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AxoGen, Inc.$54.15$1.402.65%

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 AxoGen, Inc. Reports 2017 First Quarter Financial Results
   Thursday, May 04, 2017 4:03:30 PM ET

AxoGen, Inc. (AXGN ), a global leader in developing and marketing innovative surgical solutions for peripheral nerve injuries, today reported financial results and business highlights for the first quarter ended March 31, 2017.

First Quarter 2017 Financial Results and Recent Business Highlights

-- Revenue of $12.2 million, up 51% compared to $8.1 million in the first quarter of 2016

-- Gross margin of 84.4% compared to 82.7% in the first quarter of 2016

-- Net loss for the first quarter of 2017 is $3.8 million, or $0.11 per share, compared with a net loss of $3.7 million, or $0.12 per share, in the first quarter of 2016

-- Adjusted EBITDA loss of $2.2 million compared to Adjusted EBITDA loss of $2.3 million in Q1 2016

"We are pleased to complete another successful quarter, with record revenues of $12.2 million and growth of 51 percent," stated Karen Zaderej, President and Chief Executive Officer. "We are successfully executing against our strategic initiatives and driving awareness and growth in the emerging peripheral nerve repair market."

Additional First Quarter and Recent Operational Highlights

-- Increased active accounts in the first quarter to 465, up 37% from 340 in Q1 2016

-- We ended the quarter with 49 direct sales reps and have 50 as of today’s call; we also have 20 independent distributors

-- Conducted three national education courses in the first quarter, and four year-to-date

-- Increased the number of peer reviewed clinical publications for our surgical portfolio by six to a total of 50 year to date

-- Conducted a second clinical advisory panel with leading reconstructive breast surgeons - the panel reviewed patient, surgeon, and health care stakeholder perspectives and needs, as well as how the AxoGen portfolio of products may help surgeons overcome current clinical challenges related to restoring breast sensation for women who choose autologous reconstruction following a mastectomy

-- Ended the quarter with $25.9 million in cash compared to $30 million at the end of 2016. Net cash burn in Q1 was $4.1 million and includes $1.2 million payment of the 2016 all-employee annual performance bonus

-- Ended the quarter with $25 million of total bank debt, compared to $25 million at the end of 2016

"We continue to focus on surgeon education and growing the body of clinical evidence for our nerve repair solutions," added Zaderej. "As a result we are building awareness of peripheral nerve repair and expanding usage of our products with innovator and early adopter surgeons, while also working to develop the middle adopter market."

2017 Financial Guidance

Management reiterates 2017 annual revenue will grow at least 40% over 2016 revenue and gross margins will remain above 80%.

Upcoming Investor Events

Members of the AxoGen senior management team will participate at the following upcoming conferences and events:

-- Jefferies Global Healthcare Conference in New York City on June 6

-- JMP Securities Conference in New York City on June 21-22

Conference Call

The Company will host a conference call and webcast for the investment community today at 4:30 p.m. ET. Investors interested in participating by phone are invited to call toll free at 1-877-407-0993 or use the direct dial-in number 1-201-689-8795. Those interested in listening to the conference call live via the Internet can do so by visiting the Investors page of the Company’s website at www.axogeninc.com and clicking on the webcast link on the Investors home page.

Following the conference call, a replay will be available on the Company’s website at www.axogeninc.com under Investors.

About AxoGen

AxoGen (AXGN) is a global leader in innovative surgical solutions for peripheral nerve injuries. AxoGen is the only company focused specifically on the science, development and commercialization of technologies for peripheral nerve regeneration and repair. We are passionate about restoring nerve function and quality of life to patients with peripheral nerve injuries by providing innovative, clinically proven and economically effective repair solutions for surgeons and health care providers. Peripheral nerves provide the pathways for both motor and sensory signals throughout the body. Every day, people suffer traumatic injuries or undergo surgical procedures that impact the function of their peripheral nerves. Damage to a peripheral nerve can result in the loss of muscle or organ function, the loss of sensory feeling, or the initiation of pain.

