MIMEDX GROUP, INC. First Quarter GAAP Net Income was
First Quarter Adjusted EBITDA of
Management to Host Conference Call Today,
Recent Operating and Financial Highlights:
- First quarter 2024 net sales of $85 million, reflecting 18% growth over the prior year period.
- GAAP net income from continuing operations and net margin for the first quarter 2024 of $9 million and 11%, respectively.
- Adjusted EBITDA and Adjusted EBITDA margin for the first quarter 2024 of
$19 million and 22%, respectively. - Improved capital structure with new senior secured credit facilities and debt refinancing.
- Announced portfolio expansion through a distribution agreement with Regenity Biosciences for a 510(k)-cleared collagen particulate xenograft product we plan to launch later this year.
- Appointed two new independent directors to the Company’s Board of Directors.
- Introduced MIMEDX Connect, an online product ordering and account management platform for our customers.
| Three Months Ended | |||||||
| 2024 | 2023 | ||||||
| Net Income (loss) | $ | 9,261 | $ | (4,983 | ) | ||
| Non-GAAP Adjustments: | |||||||
| Depreciation expense | 558 | 714 | |||||
| Amortization of intangible assets | 189 | 190 | |||||
| Interest expense, net | 1,690 | 1,553 | |||||
| Income tax expense | 2,348 | 51 | |||||
| Share-based compensation | 4,340 | 4,345 | |||||
| Investigation, restatement and related expenses | 311 | 3,673 | |||||
| Strategic and other expenses | 168 | — | |||||
| Expenses related to disbanding of Regenerative Medicine business unit | (200 | ) | — | ||||
| Adjusted EBITDA | $ | 18,665 | $ | 5,543 | |||
| Adjusted EBITDA margin | 22.0 | % | 7.7 | % | |||
First Quarter 2024 Results Discussion1
_______________
1 The following discussion of the Company's first quarter 2024 results are made on a "continuing operations basis" and exclude the historical costs of the Regenerative Medicine business unit, which was disbanded beginning in
Gross Profit and Margin
Gross profit for the three months ended
Operating Expenses
Selling, general and administrative ("SG&A") expenses for the three months ended
Research and development expenses were $3 million for each of the three months ended
Investigation, restatement and related expense was immaterial for the three months ended
Net income from continuing operations for the three months ended
Cash and Cash Equivalents
As of
Conference Call and Webcast
Webcast: Click here
U.S. Investors: 877-407-6184
Conference ID: 13745475
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 2024 financial goals and expectations for future financial results, including levels of net sales, Adjusted EBITDA, and Adjusted EBITDA margin; (iii) our cash flows; (iv)our expectations regarding the use of our products, including EPIEFFECT and AMNIOEFFECT; (v) our expectations regarding the launch of our collagen particulate xenograft product; and (v) continued growth in different care settings. 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 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
About
Contact:
Investor Relations
470.304.7291
mnotarianni@mimedx.com
Selected Unaudited Financial Information
| Condensed Consolidated Balance Sheets | |||||||
| (in thousands) Unaudited | |||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 48,487 | $ | 82,000 | |||
| Accounts receivable, net | 57,016 | 53,871 | |||||
| Inventory | 24,454 | 21,021 | |||||
| Prepaid expenses | 6,095 | 5,624 | |||||
| Other current assets | 2,801 | 1,745 | |||||
| Total current assets | 138,853 | 164,261 | |||||
| Property and equipment, net | 7,340 | 6,974 | |||||
| Right of use asset | 3,499 | 2,132 | |||||
| Deferred tax asset, net | 38,747 | 40,777 | |||||
| 19,441 | 19,441 | ||||||
| Intangible assets, net | 12,550 | 5,257 | |||||
| Other assets | 1,251 | 205 | |||||
| Total assets | $ | 221,681 | $ | 239,047 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
| Current liabilities: | |||||||
| Current portion of long term debt | $ | 1,000 | $ | 1,000 | |||
| Accounts payable | 9,697 | 9,048 | |||||
| Accrued compensation | 17,913 | 22,353 | |||||
| Accrued expenses | 9,196 | 9,361 | |||||
| Current liabilities of discontinued operations | 344 | 1,352 | |||||
| Other current liabilities | 4,071 | 2,894 | |||||
| Total current liabilities | 42,221 | 46,008 | |||||
| Long term debt, net | 18,453 | 48,099 | |||||
| Other liabilities | 5,276 | 2,223 | |||||
| Total liabilities | 65,950 | 96,330 | |||||
| Total stockholders' equity | 155,731 | 142,717 | |||||
| Total liabilities and stockholders’ equity | $ | 221,681 | $ | 239,047 | |||
| Condensed Consolidated Statements of Operations | |||||||
| (in thousands, except share and per share amounts) Unaudited | |||||||
| Three Months Ended | |||||||
| 2024 | 2023 | ||||||
| Net sales | $ | 84,709 | $ | 71,676 | |||
