MiMedx Group, Inc. (Nasdaq: MDXG) (“MIMEDX” or the “Company”),
today announced operating and financial results for the second
quarter 2023, which ended June 30, 2023, including net sales
of $81.3 million, net income of $1.2 million and Adjusted EBITDA1
of $14.1 million.
Joseph H. Capper, MIMEDX Chief Executive
Officer, commented, “Our second quarter results demonstrate
excellent momentum in the business, as we continue to see
increasing demand for our products across all sites of
service. The Company’s 21.5% top-line growth was driven
by solid execution on the part of our commercial team, which
continues to out-perform the market. Our Operations
team also deserves tremendous credit for not only ensuring
production levels to meet this increasing demand, but to do so in a
highly efficient manner, resulting in an improved gross margin
percentage.
“We were also excited to record a much improved
second quarter Adjusted EBITDA of $14.1 million, representing 17.4%
of net sales. With the elimination of the expenses that were
associated with our knee osteoarthritis ("KOA") development
project, we now expect our Adjusted EBITDA margin in the second
half of 2023 to be above 20%, demonstrating excellent leverage as
the business scales.
“As a result of our progress to date, we are
increasing guidance for our full-year 2023 net sales percentage
growth rate to be in the mid to high teens.
“Finally, we could not be more pleased with the
arrival of Doug Rice, who has joined MIMEDX as our new CFO,
rounding out a team of highly accomplished and seasoned healthcare
executives, capable of taking the Company to new heights.”
Recent Operating and Financial
Highlights:
- Announced strategic realignment;
increasing focus on Wound & Surgical businesses and positioning
the Company with opportunity to significantly improve
profitability.
- Appointed Doug Rice as Chief
Financial Officer.
- Announced favorable appellate court
ruling affirming dismissal of putative securities class action
case.
- Reported
- Second quarter
2023 net sales of $81.3 million, an increase of 21.5% over second
quarter 2022.
- GAAP net
income of $1.2 million for second quarter 2023, compared to a net
loss of $10.9 million for the prior year period.
- Adjusted
EBITDA of $14.1 million for second quarter 2023, compared to an
Adjusted EBITDA loss of $1.0 million for the prior year period and
$5.5 million in Adjusted EBITDA during the first quarter 2023.
1EBITDA, Adjusted EBITDA, Free Cash Flow and related margins are
non-GAAP financial measures. See “Reconciliation of Non-GAAP
Measures” for a reconciliation of EBITDA, Adjusted EBITDA and Free
Cash Flow to GAAP financial measures, located in “Selected
Unaudited Financial Information” of this release.
|
Three Months Ended June 30, |
|
(in thousands) |
|
2023 |
|
2022 |
Net sales |
$ |
81,257 |
|
|
$ |
66,883 |
|
GAAP Net income (loss) |
|
1,200 |
|
|
|
(10,868 |
) |
EBITDA |
|
3,634 |
|
|
|
(8,605 |
) |
Adjusted EBITDA |
|
14,102 |
|
|
|
(959 |
) |
GAAP Net loss per common share - basic |
$ |
(0.00 |
) |
|
$ |
(0.11 |
) |
GAAP Net loss per common share - diluted |
$ |
(0.00 |
) |
|
$ |
(0.11 |
) |
Segment Information
MIMEDX’s second quarter results are summarized
using the Company’s two reportable segments: Wound & Surgical
and Regenerative Medicine. Following the announced strategic
realignment in June 2023, the Company anticipates it will present
its financial results as one segment prospectively. A summary of
the Company’s performance for the three months ended June 30, 2023
and three months ended June 30, 2022 by segment is included below
(amounts in thousands):
Three Months Ended June 30,
2023
|
Wound & Surgical |
|
RegenerativeMedicine |
|
Corporate &Other |
|
Consolidated |
Net sales |
$ |
80,461 |
|
$ |
— |
|
|
$ |
796 |
|
$ |
81,257 |
Cost of sales |
|
12,736 |
|
|
— |
|
|
|
847 |
|
|
13,583 |
Selling, general and administrative expense |
|
38,500 |
|
|
— |
|
|
|
13,425 |
|
|
51,925 |
Research and development expense |
|
1,632 |
|
|
6,865 |
|
|
|
— |
|
|
8,497 |
Restructuring |
|
— |
|
|
3,256 |
|
|
|
— |
|
|
3,256 |
Amortization of intangible assets |
|
— |
|
|
— |
|
|
|
191 |
|
|
191 |
Segment contribution |
$ |
27,593 |
|
$ |
(10,121 |
) |
|
|
|
|
Investigation, restatement and related expense |
|
|
|
|
|
|
|
1,017 |
Operating income |
|
|
|
|
|
|
$ |
2,788 |
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 June 30,
2022
|
Wound & Surgical |
|
Regenerative Medicine |
|
Corporate & Other |
|
Consolidated |
Net sales |
$ |
66,094 |
|
$ |
— |
|
|
$ |
789 |
|
$ |
66,883 |
|
Cost of sales |
|
10,838 |
|
|
— |
|
|
|
985 |
|
|
11,823 |
|
Selling, general and administrative expense |
|
38,681 |
|
|
— |
|
|
|
17,112 |
|
|
55,793 |
|
Research and development expense |
|
2,408 |
|
|
3,104 |
|
|
|
— |
|
|
5,512 |
|
Amortization of intangible assets |
|
— |
|
|
— |
|
|
|
173 |
|
|
173 |
|
Segment contribution |
$ |
14,167 |
|
$ |
(3,104 |
) |
|
|
|
|
Investigation, restatement and related expense |
|
|
|
|
|
|
|
3,218 |
|
Operating loss |
|
|
|
|
|
|
$ |
(9,636 |
) |
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.
