AXGN - Earnings call transcript Q1 2024

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Operator

Greetings, and welcome to the AxoGen, Inc. 2024 First Quarter Financial Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded.

It's now my pleasure to introduce your host, Harold Tamayo, Vice President of Finance and Investor Relations. Thank you, Harold.

begin. may You

Harold Tamayo

Good Keith. Thank morning, you, everyone.

question-and-answer of on AxoGen's for year, Zaderej, me Financial an Karen first analysis a is will financial followed and Nir and Karen Chief Executive Officer. discuss quarter the discuss and call of Chairman, will financial Officer provide the session. Chief results, Nir Joining Naor, today's XXXX performance and guidance our and President; outlook our by

Investors the of Today's which being is website. call the broadcast webcast, on is AxoGen via live available section

Following of available end website of the the replay live www.axogeninc.com. will in the call, be at section a the Investors company's

expectations products; started, get our breast, our expand application and make we BLA. OMF approval as nerve regarding this and categories, ability conference of regarding advanced expand remind and of the footprint core accounts, with opportunities revenue statement of I'd surgical complete the revenue Before the applications our treatment you with for projections graft as the that and associated nerve for our protection during anticipated regarding like to marketing including growth forward-looking to will company statements, from for a call, the launch guidance, license Avive+; biologics of regarding our our the timing timing timing statement expectations submission the of well new pain financial

and BLA, the around Graft will cash that Nerve expectations breakeven profitability. a and including will of be Advance and product exclusivity expected market trending Our we the expectation of approval towards flow, that is as reference such flow cash assuming continue our designated designation

such are not to of approvals, hospital and the product staffing regulatory products. in and surgeon on and without future our uncertainties and company's periodic risks assumptions issues, and Forward-looking performance and awareness are current of including, reports based and not annual beliefs and statements the reflected as adoption risks processes limitation, market uncertainties, guarantees subject and are

are forward-looking revise they responsibility as by the representative or as required assume are only statements made forward-looking applicable any and law. statements. of date update The no publicly We except to

non-GAAP press reference company's Investors today's addition a in section of corporate reconciliation In on for our measures, the of the website. presentation please release

Now I Karen? would Karen. over call turn to to like the

Karen Zaderej

and all first you, financial today results. as our Thank you joining discuss for thank we us quarter Harold, XXXX

We trends we're had quarter, revenue a solid and with pleased the first line. bottom both positive and in

progress continue and profitability make Our generating we the flow. performance towards positive underscores to cash

across I which we've the the today's some During I'm the will our and going as on call, progress made both later as Nir made on discuss to side, reporting and changes well highlight in we've business disclosure call.

Revenue for this year. guidance. run rate top pleased by increased quarter with last above of million quarter's XX.X% $XX.X our to was which at We're performance, the midpoint line annual a to the compared

We broad-based guidance. across that a volume in and growth was than the strong at confident closely will products remain April and step-up XXXX Looking in and our February, January quarter, March saw occurred applications. year. achieve our We this our top we line rather typical

scheduled we've breakdown made trauma the I strategic to of in revenue the changes our part and opening comments, As to and disclosure decision alluded between reporting remove my applications. emergent

across Our potential nerve high build business and to on the be growth to targeted and these in applications. nerve going strategy repair continues accounts focused accounts repair of deeper all our

progress revenue our on of estimates metrics business model most provide and performance key the We pertaining application. sales the in accounts our the clarity core to believe productivity and by versus

to and We and color our both to for the the applications in give growth nerve making. progress continue repair talk the opportunities qualitatively us will front you on about of we're

number resulting applications in be and surgeon opportunity upside focused clinical in significant accounts. opportunity increasing applications, to as see our strategy Most footprint the across expand on going accounts our accounts have growth for the our users total core earlier, significant core expansion where our in said core of I existing to deeper in of well multiple As as continues we revenue.

