8-K
False000166118100016611812022-11-092022-11-09

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported):November 9, 2022

 

ORGANOGENESIS HOLDINGS INC.

(Exact Name of Registrant as specified in its charter)

 

 

Delaware

001-37906

98-1329150

(State or Other Jurisdiction

of Incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

 

 

 

85 Dan Road

Canton, MA

 

02021

(Address of principal executive offices)

 

(Zip Code)

(781) 575-0775

(Registrant’s telephone number, including area code)

Not Applicable

(Registrant’s name or former address, if change since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Class A Common Stock, $0.0001 par value

 

ORGO

 

Nasdaq Capital Market

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 


 

Item 2.02 Results of Operations and Financial Condition.

On November 9, 2022, the Company announced via press release its results for the fiscal third quarter ended September 30, 2022. A copy of the Company’s press release is hereby furnished to the Commission and incorporated herein by reference as Exhibit 99.1.

The information in the press release attached as Exhibit 99.1 is intended to be furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

 

Exhibit

No.

 

Description

99.1

 

Press Release dated November 9, 2022

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

 


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Organogenesis Holdings Inc.

 

 

By:

/s/ Lori Freedman

Name:

Lori Freedman

Title:

Vice President and General Counsel

 

Date: November 9, 2022

 


EX-99.1

 

 

https://cdn.kscope.io/3a1778e6d4268483729f4e239fcfc661-img36819578_0.jpg 

 

FOR IMMEDIATE RELEASE

 

Organogenesis Holdings Inc. Reports Third Quarter 2022 Financial Results

 

CANTON, Mass., (November 9, 2022) -- Organogenesis Holdings Inc. (Nasdaq: ORGO), a leading regenerative medicine company focused on the development, manufacture, and commercialization of product solutions for the Advanced Wound Care and Surgical & Sports Medicine markets, today reported financial results for the third quarter ended September 30, 2022.

 

Third Quarter 2022 Financial Results Summary:

 

Net revenue of $116.9 million for the third quarter of 2022, an increase of 3% compared to net revenue of $113.8 million for the third quarter of 2021. Net revenue for the third quarter of 2022 consists of:
o
Net revenue from Advanced Wound Care products of $109.5 million, an increase of 2% from the third quarter of 2021.
o
Net revenue from Surgical & Sports Medicine products of $7.3 million, an increase of 15% from the third quarter of 2021.
o
Net revenue from the sale of PuraPly products of $63.7 million for the third quarter of 2022, an increase of 12% from the third quarter of 2021.
o
Net revenue from the sale of non-PuraPly products of $53.2 million, a decrease of 6% from the third quarter of 2021.
Net income of $0.2 million for the third quarter of 2022, compared to a net income of $12.6 million for the third quarter of 2021, a decrease of $12.4 million.
Adjusted net income1 of $5.1 million for the third quarter of 2022, compared to an adjusted net income of $15.8 million for the third quarter of 2021, a decrease of $10.7 million, or 68%.
Adjusted EBITDA of $11.6 million for the third quarter of 2022, compared to Adjusted EBITDA of $21.7 million for the third quarter of 2021, a decrease of $10.0 million, or 46%.

 

“We delivered third quarter revenue results below the guidance we provided on our second quarter earnings call driven primarily by a challenging environment in the physician office setting,” said Gary S. Gillheeney, Sr., President and Chief Executive Officer of Organogenesis. “Our full year 2022 revenue guidance now reflects a more challenging operating environment in the physician office setting in the fourth quarter, compared to what our prior guidance had assumed. Specifically, we expect our sales in the physician office setting to be impacted by continued competitive pressure from smaller amniotic players and overall market disruption driven by reimbursement uncertainty related to CMS’ publishing ASPs for skin substitute products this year.”

 

 

1Defined as GAAP net income adjusted to exclude the effect of amortization, restructuring charges, the recovery of certain notes receivable from related parties, the change in the fair value of the CPN earnout, loss on extinguishment of debt, write-off of certain assets, facility construction project pause, GPO settlement fee and the resulting income taxes on these items.