Net Sales
MIMEDX reported net sales for the three months
ended June 30, 2023 of $81.3 million, compared to $66.9 million for
the three months ended June 30, 2022, an increase of 21.5%. Net
sales growth benefited from strong demand for the Company’s Wound
& Surgical product offering across all of its sites-of-service
and continued uptake of new products launched in the last twelve
months.
Gross Profit and Margin
Gross profit for the three months ended June 30,
2023, was $67.7 million an increase of $12.6 million, as compared
to the prior year period.
Gross margin for the three months ended June 30,
2023, was 83.3% compared to 82.3% for the three months ended June
30, 2022. The year-over-year improvement in gross margins was
driven by continued execution on yield improvement projects as well
as favorable product mix, with increased sales in higher margin
care settings.
Operating Expenses
Selling, general and administrative expenses for
the three months ended June 30, 2023, were $51.9 million compared
to $55.8 million for the three months ended June 30, 2022. The
decrease primarily reflects continued focus on expense management,
more than offsetting higher commissions associated with increased
sales.
Research and development expenses were $8.5
million for the three months ended June 30, 2023 compared to $5.5
million for the three months ended June 30, 2022. The increase was
primarily driven by clinical trial costs as well as severance
expense associated with the Company’s strategic realignment
announced in June 2023.
Restructuring expense for the three months ended
June 30, 2023 were $3.3 million, reflecting certain charges related
to the disbanding of our Regenerative Medicine business unit,
including write-downs of prepaid clinical trial costs and other
wind-down activities.
Investigation, restatement and related expenses
for the three months ended June 30, 2023 were $1.0 million compared
to $3.2 million for the three months ended June 30, 2022.
Net income for the three months ended June 30,
2023, was $1.2 million compared to a net loss of $10.9 million for
the three months ended June 30, 2022.
Liquidity
As of June 30, 2023, the Company had $68.7
million of cash and cash equivalents compared to $61.2 million as
of March 31, 2023 and $66.0 million as of December 31, 2022. Also
as of June 30, 2023, the Company had $48.8 million in long term
debt, essentially flat versus the prior year period.
For the second quarter 2023, the Company
generated operating cash flows of $7.8 million, compared
operating cash flow usage of $3.0 million in the prior year
period. Also, for the second quarter 2023, the Company generated
Free Cash Flow2 of $7.5 million, compared to negative Free Cash
Flow of $3.4 million in the prior year period.
Financial Goals
Based upon the strong commercial momentum in the
business on a year-to-date basis, MIMEDX expects full year 2023 net
sales growth in the mid-to-upper teens as a percentage, 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, based in part on the financial
benefits associated with the Company’s recently announced strategic
realignment, Adjusted EBITDA margin in the second half of 2023 is
expected to exceed 20%.
Conference Call and Webcast
MIMEDX will host a conference call and webcast
to review its second quarter 2023 results on Tuesday, August 1,
2023, beginning at 5:00 p.m., Eastern Time. The call can be
accessed using the following information:
Webcast: Click here U.S. Investors:
877-407-6184International Investors: 201-389-0877Conference ID:
13739125
2Free Cash Flow is a Non-GAAP financial measure.
See "Reconciliation of Non-GAAP Measures" for a reconciliation of
Free Cash Flow to cash flows provided by (used in) operating
activities, located in "Selected Unaudited Financial Information"
of this release.
