Record Quarterly Revenues of $23.4
Million Represent a 41% Increase Over Fourth Quarter
2016
Vericel Corporation (NASDAQ:VCEL), a leader in advanced cell
therapies for the sports medicine and severe burn care markets,
today reported financial results and business highlights for the
fourth quarter and year ended December 31, 2017 and full year 2018
financial guidance.
Fourth Quarter 2017 Financial Highlights
- Total net revenues increased 41% to $23.4 million compared to
$16.5 million in the fourth quarter of 2016; excluding license
revenue, net revenue increased 34% to $22.2 million;
- Gross margins of 64% compared to gross margins of 54% in the
fourth quarter of 2016;
- Operating income of $1.2 million, compared to operating loss of
$5.9 million in the fourth quarter of 2016;
- Net income of $0.3 million, or $0.01 per share, compared to net
loss of $6.2 million, or $0.34 per share, in the fourth quarter of
2016; and
- As of December 31, 2017, the company had $26.9 million in cash
compared to $23.0 million in cash at December 31, 2016.
Full Year 2017 Financial Highlights
- Total net revenue increased 18% to $63.9 million compared to
$54.4 million in 2016; excluding license revenue, net revenue
increased 15% to $62.8 million;
- Gross margins of 53% compared to gross margins of 48% in
2016;
- Operating loss of $15.0 million, compared to operating loss of
$19.2 million in 2016; and
- Net loss of $17.3 million, or $0.52 per share, compared to net
loss of $19.6 million, or $1.18 per share, in 2016.
Recent Business HighlightsDuring and since the
fourth quarter of 2017, the company:
- Achieved record fourth quarter revenues and the third straight
quarter of 30% or greater revenue growth versus the same quarter of
the prior year;
- Trained approximately 600 surgeons on the MACI® (autologous
cultured chondrocytes on porcine collage membrane) surgical
procedure to date;
- Increased MACI biopsies 48% in the fourth quarter of 2017
compared to the same period in 2016, the second consecutive quarter
with over 40% growth versus the same quarter of the prior
year;
- Expanded the MACI sales force from 28 to 40 sales
territories;
- Achieved significant growth in burn centers utilizing Epicel®
(cultured epidermal autografts), with 40 burn centers utilizing
Epicel in 2017 compared to 20 centers in 2014 when the
business was acquired;
- Launched the MACI “It’s Your Move” campaign with world champion
swimmer, five-time Olympian, best-selling author and recent MACI
patient Dara Torres to empower patients with knee pain to seek
treatment;
- Entered into an expanded $25 million debt facility providing
approximately $8 million of incremental capital; and
- Initiated collaboration with Innovative Cellular Therapeutics
(ICT), receiving $5.1 million for the purchase of warrants and an
upfront license fee.
“We had record fourth quarter revenues and achieved both
positive operating income and net income for the quarter, an
important milestone for the company,” said Nick Colangelo,
president and CEO of Vericel. “Our record fourth quarter
revenues represent the third straight quarter of 30% or higher
revenue growth compared to the same quarter of the prior year, and
this strong growth and margin expansion were driven by both the
accelerating uptake of MACI as well as substantial growth for
Epicel in the quarter.”
Fourth Quarter 2017 ResultsTotal net revenues
for the quarter ended December 31, 2017 were $23.4 million, which
included $16.1 million of MACI net revenue and $6.1 million of
Epicel net revenue, compared to $12.8 million of Carticel®
(autologous cultured chondrocytes) net revenue and $3.8 million of
Epicel net revenue, respectively, in the fourth quarter of 2016.
Total net revenues for the quarter ended December 31, 2017
also included $1.2 million in license revenue related to the
company’s collaboration agreement with ICT. Total net
revenues increased 41% compared to the fourth quarter of 2016, with
MACI revenue increasing 26% and Epicel revenue increasing 62%,
respectively, compared to the same period in 2016. Excluding
license revenue, net revenues increased 34% compared to the fourth
quarter of 2016.
Gross profit for the quarter ended December 31, 2017 was $15.0
million, or 64% of net revenues, compared to $8.9 million, or 54 %
of net revenues, for the fourth quarter of 2016.
