MARIETTA, Ga., Feb. 23, 2016 /PRNewswire/ -- MiMedx Group, Inc. (NASDAQ: MDXG), the leading regenerative medicine company utilizing human amniotic membrane and other birth tissues, human skin and bone, and patent-protected processes and proprietary platforms to develop and market advanced products and therapies, announced today its record results for the full year and fourth quarter ended December 31, 2015.
Full Year 2015 Highlights are:
- 4th consecutive year of meeting or exceeding revenue guidance
- Revenue of $187.3 million increased by 58% over 2014
- Revenue nears upper end of MiMedx guidance range
- Gross margin of 89% remains unchanged from its record level in 2014
- Wound Care sales grew by more than 50% in 2015
- Surgical, Sports Medicine & Orthopedics revenue grew more than 85% in 2015
- Adjusted EBITDA* of $44 million represents a 113% improvement over 2014
- Net income of $29.4 million represents a 373% improvement over 2014
Fourth Quarter 2015 Highlights are:
- 17th consecutive quarter of meeting or exceeding revenue guidance
- Revenue of $51.8 million increased by 31% over Q4 2014
- Revenue in upper range of MiMedx Q4 guidance
- Gross margin of 90%
- 16th consecutive quarter of positive Adjusted EBITDA*
- Adjusted EBITDA* of $12.9 million represents a 51% improvement over Q4 2014
- Net income of $13.4 million represents a 249% improvement over Q4 2014
Results for Full Year and Fourth Quarter Ended December 31, 2015
For the year ended December 31, 2015, the Company recorded record revenue of $187.3 million, a $69.1 million or 58% increase over 2014 revenue of $118.2 million. The Company’s gross margin for the year ended December 31, 2015, was 89%, which was equal to the gross margin in the same period of 2014 in spite of market price decreases. Adjusted EBITDA* for the year ended December 31, 2015, was $44 million, a $23.3 million or 113% improvement, as compared to Adjusted EBITDA* of $20.7 million for the year ended December 31, 2014. Net Income for the year ended December 31, 2015, was $29.4 million, or $0.26 per diluted common share, a $23.2 million or 373% improvement, as compared to Net Income of $6.2 million, or $0.05 per diluted common share, in the same period of 2014.
The Company recorded record revenue for the fourth quarter of 2015 of $51.8 million, a $12.3 million or 31% increase over 2014 fourth quarter revenue of $39.6 million. The Company’s gross margin for the quarter ended December 31, 2015, was 90%, equal to the gross margin in the fourth quarter of 2014. Adjusted EBITDA* for the quarter ended December 31, 2015, was $12.9 million, a $4.4 million or 51% improvement, as compared to Adjusted EBITDA* of $8.5 million for the fourth quarter of 2014. Net Income for the fourth quarter of 2015, which included an income tax benefit of $5.7 million due to the release of our net operating loss valuation allowance, was $13.4 million, or $0.12 per diluted common share, a $9.5 million or 249% improvement, as compared to Net Income of $3.8 million, or $0.03 per diluted common share, in the fourth quarter of 2014.
Management Commentary on Results
Parker H. “Pete” Petit, Chairman and CEO, said, “We are pleased with our 2015 results which were accomplished in spite of a year of price decreases caused by the Centers for Medicare and Medicaid Services (“CMS”) pass through expiration on our EpiFix® allografts. The fourth quarter marked our 17th straight quarter of meeting or exceeding our revenue guidance. Our 2015 Wound Care revenue grew by more than 50% and Surgical, Sports Medicine and Orthopedics (“SSO”) revenue increased by more than 85%. A strategic imperative for the Company was to propel our growth rate in SSO sales, and we clearly executed on that strategy.”
“Our profit performance during 2015 was equally as impressive,” added Petit. “The fourth quarter was our 16th consecutive quarter of recording positive Adjusted EBITDA*. Our Net Income for the fourth quarter of $13.4 million was a 249% improvement over the fourth quarter of 2014, and the full year Net Income increased by 373% to a record $29.4 million. 2015 was definitely a year of considerable top line and bottom line growth, and one that any CEO would be pleased to report.”
Bill Taylor, President and COO, stated, “During the year, we accelerated our investments in clinical trials. At the end of the year, we had 21 clinical studies ongoing with 73 clinical sites under management. As of now, our Compendium of peer-reviewed published studies includes 28 Randomized Control Trials (RCTs), scientific studies and significant case studies. The investment in this strategy has contributed immensely to our successes in reimbursement and regulatory approvals.”
Petit commented, “During 2015, we continued to gain reimbursement coverage from additional commercial health plans and state Medicaid programs. By year end 2015, we had 168 commercial health plans representing more than 170 million covered lives providing insurance coverage. Within the 168 commercial health plans, Blue Cross/Blue Shield plans encompassing 45 states plus the District of Columbia also provide insurance coverage for their members. In addition to the commercial health plans, 36 million Medicare and 49.1 million Medicaid beneficiaries have insurance coverage for our allografts. Unmatched in our industry, our Compendium of peer-reviewed, published clinical studies plays a crucial part in gaining reimbursement coverage from commercial health plans and state Medicaid programs.”