 


 

 

 

Mr. Gillheeney, Sr. continued: “We continue to believe that we are well positioned with our unique customer value proposition offering a broad portfolio of products across the continuum of wound care, diversified revenue sources across multiple sites of care and physician specialties and broad commercial reach. While the office channel is facing challenges this year, we continue to grow our customer base and build upon our leadership position in the office setting, as well as in wound care centers across the United States. Long-term, we will continue to be a leader in the Advanced Wound Care space by launching highly innovative, highly efficacious products as we deliver on our mission to provide integrated healing solutions that substantially improve outcomes while lowering the overall cost of care.”

 

 

 

 

Three Months Ended
September 30,

 

 

Change

 

 

 

2022

 

 

2021

 

 

$

 

 

%

 

 

 

(in thousands, except for percentages)

 

Advanced Wound Care

 

$

109,514

 

 

$

107,341

 

 

$

2,173

 

 

 

2

%

Surgical & Sports Medicine

 

 

7,345

 

 

 

6,412

 

 

 

933

 

 

 

15

%

Net revenue

 

$

116,859

 

 

$

113,753

 

 

$

3,106

 

 

 

3

%

 

Net revenue for the third quarter of 2022 was $116.9 million, compared to $113.8 million for the third quarter of 2021, an increase of $3.1 million, or 3%. The increase in net revenue was driven by an increase of $2.2 million, or 2% in Advanced Wound Care products and an increase of $0.9 million, or 15% in net revenue of Surgical & Sports Medicine products.

 

Gross profit for the third quarter of 2022 was $90.7 million, or 78% of net revenue, compared to $87.6 million or 77% of net revenue for the third quarter of 2021, an increase of $3.1 million, or 4%.

 

Operating expenses for the third quarter of 2022 were $88.9 million compared to $71.3 million for the third quarter of 2021, an increase of $17.6 million, or 25%. R&D expense was $9.6 million for the third quarter of 2022, compared to $9.0 million in the third quarter of 2021, an increase of $0.6 million, or 7%. Selling, general and administrative expenses were $79.3 million, compared to $62.4 million in the third quarter of 2021, an increase of $17.0 million, or 27%.

 

Operating income for the third quarter of 2022 was $1.8 million, compared to an operating income of $16.3 million for the third quarter of 2021, a decrease of $14.5 million, or 89%.

 

Total other expenses, net, for the third quarter of 2022 were $0.6 million, compared to $3.4 million for the third quarter of 2021, a decrease of $2.8 million, or 83%.

 

Net income for the third quarter of 2022 was $0.2 million, or $0.00 per share, compared to a net income of $12.6 million, or $0.09 per share, for the third quarter of 2021, a decrease of $12.4 million of, or $(0.09) per share.

 

Adjusted net income of $5.1 million for the third quarter of 2022, compared to adjusted net income of $15.8 million for the third quarter of 2021, a decrease of $10.7 million, or 68%.

 

Adjusted EBITDA was $11.6 million for the third quarter of 2022, compared to $21.7 million for the third quarter of 2021, a decrease of $10.0 million, or 46%.

 

 


 

As of September 30, 2022, the Company had $108.0 million in cash, cash equivalents and restricted cash and $72.6 million in debt obligations, compared to $114.5 million in cash, cash equivalents and restricted cash and $73.6 million in debt obligations, of which $0.2 million were finance lease obligations as of December 31, 2021.