Total operating expenses for the quarter ended December 31, 2017
were $13.8 million compared to $14.8 million for the same period in
2016. Operating expenses for the quarter ended December 31,
2016 included $2.6 million from the write-off of commercial use
rights related to Carticel. Given the approval of MACI in
December 2016 and the replacement of Carticel with MACI, it was
determined that the Carticel-related intangible asset was fully
impaired as of December 31, 2016. Excluding the impairment,
the increase in fourth quarter operating expenses is primarily due
to an increase in the MACI sales force during 2017 as well as case
management services to support MACI.
Income from operations for the quarter ended December 31, 2017
was $1.2 million, compared to a loss of $5.9 million for the fourth
quarter of 2016. Material non-cash items impacting the
operating income for the quarter included $0.7 million of
stock-based compensation expense and $0.4 million in depreciation
expense.
Other expense for the quarter ended December 31, 2017 was $0.9
million compared to $0.3 million for the same period in 2016.
The change in other expense for the quarter is primarily due
to the loss on extinguishment of debt associated with the expanded
long-term debt facility which closed in December 2017.
Vericel’s net income for the quarter ended December 31, 2017 was
$0.3 million, or $0.01 per share, compared to a net loss of $6.2
million, or $0.34 per share, for the same period in 2016.
Full Year 2017 ResultsTotal net revenues for
the year ended December 31, 2017 were $63.9 million, including
$43.9 million of Carticel and MACI net revenues, $18.9 million of
Epicel net revenue and $1.2 million in license revenue. Total
net revenues for the year ended December 31, 2017 increased 18%
over 2016.
Gross profit for the year ended December 31, 2017 was $33.6
million, or 53% of net revenues, compared to $26.1 million, or 48%
of net revenues, for the year ended December 31, 2016.
Total operating expenses for the year ended December 31, 2017
were $48.6 million compared to $45.3 million in 2016.
Operating expenses for the year ended December 31, 2016
included $2.6 million from the write-off of commercial use rights
related to Carticel. The increase in operating expenses
during 2017 is primarily due to an increase in the MACI sales
force, expenses for marketing initiatives related to the launch of
MACI, and an increase in case management services to support
MACI.
Loss from operations for the year ended December 31, 2017 was
$15.0 million, compared to a loss of $19.2 million in 2016.
Material non-cash items impacting the operating loss for the
year included $2.7 million of stock-based compensation expense and
$1.6 million in depreciation expense.
Other expense for the year ended December 31, 2017 was $2.3
million compared to $0.3 million in 2016. The change in other
expense is primarily due to the loss on extinguishment of debt
associated with the expanded long-term debt facility which closed
in December 2017 and the interest expense related to the
outstanding revolver and credit term loans.
Vericel’s net loss for the year ended December 31, 2017 was
$17.3 million, or $0.52 per share, compared to a net loss of $19.6
million, or $1.18 per share, in 2016.
As of December 31, 2017, the company had $26.9 million in cash
compared to $23.0 million in cash at December 31, 2016.
Full Year 2018 Financial GuidanceThe company
expects total net product revenues for the full year 2018,
excluding additional license revenue, to be in the range of $73
million to $78 million compared to total net product revenue,
excluding license revenue, of $62.8 million in 2017. The
company also expects the seasonality of MACI and Epicel revenues
for 2018 to be in line with prior years, wherein total
product quarterly revenues were, on average, 21%, 25%, 21%, and 33%
in the first through the fourth quarters.
“We successfully executed the launch of MACI and expanded Epicel
utilization in 2017,” added Mr. Colangelo. “These successes,
combined with a strong balance sheet and an expanded sales force in
2018, have positioned the company for continued strong revenue
growth in the years ahead.”
Conference Call Information Today's conference
call will be available live at 8:30am Eastern time in the Investor
Relations section of the Vericel website at
http://investors.vcel.com/events-presentations. Please access
the site at least 15 minutes prior to the scheduled start time in
order to download the required audio software if necessary.
To participate in the live call by telephone, please call
(877) 312-5881 and reference Vericel Corporation's fourth-quarter
2017 earnings call. If calling from outside the U.S., please
use the international phone number (253) 237-1173.
If you are unable to participate in the live call, the webcast
will be available at
http://investors.vcel.com/events-presentations until March 5,
2019. A replay of the call will also be available until
11:30am (EST) on March 10, 2018 by calling (855) 859-2056, or from
outside the U.S. (404) 537-3406. The conference ID is
4899311.
About Vericel Corporation
Vericel develops, manufactures, and markets advanced cell
therapies for the sports medicine and severe burn care markets.
