Organogenesis (US:ORGO)2022-11-09 21:41Financial Performance - For the nine months ended September 30, 2022, the company generated $335.4 million in net revenue, a decrease of 1.3% from $339.5 million in the same period of 2021[114]. - The net income for the nine months ended September 30, 2022, was $8.0 million, down from $43.2 million in the prior year, reflecting a significant decline[114]. - The company reported a gross profit of $257.5 million for the nine months ended September 30, 2022, compared to $257.9 million for the same period in 2021, showing a slight decrease[132]. - Net income for the three months ended September 30, 2022, was $0.215 million, a significant decrease from $12.577 million in the same period in 2021[134]. - Adjusted EBITDA for the three months ended September 30, 2022, was $11.605 million, compared to $21.650 million in the same period in 2021, reflecting a decline of 46.3%[134]. - Net revenue for the three months ended September 30, 2022, was $116.859 million, a 3% increase from $113.753 million in the same period in 2021[136]. - Advanced Wound Care products generated net revenue of $109.514 million in the three months ended September 30, 2022, up 2% from $107.341 million in 2021[136]. - Surgical & Sports Medicine products saw a revenue increase of 15% to $7.345 million in the three months ended September 30, 2022, compared to $6.412 million in 2021[137]. - Net revenue from PuraPly products was $63.7 million for the three months ended September 30, 2022, up from $57.0 million in the same period in 2021[138]. Expenses - Selling, general and administrative expenses increased to $215.5 million for the nine months ended September 30, 2022, up from $182.9 million in 2021, reflecting increased investments in market development[132]. - Research and development expenses rose to $28.4 million for the nine months ended September 30, 2022, compared to $22.5 million in the prior year, indicating a focus on product development[132]. - Research and development expenses rose by 7% to $9.575 million in the three months ended September 30, 2022, from $8.953 million in 2021[141]. - Selling, general and administrative expenses increased by 27% to $79.328 million in the three months ended September 30, 2022, from $62.369 million in 2021[142]. Cash Flow and Capital Expenditures - Net cash provided by operating activities was $17.1 million for the nine months ended September 30, 2022, compared to $44.0 million for the same period in 2021[151]. - During the nine months ended September 30, 2022, the company used $23.2 million in cash for capital expenditures[154]. - The company expects that its cash on hand and working capital will be sufficient to fund operating expenses and capital expenditures for at least 12 months beyond the filing date of the quarterly report[147]. Debt and Borrowings - As of September 30, 2022, the company had outstanding borrowings of $73.1 million under the Term Loan Facility of the 2021 Credit Agreement[162]. - The 2021 Credit Agreement provides for a term loan facility not to exceed $75.0 million and a revolving credit facility not to exceed $125.0 million[157]. - As of September 30, 2022, the company had $73.1 million in borrowings outstanding under its term loan facility[170]. - There were no borrowings outstanding under the revolving credit facility as of the same date[170]. - Borrowings under both facilities bear interest at variable rates, with a 10% change in interest rates having no material impact on debt obligations or financial position[170]. Financial Position - As of September 30, 2022, the company had an accumulated deficit of $52.8 million, indicating ongoing financial challenges since inception[114]. - As of September 30, 2022, the company had working capital of $141.3 million, including $107.3 million in cash and cash equivalents[147]. Market and Operational Risks - The company continues to monitor the impact of COVID-19 on its operations, although it has not materially affected financial results through September 30, 2022[115]. - The majority of the company's operations are located in the United States, with minimal exposure to foreign currency fluctuations[171]. - The functional currency of the Swiss subsidiary is the U.S. dollar, indicating limited foreign currency risk[171]. - The company has engaged in contracts with vendors in currencies other than the U.S. dollar, but the exposure has been minimal due to short transaction durations[171]. - Established policies and procedures are in place for managing market risk and financial instruments[168]. - The company is primarily exposed to interest rate risk and currency exchange rate variability[168]. - Overall, the company believes it does not have a material exposure to foreign currency risk[171]. - The management of market risk is governed by internal processes established by the company[168]. Strategic Initiatives - The company plans to transition Dermagraft manufacturing to Massachusetts, which is expected to result in substantial long-term cost savings[118]. - The company is focusing on clinical development of ReNu for knee osteoarthritis treatment, having discontinued clinical development of NuCel[117].