Vericel (US:VCEL)2024-11-07 13:48PART I - FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Unaudited Q3 2024 financial statements show strong revenue growth, a reduced net loss, and asset expansion Condensed Consolidated Balance Sheets Total assets grew to $390.4 million by September 30, 2024, primarily from property and equipment, alongside rising liabilities and equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total current assets | $190,520 | $205,631 | | Property and equipment, net | $88,413 | $41,635 | | Total assets | $390,405 | $353,657 | | Total current liabilities | $41,346 | $45,749 | | Total liabilities | $132,933 | $127,705 | | Total shareholders' equity | $257,472 | $225,952 | Condensed Consolidated Statements of Operations Q3 2024 revenue grew 27% to $57.9 million, reducing net loss to $0.9 million, reflecting strong nine-month performance Statement of Operations Summary (in thousands, except per share data) | Metric | Q3 2024 | Q3 2023 | Nine Months 2024 | Nine Months 2023 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $57,905 | $45,581 | $161,848 | $132,520 | | Gross profit | $41,653 | $30,608 | $113,608 | $87,069 | | Loss from operations | $(2,465) | $(5,057) | $(13,960) | $(19,195) | | Net loss | $(901) | $(3,660) | $(9,445) | $(16,175) | | Net loss per share (basic & diluted) | $(0.02) | $(0.08) | $(0.19) | $(0.34) | Condensed Consolidated Statements of Cash Flows Operating activities generated $35.9 million in cash, while investing used $64.4 million, resulting in a net cash decrease of $16.5 million Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $35,921 | $25,225 | | Net cash (used in) provided by investing activities | $(64,383) | $4,958 | | Net cash provided by financing activities | $11,946 | $2,311 | | Net (decrease) increase in cash | $(16,516) | $32,494 | - The significant use of cash in investing activities was driven by $50.2 million in expenditures for property and equipment, a substantial increase from $12.2 million in the prior year, mainly related to the new Burlington facility15115 Notes to Condensed Consolidated Financial Statements The notes provide details on business operations, accounting policies, key product launches, and the company's liquidity position - The company markets three products: MACI, Epicel, and NexoBrid, with MACI Arthro commercially available in Q3 20242021 - Existing cash, investments, and product sales are expected to support operations for at least 12 months from the financial statement issuance date25 Revenue by Product (Nine Months Ended Sep 30, in thousands) | Product | 2024 | 2023 | | :--- | :--- | :--- | | MACI (implants, kits, instruments) | $128,973 | $108,114 | | Epicel | $30,606 | $23,808 | | NexoBrid | $2,269 | $598 | | Total revenue | $161,848 | $132,520 | - A new 126,000 sq. ft. Burlington facility lease began in June 2023, with rent starting July 2024, resulting in a $71.6 million right-of-use asset and $97.5 million in lease liabilities as of September 30, 2024525459 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes strong financial performance to revenue growth and the MACI Arthro launch, with operating expenses rising due to headcount and new facility costs Results of Operations Q3 2024 revenue grew 27.0% to $57.9 million, driven by volume and price, improving gross profit margin despite increased operating expenses Revenue by Product (in thousands) | Product | Q3 2024 | Q3 2023 | % Change | Nine Months 2024 | Nine Months 2023 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | MACI | $44,656 | $37,589 | 18.8% | $128,973 | $108,114 | 19.3% | | Epicel | $12,184 | $7,394 | 64.8% | $30,606 | $23,808 | 28.6% | | NexoBrid | $1,065 | $598 | 78.1% | $2,269 | $598 | 279.4% | | Total | $57,905 | $45,581 | 27.0% | $161,848 | $132,520 | 22.1% | - Selling, General and Administrative expenses increased due to higher headcount, employee expenses, and marketing programs supporting the MACI arthroscopic launch107108 - Gross profit increased due to revenue growth combined with a primarily fixed manufacturing cost structure104 Liquidity and Capital Resources The company maintains strong liquidity with $70.4 million cash and $81.0 million investments, ensuring sufficient funds for the next 12 months Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $35,921 | $25,225 | | Net cash (used in) provided by investing activities | $(64,383) | $4,958 | | Net cash provided by financing activities | $11,946 | $2,311 | - The company has an undrawn $150.0 million five-year senior secured revolving credit agreement as of September 30, 2024122 - Management believes current cash, investments, and borrowing capacity will support operations for at least 12 months from the financial statement issuance date120 Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes to market risk exposures have occurred since December 31, 2023, as previously disclosed in the Annual Report - No material changes have occurred to the company's market risk exposures since the end of the last fiscal year129 Item 4. Controls and Procedures Disclosure controls and procedures were effective as of September 30, 2024, with no material changes to internal control over financial reporting - Disclosure controls and procedures were effective as of September 30, 2024, as concluded by Certifying Officers130 - No material changes were made to internal control over financial reporting during the three months ended September 30, 2024132 PART II — OTHER INFORMATION Item 1. Legal Proceedings The company is not currently a party to any material legal proceedings - As of the filing date, Vericel is not involved in any material legal proceedings133 Item 1A. Risk Factors No material changes have occurred to the risk factors previously disclosed in the company's 2023 Form 10-K - No material changes have occurred to the risk factors disclosed in the company's 2023 Form 10-K134 Item 5. Other Information No Section 16 officers or directors adopted, modified, or terminated Rule 10b5-1 trading arrangements during Q3 2024 - No Section 16 officers or directors adopted, modified, or terminated a Rule 10b5-1 trading arrangement during the three months ended September 30, 2024136 Item 6. Exhibits This section provides an index of exhibits filed as part of the Quarterly Report on Form 10-Q - The report includes an Exhibit Index listing all documents filed with the Form 10-Q139140