 

First Nine Months 2022 Results

The following table represents net revenue by product grouping for the nine months ended September 30, 2022 and September 30, 2021, respectively:

 

 

 

Nine Months Ended
September 30,

 

 

Change

 

 

 

2022

 

 

2021

 

 

$

 

 

%

 

 

 

(in thousands, except for percentages)

 

Advanced Wound Care

 

$

313,395

 

 

$

309,485

 

 

$

3,910

 

 

 

1

%

Surgical & Sports Medicine

 

 

21,982

 

 

 

30,016

 

 

 

(8,034

)

 

 

(27

%)

Net revenue

 

$

335,377

 

 

$

339,501

 

 

$

(4,124

)

 

 

(1

%)

 

Net revenue for the nine months ended September 30, 2022 was $335.4 million, compared to $339.5 million for the nine months ended September 30, 2021, a decrease of $4.1 million, or 1%. The decrease in net revenue was driven by a decrease of $8.0 million, or 27% in net revenue of Surgical & Sports Medicine products. This is partially offset by an increase of $3.9 million, or 1% in Advanced Wound Care products.

 

Gross profit for the nine months ended September 30, 2022 is $257.5 million, or 77% of net revenue, compared to $257.9 million, or 76% of net revenue, for the nine months ended September 30, 2021, a decrease of $0.4 million, or 0%.

 

Operating expenses for the nine months ended September 30, 2022 were $243.9 million, compared to $205.4 million for the nine months September 30, 2021, an increase of $38.5 million, or 19%. R&D expense was $28.4 million for the nine months ended September 30, 2022, compared to $22.5 million in the nine months ended September 30, 2021, an increase of $5.9 million, or 26%. Selling, general and administrative expenses were $215.5 million for the nine months ended September 30, 2022, compared to $183.0 million in the nine months ended September 30, 2021, an increase of $32.6 million, or 18%.

 

Operating income for the nine months ended September 30, 2022 was $13.6 million, compared to an operating income of $52.5 million for the nine months ended September 30, 2021, a decrease of $38.9 million, or 74%.

 

Total other expenses, net, for the nine months ended September 30, 2022 were $2.1 million, compared to $8.3 million for the nine months ended September 30, 2021, a decrease of $6.2 million, or 75%.

 

Net income of $8.0 million for the nine months ended September 30, 2022 or $0.06 per share, compared to net income of $43.2 million, or $0.32 per share for the nine months ended September 30, 2021, a decrease of $35.2 million, or $(0.26) per share.

 

Adjusted net income for the nine months ended September 30, 2022 was $17.3 million compared to $47.3 million, for the nine months ended June 30, 2021, a decrease of $30.0 million, or 63%.

 

Adjusted EBITDA of $35.2 million for the nine months ended September 30, 2022, compared to an Adjusted EBITDA of $62.8 million, for the nine months ended September 30, 2021, a decrease of $27.6 million, or 44%.

 


 

Fiscal Year 2022 Guidance:

 

For the year ending December 31, 2022, the Company expects:

 

Net revenue of between $448 million and $465 million, representing a decrease of approximately 1% to 4% year-over-year, and a decrease of 2% to an increase of 2% on an adjusted basis2, as compared to net revenue of $467.4 million3 for the year ended December 31, 2021.
o
The 2022 net revenue guidance range assumes:
Net revenue from Advanced Wound Care products of between $420 million and $432 million, representing a decrease of approximately 2% and remaining flat year-over-year as compared to net revenue of $430.2 million for the year ended December 31, 2021.
Net revenue from Surgical & Sports Medicine products of between $28 million and $33 million, representing a decrease of approximately 11% to 25% year-over-year as compared to net revenue of $37.1 million for the year ended December 31, 2021.
Net revenue from the sale of PuraPly products of between $252 million and $260 million, representing an increase of approximately 27% to 31% year-over-year, as compared to net revenue of $198.1 million for the year ended December 31, 2021.
Net income in a range of approximately $12 million to $20 million and adjusted net income in a range of approximately $22 million to $31 million.
EBITDA in a range of approximately $31 million to $42 million and Adjusted EBITDA in a range of approximately $46 million to $58 million.

 

 

Third Quarter Earnings Conference Call:

 

Financial results for the third fiscal quarter of 2022 will be reported after the market closes on Wednesday, November 9. Management will host a conference call at 5:00 p.m. Eastern Time on November 9th to discuss the results of the quarter, and provide a corporate update with a question and answer session. Those who would like to participate may access the live webcast here, or access the teleconference here. A live webcast of the call will also be provided on the investor relations section of the Company's website at investors.organogenesis.com.

