First Quarter 2023 Financial Results Summary:
- Net revenue of
$107.6 million for the first quarter of 2023, an increase of$10.5 million compared to net revenue of$97.1 million for the first quarter of 2022. Net revenue for the first quarter of 2023 consists of:- Net revenue from Advanced Wound Care products of
$100.9 million , an increase of 12% from the first quarter of 2022. - Net revenue from Surgical & Sports Medicine products of
$6.7 million , a decrease of 4% from the first quarter of 2022.
- Net revenue from Advanced Wound Care products of
- Net loss of
$3.0 million for the first quarter of 2023, compared to a net loss of$0.9 million for the first quarter of 2022, an increase of$2.1 million . - Adjusted net loss1 of
$0.7 million for the first quarter of 2023, compared to an adjusted net income of$1.0 million for the first quarter of 2022, a decrease of$1.6 million . - Adjusted EBITDA of
$3.8 million for the first quarter of 2023, compared to Adjusted EBITDA of$5.0 million for the first quarter of 2022, a decrease of$1.2 million .
“First quarter sales came in above the high-end of the guidance range we provided on our fourth quarter earnings call,” said
1Defined as GAAP net income (loss) adjusted to exclude the effect of amortization, restructuring charges, GPO settlement fee and the resulting income taxes on these items.
First Quarter 2023 Financial Results:
Three Months Ended | Change | ||||||||||||||
2023 | 2022 | $ | % | ||||||||||||
(in thousands, except for percentages) | |||||||||||||||
Advanced Wound Care | $ | 100,917 | $ | 90,090 | $ | 10,827 | 12 | % | |||||||
Surgical & Sports Medicine | 6,725 | 7,027 | (302 | ) | (4 | %) | |||||||||
Net revenue | $ | 107,642 | $ | 97,117 | $ | 10,525 | 11 | % |
Net revenue for the first quarter of 2023 was
Gross profit for the first quarter of 2023 was
Operating expenses for the first quarter of 2023 were
Operating loss for the first quarter of 2023 was
Total other expense, net, for the first quarter of 2023 was
Net loss for the first quarter of 2023 was
Adjusted net loss of
Adjusted EBITDA was
As of
Fiscal Year 2023 Guidance:
For the year ending
- Net revenue between
$454 million and$466 million , representing an increase of approximately 1% to 3% year-over-year, as compared to net revenue of$450.9 million for the year endedDecember 31, 2022 .- The 2023 net revenue guidance range assumes:
- Net revenue from Advanced Wound Care products between
$424 million and$432 million , an increase of 0% to 2% year-over-year as compared to net revenue of$422.2 million for the year endedDecember 31, 2022 . - Net revenue from Surgical & Sports Medicine products between
$30 million and$34 million , an increase of approximately 5% to 19% year-over-year as compared to net revenue of$28.7 million for the year endedDecember 31, 2022 .
- Net revenue from Advanced Wound Care products between
- The 2023 net revenue guidance range assumes:
- Net income between
$3 million and$11 million and adjusted net income between$8 million and$16 million . - EBITDA between
$28 million and$39 million and Adjusted EBITDA between$38 million and$49 million .
First Quarter Earnings Conference Call:
Financial results for the first fiscal quarter of 2023 will be reported after the market closes on
For those unable to participate, the webcast will be archived at investors.organogenesis.com for approximately one year.
UNAUDITED CONSOLIDATED BALANCE SHEETS | |||||||
(amounts in thousands, except share and per share data) | |||||||
2023 | 2022 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 88,694 | $ | 102,478 | |||
Restricted cash | 721 | 812 | |||||
Accounts receivable, net | 92,021 | 89,450 | |||||
Inventory, net | 25,539 | 24,783 | |||||
Prepaid expenses and other current assets | 9,847 | 5,086 | |||||
Total current assets | 216,822 | 222,609 | |||||
Property and equipment, net | 106,637 | 102,463 | |||||
Intangible assets, net | 19,560 | 20,789 | |||||
28,772 | 28,772 | ||||||
Operating lease right-of-use assets, net | 42,839 | 43,192 | |||||
Deferred tax asset, net | 30,014 | 30,014 | |||||
Other assets | 1,463 | 1,520 | |||||
Total assets | $ | 446,107 | $ | 449,359 | |||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities: | |||||||
Current portion of term loan | $ | 5,009 | $ | 4,538 | |||
Current portion of operating lease obligations | 12,160 | 11,708 | |||||
Accounts payable | 30,310 | 32,330 | |||||
Accrued expenses and other current liabilities | 28,597 | 26,447 | |||||
Total current liabilities | 76,076 | 75,023 | |||||
Term loan, net of current portion | 64,860 | 66,231 | |||||
Operating lease obligations, net of current portion | 40,325 | 41,314 | |||||
Other liabilities | 1,145 | 1,122 | |||||
Total liabilities | 182,406 | 183,690 | |||||
Commitments and contingencies (Note 18) | |||||||
Stockholders’ equity: | |||||||
Preferred stock, | - | - | |||||
Common stock, | 13 | 13 | |||||
