Vericel Corporation (NASDAQ:VCEL), a leader in advanced therapies
for the sports medicine and severe burn care markets, today
reported financial results and business highlights for the third
quarter ended September 30, 2022.
Third Quarter 2022 Financial Highlights
- Total net revenue of $38.6
million
- MACI® net revenue of $31.0 million,
Epicel® net revenue of $7.3 million, and NexoBrid® revenue of $0.2
million
- Gross margin of 65%
- Net loss of $6.6 million, or $0.14
per share
- Non-GAAP adjusted
EBITDA of $3.3 million
- Operating cash
flow of $4.1 million
- As of September 30, 2022,
approximately $133 million in cash and investments, and no
debt
Business Highlights and Updates
- Third-quarter MACI revenue growth of 30% compared to the prior
year and 8% sequential growth versus the prior quarter,
representing the highest quarterly revenue outside of the
seasonally-high fourth quarter since the launch of MACI
- Ninth straight quarter of positive adjusted EBITDA and
operating cash flow
- FDA’s review of NexoBrid BLA is progressing, with inspections
of manufacturing facilities in Taiwan and Israel underway
- Type C meeting with the FDA scheduled for December to discuss
MACI arthroscopic delivery program
“The Company executed well in the third quarter, delivering
strong MACI revenue growth, record third-quarter total revenue, and
continued quarterly profitability and positive operating cash
flow,” said Nick Colangelo, President and CEO of Vericel. “We also
continued to advance important pipeline programs with planned
meetings with the FDA for both the MACI arthroscopic delivery and
ankle development programs, as well as continued pre-launch
activities for the potential launch of NexoBrid, which we believe
positions the Company for continued strong growth in the years
ahead.”
Full-Year 2022 Financial Guidance Update
- Total net revenue expected to be in
the range of $164 to $166 million
- MACI revenue expected to be
approximately $130 to $132 million
- Total burn care revenue, including
Epicel and NexoBrid, expected to be approximately $34 million
- Gross margin expected to be in the
mid-60% range
- Adjusted EBITDA margin in the
mid-teens % range
Third Quarter 2022 ResultsTotal net revenue for
the quarter ended September 30, 2022 increased 12% to $38.6
million, compared to $34.5 million in the third quarter of 2021.
Total net product revenue for the quarter included $31.0 million of
MACI (autologous cultured chondrocytes on porcine collagen
membrane) net revenue and $7.3 million of Epicel (cultured
epidermal autografts) net revenue, compared to $23.9 million of
MACI net revenue and $9.8 million of Epicel net revenue,
respectively, in the third quarter of 2021. Total net revenue for
the quarter also included $0.2 million of revenue related to the
procurement of NexoBrid (concentrate of proteolytic enzymes
enriched in bromelain) by the U.S. Biomedical Advanced Research and
Development Authority (BARDA) for emergency response preparedness,
compared to $0.8 million in the third quarter of 2021.
Gross profit for the quarter ended September 30, 2022 was $25.2
million, or 65% of net revenue, compared to $22.1 million, or 64%
of net revenue, for the third quarter of 2021.
Total operating expenses for the quarter ended September 30,
2022 were $32.0 million, compared to $27.1 million for the same
period in 2021. The increase in operating expenses was primarily
due to an increase in employee expenses, continued investment in
commercialization initiatives and additional stock-based
compensation expense.
Net loss for the quarter ended September 30, 2022 was $6.6
million, or $0.14 per share, compared to $4.9 million, or $0.11 per
share, for the third quarter of 2021.
Non-GAAP adjusted EBITDA for the quarter ended September 30,
2022 was $3.3 million, or 9% of net revenue, compared to $4.3
million, or 12% of net revenue, for the third quarter of 2021. A
table reconciling non-GAAP measures is included in this press
release for reference.
As of September 30, 2022, the Company had approximately $133
million in cash and investments, compared to approximately $129
million as of December 31, 2021, and no debt.
Conference Call Information Today’s conference
call will be available live at 8:30am Eastern Time and can be
accessed through the Investor Relations section of the Vericel
website at http://investors.vcel.com/events-presentations. A slide
presentation with highlights from today’s conference call will be
available on the webcast and in the Investor Relations section of
the Vericel website. 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 by telephone, please
register here to receive dial-in details and your personal
passcode. A replay of the webcast will be available on the Vericel
website until November 9, 2023.
About Vericel CorporationVericel is a leader in
advanced 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. The Company also holds an exclusive
license for North American rights to NexoBrid, a registration-stage
biological orphan product for debridement of severe thermal burns.
For more information, please visit the Company’s website at
www.vcel.com.
