AxoGen(US:AXGN)2019-05-09 02:18Financial Data and Key Metrics Changes - First quarter revenue grew 35% to $23.3 million, driven by increased surgeon acceptance and a growing commercial team [7][21] - Gross profit for Q1 was $19.6 million, a 35% increase compared to Q1 of 2018, with a gross margin of 84% [21] - Net loss in Q1 was $9.5 million or $0.24 per share, compared to a net loss of $5.6 million or $0.16 per share in the prior year [23] Business Line Data and Key Metrics Changes - The number of active accounts increased 21% to 731, up from 604 in Q1 of 2018 [21][17] - Sales and marketing expense in Q1 was $16.4 million, up 32% over the prior year, while R&D spending increased to $4.1 million from $2.1 million [22] Market Data and Key Metrics Changes - The trauma market remains the largest segment, but emerging markets in OMF and breast are growing at a faster rate [50] Company Strategy and Development Direction - The company is focused on five pillars of growth: building market awareness, educating surgeons, growing clinical evidence, executing sales plans, and introducing new products [10][19] - Investments are being made to expand the treatment algorithms for surgeons to include all surgical implant products [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the foundation being built for long-term sustainable growth despite increased operating expenses [24][25] - The company anticipates revenue for 2019 to be between $109 million and $114 million, with gross margins expected to exceed 80% [24] Other Important Information - The company announced the appointment of two new board members with extensive healthcare leadership experience [9] - The RECON trial is expected to complete enrollment by summer 2020, with BLA submission anticipated in late 2021 or early 2022 [8][58] Q&A Session Summary Question: Sales results and pricing mix - The revenue growth was primarily driven by volume, with net price impact in the mid-single digit range [28] Question: Sales management transition - The sales team has welcomed new leadership, and attrition has been normal [30] Question: Guidance for the year - Management is confident in the solid start but prefers to wait for another quarter before adjusting guidance [32] Question: Direct rep productivity - Direct reps are growing faster than the overall company average [36] Question: Independent agencies strategy - The company is rationalizing direct sales territories and adding independent agencies in select geographies [38] Question: Long-term sales rep strategy - The company aims to maintain a territory split at around $2 million to sustain high growth [41] Question: Spending growth moderation - Operating expenses are expected to align more closely with revenue growth as the year progresses [43] Question: Revenue contribution from new hires - Most revenue growth is expected from reps hired in 2018, with new hires contributing modestly [46] Question: Account growth pace - The company has not provided specific guidance on account growth pace, focusing instead on penetration in existing accounts [48] Question: RECON trial confidence - Management is confident in completing enrollment by summer 2020, with a BLA submission expected in late 2021 or early 2022 [57] Question: Educational programs - Educational programs typically involve 20 to 25 surgeons and are seen as significant drivers of future business [60]