35   (915)
 Cash paid for interest portion of Finance Leases  (1)   
 Contract and other liabilities  (3)  (6)
 Net cash used in operating activities  (11,515)  (15,081)
 Cash flows from investing activities:    
 Purchase of short-term investments  (10,924)  (13,183)
 Purchase of property and equipment  (23,966)  (22,965)
 Sale/Maturities of short-term investments  32,295   59,883 
 Cash payments for intangible assets  (692)  (216)
 Net cash provided by/ (used for) investing activities  (3,287)  23,519 
 Cash flows from financing activities:    
 Proceeds from the issuance long term debt  15,000   35,000 
 Proceeds from the paycheck protection program     7,820 
 Repayment of paycheck protection program     (7,820)
 Payments of debt issuance costs     (350)
 Payments for repurchase of common stock for employee tax withholding     (658)
 Cash paid for debt portion of finance leases  (8)  (8)
 Proceeds from exercise of stock options and warrants  3,612   1,784 
 Net cash provided by financing activities  18,604   35,768 
 Net increase in cash, cash equivalents and restricted cash  3,802   44,206 
 Cash, cash equivalents and restricted cash, beginning of year  55,609   41,724 
 Cash, cash equivalents and restricted cash, end of period $59,411  $85,930 
 Supplemental disclosures of cash flow activity:    
 Cash paid for interest  739   23 
 Supplemental disclosure of non-cash investing and financing activities    
 Acquisition of fixed assets in accounts payable and accrued expenses  3,035   617 
 Obtaining a right-of-use asset in exchange for a lease liability  371   796 
 Embedded derivative associated with the long-term debt  1,173   2,563 
 Acquisition of intangible assets in accounts payable and accrued expenses  190    

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