Organogenesis (ORGO) - 2020 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents Organogenesis's unaudited consolidated financial statements and management's discussion Item 1. Unaudited Consolidated Financial Statements This section presents Organogenesis Holdings Inc.'s unaudited consolidated financial statements for Q1 2020, including balance sheets, operations, equity, cash flows, and notes Consolidated Balance Sheets This section presents the company's financial position, detailing assets, liabilities, and equity at quarter-end | Metric | March 31, 2020 (in thousands) | December 31, 2019 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Cash | $46,898 | $60,174 | | Total current assets | $111,398 | $125,600 | | Total assets | $208,340 | $220,687 | | Total current liabilities | $54,825 | $59,894 | | Total liabilities | $168,045 | $165,104 | | Total stockholders' equity | $40,295 | $55,583 | Consolidated Statements of Operations This section details the company's revenues, expenses, and net loss for Q1 2020 and 2019 | Metric | Three Months Ended March 31, 2020 (in thousands) | Three Months Ended March 31, 2019 (in thousands) | | :----------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net revenue | $61,732 | $57,123 | | Cost of goods sold | $18,793 | $16,980 | | Gross profit | $42,939 | $40,143 | | Total operating expenses | $58,023 | $52,264 | | Loss from operations | $(15,084) | $(12,121) | | Total other expense, net | $(1,194) | $(3,508) | | Net loss | $(16,313) | $(15,666) | | Net loss per share — basic and diluted | $(0.16) | $(0.17) | | Weighted-average common shares outstanding | 104,486,924 | 90,604,107 | Consolidated Statements of Redeemable Common Stock and Stockholders' Equity This section outlines changes in redeemable common stock and stockholders' equity for Q1 2020 and 2019 | Item | Three Months Ended March 31, 2020 (in thousands) | Three Months Ended March 31, 2019 (in thousands) | | :------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | | Balance as of December 31 | $55,583 | $47,041 | | Exercise of stock options | $816 | $628 | | Stock-based compensation expense | $209 | $224 | | Net loss | $(16,313) | $(15,666) | | Balance as of March 31 | $40,295 | $32,559 | Consolidated Statements of Cash Flows This section presents the company's cash flows from operating, investing, and financing activities for Q1 2020 and 2019 | Cash Flow Activity | Three Months Ended March 31, 2020 (in thousands) | Three Months Ended March 31, 2019 (in thousands) | | :--------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net cash used in operating activities | $(17,283) | $(9,558) | | Net cash used in investing activities | $(4,243) | $(317) | | Net cash provided by financing activities | $8,230 | $19,133 | | Change in cash and restricted cash | $(13,296) | $9,258 | | Cash and restricted cash, end of period | $47,074 | $30,663 | Notes to Consolidated Financial Statements These notes detail the unaudited consolidated financial statements, covering business, accounting policies, financial condition, debt, equity, and COVID-19 impacts 1. Nature of the Business and Basis of Presentation This note describes Organogenesis's business, regenerative medicine focus, and basis for financial statement presentation - Organogenesis Holdings Inc. is a leading regenerative medicine company focused on Advanced Wound Care and Surgical & Sports Medicine markets, serving hospitals, wound care centers, government facilities, ASCs, and physician offices[24] - The COVID-19 pandemic had no material adverse effect on Q1 2020 financial results but presents significant future risks to demand, sales, staffing, manufacturing, supply chain, and financial covenants, with the company implementing cost-saving measures and monitoring the situation[25][26] - The Avista Merger in December 2018 was accounted for as a reverse merger, with Organogenesis Inc. treated as the accounting acquirer, resulting in no goodwill or other intangible assets recorded from the merger[27][28] - The company has incurred recurring operating losses since inception and had an accumulated deficit of $187.3 million as of March 31, 2020, with management believing current cash and credit facilities will be sufficient for at least 12 months, but future funding may be needed[30][31] 2. Summary of Significant Accounting Policies This note outlines key accounting principles and policies applied in preparing consolidated financial statements - The unaudited consolidated financial statements are prepared in accordance with GAAP and SEC rules for interim reporting, and should be read with the Annual Report on Form 10-K for the fiscal year ended December 31, 2019[32] - No material changes to significant accounting policies previously disclosed in the Annual Report[36] - The company, as an emerging growth company, will adopt ASU 2016-02 (Leases) on January 1, 2021, and ASU 2016-13 (Credit Losses) on January 1, 2023, recognizing cumulative-effect adjustments to retained earnings[38][39] 3. Product and Geographic Sales This note details revenue by product category and geographic region, along with revenue recognition policies - Revenue is generated from Advanced Wound Care and Surgical & Sports Medicine products, recognized when customers obtain control, net of returns, discounts, and GPO rebates[41] | Product Category | Three Months Ended March 31, 2020 (in thousands) | Three Months Ended March 31, 2019 (in thousands) | | :----------------------- | :--------------------------------------------- | :--------------------------------------------- | | Advanced Wound Care | $51,288 | $47,844 | | Surgical & Sports Medicine | $10,444 | $9,279 | | Total net revenue | $61,732 | $57,123 | | Net PuraPly revenue | $32,505 | $25,447 | - Net revenue generated outside the United States represented less than 1% of total net revenue for all periods presented[42] 4. Accounts Receivable, Net This note breaks down accounts receivable, net of allowances for sales returns and doubtful accounts | Metric | March 31, 2020 (in thousands) | December 31, 2019 (in thousands) | | :----------------------------------- | :----------------------------- | :------------------------------- | | Accounts receivable | $35,928 | $42,408 | | Less — allowance for sales returns and doubtful accounts | $(3,204) | $(3,049) | | Accounts receivable, net | $32,724 | $39,359 | | Allowance for Sales Returns and Doubtful Accounts | Three Months Ended March 31, 2020 (in thousands) | Three Months Ended March 31, 2019 (in thousands) | | :------------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | | Balance at beginning of period | $3,049 | $3,420 | | Additions (reductions) | $217 | $(76) | | Write-offs | $(62) | $(52) | | Balance at end of period | $3,204 | $3,292 | 5. Inventories This note details the composition of inventories, including raw materials, work in process, and finished goods | Inventory Category | March 31, 2020 (in thousands) | December 31, 2019 (in thousands) | | :----------------- | :----------------------------- | :------------------------------- | | Raw materials | $10,142 | $9,178 | | Work in process