Additional paid-in capital | 312,573 | 310,957 | |||||
Accumulated deficit | (48,885 | ) | (45,301 | ) | |||
Total stockholders’ equity | 263,701 | 265,669 | |||||
Total liabilities and stockholders’ equity | $ | 446,107 | $ | 449,359 |
UNAUDITED CONSOLIDATED | |||||||
STATEMENTS OF OPERATIONS | |||||||
(amounts in thousands, except share and per share data) | |||||||
Three Months Ended | |||||||
2023 | 2022 | ||||||
Net revenue | $ | 107,642 | $ | 97,117 | |||
Cost of goods sold | 26,607 | 25,080 | |||||
Gross profit | 81,035 | 72,037 | |||||
Operating expenses: | |||||||
Selling, general and administrative | 73,834 | 63,578 | |||||
Research and development | 11,202 | 8,587 | |||||
Total operating expenses | 85,036 | 72,165 | |||||
Loss from operations | (4,001 | ) | (128 | ) | |||
Other expense, net: | |||||||
Interest expense | (649 | ) | (737 | ) | |||
Other income (expense), net | 23 | (3 | ) | ||||
Total other expense, net | (626 | ) | (740 | ) | |||
Net loss before income taxes | (4,627 | ) | (868 | ) | |||
Income tax benefit (expense) | 1,658 | (45 | ) | ||||
Net loss | $ | (2,969 | ) | $ | (913 | ) | |
Net loss, per share: | |||||||
Basic | $ | (0.02 | ) | $ | (0.01 | ) | |
Diluted | $ | (0.02 | ) | $ | (0.01 | ) | |
Weighted-average common shares outstanding | |||||||
Basic | 131,083,841 | 128,788,721 | |||||
Diluted | 131,083,841 | 128,788,721 |
UNAUDITED CONSOLIDATED | |||||||
STATEMENT OF CASH FLOWS | |||||||
(amounts in thousands, except share and per share data) | |||||||
Three Months Ended | |||||||
2023 | 2022 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (2,969 | ) | $ | (913 | ) | |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||
Depreciation | 2,694 | 1,347 | |||||
Amortization of intangible assets | 1,230 | 1,221 | |||||
Reduction in the carrying value of right-of-use assets | 1,939 | 1,847 | |||||
Non-cash interest expense | 107 | 108 | |||||
Deferred interest expense | 122 | 151 | |||||
Provision recorded for credit losses | 243 | 40 | |||||
Loss on disposal of property and equipment | 63 | - | |||||
Adjustment for excess and obsolete inventories | 1,407 | 2,205 | |||||
Stock-based compensation | 1,914 | 1,303 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (3,429 | ) | 2,942 | ||||
Inventory | (2,163 | ) | 80 | ||||
Prepaid expenses and other current assets | (4,774 | ) | (2,165 | ) | |||
Operating leases | (2,122 | ) | (1,751 | ) | |||
Accounts payable | (1,390 | ) | (1,186 | ) | |||
Accrued expenses and other current liabilities | 2,029 | (3,828 | ) | ||||
Other liabilities | 22 | 10 | |||||
Net cash provided by (used in) operating activities | (5,077 | ) | 1,411 | ||||
Cash flows from investing activities: | |||||||
Purchases of property and equipment | (7,562 | ) | (6,672 | ) | |||
Net cash used in investing activities | (7,562 | ) | (6,672 | ) | |||
Cash flows from financing activities: | |||||||
Payments of term loan under the 2021 Credit Agreement | (938 | ) | (469 | ) | |||
Payments of withholding taxes in connection with RSUs vesting | (298 | ) | (488 | ) | |||
Proceeds from the exercise of stock options | - | 291 | |||||
Principal repayments of finance lease obligations | - | (99 | ) | ||||
Net cash used in financing activities | (1,236 | ) | (765 | ) | |||
Change in cash, cash equivalents and restricted cash | (13,875 | ) | (6,026 | ) | |||
Cash, cash equivalents, and restricted cash, beginning of period | 103,290 | 114,528 | |||||
Cash, cash equivalents, and restricted cash, end of period | $ | 89,415 | $ | 108,502 | |||
Supplemental disclosure of cash flow information: | |||||||
Cash paid for interest | $ | 1,271 | $ | 627 | |||
Cash paid for income taxes | $ | 128 | $ | 4 | |||
Supplemental disclosure of non-cash investing and financing activities: | |||||||
Purchases of property and equipment included in accounts payable and accrued expenses | $ | 1,986 | $ | 1,869 | |||
Right-of-use assets obtained through operating lease obligations | $ | 1,586 | $ | 171 |
Non-GAAP Financial Measures
Our management uses financial measures that are not in accordance with generally accepted accounting principles in
The following table presents a reconciliation of GAAP net income to non-GAAP EBITDA and non-GAAP Adjusted EBITDA, for the period presented:
Three Months Ended | |||||||
2023 | 2022 | ||||||
(Unaudited) (in thousands) | |||||||
Net loss | $ | (2,969 | ) | $ | (913 | ) | |
Interest expense, net | 649 | 737 | |||||
Income tax expense (benefit) | (1,658 | ) | 45 | ||||
Depreciation | 2,694 | 1,347 | |||||
Amortization | 1,230 | 1,221 | |||||
EBITDA | (54 | ) | 2,437 | ||||
Stock-based compensation expense | 1,914 | 1,303 | |||||
Restructuring charge (1) | 1,908 | 264 | |||||
Settlement fee (2) | - | 1,000 | |||||
Adjusted EBITDA | $ | 3,768 | $ | 5,004 |
(1) Amounts reflect employee severance, retention and benefits as well as other exit costs associated with the Company’s restructuring activities.
