Paragon 28 Reports First Quarter 2023 Financial Results and Reaffirms 2023 Net Revenue Guidance
- Q1 2023 net revenue of $52.0 million, representing 25.8% and 27.1% growth over Q1 2022
- U.S. net revenue for Q1 2023 was $45.0 million, a growth of 24.9% over Q1 2022
- International net revenue for Q1 2023 was a record $7.1 million, representing 31.9% and 42.2% growth over Q1 2022
- Gross margin of 83% for Q1 2023
- Adjusted EBITDA improved by 57.1% to a loss of $1.4 million in Q1 2023 compared to a loss of $3.3 million in Q1 2022
- Net loss of $9.1 million in Q1 2023 compared to a net loss of $9.2 million in Q1 2022
- Operating expenses increased by 18.3% to $50.9 million in Q1 2023 compared to $43.0 million in Q1 2022
First Quarter 2023 Financial Results
-
Consolidated net revenue for the first quarter of 2023 was a record
$52.0 million 25.8% and27.1% reported and constant currency growth, respectively, over the first quarter of 2022. -
U.S. net revenue for the first quarter of 2023 was$45.0 million 24.9% over the first quarter of 2022. -
International net revenue for the first quarter of 2023 was a record
$7.1 million 31.9% and42.2% reported and constant currency growth, respectively, over the first quarter of 2022. -
Gross margin was
83% for the first quarter of 2023 compared to84% in the first quarter of 2022. -
Operating expenses were
$50.9 million 18.3% , compared to$43.0 million -
Net loss was
$9.1 million $9.2 million -
Adjusted EBITDA was a
$1.4 million 57.1% improvement, compared to a$3.3 million
“Paragon 28 is off to a great start in 2023. We are thrilled with our
2023 Net Revenue Guidance
The Company reaffirms its prior 2023 net revenue guidance, and expects net revenue to be
The Company’s 2023 net revenue guidance assumes foreign currency translation rates remain consistent with current foreign currency translation rates.
Webcast and Conference Call Information
Paragon 28 will host a conference call to discuss first quarter 2023 financial results on Thursday, May 4, 2023, at 2:30 p.m. Mountain Time / 4:30 p.m. Eastern Time. Investors interested in listening to the conference call may do so by dialing (833)-470-1428 for domestic callers or (929)-526-1599 for international callers, using conference ID: 007721. Live audio of the webcast will be available on the “Investors” section of the company’s website at ir.paragon28.com. The webcast will be archived and available for replay for at least 90 days after the event.
About Paragon 28, Inc.
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 net revenue for full year 2023. 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 Securities and Exchange Commission (the “SEC”), including Paragon 28’s annual report on Form 10-K filed with the SEC on March 2, 2023. Paragon 28 does not undertake any obligation to update forward‐looking statements and expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward‐looking statements contained herein. These forward-looking statements should not be relied upon as representing Paragon 28’s views as of any date subsequent to the date of this press release. Paragon 28’s results for the quarter ended March 31, 2023 are not necessarily indicative of our operating results for any future periods.
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 define Adjusted EBITDA as earnings (loss) before interest expense, income tax expense (benefit), depreciation and amortization, stock-based compensation expense, employee stock purchase plan expense, non-recurring expenses and certain other non-cash expenses.
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.
Additionally, we report revenue growth on a constant-currency basis in order to facilitate period-to-period comparisons of results without regard to the impact of fluctuating foreign currency exchange rates. The term foreign currency exchange rates refers to the exchange rates used to translate the company's operating results for all countries where the functional currency is not the
The company believes disclosure of constant-currency revenue growth rates is helpful to investors because it facilitates period-to-period comparisons. However, constant-currency revenue growth rates are non-GAAP financial measures and are not meant to be considered as an alternative or substitute for comparable measures prepared in accordance with GAAP. Constant-currency growth has no standardized meaning prescribed by GAAP and should be read in conjunction with the our consolidated financial statements prepared in accordance with GAAP. We calculate constant-currency growth rates by translating local currency amounts in the current period at actual foreign exchange rates for the prior period.
Because of these and other limitations, you should consider our non-GAAP measures only as supplemental to other GAAP-based financial measures.
