Record First Quarter Revenues of $18.0
Million
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
first quarter ended March 31, 2018.
First Quarter 2018 Financial Highlights
- Total net revenues of $18.0 million compared to $9.4 million in
the first quarter of 2017; first quarter 2017 revenues included a
$2.8 million revenue reserve for Carticel® and MACI® related to a
contractual dispute between one of the Company’s pharmacy providers
and a third-party payer;
- Gross margins of 57% compared to gross margins of 24% in the
first quarter of 2017;
- Net loss of $7.7 million, or $0.21 loss per share, which
included warrant-related expense of $2.9 million, compared to net
loss of $9.8 million, or $0.31 per share, in the first quarter of
2017, which included $0.1 million of warrant income;
- Non-GAAP adjusted EBITDA loss of $2.6 million compared to a
loss of $5.9 million in the first quarter of 2017; and
- As of March 31, 2018, the company had $29.8 million in cash
compared to $26.9 million in cash at December 31, 2017.
Recent Business HighlightsDuring and since the
first quarter of 2018, the company:
- Achieved record first quarter revenues and the fourth straight
quarter of 30% or greater revenue growth versus the same quarter of
the prior year;
- Achieved the Company’s first quarter of positive operating cash
flow;
- Deployed the expanded MACI (autologous cultured chondrocytes on
porcine collagen membrane) sales force, which increased from 28 to
40 sales representatives;
- Launched the MACI ‘It’s Your Move’ campaign in partnership with
world champion swimmer, five-time Olympian, and best-selling author
Dara Torres; and
- Announced the publication of results from the Phase 3 SUMMIT
Extension Study in the American Journal of Sports Medicine
demonstrating sustained clinical benefit of MACI out to five
years.
“We had a strong start to 2018 with significant revenue growth
for both MACI and Epicel, and delivered the fourth straight quarter
of 30% or higher revenue growth compared to the same quarter of the
prior year,” said Nick Colangelo, president and CEO of
Vericel. “We also reported significant margin improvements
and generated the Company’s first quarter of positive operating
cash flow as we continue to move our current business towards
sustained profitability.”
First Quarter 2018 ResultsTotal net revenues
for the quarter ended March 31, 2018 were $18.0 million, which
included $12.1 million of MACI net revenue and $6.0 million of
Epicel® (cultured epidermal autografts) net revenue, compared to
$5.0 million of Carticel (autologous cultured chondrocytes) and
MACI net revenue and $4.4 million of Epicel net revenue,
respectively, in the first quarter of 2017. Total net
revenues for the quarter ended March 31, 2017 included a $2.8
million revenue reserve for Carticel and MACI related to a
contractual dispute between one of the Company’s pharmacy providers
and a third-party payer. Total net revenues increased 93%
compared to the first quarter of 2017, with MACI revenue increasing
141% and Epicel revenue increasing 37%, respectively, compared to
the same period in 2017. Excluding the revenue reserve in the
first quarter of 2017, non-GAAP net revenues increased 49%, with
MACI revenue increasing 55% compared to first quarter of 2017.
Gross profit for the quarter ended March 31, 2018 was $10.4
million, or 57% of net revenues, compared to $2.3 million, or 24%
of net revenues, for the first quarter of 2017.
Total operating expenses for the quarter ended March 31, 2018
were $14.7 million compared to $11.9 million for the same period in
2017.
Loss from operations for the quarter ended March 31, 2018 was
$4.3 million, compared to a loss of $9.6 million for the first
quarter of 2017. Material non-cash items impacting the
operating loss for the quarter included $1.3 million of stock-based
compensation expense and $0.4 million in depreciation expense.
Other expense for the quarter ended March 31, 2018 was $3.3
million compared to $0.2 million for the same period in 2017.
The change in other expense for the quarter is primarily due
to a $2.9 million change in the fair value of warrants.
Non-GAAP adjusted EBITDA loss was $2.6 million for the quarter
ended March 31, 2018 compared to a loss of $5.9 million in the same
period in 2017. See table reconciling non-GAAP measures for
more details.
Vericel’s net loss for the quarter ended March 31, 2018 was $7.7
million, or $0.21 per share, compared to a net loss of $9.8
million, or $0.31 per share, for the same period in 2017.
As of March 31, 2018, the company had $29.8 million in cash
compared to $26.9 million in cash at December 31, 2017.
“Our first quarter results demonstrated continued momentum
moving into our second year with MACI on the market and that
investments made in Epicel are continuing to drive additional
utilization,” added Mr. Colangelo. “We believe that an
expanded MACI sales force in 2018, together with patient-focused
marketing initiatives, will further strengthen our position in the
market and build the foundation for 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.cfm. 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 first-quarter 2018
investor conference 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.cfm until May
8, 2019. A replay of the call will also be available until
11:30am (EST) on May 13, 2018 by calling (855) 859-2056, or from
outside the U.S. (404) 537-3406. The conference ID is 1564056.
About Vericel CorporationVericel is a leader in
advanced cell therapies for the sports medicine and severe burn
care markets. The company markets two cell therapy products
in the United States. MACI (autologous cultured chondrocytes
on porcine collagen membrane) is 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. Epicel (cultured
epidermal autografts) is 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.
GAAP v. Non‑GAAP Measures Vericel's reported
earnings are prepared in accordance with generally accepted
accounting principles in the United States, or GAAP, and represent
earnings as reported to the Securities and Exchange Commission.