sales core in As annualized, and and as million XX% core continue revenue our X the first represent over $XXX,XXX a to $X generating grow to with look we accounts and potential. our those total core approximately trailing reminder, are XXX sequentially towards the year more quarter XX a months ago. than to We compared of are our largest their full accounts ended revenue. down defined Today, direct over representatives, accounts

add we We to levels. believe primarily territories sales continue by productivity sales evaluate targeted reps revenue and additional as be driven their our will and growth increased approach our force, can of

Our agencies direct sales XX% revenue. represent approximately our sales force independent is that supplemented of total by

technique driving As included in innovations neurotization. for their market, our surgeons repair protection the the innovation which the and leader We of Resensation provide space new to for solutions previously breast key X nerve patients pillar X to to portfolio, and implant-based is advanced growth. a our products announced the

our interest with the this and efforts and Resensation strong track XXXX. of We programs national in patient technique. in number trained to training implant-based surgeon X on teams We're expand education in surgical neurotization saw grew breast new surgeon

continues significant growth represent for opportunity a to AxoGen. protection Nerve

As previously nerve to need for mentioned, product we address nontransfected diverse multiple injuries. the types a saw solutions of

including use and with and AxoGuard the surgeon the new have of the Protector, targeted portfolio of and of positive the surgeon we're first we cases with product expansion Our in been pleased HA+ seeing applications. activation the on launch, progress impact the Nerve launch acceptance

Matrix during Avive+ a expand the resorbable and as phase critical temporary continuing broadens nerve separation tissue Soft targets that with our nerve protection and implant is healing. nerve Soft our Tissue of for to barrier, We're a providing the traumatized functions protection portfolio which protection Matrix, protection Tissue offering Avive+ acutely nerves.

launch the pleased initial on June. market limited with in our track We're we've in feedback surgeon full and received for a release

protection the we a offer and the these to -- portfolio in broadest nerve protection market. repair, continue With this additions, growth portfolio for believe we will drive nerve

body to evidence. growing our updates to of on clinical Moving

demonstrate investments our evidence economics care of Over quality utility health performance, the the made significant we've years, repair to solutions. safety, to nerve and clinical develop

Our as are expected. progressing clinical active programs

trauma, applications in OMF peer-reviewed As quarter, of the had pain. including breast, the of we end and publications, XXX

January, we the to of for nerve AxoGuard neuromas from This comparing scale. the care our Cap. in by and clinical post-marketing symptomatic the study reduction REPOSE positive and and top with standard This protection study its terminated pain endpoint Nerve line neurectomy neurectomy of measured visual analog results as of primary met announced

over an will role Cap important the full clinical that believe reported care study addition, standard statistical by the Nerve course investigators of neurectomy. AxoGuard the in In surgeon We follow-up, that total the of decision-making. the compared for in demonstrated superiority reduction to subjects found XX-month play these findings pain

BLA with Neuro XXXX, to of the completed and BLA We're the mid-XXXX. encouraged to of process now the submission. we're modules on time rolling for content third completed submission the interactions for Graft. positive line Turning have We filing aligned quarter FDA. be meeting a track allow with in will for and a FDA for approval the Advanced the We productive pre-BLA in submission potential believe the and on by a

Act, made biologics under decision time FDA with the In at required the addition, agreement of application. plan initial the Equity by A as study approval an of Pediatric plan the reached final have submitted and is of proposed of we review marketing proposal. pediatric the the division Research

our all construction validation center. end capacity. the Another of processing processing transitioned AxoGen and processing of environment center. of well as provide the as our expand component At we new biologic of facility to believe appropriate our the our was biologic fully our transition XXXX, advancements processing We the advanced to a processing new will

XXX reminder, tissue a complete biological As regulatory a Avance approval product. to from product a XXX of BLA transition Graft will a the Nerve