PARAGON 28, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands) |
||||||||
|
|
March 31,
|
|
December 31,
|
||||
ASSETS |
|
|
|
|
||||
Current assets: |
|
|
|
|
||||
Cash |
|
$ |
85,883 |
|
|
$ |
38,468 |
|
Trade receivables |
|
|
37,262 |
|
|
|
37,687 |
|
Inventories, net |
|
|
69,174 |
|
|
|
60,948 |
|
Income taxes receivable |
|
|
596 |
|
|
|
615 |
|
Other current assets |
|
|
4,167 |
|
|
|
4,658 |
|
Total current assets |
|
|
197,082 |
|
|
|
142,376 |
|
|
|
|
|
|
||||
Property and equipment, net |
|
|
66,810 |
|
|
|
61,938 |
|
Intangible assets, net |
|
|
22,137 |
|
|
|
22,387 |
|
Goodwill |
|
|
25,465 |
|
|
|
25,465 |
|
Deferred income taxes |
|
|
354 |
|
|
|
148 |
|
Other assets |
|
|
1,697 |
|
|
|
1,795 |
|
Total assets |
|
$ |
313,545 |
|
|
$ |
254,109 |
|
|
|
|
|
|
||||
LIABILITIES & STOCKHOLDERS' EQUITY |
|
|
|
|
||||
Current liabilities: |
|
|
|
|
||||
Accounts payable |
|
$ |
20,538 |
|
|
$ |
14,939 |
|
Accrued expenses |
|
|
25,446 |
|
|
|
26,807 |
|
Accrued legal settlement |
|
|
13,000 |
|
|
|
22,000 |
|
Other current liabilities |
|
|
3,772 |
|
|
|
3,844 |
|
Current maturities of long-term debt |
|
|
690 |
|
|
|
728 |
|
Income taxes payable |
|
|
208 |
|
|
|
184 |
|
Total current liabilities |
|
|
63,654 |
|
|
|
68,502 |
|
Long-term liabilities: |
|
|
|
|
||||
Long-term debt net, less current maturities |
|
|
42,204 |
|
|
|
42,182 |
|
Other long-term liabilities |
|
|
1,523 |
|
|
|
1,628 |
|
Deferred income taxes |
|
|
377 |
|
|
|
342 |
|
Income taxes payable |
|
|
635 |
|
|
|
527 |
|
Total liabilities |
|
|
108,393 |
|
|
|
113,181 |
|
|
|
|
|
|
||||
Stockholders' equity: |
|
|
|
|
||||
Common stock, |
|
|
821 |
|
|
|
776 |
|
Additional paid in capital |
|
|
287,286 |
|
|
|
213,956 |
|
Accumulated deficit |
|
|
(76,841 |
) |
|
|
(67,789 |
) |
Accumulated other comprehensive loss |
|
|
(132 |
) |
|
|
(33 |
) |
Treasury stock, at cost; 913,519 shares as of March 31, 2023 and December 31, 2022 |
|
|
(5,982 |
) |
|
|
(5,982 |
) |
Total stockholders' equity |
|
|
205,152 |
|
|
|
140,928 |
|
Total liabilities & stockholders' equity |
|
$ |
313,545 |
|
|
$ |
254,109 |
|
PARAGON 28, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) |
||||||||
|
|
Three Months Ended March 31, |
||||||
|
|
2023 |
|
2022 |
||||
Net revenue |
|
$ |
52,036 |
|
|
$ |
41,371 |
|
Cost of goods sold |
|
|
8,906 |
|
|
|
6,791 |
|
Gross profit |
|
|
43,130 |
|
|
|
34,580 |
|
Operating expenses |
|
|
|
|
||||
Research and development costs |
|
|
7,049 |
|
|
|
5,773 |
|
Selling, general, and administrative |
|
|
43,820 |
|
|
|
37,242 |
|
Total operating expenses |
|
|
50,869 |
|
|
|
43,015 |
|
Operating loss |
|
|
(7,739 |
) |
|
|
(8,435 |
) |
Other income: |
|
|
|
|
||||
Other expense |
|
|
(179 |
) |
|
|
(101 |
) |
Interest expense |
|
|
(1,205 |
) |
|
|
(668 |
) |
Total other expense |
|
|
(1,384 |
) |
|
|
(769 |
) |
Loss before income taxes |
|
|
(9,123 |
) |
|
|
(9,204 |
) |
Income tax (benefit) expense |
|
|
(71 |
) |
|
|
32 |
|
Net loss |
|
$ |
(9,052 |
) |
|
$ |
(9,236 |
) |
PARAGON 28, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) |
||||||||
|
|
Three Months Ended March 31, |
||||||
|
|
2023 |
|
2022 |
||||
Cash flows from operating activities |
|
|
|
|
||||
Net loss |
|
$ |
(9,052 |
) |
|
$ |
(9,236 |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
||||
Depreciation and amortization |
|
|
3,117 |
|
|
|
3,030 |
|
Allowance for doubtful accounts |
|
|
— |
|
|
|
600 |
|
Provision for (reversal of) excess and obsolete inventories |
|
|
293 |
|
|
|
(643 |
) |
Stock-based compensation |
|
|
3,182 |
|
|
|
2,122 |
|
Other |
|
|
180 |
|
|
|
387 |
|
Changes in other assets and liabilities, net of acquisitions: |
|
|
|
|
||||
Accounts receivable |