AxoGen’s portfolio of products includes Avance Nerve Graft, an off-the-shelf processed human nerve allograft for bridging severed nerves without the comorbidities associated with a second surgical site, AxoGuard Nerve Connector, a porcine submucosa extracellular matrix (ECM) coaptation aid for tensionless repair of severed nerves, AxoGuard Nerve Protector, a porcine submucosa ECM product used to wrap and protect injured peripheral nerves and reinforce the nerve reconstruction while preventing soft tissue attachments, and Avive Soft Tissue Membrane, a minimally processed human umbilical cord membrane that may be used as a resorbable soft tissue covering to separate tissue layers and modulate inflammation in the surgical bed. Along with these core surgical products, AxoGen also offers AcroVal(TM) Neurosensory & Motor Testing System and AxoTouch(TM) Two-Point Discriminator. These evaluation and measurement tools assist health care professionals in detecting changes in sensation, assessing return of sensory, grip, and pinch function, evaluating effective treatment interventions, and providing feedback to patients on nerve function. The AxoGen portfolio of products is available in the United States, Canada, the United Kingdom, and several other European and international countries.

Cautionary Statements Concerning Forward-Looking Statements

This Press Release contains "forward-looking" statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations or predictions of future conditions, events, or results based on various assumptions and management’s estimates of trends and economic factors in the markets in which we are active, as well as our business plans. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "projects," "forecasts," "continue," "may," "should," "will," and variations of such words and similar expressions are intended to identify such forward-looking statements. The forward-looking statements may include, without limitation, statements regarding our assessment on our internal control over financial reporting, our growth, our 2017 guidance, product development, product potential, financial performance, sales growth, product adoption, market awareness of our products, data validation, our visibility at and sponsorship of conferences and educational events. The forward-looking statements are subject to risks and uncertainties, which may cause results to differ materially from those set forth in the statements. Forward-looking statements in this release should be evaluated together with the many uncertainties that affect AxoGen’s business and its market, particularly those discussed in the risk factors and cautionary statements in AxoGen’s filings with the Securities and Exchange Commission. Forward-looking statements are not guarantees of future performance, and actual results may differ materially from those projected. The forward-looking statements are representative only as of the date they are made and, except as required by law, AxoGen assumes no responsibility to update any forward-looking statements, whether as a result of new information, future events, or otherwise.

