Records Second Quarter Net Sales of $81.3 Million; an Increase of 21.5% Over the Prior Year Period
Increases Full-Year 2023 Guidance for Net Sales Growth
Welcomes Highly Successful MedTech Executive as Chief Financial Officer
Management to Host Conference Call on Tuesday, August 1, 2023, at 5:00 PM ET
MARIETTA, Ga., Aug. 01, 2023 (GLOBE NEWSWIRE) -- MiMedx Group, Inc. ( 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 | Regenerative Medicine | 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: 877-407-6184
International Investors: 201-389-0877
Conference 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 Notarianni
Investor Relations
470.304.7291
[email protected]
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 | ||||||||||||||