Over the past 12 months, MiMedx has been investigating certain acquisition candidates that could immediately enhance the Company’s presence in select surgical markets. “We have known for years that the growth opportunities in the SSO area would require a more diverse sales organization and sales channels consisting of direct sales employees as well as sales agents and distributors. Early in 2016, we completed the acquisition of Stability Biologics. The acquisition of Stability Biologics is a perfect complement to our surgical market sector strategy as it has brought us an experienced sales distribution organization consisting of about 100 independent sales representatives that are already focused in specific surgical areas. Stability Biologics has recently begun to develop revenue associated with their new products as a manufacturer. Stability Biologics brings us the ideal combination of HCT/P products, intellectual property, sales and distribution and employee talents in a strategic market sector with great growth potential. The acquisition enables us to immediately bring our surgically related products to the market through the Stability Biologics sales representatives and distributors, and likewise, our direct sales force will be able to market the Stability Biologics portfolio of products,” said Petit.
“We have again accelerated the pace of expansion of our sales force. This phase of sales force expansion began in the fourth quarter and is expected to continue throughout the first quarter of 2016. We anticipate that an additional 30 to 40 highly experienced sales professionals will be added during this expansion phase that will affect all of our sales verticals, including SSO and Wound Care, as well as our National Accounts function. Our direct sales force has now grown to more than 240 sales professionals focusing on all of the Company’s sales verticals,” added Taylor.
Liquidity and Cash Flow
Cash on hand as of December 31, 2015, was $28.5 million, as compared to $46.6 million as of December 31, 2014. Net working capital as of December 31, 2015 increased $2.2 million to $69.5 million, as compared to $67.3 million as of December 31, 2014. The Company recorded positive net cash flow from operating activities of $18.8 million for the year ended December 31, 2015 due primarily to increased Adjusted EBITDA*.
The Company continued to pursue its share repurchase strategy during the quarter with $19.1 million in repurchased shares, bringing the total amount since the inception of the program in late 2015 through December 31, 2015 to $46.3 million in repurchased shares.
GAAP Earnings
The Company recorded Net Income of $29.4 million for the year ended December 31, 2015, or $0.26 per diluted common share, as compared to a Net Income of $6.2 million, or $0.05 per diluted common share, for the year ended December 31, 2014. The Company recorded Net Income of $13.4 million for the quarter ended December 31, 2015, or $0.12 per diluted common share, as compared to a Net Income of $3.8 million, or $.03 per diluted common share, for the quarter ended December 31, 2014.
Full year 2015 Research & Development (“R&D”) expenses were $8.4 million or 4.5% of Net Sales, an increase of $1.4 million over full year 2014 R&D expenses of $7.0 million. Fourth quarter 2015 R&D expenses were $2.3 million or 4.4% of Net Sales, an increase of $500,000 over fourth quarter 2014 R&D expenses of $1.8 million.
Selling, general and administrative (“SG&A”) expenses for full year 2015 were $133.4 million, a $42.9 million increase over full year 2014 SG&A expenses of $90.5 million. SG&A expenses for the fourth quarter of 2015 were $36.5 million, a $7.3 million increase over fourth quarter of 2014 SG&A expenses of $29.2 million. Increases in SG&A were due to the continuation of the buildup of the Company’s National Accounts function, direct sales force in Wound Care and SSO sales channels, as well as patent litigation costs.
Revenue Breakdown
The Company distinguishes revenue in two categories: (1) Wound Care and (2) SSO, which includes Original Equipment Manufacturer (“OEM”) applications. For fourth quarter of 2015, Wound Care revenue was $39.9 million, representing 75.3% of total revenue, and SSO (including OEM) revenue was $11.9 million, representing 24.7% of total revenue.
Outlook for First Quarter and Full Year 2016
MiMedx reiterates its first quarter and full year 2016 revenue guidance that was communicated in the Company’s press release of January 10, 2016. That guidance was inclusive of the Company’s recent acquisition of Stability Biologics and it included:
- Full Year 2016 revenue guidance in the range of $260 to $270 million
- Full Year 2016 Adjusted EPS* for 2016 forecasted to be in the range of $0.33 to $0.37
- First quarter of 2016 revenue estimated to be in the range of $55.5 to $58 million
Earnings Call
MiMedx management will host a live broadcast of its fourth quarter and full year 2015 results conference call on Tuesday, February 23, 2016, beginning at 10:30 a.m. eastern time. A listen-only simulcast of the MiMedx Group conference call will be available on-line at the Company’s website at www.mimedx.com. A 30-day on-line replay will be available approximately one hour following the conclusion of the live broadcast. The replay can also be found on the Company’s website at www.mimedx.com.
Use of Non-GAAP Financial Measures
Management has disclosed adjusted financial measurements in this press announcement that present financial information that is not in accordance with generally accepted accounting principles (“GAAP”). These measurements are not a substitute for GAAP measurements, although Company management uses these measurements as aids in monitoring the Company’s on-going financial performance from quarter-to-quarter and year-to-year on a regular basis and for benchmarking against other medical technology companies.
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