Organogenesis Holdings Inc. Reports First Quarter 2019 Financial Results
First Quarter 2019 Financial Summary:
- Net revenue of
$57.1 million for the first quarter of 2019, up 60.8% compared to net revenue of$35.5 million for the first quarter of 2018. Net revenue comprised:- Net revenue from Advanced Wound Care products of
$47.8 million , up 63.7% from the first quarter of 2018. - Net revenue from Surgical & Sports Medicine products of
$9.3 million , up 47.2% from the first quarter of 2018.
- Net revenue from Advanced Wound Care products of
- Net revenue from the sale of PuraPly products of
$25.4 million for the first quarter of 2019, up 139.1% from the first quarter of 2018. - Net revenue from the sale of non-PuraPly products of
$31.7 million for the first quarter of 2019, up 27.3% from the first quarter of 2018. - Net loss was
$15.7 million , compared to a net loss of$22.5 million for the first quarter of 2018. - Adjusted EBITDA loss of
$9.4 million , compared to Adjusted EBITDA loss of$17.3 million for the first quarter of 2018.
First Quarter 2019 and Recent Highlights:
- On
March 4, 2019 , the Company presented a new case series published in Plastic and Reconstructive Surgery- Global Open suggesting that PuraPly® Antimicrobial (PuraPly AM) positively affects the course of healing in a variety of complex, chronic wounds that were previously unresponsive to treatment. - On
March 14, 2019 , the Company entered into a new credit agreement withSilicon Valley Bank and MidCap Financial, providing an aggregate principal amount of$100 million consisting of a$60 million term loan and a$40 million revolving credit facility. - On
March 14, 2019 ,Jack Farr , MD, Medical Director of theCartilage Research Center of Indiana presented clinical trial results demonstrating the effectiveness of ReNu® in treating symptoms associated with knee osteoarthritis at theAmerican Academy of Orthopedic Surgeons Annual Meeting. - On
May 1, 2019 , the Company announced that it received an Innovative Technology contract fromVizient, Inc. for its portfolio of Advanced Wound Care and Surgical & Sports Medicine products.
“2019 is off to a strong start,” said
Mr. Gillheeney, Sr. continued: “We remain committed to delivering on our mission to provide integrated healing solutions that substantially improve medical outcomes and the lives of patients, while lowering the overall cost of care. To that end, we recently announced that we received an ‘Innovative Technology’ contract from
Net Revenue Summary:
The following table represents revenue by product grouping for the three months ended
Three Months Ended March 31, |
Increase/Decrease | ||||||||||||||||||
(In thousands) | 2019 | 2018 | $ Change | % Change | |||||||||||||||
Advanced Wound Care | $ | 47,844 | $ | 29,223 | $ | 18,621 | 63.7 | % | |||||||||||
Surgical & Sports Medicine | 9,279 | 6,306 | 2,973 | 47.2 | % | ||||||||||||||
Net revenue | $ | 57,123 | $ | 35,529 | $ | 21,594 | 60.8 | % |
First Quarter 2019 Results:
Net revenue for the first quarter of 2019 was
Gross profit for the first quarter of 2019 was
Operating expenses for the first quarter of 2019 were
Operating loss for the first quarter of 2019 was
Net loss for the first quarter of 2019 was
As of
Fiscal Year 2019 Revenue Guidance:
The Company is updating its fiscal year 2019 revenue expectations. For the twelve months ending
- Net revenue of between $249 million and $262 million, representing growth of approximately 29% to 35% year-over-year, as compared to net revenue of
$193.4 million for the twelve months endedDecember 31 , 2018. - The 2019 net revenue forecast assumes:
- Net revenue from Advanced Wound Care products of between $219 million and $229 million, representing growth of approximately 33% to 39% year-over-year as compared to net revenue of
$164.3 million for the twelve months endedDecember 31, 2018 . - Net revenue from Surgical & Sports Medicine products of between $30 million and $33 million, representing growth of approximately 3% to 13% year-over-year as compared to net revenue of
$29 .1 million for the twelve months endedDecember 31, 2018 . - The 2019 net revenue guidance range also assumes that net revenue from the sale of PuraPly products will represent between $96 million and $103 million of net revenue, representing growth of approximately 38% to 48% year-over-year, as compared to net revenue of
$69.8 million for the twelve months endedDecember 31, 2018 .
- Net revenue from Advanced Wound Care products of between $219 million and $229 million, representing growth of approximately 33% to 39% year-over-year as compared to net revenue of
Conference Call:
Management will host a conference call at
For those unable to participate, a replay of the call will be available for two weeks at 855-859-2056 (404-537-3406 for international callers); access code 4572798. The webcast will be archived at investors.organogenesis.com.
