Full Press Release Details
Aziyo Biologics Reports Highest Sales and Gross
Profit in Company History
- All Four Business Segments Achieved Growth
Led by Strong SimpliDerm and CanGaroo Sales -
SPRING, Md., May 10, 2023 - Aziyo Biologics, Inc. (Nasdaq: AZYO) ("Aziyo"), a
company that develops and commercializes biologic products to improve compatibility between medical devices and the patients who need
them, today provided a business update and reported financial results for the first quarter ended March 31, 2023.
Business Highlights:
"Aziyo's record first quarter performance
is a testament to our products, people and plan," said Dr. Randy Mills, President and Chief Executive Officer of Aziyo Biologics.
"The company charged forward with strong results on all fronts, highlighted by the highest quarterly net sales and gross profit
in company history. We also made great progress in the strategic evolution of Aziyo, closing two key partnerships with LeMaitre Vascular
and Sientra, thereby significantly boosting the sales coverage of our cardiovascular and SimpliDerm product lines. Lastly, we met with
the FDA and are executing a plan to deliver the Agency the information it requested in connection with the clearance of CanGaroo RM. Thank
you to the entire Aziyo team for your grit and determination in delivering a great performance."
First Quarter 2023 Financial Results
Net sales for the first quarter of 2023 were $13.1
million, an increase of 14% compared to the first quarter of 2022. Growth was achieved in all four of the Company's major product
categories, led by SimpliDerm and CanGaroo, for which net sales grew 40% and 14%, respectively, versus the first quarter of 2022.
Gross profit for the first quarter of 2023 was
$6.3 million and gross margin was 49%, as compared to $4.3 million and 37%, 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 55% for the first quarter of 2023, as compared to 45% in the first quarter of 2022. The increase in gross margin
was primarily due to efficiency and yield improvements in the Company's Orthobiologics and Women's Health business units.
Total operating expenses were $12.7 million for the first quarter of
2023, as compared to $11.2 million in the corresponding prior-year period.
Net loss was $8.0 million in the first quarter
of 2023, as compared to $8.1 million in the corresponding prior year period. Net loss per share in the first quarter of 2023 was $0.49
per share, as compared to a loss of $0.60 per share in the first quarter of 2022.
Aziyo's cash balance as of March 31,
2023, was $11.8 million.
Aziyo will host a conference call today at 4:30
p.m. Eastern Time / 1:30 p.m. Pacific Time to discuss its first quarter 2023 financial results and performance.
Individuals interested in listening to the conference
call are required to register online. Participants are recommended 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 develops and commercializes biologic products
to improve compatibility between medical devices and the patients who need them. With a growing population in need of implantable technologies,
Aziyo's mission is to humanize medical devices to improve patient outcomes. 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. Forward-looking statements can be identified by words such as "projects," "may,"
"will," "could," "would," "should," "believes," "expects," "anticipates,"
"estimates," "intends," "plans," "potential," "promise" or similar references
to future periods. 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 effectiveness of our products, the ability to expand availability
of our products as a result of our distribution arrangements with LeMaitre Vascular and Sientra, the potential success of our distribution
arrangements with LeMaitre Vascular and Sientra, and our expectations relating to the FDA regulatory process for the CanGaroo RM Antibacterial
Envelope. Forward-looking statements are based on management's current assumptions and expectations of future events and trends,
which affect or may affect our 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 ability to successfully execute or realize the anticipated benefits under our distribution arrangements with LeMaitre
Vascular and Sientra; our inability to generate sufficient revenue to achieve or sustain profitability; adverse changes in economic conditions
and instability and disruption of credit markets; our ability to continue as a going concern; our products and our ability to enhance,
expand, develop and commercialize our product offerings; the impact on our business of the recall of a single lot of our FiberCel product
and the discontinuation of its sales by our distribution partner; our dependence on our commercial partners; physician awareness of the
distinctive characteristics, and acceptance by the medical community, of our products; the ability to obtain regulatory approval or other
marketing authorizations; and our intellectual property rights, and other important factors which 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, 2022, as such factors may be updated from time to time in Aziyo's
other filings with the SEC, including, Aziyo's Quarterly Reports on Form 10-Q, 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. Any forward-looking
statement made by Aziyo in this press release is based only on information currently available and speaks only as of the date on which
it is made. Except as required by applicable law, Aziyo expressly disclaims any obligations to publicly update any forward-looking statements,
whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.
Aziyo Biologics, Inc.
