Paragon 28 Reports First Quarter 2022 Financial Results and Increases 2022 Net Revenue Guidance
Paragon 28, Inc. (NYSE: FNA) reported Q1 2022 net revenue of $41.4 million, a growth of 25% year-over-year. U.S. revenue was $36.0 million with 24% growth, while international revenue reached $5.4 million, up 35%. Gross margin improved to 83.6% from 80.5% despite operating expenses rising to $43.0 million. The company's net loss widened to $9.2 million compared to $0.5 million last year. For 2022, Paragon expects net revenue between $171.0 million and $175.0 million, indicating 16% to 19% growth.
- Q1 2022 net revenue grew by 25% YoY to $41.4 million.
- U.S. revenue increased by 24% YoY, reaching $36.0 million.
- International revenue rose 35% YoY to $5.4 million.
- Gross margin improved to 83.6%, up from 80.5%.
- Operating expenses increased significantly to $43.0 million from $26.9 million.
- Net loss expanded to $9.2 million, compared to a loss of $0.5 million last year.
- Adjusted EBITDA decreased to negative $3.3 million from a gain of $2.3 million in Q1 2021.
Financial Highlights
-
Net revenue
$41.4 million 25% over the first quarter of 2021-
U.S. revenue for the first quarter of 2022 was$36.0 million 24% over the first quarter of 2021. Despite Covid-19 headwinds in January and early February, performance in the quarter was driven by continued strong commercial execution and contribution from new products, an expanded surgeon customer base, and increased sales rep productivity. -
International revenue for the first quarter of 2022 was
$5.4 million 35% over the first quarter of 2021. Growth in the quarter was driven primarily by strong performances inSouth Africa and theUnited Kingdom .
-
-
Gross margin
83.6% for the first quarter 2022 compared to80.5% for the first quarter of 2021, reflecting lower excess and obsolete inventory expense. -
Operating expenses
$43.0 million $26.9 million -
Net loss
$9.2 million $0.5 million -
Adjusted EBITDA for the first quarter of 2022 was negative
$3.3 million $2.3 million
“I am extremely proud of P28’s performance in the first quarter, which was driven by focused investments in product development and sales force expansion supported by best-in-class medical education,” said
2022 Financial Guidance
The Company expects full year 2022 net revenue to be in a range of
The foregoing forward-looking statements reflect our expectations as of today's date. Given the number of risk factors, uncertainties and assumptions discussed, actual results may differ materially.
Webcast and Conference Call Information
About
Based in
Forward Looking Statements
Except for the historical information contained herein, the matters set forth in this press release are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to: Paragon 28’s potential to shape a better future for foot and ankle patients and its estimated range of net revenue for the full year 2022. You are cautioned not to place undue reliance on these forward-looking statements. Forward-looking statements are only predictions based on our current expectations, estimates, and assumptions, valid only as of the date they are made, and subject to risks and uncertainties, some of which we are not currently aware. Forward‐looking statements should not be read as a guarantee of future performance or results and may not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. These forward-looking statements are based on Paragon 28’s current expectations and inherently involve significant risks and uncertainties. Actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties. These risks and uncertainties are described more fully in the section titled “Risk Factors” in Paragon 28’s filings with the
Use of Non-GAAP Financial Measures and Their Limitations
In addition to our results and measures of performance determined in accordance with
Adjusted EBITDA is a key performance measure that our management uses to assess our financial performance and is also used for internal planning and forecasting purposes.
We believe that Adjusted EBITDA, together with a reconciliation to net income, helps identify underlying trends in our business and helps investors make comparisons between our company and other companies that may have different capital structures, tax rates, or different forms of employee compensation. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects, and allowing for greater transparency with respect to a key financial metric used by our management in its financial and operational decision-making. Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider these measures in isolation or as a substitute for analysis of our financial results as reported under
- other companies, including companies in our industry which have similar business arrangements, may report Adjusted EBITDA, or similarly titled measures but calculate them differently, which reduces their usefulness as comparative measures;
- although depreciation and amortization expenses are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditures for such replacements or for new capital expenditure requirements;
- Adjusted EBITDA also does not reflect changes in, or cash requirements for, our working capital needs or the potentially dilutive impact of stock based compensation; and
- Adjusted EBITDA does not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debt that we may incur.
Because of these and other limitations, you should consider our non-GAAP measures only as supplemental to other GAAP-based financial measures.
CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) (unaudited) |
||||||||
|
|
|
||||||
|
|
|
||||||
ASSETS |
|
|
||||||
Current assets: |
|
|
||||||
Cash |
$ |
93,647 |
|
$ |
109,352 |
|
||
Trade receivables, less allowance for doubtful accounts of |
|
27,653 |
|
|
25,939 |
|
||
Inventories, net |
|
43,185 |
|
|
40,241 |
|
||
Income taxes receivable |
|
622 |
|
|
920 |
|
||
Other current assets |
|
3,448 |
|
|
3,078 |
|
||
Total current assets |
|
168,555 |
|
|
179,530 |
|
||
|
|
|
||||||
Property and equipment, net |
|
51,850 |
|
|
32,181 |
|
||
|
|
|
||||||
Intangible assets, net |
|
21,350 |
|
|
16,505 |
|
||
|
|
26,672 |
|
|
6,329 |
|
||
|
|
|
||||||
Deferred income taxes |
|
303 |
|
|
— |
|
||
|
|
|
||||||
Total assets |
$ |
268,730 |
|
$ |
234,545 |
|
||
|
|
|
||||||
LIABILITIES & STOCKHOLDERS' EQUITY |
|
|
||||||
Current liabilities: |
|
|
||||||
Accounts payable |
$ |
11,877 |
|
$ |
13,028 |
|
||
Accrued expenses |
|
17,827 |
|
|
18,232 |
|
||
Other current liabilities |
|
7,433 |
|
|
1,929 |
|
||
Current maturities of long-term debt |
|
781 |
|
|
153 |
|
||
Income taxes payable |
|
492 |
|
|
615 |
|
||
Total current liabilities |
|
38,410 |
|
|
33,957 |
|
||
|
|
|
||||||
Long-term liabilities: |
|
|
||||||
Long-term debt net, less current maturities |
|
42,471 |
|
|
7,476 |
|
||
Other long-term liabilities |
|
2,518 |
|
|
840 |
|
||
Deferred income taxes |
|
302 |
|
|
78 |
|
||
Income taxes payable |
|
527 |
|
|
— |
|
||
Total liabilities |
|
84,228 |
|
|
42,351 |
|
||
|
|
|
||||||
Commitments and contingencies (Note 12) |
|
|
||||||
|
|
|
||||||
Stockholders' equity: |
|
|
||||||
Common stock, |
|
763 |
|
|
763 |
|
||
Additional paid in capital |
|
199,736 |
|
|
197,868 |
|
||
Accumulated deficit |
|
(9,699 |
) |
|
(463 |
) |
||
Accumulated other comprehensive income |
|
(316 |
) |
|
8 |
|
||
|
|
(5,982 |
) |
|
(5,982 |
) |
||
Total stockholders' equity |
|
184,502 |
|
|
192,194 |
|
||
Total liabilities & stockholders' equity |
$ |
268,730 |
|
$ |
234,545 |
|
||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (in thousands, except share and per share data) (unaudited) |
||||||||
|
|
|
||||||
|
|
Three Months Ended |
||||||
|
|
2022 |
|
2021 |
||||
Net revenue |
$ |
41,371 |
|
$ |
33,104 |
|
||
Cost of goods sold |
|
6,791 |
|
|
6,441 |
|
||
Gross profit |
|
34,580 |
|
|
26,663 |
|
||
|
|
|
||||||
Operating expenses |
|
|
||||||
Research and development costs |
|
5,773 |
|
|
3,549 |
|
||
Selling, general, and administrative |
|
37,242 |
|
|
23,396 |
|
||
Total operating expenses |
|
43,015 |
|
|
26,945 |
|
||
|
|
|
||||||
Operating loss |
|
(8,435 |
) |
|
(282 |
) |
||
|
|
|
||||||
Other expense |
|
|
||||||
Other expense |
|
(101 |
) |
|
(27 |
) |
||
Interest expense, net |
|
(668 |
) |
|
(64 |
) |
||
Total other expense |
|
(769 |
) |
|
(91 |
) |
||
|
|
|
||||||
Loss before income taxes |
|
(9,204 |
) |
|
(373 |
) |
||
Income tax expense |
|
32 |
|
|
154 |
|
||
|
|
|
||||||
Net loss |
$ |
(9,236 |
) |
$ |
(527 |
) |
||
Less: cumulative dividends on Series B convertible preferred stock |
|
— |
|
|
(469 |
) |
||
Net loss attributable to common stockholders |
$ |
(9,236 |
) |
$ |
(996 |
) |
||
Foreign currency translation adjustment |
|
(324 |
) |
|
(538 |
) |
||
Comprehensive loss |
$ |
(9,560 |
) |
$ |
(1,534 |
) |
||
Weighted average number of common stocks outstanding: |
|
|
||||||
Basic |
|
76,447,454 |
|
|
46,852,175 |
|
||
Diluted |
|
76,447,454 |
|
|
46,852,175 |
|
||
Net loss per share attributable to common stockholders: |
|
|
||||||
Basic |
$ |
(0.12 |
) |
$ |
(0.02 |
) |
||
Diluted |
$ |
(0.12 |
) |
$ |
(0.02 |
) |
