Full Press Release Details
Paragon 28 Reports First Quarter 2024 Financial Results
and Reaffirms 2024 Net Revenue Guidance
ENGLEWOOD, CO., May 8, 2024 Paragon 28, Inc. (NYSE: FNA) ( Paragon 28 or Company ), a leading medical device company
exclusively focused on the foot and ankle orthopedic market, today reported financial results for the quarter ended March 31, 2024, and reaffirmed its 2024 net revenue guidance.
First Quarter 2024 Financial Results
We are off to a strong start in 2024 and continue to see
increased surgeon activity in the U.S. and Internationally. Our commercial channel continues to expand across all geographies, and we see a tremendous amount of excitement for the new products we have introduced this year, said Albert DaCosta,
Chairman and Chief Executive Officer. Our focus on innovation and education across all foot and ankle segments has set us up well for continued sustainable growth.
2024 Net Revenue Guidance
The Company reaffirms its
prior 2024 net revenue guidance, and expects net revenue to be $249 million to $259 million, representing 15.1% and 19.7% reported growth compared to 2023.
The Company s 2024 net revenue guidance assumes foreign currency translation rates remain consistent with current foreign currency translation rates.
Webcast and Conference Call Information
will host a conference call to discuss first quarter 2024 financial results on Wednesday, May 8, 2024, at 2:30 p.m. Mountain Time / 4:30 p.m. Eastern Time. Investors interested in listening to the conference call may do so by dialing (833-470-1428) for domestic callers or (404-975-4839) for international callers, using
conference ID: 483904. Live audio of the webcast will be available on the Investors section of the company s website at ir.paragon28.com. The webcast will be archived and available for replay for at least 90 days after the event.
About Paragon 28, Inc.
Based in Englewood, CO., Paragon 28, is a leading medical device company exclusively focused on the foot and ankle orthopedic market and is dedicated to
improving patient lives. From the onset, Paragon 28 has provided innovative orthopedic solutions, procedural approaches and instrumentation that cover a wide range of foot and ankle ailments
including fracture fixation, forefoot, ankle, progressive collapsing foot deformity (PCFD) or flatfoot, Charcot foot and orthobiologics. The Company designs products with both the patient and surgeon in mind, with the goal of improving outcomes,
reducing ailment recurrence and complication rates, and making the procedures simpler, consistent, and reproducible.
Forward Looking Statements
Except for the historical information contained herein, the matters set forth in this press release are forward-looking statements within the meaning
of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to: Paragon 28 s potential to shape a better future for foot and ankle patients, its estimated net revenue for full
year 2024. You are cautioned not to place undue reliance on these forward-looking statements. Forward-looking statements are only predictions based on our current expectations, estimates, and assumptions, valid only as of the date they are made, and
subject to risks and uncertainties, some of which we are not currently aware. Forward-looking statements should not be read as a guarantee of future performance or results and may not necessarily be accurate
indications of the times at, or by, which such performance or results will be achieved. These forward-looking statements are based on Paragon 28 s current expectations and inherently involve significant
risks and uncertainties. Actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties. For a further
description of the risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to Paragon 28 s business in general, see Paragon 28 s current and
future reports filed with the Securities and Exchange Commission (the SEC ), including its Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as updated periodically with
its other filings with the SEC. These forward-looking statements are made as of the date of this press release, and Paragon 28 assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ
from those projected in the forward-looking statements, except as required by law.
Use of Non-GAAP Financial
Measures and Their Limitations
In addition to our results and measures of performance determined in accordance with U.S. GAAP presented in this press
release, we believe that certain non-GAAP financial measures are useful in evaluating and comparing our financial and operational performance over multiple periods, identifying trends affecting our business,
formulating business plans, and making strategic decisions.
Adjusted EBITDA is a key performance measure that our management uses to assess our financial
performance and is also used for internal planning and forecasting purposes. We define Adjusted EBITDA as earnings (loss) before interest expense, income tax expense (benefit), depreciation and amortization, stock-based compensation expense,
employee stock purchase plan expense, non-recurring expenses, and certain other non-cash expenses.
We believe that Adjusted EBITDA, together with a reconciliation to net income, helps identify underlying trends in our business and helps investors make
comparisons between our company and other companies that may have different capital structures, tax rates, or different forms of employee compensation. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others
in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects, and allowing for greater transparency with respect to a key financial metric used by our management in its
financial and operational decision-making. Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider these measures in isolation or as a substitute for analysis of our financial results as reported under U.S.
