On February 25, 2020 Vericel Corporation (NASDAQ:VCEL), a leader in advanced therapies for the sports medicine and severe burn care markets, reported financial results and business highlights for the fourth quarter and year ended December 31, 2019, and provided full-year 2020 financial guidance (Press release, Vericel, FEB 25, 2020, View Source [SID1234554707]).
Fourth Quarter 2019 Financial Highlights

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Total net product revenues increased 26% to $39.4 million, compared to $31.3 million in the fourth quarter of 2018, marking the eleventh consecutive quarter with record revenues for the reported quarter;

MACI net revenue of $33.6 million and Epicel net revenue of $5.8 million;

Gross margin of 73%, compared to gross margin of 72% in the fourth quarter of 2018;

Net income of $9.5 million, or $0.20 per share, compared to $5.2 million, or $0.11 per share, in the fourth quarter of 2018; and

Non-GAAP adjusted EBITDA of $12.8 million, compared to $7.7 million in the fourth quarter of 2018.
Full-Year 2019 Financial Highlights

Total net product revenues increased 30% to $117.9 million, compared to $90.9 million in 2018;

MACI net revenue of $91.6 million and Epicel net revenue of $26.2 million;

Gross margin of 68%, compared to gross margin of 65% in 2018;

Net loss of $9.7 million, or $0.22 per share, which includes the $17.5 million upfront license payment to MediWound Ltd. for North American rights to NexoBrid;

Non-GAAP adjusted net income, excluding the $17.5 million upfront license payment to MediWound, of $7.8 million, or $0.18 per share, compared to a net loss of $8.1 million, or $0.20 per share, in 2018;

Non-GAAP adjusted EBITDA of $21.2 million, compared to $4.7 million in 2018; and

As of December 31, 2019, the company had $79.0 million in cash and investments, compared to $82.9 million as of December 31, 2018; excluding the $17.5 million license payment to MediWound, the company’s cash balance increased by $13.6 million in 2019.
Business Highlights and Updates

Initiated the MACI sales force expansion from 49 to 76 sales territories and from six to nine sales regions, which remains on track to be implemented on April 1, 2020;

Announced initiation of the NexoBrid Expanded Access Treatment Protocol (NEXT) to treat patients with deep partial- and full-thickness burns in the United States during the preparation and review of the NexoBrid Biologics License Application;

Announced that that the U.S. Biomedical Advanced Research and Development Authority (BARDA) has begun procuring NexoBrid for emergency stockpile as part of the U.S. Department of Health and Human Services’ mission to build national preparedness for public health medical emergencies; and

Planning a mid-2020 submission of the NexoBrid Biologics License Application to the FDA.
"Our fourth-quarter and full-year results reflect a landmark year for the company in which we not only continued to deliver significant revenue growth, but also achieved strong profit growth and added an exciting new product to our portfolio," said Nick Colangelo, President and CEO of Vericel. "With expected sustained strong double-digit growth ahead for MACI, together with continued growth for Epicel and the anticipated launch of NexoBrid, we believe that Vericel is well-positioned to deliver substantial revenue, profit, and cash flow growth in the years ahead."
2020 Financial Guidance
The company expects total net revenues for 2020 to be in the range of $141 million to $146 million, including full-year revenue of approximately $3.0 million from BARDA’s emergency stockpile purchases of NexoBrid.
Fourth Quarter 2019 Results
Total net product revenues for the quarter ended December 31, 2019 increased 26% to $39.4 million, compared to $31.3 million in the fourth quarter of 2018. Total net product revenues for

the quarter included $33.6 million of MACI (autologous cultured chondrocytes on porcine collagen membrane) net revenue and $5.8 million of Epicel (cultured epidermal autografts) net revenue, compared to $25.1 million of MACI net revenue and $6.2 million of Epicel net revenue, respectively, in the fourth quarter of 2018.
Gross profit for the quarter ended December 31, 2019 was $28.8 million, or 73% of net revenues, compared to $22.7 million, or 72% of net revenues, for the fourth quarter of 2018.
Total operating expenses for the quarter ended December 31, 2019 were $19.6 million, compared to $16.7 million for the same period in 2018. The increase in operating expenses was primarily due to a $1.3 million increase in stock-based compensation expense, a $0.7 million increase in MACI sales force expenses driven by the expansion in the second quarter of 2019, and a $0.7 million increase in patient reimbursement support services.
Vericel’s net income for the quarter ended December 31, 2019 was $9.5 million, or $0.20 per share, compared to $5.2 million, or $0.11 per share, for the fourth quarter of 2018.
Non-GAAP adjusted EBITDA was $12.8 million for the quarter ended December 31, 2019, compared to $7.7 million in the fourth quarter of 2018. A table reconciling non-GAAP measures is included in this press release for reference.
Full-Year 2019 Results
Total net product revenues for the year ended December 31, 2019 increased 30% to $117.9 million, compared to $90.9 million in 2018. Total net product revenues included $91.6 million of MACI net revenue and $26.2 million of Epicel net revenue, compared to $67.7 million of MACI net revenue and $23.1 million of Epicel net revenue, respectively, in 2018.
Gross profit for the year ended December 31, 2019 was $80.3 million, or 68% of net revenues, compared to $58.7 million, or 65% of net revenues, in 2018.
Total operating expenses for the year ended December 31, 2019 were $91.5 million, including the $17.5 million upfront license payment to MediWound for North American rights to NexoBrid. Excluding the $17.5 million license payment, operating expenses were $74.0 million, compared to $62.6 million in 2018. Other increases in operating expenses include a $5.0 million increase in stock-based compensation expenses, an incremental $2.6 million in MACI sales force expenses driven by the expansion in the second quarter of 2019, a $2.4 million increase in marketing expenses, and a $1.8 million increase in patient reimbursement support services.
Vericel’s net loss for the year ended December 31, 2019 was $9.7 million, or $0.22 per share, which includes the $17.5 million upfront license payment to MediWound for North American rights to NexoBrid. Non-GAAP adjusted net income, excluding the $17.5 million upfront license payment to MediWound, was $7.8 million, or $0.18 per share, compared to a net loss of $8.1 million, or $0.20 per share, in 2018. A table reconciling non-GAAP measures is included in this press release for reference.

Non-GAAP adjusted EBITDA was $21.2 million for the year ended December 31, 2019, compared to $4.7 million in 2018. A table reconciling non-GAAP measures is included in this press release for reference.
As of December 31, 2019, the company had $79.0 million in cash and investments, compared to $82.9 million as of December 31, 2018. Excluding the $17.5 million license payment to MediWound, the company’s cash balance increased by $13.6 million in 2019.
Conference Call Information
Today’s conference call will be available live at 8:30am Eastern Standard Time and can be accessed through the Investor Relations section of the Vericel website at View Source." target="_blank" title="View Source." rel="nofollow">View Source A slide presentation with highlights from today’s conference call will be available on the webcast and in the Investor Relations section of the Vericel website. 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 second-quarter 2019 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 February 25, 2021. A replay of the call will also be available until 11:00am (EDT) on March 1, 2020 by calling (855) 859-2056, or from outside the U.S. at (404) 537-3406. The conference ID is 1269587.