Paragon 28 Reports Fourth Quarter and Full Year 2022 Financial Results and Provides 2023 Financial Guidance
Paragon 28, Inc. (NYSE: FNA) reported its financial results for Q4 and full year 2022, showcasing a strong revenue performance.
Q4 consolidated net revenue reached $51.5 million, marking a 20.4% increase. For the full year, consolidated net revenue totaled $181.4 million, up 23%. U.S. revenue for Q4 was $45.3 million, contributing to a 22% annual growth rate. The gross margin remained robust at 82% for both Q4 and the entire year.
However, the company faced a net loss of $38.8 million for Q4, up from a loss of $6.2 million in the prior year, and an annual loss of $67.3 million.
Looking ahead, Paragon 28 anticipates net revenue of $214-$218 million for 2023, indicating an 18%-20% growth.
- Q4 consolidated net revenue of $51.5 million, a 20.4% increase.
- Full year 2022 consolidated net revenue of $181.4 million, reflecting 23% growth.
- Gross margin maintained at 82% for both Q4 and full year 2022.
- International net revenue growth rate of 34% reported for the full year.
- Net loss of $38.8 million in Q4 2022, compared to a loss of $6.2 million in Q4 2021.
- Annual net loss of $67.3 million in 2022, a significant increase from a loss of $13.7 million in 2021.
- Increased research and development and SG&A expenses totaling $51 million for Q4, up from $40 million in Q4 2021.
Fourth Quarter and Full Year 2022 Financial Results
-
Consolidated net revenue for the fourth quarter of 2022 was
, representing$51.5 million 20.4% and22.1% reported and constant currency growth, respectively. Consolidated net revenue for the full year 2022 was , representing$181.4 million 23.0% and24.5% reported and constant currency growth, respectively.-
U.S. net revenue for the fourth quarter and full year of 2022 was and$45.3 million , respectively, contributing to a$158.1 million 22% growth rate for the year ended 2022. -
International net revenue for the fourth quarter and full year 2022 was
and$6.2 million , respectively, contributing to a$23.3 million 34% reported growth rate and a47% constant currency growth rate for the year ended 2022.
-
-
Gross margin for the fourth quarter of 2022 was
82% , consistent with the fourth quarter of 2021 and the third quarter of 2022. Gross margin for the full year of 2022 was82% compared to81% for the full year of 2021. -
Research and development costs and selling, general, and administrative expenses
for the fourth quarter of 2022, compared to$51.0 million for the fourth quarter of 2021 and$40.0 million for the third quarter of 2022. Research and development costs and selling, general, and administrative expenses$46.0 million for the full year of 2022, compared to$184.0 million in the full year of 2021.$130.2 million -
Net loss
for the fourth quarter of 2022, compared to net loss$38.8 million for the fourth quarter of 2021 and net loss of$6.2 million for the third quarter 2022. Net loss$9.7 million for the full year of 2022 compared to net loss$67.3 million for the full year of 2021.$13.7 million -
Adjusted EBITDA
( for the fourth quarter of 2022, compared to$1.5) million in the fourth quarter of 2021 and$0.1 million ( in the third quarter of 2022. Adjusted EBITDA$2.7) million ( for the full year of 2022 compared to$10.7) million for the full year of 2021.$3.1 million
“P28 continued to deliver exceptional revenue growth throughout 2022, including
2023 Net Revenue Guidance
The Company expects 2023 net revenue to be
The Company’s 2023 Revenue Guidance assumes foreign currency translation rates remain consistent with current foreign currency translation rates.
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 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
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.
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.
CONSOLIDATED BALANCE SHEETS (in thousands) |
||||||||
|
|
As of |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
ASSETS |
|
|
|
|
|
|
||
Current assets: |
|
|
|
|
|
|
||
Cash |
|
$ |
38,468 |
|
|
$ |
109,352 |
|
Trade receivables |
|
|
37,687 |
|
|
|
25,939 |
|
Inventories, net |
|
|
60,948 |
|
|
|
40,241 |
|
Income taxes receivable |
|
|
615 |
|
|
|
920 |
|
Other current assets |
|
|
4,658 |
|
|
|
3,078 |
|
Total current assets |
|
|
142,376 |
|
|
|
179,530 |
|
Property and equipment, net |
|
|
61,938 |
|
|
|
32,181 |
|
Intangible assets, net |
|
|
22,387 |
|
|
|
