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Vericel Corporation

Vericel Corp. reports financial results for the quarter ended September 30, 2017.We analyze the earnings along side the following peers of Vericel Corp. - Medtronic plc (MDT-US) that have also reported for this period.

  • Summary numbers: Revenues of USD 14.26 million, Net Earnings of USD -5.41 million.
  • Gross margins widened from 37.27% to 49.61% compared to the same period last year, operating (EBITDA) margins now -25.46% from -54.08%.
  • Year-on-year change in operating cash flow of -25.32% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth from operating margin improvements as well as one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

Revenues (mil)14.3179.416.510.9
Revenue Growth (%YOY)30.532.2-33.67.2-3.4
Earnings (mil)-5.4-2.4-9.8-6.2-6.7
Earnings Growth (%YOY)1921.6-167.9-26.2-51.2
Net Margin (%)-37.9-14.1-104.5-37.5-61.1
Return on Equity (%)-35.2-16.2-48.6-45.3-60.4
Return on Assets (%)-56.3-24.8-87.7-64.7-92.9

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VCEL-US's change in revenue this period compared to the same period last year of 30.48% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that VCEL-US is holding onto its market share. Also, for comparison purposes, revenues changed by -15.89% and earnings by -126.42% compared to the immediate last period.Spreadsheet

MDT-USMDT-USVCEL-USVCEL-USLeaderLeaderEarnings FocusEarnings FocusLaggardLaggardRevenues FocusRevenues Focus

The company's earnings growth was influenced by year-on-year improvement in gross margins from 37.27% to 49.61% as well as better cost controls. As a result, operating margins (EBITDA margins) rose from -54.08% to -25.46% compared to the same period last year. For comparison, gross margins were 54.76% and EBITDA margins were -12.51% in the last reporting period.Spreadsheet

MDT-USMDT-USVCEL-USVCEL-USDifferentiated; Low CostDifferentiated; Low CostCommodity; Low CostCommodity; Low CostCommodity; High CostCommodity; High CostDifferentiated; High CostDifferentiated; High Cost

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company's performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.



VCEL-US's gross margin improvement has not produced any big difference in its working capital. Working capital days are currently 133.63, compared to last year's level of 69.06 days. This leads Capital Cube to conclude that the improvements in gross margins are likely from operating decisions and not trade-offs with the balance sheet.Spreadsheet

MDT-USMDT-USVCEL-USVCEL-USCustomer FinancedCustomer FinancedCash StarvedCash StarvedSupplier FinancedSupplier FinancedCash RichCash Rich

Cash Versus Earnings - Sustainable Performance?It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.VCEL-US's change in operating cash flow of -25.32% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.Spreadsheet

MDT-USMDT-USVCEL-USVCEL-USCash Flow based EarningsCash Flow based EarningsLikely Non-cash EarningsLikely Non-cash EarningsLow Cash Flow BaseLow Cash Flow BaseLikely Undeclared EarningsLikely Undeclared Earnings

The company's earnings growth has also been influenced by the following factors: (1) Improvements in operating (EBIT) margins from -58.38% to -28.27% and (2) one-time items. The company's pretax margins are now -37.92% compared to -61.08% for the same period last year.Spreadsheet

MDT-USMDT-USVCEL-USVCEL-USOne-time FavorablesOne-time FavorablesLow Earnings BaseLow Earnings BaseOne-time UnfavorablesOne-time Unfavorables



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Vericel Corp. engages in the development of patient-specific expanded cellular therapies for use in the treatment of patients with severe diseases and conditions. It markets two cell therapy products in the United States of America, Carticel autologous cultured chondrocytes, an autologous chondrocyte implant for the treatment of cartilage defects in the knee and Epicel cultured epidermal autografts, a permanent skin replacement for the treatment of patients with deep dermal or full thickness burns. The company was founded on March 24, 1989 and is headquartered in Cambridge, MA.CapitalCube does not own any shares in the stocks mentioned and focuses solely on providing unique fundamental research and analysis on approximately 50,000 stocks and ETFs globally. Try any of our analysis, screener or portfolio premium services free for 7 days. To get a quick preview of our services, check out our free quick summary analysis of VCEL-US.The information presented in this report has been obtained from sources deemed to be reliable, but AnalytixInsight does not make any representation about the accuracy, completeness, or timeliness of this information. This report was produced by AnalytixInsight for informational purposes only and nothing contained herein should be construed as an offer to buy or sell or as a solicitation of an offer to buy or sell any security or derivative instrument. This report is current only as of the date that it was published and the opinions, estimates, ratings and other information may change without notice or publication. Past performance is no guarantee of future results. Prior to making an investment or other financial decision, please consult with your financial, legal and tax advisors. AnalytixInsight shall not be liable for any party's use of this report. AnalytixInsight is not a broker-dealer and does not buy, sell, maintain a position, or make a market in any security referred to herein. One of the principal tenets for us at AnalytixInsight is that the best person to handle your finances is you. By your use of our services or by reading any of our reports, you're agreeing that you bear responsibility for your own investment research and investment decisions. You also agree that AnalytixInsight, its directors, its employees, and its agents will not be liable for any investment decision made or action taken by you and others based on news, information, opinion, or any other material generated by us and/or published through our services. For a complete copy of our disclaimer, please visit our website