| Cost of sales | 12,987 | 12,419 | |||||
| Gross profit | 71,722 | 59,257 | |||||
| Operating expenses: | |||||||
| Selling, general and administrative | 55,129 | 52,250 | |||||
| Research and development | 2,841 | 3,484 | |||||
| Investigation, restatement and related | 311 | 3,673 | |||||
| Amortization of intangible assets | 189 | 190 | |||||
| Impairment of intangible assets | 54 | — | |||||
| Operating income (loss) | 13,198 | (340 | ) | ||||
| Other expense, net | |||||||
| Interest expense, net | (1,690 | ) | (1,553 | ) | |||
| Other (expense) income, net | (99 | ) | 2 | ||||
| Income (loss) from continuing operations before income tax | 11,409 | (1,891 | ) | ||||
| Income tax expense from continuing operations | (2,348 | ) | (51 | ) | |||
| Net income (loss) from continuing operations | 9,061 | (1,942 | ) | ||||
| Income (loss) from discontinued operations, net of tax | 200 | (3,041 | ) | ||||
| Net income (loss) | $ | 9,261 | $ | (4,983 | ) | ||
| Net income (loss) from continuing operations available to common stockholders | $ | 9,061 | $ | (3,626 | ) | ||
| Basic net income (loss) per common share: | |||||||
| Continuing operations | $ | 0.06 | $ | (0.03 | ) | ||
| Discontinued operations | 0.00 | (0.03 | ) | ||||
| Basic net income (loss) per common share | $ | 0.06 | $ | (0.06 | ) | ||
| Diluted net income (loss) per common share: | |||||||
| Continuing operations | $ | 0.06 | $ | (0.03 | ) | ||
| Discontinued operations | 0.00 | (0.03 | ) | ||||
| Diluted net income (loss) per common share | $ | 0.06 | $ | (0.06 | ) | ||
| Weighted average common shares outstanding - basic | 146,404,587 | 114,398,813 | |||||
| Weighted average common shares outstanding - diluted | 150,028,107 | 114,398,813 | |||||
| Condensed Consolidated Statements of Cash Flows | |||||||
| (in thousands) Unaudited | |||||||
| Three Months Ended | |||||||
| 2024 | 2023 | ||||||
| Net cash flows provided by (used in) operating activities | $ | 5,978 | $ | (4,048 | ) | ||
| Net cash flows used in investing activities | (6,024 | ) | (677 | ) | |||
| Net cash flows used in financing activities | (33,467 | ) | (4 | ) | |||
| Net change in cash | $ | (33,513 | ) | $ | (4,729 | ) | |
Reconciliation of Non-GAAP Measures
In addition to our GAAP results, we provide certain non-GAAP metrics including 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:
- Share-based compensation expense - expense recognized related to awards to various employees pursuant to our share-based compensation plans. This expense is reflected amongst cost of sales, research and development expense, and selling, general, and administrative expense in the unaudited condensed consolidated statements of operations.
- Investigation, restatement, and related expense - expenses incurred toward the legal defense of the Company and advanced on behalf of certain former officers and directors, net of negotiated reductions and settlements of amounts previously advanced, related to certain legal matters. This expense is reflected in the line of the same name in our unaudited condensed consolidated statements of operations.
- Strategic and other expenses - reflects expenses incurred resulting from the consummation of material transactions or the integration of acquired assets or operations into our core business, impairment of intangibles, and certain regulatory expenses. With respect to the three months ended
March 31, 2024 , this relates to the acquisition and integration of exclusive distribution rights to a collagen particulate xenograft product and regulatory and litigation expenses incurred relating to the FDA designation of one of our products. - Loss on extinguishment of debt - reflects the excess of cash paid to extinguish debt over the carrying value of the debt on our balance sheet upon the repayment and termination of a loan agreement. With respect to the three months ended
March 31, 2024 , this relates to the repayment and termination of the Hayfin Loan Agreement. Amounts in this line reflect (i) prepayment premium paid and (ii) write-offs of unamortized original issue discount and deferred financing costs. - Expenses related to the Disbanding of Regenerative Medicine - incremental expenses recognized or incurred directly as a result of our announcement to disband our Regenerative Medicine segment. This reflects (i) write-downs of clinical trial assets, (ii) charges associated with the wind-down of contracts associated with our clinical trial program, (iii) severance expenses incurred which were directly attributable to the disbanding, and (iv) impairment of goodwill. Severance expenses are reflected in research and development expense on the unaudited condensed consolidated statements of operations. All other charges are reflected in restructuring expense in the unaudited condensed consolidated statements of operations.
