Full Press Release Details
MIMEDX Announces Third Quarter 2023 Operating and Financial Results
Third Consecutive Quarter of Net Sales Growth Exceeding 20% Over the Prior Year Period
Raises Full-Year 2023 Net Sales Percentage Growth Outlook to the High Teens
MARIETTA, GA., October 30, 2023 MiMedx Group, Inc. (Nasdaq: MDXG) ( MIMEDX or the Company ), today
announced operating and financial results for the third quarter 2023, which ended September 30, 2023.
Recent Operating and Financial Highlights:
Joseph H. Capper, MIMEDX Chief Executive Officer, commented, We are delighted to report another excellent quarter as the Company continues to execute
across the board - commercially, operationally and financially. Net sales growth exceeded 20%, with an Adjusted EBITDA margin of 21.6% and a $12.5 million increase in our cash balance. Once again, our growth was broad-based, with contributions
from each site-of-service, largely driven by emerging competitive wins and continued uptake in the products we launched in late-2022. Additionally, the Company is
realizing benefits of scale as evidenced by the improvement in our Adjusted EBITDA and Free Cash Flow.2
With the full commercial launch of EPIEFFECT, the latest addition to our market-leading placental- derived allograft portfolio, we look forward to
closing out an excellent 2023. As a result, we now expect our full-year 2023 net sales percentage growth rate to be in the high teens.
the share repurchase of the Company s Series B Shares Preferred Stock ( Series B Shares ), Mr. Capper commented, We greatly appreciate the Hayfin partnership and support of MIMEDX that began in 2020. We view this
transaction as opportunistic, as it eliminates the dividend requirement on the repurchased equity and reduces potential for liquidation pressure upon the future conversion of the balance of Hayfin s Series B Shares.
| Three Months Ended September 30, | ||||||||
| (in thousands) | ||||||||
| 2023 | 2022 | |||||||
| Net sales | $ | 81,712 | $ | 67,689 | ||||
| GAAP Net income (loss) | 8,534 | (8,426 | ) | |||||
| EBITDA | 11,648 | (6,097 | ) | |||||
| Adjusted EBITDA | 17,619 | 2,381 | ||||||
| GAAP Net income (loss) per common share - basic | $ | 0.06 | $ | (0.09 | ) | |||
| GAAP Net income (loss) per common share - diluted | $ | 0.06 | $ | (0.09 | ) | |||
| Adjusted Earnings (loss) Per Share | $ | 0.05 | $ | (0.03 | ) |
reported net sales for the three months ended September 30, 2023 of $81.7 million, compared to $67.7 million for the three months ended September 30, 2022, an increase of 20.7%.
Third quarter net sales growth benefited from strong demand for the Company s Wound & Surgical product offering across all of its sites-of-service, continued uptake of new products launched in the last twelve months, which primarily impacted the hospital channel, and a contribution associated with the
wind-down of a product line related to the end of a contract.
Gross Profit and Margin
Gross profit for the three months ended September 30, 2023, was $66.9 million, an increase of $11.4 million as compared to the prior year
Gross profit margin for the three months ended September 30, 2023, was 81.9% compared to 82.0% for the three months ended September 30,
2022. Third quarter gross profit margin was roughly flat versus the prior year period due to improvements in yield, partially offset by production variances and the unfavorable impact of the product line related to the end of a contract referenced
Selling, general and
administrative expenses for the three months ended September 30, 2023, were $52.6 million, compared to $53.5 million for the three months ended September 30, 2022. The decrease primarily reflects disciplined expense management, more
than offsetting higher commissions associated with increased sales.
Research and development expenses were $3.2 million for the three months ended
September 30, 2023 compared to $6.0 million for the three months ended September 30, 2022. The decrease was primarily driven by the Company s strategic realignment disbanding its Regenerative Medicine business unit announced in
Restructuring expense and investigation, restatement, and related expenses for the three months ended
September 30, 2023 were immaterial. Investigation, restatement and related expenses were $3.0 million for the three months ended September 30, 2022.
