Paragon 28 Reports Fourth Quarter and Full Year 2021 Financial Results and Provides 2022 Net Revenue Guidance
Paragon 28 (NYSE: FNA) reported Q4 2021 net revenue of $42.8 million, a 22% increase year-over-year, and total revenue of $147.5 million for 2021, reflecting 33% growth. The gross margin improved to 81.7% from 72.3% in the prior year, attributed to higher margin product sales. However, operating expenses surged to $40.0 million, leading to a net loss of $6.2 million. The company expects net revenue for 2022 to be between $167.0 million and $171.0 million, indicating growth of 13% to 16%, despite potential COVID-19 challenges.
- Q4 net revenue increased by 22% year-over-year.
- 2021 total revenue of $147.5 million, up 33%.
- Gross margin improved to 81.7% from 72.3% in previous year.
- Adjusted EBITDA reached $3.1 million for 2021.
- Expected net revenue growth between 13% to 16% for 2022.
- Net loss of $6.2 million in Q4 2021 compared to a profit of $4.2 million in Q4 2020.
- Operating expenses rose to $40.0 million, leading to a significant increase in losses.
2021 Highlights
-
Net revenue
for the fourth quarter of 2021, representing$42.8 million 22% growth over the fourth quarter of 2020, driven by increased revenue per US surgeon and US sales force expansion, plus strong growth inSouth Africa and theUK -
Net revenue
for the twelve months ended$147.5 million December 31, 2021 , representing33% growth over 2020 -
Gross margin
81.7% for the fourth quarter 2021 compared to72.3% for the fourth quarter of 2020, reflecting lower excess and obsolete inventory expenses and a greater mix of higher margin products sold in the current period -
Operating expenses
for the fourth quarter of 2021 compared to$40.0 million for the fourth quarter of 2020$24.7 million -
Research and Development expense
compared to$4.9 million in the prior year quarter, driven by 30 new products in development, plus three new products receiving FDA clearance in the fourth quarter of 2021$3.0 million -
Selling, General and Administrative expense
compared to$35.1 million in the prior year quarter, including increased selling and marketing expenses driven by more US marketing and medical education events, increased variable commission expense, and investments in US and International commercial teams, and increased general and administrative expenses, driven primarily by additional costs related to becoming a publicly traded company$21.7 million
-
Research and Development expense
-
Net loss
for the fourth quarter of 2021 compared to net income$6.2 million for the fourth quarter of 2020$4.2 million -
Adjusted EBITDA
for the fourth quarter 2021 compared to$0.1 million for the fourth quarter of 2020$6.3 million -
Cash
as of$109.4 million December 31, 2021
“Our teams are foot and ankle specialists, and their focus, resilience, and passion for serving foot and ankle patients and surgeons drove our strong fourth quarter and full year revenue growth, further expanding our market share in the US and internationally,” said
2022 Net Revenue Guidance
The Company expects 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 below, actual results may differ materially. We do not intend to update our financial outlook until our next quarterly results announcement.
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 2022 and first quarter 2022 net revenues. 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.
CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) |
||||||||
|
|
As of |
||||||
|
|
2021 |
|
2020 |
||||
ASSETS |
|
|
|
|
||||
Current assets: |
|
|
|
|
||||
Cash |
|
$ |
109,352 |
|
|
$ |
17,501 |
|
Trade receivables, less allowance for doubtful accounts of |
|
|
25,939 |
|
|
|
19,972 |
|
Inventories, net |
|
|
40,241 |
|
|
|
32,226 |
|
Income taxes receivable |
|
|
920 |
|
|
|
1,479 |
|
Other current assets |
|
|
3,078 |
|
|
|
617 |
|
Total current assets |
|
|
179,530 |
|
|
|
71,795 |
|
|
|
|
|
|
||||
Property and equipment, net |
|
|
32,181 |
|
|
|
22,363 |
|
|
|
|
|
|
||||
Intangible assets, net |
|
|
16,505 |
|
|
|
3,325 |
|
|
|
|
6,329 |
|
|
|
— |
|
|
|
|
|
|
||||
Deferred income taxes |
|
|
— |
|
|
|
100 |
|
|
|
|
|
|
||||
Total assets |
|
$ |
234,545 |
|
|
$ |
97,583 |
|
|
|
|
|
|
||||
LIABILITIES, CONVERTIBLE PREFERRED SERIES EQUITY & STOCKHOLDERS' EQUITY |
|
|
|
|
||||
Current liabilities: |
|
|
|
|
||||
Accounts payable |
|
$ |
13,028 |
|
|
$ |
8,812 |
|
Accrued expenses |
|
|
18,232 |
|
|
|
10,052 |
|
Other current liabilities |
|
|
1,929 |
|
|
|
469 |
|
Current maturities of long-term debt |
|
|
153 |
|
|
|
2,231 |
|
Income taxes payable |
|
|
615 |
|
|
|
504 |
|
Total current liabilities |
|
|
33,957 |
|
|
|
22,068 |
|
|
|
|
|
|
||||
Long-term liabilities: |
|
|
|
|
||||
Long-term debt net, less current maturities |
|
|
7,476 |
|
|
|
4,030 |
|
Other long-term liabilities |
|
|
840 |
|
|
|
— |
|
Deferred income taxes |
|
|
78 |
|
|
|
— |
|
Total liabilities |
|
|
42,351 |
|
|
|
26,098 |
|
|
|
|
|
|
||||
Commitments and contingencies (Note 14) |
|
|
|
|
||||
|
|
|
|
|
||||
Convertible preferred series equity: |
|
|
|
|
||||
Series A convertible preferred stock, |
|
|
— |
|
|
|
4,250 |
|
Series B convertible preferred stock, |
|
|
— |
|
|
|
36,842 |
|
|
|
|
|
|
||||
Stockholders' equity: |
|
|
|
|
||||
Common stock, |
|
|
763 |
|
|
|
467 |
|
Additional paid-in-capital |
|
|
197,868 |
|
|
|
22,107 |
|
Retained earnings (accumulated deficit) |
|
|
(463 |
) |
|
|
12,418 |
|
Accumulated other comprehensive income |
|
|
8 |
|
|
|
823 |
|
|
|
|
(5,982 |
) |
|
|
(5,422 |
) |
Total stockholders' equity |
|
|
192,194 |
|
|
|
30,393 |
|
Total liabilities, convertible preferred series equity & stockholders' equity |
|
$ |
234,545 |
|
|
$ |
97,583 |
|
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME (in thousands)
(unaudited – Three Months Ended |
||||||||||||||||
|
|
Three Months Ended |
|
Years Ended |
||||||||||||
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
Net revenue |
|
$ |
42,774 |
|
|
$ |
35,057 |
|
|
$ |
147,464 |
|
|
$ |
110,981 |
|
Cost of goods sold |
|
|
7,815 |
|
|
|
9,713 |
|
|
|
28,024 |
|
|
|
25,099 |
|
Gross profit |
|
|
34,959 |
|
|
|
25,344 |
|
|
|
119,440 |
|
|
|
85,882 |
|
|
|
|
|
|
|
|
|
|
||||||||
Operating expenses |
|
|
|
|
|
|
|
|
||||||||
Research and development costs |
|
|
4,873 |
|
|
|
2,996 |
|
|
|
16,128 |
|
|
|
11,171 |
|
Selling, general, and administrative |
|
|
35,078 |
|
|
|
21,679 |
|
|
|
114,087 |
|
|
|
72,641 |
|
Total operating expenses |
|
|
39,951 |
|
|
|
24,676 |
|
|
|
130,215 |
|
|
|
83,812 |
|
|
|
|
|
|
|
|
|
|
||||||||
Operating (loss) income |
|
|
(4,992 |
) |
|
