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Actionable news in MDXG: MiMedx Group, Inc,

MiMedx Announces Record Results For The Second Quarter Of 2017 And Raises Full Year Revenue Guidance

Second Quarter 2017 Highlights

  • Q2 2017 Revenue grew 33% over Q2 2016 revenue
  • 25 of 26 quarters of meeting or exceeding revenue guidance
  • Gross profit margin of 89%
  • 22nd consecutive quarter of positive Adjusted EBITDA*
  • Adjusted EBITDA* of $14.2 million is a 41% increase over Q2 2016
    * See the accompanying tables for definitions of each Non-GAAP metric. Reconciliations of GAAP Net Income to Adjusted EBITDA, GAAP Gross Margin to Adjusted Gross Margin, and GAAP Net Income to Adjusted Net Income and Adjusted Diluted Net Income Per Share appear in the tables below. These non-GAAP measures include, but are not limited to, adjustments for non-cash charges associated with purchase accounting related to the Stability Biologics acquisition, normalization of tax expense, one-time non-recurring cash charges and share based compensation expense.

The Company recorded record revenue for the 2017 second quarter of $76.4 million, a $19.1 million or 33% increase over 2016 second quarter revenue of $57.3 million. The Company's gross margin for the quarter ended June 30, 2017, was 89%, as compared to the 87% gross margin in the second quarter of 2016. Net Income for the second quarter of 2017 was $8.1 million, or $0.07 per diluted common share, a $6.1 million or 309% increase, as compared to Net Income of $2.0 million, or $0.02 per diluted common share in the second quarter of 2016. Adjusted EBITDA* for the quarter ended June 30, 2017, was $14.2 million, a $4.1 million or 41% improvement, as compared to Adjusted EBITDA* of $10.1 million for the second quarter of 2016.

The Company recorded record revenue for the six months ended June 30, 2017 of $149 million, a $38.3 million or 35% increase over revenue for the six months ended June 30, 2016 of $110.7 million. The Company's gross margin for the six months ended June 30, 2017, was 88%, as compared to 86% gross margin in the same period of 2016. Net Income for the first six months of 2017, was $12.4 million, or $0.11 per diluted common share, a $9.2 million or 291% increase, as compared to Net Income of $3.2 million, or $0.03 per diluted common share in the first six months of 2016. Adjusted EBITDA* for the six months ended June 30, 2017, was $26.6 million, a $7.4 million or 39% improvement, as compared to Adjusted EBITDA* of $19.1 million for the six months ended June 30, 2016.

Management Commentary
Parker H. "Pete" Petit, Chairman and CEO stated, "We are very pleased with our second quarter results. We exceeded the top end of our guidance and produced impressive earnings and cash flow. The second quarter was our 26th consecutive quarter of sequential revenue growth, the 25th of the last 26 quarters of meeting or exceeding our revenue guidance, and our 22nd consecutive quarter of positive Adjusted EBITDA. Our second quarter performance generated strong operating cash flow of $13.5 million, an 85% increase over prior year. We continued to make significant improvement in our collection of accounts receivable during the quarter, and we ended the quarter with a Days Sales Outstanding (DSO) of 72 which exceeded our internal target of 75."

Bill Taylor, President and COO, said, "The second quarter was driven by the very solid performance of our sales organization. We gained continued momentum during the quarter and feel poised to deliver stronger performances in the third and fourth quarters. Adding additional fuel to this momentum is the performance of the three new products we launched during 2016: EpiCord®, our new dehydrated human umbilical cord allograft; AmnioFill®, the first product in the MiMedx placental collagen matrix product family; and OrthoFlo Lyophilized, an extension of the Company's amniotic fluid product family. Each performed well during the quarter, and they are living up to our expectations for utilization in the market. We anticipate the trend these new products experienced in the first and second quarters of this year, will continue in future quarters."

Petit commented on the status of the Company's clinical trials, "In addition to the momentum that our sales force is gaining, our scientific and clinical functions are making terrific progress demonstrating the efficacy of our allografts. We have completed our fifteen-center multicenter Randomized Control Trial (RCT) evaluating the efficacy of our EpiFix allografts for the treatment of Venous Leg Ulcers (VLUs). The paper chronicling the study results is currently undergoing peer review by a major journal. We are looking forward to sharing these impressive results and conclusions later in the third quarter."

Petit continued, "Our Plantar Fasciitis Phase 2B trial is progressing extremely well. We submitted applications to the FDA at the end of June requesting closure of the 2B trial, publishing of the interim results, and initiation of the Phase 3 trial for Plantar Fasciitis. Additionally, the Company will be completing the filing of two additional INDs in the biopharmaceutical area in the near future."

Liquidity and Cash Flow
Cash on hand as of June 30, 2017, was $47.5 million, as compared to $34.4 million as of December 31, 2016. Cash from operations for the quarter was $13.5 million driven by improved collections of accounts receivable and improved inventory turns somewhat offset by the payment of $8.2 million in income taxes in the quarter. Cash used for investing activities for the quarter was comprised of $1.8 million in capital expenditures primarily in support of increased production capacity driven by projected demand. Net cash flow from financing activities for the quarter was $4.9 million driven by the exercise of stock options somewhat offset by the repurchase of company stock under our share repurchase plan.

Share Repurchase Program
During the quarter, the Company acquired $2.1 million in repurchased shares, and since the May 2014 inception of the program through June 30, 2017, the Company has acquired a total of $71 million in repurchased shares. On July 26, 2017, the MiMedx Board of Directors authorized an additional increase of $14 million to the Company's Share Repurchase Program, bringing the total authorized to date to $100 million. "Our share repurchases have proven to be very wise investments for the Company," noted Petit.

GAAP Earnings
The Company recorded Net Income of $8.1 million for the quarter ended June 30, 2017, or $0.07 per diluted common share, as compared to a Net Income of $2.0 million, or $0.02 per diluted common share, for the quarter ended June 30, 2016. The Company recorded Net Income of $12.4 million for the six months ended June 30, 2017, or $0.11 per diluted common share, as compared to a Net Income of $3.2 million, or $.03 per diluted common share, for the same period of 2016.

Gross margin for the quarter was 88.7% as compared to 87.1% in the prior year. Year to date gross margins were 88.3% as compared to 86.1 % in 2016. The improvement was driven by higher sales volume and improved manufacturing efficiencies and yield improvements, as well as the one-time inventory costs incurred in connection with the Stability acquisition that were reported during the same period of 2016.

Second quarter 2017 Research & Development ("R&D") expenses were $4.7 million or 6.2% of Net Sales, an increase of $1.6 million over second quarter 2016 R&D expenses of $3.2 million. R&D expenses for the first 6 months of 2017 were $8.9 million or 6.0% of Net Sales, an increase of $3.3 over R&D...


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