ALACHUA, Fla., Nov. 06, 2019 (GLOBE NEWSWIRE) -- Axogen, Inc. (NASDAQ: AXGN), a global leader in developing and marketing innovative surgical solutions for damage or transection to peripheral nerves, today reported financial results and business highlights for the third quarter ended September 30, 2019.

Third Quarter 2019 Financial Results:

  • Net sales were $28.6 million during the quarter, an increase of 26.1% compared to third quarter 2018 revenue of $22.7 million.
  • Gross margin was 84.2% for the quarter, compared to 84.7% in the third quarter of 2018.
  • Net loss for the quarter was $5.6 million, or $0.14 per share, compared to net loss of $4.1 million, or $0.11 per share in the third quarter of 2018.
  • Adjusted net loss was $2.6 million for the quarter, or $0.07 per share, compared with adjusted net loss of $1.9 million, or $0.05 per share, in the third quarter of 2018.
  • Adjusted EBITDA loss was $3.0 million for the quarter, compared to adjusted EBITDA loss of $2.4 million in the third quarter of 2018.
  • Ended the quarter with $106.1 million in cash, cash equivalents, and investments, compared to $109.1 million at the end of the second quarter of 2019.

“We delivered solid financial results during the quarter, and I am pleased with the progress we are making to improve our commercial operations,” commented Karen Zaderej, chairman, CEO, and president. “We are rebalancing our efforts toward our largest market opportunity, extremity trauma, which represents the most efficient and effective path to sustainable long-term growth. We will continue to invest in the breast reconstruction neurotization and oral and maxillofacial markets and expect to expand these efforts as these nascent markets continue to develop. Additionally, we are slowing the rate of sales force expansion to enable further productivity gains across our existing commercial footprint. We are encouraged with the early results of these initiatives and will continue to evaluate and build upon them throughout the remainder of the year and into 2020.” 

Additional Third Quarter 2019 Operational and Clinical Updates:

  • Increased active accounts in the third quarter to 791, up 16% from 679 a year ago.
  • Ended the quarter with 105 direct sales representatives and 19 independent agencies.
  • Conducted four national education programs in the third quarter, including one OMF specialty program, and expect to conduct 25 programs in total during 2019.
  • Added five peer reviewed clinical publications to our surgical portfolio for a total of 105.
  • Increased the number of presentations at clinical and scientific conferences related to our surgical portfolio by 14, for a total of 44 year-to-date.
  • The following updates were provided by clinical investigators at the 2019 American Society for Surgery of the Hand (ASSH) meeting:
    • Updated data from the RANGER® registry, including 511 upper extremity nerve repairs, demonstrate a consistent meaningful recovery rate for Avance® Nerve Graft of 84%
    • Findings from the MATCHSM study show Avance Nerve Graft had statistically significant improvements as compared to synthetic conduits in three essential areas: the rate of recovery, the overall degree of recovery, and in average recovery of static two-point discrimination, a key sensory measure in the hand

2019 Financial Guidance
The Company continues to expect 2019 revenue will be between $106 million and $110 million. Management reiterates its expectation for gross margin to remain above 80%. Additionally, the Company now expects to have between 105 and 110 direct sales representatives by year-end, compared to its previous estimate of at least 115.

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. We 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 Avive® Soft Tissue Membrane, a processed human umbilical cord intended for surgical use as a resorbable soft tissue barrier. The Axogen portfolio of products is available in the United States, Canada, the United Kingdom, 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 regarding our growth, our 2019 guidance, product development, product potential, 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, 2018, 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 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.  We also use the non-GAAP financial measures of Adjusted Net Loss and Adjusted Net Loss Per Common Share - basic and diluted which excludes non-cash stock compensation expense and loss on extinguishment of debt 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, Chief Financial Officer