Importantly, exclusivity the be designated XX we believe the will potential reference providing product Avance biosimilars, of years approval. as market from for

these we're of the in which our talented been first from reflects strategy. pivotal results has conclusion, pleased growth exceptional execution our performance outcomes. quarter, team of with In The achieving AxoGen's the

furthering Looking the our ahead, delivering and to focused revolutionize we're nerve repair. mission of science on

the now further review our details financial changes, over highlights who and I'll provide reporting to guidance. hand on provide our Nir? call Nir, will

Nir Naor

listening business. joined teams to team. It's exciting details months and behind carefully Karen. you, innovative this vast learning various I the quickly very and Thank since AxoGen I've the been the robust been X

changes part reporting. our opportunities diligence, As several enhance my seen and of I different have to

All more of previous that improved in practices our of the comparability the And company's used are strictly to provide were I are widely believe new alternatives, statements practices financial although acceptable voluntary. peers. these the investors changes industry and

allocation changes resource addition, In facilitate these our will provide transparency as we better to profitability. journey and better continue

auditors they acceptable. and agree Our are these reviewed have changes that

involve changes accounting shipping handling these our and One costs. for policy of

sales and goods As of the their warehousing in quarter cost expenses. to related and our they bringing destination, sold, costs facility our handling previously, directly shipping including included overhead, of of in now to included XXXX, whereas were products are final and marketing first

from as costs certain company's we of share expense the ceased quarter costs to the estimate of first the proportionate allocating and on departments. item. such XXXX, Previously, been total had certain Additionally, of line of each allocated based to

is recognize cash that or voluntary, It on common flows. changes, were which per no revenue, loss these net from of operations, all net had to completely impact share important loss

We condensed changes. provide this of in morning our release statements full reclassified have operations to transparency earnings made consolidated available these our XXXX of quarter by

all Correspondingly, all refer the that financial of results changes. these to include XXXX we

where provided In emerging the disclosing disclosure breakout qualitative our This addition, revenue. and was we on based estimates longer are procedure about be used. scheduled products versus will applications no the on information

speaking and investors and model that I commercial advisers, into not best this business execution of disclosure our After looking to our insights conclusion with does into the successful the provide this came disclosure strategy. and

accounts surgeon specialties our is potential applications. on sales into Our penetration increasing multiple strategy and across productivity focused high procedural and

As to our a our align result, with more strategy. we closely have reporting decided

our to turning now And results. financial

growth our price. a of quarter, X.X% in is and favorability unit to from added with a representing $XX.X this XXXX. a This growth in X.X% the increase volume first revenue For XX.X% quarter mix increase attributed million, X.X% was

gross quarter million, in first the gross the XXXX. of margin $XX.X million XX.X% in from was same last for Our from the represents an XX.X%, year. recorded profit the quarter This up increase period of $XX.X

of expenses increased by in $XX.X X.X% Our million, up to total for quarter operating million $XX.X the from QX XXXX.

on the and for royalty Avance. quarter by we marketing the $XX.X total XX% first quarter payments of a to expenses XX.X% from of as and in XXXX the saw as to sales percentage first grew as as of marketing revenue productivity Our improved million. well Sales expenses X.X% termination sales decreased

million development XX.X% $X.X related costs driven Research BLA. to to by increased and the expenses million in from $X.X XXXX, by

of XXXX. total quarter a in XX.X%, in to to at first expenses the quarter $X.X increased in of remained General the last XX.X% flat million up and QX revenue, million As from R&D $XX.X of percentage almost of the expenses previous year. total XXXX compared administrative

XXXX. of with loss $X.XX to quarter compared million per ended share net $X.XX per in net quarter or $X.X or a million $X.X a the The share loss of of first

an million same we year. $X.X net loss or a shift million per last $X.XX or $X.XX However, period adjusted loss adjusted the recorded in share, $X.X of from per quarter net for the of share

quarter first and change to adjusted $X focused our compared the improvement to loss an execution EBITDA stands optimizing to was efficiency in of operational our EBITDA This cost $X.X testament as and a year. million structure. million previous our Adjusted commitment in underscores

