Full Press Release Details
MIMEDX Announces Third Quarter 2022 Operating and Financial Results
Third Quarter Net Sales of $67.7 Million Reflect Growth of 7.3%
Introducing Wound & Surgical and Regenerative Medicine Segment Reporting to Highlight Trends Within Each Business Unit
Third Quarter Growth Led by Surgical Recovery with Initial Contributions from
AMNIOEFFECTTM and AXIOFILLTM
Management to Host Conference Call on Wednesday, November 2, 2022, at 5:00 PM ET
MARIETTA, Ga., November 2, 2022 MiMedx Group, Inc. (Nasdaq: MDXG) ( MIMEDX or the Company ), a
transformational placental biologics company, today announced operating and financial results for the third quarter 2022, which ended September 30, 2022.
Todd Newton, MIMEDX interim Chief Executive Officer ( CEO ), commented, The third quarter 2022 represented the first year-over-year growth in
net sales in six quarters and included several important achievements that we expect to build upon. In September, we launched two new products tailored for the Surgical Recovery market,
AXIOFILL and AMNIOEFFECT ; secured reimbursement approval in Japan for our
EPIFIX product; and the first patients in Japan were treated with our product. Also, we made recent progress toward our goal of commencing patient enrollment in our registrational study for
the treatment of knee osteoarthritis.
Mr. Newton continued, However, there is no denying that we must also focus on becoming profitable.
The executive team and I have set goals to continue delivering year-over-year revenue growth, while at the same time generating profitability. We are now forming detailed plans across the organization to realize our goals. Beginning this quarter, we
are reporting our financial results by segment to better highlight the underlying revenue trends, cost structure and progress against the growth and profitability initiatives we are implementing. We clearly have much to do and I look forward to
reporting back to shareholders on these initiatives.
Recent Operating and Financial Highlights:
Key Third Quarter 2022 Financial Metrics
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| (in thousands) | (in thousands) | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Net sales | $ | 67,689 | $ | 63,074 | $ | 193,466 | $ | 191,206 | ||||||||
| Net loss | (8,426 | ) | (2,339 | ) | (29,783 | ) | (12,500 | ) | ||||||||
| EBITDA 1 | (6,097 | ) | 41 | (22,971 | ) | (4,302 | ) | |||||||||
| Adjusted EBITDA 1 | (724 | ) | 7,022 | (3,402 | ) | 15,117 | ||||||||||
| Net loss per common share - basic | $ | (0.09 | ) | $ | (0.04 | ) | $ | (0.31 | ) | $ | (0.15 | ) | ||||
| Net loss per common share - diluted | $ | (0.09 | ) | $ | (0.04 | ) | $ | (0.31 | ) | $ | (0.15 | ) |
MIMEDX operates as two reportable segments: Wound & Surgical and Regenerative Medicine. A summary of the Company s performance for the three
months ended September 30, 2022 and three months ended September 30, 2021 by segment is summarized below (amounts in thousands):
Three Months Ended September 30, 2022
| Wound & Surgical | Regenerative Medicine | Corporate & Other | Consolidated | |||||||||||||
| Net sales | $ | 66,873 | $ | $ | 816 | $ | 67,689 | |||||||||
| Cost of sales | 11,159 | 1,029 | 12,188 | |||||||||||||
| Selling, general and administrative expense | 35,531 | 17,944 | 53,475 | |||||||||||||
| Research and development expense | 1,680 | 4,273 | 5,953 | |||||||||||||
| Amortization of intangible assets | 175 | 175 | ||||||||||||||
| Segment contribution | $ | 18,503 | $ | (4,273 | ) | |||||||||||
| Investigation, restatement and related expense | 3,001 | |||||||||||||||
| Operating loss | $ | (7,103 | ) | |||||||||||||
| Supplemental information | ||||||||||||||||
| Depreciation expense | $ | 451 | $ | 36 | $ | 344 | $ | 831 | ||||||||
| Share-based compensation | $ | 1,945 | $ | 347 | $ | 80 | $ | 2,372 |
Note: Net sales in Corporate & Other reflect the Company s only sales of Dental products, from a contract
under which sales will terminate in 2023.
