Full Press Release Details
Aziyo Biologics Announces Second Quarter 2022
Financial Results and Recent Business Achievements, Including Robust Revenue Growth and Strengthened Balance Sheet
SILVER SPRING, Md. - August 11, 2022 - Aziyo Biologics,
Inc. (Nasdaq: AZYO), a commercial-stage regenerative medicine company, today provided a business
update and reported financial results for the second quarter June 30, 2022.
"First, I want to thank the outstanding team at Aziyo for another
great performance," said Dr. Randy Mills, CEO. "You make possible everything we do and will accomplish going forward."
Dr. Mills continued, "Since June I have been meeting with our
partners, physicians and Aziyo team members. During this time, three things have become crystal clear to me. One, there exists remarkably
favorable market dynamics for which we have domain expertise. Two, our existing technology platform uniquely enables us to capture this
demand with best-in-class products, including CanGaroo RM, which is currently under review at FDA. And three, we are
well positioned to leverage strategic partnerships to grow quickly and efficiently, better serving our patient's needs."
Second Quarter 2022 Financial
Net sales for the second quarter
of 2022 were $12.6 million, an increase of 3.9%, compared to the second quarter of 2021. Net sales of core products were $9.1 million
in the second quarter of 2022, compared to $10.0 million for the second quarter of 2021, and net sales of non-core products were $3.6
million in the second quarter of 2022, compared to $2.2 million in the second quarter of 2021. Net sales from current products
increased 20.3% in the second quarter of 2022 compared to the corresponding prior year quarter, after excluding second quarter 2021 sales
of $1.7 million from discontinued product FiberCel.
Gross profit for the second quarter
of 2022 was $4.9 million and gross margin was 38.8%, as compared to $5.6 million and 46.2%, respectively, in the corresponding prior-year
period. Gross margin, excluding intangible asset amortization (a measure not presented in accordance with U.S. generally accepted accounting
principles ("GAAP")) was 45.5% for the second quarter of 2022, as compared to 53.1% in the second quarter of 2021. The decline
in gross margin was primarily due to higher net sales of non-core products net sales in the second quarter of 2022, which had lower
Total operating expenses were
$13.1 million for the second quarter of 2022, as compared to $10.2 million in the corresponding prior-year period, representing an increase
of 28.1%. The increase was primarily due to higher stock-based compensation, legal expenses, the Company's CEO transition
and CanGaroo RM development.
Net loss was $9.4 million in
the second quarter of 2022, as compared to $2.4 million in the corresponding period of the prior year. Net loss in the second quarter
of 2021 included non-recurring other income related to forgiveness of $3.0 million of indebtedness under the Paycheck Protection Program
of the CARES Act, as well as a payment to Aziyo of $550,000 in accordance with the terms of a settlement agreement related to a 2015 corporate
Loss per share in the second quarter of 2022 was $0.69 per share, compared
to a loss of $0.23 per share in the second quarter of 2021.
Aziyo's cash balance as
of June 30, 2022, was $16.5 million, and total liquidity including available capacity under the Company's working capital line of
credit was $17.5 million.
On August 10, 2022, the Company
entered into a $25 million credit facility with SWK Holdings. The facility included an initial term loan of $21 million that the Company
intends to use to fund its on-going commercial and product development initiatives and through which it repaid the outstanding balances
under its previous term loan and working capital credit facility. The new facility also provides for an additional term loan of $4 million,
subject to the achievement of specified operational and financial metrics by September 30, 2023. In addition, the loan facility allows
for the establishment of a new asset-based revolving loan facility of up to $8 million.
Guidance for Full Year 2022
Aziyo confirmed its expectation
that total net sales for the full year 2022 will be in the range of $47 million to $50 million. Excluding approximately $4.9 million of
FiberCel sales in 2021, this range represents expected growth of 11% to 18%.
Aziyo will host a conference
call at 4:30 p.m. Eastern Time / 1:30 p.m. Pacific Time on Thursday, August 11, 2022, to discuss its second quarter 2022 financial results,
performance and vision for the future. Individuals interested in listening to the conference call are required to register online.
Participants are required to register at least 15 minutes before the start of the call. A live and archived webcast of the event
and the accompanying presentation materials will be available on the "Investors" section of the Aziyo website at https://investors.aziyo.com/.
About Aziyo Biologics
Aziyo Biologics is a commercial-stage regenerative medicine company
focused on creating the next generation of differentiated products and improving outcomes in patients undergoing surgery, concentrating
on patients receiving implantable medical devices. Since its founding in 2015, the Company has created a portfolio of commercial-stage
products used in cardiovascular, orthopedic, and reconstructive specialties. For more information, visit www.Aziyo.com.
Forward-Looking Statements
This press release contains
forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. All statements contained in this press release that do not relate to matters of historical fact should
be considered forward-looking statements, including statements and information concerning the Company's anticipated financial performance;
possible or assumed future results of operations, including descriptions of the Company's revenues, profitability, outlook, guidance
for the full year 2022 and overall business strategy and expected success; expectations regarding the Company's operational position,
opportunities and deliverables, goals, strategies, priorities and initiatives; and the timing of regulatory clearance and product launch.
