On May 8, 2018 Vericel Corporation (NASDAQ:VCEL), a leader in advanced cell therapies for the sports medicine and severe burn care markets, reported financial results and business highlights for the first quarter ended March 31, 2018 (Press release, Vericel, MAY 8, 2018, View Source [SID1234526266]).
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First Quarter 2018 Financial Highlights
Total net revenues of $18.0 million compared to $9.4 million in the first quarter of 2017; first quarter 2017 revenues included a $2.8 million revenue reserve for Carticel and MACI related to a contractual dispute between one of the Company’s pharmacy providers and a third-party payer;
Gross margins of 57% compared to gross margins of 24% in the first quarter of 2017;
Net loss of $7.7 million, or $0.21 loss per share, which included warrant-related expense of $2.9 million, compared to net loss of $9.8 million, or $0.31 per share, in the first quarter of 2017, which included $0.1 million of warrant income;
Non-GAAP adjusted EBITDA loss of $2.6 million compared to a loss of $5.9 million in the first quarter of 2017; and
As of March 31, 2018, the company had $29.8 million in cash compared to $26.9 million in cash at December 31, 2017.
Recent Business Highlights
During and since the first quarter of 2018, the company:
Achieved record first quarter revenues and the fourth straight quarter of 30% or greater revenue growth versus the same quarter of the prior year;
Achieved the Company’s first quarter of positive operating cash flow;
Deployed the expanded MACI (autologous cultured chondrocytes on porcine collagen membrane) sales force, which increased from 28 to 40 sales representatives;
Launched the MACI ‘It’s Your Move’ campaign in partnership with world champion swimmer, five-time Olympian, and best-selling author Dara Torres; and
Announced the publication of results from the Phase 3 SUMMIT Extension Study in the American Journal of Sports Medicine demonstrating sustained clinical benefit of MACI out to five years.
"We had a strong start to 2018 with significant revenue growth for both MACI and Epicel, and delivered the fourth straight quarter of 30% or higher revenue growth compared to the same quarter of the prior year," said Nick Colangelo, president and CEO of Vericel. "We also reported significant margin improvements and generated the Company’s first quarter of positive operating cash flow as we continue to move our current business towards sustained profitability."
First Quarter 2018 Results
Total net revenues for the quarter ended March 31, 2018 were $18.0 million, which included $12.1 million of MACI net revenue and $6.0 million of Epicel (cultured epidermal autografts) net revenue, compared to $5.0 million of Carticel (autologous cultured chondrocytes) and MACI net revenue and $4.4 million of Epicel net revenue, respectively, in the first quarter of 2017. Total net revenues for the quarter ended March 31, 2017 included a $2.8 million revenue reserve for Carticel and MACI related to a contractual dispute between one of the Company’s pharmacy providers and a third-party payer. Total net revenues increased 93% compared to the first quarter of 2017, with MACI revenue increasing 141% and Epicel revenue increasing 37%, respectively, compared to the same period in 2017. Excluding the revenue reserve in the first quarter of 2017, non-GAAP net revenues increased 49%, with MACI revenue increasing 55% compared to first quarter of 2017.
Gross profit for the quarter ended March 31, 2018 was $10.4 million, or 57% of net revenues, compared to $2.3 million, or 24% of net revenues, for the first quarter of 2017.
Total operating expenses for the quarter ended March 31, 2018 were $14.7 million compared to $11.9 million for the same period in 2017.
Loss from operations for the quarter ended March 31, 2018 was $4.3 million, compared to a loss of $9.6 million for the first quarter of 2017. Material non-cash items impacting the operating loss for the quarter included $1.3 million of stock-based compensation expense and $0.4 million in depreciation expense.
Other expense for the quarter ended March 31, 2018 was $3.3 million compared to $0.2 million for the same period in 2017. The change in other expense for the quarter is primarily due to a $2.9 million change in the fair value of warrants.
Non-GAAP adjusted EBITDA loss was $2.6 million for the quarter ended March 31, 2018 compared to a loss of $5.9 million in the same period in 2017. See table reconciling non-GAAP measures for more details.
Vericel’s net loss for the quarter ended March 31, 2018 was $7.7 million, or $0.21 per share, compared to a net loss of $9.8 million, or $0.31 per share, for the same period in 2017.
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As of March 31, 2018, the company had $29.8 million in cash compared to $26.9 million in cash at December 31, 2017.
"Our first quarter results demonstrated continued momentum moving into our second year with MACI on the market and that investments made in Epicel are continuing to drive additional utilization," added Mr. Colangelo. "We believe that an expanded MACI sales force in 2018, together with patient-focused marketing initiatives, will further strengthen our position in the market and build the foundation for strong revenue growth in the years ahead."
Conference Call Information
Today’s conference call will be available live at 8:30am Eastern time in the Investor Relations section of the Vericel website at View Source." target="_blank" title="View Source." rel="nofollow">View Source Please access the site at least 15 minutes prior to the scheduled start time in order to download the required audio software if necessary. To participate in the live call by telephone, please call (877) 312-5881 and reference Vericel Corporation’s first-quarter 2018 investor conference call. If calling from outside the U.S., please use the international phone number (253) 237-1173.
If you are unable to participate in the live call, the webcast will be available at View Source until May 8, 2019. A replay of the call will also be available until 11:30am (EST) on May 13, 2018 by calling (855) 859-2056, or from outside the U.S. (404) 537-3406. The conference ID is 1564056.