 

For those unable to participate, the webcast will be archived at investors.organogenesis.com for approximately one year.

 

 

 

 

 

2After excluding net revenue from the sale of our ReNu, and NuCel products.

3 Adjusted by $(0.7) million due to the settlement of a GPO fee dispute as reported under the heading “Revision to Previously Issued Financial Statements” in Note 2 to the Unaudited Consolidated Financial Statements included in our Quarterly Report on Form 10-Q filed today with the SEC.

 


 

ORGANOGENESIS HOLDINGS INC.

UNAUDITED CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except share and per share data)

 

 

 

 

September 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

107,250

 

 

$

113,929

 

Restricted cash

 

 

771

 

 

 

599

 

Accounts receivable, net

 

 

93,115

 

 

 

82,460

 

Inventory, net

 

 

24,683

 

 

 

25,022

 

Prepaid expenses and other current assets

 

 

4,707

 

 

 

4,969

 

Total current assets

 

 

230,526

 

 

 

226,979

 

Property and equipment, net

 

 

97,012

 

 

 

79,160

 

Intangible assets, net

 

 

22,010

 

 

 

25,673

 

Goodwill

 

 

28,772

 

 

 

28,772

 

Operating lease right-of-use assets, net

 

 

45,369

 

 

 

49,144

 

Deferred tax asset, net

 

 

31,994

 

 

 

31,994

 

Other assets

 

 

1,589

 

 

 

1,537

 

Total assets

 

$

457,272

 

 

$

443,259

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Deferred acquisition consideration

 

$

-

 

 

$

1,436

 

Current portion of term loan

 

 

5,004

 

 

 

2,656

 

Finance lease obligations

 

 

-

 

 

 

200

 

Current portion of operating lease obligations

 

 

12,155

 

 

 

11,785

 

Accounts payable

 

 

37,952

 

 

 

29,339

 

Accrued expenses and other current liabilities

 

 

34,162

 

 

 

37,289

 

Total current liabilities

 

 

89,273

 

 

 

82,705

 

Term loan, net of current portion

 

 

67,600

 

 

 

70,769

 

Operating lease obligations, net of current portion

 

 

42,981

 

 

 

46,893

 

Other liabilities

 

 

1,090

 

 

 

1,557

 

Total liabilities

 

 

200,944

 

 

 

201,924

 

Commitments and contingencies (Note 18)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued

 

 

-

 

 

 

-

 

Common stock, $0.0001 par value; 400,000,000 shares authorized; 131,643,647 and 129,408,740 shares issued; 130,915,099 and 128,680,192 shares outstanding at September 30, 2022 and December 31, 2021, respectively.

 

 

13

 

 

 

13

 

Additional paid-in capital

 

 

309,102

 

 

 

302,155

 

Accumulated deficit

 

 

(52,787

)

 

 

(60,833

)

Total stockholders’ equity

 

 

256,328

 

 

 

241,335

 

Total liabilities and stockholders’ equity

 

$

457,272

 

 

$

443,259

 

 

 

 


 

ORGANOGENESIS HOLDINGS INC. UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands, except share and per share data)

 

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net revenue

 

$

116,859

 

 

$

113,753

 

 

$

335,377

 

 

$

339,501

 

Cost of goods sold

 

 

26,177

 

 

 

26,167

 

 

 

77,909

 

 

 

81,602

 

Gross profit

 

 

90,682

 

 

 

87,586

 

 

 

257,468

 

 

 

257,899

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

79,328

 

 

 

62,369

 

 

 

215,515

 

 

 

182,950

 

Research and development

 

 

9,575

 

 

 

8,953

 

 

 

28,367

 

 

 

22,482

 

Total operating expenses

 

 

88,903

 

 

 

71,322

 

 

 

243,882

 

 

 

205,432

 

Income from operations

 