Three Months Ended September 30, 2021
| Wound & Surgical | Regenerative Medicine | Corporate & Other | Consolidated | |||||||||||||
| Net sales | $ | 62,138 | $ | 76 | $ | 860 | $ | 63,074 | ||||||||
| Cost of sales | 8,924 | 16 | 1,189 | 10,129 | ||||||||||||
| Selling, general and administrative expense | 32,104 | 1,285 | 12,900 | 46,289 | ||||||||||||
| Research and development expense | 1,423 | 2,945 | 4,368 | |||||||||||||
| Amortization of intangible assets | 193 | 193 | ||||||||||||||
| Segment contribution | $ | 19,687 | $ | (4,170 | ) | |||||||||||
| Investigation, restatement and related expense | 3,170 | |||||||||||||||
| Operating loss | $ | (1,075 | ) | |||||||||||||
| Supplemental information | ||||||||||||||||
| Depreciation expense | $ | 511 | $ | 34 | $ | 378 | $ | 923 | ||||||||
| Share-based compensation | $ | 1,435 | $ | 322 | $ | 2,054 | $ | 3,811 |
Note: Net sales in Corporate & Other reflect the Company s only sales of Dental products, from a contract
under which sales will terminate in 2023.
MIMEDX reported net sales for the three months ended September 30, 2022, of $67.7 million, compared to $63.1 million for the three months ended
September 30, 2021, an increase of 7.3%. Growth in net sales was led by demand for the Company s products in the Surgical Recovery market and included contributions from its two newest products, AMNIOEFFECT and AXIOFILL, which launched in
the third quarter of 2022.
Gross Profit and Margin
Gross profit for the three months ended September 30, 2022, was $55.5 million an increase of $2.6 million as compared to the prior year.
Gross margin for the three months ended September 30, 2022, was 82.0% compared to 83.9% for the three months ended September 30, 2021. Gross profit
margins were negatively impacted in the third quarter by lower production levels.
Selling, general and administrative expenses for the three months ended September 30, 2022 were $53.5 million compared to $46.3 million for the
three months ended September 30, 2021. The increase reflects higher commissions and increased levels of travel compared to 2021, which saw lower travel activity due to the COVID-19 pandemic.
Additionally, the third quarter of 2022 included higher personnel costs associated with the severance expense, net of stock forfeitures, related to our former CEO, and consulting expenses related to various market assessments conducted as part of
the Company s strategic planning process.
Research and development expenses were $6.0 million for the three months ended September 30,
2022 compared to $4.4 million for the three months ended September 30, 2021. The increase reflects higher costs associated with our KOA clinical program as well as higher development and testing costs incurred in anticipation and support
of the AMNIOEFFECT and AXIOFILL new product launches.
Investigation, restatement and related expenses for the three months ended September 30, 2022
were $3.0 million compared to $3.2 million for the three months ended September 30, 2021.
Net loss for the three months ended
September 30, 2022, was $8.4 million compared to a net loss of $2.3 million for the three months ended September 30, 2021.
and Cash Equivalents
As of September 30, 2022, the Company had $73.2 million of cash and cash equivalents compared to $87.1 million as
of December 31, 2021 and $72.5 million as of June 30, 2022.
Outlook for Q4:22 and 2022
The Company expects net sales for the fourth quarter 2022 to be in a range of $73 to $76 million, which reflects year over year growth in a range of 8% to
15%. As a result, for the full year 2022, the Company expects net sales to be in a range of $266 to $269 million, which reflects 11% to 12% growth on its 2021 net sales of its continuing portfolio of Advanced Wound Care products.
Conference Call and Webcast
MIMEDX will host a conference call and webcast to review its third quarter 2022 results on Wednesday, November 2, 2022, beginning at 5:00 p.m., Eastern
Time. The call can be accessed using the following information:
U.S. Investors: 877-407-6184
International Investors: 201-389-0877
Conference ID: 13733025
A replay of the webcast will be
available for approximately 30 days on the Company s website at www.mimedx.com following the conclusion of the event.
Important Cautionary
This press release includes forward-looking statements. Statements regarding: (i) future sales or sales growth; (ii) our 2022
financial outlook and expectations for future financial results, including net sales and levels of selling, general and administrative expense; (iii) our expectations regarding the timing of clinical programs and trials; (iv) our
expectations regarding the timing and impact of new product launches; and (v) the effectiveness of amniotic tissue as a therapy for any particular indication or condition. Additional forward-looking statements may be identified by words such as
believe, expect, may, plan, goal, outlook, potential, will, preliminary, and similar expressions, and are based on management s current
beliefs and expectations.