|
|
441 |
|
|
|
(2,240 |
) |
Inventories |
|
|
(8,435 |
) |
|
|
(2,329 |
) |
Accounts payable |
|
|
5,592 |
|
|
|
(1,178 |
) |
Accrued expenses |
|
|
(877 |
) |
|
|
(682 |
) |
Accrued legal settlement |
|
|
(9,000 |
) |
|
|
— |
|
Income tax receivable/payable |
|
|
132 |
|
|
|
669 |
|
Other assets and liabilities |
|
|
367 |
|
|
|
(3 |
) |
Net cash used in operating activities |
|
|
(14,060 |
) |
|
|
(9,503 |
) |
Cash flows from investing activities |
|
|
|
|
||||
Purchases of property and equipment |
|
|
(7,521 |
) |
|
|
(23,036 |
) |
Proceeds from sale of property and equipment |
|
|
223 |
|
|
|
305 |
|
Purchases of intangible assets |
|
|
(254 |
) |
|
|
(704 |
) |
Acquisition of Disior, net of cash received |
|
|
— |
|
|
|
(18,201 |
) |
Net cash used in investing activities |
|
|
(7,552 |
) |
|
|
(41,636 |
) |
Cash flows from financing activities |
|
|
|
|
||||
Proceeds from draw on term loan |
|
|
— |
|
|
|
20,000 |
|
Proceeds from issuance of long-term debt |
|
|
— |
|
|
|
16,000 |
|
Payments on long-term debt |
|
|
(197 |
) |
|
|
(37 |
) |
Payments of debt issuance costs |
|
|
(7 |
) |
|
|
(405 |
) |
Proceeds from issuance of common stock, net of issuance costs |
|
|
68,449 |
|
|
|
— |
|
Proceeds from exercise of stock options |
|
|
1,622 |
|
|
|
12 |
|
Payments on earnout liability |
|
|
(500 |
) |
|
|
— |
|
Net cash provided by financing activities |
|
|
69,367 |
|
|
|
35,570 |
|
Effect of exchange rate changes on cash |
|
|
(340 |
) |
|
|
(136 |
) |
Net increase (decrease) in cash |
|
|
47,415 |
|
|
|
(15,705 |
) |
Cash at beginning of period |
|
|
38,468 |
|
|
|
109,352 |
|
Cash at end of period |
|
$ |
85,883 |
|
|
$ |
93,647 |
|
PARAGON 28, INC. AND SUBSIDIARIES RECONCILIATION OF NET LOSS TO NON-GAAP ADJUSTED EBITDA (in thousands, unaudited) |
||||||||
|
|
Three Months Ended December 31, |
||||||
|
|
2023 |
|
2022 |
||||
Net loss |
|
$ |
(9,052 |
) |
|
$ |
(9,236 |
) |
Interest expense |
|
|
1,205 |
|
|
|
668 |
|
Income tax (benefit) expense |
|
|
(71 |
) |
|
|
32 |
|
Depreciation and amortization expense |
|
|
3,117 |
|
|
|
3,030 |
|
Stock based compensation expense |
|
|
3,182 |
|
|
|
2,122 |
|
Employee stock purchase plan expense |
|
|
122 |
|
|
|
— |
|
Change in fair value of earnout liability (1) |
|
|
80 |
|
|
|
80 |
|
Adjusted EBITDA |
|
$ |
(1,417 |
) |
|
$ |
(3,304 |
) |
(1) Represents non-cash change in the fair value of earnout liabilities. |
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PARAGON 28, INC. AND SUBSIDIARIES Constant-Currency Revenue Growth (in thousands, unaudited) |
||||||||||
|
|
|
|
|
|
|
||||
|
|
Three months ended March 31, |
||||||||
|
|
2023 |
|
2022 |
|
% Increase
|
||||
Total Consolidated Revenues |
|
|
|
|
|
|
||||
As Reported |
|
$ |
52,036 |
|
$ |
41,371 |
|
|
25.8 |
% |
Impact of foreign currency exchange rates |
|
|
552 |
|
|
— |
|
* |
||
Constant-currency net revenues |
|
$ |
52,588 |
|
$ |
41,371 |
|
|
27.1 |
% |
|
|
|
|
|
|
|
||||
Total International Revenues |
|
|
|
|
|
|
||||
As Reported |
|
$ |
7,055 |
|
$ |
5,348 |
|
|
31.9 |
% |
Impact of foreign currency exchange rates |
|
|
552 |
|
|
— |
|
* |
||
Constant-currency net revenues |
|
$ |
7,607 |
|
$ |
5,348 |
|
|
42.2 |
% |
* Not Meaningful |
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View source version on businesswire.com: https://www.businesswire.com/news/home/20230504005857/en/
Investor Contact:
Matt Brinckman
Senior Vice President, Strategy and Investor Relations
mbrinckman@paragon28.com
Source: Paragon 28, Inc.
FAQ
What were the Q1 2023 net revenue results for Paragon 28?
What was the net loss for Q1 2023?
How did the Adjusted EBITDA change in Q1 2023?
What is Paragon 28's 2023 net revenue guidance?