  September 30,December 31,     
   2019  2018      
Current assets:         
Cash and cash equivalents $24,555  $24,294      
Restricted Cash  6,000   6,000      
Investments  75,511   92,311      
Accounts receivable, net  15,451   15,321      
Inventory  13,682   11,982      
Prepaid expenses and other  2,144   1,045      
Total current assets  137,343   150,953      
Property and equipment, net  11,673   8,039      
Operating lease right-of-use assets  3,595     -    
Finance lease right-of-use assets  93     -    
Intangible assets  1,488   1,181      
Total assets $154,192  $160,173      
Liabilities and Shareholders’ Equity         
Current liabilities:         
Accounts payable and accrued expenses $14,970  $12,998      
Current maturities of long term obligations  1,773   28      
Contract liabilities, current  14   18      
Total current liabilities  16,757   13,044      
Long-term obligations, net of current maturities and deferred financing fees  2,002   35      
Other long-term liabilties     70      
Contract liabilities  22   42      
Total liabilities  18,781   13,191      
Shareholders’ equity:         
Common stock, $.01 par value; 100,000,000 shares authorized; 39,461,318 and 38,900,875 shares issued and outstanding  395   389      
Additional paid-in capital  307,839   297,319      
Accumulated deficit  (172,823)  (150,726)     
Total shareholders’ equity   135,411   146,982      
Total liabilities and shareholders' equity $154,192  $160,173      
Three and Nine Months ended September 30, 2019 and 2018 
  Three Months Ended Nine Months Ended 
  September 30, September 30, September 30, September 30, 
   2019   2018   2019   2018  
Revenues  $28,564  $22,660  $78,550  $60,504  
  Cost of goods sold  4,510   3,464   12,468   9,282  
  Gross profit  24,054   19,196   66,082   51,222  
Costs and expenses:    84.7%  84.1%  84.7% 
  Sales and marketing  18,245   14,653   53,146   41,149  
  Research and development  4,181   3,307   12,602   7,967  
  General and administrative  7,740   6,071   24,321   16,751  
Total costs and expenses  30,166   24,031   90,069   65,867  
Loss from operations  (6,112)  (4,835)  (23,987)  (14,645) 
Other income (expense):         
  Interest income  555   727   1,925   884  
  Interest expense  (7)  6   (32)  (1,124) 
  Interest expense – deferred financing costs           (81) 
  Loss on extinguishment of debt           (2,186) 
  Other expense  (7)     (3)  (16) 
Total other expense   541   733   1,890   (2,523) 
Net loss $(5,571) $(4,102) $(22,097) $(17,168) 
Weighted average common shares outstanding – basic and diluted  39,340   38,505   39,151   36,582  
Loss per common share – basic and diluted $(0.14) $(0.11) $(0.56) $(0.47) 
Adjusted net loss - non GAAP  (2,644)  (1,891)  (12,386)  (9,001) 
Adjusted net loss per common share - basic and diluted $(0.07) $(0.05) $(0.32) $(0.25) 
Three and Nine Months ended September 30, 2019 and 2018 
  Three Months Ended Nine Months Ended 
  September 30, September 30, September 30, September 30, 
  2019   2018   2019   2018  
Net loss $(5,571) $(4,102) $(22,097) $(17,168) 
  Depreciation and amortization expense  244   219   757   634  
  Investment income  (555)  (727)  (1,925)  (884) 
  Income tax  (3)     (15)  13  
  Interest expense  7   (6)  32   3,391  
  EBITDA - non GAAP $(5,879) $(4,616) $(23,248) $(14,014) 
  Non cash stock compensation expense  2,395   2,211   7,384   5,981  
  Litigation and related costs  532      2,327   -  
  Adjusted EBITDA - non GAAP $(2,952) $(2,405) $(13,537) $(8,033) 
Net loss $(5,571) $(4,102) $(22,097) $(17,168) 
  Non cash stock compensation expense  2,395   2,211   7,384   5,981  
  Litigation and related costs  532      2,327     
  Loss on extinguishment of debt           2,186  
  Adjusted Net Loss - non GAAP $(2,644) $(1,891) $(12,386) $(9,001) 
Weighted average common shares outstanding – basic and diluted  39,340   38,505   39,151   36,582  
Adjusted net loss per common share - basic and diluted $(0.07) $(0.05) $(0.32) $(0.25) 
Nine Months Ended September 30, 2019 and 2018 
  Common Stock Additional Paid-in Capital Accumulated Deficit Total Shareholders' Equity 