 

1,779

 

 

 

16,264

 

 

 

13,586

 

 

 

52,467

 

Other expense, net:

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(572

)

 

 

(1,482

)

 

 

(2,039

)

 

 

(6,383

)

Loss on extinguishment of debt

 

 

-

 

 

 

(1,883

)

 

 

-

 

 

 

(1,883

)

Other income (expense), net

 

 

5

 

 

 

(19

)

 

 

(19

)

 

 

(4

)

Total other expense, net

 

 

(567

)

 

 

(3,384

)

 

 

(2,058

)

 

 

(8,270

)

Net income before income taxes

 

 

1,212

 

 

 

12,880

 

 

 

11,528

 

 

 

44,197

 

Income tax expense

 

 

(997

)

 

 

(303

)

 

 

(3,482

)

 

 

(990

)

Net income

 

$

215

 

 

$

12,577

 

 

$

8,046

 

 

$

43,207

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income, per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.00

 

 

$

0.10

 

 

$

0.06

 

 

$

0.34

 

Diluted

 

$

0.00

 

 

$

0.09

 

 

$

0.06

 

 

$

0.32

 

Weighted-average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

130,903,160

 

 

 

128,546,301

 

 

 

129,784,890

 

 

 

128,219,674

 

Diluted

 

 

132,232,954

 

 

 

133,850,216

 

 

 

132,555,265

 

 

 

133,766,004

 

 

 

 

 

 

 


 

ORGANOGENESIS HOLDINGS INC. UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

(amounts in thousands, except share and per share data)

 

 

 

 

Nine Months Ended
September 30,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

8,046

 

 

$

43,207

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation

 

 

4,331

 

 

 

4,010

 

Amortization of intangible assets

 

 

3,662

 

 

 

3,726

 

Amortization of operating lease right-of-use assets

 

 

5,483

 

 

 

4,117

 

Non-cash interest expense

 

 

326

 

 

 

236

 

Deferred interest expense

 

 

428

 

 

 

1,331

 

Provision recorded for doubtful accounts

 

 

855

 

 

 

2,367

 

Loss on disposal of property and equipment

 

 

4,412

 

 

 

1,397

 

Adjustment for excess and obsolete inventories

 

 

7,621

 

 

 

8,045

 

Stock-based compensation

 

 

4,697

 

 

 

2,781

 

Change in fair value of Earnout liability

 

 

-

 

 

 

(3,985

)

Loss on extinguishment of debt

 

 

-

 

 

 

1,883

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(11,510

)

 

 

(20,147

)

Inventory

 

 

(7,282

)

 

 

(9,741

)

Prepaid expenses and other current assets

 

 

1

 

 

 

(98

)

Operating leases

 

 

(5,250

)

 

 

(4,179

)

Accounts payable

 

 

5,261

 

 

 

5,237

 

Accrued expenses and other current liabilities

 

 

(4,061

)

 

 

6,765

 

Other liabilities

 

 

39

 

 

 

(2,922

)

Net cash provided by operating activities

 

 

17,059

 

 

 

44,030

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(23,242

)

 

 

(25,993

)

Net cash used in investing activities

 

 

(23,242

)

 

 

(25,993

)

Cash flows from financing activities:

 

 

 

 

 

 

Repayments under the 2019 Credit Agreement

 

 

-

 

 

 

(70,000

)

Proceeds from term loan under the 2021 Credit Agreement, net of debt discount and issuance cost

 

 

-

 

 

 

73,174

 

Payments of term loan under the 2021 Credit Agreement

 

 

(938

)

 

 

(469

)

Payments of withholding taxes in connection with RSUs vesting

 

 

(648

)

 

 

(737

)

Proceeds from the exercise of stock options

 

 

2,070

 

 

 

2,115

 

Principal repayments of finance lease obligations

 

 

(200

)

 

 

(2,099

)

Payment to extinguish debt

 

 

-

 

 

 

(1,620

)

Payment of deferred acquisition consideration

 

 