GAAP. Some of these potential limitations include:
Additionally, we report revenue growth on a constant-currency basis in order to
facilitate period-to-period comparisons of results without regard to the impact of fluctuating foreign currency exchange rates. The term foreign currency exchange rates
refers to the exchange rates used to translate the company s operating results for all countries where the functional currency is not the U.S. dollar into U.S. dollars. Because we are a global company, foreign currency exchange rates used for
translation may have a significant effect on our reported results. References to revenue growth on a constant-currency basis means without the impact of foreign currency exchange rate fluctuations.
The company believes disclosure of constant-currency revenue growth rates is helpful to investors because it facilitates period-to-period comparisons. However, constant-currency revenue growth rates are non-GAAP financial measures and are not meant to be considered as an alternative or
substitute for comparable measures prepared in accordance with GAAP. Constant-currency growth has no standardized meaning prescribed by GAAP and should be read in conjunction with our consolidated financial statements prepared in accordance with
GAAP. We calculate constant-currency growth rates by translating local currency amounts in the current period at actual foreign exchange rates for the prior period.
Because of these and other limitations, you should consider our non-GAAP measures only as supplemental to other
GAAP-based financial measures.
Senior Vice President, Strategy and Investor
PARAGON 28, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, unaudited)
| March 31, 2024 | December 31, 2023 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 58,222 | $ | 75,639 | ||||
| Trade receivables, net of allowance for doubtful accounts of $1,701 and $1,339, respectively | 40,262 | 37,323 | ||||||
| Inventories, net | 104,298 | 98,062 | ||||||
| Income taxes receivable | 597 | 794 | ||||||
| Other current assets | 4,013 | 3,997 | ||||||
| Total current assets | 207,392 | 215,815 | ||||||
| Property and equipment, net | 75,701 | 74,122 | ||||||
| Intangible assets, net | 21,458 | 21,674 | ||||||
| Goodwill | 25,465 | 25,465 | ||||||
| Deferred income taxes | 678 | 705 | ||||||
| Other assets | 3,900 | 2,918 | ||||||
| Total assets | $ | 334,594 | $ | 340,699 | ||||
| LIABILITIES & STOCKHOLDERS EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 29,224 | $ | 21,696 | ||||
| Accrued expenses | 26,823 | 27,781 | ||||||
| Other current liabilities | 909 | 883 | ||||||
| Current maturities of long-term debt | 640 | 640 | ||||||
| Income taxes payable | 450 | 243 | ||||||
| Total current liabilities | 58,046 | 51,243 | ||||||
| Long-term liabilities: | ||||||||
| Long-term debt net, less current maturities | 109,847 | 109,799 | ||||||
| Other long-term liabilities | 1,356 | 1,048 | ||||||
| Deferred income taxes | 231 | 233 | ||||||
| Income taxes payable | 638 | 635 | ||||||
| Total liabilities | 170,118 | 162,958 | ||||||
| Stockholders equity: | ||||||||
| Common stock, $0.01 par value, 300,000,000 shares authorized; 83,858,930 and 83,738,974 shares issued, and 82,945,411 and 82,825,455 shares outstanding as of March 31, 2024 and December 31, 2023, respectively | 828 | 827 | ||||||
| Additional paid in capital | 301,459 | 298,394 | ||||||
| Accumulated deficit | (130,864 | ) | (115,630 | ) | ||||
| Accumulated other comprehensive loss | (965 | ) | 132 | |||||
| Treasury stock, at cost; 913,519 shares as of March 31, 2024 and December 31, 2023 | (5,982 | ) | (5,982 | ) | ||||
| Total stockholders equity | 164,476 | 177,741 | ||||||
| Total liabilities & stockholders equity | $ | 334,594 | $ | 340,699 |
PARAGON 28, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, unaudited)
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Net revenue | $ | 61,082 | $ | 52,036 | ||||