Vericel has provided in this release financial information
that has not been prepared in accordance with GAAP. Vericel's
management believes that adjusted EBITDA loss described in the
release, or EBITDA loss adjusted for specific items that are
generally not indicative of our core operations, provides
additional information that is useful to investors in understanding
Vericel's underlying performance, business and performance trends,
and helps facilitate period to period comparisons and compare its
financial measures with other companies in Vericel's industry.
However, non-GAAP financial measures that Vericel uses may
differ from measures that other companies may use. Non-GAAP
financial measures are not required to be uniformly applied, are
not audited and should not be considered in isolation or as
substitutes for results prepared in accordance with GAAP.
Epicel®, MACI® and Carticel® are registered trademarks of
Vericel Corporation. © 2018 Vericel Corporation. All rights
reserved.
This document contains forward-looking statements, including,
without limitation, statements concerning anticipated progress,
objectives and expectations regarding the commercial potential of
our products and growth in revenues, 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, competitive developments, 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, 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 RubinSolebury
Troutcrubin@troutgroup.com+1 (646) 378-2947
Lee SternSolebury Troutlstern@troutgroup.com+1 (646)
378-2922
VERICEL
CORPORATIONCONDENSED CONSOLIDATED BALANCE
SHEETS(unaudited, amounts in
thousands)
|
March 31, |
|
December 31, |
|
2018 |
|
2017 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash |
$ |
29,777 |
|
|
$ |
26,862 |
|
Accounts
receivable (net of allowance for doubtful accounts of $315 and
$249, respectively) |
13,162 |
|
|
18,270 |
|
Inventory |
3,905 |
|
|
3,793 |
|
Other
current assets |
1,358 |
|
|
1,581 |
|
Total
current assets |
48,202 |
|
|
50,506 |
|
Property
and equipment, net |
4,207 |
|
|
4,071 |
|
Total
assets |
$ |
52,409 |
|
|
$ |
54,577 |
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
5,768 |
|
|
$ |
5,552 |
|
Accrued
expenses |
4,007 |
|
|
5,573 |
|
Short
term deferred rent |
426 |
|
|
420 |
|
Current
portion of term loan credit agreement (net of deferred costs of $69
and $67, respectively) |
1,597 |
|
|
350 |
|
Warrant
liabilities |
1,921 |
|
|
1,014 |
|
Other |
159 |
|
|
181 |
|
Total
current liabilities |
13,878 |
|
|
13,090 |
|
Revolving
and term loan credit agreement (net of deferred costs of $185 and
$196, respectively) |
15,649 |
|
|
16,888 |
|
Long term
deferred rent |
1,947 |
|
|
2,059 |
|
Total
liabilities |
31,474 |
|
|
32,037 |
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
Shareholders’
equity: |
|
|
|
Common
stock, no par value; shares authorized — 75,000; shares issued
and outstanding — 36,502 and 35,861, respectively |
389,074 |
|
|
383,020 |
|
Warrants |
397 |
|
|
397 |
|
Accumulated deficit |
(368,536 |
) |
|
(360,877 |
) |
Total
shareholders’ equity |
20,935 |
|
|
22,540 |
|
Total
liabilities and shareholders’ equity |
$ |
52,409 |
|
|
$ |
54,577 |
|
|
|
|
VERICEL
CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(unaudited, amounts in thousands except
per share amounts)
|
Three Months Ended March 31, |
|
2018 |
|
2017 |
Product
sales, net |
$ |
18,027 |
|
|
$ |
9,361 |
|
Cost of
product sales |
7,666 |
|
|
7,109 |
|
Gross
profit |
10,361 |
|
|
2,252 |
|
Research
and development |
3,729 |
|
|
3,467 |
|
Selling,
general and administrative |
10,954 |
|
|
8,408 |
|
Total
operating expenses |
14,683 |
|
|
11,875 |
|
Loss from
operations |
(4,322 |
) |
|
(9,623 |
) |
Other income
(expense): |
|
|
|
(Increase) decrease in fair value of warrants |
(2,907 |
) |
|
107 |
|
Foreign
currency translation (loss) |
(44 |
) |
|
(1 |
) |
Interest
income |
— |
|
|
1 |
|
Interest
expense |
(432 |
) |
|
(262 |
) |
Other
income |
46 |
|
|
— |
|
Total
other income (expense) |
(3,337 |
) |
|
(155 |
) |
Net loss |
$ |
(7,659 |
) |
|
$ |
(9,778 |
) |
|
|
|
|
Net loss per share
attributable to common shareholders (Basic and Diluted) |
$ |
(0.21 |
) |
|
$ |
(0.31 |
) |
Weighted average number
of common shares outstanding (Basic and Diluted)
|
36,140 |
|
|
31,896 |
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF REPORTED NET LOSS (GAAP) TO
ADJUSTED EBITDA (NON-GAAP MEASURE) - UNAUDITED |
|
|
|
|
|
|
|
Three Months Ended March 31, |
(In thousands) |
|
2018 |
|
2017 |
Net loss (GAAP) |
|
$ |
(7,659 |
) |
|
$ |
(9,778 |
) |
Change in
fair value of warrants |
|
2,907 |
|
|
(107 |
) |
Revenue
reserve related to a dispute between pharmacy provider and
payer |
|
— |
|
|
2,775 |
|
Stock
compensation expense |
|
1,342 |
|
|
502 |
|
Depreciation and amortization |
|
427 |
|
|
409 |
|
Net
interest expense |
|
432 |
|
|
261 |
|
Adjusted EBITDA
(Non-GAAP) |
|
$ |
(2,551 |
) |
|
$ |
(5,938 |
) |
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