For the Three Months Ended September 30, 2019:         
Balance at June 30, 2019 $393  $304,819  $(167,252) $137,960  
Net loss        (5,571)  (5,571) 
Stock-based compensation     2,397      2,397  
Exercise of stock options and employee stock purchase plan  2   623      625  
Balance at September 30, 2019 $395  $307,839  $(172,823) $135,411  
For the Nine Months Ended September 30, 2019:         
Balance at December 31, 2018 $389  $297,319  $(150,726) $146,982  
Net loss  -   -   (22,097)  (22,097) 
Stock-based compensation  -   7,384   -   7,384  
Exercise of stock options and employee stock purchase plan  6   3,136   -   3,142  
Balance at September 30, 2019 $395  $307,839  $(172,823) $135,411  
For the Three Months Ended September 30, 2018:         
Balance at June 30, 2018 $383  $291,515  $(141,395) $150,503  
Net loss  -   -   (4,102)  (4,102) 
Issuance of common stock  -   -   -   -  
Stock-based compensation  -   2,211   -   2,211  
Exercise of stock options and employee stock purchase plan  4   863   -   867  
Balance at September 30, 2018 $387  $294,589  $(145,497) $149,479  
For the Nine Months Ended September 30, 2018:         
Balance at December 31, 2018 $343  $153,168  $(128,329) $25,182  
Net loss  -   -   (17,168)  (17,168) 
Issuance of common stock  35   132,671   -   132,706  
Stock-based compensation  -   5,981   -   5,981  
Exercise of stock options and employee stock purchase plan  9   2,769   -   2,778  
Balance at September 30, 2018 $387  $294,589  $(145,497) $149,479  
Nine Months ended September 30, 2019 and 2018     
  Nine Months Ended     
  Sept 30, Sept 30,     
   2019   2018      
Cash flows from operating activities:         
Net loss $(22,097) $(17,168)     
Adjustments to reconcile net loss to net cash used in operating activities:         
Depreciation  631   575      
Amortization of right-of-use assets  1,352         
Amortization of intangible assets  89   59      
Amortization of deferred financing costs  -   81      
Loss on extinguishment of debt  -   2,186      
Provision for bad debt  (150)  298      
Provision for inventory write down  (44)  877      
Change in investment gains and losses  (957)  (375)     
Share-based compensation  7,384   5,981      
Change in assets and liabilities:         
Accounts receivable  20   (3,223)     
Inventory  (1,657)  (4,510)     
Prepaid expenses and other  (1,099)  (624)     
Accounts payable and accrued expenses  1,288   3,005      
Operating Lease Obligations  (1,276)        
Cash paid for interest portion of Finance Leases  (3)        
Contract and other liabilities  (23)  (48)     
Net cash used in operating activities  (16,542)  (12,886)     
Cash flows from investing activities:         
Purchase of short-term investments  (104,314)  (103,865)     
Purchase of property and equipment  (3,676)  (6,052)     
Sale/Maturities of short-term investments  122,071   3,500      
Cash payments for intangible assets  (396)  (320)     
Net cash provided by/ (used for) investing activities  13,685   (106,737)     
Cash flows from financing activities:         
Proceeds from the issuance of common stock     132,963      
Cash paid for equity offering     (257)     
Borrowing on revolving loan     26,253      
Payments on revolving loan and prepayment penalties     (30,489)     
Repayments of long term debt and prepayment penalties     (22,503)     
Cash paid for debt portion of finance leases  (24)        
Proceeds from exercise of stock options and warrants  3,142   2,778      
Net cash provided by financing activities  3,118   108,745      
Net increase in cash, cash equivalents and restricted cash  261   (10,878)     
Cash, cash equivalents and restricted cash, beginning of year  30,294   36,507      
Cash, cash equivalents and restricted cash, end of period $30,555  $25,629      
Supplemental disclosures of cash flow activity:         
Cash paid for interest  31   1,322      
Supplemental disclosure of non-cash investing and financing activities         
Acquisition of fixed assets in accounts payable and accrued expenses  684         
Right-of-use asset and operating lease liability  26