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 Adjusted EBITDA, Adjusted EBITDA
margin, contribution margin and corporate expenses; (iii) our
expectations regarding the timing and impact of new product
launches; and (iv) 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, the reimbursement environment and many other
factors; (ii) the Company may change its plans due to unforeseen
circumstances; (iii) our access to hospitals and health care
provider facilities could be restricted as a result of any public
health emergencies, such as COVID-19, or other factors; (iv) the
results of scientific research are uncertain and may have little or
no value; (v) 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; (vi) the effectiveness of amniotic
tissue as a therapy for particular indications or conditions is the
subject of further scientific and clinical studies; and (vii) 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.
About MIMEDX
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.
Contact:Matt NotarianniInvestor
Relations470.304.7291mnotarianni@mimedx.com
Selected Unaudited Financial
Information
MiMedx Group, Inc. |
Condensed Consolidated Balance Sheets |
(in thousands) Unaudited |
|
June 30, 2023 |
|
December 31, 2022 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
68,652 |
|
|
$ |
65,950 |
|
Accounts receivable, net |
|
48,963 |
|
|
|
43,084 |
|
Inventory |
|
16,815 |
|
|
|
13,183 |
|
Prepaid expenses |
|
3,683 |
|
|
|
8,646 |
|
Other current assets |
|
3,110 |
|
|
|
3,335 |
|
Total current assets |
|
141,223 |
|
|
|
134,198 |
|
Property and equipment, net |
|
7,261 |
|
|
|
7,856 |
|
Right of use asset |
|
2,742 |
|
|
|
3,400 |
|
Goodwill |
|
19,441 |
|
|
|
19,976 |
|
Intangible assets, net |
|
5,565 |
|
|
|
5,852 |
|
Other assets |
|
146 |
|
|
|
148 |
|
Total assets |
$ |
176,378 |
|
|
$ |
171,430 |
|
LIABILITIES, CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS’
DEFICIT |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
8,150 |
|
|
$ |
8,847 |
|
Accrued compensation |
|
21,602 |
|
|
|
21,852 |
|
Accrued expenses |
|
12,645 |
|
|
|
11,024 |
|
Other current liabilities |
|
2,063 |
|
|
|
1,834 |
|
Total current liabilities |
|
44,460 |
|
|
|
43,557 |
|
Long term debt, net |
|
48,838 |
|
|
|
48,594 |
|
Other liabilities |
|
3,252 |
|
|
|
4,773 |
|
Total liabilities |
|
96,550 |
|
|
|
96,924 |
|
Convertible preferred stock |
|
92,494 |
|
|
|
92,494 |
|
Total stockholders' (deficit) equity |
|
(12,666 |
) |
|
|
(17,988 |
) |
Total liabilities, convertible preferred stock, and stockholders’
(deficit) equity |
$ |
176,378 |
|
|
$ |
171,430 |
|
MiMedx Group, Inc. |
Condensed Consolidated Statements of
Operations |
(in thousands) Unaudited |
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Net sales |
$ |
81,257 |
|
|
$ |
66,883 |
|
|
$ |
152,933 |
|
|
$ |
125,777 |
|
Cost of sales |
|
13,583 |
|
|
|
11,823 |
|
|
|
26,002 |
|
|
|
21,759 |
|
Gross profit |
|
67,674 |
|
|
|
55,060 |
|
|
|
126,931 |
|
|
|
104,018 |
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
Selling, general and administrative |
|
51,925 |
|
|
|
55,793 |
|
|
|
104,202 |
|
|
|
105,363 |
|
Research and development |
|
8,497 |
|
|
|
5,512 |
|
|
|
14,993 |
|
|
|
11,476 |
|
Restructuring |
|
3,256 |
|
|
|
— |
|
|
|
3,256 |
|
|
|
— |
|
Investigation, restatement and related |
|
1,017 |
|
|
|
3,218 |
|
|
|
4,690 |
|
|
|
5,770 |
|
Amortization of intangible assets |
|
191 |
|
|
|
173 |
|
|
|
380 |
|
|
|
345 |
|
Operating income (loss) |
|
2,788 |
|
|
|
(9,636 |
) |
|
|
(590 |
) |
|
|
(18,936 |
) |
|
|
|
|
|
|
|
|
Other expense, net |
|
|
|
|
|
|
|
Interest expense, net |
|
(1,630 |
) |
|
|
(1,170 |
) |
|
|
(3,184 |
) |
|
|
(2,295 |
) |
Other expense, net |
|
(32 |
) |
|
|
— |
|
|
|
(32 |
) |
|
|
(1 |
) |
Income (loss) before income tax provision |
|
1,126 |
|
