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 second quarter ended June 30, 2023.
“Our strategy to transform Aziyo into a high
growth drug-eluting biomatrix product company continues to move
forward," said Dr. Randy Mills, President and Chief Executive
Officer of Aziyo Biologics. “We are in discussions with several
interested parties to divest our Orthopedic business and have made
significant progress in preparing our resubmission of CanGaroo RM
for 510(k) clearance with the FDA. Furthermore, SimpliDerm had a
strong quarter with sales up 32%, and we are pleased with higher
sales volume of our Cardiovascular segment following our product
distribution agreement with LeMaitre Vascular.”
“Regarding the voluntary recall of our viable
bone matrix products, we continue to work closely with the FDA and
the CDC to fully investigate the matter. Patients are at the center
of everything we do at Aziyo and their safety will continue to be
our foremost priority,” added Dr. Mills.
Second Quarter 2023 Financial Results
Net sales for the second quarter of 2023 were
$10.3 million, compared to $12.6 million in the second quarter of
2022. The decrease was primarily due to the viable bone matrix
recall and market withdrawal in July 2023, which resulted in the
reversal of $3.0 million of second quarter revenue.
While the voluntary recall and market withdrawal
of the Company’s viable bone matrix products negatively impacted
the Orthopedic segment, the Women’s Health segment and its
SimpliDerm product experienced 32% growth in the second quarter of
2023 compared to the corresponding prior-year period. Device
Protection revenue during the second quarter was relatively
consistent compared to the prior-year period, and net sales from
the Cardiovascular segment declined due to the commencement of the
Company’s distribution agreement with LeMaitre Vascular, which
resulted in increased sales volume but at distributor transfer
pricing rather than the previous end-user pricing.
Gross profit for the second quarter of 2023 was
$1.0 million and gross margin was 9.5%, as compared to $4.9 million
and 38.8%, 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 17.8% for the second quarter of 2023, as
compared to 45.5% in the second quarter of 2022. The decline in
gross margin was due to the impact of the viable bone matrix recall
and market withdrawal, which decreased second quarter gross profit
by $5.0 million and gross margin by 35%.
Total operating expenses were $10.1 million for
the second quarter of 2023, as compared to $13.1 million in the
corresponding prior-year period.
Net loss was $10.6 million in the second quarter
of 2023, as compared to $9.4 million in the corresponding prior
year period. Net loss per share in the second quarter of 2023 was
$0.65 per share, as compared to a loss of $0.69 per share in the
second quarter of 2022.
Aziyo’s cash balance as of June 30, 2023, was
$9.3 million.
Conference Call
Aziyo will host a conference call today at 4:30
p.m. Eastern Time / 1:30 p.m. Pacific Time to discuss its second
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 any 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, our expectations regarding the potential
disposition of our Orthopedics business 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 ability to successfully execute or
achieve expected benefits from a divestiture of our Orthopedics
business; 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;
consequences of our recall of a single lot of one of our viable
bone matrix products and market withdrawal of all of our viable
bone matrix products; our dependence on our commercial partners;
the impact of the bankruptcy of Surgalign Holdings, Inc., a
significant customer of the Company, on our future revenues;
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.
Investors:Matt SteinbergFINN
Partnersmatt.steinberg@finnpartners.com
AZIYO BIOLOGICS, INC. |
CONSOLIDATED BALANCE SHEET DATA |
(Unaudited, in thousands) |
|
|
|
|
Assets |
June 30, 2023 |
|
December 31, 2022 |
Current assets: |
|
|
|
Cash |
$ |
9,296 |
|
|
$ |
16,989 |
|
Accounts receivable, net |
|
6,317 |