(608

)

 

 

(483

)

Net cash used in financing activities

 

 

(324

)

 

 

(119

)

Change in cash, cash equivalents and restricted cash

 

 

(6,507

)

 

 

17,918

 

Cash, cash equivalents, and restricted cash, beginning of period

 

 

114,528

 

 

 

84,806

 

Cash, cash equivalents, and restricted cash, end of period

 

$

108,021

 

 

$

102,724

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Cash paid for interest

 

$

1,787

 

 

$

5,830

 

Cash paid for income taxes

 

$

974

 

 

$

582

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

Purchases of property and equipment included in accounts payable and accrued expenses

 

$

5,547

 

 

$

1,523

 

Right-of-use assets obtained through operating lease obligations

 

$

1,708

 

 

$

30,639

 

Shares issued for deferred acquisition consideration

 

$

828

 

 

$

-

 

 

 

 

 

 

 


 

Non-GAAP Financial Measures

Our management uses financial measures that are not in accordance with generally accepted accounting principles in the United States, or GAAP, in addition to financial measures in accordance with GAAP to evaluate our operating results. These non-GAAP financial measures should be considered supplemental to, and not a substitute for, our reported financial results prepared in accordance with GAAP. Our management uses Adjusted EBITDA and adjusted net income to evaluate our operating performance and trends and make planning decisions. Our management believes Adjusted EBITDA and adjusted net income help identify underlying trends in our business that could otherwise be masked by the effect of the items that we exclude. Accordingly, we believe that Adjusted EBITDA and adjusted net income provide useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and prospects, and allowing for greater transparency with respect to key financial metrics used by our management in its financial and operational decision-making.

The following table presents a reconciliation of GAAP net income to non-GAAP EBITDA and non-GAAP Adjusted EBITDA, for each of the periods presented:

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

(Unaudited) (in thousands)

 

Net income

 

$

215

 

 

$

12,577

 

 

$

8,046

 

 

$

43,207

 

Interest expense, net

 

 

572

 

 

 

1,482

 

 

 

2,039

 

 

 

6,383

 

Income tax expense

 

 

997

 

 

 

303

 

 

 

3,482

 

 

 

990

 

Depreciation

 

 

1,456

 

 

 

1,937

 

 

 

4,331

 

 

 

4,010

 

Amortization

 

 

1,220

 

 

 

1,240

 

 

 

3,662

 

 

 

3,726

 

EBITDA

 

 

4,460

 

 

 

17,539

 

 

 

21,560

 

 

 

58,316

 

Stock-based compensation expense

 

 

1,702

 

 

 

1,041

 

 

 

4,697

 

 

 

2,781

 

Recovery of certain notes receivable from related parties (1)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(179

)

Change in fair value of Earnout (2)

 

 

-

 

 

 

(927

)

 

 

-

 

 

 

(3,985

)

Restructuring charge (3)

 

 

611

 

 

 

1,010

 

 

 

1,518

 

 

 

2,876

 

Loss on extinguishment of debt (4)

 

 

-

 

 

 

1,883

 

 

 

-

 

 

 

1,883

 

Write-off of certain assets (5)

 

 

4,200

 

 

 

1,104

 

 

 

4,200

 

 

 

1,104

 

Facility construction project pause (6)

 

 

632

 

 

 

 

 

 

632

 

 

 

 

Settlement fee (7)

 

 

-

 

 

 

-

 

 

 

2,600

 

 

 

-

 

Adjusted EBITDA

 

$

11,605

 

 

$

21,650

 

 

$

35,207

 

 

$

62,796

 

 

(1)
Amount reflects the collection of certain notes receivable from related parties previously reserved.
(2)
Amounts reflect the change in the fair value of the Earnout liability in connection with the CPN acquisition.
(3)
Amounts reflect employee retention and benefits as well as other exit cost associated with the Company’s restructuring activities.
(4)
Amounts reflect the loss recognized on the extinguishment of the 2019 Credit Agreement upon repayment.
(5)
Amount in 2021 reflects the write-off of certain design and consulting fees previously capitalized related to the construction in progress in one of the Company’s Canton, Massachusetts facilities. Amount in 2022 reflects the disposal of certain equipment related to the same facility.
(6)
Amounts reflect the cancellation fees incurred in connection with the Company’s decision to pause one of its manufacturing facility construction projects.
(7)
Amount reflects the fee the Company agreed to pay to a GPO to settle previously disputed GPO fees.

