MiMedx(MDXG) - 2023 Q4 - Annual Results

Financial and Operating Highlights MIMEDX achieved strong Q4 and full-year 2023 performance, with significant net sales growth and a substantial profitability turnaround Q4 and Full Year 2023 Performance Summary MIMEDX reported strong Q4 and full-year 2023 performance, with net sales increasing 17% and 20% and a significant profitability turnaround Q4 & Full Year 2023 Key Financial Metrics (in millions) | Metric | Q4 2023 | Q4 YoY Growth | Full Year 2023 | FY YoY Growth | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $87 | 17% | $321 | 20% | | GAAP Net Income | $53 | N/A | $58 | N/A | | Adjusted EBITDA | $21 | 189.9% | $58.5 | 733.2% | | Adjusted EBITDA Margin | 24% | - | 18.2% | - | - Q4 2023 Net Income of $53 million included a significant one-time, non-cash tax benefit of $40 million[1] Management Commentary Management highlighted 2023's transformative growth and profitability, projecting low double-digit net sales growth and over 20% Adjusted EBITDA margin for 2024 - Full-year 2023 top-line growth of 20% exceeded expectations and provides strong momentum for the future[3] - The company has successfully unlocked robust cash flow generation that is expected to improve with scale[3] - The outlook for 2024 includes low double-digit net sales percentage growth and an Adjusted EBITDA margin exceeding 20%[3] Key Corporate Developments MIMEDX launched EPIEFFECT®, a new Advanced Wound Care product, and completed significant financial restructuring and debt refinancing - Launched EPIEFFECT®, a new addition to the Advanced Wound Care product portfolio[4] - Announced the conversion of all outstanding Series B convertible preferred stock to common stock[4] - Completed a debt refinancing with new senior secured credit facilities in January 2024 and subsequently repaid a $30 million revolving credit facility with cash on hand[4] Detailed Financial Results Discussion (Q4 & FY 2023) This section details MIMEDX's Q4 and full-year 2023 financial performance, analyzing net sales, gross profit, operating expenses, net income, and cash position Net Sales Net sales grew 17% in Q4 2023 to $87 million and 20% for the full year to $321 million, driven by strong performance across Wound and Surgical markets Net Sales Performance (in millions) | Period | 2023 Net Sales | 2022 Net Sales | YoY Growth | | :--- | :--- | :--- | :--- | | Q4 | $87 | $74 | 17% | | Full Year | $321 | $268 | 20% | Gross Profit and Margin Gross margin improved in Q4 2023 to 84.1% and for the full year to 83.0%, driven by a favorable product mix and enhanced production yields Gross Profit and Margin Analysis (in millions) | Period | 2023 Gross Profit | 2023 Gross Margin | 2022 Gross Margin | | :--- | :--- | :--- | :--- | | Q4 | $73 | 84.1% | 80.7% | | Full Year | $267 | 83.0% | 82.0% | Operating Expenses Full-year 2023 operating expenses saw modest SG&A growth, flat R&D, and a significant 58.3% reduction in investigation-related expenses Full Year Operating Expense Comparison (in millions) | Expense Category | FY 2023 | FY 2022 | Change | | :--- | :--- | :--- | :--- | | SG&A | $211 | $209 | +1.1% | | Research & Development | $13 | $13 | 0% | | Investigation, Restatement & Related | $5 | $12 | -58.3% | Net Income The company achieved a significant shift to profitability, with full-year 2023 net income of $67 million, largely due to a $37 million non-cash income tax benefit Net Income (Loss) from Continuing Operations (in millions) | Period | 2023 | 2022 | | :--- | :--- | :--- | | Q4 | $51 | $2 | | Full Year | $67 | ($20) | - The positive results in 2023 were significantly impacted by a $37 million non-cash income tax provision benefit related to the reversal of a valuation allowance[14] Cash Position Cash and cash equivalents increased to $82 million as of December 31, 2023, up from $66 million in 2022, driven by higher sales collections and lower operating expenses Cash and Cash Equivalents (in millions) | Date | Amount | | :--- | :--- | | Dec 31, 2023 | $82 | | Sep 30, 2023 | $81 | | Dec 31, 2022 | $66 | 2024 Financial Outlook This section outlines MIMEDX's financial projections for 2024, targeting low double-digit net sales growth and an Adjusted EBITDA margin exceeding 20% Financial Goals MIMEDX targets low