Net income for the three months ended September 30, 2023, was $8.5 million, compared to a net loss of $8.4 million for the three months ended
2023, the Company had $81.2 million of cash and cash equivalents, compared to $68.7 million as of June 30, 2023 and $66.0 million as of December 31, 2022. Also as of September 30, 2023, the Company had
$49.0 million in long term debt, essentially flat versus the prior year period.
For the third quarter 2023, the Company generated operating cash
flows of $12.8 million, compared to operating cash flow usage of $1.0 million in the prior year period. Also, for the third quarter 2023, the Company generated Free Cash Flow of $12.2 million, compared to negative Free Cash Flow of
$0.6 million in the prior year period.
On October 27, 2023, MIMEDX repurchased 5,000 of its 100,000 shares of Series B Preferred Stock
outstanding held by Hayfin for a lump sum cash payment of $9.5 million, or $6.13 per common share on an as-converted basis. Under the terms of the transaction, Hayfin has agreed to customary lock-up provisions for the remainder of its MIMEDX equity position including any shares of common stock issued upon conversion of any remaining Series B Shares held by Hayfin for a one-year period following the
Based upon the strong
commercial momentum in the business on a year-to-date basis, MIMEDX expects full year 2023 net sales percentage growth to be in the high teens, driven by continued
demand for the Company s Wound & Surgical product offering across its sites of service, and ongoing uptake of new products launched in the last twelve months.
Additionally, the Company continues to expect Adjusted EBITDA margin in the second half of 2023 to exceed 20%.
Following the $9.5 million Hayfin preferred share repurchase, the Company anticipates cash on the balance sheet at December 31, 2023 to be above
Conference Call and Webcast
MIMEDX will host a conference call and webcast to review its third quarter 2023 results on Monday, October 30, 2023, beginning at 4:30 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: 13741654
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 Statement
This press release includes forward-looking statements. Statements regarding: (i) future sales or sales growth; (ii) our 2023 financial goals and
expectations for future financial results, including levels of net sales, Adjusted EBITDA, Adjusted EBITDA margin, corporate expenses and cash; (iii) our expectations regarding our new products, including EPIEFFECT; and (iv) demand for our
products. 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, the reimbursement environment and many other factors; (ii) the
Company may change its plans due to unforeseen circumstances; (iii) the results of scientific research are uncertain and may have little or no value; (iv) 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; (v) the effectiveness of amniotic tissue as a therapy for
particular indications or conditions is the subject of further scientific and clinical studies; and (vi) 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 pioneer and leader focused on helping humans heal. With more than a decade of helping clinicians manage chronic and other hard-to-heal wounds, MIMEDX is dedicated to providing a leading portfolio of products for applications in the wound care, burn, and surgical sectors of healthcare. The
Company s vision is to be the leading global provider of healing solutions through relentless innovation to restore quality of life. For additional information, please visit www.mimedx.com.