GAAP v. Non-GAAP MeasuresVericel’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 certain financial information
that has not been prepared in accordance with GAAP. Vericel’s
management believes that the non-GAAP adjusted EBITDA described in
the release, which includes adjustments 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 comparisons
of its financial measures with other companies in Vericel’s
industry. However, the 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® and MACI® are registered trademarks of Vericel
Corporation. NexoBrid® is a registered trademark of MediWound Ltd.
(MediWound) and is used under license to Vericel Corporation. ©
2022 Vericel Corporation. All rights reserved.
Forward-Looking StatementsVericel cautions you
that all statements other than statements of historical fact
included in this press release that address activities, events or
developments that we expect, believe or anticipate will or may
occur in the future are forward-looking statements. Although we
believe that we have a reasonable basis for the forward-looking
statements contained herein, they are based on current expectations
about future events affecting us and are subject to risks,
assumptions, uncertainties and factors relating to our operations
and business environment, all of which are difficult to predict and
many of which are beyond our control. Our actual results may differ
materially from those expressed or implied by the forward-looking
statements in this press release. These statements are often, but
are not always, made through the use of words or phrases such as
“anticipates,” “intends,” “estimates,” “plans,” “expects,”
“continues,” “believe,” “guidance,” “outlook,” “target,” “future,”
“potential,” “goals” and similar words or phrases, or future or
conditional verbs such as “will,” “would,” “should,” “could,”
“may,” or similar expressions.
Among the factors that could cause actual results to differ
materially from those set forth in the forward-looking statements
include, but are not limited to, uncertainties associated with our
expectations regarding future revenue, growth in revenue, market
penetration for MACI and Epicel, growth in profit, gross margins
and operating margins, the ability to achieve or sustain
profitability, contributions to adjusted EBITDA, the expected
target surgeon audience, potential fluctuations in sales and
volumes and our results of operations over the course of the year,
timing and conduct of clinical trial and product development
activities, likelihood of the FDA’s potential approval of the
NexoBrid BLA resubmission seeking approval for the treatment of
severe burns in the United States, timing and likelihood of the
FDA’s potential approval of the arthroscopic delivery of MACI to
the knee or the use of MACI to treat cartilage defects in the
ankle, the estimate of the commercial growth potential of our
products and product candidates, availability of funding from BARDA
under its agreement with MediWound for use in connection with
NexoBrid development activities, competitive developments, changes
in third-party coverage and reimbursement, our ability to supply or
meet customer demand for our products, negative impacts on the
global economy and capital markets resulting from the conflict in
Ukraine, global geopolitical tensions or record inflation and the
ongoing or future impacts of the COVID-19 pandemic on our business
or the economy generally.
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, 2021, filed with the Securities and Exchange
Commission (SEC) on February 24, 2022, Vericel’s Quarterly Report
on Form 10-Q for the quarter ended September 30, 2022, filed with
the SEC on November 9, 2022, and in other filings with the SEC.
These forward-looking statements reflect our views as of the date
hereof and Vericel does not assume and specifically disclaims any
obligation 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.
Investor Contact: Eric Burnsir@vcel.com+1 (734)
418-4411
Media Contact:Julie Downsmedia@vcel.com