(2) Amounts reflect the fee the Company paid to a GPO to settle previously disputed GPO fees.
The following table presents a reconciliation of GAAP net loss to non-GAAP adjusted net income (loss), for the periods presented:
Three Months Ended | |||||||
2023 | 2022 | ||||||
(Unaudited) (in thousands) | |||||||
Net loss | $ | (2,969 | ) | $ | (913 | ) | |
Amortization | 1,230 | 1,221 | |||||
Restructuring charge (1) | 1,908 | 264 | |||||
Settlement fee (2) | - | 1,000 | |||||
Tax on above | (847 | ) | (621 | ) | |||
Adjusted net income (loss) | $ | (678 | ) | $ | 951 |
(1) Amounts reflect employee severance, retention and benefits as well as other exit costs associated with the Company’s restructuring activities.
(2) Amounts reflect the fee the Company paid to a GPO to settle previously disputed GPO fees.
The following table presents a reconciliation of projected GAAP net income to projected non-GAAP EBITDA and projected non-GAAP Adjusted EBITDA included in our guidance for the year ending
Year Ending | |||||||
2023L | 2023H | ||||||
Net income | $ | 3,200 | $ | 10,900 | |||
Interest expense | 3,300 | 3,300 | |||||
Income tax expense | 5,100 | 8,100 | |||||
Depreciation | 11,500 | 11,500 | |||||
Amortization | 4,900 | 4,900 | |||||
EBITDA | $ | 28,000 | $ | 38,700 | |||
Stock-based compensation expense | 7,900 | 7,900 | |||||
Restructuring charge | 2,200 | 2,200 | |||||
Adjusted EBITDA | $ | 38,100 | $ | 48,800 |
The following table presents a reconciliation of projected GAAP net income to projected non-GAAP adjusted net income included in our guidance for the year ending
Year Ending | |||||||
2023L | 2023H | ||||||
Net income | $ | 3,200 | $ | 10,900 | |||
Amortization | 4,900 | 4,900 | |||||
Restructuring charge | 2,200 | 2,200 | |||||
Tax on above | (1,900 | ) | (1,900 | ) | |||
Adjusted net income | $ | 8,400 | $ | 16,100 |
Forward-Looking Statements
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to expectations or forecasts of future events. Forward-looking statements may be identified by the use of words such as “forecast,” “intend,” “seek,” “target,” “anticipate,” “believe,” “expect,” “estimate,” “plan,” “outlook,” and “project” and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. Such forward-looking statements include statements relating to the Company’s expected revenue, adjusted net revenue, net income, adjusted net income, EBITDA, and Adjusted EBITDA for fiscal 2023 and the breakdown of expected revenue in both its Advanced Wound Care and Surgical & Sports Medicine categories as well as the estimated revenue contribution of its PuraPly products. Forward-looking statements with respect to the operations of the Company, strategies, prospects, and other aspects of the business of the Company are based on current expectations that are subject to known and unknown risks and uncertainties, which could cause actual results or outcomes to differ materially from expectations expressed or implied by such forward-looking statements. These factors include, but are not limited to: (1) the impact of any changes to the reimbursement levels for the Company’s products; (2) the Company faces significant and continuing competition, which could adversely affect its business, results of operations and financial condition; (3) rapid technological change could cause the Company’s products to become obsolete and if the Company does not enhance its product offerings through its research and development efforts, it may be unable to effectively compete; (4) to be commercially successful, the Company must convince physicians that its products are safe and effective alternatives to existing treatments and that its products should be used in their procedures; (5) the Company may owe rebates to the federal government prospectively on certain of its products if more than a certain percentage of the product is not administered to a patient and is discarded (wasted) by providers; (6) the Company’s ability to raise funds to expand its business; (7) the Company has incurred losses in prior years and may incur losses in the future; (8) changes in applicable laws or regulations; (9) the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors; (10) the Company’s ability to maintain production of Affinity in sufficient quantities to meet demand; (11) any resurgence of the COVID-19 pandemic and its impact, if any, on the Company’s fiscal condition and results of operations; (12) the impact of the suspension of commercialization of: (a) ReNu and NuCel in connection with the expiration of the FDA’s enforcement grace period for HCT/Ps on
About
Investor Inquiries: ICR WestwickeMike Piccinino , CFA OrganoIR@westwicke.com Press and Media Inquiries: Organogenesis Ron O’Brien robrien@organo.com
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