Selected Unaudited Financial Information
Condensed Consolidated Balance Sheets
(in thousands) Unaudited
| September 30, 2023 | December 31, 2022 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 81,164 | $ | 65,950 | ||||
| Accounts receivable, net | 49,005 | 43,084 | ||||||
| Inventory | 19,068 | 13,183 | ||||||
| Prepaid expenses | 2,954 | 8,646 | ||||||
| Other current assets | 2,311 | 3,335 | ||||||
| Total current assets | 154,502 | 134,198 | ||||||
| Property and equipment, net | 7,094 | 7,856 | ||||||
| Right of use asset | 2,441 | 3,400 | ||||||
| Goodwill | 19,441 | 19,976 | ||||||
| Intangible assets, net | 5,395 | 5,852 | ||||||
| Other assets | 149 | 148 | ||||||
| Total assets | $ | 189,022 | $ | 171,430 | ||||
| LIABILITIES, CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS EQUITY (DEFICIT) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 9,170 | $ | 8,847 | ||||
| Accrued compensation | 23,159 | 21,852 | ||||||
| Accrued expenses | 9,444 | 11,024 | ||||||
| Other current liabilities | 1,854 | 1,834 | ||||||
| Total current liabilities | 43,627 | 43,557 | ||||||
| Long term debt, net | 48,966 | 48,594 | ||||||
| Other liabilities | 2,605 | 4,773 | ||||||
| Total liabilities | 95,198 | 96,924 | ||||||
| Convertible preferred stock | 92,494 | 92,494 | ||||||
| Total stockholders equity (deficit) | 1,330 | (17,988 | ) | |||||
| Total liabilities, convertible preferred stock, and stockholders equity (deficit) | $ | 189,022 | $ | 171,430 |
Condensed Consolidated Statements of Operations
(in thousands, except share data) Unaudited
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Net sales | $ | 81,712 | $ | 67,689 | $ | 234,645 | $ | 193,466 | ||||||||
| Cost of sales | 14,790 | 12,188 | 40,792 | 33,947 | ||||||||||||
| Gross profit | 66,922 | 55,501 | 193,853 | 159,519 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative | 52,571 | 53,475 | 156,773 | 158,838 | ||||||||||||
| Research and development | 3,175 | 5,953 | 18,168 | 17,429 | ||||||||||||
| Restructuring | 208 | 3,464 | ||||||||||||||
| Investigation, restatement and related | (38 | ) | 3,001 | 4,652 | 8,771 | |||||||||||
| Amortization of intangible assets | 190 | 175 | 570 | 519 | ||||||||||||
| Operating income (loss) | 10,816 | (7,103 | ) | 10,226 | (26,038 | ) | ||||||||||
| Other expense, net | ||||||||||||||||
| Interest expense, net | (1,680 | ) | (1,270 | ) | (4,864 | ) | (3,566 | ) | ||||||||
| Other expense, net | (11 | ) | (42 | ) | (1 | ) | ||||||||||
| Income (loss) before income tax provision | 9,125 | (8,373 | ) | 5,320 | (29,605 | ) | ||||||||||
| Income tax provision expense | (591 | ) | (53 | ) | (569 | ) | (178 | ) | ||||||||
| Net income (loss) | $ | 8,534 | $ | (8,426 | ) | $ | 4,751 | $ | (29,783 | ) | ||||||
| Net income (loss) available to common shareholders | $ | 6,761 | $ | (10,096 | ) | $ | (433 | ) | $ | (34,667 | ) | |||||
| Net income (loss) per common share - basic | $ | 0.06 | $ | (0.09 | ) | $ | (0.00 | ) | $ | (0.31 | ) | |||||
| Net income (loss) per common share - diluted | $ | 0.06 | $ | (0.09 | ) | $ | (0.00 | ) | $ | (0.31 | ) | |||||
| Weighted average common shares outstanding - basic | 116,298,146 | 113,448,251 | 115,528,067 | 112,650,713 | ||||||||||||
| Weighted average common shares outstanding - diluted | 119,327,709 | 113,448,251 | 115,528,067 | 112,650,713 |
Condensed Consolidated Statements of Cash Flows
(in thousands) Unaudited
| Nine Months Ended September 30, | ||||||||
| 2023 | 2022 | |||||||
| Net cash flows provided by (used in) operating activities | $ | 16,518 | $ | (12,269 | ) | |||
| Net cash flows used in investing activities | (1,674 | ) | (951 | ) | ||||
| Net cash flows provided by (used in) financing activities | 370 | (646 | ) | |||||
| Net change in cash | $ | 15,214 | $ | (13,866 | ) |
Reconciliation of Non-GAAP Measures
In addition to our GAAP results, we provide certain non-GAAP metrics including Earnings Before Interest, Taxes,
Depreciation and Amortization ( EBITDA ), Adjusted EBITDA, related margins, Free Cash Flow, Adjusted Net Income, and Adjusted Earnings Per Share ( Adjusted EPS ). We believe that the presentation of these measures provides
important supplemental information to management and investors regarding our performance. These measurements are not a substitute for GAAP measurements. Company management uses these Non-GAAP measurements as
aids in monitoring our ongoing financial performance from quarter-to-quarter and
year-to-year on a regular basis and for benchmarking against comparable companies.
