Full Press Release Details
AxoGen, Inc. Reports 61% Revenue Growth for the 2014 Fourth Quarter
AXGN fourth quarter revenue reaches $4.79 million and full year 2014 revenue increases 54% to $16.8 million.
Company Introduces full year 2015 revenue guidance to exceed $24 million
ALACHUA, FL March 5, 2015 AxoGen, Inc. (NASDAQ: AXGN), a leading medical technology company focused on the peripheral nerve repair market, reported record revenue of $4.79 million for the fourth quarter ended December 31, 2014 compared to $2.98 million in the year-ago fourth quarter demonstrating the Company s successful execution of its growth strategies.
Our strong fourth quarter revenue growth reflects the market s growing acceptance of our peripheral nerve repair products which is driving increased surgeon adoption of our unique product portfolio Avance Nerve Graft, AxoGuard Nerve Connector and AxoGuard Nerve Protector, commented Karen Zaderej, AxoGen Chief Executive Officer. 2014 was a pivotal year for AxoGen and positions the Company well for continued success in 2015. Entering this year, our strengthened balance sheet provides us with the resources to further invest in our marketing and sales initiatives and we are confident we will continue to successfully execute our strategies and deliver growth.
2014 Fourth Quarter Financial Results
For the fourth quarter ended December 31, 2014, revenues totaled $4.79 million, a 61% increase compared to $2.98 million in the prior year fourth quarter. The Company reported gross margin of 80%, similar to the fourth quarter of 2013. Net loss was $6.5 million, or $(0.35) per share, compared to a net loss of $4.1 million, or $(0.24) per share, for the fourth quarter of 2013. The total net loss includes one-time interest expenses and the write off of non-cash deferred financing charges totaling $2.5 million that were related to the extinguishment of the PDL Royalty Contract. The weighted average common shares outstanding for the 2014 fourth quarter were approximately 18.6 million shares compared to 17.3 million shares in the 2013 fourth quarter.
Full Year Financial Results
For the full year ended December 31, 2014, AxoGen increased revenue 54% to $16.8 million compared with $10.9 million for the comparable period of 2013. Gross margin for the full year expanded to 79.5% compared with 77.7% for the full year ended December 31, 2013. Total operating expenses were $23.2 million compared to $18.1 million for 2013 and the operating loss was $9.8 million versus $9.6 million for the year ago period. Net loss was $17.7 million, or $(0.99) per share, compared to a net loss of $14.6 million, or $(1.08) per share for 2013. The weighted average common shares outstanding for the 2014 full year were approximately 17.7 million shares compared to 13.5 million shares in 2013.
As of December 31, 2014, cash and cash equivalents totaled $8.2 million. Subsequent to the end of the fourth quarter, in February 2015, the Company raised $13.6 million, net of expenses, in a public stock offering increasing its current cash and cash equivalents to over $20 million.
Based on the market s increasing awareness of AxoGen s product portfolio, continued expansion of its sales footprint and current sales pipeline, the Company currently anticipates 2015 full year revenue to exceed $24 million and annual gross margin in the mid to high 70% range.
The Company will host a conference call and webcast for the investment community on Friday, March 6, 2015 at 8:30 AM 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 joining via the webcast, should visit http://axogeninc.equisolvewebcast.com/q4-2014.
Following the conference call, a replay will be available on the Company s website at www.AxoGenInc.com, under Investors.
AxoGen (NASDAQ: AXGN) is a leading medical technology company dedicated to peripheral nerve repair. AxoGen s portfolio of regenerative medicine products is available in the United States, Canada and several other countries and includes Avance Nerve Graft, an off-the-shelf processed human nerve allograft for bridging severed 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 nerves, and AxoGuard Nerve Protector, a porcine submucosa ECM product used to wrap and protect injured peripheral nerves and reinforce the nerve reconstruction while preventing soft tissue attachments.
Avance Nerve Graft is processed in the United States by AxoGen. AxoGuard Nerve Connector and AxoGuard Nerve Protector are manufactured in the United States by Cook Biotech Incorporated, and are distributed worldwide exclusively by AxoGen. AxoGen maintains its corporate offices in Alachua, Florida and is the parent of its wholly owned operating subsidiary, AxoGen Corporation.
Cautionary Statement 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 , 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, market size, product development, product potential, or regulatory activity. The forward-looking statements are subject to risks and uncertainties, which may cause results to differ materially from those set forth in the statements. Forward-looking statements in this release should be evaluated together with the many uncertainties that affect AxoGen s business and its market, particularly those discussed in the risk factors and cautionary statements in AxoGen s filings with the Securities and Exchange Commission. Forward-looking statements are not guarantees 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 law, AxoGen assumes no responsibility to update any forward-looking statements, whether as a result of new information, future events or otherwise.