AZIYO BIOLOGICS, INC.
CONSOLIDATED BALANCE SHEET DATA
| Assets | March 31, 2023 | December 31, 2022 | ||||||
| Current assets: | ||||||||
| Cash | $ | 11,789 | $ | 16,989 | ||||
| Accounts receivable, net | 7,334 | 6,830 | ||||||
| Inventory | 11,055 | 10,052 | ||||||
| Receivables of FiberCel litigation costs | 10,921 | 13,813 | ||||||
| Prepaid expense and other assets | 2,367 | 3,015 | ||||||
| Total current assets | 43,466 | 50,699 | ||||||
| Property and equipment, net | 1,488 | 1,403 | ||||||
| Intangible assets, net | 14,220 | 15,069 | ||||||
| Operating lease right-of-use assets, and other | 1,456 | 1,670 | ||||||
| Total assets | $ | 60,630 | $ | 68,841 | ||||
| Liabilities and Stockholders' Deficit | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 15,527 | $ | 15,583 | ||||
| Current portion of long-term debt and revenue interest obligation | 9,678 | 8,990 | ||||||
| Revolving line of credit | - | - | ||||||
| Contingent liability for FiberCel litigation | 15,631 | 17,360 | ||||||
| Current operating lease liabilities and other | 588 | 682 | ||||||
| Total current liabilities | 41,424 | 42,615 | ||||||
| Long-term debt | 24,589 | 24,260 | ||||||
| Long-term revenue interest obligation | 5,750 | 5,916 | ||||||
| Long-term operating lease liabilities | 835 | 956 | ||||||
| Other long-term liabilities | 207 | 127 | ||||||
| Total liabilities | 72,805 | 73,874 | ||||||
| Stockholders' equity (deficit): | ||||||||
| Common stock | 16 | 16 | ||||||
| Additional paid-in capital | 133,771 | 132,939 | ||||||
| Accumulated deficit | (145,962 | ) | (137,988 | ) | ||||
| Total stockholders' equity (deficit) | (12,175 | ) | (5,033 | ) | ||||
| Total liabilities and stockholders' equity | $ | 60,630 | $ | 68,841 |
AZIYO BIOLOGICS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
in thousands, except share and per share data)
| Three months ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Net sales | $ | 13,050 | $ | 11,495 | ||||
| Cost of goods sold | 6,719 | 7,214 | ||||||
| Gross profit | 6,331 | 4,281 | ||||||
| Operating expenses: | ||||||||
| Sales and marketing | 5,356 | 4,818 | ||||||
| General and administrative | 3,679 | 4,025 | ||||||
| Research and development | 1,803 | 2,272 | ||||||
| FiberCel litigation costs | 1,911 | 88 | ||||||
| Total operating expenses | 12,749 | 11,203 | ||||||
| Loss from operations | (6,418 | ) | (6,922 | ) | ||||
| Interest expense | 1,544 | 1,215 | ||||||
| Loss before provision of income taxes | (7,962 | ) | (8,137 | ) | ||||
| Provision for income taxes | 12 | 12 | ||||||
| Net loss | (7,974 | ) | (8,149 | ) | ||||
| Net loss per share - | ||||||||
| basic and diluted | $ | (0.49 | ) | $ | (0.60 | ) | ||
| Weighted average common shares outstanding - | ||||||||
| basic and diluted | 16,149,567 | 13,574,058 |
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.
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. We believe this provides our management
and investors with useful information to facilitate period-to-period comparisons of our operating results. Our management uses this metric
in assessing the health of our business and our operating performance, and we believe investors' understanding of our operating
performance is similarly enhanced by our presentation of this metric.
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. In addition, other companies, including companies in our industry, may use other measures to
evaluate their performance, which could reduce the usefulness of this non-GAAP financial measure as a tool for comparison.
The following table presents a reconciliation
of our gross margin, excluding intangible asset amortization, to the most directly comparable GAAP financial measure, which is our GAAP
gross margin (in thousands).
| Three months ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Net sales | $ | 13,050 | $ | 11,495 | ||||
| Gross profit | 6,331 | 4,281 | ||||||
| Intangible asset amortization expense | 849 | 849 | ||||||
| Gross profit, excluding intangible asset amortization | $ | 7,180 | $ | 5,130 | ||||
| Gross margin | 48.5 | % | 37.2 | % | ||||
| Gross margin percentage, excluding intangible asset amortization | 55.0 | % | 44.6 | % |