The company markets two cell therapy products in the United
States. Vericel is marketing MACI® (autologous cultured
chondrocytes on porcine collagen membrane), an autologous
cellularized scaffold product indicated for the repair of
symptomatic, single or multiple full-thickness cartilage defects of
the knee with or without bone involvement in adults. Vericel
is also marketing Epicel® (cultured epidermal autografts), a
permanent skin replacement for the treatment of patients with deep
dermal or full thickness burns greater than or equal to 30% of
total body surface area. For more information, please visit
the company's website at www.vcel.com.
Epicel®, Carticel®, and MACI® are registered trademarks of
Vericel Corporation. © 2018 Vericel Corporation. All
rights reserved.
This document contains forward-looking statements, including,
without limitation, all of the information in the section captioned
“Full Year 2018 Financial Guidance” and statements concerning
anticipated progress, objectives and expectations regarding the
commercial potential of our products and growth in revenues,
intended product development, clinical activity timing, regulatory
progress, and objectives and expectations regarding our company
described herein, all of which involve certain risks and
uncertainties. These statements are often, but are not always, made
through the use of words or phrases such as "anticipates,"
"intends," "estimates," "plans," "expects," "we believe," "we
intend," “guidance,” ”outlook,” “future,” and similar words or
phrases, or future or conditional verbs such as "will," "would,"
"should," "potential," "could," "may," or similar expressions.
Actual results may differ significantly from the expectations
contained in the forward-looking statements. Among the factors that
may result in differences are the inherent uncertainties associated
with our expectations regarding 2018 revenues, our ability to
achieve or sustain profitability, our need to generate significant
sales to become profitable, potential fluctuations in sales volumes
and our results of operations over the course of the year, market
adoption of our products, competitive developments, regulatory
approval requirements, estimating the commercial growth potential
of our products and product candidates and growth in revenues and
improvement in costs, market demand for our products, our ability
to secure consistent reimbursement for our products, changes in
third party coverage and reimbursement, any disruption or delays in
operations at our facilities, our dependence on a limited number of
third party suppliers, our ability to maintain and expand our
network of direct sales employees, clinical trial and product
development activities and our ability to supply or meet customer
demand for our products. These and other significant factors are
discussed in greater detail in Vericel's Annual Report on Form 10-K
for the year ended December 31, 2017, filed with the Securities and
Exchange Commission ("SEC") on March 5, 2018, Quarterly Reports on
Form 10-Q and other filings with the SEC. These forward-looking
statements reflect management's current views and Vericel does not
undertake to update any of these forward-looking statements to
reflect a change in its views or events or circumstances that occur
after the date of this release except as required by law.
vcel-fin
Global Media Contacts:David SchullRusso
Partners LLC+1 212-845-4271 (office)+1 858-717-2310
(mobile)David.schull@russopartnersllc.com
Karen ChaseRusso Partners LLC+1 646-942-5627 (office)+1
917-547-0434 (mobile)Karen.chase@russopartnersllc.com
Investor Contacts: Chad RubinThe Trout
Groupcrubin@troutgroup.com+1 (646) 378-2947
Lee SternThe Trout Grouplstern@troutgroup.com+1 (646)
378-2922
VERICEL CORPORATIONCONDENSED
CONSOLIDATED BALANCE SHEETS(unaudited, amounts in
thousands) |
|
|
|
|
|
December 31, |