 

 

 


 

The following table presents a reconciliation of GAAP net income to non-GAAP adjusted net income, for each of the periods presented:

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

(in thousands)

 

 

(in thousands)

 

Net income

 

$

215

 

 

$

12,577

 

 

$

8,046

 

 

$

43,207

 

Amortization

 

 

1,220

 

 

 

1,240

 

 

 

3,662

 

 

 

3,726

 

Recovery of certain notes receivable from related parties (1)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(179

)

Change in fair value of Earnout (2)

 

 

-

 

 

 

(927

)

 

 

-

 

 

 

(3,985

)

Restructuring charge (3)

 

 

611

 

 

 

1,010

 

 

 

1,518

 

 

 

2,876

 

Loss on extinguishment of debt (4)

 

 

-

 

 

 

1,883

 

 

 

-

 

 

 

1,883

 

Write-off of certain assets (5)

 

 

4,200

 

 

 

1,104

 

 

 

4,200

 

 

 

1,104

 

Facility construction project pause (6)

 

 

632

 

 

 

-

 

 

 

632

 

 

 

-

 

Settlement fee (7)

 

 

-

 

 

 

-

 

 

 

2,600

 

 

 

-

 

Tax on above

 

 

(1,781

)

 

 

(1,076

)

 

 

(3,371

)

 

 

(1,355

)

Adjusted net income

 

$

5,097

 

 

$

15,811

 

 

$

17,287

 

 

$

47,277

 

(1)
Amount reflects the collection of certain notes receivable from related parties previously reserved.
(2)
Amounts reflect the change in the fair value of the Earnout liability in connection with the CPN acquisition.
(3)
Amounts reflect employee retention and benefits as well as other exit cost associated with the Company’s restructuring activities.
(4)
Amounts reflect the loss recognized on the extinguishment of the 2019 Credit Agreement upon repayment.
(5)
Amount in 2021 reflects the write-off of certain design and consulting fees previously capitalized related to the construction in progress in one of the Company’s Canton, Massachusetts facilities. Amount in 2022 reflects the disposal of certain equipment related to the same facility.
(6)
Amounts reflect the cancellation fees incurred in connection with the Company’s decision to pause one of its manufacturing facility construction projects.
(7)
Amount reflects the fee the Company agreed to pay 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 December 31, 2022:

 

 

 

Year Ending December 31,

 

 

 

2022L4

 

 

2022H4

 

Net income

 

$

11,900

 

 

$

20,200

 

Interest expense

 

 

2,800

 

 

 

2,800

 

Income tax expense

 

 

5,000

 

 

 

8,600

 

Depreciation

 

 

5,900

 

 

 

5,900

 

Amortization

 

 

4,900

 

 

 

4,900

 

EBITDA

 

$

30,500

 

 

$

42,400

 

Stock-based compensation expense

 

 

6,400

 

 

 

6,400

 

Restructuring charge

 

 

2,100

 

 

 

2,100

 

Write-off of certain assets

 

 

4,200

 

 

 

4,200

 

Facility construction project pause

 

 

632

 

 

 

632

 

Settlement fee

 

 

2,600

 

 

 

2,600

 

Adjusted EBITDA

 

$

46,432

 

 

$

58,332

 

 

 

 

 


 

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 December 31, 2022:

 

 

Year Ending December 31,

 

 

 

2022L4

 

 

2022H4

 

Net income

 

$

11,900

 

 

$

20,200

 

Amortization

 

 

4,900

 

 

 

4,900

 

Restructuring charge