| Cost of goods sold | 12,186 | 8,906 | ||||||
| Gross profit | 48,896 | 43,130 | ||||||
| Operating expenses: | ||||||||
| Research and development costs | 7,584 | 7,049 | ||||||
| Selling, general, and administrative | 54,215 | 43,820 | ||||||
| Total operating expenses | 61,799 | 50,869 | ||||||
| Operating loss | (12,903 | ) | (7,739 | ) | ||||
| Other income (expense): | ||||||||
| Other income (expense), net | 515 | (179 | ) | |||||
| Interest expense, net | (2,622 | ) | (1,205 | ) | ||||
| Total other expense, net | (2,107 | ) | (1,384 | ) | ||||
| Loss before income taxes | (15,010 | ) | (9,123 | ) | ||||
| Income tax expense (benefit) | 224 | (71 | ) | |||||
| Net loss | $ | (15,234 | ) | $ | (9,052 | ) |
PARAGON 28, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | (15,234 | ) | $ | (9,052 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 4,258 | 3,117 | ||||||
| Provision for excess and obsolete inventories | 471 | 293 | ||||||
| Stock-based compensation | 3,088 | 3,182 | ||||||
| Change in fair value | (519 | ) | 80 | |||||
| Other | (785 | ) | 100 | |||||
| Changes in other assets and liabilities, net of acquisitions: | ||||||||
| Accounts receivable | (3,099 | ) | 441 | |||||
| Inventories | (7,044 | ) | (8,435 | ) | ||||
| Accounts payable | 7,441 | 5,592 | ||||||
| Accrued expenses | 194 | (877 | ) | |||||
| Accrued legal settlement | (9,000 | ) | ||||||
| Income tax receivable/payable | 398 | 132 | ||||||
| Other assets and liabilities | (162 | ) | 367 | |||||
| Net cash used in operating activities | (10,993 | ) | (14,060 | ) | ||||
| Cash flows from investing activities | ||||||||
| Purchases of property and equipment | (5,817 | ) | (7,521 | ) | ||||
| Proceeds from sale of property and equipment | 292 | 223 | ||||||
| Purchases of intangible assets | (253 | ) | (254 | ) | ||||
| Net cash used in investing activities | (5,778 | ) | (7,552 | ) | ||||
| Cash flows from financing activities | ||||||||
| Payments on long-term debt | (160 | ) | (197 | ) | ||||
| Payments of debt issuance costs | (7 | ) | ||||||
| Proceeds from issuance of common stock, net of issuance costs | 68,449 | |||||||
| Options exercised | 298 | 1,622 | ||||||
| RSU vesting, taxes paid | (400 | ) | ||||||
| Payments on earnout liability | (1,000 | ) | (500 | ) | ||||
| Net cash (used in) provided by financing activities | (1,262 | ) | 69,367 | |||||
| Effect of exchange rate changes on cash | 616 | (340 | ) | |||||
| Net (decrease) increase in cash | (17,417 | ) | 47,415 | |||||
| Cash at beginning of period | 75,639 | 38,468 | ||||||
| Cash at end of period | $ | 58,222 | $ | 85,883 |
PARAGON 28, INC. AND SUBSIDIARIES
RECONCILIATION OF NET LOSS TO NON-GAAP ADJUSTED EBITDA
(in thousands, unaudited)
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| (in thousands) | ||||||||
| Net loss | $ | (15,234 | ) | $ | (9,052 | ) | ||
| Interest expense, net | 2,622 | 1,205 | ||||||
| Income tax expense (benefit) | 224 | (71 | ) | |||||
| Depreciation and amortization expense | 4,258 | 3,117 | ||||||
| Stock based compensation expense | 3,088 | 3,182 | ||||||
| Employee stock purchase plan expense | 80 | 122 | ||||||
| Change in fair value (1) | (519 | ) | 80 | |||||
| Adjusted EBITDA | $ | (5,481 | ) | $ | (1,417 | ) |
PARAGON 28, INC. AND SUBSIDIARIES
Constant-Currency Revenue Growth
(in thousands, unaudited)
| Three Months Ended March 31, | Change | |||||||||||
| 2024 | 2023 | % | ||||||||||
| Total Consolidated Revenues | ||||||||||||
| As Reported | $ | 61,082 | $ | 52,036 | 17.4 | % | ||||||
| Impact of foreign currency exchange rates | 23 | * | ||||||||||
| Constant-currency net revenues | $ | 61,105 | $ | 52,036 | 17.4 | % | ||||||
| Total International Revenues | ||||||||||||
| As Reported | $ | 10,031 | $ | 7,055 | 42.2 | % | ||||||
| Impact of foreign currency exchange rates | 23 | * | ||||||||||
| Constant-currency net revenues | $ | 10,054 | $ | 7,055 | 42.5 | % |