Release Date: May 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue for the quarter increased by 12.9% to $41.4 million compared to last year, indicating strong top-line performance.
- Gross profit for the quarter was $32.6 million, an increase from $28.5 million in Q1 2023, with a gross margin improvement to 78.8% from 77.7%.
- AxoGen Inc (AXGN, Financial) is on track with the BLA filing for Advanced Nerve Graft, expecting completion in Q3 2024 and potential approval in mid-2025.
- Introduced new products enhancing the nerve protection portfolio, with positive initial surgeon feedback and market acceptance.
- Maintained strong focus on core accounts, which represent approximately 65% of total revenue, with potential for significant expansion.
Negative Points
- Reported a net loss of $6.6 million for the quarter, although this is an improvement from a net loss of $7.1 million in Q1 2023.
- Experienced a sequential decrease in direct sales representatives, potentially impacting future sales force effectiveness.
- The company is undergoing a transition in reporting and accounting practices, which could lead to initial confusion or adjustment among stakeholders.
- Despite revenue growth, still facing challenges in achieving profitability, with ongoing net losses reported.
- Operational expenses increased by 3.8% to $37.2 million, indicating rising costs that could impact future profitability.
Q & A Highlights
Q: Can you provide some color on what happened in March and how it compares to what you've seen historically?
A: Karen Zaderej, AxoGen Inc - Chairman, Chief Executive Officer, and President: Historically, we've seen a step-up in volume in March, but this year it shifted to April, possibly due to the timing of the Easter holidays. This shift aligns with changes in elective outpatient procedures observed by some hospital systems.
Q: Given the shift in volume to April, does this affect the quarterly sales cadence for the rest of the year?
A: Karen Zaderej, AxoGen Inc - Chairman, Chief Executive Officer, and President: The overall quarterly cadence should remain the same, with expected step-ups in Q2 and Q3, similar to past years. The timing within the quarter may vary slightly.
Q: Can you update us on the CFO search?
A: Karen Zaderej, AxoGen Inc - Chairman, Chief Executive Officer, and President: The search is ongoing, led by independent directors and an external search firm. The selection process is thorough to ensure a thoughtful transition, with support available from the current leadership during the transition period.
Q: Why was the decision made to remove the scheduled versus emergent breakdown in reporting?
A: Nir Naor, AxoGen Inc - Chief Financial Officer: The decision was based on the realization that the breakdown did not provide meaningful insight into our business model or commercial strategy. Our focus is on increasing penetration into high-potential accounts across various procedures and specialties.
Q: How should we think about the contribution from newer product launches in 2024?
A: Karen Zaderej, AxoGen Inc - Chairman, Chief Executive Officer, and President: New products are included in our guidance, with modest revenue impact expected as they ramp up. Products like AxoGuard HA+ are seeing steady use and are becoming a regular part of treatment algorithms in targeted applications.
Q: What is the site of service mix for core accounts, and what does penetration look like in hospital outpatient settings?
A: Karen Zaderej, AxoGen Inc - Chairman, Chief Executive Officer, and President: Core accounts are primarily Level 1-3 trauma centers and specialty hospitals. There is a mix of inpatient and outpatient procedures, with some procedures increasingly moving to outpatient settings due to economic and healthcare efficiency improvements.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