VERICEL
CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited, amounts in thousands, except
per share amounts)
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Product sales, net |
$ |
38,326 |
|
|
$ |
33,718 |
|
|
$ |
111,004 |
|
|
$ |
106,025 |
|
Other revenue |
|
225 |
|
|
|
788 |
|
|
|
667 |
|
|
|
2,568 |
|
Total revenue |
|
38,551 |
|
|
|
34,506 |
|
|
|
111,671 |
|
|
|
108,593 |
|
Cost of product sales |
|
13,318 |
|
|
|
12,408 |
|
|
|
40,132 |
|
|
|
36,600 |
|
Gross profit |
|
25,233 |
|
|
|
22,098 |
|
|
|
71,539 |
|
|
|
71,993 |
|
Research and development |
|
5,046 |
|
|
|
4,284 |
|
|
|
14,698 |
|
|
|
12,363 |
|
Selling, general and administrative |
|
26,975 |
|
|
|
22,775 |
|
|
|
79,984 |
|
|
|
71,625 |
|
Total operating expenses |
|
32,021 |
|
|
|
27,059 |
|
|
|
94,682 |
|
|
|
83,988 |
|
Loss from operations |
|
(6,788 |
) |
|
|
(4,961 |
) |
|
|
(23,143 |
) |
|
|
(11,995 |
) |
Other income (expense): |
|
|
|
|
|
|
|
Interest income |
|
342 |
|
|
|
44 |
|
|
|
578 |
|
|
|
163 |
|
Interest expense |
|
(105 |
) |
|
|
(1 |
) |
|
|
(143 |
) |
|
|
(3 |
) |
Other income (expense) |
|
(5 |
) |
|
|
(13 |
) |
|
|
98 |
|
|
|
44 |
|
Total other income |
|
232 |
|
|
|
30 |
|
|
|
533 |
|
|
|
204 |
|
Loss before income taxes |
|
(6,556 |
) |
|
|
(4,931 |
) |
|
|
(22,610 |
) |
|
|
(11,791 |
) |
Income tax expense |
|
21 |
|
|
|
— |
|
|
|
21 |
|
|
|
215 |
|
Net loss |
$ |
(6,577 |
) |
|
$ |
(4,931 |
) |
|
$ |
(22,631 |
) |
|
$ |
(12,006 |
) |
Net loss per common
share: |
|
|
|
|
|
|
|
Basic |
$ |
(0.14 |
) |
|
$ |
(0.11 |
) |
|
$ |
(0.48 |
) |
|
$ |
(0.26 |
) |
Diluted |
$ |
(0.14 |
) |
|
$ |
(0.11 |
) |
|
$ |
(0.48 |
) |
|
$ |
(0.26 |
) |
Weighted-average common shares
outstanding: |
|
|
|
|
|
|
|
Basic |
|
47,182 |
|
|
|
46,669 |
|
|
|
47,096 |
|
|
|
46,355 |
|
Diluted |
|
47,182 |
|
|
|
46,669 |
|
|
|
47,096 |
|
|
|
46,355 |
|
VERICEL
CORPORATIONRECONCILIATION OF REPORTED NET LOSS
(GAAP) TO ADJUSTED EBITDA (NON-GAAP
MEASURE)(Unaudited, amounts in
thousands)
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net loss |
$ |
(6,577 |
) |
|
$ |
(4,931 |
) |
|
$ |
(22,631 |
) |
|
$ |
(12,006 |
) |
Stock-based compensation expense |
|
9,104 |
|
|
|
8,596 |
|
|
|
29,443 |
|
|
|
26,481 |
|
Depreciation and amortization |
|
1,014 |
|
|
|
679 |
|
|
|
2,942 |
|
|
|
2,185 |
|
Net interest income |
|
(237 |
) |
|
|
(43 |
) |
|
|
(435 |
) |
|
|
(160 |
) |
Income tax expense |
|
21 |
|
|
|
— |
|
|
|
21 |
|
|
|
215 |
|
Adjusted EBITDA
(Non-GAAP) |
$ |
3,325 |
|
|
$ |
4,301 |
|
|
$ |
9,340 |
|
|
$ |
16,715 |
|
VERICEL
CORPORATIONCONDENSED CONSOLIDATED BALANCE
SHEETS(Unaudited, amounts in
thousands)
|
September 30, |
|
December 31, |
|
|
2022 |
|
|
|
2021 |
|
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
65,216 |
|
|
$ |
68,330 |
|
Short-term investments |
|
45,724 |
|
|
|
35,068 |
|
Accounts receivable (net of allowance for doubtful accounts of $115
and $40, respectively) |
|
34,296 |
|
|
|
37,437 |
|
Inventory |
|
16,729 |
|
|
|
13,381 |
|
Other current assets |
|
4,410 |
|
|
|
4,246 |
|
Total current assets |
|
166,375 |
|
|
|
158,462 |
|
Property and equipment, net |
|
15,918 |
|
|
|
13,308 |
|
Restricted cash |
|
— |
|
|
|
211 |
|
Right-of-use assets |
|
42,628 |
|
|
|
45,720 |
|
Long-term investments |
|
21,739 |
|
|
|
25,687 |
|
Other long-term assets |
|
1,357 |
|
|
|
317 |
|
Total assets |
$ |
248,017 |
|
|
$ |
243,705 |
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
8,113 |
|
|
$ |
9,016 |
|
Accrued expenses |
|
13,948 |
|
|
|
14,045 |
|
Current portion of operating lease liabilities |
|
4,902 |
|
|
|
2,950 |
|
Other current liabilities |
|
41 |
|
|
|
41 |
|
Total current liabilities |
|
27,004 |
|
|
|
26,052 |
|
Operating lease liabilities |
|
43,176 |
|
|
|
47,147 |
|
Other long-term liabilities |
|
— |
|
|
|
44 |
|
Total liabilities |
|
70,180 |
|
|
|
73,243 |
|
Total shareholders’ equity |
|
177,837 |
|
|
|
170,462 |
|
Total liabilities and shareholders’ equity |
$ |
248,017 |
|
|
$ |
243,705 |
|
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