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 for fiscal 2019 and the breakdown of such 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 Company has incurred significant losses since inception and anticipates that it will incur substantial losses for the foreseeable future; (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’s ability to raise funds to expand its business; (6) the impact of any changes to the reimbursement levels for the Company’s products and the impact to the Company of the loss of preferred “pass through” status for PuraPly AM and PuraPly on
About
ORGANOGENESIS HOLDINGS INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
March 31, | December 31, | ||||||
2019 | 2018 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash | $ | 30,561 | $ | 21,291 | |||
Restricted cash | 102 | 114 | |||||
Accounts receivable, net | 32,509 | 34,077 | |||||
Inventory | 17,972 | 13,321 | |||||
Prepaid expenses and other current assets | 3,918 | 2,328 | |||||
Total current assets | 85,062 | 71,131 | |||||
Property and equipment, net | 39,454 | 39,623 | |||||
Notes receivable from related parties | 496 | 477 | |||||
Intangible assets, net | 24,592 | 26,091 | |||||
Goodwill | 25,539 | 25,539 | |||||
Deferred tax asset | 238 | 238 | |||||
Other assets | 1,072 | 579 | |||||
Total assets | $ | 176,453 | $ | 163,678 | |||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities: | |||||||
Deferred acquisition consideration | $ | 5,000 | $ | 5,000 | |||
Redeemable common stock liability | - | 6,762 | |||||
Current portion of notes payable | - | 2,545 | |||||
Current portion of capital lease obligations | 2,337 | 2,236 | |||||
Accounts payable | 24,575 | 19,165 | |||||
Accrued expenses and other current liabilities | 20,395 | 20,388 | |||||
Total current liabilities | 52,307 | 56,096 | |||||
Line of credit | 30,984 | 26,484 | |||||
Notes payable, net of current portion | - | 12,578 | |||||
Term loan | 39,635 | - | |||||
Deferred rent, net of current portion | 179 | 130 | |||||
Capital lease obligations, net of current portion | 15,109 | 15,418 | |||||
Other liabilities | 5,680 | 5,931 | |||||
Total liabilities | 143,894 | 116,637 | |||||
Commitments and contingencies (Note 13) | |||||||
Stockholders’ equity: | |||||||
Common stock, $0.0001 par value; 400,000,000 shares authorized; 92,044,587 and 91,261,413 shares issued; 91,316,039 and 91,261,413 shares outstanding at March 31, 2019 and December 31, 2018, respectively. | 9 | 9 | |||||
Additional paid-in capital | 178,124 | 177,272 | |||||
Accumulated deficit | (145,574 | ) | (130,240 | ) | |||
Total stockholders' equity | 32,559 | 47,041 | |||||
Total liabilities and stockholders' equity | $ | 176,453 | $ | 163,678 |
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
(in thousands) | |||||||
Net revenue | $ | 57,123 | $ | 35,529 | |||
Cost of goods sold | 16,980 | 14,521 | |||||
Gross profit | 40,143 | 21,008 | |||||
Operating expenses: | |||||||
Selling, general and administrative | 48,893 | 38,165 | |||||
Research and development | 3,371 | 2,824 | |||||
Total operating expenses | 52,264 | 40,989 | |||||
Loss from operations | (12,121 | ) | (19,981 | ) | |||
Other income (expense), net: | |||||||
Interest expense | (1,797 | ) | (2,429 | ) | |||
Interest income | 19 | 19 | |||||
Change in fair value of warrants | - | (74 | ) | ||||
Loss on the extinguishment of debt | (1,862 | ) | - | ||||
Other income, net | 132 | 5 | |||||
Total other income (expense), net | (3,508 | ) | (2,479 | ) | |||
Net loss before income taxes | (15,629 | ) | (22,460 | ) | |||
Income tax expense | (37 | ) | (28 | ) | |||
Net loss | $ | (15,666 | ) | $ | (22,488 | ) | |
Net loss per share - basic and diluted | $ | (0.17 | ) | $ | (0.35 | ) | |
Weighted average common shares outstanding - basic and diluted | 90,604,107 | 64,320,931 |
ORGANOGENESIS HOLDINGS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended March 31, | |||||||||
2019 | 2018 | ||||||||
Cash flows from operating activities: | |||||||||
Net loss | $ | (15,666 | ) | $ | (22,488 | ) | |||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||
Depreciation | 902 | 872 | |||||||
Amortization of intangible assets | 1,498 | 917 | |||||||
Non-cash interest expense | 170 | 239 | |||||||
Non-cash interest income | (19 | ) | (20 | ) | |||||
Non-cash rent expense | 49 | 14 | |||||||
Benefit recorded for sales returns and doubtful accounts | (76 | ) | (208 | ) | |||||
Provision recorded for inventory reserve | 520 | 1,482 | |||||||
Stock-based compensation | 224 | 317 | |||||||
Change in fair value of warrant liability | - | 73 | |||||||
Loss on extinguishment of debt | 1,862 | - | |||||||
Changes in fair value of forfeiture rights | - | 589 | |||||||
Changes in operating assets and liabilities: | |||||||||
Accounts receivable | 2,474 | 7,547 | |||||||
Inventory | (5,339 | ) | (2,282 | ) | |||||
Prepaid expenses and other current assets | (963 | ) | (1,352 | ) | |||||
Accounts payable | 4,882 | 9,706 | |||||||