- Income Tax Adjustment - for purposes of calculating Adjusted Net Income (Loss) and Adjusted Earnings Per Share, reflects our expectation of a long-term effective tax rate, which is normalized and balance sheet-agnostic. Actual reporting tax expense will be based on GAAP earnings, and may differ from the expected long-term effective tax rate due to a variety of factors, including the tax treatment of various transactions included in GAAP net income and other reconciling items that are excluded in determining Adjusted Net Income (Loss) and Adjusted EPS. The long-term normalized effective tax rate was 25% for each of the quarters ended
March 31, 2024 and 2023.
Adjusted EBITDA and Adjusted EBITDA margin
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 and employees (vii) expenses related to disbanding of the Regenerative Medicine business unit and (viii) share-based compensation.
Please refer to the tables at the beginning of this press release for reconciliation to GAAP net income (loss).
Adjusted Net Income (Loss)
Adjusted Net Income (Loss) provides a view of our operating performance, exclusive of certain items which are non-recurring or not reflective of our core operations.
Adjusted Net Income is defined as GAAP net income (loss) plus (i) loss on extinguishment of debt, (ii) investigation restatement and related expenses, (iii) expenses related to disbanding of our Regenerative Medicine business unit, (iv) strategic and other expenses, and (v) the long-term effective income tax rate adjustment.
A reconciliation of GAAP Net Income (Loss) to Adjusted Net Income appears in the table below (in thousands):
| Three Months Ended | |||||||
| 2024 | 2023 | ||||||
| Net income (loss) | $ | 9,261 | $ | (4,983 | ) | ||
| Loss on extinguishment of debt | 1,401 | — | |||||
| Investigation, restatement and related expenses | 311 | 3,673 | |||||
| Strategic and other expenses | 168 | — | |||||
| Expenses related to disbanding of Regenerative Medicine business unit | (200 | ) | — | ||||
| Long-term effective income tax rate adjustment | (974 | ) | 366 | ||||
| Adjusted net income (loss) | $ | 9,967 | $ | (944 | ) | ||
Adjusted Earnings Per Share
Adjusted Earnings Per Share is intended to provide a normalized view of earnings per share by removing items that may be irregular, one-time, or non-recurring from net income. This enables us to identify underlying trends in our business that could otherwise be masked by such items. Adjusted Earnings Per Share consists of GAAP diluted earnings per share including adjustments for: (i) effects of antidilution, (ii) investigation, restatement and related expenses, (iii) reorganization expenses related to severance charges for certain officers and employees and (iv) long-term adjusted effective income tax rate.
A reconciliation of GAAP diluted earnings per share to Adjusted Earnings Per Share appears in the table below (per diluted share):
| Three Months Ended | |||||||
| 2024 | 2023 | ||||||
| GAAP net income (loss) per common share - diluted | $ | 0.06 | $ | (0.06 | ) | ||
| Loss on extinguishment of debt | 0.01 | 0.00 | |||||
| Investigation, restatement and related (benefit) expense | 0.00 | 0.03 | |||||
| Strategic and other expenses | 0.00 | 0.00 | |||||
| Expenses related to disbanding of Regenerative Medicine business unit | 0.00 | 0.00 | |||||
| Long-term effective income tax rate adjustment | 0.00 | 0.00 | |||||
| Adjusted Earnings Per Share | $ | 0.07 | $ | (0.03 | ) | ||
| Weighted average common shares outstanding - adjusted | 150,028,107 | 114,398,813 | |||||
Free Cash Flow
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 flows provided by (used in) operating activities to Free Cash Flow appears in the table below (in thousands):
| Three Months Ended | |||||||
| 2024 | 2023 | ||||||
| Net cash flows provided by (used in) operating activities | 5,978 | (4,048 | ) | ||||
| Capital expenditures, including purchases of equipment | (1,144 | ) | (633 | ) | |||
| Free Cash Flow | $ | 4,834 | $ | (4,681 | ) | ||
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