||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) |
||||||||
|
|
|
||||||
|
|
Three Months Ended |
||||||
|
|
2022 |
|
2021 |
||||
Cash flows from operating activities |
|
|
||||||
Net loss |
$ |
(9,236 |
) |
$ |
(527 |
) |
||
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
||||||
Depreciation and amortization |
|
3,030 |
|
|
1,739 |
|
||
Allowance for doubtful accounts |
|
600 |
|
|
205 |
|
||
Provision for (reversal of) excess and obsolete inventories |
|
(643 |
) |
|
977 |
|
||
Stock-based compensation |
|
2,122 |
|
|
858 |
|
||
Amortization of debt issuance costs |
|
71 |
|
|
17 |
|
||
Change in fair value of earnout liabilities |
|
80 |
|
|
— |
|
||
Deferred income taxes |
|
(340 |
) |
|
88 |
|
||
Loss on disposal of property and equipment |
|
898 |
|
|
170 |
|
||
Other |
|
(322 |
) |
|
159 |
|
||
Changes in other assets and liabilities, net of acquisitions: |
|
|
||||||
Accounts receivable |
|
(2,240 |
) |
|
527 |
|
||
Inventories |
|
(2,329 |
) |
|
(3,979 |
) |
||
Other current assets |
|
(3 |
) |
|
(191 |
) |
||
Accounts payable |
|
(1,178 |
) |
|
1,517 |
|
||
Accrued expenses and other current liabilities |
|
(682 |
) |
|
1,852 |
|
||
Income tax receivable/payable |
|
669 |
|
|
274 |
|
||
Net cash (used in) provided by operating activities |
|
(9,503 |
) |
|
3,686 |
|
||
|
|
|
||||||
Cash flows from investing activities |
|
|
||||||
Purchases of property and equipment |
|
(23,036 |
) |
|
(3,033 |
) |
||
Proceeds from sale of property and equipment |
|
305 |
|
|
191 |
|
||
Purchases of intangible assets |
|
(704 |
) |
|
(173 |
) |
||
Acquisition of Disior, net of cash received |
|
(18,201 |
) |
|
— |
|
||
Net cash used in investing activities |
|
(41,636 |
) |
|
(3,015 |
) |
||
|
|
|
||||||
Cash flows from financing activities |
|
|
||||||
Proceeds from drawdown on term loan |
|
20,000 |
|
|
— |
|
||
Proceeds from issuance of long-term debt |
|
16,000 |
|
|
— |
|
||
Payments on long-term debt |
|
(37 |
) |
|
(560 |
) |
||
Payments of debt issuance costs |
|
(405 |
) |
|
— |
|
||
Proceeds from issuance of common stock |
|
— |
|
|
1,001 |
|
||
Payments on treasury stock repurchased |
|
— |
|
|
(561 |
) |
||
Proceeds from exercise of stock options |
|
12 |
|
|
98 |
|
||
Net cash provided by (used in) financing activities |
|
35,570 |
|
|
(22 |
) |
||
|
|
|
||||||
Effect of exchange rate changes on cash |
|
(136 |
) |
|
(470 |
) |
||
Net (decrease) increase in cash |
|
(15,705 |
) |
|
179 |
|
||
Cash at beginning of period |
|
109,352 |
|
|
17,501 |
|
||
Cash at end of period |
$ |
93,647 |
|
$ |
17,680 |
|
||
|
|
|
||||||
RECONCILIATION OF NET INCOME (LOSS) TO NON-GAAP ADJUSTED EBITDA (in thousands) (unaudited) |
||||||||
|
|
|
||||||
|
|
Three Months Ended |
||||||
|
|
2022 |
|
2021 |
||||
|
(in thousands) |
|||||||
Net loss |
$ |
(9,236 |
) |
$ |
(527 |
) |
||
Interest expense |
|
668 |
|
|
64 |
|
||
Income tax expense |
|
32 |
|
|
154 |
|
||
Depreciation and amortization expense |
|
3,030 |
|
|
1,739 |
|
||
Stock based compensation expense |
|
2,122 |
|
|
858 |
|
||
Change in fair value of earnout liability (1) |
|
80 |
|
|
— |
|
||
Adjusted EBITDA |
$ |
(3,304 |
) |
$ |
2,288 |
|
||
(1) Represents non-cash change in the fair value of earnout liability for the three months ended
View source version on businesswire.com: https://www.businesswire.com/news/home/20220509006042/en/
Investor Contact:
Matt.bacso@gilmartinir.com
Source:
FAQ
What were Paragon 28's Q1 2022 earnings results?
What is Paragon 28's revenue guidance for 2022?
How did Paragon 28 perform internationally in Q1 2022?
What were the main drivers of Paragon 28's performance in Q1 2022?