double-digit net sales growth and an Adjusted EBITDA margin above 20% for full-year 2024, driven by growth in Wound and Surgical markets - The company's annual goal is to deliver net sales percentage growth in the low double-digits[17] - For full year 2024, the company expects Adjusted EBITDA as a percentage of net sales to be above 20%[19] - Growth in 2024 is expected to be driven by the private office setting (EPIEFFECT launch) and various Surgical use cases (AMNIOEFFECT)[18] Financial Statements This section presents MIMEDX's condensed consolidated balance sheets, statements of operations, and cash flows for the reported periods Condensed Consolidated Balance Sheets The balance sheet strengthened significantly as of December 31, 2023, with total assets growing to $239.0 million and stockholders' equity turning positive Key Balance Sheet Items (in thousands) | Account | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $82,000 | $65,950 | | Total current assets | $164,261 | $134,198 | | Total assets | $239,047 | $171,430 | | Total liabilities | $96,330 | $96,924 | | Total stockholders' equity (deficit) | $142,717 | $(17,988) | Condensed Consolidated Statements of Operations The 2023 income statement reflects significant operational improvement, with gross profit increasing to $266.8 million and a swing to operating income and net income Full Year Income Statement Highlights (in thousands) | Account | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :--- | :--- | :--- | | Net sales | $321,477 | $267,841 | | Gross profit | $266,843 | $219,525 | | Operating income (loss) | $37,116 | $(14,727) | | Net income (loss) | $58,228 | $(30,197) | | Diluted net income (loss) per share | $0.37 | $(0.33) | Condensed Consolidated Statements of Cash Flows The company demonstrated a strong turnaround in cash generation in 2023, with net cash from operating activities at $26.8 million and a positive net change in cash Full Year Cash Flow Summary (in thousands) | Cash Flow Activity | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :--- | :--- | :--- | | Net cash from operating activities | $26,775 | $(17,893) | | Net cash used in investing activities | $(2,155) | $(2,660) | | Net cash used in financing activities | $(8,570) | $(580) | | Net change in cash | $16,050 | $(21,133) | Reconciliation of Non-GAAP Measures This section provides a reconciliation of MIMEDX's non-GAAP financial measures, including Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, and Free Cash Flow Adjusted EBITDA Adjusted EBITDA significantly increased to $21.2 million (24.4% margin) in Q4 2023 and $58.5 million for the full year Adjusted EBITDA Reconciliation Summary (in thousands) | Metric | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :--- | :--- | :--- | :--- | :--- | | Net Income (loss) | $53,476 | $(415) | $58,228 | $(30,197) | | Adjusted EBITDA | $21,217 | $7,315 | $58,482 | $7,019 | | Adjusted EBITDA Margin | 24.4% | 9.8% | 18.2% | 2.6% | Adjusted Net Income (Loss) Adjusted Net Income for Q4 2023 was $10.8 million and $23.6 million for the full year, a significant improvement from the prior year's loss Adjusted Net Income (Loss) Reconciliation (in thousands) | Metric | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | $53,476 | $(415) | $58,228 | $(30,197) | | Adjusted net income (loss) | $10,827 | $2,265 | $23,565 | $(11,032) | Adjusted Earnings Per Share (EPS) Adjusted EPS for full-year 2023 was $0.10, a positive swing from a ($0.16) loss in 2022, reflecting normalized earnings Adjusted EPS vs. GAAP Diluted EPS | Metric | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :--- | :--- | :--- | :--- | :--- | | GAAP diluted EPS | $0.32 | $(0.02) | $0.37 | $(0.33) | | Adjusted EPS | $0.04 | $0.01 | $0.10 | $(0.16) | Free Cash Flow The company generated positive Free Cash Flow of $24.8 million for full-year 2023, a substantial improvement from a negative $19.4 million in 2022 Free Cash Flow Reconciliation (in thousands) | Metric | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :--- | :--- | :--- | :--- | :--- | | Net cash from operating activities | $10,257 | $(5,624) | $26,775 | $(17,893) | | Capital expenditures | $(427) | $(667) | $(1,987) | $(1,514) | | Free Cash Flow | $9,830 | $(6,291) | $24,788 | $(19,407) |