Vericel Reports Record Second Quarter Revenues of $19.0 Million

8/6/18

CAMBRIDGE, Mass., Aug. 06, 2018 (GLOBE NEWSWIRE) -- Vericel Corporation (NASDAQ:VCEL), a leader in advanced cell therapies for the sports medicine and severe burn care markets, today reported financial results and business highlights for the second quarter ended June 30, 2018.

Second Quarter 2018 Financial Highlights

  • Total net revenues of $19.0 million compared to $17.0 million in the second quarter of 2017; second quarter 2017 revenues included a favorable $1.4 million reversal of a revenue reserve for Carticel® and MACI® related to a contractual dispute between one of the Company’s pharmacy providers and a third-party payer;
  • Gross margins of 59% compared to gross margins of 55% on a GAAP basis and 51% on a non-GAAP basis excluding the impact of the revenue reserve reversal in the second quarter of 2017;
  • Net loss of $4.7 million, or $0.12 loss per share, compared to net loss of $2.4 million, or $0.07 per share on a GAAP basis and $3.7 million, or $0.11 per share, on a non-GAAP basis excluding the impact of the revenue reserve reversal, in the second quarter of 2017;
  • Non-GAAP adjusted EBITDA loss of $1.4 million compared to a loss of $2.7 million in the second quarter of 2017;
  • As of June 30, 2018, the company had $95.0 million in cash compared to $26.9 million in cash at December 31, 2017; and
  • Full year 2018 revenue guidance raised to $80 to $83 million compared to previous full year revenue guidance of $73 to $78 million.

Recent Business Highlights
During and since the second quarter of 2018, the company:

  • Reported record second quarter revenues, marking the fifth consecutive quarter with record revenues for the reported quarter;
  • Deployed the expanded MACI sales force, which increased from 28 to 40 sales representatives;
  • Completed an expansion of MACI manufacturing capacity to support expected growth in MACI demand;
  • Implemented an expanded pharmacy distribution network to continue expansion of MACI payer access;
  • Closed a $74.8 million public offering; and
  • Joined the Russell 3000® Index.

“We continued our strong start to 2018 with solid revenue growth and expanding margins in the second quarter, and we believe that key performance indicators point to continued robust growth for MACI in the second half of the year,” said Nick Colangelo, president and CEO of Vericel. “Moreover, based on our strengthened financial position, we are well positioned to execute on our business and strategic plans.”

Second Quarter 2018 Results
Total net revenues for the quarter ended June 30, 2018 were $19.0 million, which included $14.1 million of MACI®(autologous cultured chondrocytes on porcine collagen membrane) net revenue and $4.9 million of Epicel® (cultured epidermal autografts) net revenue, compared to $12.9 million of Carticel® (autologous cultured chondrocytes) and MACI net revenue and $4.0 million of Epicel net revenue, respectively, in the second quarter of 2017. Total net revenues for the quarter ended June 30, 2017 included a favorable $1.4 million reversal of a revenue reserve for Carticel and MACI related to a contractual dispute between one of the Company’s pharmacy providers and a third-party payer.

Gross profit for the quarter ended June 30, 2018 was $11.3 million, or 59% of net revenues, compared to $9.3 million, or 55% of net revenues on a GAAP basis and 51% on a non-GAAP basis excluding the impact of the revenue reserve reversal, for the second quarter of 2017. See table reconciling non-GAAP measures for more details.

Total operating expenses for the quarter ended June 30, 2018 were $15.5 million compared to $11.8 million for the same period in 2017. The increase in operating expenses was due primarily to a $1.7 million increase in stock-based compensation expense, a $1.6 million increase in MACI related sales and marketing activities, and $0.7 million increase in R&D expense related to the preparations for a MACI pediatric clinical study in the U.S.

Loss from operations for the quarter ended June 30, 2018 was $4.2 million, compared to a loss of $2.5 million on a GAAP basis and $3.9 million on a non-GAAP basis excluding the impact of the revenue reserve reversal for the second quarter of 2017. Material non-cash items impacting the operating loss for the quarter in the current year included $2.5 million of stock-based compensation expense and $0.4 million in depreciation expense, compared to $0.8 million of stock-based compensation expense and $0.4 million in depreciation expense in the second quarter of 2017.

Other expense for the quarter ended June 30, 2018 was $0.4 million compared to other income of $0.1 million for the second quarter of 2017.

Non-GAAP adjusted EBITDA loss was $1.4 million for the quarter ended June 30, 2018 compared to a loss of $2.7 million in the second quarter of 2017.

Vericel’s net loss for the quarter ended June 30, 2018 was $4.7 million, or $0.12 per share, compared to a net loss of $2.4 million, or $0.07 per share on a GAAP basis and $3.7 million, or $0.11 per share on a non-GAAP basis excluding the impact of the revenue reserve reversal, for the second quarter of 2017.

As of June 30, 2018, the company had $95.0 million in cash compared to $26.9 million in cash at December 31, 2017.

Full Year 2018 Financial Guidance
The company now expects total net product revenues for the full year 2018 to be in the range of $80 to $83 million, compared to the previous full year revenue guidance of $73 to $78 million.

About Vericel Corporation

Vericel is a leader in advanced cell therapies for the sports medicine and severe burn care markets. The company markets two cell therapy products in the United States. MACI (autologous cultured chondrocytes on porcine collagen membrane) is an autologous cellularized scaffold product indicated for the repair of symptomatic, single or multiple full-thickness cartilage defects of the knee with or without bone involvement in adults. Epicel (cultured epidermal autografts) is a permanent skin replacement for the treatment of patients with deep dermal or full thickness burns greater than or equal to 30% of total body surface area. For more information, please visit the company's website at www.vcel.com.

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