|
|
2017 |
|
2016 |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash |
|
$ |
26,862 |
|
|
$ |
22,978 |
|
Accounts
receivable (net of allowance for doubtful accounts of $249 and
$225, respectively) |
|
18,270 |
|
|
17,093 |
|
Inventory |
|
3,793 |
|
|
3,488 |
|
Other
current assets |
|
1,581 |
|
|
1,164 |
|
Total
current assets |
|
50,506 |
|
|
44,723 |
|
Property
and equipment, net |
|
4,071 |
|
|
3,875 |
|
Total
assets |
|
$ |
54,577 |
|
|
$ |
48,598 |
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts
payable |
|
$ |
5,552 |
|
|
$ |
6,535 |
|
Accrued
expenses |
|
5,573 |
|
|
4,523 |
|
Short
term deferred rent |
|
420 |
|
|
3 |
|
Warrant
liabilities |
|
1,014 |
|
|
757 |
|
Current
portion of term loan credit agreement (net of deferred costs of $67
and $110, respectively) |
|
350 |
|
|
779 |
|
Other |
|
181 |
|
|
256 |
|
Total
current liabilities |
|
13,090 |
|
|
12,853 |
|
Revolving
and term loan credit agreement (net of deferred costs of $196 and
$293, respectively) |
|
16,888 |
|
|
9,318 |
|
Long term
deferred rent |
|
2,059 |
|
|
1,687 |
|
Other
long term debt |
|
— |
|
|
32 |
|
Total
liabilities |
|
32,037 |
|
|
23,890 |
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
|
Shareholders’
equity: |
|
|
|
|
Series
B-2 non-voting convertible preferred stock, no par value: shares
authorized and reserved — 39; shares issued and outstanding — 0 and
12, respectively |
|
— |
|
|
38,389 |
|
Common
stock, no par value; shares authorized — 75,000; shares issued
and outstanding — 35,861 and 31,595, respectively |
|
383,020 |
|
|
329,720 |
|
Warrants |
|
397 |
|
|
190 |
|
Accumulated deficit |
|
(360,877 |
) |
|
(343,591 |
) |
Total
shareholders’ equity |
|
22,540 |
|
|
24,708 |
|
Total
liabilities and shareholders’ equity |
|
$ |
54,577 |
|
|
$ |
48,598 |
|
VERICEL CORPORATIONCONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS(unaudited,
amounts in thousands except per share amounts) |
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Year ended December 31, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Product
sales, net |
|
$ |
22,186 |
|
|
$ |
16,523 |
|
|
$ |
62,760 |
|
|
$ |
54,383 |
|
Other |
|
1,164 |
|
|
— |
|
|
1,164 |
|
|
— |
|
Total revenue |
|
$ |
23,350 |
|
|
$ |
16,523 |
|
|
$ |
63,924 |
|
|
$ |
54,383 |
|
Cost of
product sales |
|
8,389 |
|
|
7,591 |
|
|
30,354 |
|
|
28,307 |
|
Gross
profit |
|
14,961 |
|
|
8,932 |
|
|
33,570 |
|
|
26,076 |
|
Research
and development |
|
3,587 |
|
|
4,258 |
|
|
12,944 |
|
|
15,295 |
|
Selling,
general and administrative |
|
10,183 |
|
|
7,925 |
|
|
35,610 |
|
|
27,388 |
|
Loss on
impairment of intangible asset |
|
— |
|
|
2,638 |
|
|
— |
|
|
2,638 |
|
Total
operating expenses |
|
13,770 |
|
|
14,821 |
|
|
48,554 |
|
|
45,321 |
|
Income (loss) from
operations |
|
1,191 |
|
|
(5,889 |
) |
|
(14,984 |
) |
|
(19,245 |
) |
Other income
(expense): |
|
-6 |
|
-6 |
|
|
|
|
(Increase) decrease in fair value of warrants |
|
255 |
|
|
(99 |
) |
|
(257 |
) |
|
— |
|
Loss on
extinguishment of debt |
|
(860 |
) |
|
— |
|
|
(860 |
) |
|
— |
|
Interest
income |
|
8 |
|
|
1 |
|
|
14 |
|
|
8 |
|
Other
(expense) income |
|
(78 |
) |
|
— |
|
|
(92 |
) |
|
(15 |
) |
Interest
expense |
|
(229 |
) |
|
(210 |
) |
|
(1,107 |
) |
|
(314 |
) |
Total
other (expense) income |
|
(904 |
) |
|
(308 |
) |
|
(2,302 |
) |
|
(321 |
) |
Net income (loss) |
|
$ |
287 |
|
|
$ |
(6,197 |
) |
|
$ |
(17,286 |
) |
|
$ |
(19,566 |
) |
|
|
|
|
|
|
|
|
|
Net income (loss) per
share attributable to common shareholders (Basic and Diluted) |
|
$ |
0.01 |
|
|
$ |
(0.34 |
) |
|
$ |
(0.52 |
) |
|
$ |
(1.18 |
) |
Weighted average number
of common shares outstanding (Basic) |
|
35,054 |
|
|
24,329 |
|
|
33,355 |
|
|
23,093 |
|
Weighted average number
of common shares outstanding (Diluted) |
|
36,150 |
|
|
24,329 |
|
|
33,355 |
|
|
23,093 |
|
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