|
|
|
6,830 |
|
Inventory |
|
9,274 |
|
|
|
10,052 |
|
Receivables of FiberCel litigation costs |
|
8,876 |
|
|
|
13,813 |
|
Prepaid expense and other assets |
|
2,363 |
|
|
|
3,015 |
|
Total current assets |
|
36,126 |
|
|
|
50,699 |
|
|
|
|
|
Property and equipment,
net |
|
1,467 |
|
|
|
1,403 |
|
Intangible assets, net |
|
13,370 |
|
|
|
15,069 |
|
Operating lease right-of-use
assets, and other |
|
1,366 |
|
|
|
1,670 |
|
Total assets |
$ |
52,329 |
|
|
$ |
68,841 |
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Deficit |
|
|
|
Current liabilities: |
|
|
|
Accounts payable and accrued expenses and other current
liabilities |
$ |
17,411 |
|
|
$ |
15,583 |
|
Current portion of long-term debt and revenue interest
obligation |
|
10,366 |
|
|
|
8,990 |
|
Contingent liability for FiberCel litigation |
|
14,470 |
|
|
|
17,360 |
|
Current operating lease liabilities |
|
620 |
|
|
|
682 |
|
Total current liabilities |
|
42,867 |
|
|
|
42,615 |
|
|
|
|
|
Long-term debt |
|
24,927 |
|
|
|
24,260 |
|
Long-term revenue interest
obligation |
|
5,601 |
|
|
|
5,916 |
|
Long-term operating lease
liabilities |
|
711 |
|
|
|
956 |
|
Other long-term
liabilities |
|
351 |
|
|
|
127 |
|
Total liabilities |
|
74,457 |
|
|
|
73,874 |
|
|
|
|
|
Stockholders' equity
(deficit): |
|
|
|
Common stock |
|
16 |
|
|
|
16 |
|
Additional paid-in
capital |
|
134,439 |
|
|
|
132,939 |
|
Accumulated deficit |
|
(156,583 |
) |
|
|
(137,988 |
) |
Total stockholders' equity (deficit) |
|
(22,128 |
) |
|
|
(5,033 |
) |
Total liabilities and stockholders' equity |
$ |
52,329 |
|
|
$ |
68,841 |
|
|
|
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, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
10,296 |
|
|
$ |
12,638 |
|
|
$ |
23,346 |
|
|
$ |
24,133 |
|
|
Cost of goods sold |
|
9,316 |
|
|
|
7,740 |
|
|
|
16,035 |
|
|
|
14,954 |
|
|
Gross profit |
|
980 |
|
|
|
4,898 |
|
|
|
7,311 |
|
|
|
9,179 |
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
Sales and marketing |
|
3,618 |
|
|
|
5,406 |
|
|
|
8,974 |
|
|
|
10,224 |
|
|
General and administrative |
|
4,005 |
|
|
|
4,711 |
|
|
|
7,684 |
|
|
|
8,736 |
|
|
Research and development |
|
1,171 |
|
|
|
2,617 |
|
|
|
2,974 |
|
|
|
4,889 |
|
|
FiberCel litigation costs |
|
1,271 |
|
|
|
346 |
|
|
|
3,182 |
|
|
|
434 |
|
|
Total operating expenses |
|
10,065 |
|
|
|
13,080 |
|
|
|
22,814 |
|
|
|
24,283 |
|
|
Loss from operations |
|
(9,085 |
) |
|
|
(8,182 |
) |
|
|
(15,503 |
) |
|
|
(15,104 |
) |
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
1,524 |
|
|
|
1,204 |
|
|
|
3,068 |
|
|
|
2,419 |
|
|
Loss before provision of income taxes |
|
(10,609 |
) |
|
|
(9,386 |
) |
|
|
(18,571 |
) |
|
|
(17,523 |
) |
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes |
|
12 |
|
|
|
12 |
|
|
|
24 |
|
|
|
24 |
|
|
Net loss |
|
(10,621 |
) |
|
|
(9,398 |
) |
|
|
(18,595 |
) |
|
|
(17,547 |
) |
|
Net loss attributable to
common stockholders |
|
(10,621 |
) |
|
|
(9,398 |
) |
|
|
(18,595 |
) |
|
|
(17,547 |
) |
|
|
|
|
|
|
|
|
|
|
Net loss per share
attributable to common stockholders - |
|
|
|
|
|
|
|
|
basic and diluted |
$ |
(0.65 |
) |
|
$ |
(0.69 |
) |
|
$ |
(1.15 |
) |
|
$ |
(1.29 |
) |
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding - |
|
|
|
|
|
|
|
|
basic and diluted |
|
16,223,919 |
|
|
|
13,620,196 |
|
|
|
16,208,905 |
|
|
|
13,597,243 |
|
|
|
|
|
|
|
|
|
|
|
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 June 30, |
|
Six months ended June 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
10,296 |
|
|
$ |
12,638 |
|
|
$ |
23,346 |
|
|
$ |
24,133 |
|
|
Gross profit |
|
980 |
|
|
|
4,898 |
|
|
|
7,311 |
|
|
|
9,179 |
|
|
Intangible asset amortization
expense |
|
849 |
|
|
|
849 |
|
|
|
1,698 |
|
|
|
1,698 |
|
|
Gross profit, excluding
intangible asset amortization |
$ |
1,829 |
|
|
$ |
5,747 |
|
|
$ |
9,009 |
|
|
$ |
10,877 |
|
|
Gross margin |
|
9.5 |
% |
|
|
38.8 |
% |
|
|
31.3 |
% |
|
|
38.0 |
% |
|
Gross margin percentage,
excluding intangible asset |
|
|
|
|
|
|
|
|
amortization |
|
17.8 |
% |
|
|
45.5 |
% |
|
|
38.6 |
% |
|
|
45.1 |
% |
|
|
|
|
|
|
|
|
|
|
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