Accrued expenses and other current liabilities | 176 | (789 | ) | ||||||
Accrued interest - affiliate debt | - | 797 | |||||||
Other liabilities | (252 | ) | 129 | ||||||
Net cash used in operating activities | (9,558 | ) | (4,457 | ) | |||||
Cash flows from investing activities: | |||||||||
Purchases of property and equipment | (317 | ) | (65 | ) | |||||
Net cash used in investing activities | (317 | ) | (65 | ) | |||||
Cash flows from financing activities: | |||||||||
Line of credit borrowings | 4,500 | 3,075 | |||||||
Proceeds from term loan | 40,000 | - | |||||||
Repayment of notes payable | (17,585 | ) | (10 | ) | |||||
Proceeds from the exercise of stock options | - | 44 | |||||||
Redemption of redeemable common stock | (6,762 | ) | - | ||||||
Principal repayments of capital lease obligations | (209 | ) | (18 | ) | |||||
Payment of debt issuance costs | (811 | ) | (9 | ) | |||||
Net cash provided by financing activities | 19,133 | 3,082 | |||||||
Change in cash and restricted cash | 9,258 | (1,440 | ) | ||||||
Cash and restricted cash, beginning of period | 21,405 | 2,358 | |||||||
Cash and restricted cash, end of period | $ | 30,663 | $ | 918 | |||||
Supplemental disclosure of cash flow information: | |||||||||
Cash paid for interest | $ | 1,627 | $ | 1,650 | |||||
Cash paid for income taxes | $ | 58 | $ | 1 | |||||
Supplemental disclosure of non-cash investing and financing activities: | |||||||||
Debt issuance costs included in accounts payable | $ | 113 | $ | - | |||||
Purchases of property and equipment in accounts payable and accrued expenses | $ | 415 | $ | 715 | |||||
Exercise of common stock warrants included in prepaids and other current assets | $ | 628 | $ | - |
Use of Non‑GAAP Measures
Our management uses financial measures that are not in accordance with generally accepted accounting principles in
We define EBITDA as net income (loss) before depreciation and amortization, net interest expense and income taxes and we define Adjusted EBITDA as EBITDA, further adjusted for the impact of certain items that we do not consider indicative of our core operating performance. These items consist of non-cash equity compensation, mark to market adjustments on our warrant liabilities, change in fair value of interest rate swaps and our contingent asset and liabilities, write-off of deferred offering costs,
Our Adjusted EBITDA is not prepared in accordance with GAAP, and should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. There are a number of limitations related to the use of Adjusted EBITDA rather than net income (loss), which is the most directly comparable GAAP equivalent. Some of these limitations are:
- Adjusted EBITDA excludes stock-based compensation expense, as stock-based compensation expense has recently been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy;
- Adjusted EBITDA excludes depreciation and amortization expense and, although these are non-cash expenses, the assets being depreciated may have to be replaced in the future;
- Adjusted EBITDA excludes net interest expense, or the cash requirements necessary to service interest, which reduces cash available to us;
- Adjusted EBITDA excludes the impact of the changes in the fair value of our warrant liability, our contingent consideration forfeiture asset, and the fair value of interest rate swaps;
- Adjusted EBITDA excludes the write-off of deferred offering costs, as well as merger transaction costs, consisting primarily of legal and professional fees;
- Adjusted EBITDA excludes the loss on extinguishment of debt, which is a non-cash loss related to the write-off of unamortized debt issuance costs upon repayment of affiliate and third-party debt, and related prepayment penalties;
- Adjusted EBITDA excludes income tax expense (benefit); and
- Other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.
Because of these limitations, we consider, and you should consider, Adjusted EBITDA together with other operating and financial performance measures presented in accordance with GAAP. A reconciliation of Adjusted EBITDA to net loss, the most directly comparable measure calculated in accordance with GAAP, has been included herein.
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
(in thousands) | |||||||
Net loss | $ | (15,666 | ) | $ | (22,488 | ) | |
Interest expense, net | 1,778 | 2,410 | |||||
Income tax expense | 37 | 28 | |||||
Depreciation | 902 | 872 | |||||
Amortization | 1,498 | 917 | |||||
EBITDA | $ | (11,451 | ) | $ | (18,261 | ) | |
Stock-based compensation expense | 224 | 317 | |||||
Change in contingent consideration forfeiture asset | - | 589 | |||||
Change in fair value of warrant liability | - | 74 | |||||
Loss on extinguishment of debt | 1,862 | - | |||||
Adjusted EBITDA | $ | (9,365 | ) | $ | (17,281 | ) |
Investor Inquiries:Westwicke Partners Mike Piccinino , CFA OrganoIR@westwicke.com 443-213-0500 Press and Media Inquiries:Organogenesis Angelyn Lowe alowe@organo.com 781-774-9364
Source: Organogenesis Holdings Inc.