As end of the at investments million fourth March was equivalents XXXX. $XX.X million of XX, our compared of cash, cash quarter and of the balance to $XX

Turning now guidance. to our

guidance outlined press maintaining our year we in for As are XXXX. today's release, full

We in $XXX annual XX%. to an to approximately expect represents $XXX rate be growth of million which of range to revenue XX% the million,

for to We guidance be margin also to XX%. the year XX% of the reiterate in full gross range our

flow cash Additionally, period cumulatively net we expect April to from year-end. for be through positive X the

in In summary, first quarter. the our performance with pleased we're

to We revenue drive innovation, our allocation optimize growth will in profitability. and execute invest resource strategies, continue and

to for the At like line this open questions. we'd time,

Operator

Michael with [Operator Instructions] And first from comes Sarcone Jefferies. the question

Michael Sarcone

one. the Karen, first just

bit Your a maybe performance about January a comments and a what and the us volume talked you've of that how uptick on April. on historically? compares in February give Can March happened to what little you color then seen strong in through quarter, and you

Karen Zaderej

Yes.

not with notes, on in part. historically see As into that of where do March. said up the it but year, just in, usually have here in I'm start this pushed and my timing in a the saw as holidays, that the hypothesize get in the of is sort the you that's leads I to We hypothesis Easter saw we we it step-up. lead know, going seen March. my quarter, in, the a as to And step second actually, we April had did summer months

we of systems when a outpatient saw hospital shift was we have saw timing We said in talked March also in a of But number they the to time difference little that procedures might on frame just support their have that in that. across a what elective step to occur. accounts real a out across we're applications, see that with again build this penetration in driving focus saw building account. that up saw products, core Having pleased really business continuing to we core that, said and those growth

Michael Sarcone

Got than it. That's of for saw quarterly sales you March, the the step-up have through that just in particularly does prior And April cadence differs year, that helpful. if given it balance the years? implications any from rather

Karen Zaderej

going end, see I still second that we're to we've step-up past. think in the in and you quarter the a quarter third the see a step-up that seen cadence

So seeing timing I it think of that a It's occurred week slight we're in in. just not there. difference the difference a

Michael Sarcone

any you Got me. for And just updates the it. give Can us on search? one CEO last one

Karen Zaderej

and search an There's going process. candidates, who a of is are independent the sourcing through group process. interview outside search hired the CEO directors they're is who leading They've search. firm in

still that. then want to available in to that that a ultimately be announcement thoughtful process that we'll in remember, we transition. consulting course, I'll if They a So still And selection. of support get time an work standpoint be finalize period for from you as of

Operator

with And Securities. the SMB Mike from next comes question Kratky

Michael Kratky

to little be give odds saw bit X to Or the was thinking kind there was between the on breakdown? I expected? what emerging schedule just a versus about you at of you the forward? mean, color you changes that split should remove Can anything more quarter any the how we those moving with this decision

Nir Naor

the question. Thank Yes. you for

those breakout this X breakout And that with is allocations and this emphasis into provide on qualitative So estimates looking after between I as especially we procedures. on resource that, this mentioned, way promoted and best and our investors, I look the several the to got strategy. business talking and to that best at doesn't commercial our and it analysts provide conclusion the insights based

been spend and accounts, Our our which to surgeon strategy applications into each increase penetration procedures high commercial and has several potential specialties.

the basically rationale. So is that

Karen Zaderej

color in from your again, question, And then standpoint. a commentary

area continue not protection isolated to area. the or continue frankly. see were into excited We growth and products we product, that to one in growth to the across multiple We're applications one see see

If is both part scheduled you of trauma remember, protection our cases. and part of

that to to that And all continue happening these say shifts is is. these And that's so accounts. where core of predominantly is the one pleased That's are we in our grow. growth of we're areas seeing again see to focus

to indicative we're be the of business. account that metrics So our I'm just are core thinking going how more growing