|
668 |
|
|
|
(10,775 |
) |
|
|
2,070 |
|
|
|
|
|
|
|
|
|
|
||||||||
Other (expense) income |
|
|
|
|
|
|
|
|
||||||||
Other (expense) income |
|
|
(362 |
) |
|
|
3,697 |
|
|
|
(486 |
) |
|
|
3,557 |
|
Interest expense |
|
|
(545 |
) |
|
|
(69 |
) |
|
|
(1,719 |
) |
|
|
(602 |
) |
Total other (expense) income |
|
|
(906 |
) |
|
|
3,628 |
|
|
|
(2,205 |
) |
|
|
2,955 |
|
|
|
|
|
|
|
|
|
|
||||||||
(Loss) income before income taxes |
|
|
(5,898 |
) |
|
|
4,296 |
|
|
|
(12,980 |
) |
|
|
5,025 |
|
Income tax expense (benefit) |
|
|
276 |
|
|
|
131 |
|
|
|
713 |
|
|
|
1,527 |
|
|
|
|
|
|
|
|
|
|
||||||||
Net (loss) income |
|
$ |
(6,174 |
) |
|
$ |
4,165 |
|
|
$ |
(13,693 |
) |
|
$ |
3,498 |
|
CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) |
||||||||||||
|
|
Year Ended |
||||||||||
|
|
2021 |
|
2020 |
|
2019 |
||||||
Cash flows from operating activities |
|
|
|
|
|
|
||||||
Net (loss) income |
|
$ |
(13,693 |
) |
|
$ |
3,498 |
|
|
$ |
3,117 |
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities: |
|
|
|
|
|
|
||||||
Depreciation and amortization |
|
|
8,961 |
|
|
|
6,384 |
|
|
|
4,202 |
|
Allowance for doubtful accounts |
|
|
1,022 |
|
|
|
636 |
|
|
|
300 |
|
Provision for excess and obsolete inventories |
|
|
2,821 |
|
|
|
7,467 |
|
|
|
1,712 |
|
Stock-based compensation |
|
|
4,948 |
|
|
|
1,808 |
|
|
|
1,754 |
|
Amortization of debt issuance costs |
|
|
576 |
|
|
|
134 |
|
|
|
85 |
|
Change in fair value of earnout liabilities |
|
|
440 |
|
|
|
— |
|
|
|
— |
|
Deferred income taxes |
|
|
170 |
|
|
|
1,307 |
|
|
|
(1,115 |
) |
Loss on disposal of property and equipment |
|
|
237 |
|
|
|
554 |
|
|
|
545 |
|
Other |
|
|
31 |
|
|
|
113 |
|
|
|
(26 |
) |
Changes in other assets and liabilities, net of acquisitions: |
|
|
|
|
|
|
||||||
Accounts receivable |
|
|
(6,461 |
) |
|
|
386 |
|
|
|
(5,221 |
) |
Inventories |
|
|
(11,098 |
) |
|
|
(14,831 |
) |
|
|
(3,560 |
) |
Other current assets |
|
|
(2,468 |
) |
|
|
944 |
|
|
|
(618 |
) |
Accounts payable |
|
|
3,431 |
|
|
|
(6,238 |
) |
|
|
8,430 |
|
Accrued expenses and other current liabilities |
|
|
7,095 |
|
|
|
(815 |
) |
|
|
3,098 |
|
Income tax receivable/payable |
|
|
671 |
|
|
|
(236 |
) |
|
|
(405 |
) |
Net cash (used in) provided by operating activities |
|
|
(3,317 |
) |
|
|
1,111 |
|
|
|
12,298 |
|
|
|
|
|
|
|
|
||||||
Cash flows from investing activities |
|
|
|
|
|
|
||||||
Purchases of property and equipment |
|
|
(18,296 |
) |
|
|
(9,653 |
) |
|
|
(17,261 |
) |
Proceeds from sale of property and equipment |
|
|
799 |
|
|
|
522 |
|
|
|
580 |
|
Purchases of intangible assets |
|
|
(2,993 |
) |
|
|
(1,187 |
) |
|
|
(773 |
) |
Acquisition of Additive Orthopaedics |
|
|
(15,000 |
) |
|
|
— |
|
|
|
— |
|
Net cash used in investing activities |
|
|
(35,490 |
) |
|
|
(10,318 |
) |
|
|
(17,454 |
) |
|
|
|
|
|
|
|
||||||
Cash flows from financing activities |
|
|
|
|
|
|
||||||
Proceeds from issuance of note payable - related party |
|
|
— |
|
|
|
— |
|
|
|
3,000 |
|
Payments on note payable - related party |
|
|
— |
|
|
|
(3,000 |
) |
|
|
— |
|
Proceeds from revolving credit facility |
|
|
— |
|
|
|
— |
|
|
|
780 |
|
Payments on revolving credit facility |
|
|
— |
|
|
|
