Vericel (US:VCEL)2025-07-31 12:50PART I - FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Unaudited financial statements for Q2 2025 show total revenues of $63.2 million and $115.8 million for the six-month period, with a net loss of $0.55 million for the quarter Condensed Consolidated Balance Sheets As of June 30, 2025, total assets increased slightly to $435.6 million, total liabilities decreased to $128.8 million, and shareholders' equity grew to $306.8 million Balance Sheet Summary (in thousands) | Balance Sheet Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $80,532 | $74,520 | | Total current assets | $204,577 | $212,777 | | Total assets | $435,608 | $432,722 | | Liabilities & Equity | | | | Total current liabilities | $41,132 | $50,286 | | Total liabilities | $128,799 | $140,755 | | Total shareholders' equity | $306,809 | $291,967 | Condensed Consolidated Statements of Operations Q2 2025 total revenue increased 20.1% to $63.2 million, with gross profit up 27.4%, significantly narrowing net loss to $0.55 million from $4.7 million in Q2 2024 Q2 2025 vs Q2 2024 Statement of Operations (in thousands) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total revenue | $63,240 | $52,662 | +20.1% | | Gross profit | $46,613 | $36,601 | +27.4% | | Total operating expenses | $48,642 | $42,632 | +14.1% | | Loss from operations | ($2,029) | ($6,031) | +66.4% | | Net loss | ($553) | ($4,682) | +88.2% | | Net loss per share | ($0.01) | ($0.10) | +90.0% | Six Months 2025 vs 2024 Statement of Operations (in thousands) | Metric | H1 2025 | H1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total revenue | $115,838 | $103,943 | +11.4% | | Gross profit | $82,886 | $71,955 | +15.2% | | Total operating expenses | $97,707 | $83,450 | +17.1% | | Loss from operations | ($14,821) | ($11,495) | -28.9% | | Net loss | ($11,799) | ($8,544) | -38.1% | | Net loss per share | ($0.24) | ($0.18) | -33.3% | Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities for H1 2025 was $14.8 million, with net cash used in investing activities at $24.2 million, resulting in a $4.5 million decrease in total cash Six-Month Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $14,814 | $25,737 | | Net cash used in investing activities | ($24,170) | ($43,171) | | Net cash provided by financing activities | $4,839 | $6,422 | | Net decrease in cash | ($4,517) | ($11,012) | - Expenditures for property and equipment were $22.3 million for the first six months of 2025, compared to $30.8 million in the same period of 202417 Notes to Condensed Consolidated Financial Statements Notes detail the company's products (MACI, Epicel, NexoBrid), revenue breakdown by product, and confirm sufficient liquidity for the next 12 months - The company markets three products: MACI (cartilage repair), Epicel (severe burn care), and NexoBrid (eschar removal in burn patients)2021 - In August 2024, the FDA approved MACI Arthro™, allowing for arthroscopic delivery of the MACI implant, which became commercially available in Q3 202420 Revenue by Product (in thousands) | Product | Q2 2025 | Q2 2024 | Change (%) | H1 2025 | H1 2024 | Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | MACI | $53,458 | $44,135 | +21.1% | $99,755 | $84,316 | +18.3% | | Epicel | $8,614 | $7,758 | +11.0% | $13,578 | $18,422 | -26.3% | | NexoBrid | $1,168 | $769 | +51.9% | $2,505 | $1,205 | +107.9% | | Total | $63,240 | $52,662 | +20.1% | $115,838 | $103,943 | +11.4% | - The company has a $150.0 million five-year senior secured revolving credit agreement, with no outstanding borrowings as of June 30, 20256062 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes Q2 revenue growth to increased MACI volume and price, alongside Epicel and NexoBrid growth, and confirms sufficient liquidity for the next 12 months Overview Vericel is a biopharmaceutical company focused on sports medicine and severe burn care, with MACI Arthro™ expected to drive growth by expanding the target surgeon base - The company believes the availability of MACI Arthro provides a significant growth opportunity and has expanded its target surgeon base from 5,000 to 7,00094 - Vericel plans to initiate a clinical trial for MACI use in the ankle beginning in 2025, which it views as a significant long-term growth driver94 - The company is monitoring the conflict in the Middle East as its supplier for NexoBrid, MediWound, has manufacturing facilities in Israel, but does not currently anticipate a material disruption to supply8485 Results of Operations Q2 2025 total revenue increased 20.1% to $63.2 million, driven by MACI, Epicel, and NexoBrid growth, while SG&A expenses rose due to headcount and marketing Q2 2025 vs Q2 2024 Revenue by Product (in thousands) | Product | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | MACI | $53,458 | $44,135 | $9,323 | 21.1% | | Epicel | $8,614 | $7,758 | $856 | 11.0% | | NexoBrid | $1,168 | $769 | $399 | 51.9% | | Total | $63,240 | $52,662 | $10,578 | 20.1% | - The increase in SG&A expenses for Q2 and H1 2025 was primarily due to higher headcount and employee expenses, increased marketing programs, and facility costs for the new Burlington facility107108 - R&D expenses decreased in Q2 2025 compared to Q2 2024, mainly due to higher costs related to the MACI Arthro project in 2024105 Liquidity and Capital Resources As of June 30, 2025, the company had $80.5 million in cash and $83.7 million in investments, with management confirming sufficient liquidity for at least the next 12 months - The company had $80.5 million in cash and cash equivalents, plus $83.7 million in investments as of June 30, 2025112 - Management believes current cash, investments, and available borrowing capacity will be sufficient to support operations for at least 12 months from the report's issuance119 - The company has a $150.0 million five-year senior secured revolving credit agreement available for working capital and general corporate purposes, with no outstanding borrowings121 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company states that its exposures to market risk have not changed materially since December 31, 2024 - There have been no material changes in the company's market risk exposures since the end of the last fiscal year126 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting - The company's Certifying Officers concluded that disclosure controls and procedures were effective as of June 30, 2025127 - No material changes were made to the company's internal control over financial reporting during the second quarter of 2025129 PART II — OTHER INFORMATION Item 1. Legal Proceedings The company reports that it is not currently a party to any material legal proceedings - As of the filing date, Vericel is not involved in any material legal proceedings130 Item 1A. Risk Factors The company highlights a specific risk related to potential disruptions at the FDA due to inadequate funding and personnel changes, which could delay regulatory approvals - The company identifies a risk that inadequate funding and potential disruptions at the FDA could delay the review and approval of new products or product changes132 - Potential disruptions at the FDA could specifically impact the review of submissions for the MACI Ankle clinical trial, for which enrollment is expected to begin in the second half of 2025133 - The change in presidential administration in 2025 creates uncertainty regarding FDA policies and regulations, which could prevent, limit, or delay regulatory approvals135 Item 5. Other Information Three Section 16 officers or directors adopted Rule 10b5-1 trading plans for the potential sale of company common stock during Q2 2025 - Three insiders adopted Rule 10b5-1 trading plans during the quarter ended June 30, 2025: - Kevin McLaughlin (Director): Potential sale of up to 35,000 shares - Robert Zerbe (Chairman): Potential sale of up to 7,500 shares - Jonathan Hopper (CMO): Potential sale of up to 37,847 shares139 Item 6. Exhibits This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q, including certifications by the CEO and CFO