Lee Robert Bob Johnston, Chief Financial Officer
Bob Jones/Michael Polyviou
646.201.5447/212.850.6020
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, 2014 and 2013
| December 31, | December 31, | ||||||
| 2014 | 2013 | ||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 8,215,791 | $ | 20,069,750 | |||
| Accounts receivable | 2,872,308 | 1,893,699 | |||||
| Inventory | 3,213,620 | 3,398,438 | |||||
| Prepaid expenses and other | 109,369 | 296,719 | |||||
| Total current assets | 14,411,088 | 25,658,606 | |||||
| Property and equipment, net | 619,029 | 381,689 | |||||
| Intangible assets | 577,174 | 570,396 | |||||
| Deferred financing costs | 793,498 | 1,073,579 | |||||
| $ | 16,400,789 | $ | 27,684,270 | ||||
| Liabilities and Shareholders Equity (Deficit) | |||||||
| Current liabilities: | |||||||
| Accounts payable and accrued expenses | $ | 2,431,194 | $ | 2,083,942 | |||
| Current Deferred Revenue | 14,118 | 14,118 | |||||
| Total current liabilities | 2,445,312 | 2,098,060 | |||||
| Note Payable | 25,085,777 | 25,363,695 | |||||
| Long Term Deferred Revenue | 115,380 | 85,882 | |||||
| Total liabilities | 27,646,469 | 27,547,637 | |||||
| Shareholders equity (deficit): | |||||||
| Common stock, $.01 par value; 50,000,000 shares authorized; 19,488,814 and 17,339,561 shares issued and outstanding | 194,888 | 173,395 | |||||
| Additional paid-in capital | 78,675,686 | 72,369,016 | |||||
| Accumulated deficit | (90,116,254 | ) | (72,405,778 | ) | |||
| Total shareholders equity (deficit) | (11,245,680 | ) | 136,633 | ||||
| $ | 16,400,789 | $ | 27,684,270 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended December 31, 2014 and 2013
| 2014 | 2013 | ||||||
| Revenues | $ | 16,817,403 | $ | 10,947,361 | |||
| Cost of goods sold | 3,442,183 | 2,439,818 | |||||
| Gross profit | 13,375,220 | 8,507,543 | |||||
| Costs and expenses: | |||||||
| Sales and marketing | 13,193,795 | 10,259,153 | |||||
| Research and development | 3,033,325 | 2,125,476 | |||||
| General and administrative | 6,948,890 | 5,715,119 | |||||
| Total costs and expenses | 23,176,010 | 18,099,748 | |||||
| Loss from operations | (9,800,790 | ) | (9,592,205 | ) | |||
| Other expense: | |||||||
| Interest expense | (6,812,315 | ) | (4,819,708 | ) | |||
| Interest expense deferred financing costs | (1,100,520 | ) | (178,864 | ) | |||
| Other expense | 3,149 | 33,892 | |||||
| Total other expense | (7,909,686 | ) | (4,964,680 | ) | |||
| Net Loss | (17,710,476 | ) | (14,556,885 | ) | |||
| Net loss available to common shareholders | $ | (17,710,476 | ) | $ | (14,556,885 | ) | |
| Weighted Average Common Shares outstanding basic and diluted | 17,721,742 | 13,499,793 | |||||
| Loss Per Common share basic and diluted | $ | (0.99 | ) | $ | (1.08 | ) |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 2014 and 2013
| 2014 | 2013 | ||||||
| Cash flows from operating activities: | |||||||
| Net loss | $ | (17,710,476 | ) | $ | (14,556,885 | ) | |
| Adjustments to reconcile net loss to net cash used for operating activities: | |||||||
| Depreciation | 153,670 | 79,232 | |||||
| Amortization of intangible assets | 45,224 | 59,100 | |||||
| Loss on impairment | 9,424 | ||||||
| Amortization of deferred financing costs | 199,328 | 178,864 | |||||
| Write off of deferred financing costs | 901,192 | ||||||
| Provision for bad debt | 35,478 | 58,617 | |||||
| Share-based compensation | 956,449 | 671,887 | |||||
| Stock grants | 60,125 | ||||||
| Interest added to note payable | 5,022,082 | 3,783,443 | |||||
| Change in assets and liabilities: | |||||||
| Accounts receivable | (1,014,087 | ) | (902,227 | ) | |||
| Inventory | 184,818 | (247,329 | ) | ||||
| Prepaid expenses and other | 187,350 | (109,463 | ) | ||||
| Accounts payable and accrued expenses | 498,290 | 430,579 | |||||
| Deferred revenue | 29,498 | 100,000 | |||||
| Net cash used for operating activities | (10,451,059 | ) | (10,444,758 | ) | |||
| Cash flows from investing activities: | |||||||
| Purchase of property and equipment | (542,045 | ) | (178,776 | ) | |||
| Acquisition of intangible assets | (52,002 | ) | (65,189 | ) | |||
| Net cash used for investing activities | (594,047 | ) | (243,965 | ) | |||
| Cash flows from financing activities: | |||||||
| Proceeds from issuance of common stock | 1,625,748 | 16,777,746 | |||||
| Repayments of long-term debt | (1,750,000 | ) | |||||
| Debt issuance costs | (820,441 | ) | |||||
| Proceeds from exercise of stock options | 135,840 | 73,326 | |||||
| Net cash provided by financing activities | (808,853 | ) | 16,851,072 | ||||
| Net decrease in cash and cash equivalents | (11,853,959 | ) | 6,162,349 | ||||
| Cash and cash equivalents, beginning of year | 20,069,750 | 13,907,401 | |||||
| Cash and cash equivalents, end of period | $ | 8,215,791 | $ | 20,069,750 | |||
| Supplemental disclosures of cash flow activity: | |||||||
| Cash paid for interest | $ | 3,912,463 | $ | 1,030,219 | |||
| Supplemental disclosure of non-cash investing and financing activities: | |||||||
| Payments of fixed assets in accounts payable | $ | 22,575 | $ | 173,611 | |||
| Payments of long term debt with proceeds from note payable of $25,000,000 and issuance of shares of $3,550,000 | 28,550,000 |