Forward-looking statements are subject to risks and uncertainties, and the Company cautions investors against placing undue
reliance on such statements. Actual results may differ materially from those set forth in the forward-looking statements. Factors that could cause actual results to differ from expectations include: (i) future sales are uncertain and are
affected by competition, access to customers, patient access to healthcare providers, and many other factors; (ii) the status, timing, results and expected results of the Company s clinical trials and planned regulatory submissions, and
our expectations regarding our ability to potentially accelerate the timing of any trial or regulatory submission, depend on a number of factors including favorable trial results, patient access, and our ability to manufacture in accordance with
Current Good Manufacturing Practices ( CGMP ) and appropriate CMC; (iii) the Company may change its plans due to unforeseen circumstances, or delays in analyzing and auditing results, and may delay or alter the timeline for future
trials, analyses, or public announcements; (iv) our access to hospitals and health care provider facilities could be restricted as a result of the ongoing COVID-19 pandemic or other factors; (v) the
results of scientific research are uncertain and may have little or no value; (vi) our ability to sell our products in other countries depends on a number of factors including adequate levels of reimbursement, market acceptance of novel
therapies, and our ability to build and manage a direct sales force or third party distribution relationship; (vii) the effectiveness of amniotic tissue as a therapy for particular indications or conditions is the subject of further scientific
and clinical studies; and (viii) we may alter the timing and amount of planned expenditures for research and development based on the results of clinical trials and other regulatory developments. The Company describes additional risks and
uncertainties in the Risk Factors section of its most recent annual report and quarterly reports filed with the Securities and Exchange Commission. Any forward-looking statements speak only as of the date of this press release and the Company
assumes no obligation to update any forward-looking statement.
MIMEDX is a transformational placental biologics company, developing and distributing placental tissue allografts with patent-protected, proprietary processes
for multiple sectors of healthcare. As a pioneer in placental tissue engineering, we have both a commercial business, focused on addressing the needs of patients with acute and chronic non-healing wounds, and
a promising late-stage pipeline targeted at decreasing pain and improving function for patients with degenerative musculoskeletal conditions. We derive our products from human placental tissues and process these tissues using our proprietary
methods, including the PURION process. We employ Current Good Tissue Practices, Current Good Manufacturing Practices, and terminal sterilization to produce our allografts. MIMEDX has supplied
over two million allografts, through both direct and consignment shipments. For additional information, please visit www.mimedx.com.
Selected Unaudited Financial Information
Condensed Consolidated Balance Sheets
(in thousands) Unaudited
| September 30, 2022 | December 31, 2021 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 73,217 | $ | 87,083 | ||||
| Accounts receivable, net | 40,830 | 40,353 | ||||||
| Inventory | 13,976 | 11,389 | ||||||
| Prepaid expenses | 4,679 | 6,146 | ||||||
| Income tax receivable | 756 | 743 | ||||||
| Other current assets | 2,582 | 2,809 | ||||||
| Total current assets | 136,040 | 148,523 | ||||||
| Property and equipment, net | 7,912 | 9,165 | ||||||
| Right of use asset | 3,728 | 4,696 | ||||||
| Goodwill | 19,976 | 19,976 | ||||||
| Intangible assets, net | 4,992 | 5,383 | ||||||
| Other assets | 150 | 186 | ||||||
| Total assets | $ | 172,798 | $ | 187,929 | ||||
| LIABILITIES, CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS (DEFICIT) EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 8,820 | $ | 7,385 | ||||
| Accrued compensation | 24,090 | 23,595 | ||||||
| Accrued expenses | 10,986 | 9,812 | ||||||
| Other current liabilities | 1,962 | 1,565 | ||||||
| Total current liabilities | 45,858 | 42,357 | ||||||
| Long term debt, net | 48,475 | 48,127 | ||||||
| Other liabilities | 5,491 | 4,869 | ||||||
| Total liabilities | 99,824 | 95,353 | ||||||
| Convertible preferred stock | 92,494 | 92,494 | ||||||
| Total stockholders (deficit) equity | (19,520 | ) | 82 | |||||
| Total liabilities, convertible preferred stock, and stockholders (deficit) equity | $ | 172,798 | $ | 187,929 |
Condensed Consolidated Statements of Operations
(in thousands) Unaudited
