MiMedx(MDXG) - 2025 Q1 - Quarterly Report

Part I - FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for Q1 2025, including balance sheets, income statements, equity statements, cash flows, and explanatory notes Condensed Consolidated Balance Sheets As of March 31, 2025, total assets increased to $270.4 million from $263.9 million, driven by higher cash and accounts receivable, while total liabilities decreased to $67.6 million, leading to an increase in total stockholders' equity to $202.8 million Condensed Consolidated Balance Sheets (in thousands) | | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $200,112 | $191,886 | | Total assets | $270,420 | $263,915 | | Total current liabilities | $42,619 | $45,595 | | Total liabilities | $67,644 | $70,808 | | Total stockholders' equity | $202,776 | $193,107 | Condensed Consolidated Statements of Operations For Q1 2025, net sales increased 4.1% to $88.2 million, but net income decreased to $7.0 million from $9.3 million year-over-year due to higher cost of sales and operating expenses, resulting in diluted net income per share of $0.05 Statements of Operations Highlights (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net sales | $88,205 | $84,709 | | Gross profit | $71,647 | $71,722 | | Operating income | $8,251 | $13,198 | | Net income | $7,023 | $9,261 | | Diluted net income per common share | $0.05 | $0.06 | Condensed Consolidated Statements of Stockholders' Equity Total stockholders' equity increased to $202.8 million as of March 31, 2025, primarily driven by net income and share-based compensation - Stockholders' equity grew to $202.8 million as of March 31, 2025, up from $193.1 million at the end of 2024, mainly due to net income and share-based compensation[19] Condensed Consolidated Statements of Cash Flows In Q1 2025, net cash provided by operating activities was $5.3 million, while investing and financing activities used $0.4 million and $2.9 million respectively, leading to a net increase in cash of $2.0 million and a cash balance of $106.4 million Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $5,299 | $5,978 | | Net cash used in investing activities | ($406) | ($6,024) | | Net cash used in financing activities | ($2,878) | ($33,467) | | Net change in cash | $2,015 | ($33,513) | | Cash and cash equivalents, end of period | $106,431 | $48,487 | Notes to the Condensed Consolidated Financial Statements The notes provide detailed information on the company's wound care and surgical business, accounting policies, and financial statement breakdowns, including revenue by product line, credit agreement details, and ongoing litigation with the FDA regarding AXIOFILL - The company is engaged in litigation with the FDA over the regulatory classification of its AXIOFILL product. MIMEDX filed a suit in March 2024 challenging the FDA's determination, and oral arguments on summary judgment motions were held in March 2025[54][55] Net Sales by Product Line (in thousands) | Product Line | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Wound | $56,073 | $57,049 | | Surgical | $32,132 | $27,660 | | Total | $88,205 | $84,709 | - In January 2024, the company entered into a new credit agreement with Citizens Bank, including a $30.0 million Revolving Credit Facility and a $20.0 million Term Loan Facility, to refinance a previous loan[41] - The company has a single operating segment, and its Chief Executive Officer is identified as the Chief Operating Decision Maker (CODM)[58] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the Q1 2025 financial results, highlighting a 4% year-over-year net sales growth to $88 million, driven by a 16.2% increase in the Surgical product line, which offset a 1.7% decline in the Wound segment, with GAAP net income at $7 million and sufficient liquidity for the next twelve months Q1 2025 Financial Highlights | Metric | Value | Change vs. Prior Year Period | | :--- | :--- | :--- | | Net Sales ($ million) | $88 | +4% | | Wound Net Sales ($ million) | $56 | -1.7% | | Surgical Net Sales ($ million) | $32 | +16.2% | | GAAP Net Income ($ million) | $7 | - | | GAAP Net Income Margin (%) | 8% | - | | Cash Balance ($ million) | $106 | +$58 | Results of Operations Net sales increased 4.1% to $88.2 million in Q1 2025, driven by 16.2% growth in Surgical products offsetting a 1.7% decline in Wound products, while gross margin decreased to 81.2% and operating expenses rose due to higher sales commissions, legal costs, and R&D investments - Surgical product sales grew 16.2% to $32.1 million, driven by AMNIOFIX, AMNIOEFFECT, and HELIOGEN products[70] - Wound product sales decreased 1.7% to $56.1 million, attributed to competitive challenges in the private office setting and sales team turnover, partially offset by the addition of CELERA[69] - Gross profit margin declined to 81.2% from 84.7% in the prior year, primarily due to production variances, product mix, and amortization of acquired intangible assets[71] - SG&A expenses increased by $4.8 million (8.8%) year-over-year, driven by higher sales commissions and incremental legal and regulatory dispute costs[72] Liquidity and Capital Resources The company maintains a strong liquidity position with cash and cash equivalents at $106.4 million and a current ratio of 4.7, supported by $5.3 million in operating cash flow and available credit facilities, affirming sufficient capital for the next twelve months - As of March 31, 2025, the company had $106.4 million in cash and cash equivalents and a current ratio of 4.7[81] - Net cash provided by operating activities decreased to $5.3 million in Q1 2025 from $6.8 million in Q1 2024, due to lower collections and greater expenses[77] - The company entered into a new Citizens Credit Agreement in January 2024, consisting of a $20.0 million Term Loan Facility and a $30.0 million Revolving Credit Facility (which was undrawn as of March 31, 2025)[83] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk exposure is interest rate risk from its variable-rate Term Loan Facility, which is tied to the 1-month term SOFR, and it does not utilize hedging instruments to mitigate this risk - As of March 31, 2025, the interest rate on the Term Loan Facility was 6.7%. A hypothetical 100 basis point (1%) change in the SOFR rate would impact annualized interest expense by approximately $0.2 million[89] Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures were effective at a reasonable assurance level as of the end of the reporting period[90] - No changes occurred in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[91] Part II - OTHER INFORMATION Item 1. Legal Proceedings The company is involved in various claims and lawsuits arising in the ordinary course of business, with their ultimate outcomes currently uncertain, and specific details on matters like the AXIOFILL litigation are provided in the financial statement notes - The company is involved in numerous claims and lawsuits arising from its ordinary business activities, with outcomes that are currently uncertain[93] Item 1A. Risk Factors No material changes to the company's previously disclosed risk factors were reported for the period - No material changes to the Company's risk factors were reported for the period[94] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities but repurchased 301,301 shares at an average price of $8.16 per share during the quarter to satisfy tax withholding obligations related to employee restricted stock unit vesting Company's Equity Securities Purchases (Q1 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | January 2025 | — | $ — | | February 2025 | 186,242 | $ 8.30 | | March 2025 | 115,059 | $ 7.93 | | Total | 301,301 | $ 8.16 | - The share purchases represent net settlement of shares upon vesting of employee restricted stock units to satisfy tax withholding obligations[96] Item 5. Other Information During the first quarter of 2025, no director or officer of the company adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended March 31, 2025[99] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications required by the Sarbanes-Oxley Act and XBRL data files for financial reporting - Filed exhibits include CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act, along with XBRL instance and schema documents[100]