Forward-looking statements are based on management's current assumptions and expectations of future events and trends, which affect
or may affect the Company's business, strategy, operations or financial performance, and actual results may differ materially from
those expressed or implied in such statements due to numerous risks and uncertainties. Forward-looking statements are inherently subject
to risks and uncertainties, some of which cannot be predicted or quantified, and other important factors that may cause actual results,
performance or achievements to differ materially from those contemplated or implied in this press release, including, but not limited
to, risks regarding the Company's products and its ability to enhance, expand and develop its products; the impact on the Company's
business of the recall of a single lot of its FiberCel product and the discontinuation of its sales by its distribution partner; the
Company's dependence on its commercial partners; the adverse impacts of COVID-19 or adverse changes in economic conditions; physician
awareness of the distinctive characteristics, and acceptance by the medical community, of the Company's products; the ability to
obtain regulatory approval or other marketing authorizations; and the Company's intellectual property rights, and other important
factors can be found in the "Risk Factors" section of Aziyo's public filings with the Securities and Exchange Commission
("SEC"), including Aziyo's Annual Report on Form 10-K for the year ended December 31, 2021,
as such factors may be updated from time to time in Aziyo's other filings with the SEC, including, Aziyo's Quarterly Report
on Form 10-Q for the quarterly period ended June 30, 2022 to be filed with the SEC, accessible on the SEC's website at www.sec.gov
and the Investor Relations page of Aziyo's website at https://investors.aziyo.com.
Because forward-looking statements are inherently subject to risks and uncertainties, you should not rely on these forward-looking statements
as predictions of future events. Except to the extent required by law, the Company undertakes no obligation to update or review
any estimate, projection, or forward-looking statement.
AZIYO BIOLOGICS, INC.
CONSOLIDATED BALANCE SHEET DATA
(Unaudited, in thousands)
| June 30, 2022 | December 31, 2021 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | 16,511 | $ | 30,428 | ||||
| Accounts receivable, net | 6,646 | 5,996 | ||||||
| Inventory | 9,699 | 9,554 | ||||||
| Prepaid expense and other assets | 1,828 | 1,450 | ||||||
| Total current assets | 34,684 | 47,428 | ||||||
| Property and equipment, net | 1,326 | 1,200 | ||||||
| Intangible assets, net | 16,768 | 18,466 | ||||||
| Other assets | 76 | 76 | ||||||
| Total assets | $ | 52,854 | $ | 67,170 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 12,480 | $ | 10,424 | ||||
| Current portion of long-term debt and revenue interest obligation | 15,809 | 10,809 | ||||||
| Revolving line of credit | 6,452 | 4,763 | ||||||
| Other current liabilities | 8 | 5 | ||||||
| Total current liabilities | 34,749 | 26,001 | ||||||
| Long-term debt | 7,106 | 10,410 | ||||||
| Long-term revenue interest obligation | 11,469 | 16,540 | ||||||
| Deferred revenue and other long-term liabilities | 899 | 698 | ||||||
| Total liabilities | 54,223 | 53,649 | ||||||
| Stockholders' equity (deficit): | ||||||||
| Common stock | 13 | 13 | ||||||
| Additional paid-in capital | 121,256 | 118,599 | ||||||
| Accumulated deficit | (122,638 | ) | (105,091 | ) | ||||
| Total stockholders' equity (deficit) | (1,369 | ) | 13,521 | |||||
| Total liabilities and stockholders' equity | $ | 52,854 | $ | 67,170 |
AZIYO BIOLOGICS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited, in thousands, except share and per share data)
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Net sales | $ | 12,638 | $ | 12,160 | $ | 24,133 | $ | 25,044 | ||||||||
| Cost of goods sold | 7,740 | 6,546 | 14,954 | 13,101 | ||||||||||||
| Gross profit | 4,898 | 5,614 | 9,179 | 11,943 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Sales and marketing | 5,406 | 4,799 | 10,224 | 9,502 | ||||||||||||
| General and administrative | 5,057 | 3,529 | 9,170 | 7,134 | ||||||||||||
| Research and development | 2,617 | 1,881 | 4,889 | 3,601 | ||||||||||||
| Total operating expenses | 13,080 | 10,209 | 24,283 | 20,237 | ||||||||||||
| Loss from operations | (8,182 | ) | (4,595 | ) | (15,104 | ) | (8,294 | ) | ||||||||
| Interest expense | 1,204 | 1,351 | 2,419 | 2,706 | ||||||||||||
| Other (income) expense, net | - | (3,579 | ) | - | (3,579 | ) | ||||||||||
| Loss before provision of income taxes | (9,386 | ) | (2,367 | ) | (17,523 | ) | (7,421 | ) | ||||||||
| Provision for income taxes | 12 | 18 | 24 | 31 | ||||||||||||
| Net loss | (9,398 | ) | (2,385 | ) | (17,547 | ) | (7,452 | ) | ||||||||
| Net loss per share attributable to common stockholders - basic and diluted | $ | (0.69 | ) | $ | (0.23 | ) | $ | (1.29 | ) | $ | (0.73 | ) | ||||
| Weighted average common shares outstanding - basic and diluted | 13,620,196 | 10,228,296 | 13,597,243 | 10,227,240 |
Non-GAAP Financial Measures
This press release presents our gross margin, excluding
intangible asset amortization. We calculate gross margin, excluding intangible asset amortization, as gross profit, excluding amortization
expense relating to intangible assets we acquired in our acquisition of all of the commercial assets of CorMatrix Cardiovascular, Inc.
in 2017, divided by net sales. Gross margin, excluding intangible asset amortization, is a supplemental measure of our performance, is
not defined by or presented in accordance GAAP, has limitations as an analytical tool and should not be considered in isolation or as
an alternative to our GAAP gross margin, gross profit or any other financial performance measure presented in accordance with GAAP. We
present gross margin, excluding intangible asset amortization, because we believe that it provides meaningful supplemental information
regarding our operating performance by removing the impact of amortization expense, which is not indicative of our overall operating performance.