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Net sales | $ | 67,689 | $ | 63,074 | $ | 193,466 | $ | 191,206 | ||||||||
| Cost of sales | 12,188 | 10,129 | 33,947 | 32,530 | ||||||||||||
| Gross profit | 55,501 | 52,945 | 159,519 | 158,676 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative | 53,475 | 46,289 | 158,838 | 145,291 | ||||||||||||
| Research and development | 5,953 | 4,368 | 17,429 | 12,770 | ||||||||||||
| Investigation, restatement and related | 3,001 | 3,170 | 8,771 | 8,304 | ||||||||||||
| Amortization of intangible assets | 175 | 193 | 519 | 647 | ||||||||||||
| Operating loss | (7,103 | ) | (1,075 | ) | (26,038 | ) | (8,336 | ) | ||||||||
| Other expense, net | ||||||||||||||||
| Interest expense, net | (1,270 | ) | (963 | ) | (3,566 | ) | (3,806 | ) | ||||||||
| Other expense, net | (1 | ) | (3 | ) | ||||||||||||
| Loss before income tax provision | (8,373 | ) | (2,038 | ) | (29,605 | ) | (12,145 | ) | ||||||||
| Income tax provision expense | (53 | ) | (301 | ) | (178 | ) | (355 | ) | ||||||||
| Net loss | $ | (8,426 | ) | $ | (2,339 | ) | $ | (29,783 | ) | $ | (12,500 | ) | ||||
| Net loss available to common shareholders | $ | (10,096 | ) | $ | (3,913 | ) | $ | (34,667 | ) | $ | (17,039 | ) | ||||
| Net loss per common share - basic | $ | (0.09 | ) | $ | (0.04 | ) | $ | (0.31 | ) | $ | (0.15 | ) | ||||
| Net loss per common share - diluted | $ | (0.09 | ) | $ | (0.04 | ) | $ | (0.31 | ) | $ | (0.15 | ) | ||||
| Weighted average common shares outstanding - basic | 113,448,251 | 110,717,073 | 112,650,713 | 110,136,517 | ||||||||||||
| Weighted average common shares outstanding - diluted | 113,448,251 | 110,717,073 | 112,650,713 | 110,136,517 |
Condensed Consolidated Statements of Cash Flows
(in thousands) Unaudited
| Nine Months Ended September 30, | ||||||||
| 2022 | 2021 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (29,783 | ) | $ | (12,500 | ) | ||
| Adjustments to reconcile net loss to net cash flows (used in) provided by operating activities: | ||||||||
| Share-based compensation | 10,798 | 11,115 | ||||||
| Depreciation | 2,549 | 3,390 | ||||||
| Bad debt expense | 2,817 | |||||||
| Amortization of intangible assets | 519 | 647 | ||||||
| Amortization of deferred financing costs | 348 | 943 | ||||||
| Non-cash lease expenses | 931 | 724 | ||||||
| Accretion of asset retirement obligation | 69 | 57 | ||||||
| (Gain) loss on fixed asset disposal | (17 | ) | 236 | |||||
| Increase (decrease) in cash resulting from changes in: | ||||||||
| Accounts receivable | (3,295 | ) | (1,113 | ) | ||||
| Inventory | (2,586 | ) | (835 | ) | ||||
| Prepaid expenses | 1,467 | 3,527 | ||||||
| Income taxes | (13 | ) | 9,420 | |||||
| Other assets | (287 | ) | 1,990 | |||||
| Accounts payable | 1,090 | (828 | ) | |||||
| Accrued compensation | 495 | 2,085 | ||||||
| Accrued expenses | 1,724 | (16,768 | ) | |||||
| Other liabilities | 905 | (840 | ) | |||||
| Net cash flows (used in) provided by operating activities | (12,269 | ) | 1,250 | |||||
| Cash flows from investing activities: | ||||||||
| Purchases of equipment | (847 | ) | (2,893 | ) | ||||
| Patent application costs | (128 | ) | (263 | ) | ||||
| Proceeds from sale of equipment | 24 | |||||||
| Principal payments from note receivable | 75 | |||||||
| Net cash flows used in investing activities | (951 | ) | (3,081 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Stock repurchased for tax withholdings on vesting of restricted stock | (1,191 | ) | (4,751 | ) | ||||
| Proceeds from exercise of stock options | 574 | 1,404 | ||||||
| Principal payments on finance lease | (29 | ) | (27 | ) | ||||
| Net cash flows used in financing activities | (646 | ) | (3,374 | ) | ||||
| Net change in cash | (13,866 | ) | (5,205 | ) | ||||
| Cash and cash equivalents, beginning of period | 87,083 | 95,812 | ||||||
| Cash and cash equivalents, end of period | $ | 73,217 | $ | 90,607 |
Segment Reporting for the Nine Months Ended September 30, 2022
(in thousands) Unaudited
| Wound & Surgical | Regenerative Medicine | Corporate & Other | Consolidated | |||||||||||||
| Net sales | $ | 191,297 | $ | $ | 2,169 | $ | 193,466 | |||||||||
| Cost of sales | 31,126 | 2,821 | 33,947 | |||||||||||||
| Selling, general and administrative expense | 108,256 | 50,582 | 158,838 | |||||||||||||
| Research and development expense | 6,068 | 11,361 | 17,429 | |||||||||||||
| Amortization of intangible assets | 519 | 519 | ||||||||||||||
| Segment contribution | $ | 45,847 | $ | (11,361 | ) | |||||||||||
| Investigation, restatement and related expense | 8,771 | |||||||||||||||
| Operating loss | $ | (26,038 | ) | |||||||||||||
| Supplemental information | ||||||||||||||||
| Depreciation expense | $ | 1,364 | $ | 120 | $ | 1,065 | $ | 2,549 | ||||||||
| Share-based compensation | $ | 5,609 | $ | 910 | $ | 4,279 | $ | 10,798 |
Segment Reporting for the Nine Months Ended September 30, 2021
(in thousands) Unaudited