Michael Kratky

quick know a of you're product year? it. Got half And product mix newer from think give second the to on we going XXXX some contribution about follow-up. from should then I of a and maybe But the launches the not details standpoint, the of just of in kind specifics. this But how terms

Karen Zaderej

sorry. I'm

state So again? could you question the

Michael Kratky

half general. had some how year from just second think should launches in we XXXX terms the for of of newer the the Yes, contribution that you've about of product in this and

Karen Zaderej

of included in the in X launch launch the Okay. up. Avive+ Well, here ramping a be first, in with so our of that aren't part we change they will consider were products. guidance, it so will the June, guidance them in guidance protection

new it, surgeons products, to excited got modest get are into value I accounts. of the committees back going to revenue to still to analysis through it impact be going while the all because go think be is like to half So try you've the the year,

other hand, analysis see to starting be happen into allowed before we've brought the revenue. on stocked hospitals good, a that HA+, lot there's So submissions, to through bought has steady it in we're start it can value impact the its pleased place that rightful that or -- of we really of work to and it either use and to contribution, regularly gone really the are in is of in applications. a can't becoming product algorithms to that exact you treatment surgeons' taking reuse and I certain product product. give is some of but see use the an use they getting

Operator

And Cronin Genuity. the Canaccord next comes from with Catlin question

Unknown Analyst

our This is on just end. I [ ] George questions a on of couple Catlin. for have

'XX. growth basis market procedure quarter And bit talk just then maybe first, a the like health Just on seeing general overall was about of in little in what you're a the the year-over-year? percentage

Karen Zaderej

hard hear the It I'm to sorry, was question. again.

repeat could you question? If the

Unknown Analyst

Yes.

So our quarter And basis. in how you're 'XX. just seeing was first on year-over-year market was the more procedure generally, that growth question on a the of the health in understanding just like overall then

Karen Zaderej

of me growth good Yes. in segments. each -- We've seen procedure so the break let

trauma So it. has seasonality to

So we of with we saw the of that seasonality in QX would noted a exception expect timing the step-up. the the

trail instead we April part the March. As that start saw get to active, of of into more people pushed

In of terms part reconstruction, either to scheduled -- technique whether continue a implant-based the flat-based or Resensation have of of deep by demand a patients with some an in increasing areas, see they as interest breast our strong getting we their neurotization, reconstruction.

as in continue train interest So and surgeons breast expansion see to we growth and teams, neurotization area. in that we and surgical

we In are Oral to pain in see continue -- areas. Oral Maxillofacial, Maxillofacial and X smaller

interest see to surgical neurotization the managing in of pain they're where those nerves. procedural the or surgeon doing the treatment growth continue with are We continuing, procedures and seeing

a quarter of all on So we think as train in and in continuing we're breast to a surgeon we saw through good those and areas more see teams growth, cadence more engaged. in that, get again, trajectory the of surgeons particular,

Unknown Analyst

you That's from your Great. Do from kind cadence sell one you helpful. clarity then have your any of the one very on further through just in previous last gross old us. And margin 'XX Yes. facility? as inventory

Nir Naor

Yes.

year cost. produced to comes is mentioned year, in half the higher where sold the the in call, half for, the of at at a of the facility half going current margin guidance will one in be cost. the the inventory a bit the we the be Whereas produced half that a the facility once as of main gross reiterated the from earnings we the entire first last the of for of that ones at the higher XX%. to in -- year last of year the it's So than first year is said, is in reason in And the sold produced, second a that lower again, XX% bit previous year our second the of

Operator

Osborn And the next question comes Fitzgerald. Cantor with from Ross

Ross Osborn

of penetration So starting looks the what given you like outpatient? a and accounts, discuss focus accounts for hospital core mix your site in would on off level core and service

Karen Zaderej

hard It to be repeat our it must if the Again, but -- could we're you was hear. speaker, question.