These non-GAAP financial measures reflect the exclusion of the following items:
EBITDA, Adjusted EBITDA and Adjusted EBITDA margin
EBITDA is intended to provide a measure of the Company s operating performance as it eliminates the effects of financing and capital expenditures. EBITDA
consists of GAAP net loss excluding: (i) depreciation, (ii) amortization of intangibles, (iii) interest expense, net, and (iv) income tax provision. Adjusted EBITDA is intended to provide a normalized view of EBITDA and our broader
business operations that we expect to experience on an ongoing basis by removing certain non-cash items and items that may be irregular, one-time, or non-recurring from EBITDA. This enables us to identify underlying trends in our business that could otherwise be masked by such items. Adjusted EBITDA consists of GAAP net income (loss) excluding:
(i) depreciation, (ii) amortization of intangibles, (iii) interest expense, net, (iv) income tax provision, (v) investigation, restatement and related expenses, (vi) reorganization expenses related to severance charges for
certain officers (vii) expenses related to disbanding of the Regenerative Medicine business unit and (viii) share-based compensation.
reconciliation of GAAP net income (loss) to EBITDA and Adjusted EBITDA appears in the table below (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Net income (loss) | $ | 8,534 | $ | (8,426 | ) | $ | 4,751 | $ | (29,783 | ) | ||||||
| Net margin | 10.4 | % | (12.4 | )% | 2.0 | % | (15.4 | )% | ||||||||
| Non-GAAP Adjustments: | ||||||||||||||||
| Depreciation expense | 653 | 831 | 2,054 | 2,549 | ||||||||||||
| Amortization of intangible assets | 190 | 175 | 570 | 519 | ||||||||||||
| Interest expense, net | 1,680 | 1,270 | 4,864 | 3,566 | ||||||||||||
| Income tax provision expense (benefit) | 591 | 53 | 569 | 178 | ||||||||||||
| EBITDA | 11,648 | (6,097 | ) | 12,808 | (22,971 | ) | ||||||||||
| EBITDA margin | 14.3 | % | (9.0 | )% | 5.5 | % | (11.9 | )% | ||||||||
| Additional Non-GAAP Adjustments | ||||||||||||||||
| Investigation, restatement and related expenses | (38 | ) | 3,001 | 4,652 | 8,771 | |||||||||||
| Share-based compensation | 4,389 | 2,372 | 12,793 | 10,798 | ||||||||||||
| Reorganization expenses | 1,412 | 3,105 | 1,412 | 3,105 | ||||||||||||
| Expenses related to disbanding of Regenerative Medicine business unit | 208 | 5,599 | ||||||||||||||
| Adjusted EBITDA | $ | 17,619 | $ | 2,381 | $ | 37,264 | $ | (297 | ) | |||||||
| Adjusted EBITDA margin | 21.6 | % | 3.5 | % | 15.9 | % | (0.2 | )% |
We are not able to provide a reconciliation of our Adjusted EBITDA margin expectation to the corresponding GAAP measure without
unreasonable effort because of the uncertainty and variability of the nature and amount of the non-recurring and other items that are excluded from such non-GAAP
financial measures. Such adjustments in future periods are generally expected to be similar to the kinds of charges excluded from such non-GAAP financial measures in prior periods. The exclusion of these
charges and costs in future periods could have a significant impact on our non-GAAP financial measures.
Free Cash Flow is intended to provide a measure of our ability to generate cash in excess of capital investments. It provides management
with a view of cash flows which can be used to finance operational and strategic investments.
Free Cash Flow is defined as net cash provided by (used in) operating activities less capital expenditures,
including purchases of equipment.
A reconciliation of GAAP net cash provided by (used in) operating activities to Free Cash Flow appears in the table