AXOGEN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
                                                                                                                           March 31,
                                                                                                                           2017               December 31,
                                                                                                                           (unaudited)        2016
Assets
Current assets:
Cash and cash equivalents                                                                                           $      25,913,765         $      30,014,405
Accounts receivable, net                                                                                                   8,383,925                 8,052,203
Inventory                                                                                                                  5,850,730                 5,458,840
Prepaid expenses and other                                                                                                 749,437                   511,804
Total current assets                                                                                                       40,897,857                44,037,252
Property and equipment, net                                                                                                1,484,279                 1,494,247
Intangible assets                                                                                                          890,688                   828,979
                                                                                                                    $      43,272,824         $      46,360,478
Liabilities and Shareholders’ Equity (Deficit)
Current liabilities:
Borrowings under revolving loan agreement                                                                           $      3,976,320          $      4,025,023
Accounts payable and accrued expenses                                                                                      6,660,267                 7,002,165
Current maturities of long term obligations                                                                                22,913                    20,899
Deferred revenue, current                                                                                                  35,250                    33,282
Total current liabilities                                                                                                  10,694,750                11,081,369
Long Term Obligations, net of current maturities and deferred financing fees                                               20,276,634                20,265,745
Deferred lease                                                                                                             89,888                    --
Deferred revenue                                                                                                           86,818                    92,215
Total liabilities                                                                                                          31,148,090                31,439,329
Shareholders’ equity (deficit):
Common stock, $.01 par value; 50,000,000 shares authorized; 33,063,960 and 33,008,865 shares issued and outstanding        330,639                   330,088
Additional paid-in capital                                                                                                 133,439,943               132,474,884
Accumulated deficit                                                                                                        (121,645,848 )            (117,883,823 )
Total shareholders’ equity                                                                                                 12,124,734                14,921,149
                                                                                                                    $      43,272,824         $      46,360,478
AXOGEN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months ended March 31, 2017 and 2016
(unaudited)
                                                                                                                           2017                      2016
Revenues                                                                                                            $      12,241,073         $      8,111,759
Cost of goods sold                                                                                                         1,915,648                 1,405,591
Gross profit                                                                                                               10,325,425                6,706,168
Costs and expenses:
Sales and marketing                                                                                                        8,610,482                 6,205,875
Research and development                                                                                                   1,411,136                 978,340
General and administrative                                                                                                 3,504,039                 2,144,757
Total costs and expenses                                                                                                   13,525,657                9,328,972
Loss from operations                                                                                                       (3,200,232   )            (2,622,804   )
Other expense:
Interest expense                                                                                                           (507,549     )            (1,003,027   )
Interest expense - deferred financing costs                                                                                (44,491      )            (30,810      )
Other expense                                                                                                              (9,753       )            (19,450      )
Total other expense                                                                                                        (561,793     )            (1,053,287   )
Net loss                                                                                                            $      (3,762,025   )     $      (3,676,091   )
Weighted Average Common Shares outstanding - basic and diluted                                                             33,026,433                29,994,066
Loss Per Common share - basic and diluted                                                                           $      (0.11        )     $      (0.12        )
AXOGEN, INC.
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
Three Months ended March 31, 2017 and 2016
(unaudited)
                                                                                                                           Three Months Ended
                                                                                                                           March 31,          March 31,
                                                                                                                           2017                      2016
Net loss                                                                                                            $      (3,762,025   )     $      (3,676,091   )
Depreciation and amortization expense                                                                                      108,359                   78,856
Amortization expense of intangible assets                                                                                  23,189                    16,016
Income Taxes                                                                                                               9,801                     21,427
Interest expense                                                                                                           507,549                   1,003,027
Interest expense - deferred financing costs                                                                                44,491                    30,810
EBITDA - non GAAP                                                                                                   $      (3,068,636   )     $      (2,525,955   )
Non Cash Stock Compensation Expense                                                                                        848,589                   182,955
Adjusted EBITDA - non GAAP                                                                                          $      (2,220,047   )     $      (2,343,000   )
AXOGEN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months ended March 31, 2017 and 2016
(unaudited)
                                                                                                                    2017                      2016
Cash flows from operating activities:
Net loss                                                                                                            $      (3,762,025   )     $      (3,676,091   )
Adjustments to reconcile net loss to net cash used for operating activities:
Depreciation                                                                                                               108,359                   78,856
Amortization of intangible assets                                                                                          23,189                    16,016
Amortization of deferred financing costs                                                                                   44,491                    30,810
Provision for bad debt                                                                                                     34,747                    80,651
Share-based compensation                                                                                                   848,589                   182,955
Interest added to note payable                                                                                             --                        71,950
Change in assets and liabilities:
AXOGEN, INC.
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
(unaudited)
                                                Quarter Ended      Quarter Ended      Quarter Ended      Quarter Ended    Year Ended        Quarter Ended
                                                March 31,          June 30,           September 30,      December 31,     December 31,      March 31,
                                                2016               2016               2016               2016             2016              2017
Net loss                                    $   (3,676,091 )   $   (2,802,696 )   $   (2,305,373 )   $   (5,626,984 )   $ (14,411,144 )   $ (3,762,025 )
Depreciation and amortization expense           78,856             88,734             95,543             98,484           361,617           108,359
Amortization expense of intangible assets       16,016             16,017             16,017             26,821           74,871            23,189
Income Taxes                                    21,427             --                 --                 --               --                9,801
Interest expense                                1,003,027          1,163,413          1,089,134          2,130,694        5,386,268         507,549
Interest expense - deferred financing costs     30,810             32,696             31,748             780,135          875,389           44,491
EBITDA - non GAAP                           $   (2,525,955 )   $   (1,501,836 )   $   (1,072,931 )   $   (2,590,850 )   $ (7,712,999  )   $ (3,068,636 )
Non Cash Stock Compensation Expense             182,955            569,834            293,575            343,913          1,390,277         848,589
Adjusted EBITDA - non GAAP                  $   (2,343,000 )   $   (932,002   )   $   (779,356   )   $   (2,246,937 )   $ (6,322,722  )   $ (2,220,047 )
Contacts:
AxoGen, Inc.
Peter J. Mariani, Chief Financial Officer
InvestorRelations@AxoGenInc.com

The Trout Group - Investor Relations
Brian Korb
646.378.2923
bkorb@troutgroup.com

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