Ross Osborn

what the like Sure. asking hospital mix level and I just of accounts the penetration and then outpatient. your was core site for looks service

Karen Zaderej

thank No, Yes. you.

So we may to be we that core be our driven site a centers Level by or X as X, of care, our some tend you trauma a see may it or X that center repair. nerve does military in breast might be specialty where hospitals center -- in Level accounts, and the then majority, it Level case

So targets those obviously, for are typically the as, as us academic teaching well hospitals. best

our core fact surgery in it doesn't repair. There surgeon the $XXX,XXX. accounts, an who's ambulatory have doing the center, some large Obviously, That a the it centers. a of be really is ambulatory nerve freestanding could And active center. one is are, artifact if freestanding however, that surgery potential is as that threshold academic same

center. centers Level today, a when biggest to our be to that's the X, hospital ambulatory center, surgery not Level are going X, center. million say trauma X, academic That's Level So or be I $X going over

and that drive core potential build focus, accounts, So accounts the high building continuing continue out to business. again, is to those our

a going I Level mix be of outpatient and inpatient X to talk center, when procedures. that's Now trauma about a

we hours a of through in try to an move the actually as XX technically that's possible, patient that's fair surgery they're classified the and in be that and going outpatient Where procedure. an procedure. So outpatient is trauma done under do hospital amount see

centers. on. quite on said, we not surgery bit Having to lot surgery new structure centers done make that of we've is ones for nerve do The reimbursement work to a been I said It's can them We've focused as that. economically have are centers these have freestanding of focused typically done predominantly. a challenge sense have ambulatory that, ambulatory in we And repair been work. but have reimbursement not typically that where make some, been an as sure economic the for as they there we a it

so that set of payment structure coding And been are we we has to of these move to is But CMS has see not continue health in migration, see quarter-over-quarter, migration viable attractive will it starting expect future that, that economically ambulatory for a centers, that centers. surgery happen. alternative these continue. these under are revolution. up, the now see we to It procedures we a do overall growth into -- and procedures And some and ambulatory an that care the the certainly and surgery new done

Ross Osborn

Avive Tissue, walk And helpful. Great. Would with That's through Soft conversations just year? relative to then lastly us. sort you have your for the very maybe gone how accounts, of

Karen Zaderej

Well, market Sure. done limited a release. we've

So are this gotten into happy broadly with treatment are upfront. it positive. their back product it's available. leading nerve to been for very But this to to that protection. some Surgeons have date very anxious Feedback who has not provided get alternative surgeons we've we've algorithm, extremely

there's meeting where also in protection resorbable need pain. of pain, the predominantly acute in short-term although surgical treatment sometimes Again, trauma, need a

are added opportunity And so an treatment. to them this provide excited their solution in have we this as nerve to

in been positive. more feedback Surgeon favorable, has fact, very

product the withdrew ago ultimately that the the product. that classifications called from market because we voluntarily decided If did you in FDA a regulatory and of years products birth would Avive tissue we that number had withdraw of remember, changes of a we

product handling they're of this terms using characteristics liked product in better that product. like Surgeons the of They that and the the intraoperatively.

these patients. pleased hands And able get to out to all of to our the of really on there so and and to sales reps be in our it use get customers excited we're

Operator

no closing I comments. Zaderej like are to back so floor Karen to this And any turn further would over at the time, there questions for

Karen Zaderej

outstanding earnings this and their work we our Keith. you, participated engagement to thank to want you who as for Well, their extend I to a everyone wrap input. Well, call and call, on today's up team here for thank AxoGen at

the talked lives today crucial about has the to The we've change commitment nerve peripheral reaching injuries. been as continue employees of with we you. in Thank our achievement patients of

Operator

teleconference. you. Thank concludes This today's

You at your you lines your for disconnect may participation. this Thank time.

AxoGen (AXGN) 2 May 242024 Q1 Earnings call transcript