(9,821 |
) |
|
|
— |
|
Proceeds from issuance of long-term debt |
|
|
10,000 |
|
|
|
458 |
|
|
|
8,885 |
|
Payments on long-term debt |
|
|
(6,034 |
) |
|
|
(1,686 |
) |
|
|
(2,200 |
) |
Payments of debt issuance costs |
|
|
(3,139 |
) |
|
|
(53 |
) |
|
|
(150 |
) |
Proceeds from issuance of common stock |
|
|
1,001 |
|
|
|
1,842 |
|
|
|
— |
|
Proceeds from IPO, net of issuance costs |
|
|
129,384 |
|
|
|
— |
|
|
|
||
Proceeds from issuance of Series B capital stock, net of issuance costs |
|
|
— |
|
|
|
36,030 |
|
|
|
— |
|
Payments on treasury stock repurchased |
|
|
(561 |
) |
|
|
(1,538 |
) |
|
|
(3,885 |
) |
Proceeds from exercise of stock options |
|
|
445 |
|
|
|
1,780 |
|
|
|
115 |
|
Net cash provided by financing activities |
|
|
131,096 |
|
|
|
24,012 |
|
|
|
6,545 |
|
|
|
|
|
|
|
|
||||||
Effect of exchange rate changes on cash |
|
|
(438 |
) |
|
|
86 |
|
|
|
29 |
|
Net increase in cash |
|
|
91,851 |
|
|
|
14,891 |
|
|
|
1,418 |
|
Cash at beginning of period |
|
|
17,501 |
|
|
|
2,610 |
|
|
|
1,192 |
|
Cash at end of period |
|
$ |
109,352 |
|
|
$ |
17,501 |
|
|
$ |
2,610 |
|
|
|
|
|
|
|
|
||||||
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
||||||
Cash paid for taxes |
|
$ |
678 |
|
|
$ |
453 |
|
|
$ |
97 |
|
Cash paid for interest |
|
|
1,086 |
|
|
|
395 |
|
|
|
550 |
|
Purchase of property and equipment included in accounts payable |
|
|
881 |
|
|
|
120 |
|
|
|
115 |
|
Series B convertible preferred stock dividend |
|
|
— |
|
|
|
812 |
|
|
|
— |
RECONCILIATION OF NET (LOSS) INCOME TO NON-GAAP ADJUSTED EBITDA (in thousands) (unaudited) |
||||||||||||||||
|
|
Three Months Ended |
|
Years Ended |
||||||||||||
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
Net Income (loss) |
|
$ |
(6,174 |
) |
|
$ |
4,165 |
|
|
$ |
(13,693 |
) |
|
$ |
3,498 |
|
Interest expense |
|
|
545 |
|
|
|
69 |
|
|
|
1,719 |
|
|
|
602 |
|
Income tax expense (benefit) |
|
|
276 |
|
|
|
131 |
|
|
|
713 |
|
|
|
1,527 |
|
Depreciation and amortization expense |
|
|
2,884 |
|
|
|
1,905 |
|
|
|
8,987 |
|
|
|
6,384 |
|
Stock based compensation expense |
|
|
2,201 |
|
|
|
576 |
|
|
|
4,948 |
|
|
|
1,808 |
|
PPP Loan Forgiveness (1) |
|
|
— |
|
|
|
(3,747 |
) |
|
|
— |
|
|
|
(3,747 |
) |
Excess and obsolete inventory expense related to supply chain disruption (2) |
|
|
— |
|
|
|
3,182 |
|
|
|
— |
|
|
|
3,702 |
|
Change in fair value of earnout liability (3) |
|
|
380 |
|
|
|
— |
|
|
|
440 |
|
|
|
— |
|
Adjusted EBITDA |
|
$ |
112 |
|
|
$ |
6,281 |
|
|
$ |
3,114 |
|
|
$ |
13,774 |
|
(1) |
Represents non-recurring other income received in connection with the forgiveness of the PPP Loan. |
|
(2) |
Represents non-recurring excess and obsolete inventory expense caused by supply chain purchasing process disruption during the COVID-19 pandemic. |
|
(3) |
Represents non-cash change in the fair value of earnout liability from acquisition date to |
View source version on businesswire.com: https://www.businesswire.com/news/home/20220308006021/en/
Investor Contact:
Matt.bacso@gilmartinir.com
Source:
FAQ
What were the Q4 2021 results for Paragon 28 (FNA)?
What is the revenue guidance for Paragon 28 in 2022?
How did Paragon 28's gross margin change in Q4 2021?