|
|
(10,806 |
) |
|
|
(3,806 |
) |
|
|
(21,232 |
) |
Income tax provision expense |
|
74 |
|
|
|
(62 |
) |
|
|
23 |
|
|
|
(125 |
) |
Net income (loss) |
$ |
1,200 |
|
|
$ |
(10,868 |
) |
|
$ |
(3,783 |
) |
|
$ |
(21,357 |
) |
|
|
|
|
|
|
|
|
Net loss available to common shareholders |
$ |
(528 |
) |
|
$ |
(12,496 |
) |
|
$ |
(7,194 |
) |
|
$ |
(24,571 |
) |
|
|
|
|
|
|
|
|
Net loss per common share - basic |
$ |
(0.00 |
) |
|
$ |
(0.11 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.22 |
) |
Net loss per common share - diluted |
$ |
(0.00 |
) |
|
$ |
(0.11 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.22 |
) |
|
|
|
|
|
|
|
|
Weighted average common shares outstanding - basic |
|
115,866,371 |
|
|
|
112,867,912 |
|
|
|
115,136,646 |
|
|
|
112,245,334 |
|
Weighted average common shares outstanding - diluted |
|
115,866,371 |
|
|
|
112,867,912 |
|
|
|
115,136,646 |
|
|
|
112,245,334 |
|
MiMedx Group, Inc. |
Condensed Consolidated Statements of Cash
Flows |
(in thousands) Unaudited |
|
Six Months Ended June 30, |
|
2023 |
|
2022 |
Net cash flows provided by (used in) operating activities |
3,727 |
|
|
(13,228 |
) |
Net cash flows used in investing activities |
(1,025 |
) |
|
(577 |
) |
Net cash flows used in financing activities |
— |
|
|
(776 |
) |
Net change in cash |
2,702 |
|
|
(14,581 |
) |
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, Free
Cash Flow and related margins. 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.
EBITDA, Adjusted EBITDA and Adjusted EBITDA
marginEBITDA 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 loss
excluding: (i) depreciation, (ii) amortization of intangibles,
(iii) interest expense, net, (iv) income tax provision, (v)
investigation, restatement and related expenses, (vi) expenses
related to disbanding of the Regenerative Medicine business unit
and (vii) share-based compensation.
A reconciliation of GAAP net income (loss) to
EBITDA and Adjusted EBITDA appears in the table below (in
thousands):
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Net income (loss) |
$ |
1,200 |
|
|
$ |
(10,868 |
) |
|
$ |
(3,783 |
) |
|
$ |
(21,357 |
) |
Net margin |
|
1.5 |
% |
|
|
(16.2 |
)% |
|
|
(2.5 |
)% |
|
|
(17.0 |
)% |
Non-GAAP Adjustments: |
|
|
|
|
|
|
|
Depreciation expense |
|
687 |
|
|
|
858 |
|
|
|
1,401 |
|
|
|
1,718 |
|
Amortization of intangible assets |
|
191 |
|
|
|
173 |
|
|
|
380 |
|
|
|
345 |
|
Interest expense, net |
|
1,630 |
|
|
|
1,170 |
|
|
|
3,184 |
|
|
|
2,295 |
|
Income tax provision (benefit) expense |
|
(74 |
) |
|
|
62 |
|
|
|
(23 |
) |
|
|
125 |
|
EBITDA |
|
3,634 |
|
|
|
(8,605 |
) |
|
|
1,159 |
|
|
|
(16,874 |
) |
EBITDA margin |
|
4.5 |
% |
|
|
(12.9 |
)% |
|
|
0.8 |
% |
|
|
(13.4 |
)% |
Additional Non-GAAP Adjustments |
|
|
|
|
|
|
|
Costs incurred in connection with Audit Committee Investigation and
Restatement |
|
1,017 |
|
|
|
3,218 |
|
|
|
4,690 |
|
|
|
5,770 |
|
Share-based compensation |
|
4,060 |
|
|
|
4,428 |
|
|
|
8,405 |
|
|
|
8,426 |
|
Expenses related to disbanding of Regenerative Medicine business
unit |
$ |
5,391 |
|
|
$ |
— |
|
|
$ |
5,391 |
|
|
$ |
— |
|
Adjusted EBITDA |
$ |
14,102 |
|
|
$ |
(959 |
) |
|
$ |
19,645 |
|
|
$ |
(2,678 |
) |
Adjusted EBITDA margin |
|
17.4 |
% |
|
|
(1.4 |
)% |
|
|
12.8 |
% |
|
|
(2.1 |
)% |
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 FlowFree 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 below (in thousands):
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Net cash flows provided by (used in) operating activities |
$ |
7,775 |
|
|
$ |
(3,005 |
) |
|
$ |
3,727 |
|
|
$ |
(13,228 |
) |
Purchases of equipment |
|
(299 |
) |
|
|
(380 |
) |
|
|
(932 |
) |
|
|
(498 |
) |
Free Cash Flow |
$ |
7,476 |
|
|
$ |
(3,385 |
) |
|
$ |
2,795 |
|
|
$ |
(13,726 |
) |
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