16,505 |
|
|
|
|
25,465 |
|
|
|
6,329 |
|
Deferred income taxes |
|
|
148 |
|
|
|
— |
|
Other assets |
|
|
1,795 |
|
|
|
— |
|
Total assets |
|
$ |
254,109 |
|
|
$ |
234,545 |
|
LIABILITIES & STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
||
Current liabilities: |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
14,939 |
|
|
$ |
13,028 |
|
Accrued expenses |
|
|
26,807 |
|
|
|
18,232 |
|
Accrued legal settlement |
|
|
22,000 |
|
|
|
— |
|
Other current liabilities |
|
|
3,844 |
|
|
|
1,929 |
|
Current maturities of long-term debt |
|
|
728 |
|
|
|
153 |
|
Income taxes payable |
|
|
184 |
|
|
|
615 |
|
Total current liabilities |
|
|
68,502 |
|
|
|
33,957 |
|
Long-term liabilities: |
|
|
|
|
|
|
||
Long-term debt net, less current maturities |
|
|
42,182 |
|
|
|
7,476 |
|
Other long-term liabilities |
|
|
1,628 |
|
|
|
840 |
|
Deferred income taxes |
|
|
342 |
|
|
|
78 |
|
Income taxes payable |
|
|
527 |
|
|
|
— |
|
Total liabilities |
|
|
113,181 |
|
|
|
42,351 |
|
|
|
|
|
|
|
|
||
Stockholders' equity: |
|
|
|
|
|
|
||
Common stock, |
|
|
776 |
|
|
|
763 |
|
Additional paid in capital |
|
|
213,956 |
|
|
|
197,868 |
|
Accumulated deficit |
|
|
(67,789 |
) |
|
|
(463 |
) |
Accumulated other comprehensive (loss) income |
|
|
(33 |
) |
|
|
8 |
|
|
|
|
(5,982 |
) |
|
|
(5,982 |
) |
Total stockholders' equity |
|
|
140,928 |
|
|
|
192,194 |
|
Total liabilities & stockholders' equity |
|
$ |
254,109 |
|
|
$ |
234,545 |
|
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) |
||||||||||||||||
|
|
Three Months Ended |
|
|
Years Ended |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Net revenue |
|
$ |
51,508 |
|
|
$ |
42,774 |
|
|
$ |
181,383 |
|
|
$ |
147,464 |
|
Cost of goods sold |
|
|
9,537 |
|
|
|
7,815 |
|
|
|
32,457 |
|
|
|
28,024 |
|
Gross profit |
|
|
41,971 |
|
|
|
34,959 |
|
|
|
148,926 |
|
|
|
119,440 |
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development costs |
|
|
6,550 |
|
|
|
4,873 |
|
|
|
24,650 |
|
|
|
16,128 |
|
Selling, general, and administrative |
|
|
44,466 |
|
|
|
35,078 |
|
|
|
159,323 |
|
|
|
114,087 |
|
Legal settlement |
|
|
27,000 |
|
|
|
— |
|
|
|
27,000 |
|
|
|
— |
|
Total operating expenses |
|
|
78,016 |
|
|
|
39,951 |
|
|
|
210,973 |
|
|
|
130,215 |
|
Operating loss |
|
|
(36,045 |
) |
|
|
(4,992 |
) |
|
|
(62,047 |
) |
|
|
(10,775 |
) |
Other (expense) income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other expense |
|
|
(1,824 |
) |
|
|
(362 |
) |
|
|
(1,214 |
) |
|
|
(486 |
) |
Interest expense |
|
|
(1,264 |
) |
|
|
(545 |
) |
|
|
(4,129 |
) |
|
|
(1,719 |
) |
Total other expense |
|
|
(3,088 |
) |
|
|
(906 |
) |
|
|
(5,343 |
) |
|
|
(2,205 |
) |
Loss before income taxes |
|
|
(39,133 |
) |
|
|
(5,898 |
) |
|
|
(67,390 |
) |
|
|
(12,980 |
) |
Income tax (benefit) expense |
|
|
(370 |
) |
|
|
276 |
|
|
|
(64 |
) |
|
|
713 |
|
Net loss |
|
$ |
(38,763 |
) |
|
$ |
(6,174 |
) |
|
$ |
(67,326 |
) |
|
$ |
(13,693 |
) |
CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) |
||||||||
|
|
Year Ended |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
Cash flows from operating activities |
|
|
|
|
|
|
||
Net (loss) income |
|
$ |
(67,326 |
) |
|
$ |
(13,693 |
) |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
13,728 |
|
|
|
8,961 |
|
Allowance for doubtful accounts |
|
|
155 |
|
|
|
1,022 |
|
Provision for excess and obsolete inventories |
|
|
485 |
|
|
|
2,821 |
|
Stock-based compensation |
|
|
10,365 |
|
|
|
4,948 |
|
Employee stock purchase program |
|
|
213 |
|
|
|
— |
|
Amortization of debt issuance costs |
|
|
599 |
|
|
|
576 |
|
Change in fair value of earnout liabilities |
|
|
1,280 |
|
|
|
440 |
|
Deferred income taxes |
|
|
(514 |
) |
|
|
170 |
|
(Gain) loss on disposal of property and equipment |
|
|
(71 |
) |
|
|
237 |
|
Other |
|
|
477 |
|
|
|
31 |
|
Changes in other assets and liabilities, net of acquisitions: |
|
|
|
|
|
|
||
Accounts receivable |
|
|
(12,013 |
) |
|
|
(6,461 |
) |
Inventories |
|
|
(21,512 |
) |
|
|
(11,098 |
) |
Other assets |
|
|
(3,012 |
) |
|
|
(2,468 |
) |
Accounts payable |
|
|
1,895 |
|
|
|
3,431 |
|
Accrued expenses |
|
|
2,317 |
|
|
|
7,095 |
|
Accrued legal settlement |
|
|
22,000 |
|
|
|
— |
|
Income tax receivable/payable |
|
|
391 |
|
|
|
671 |
|
Other liabilities |
|
|
1,362 |
|
|
|
— |
|
Net cash (used in) provided by operating activities |
|
|
(49,181 |
) |
|
|
(3,317 |
) |
Cash flows from investing activities |
|
|
|
|
|
|
||
Purchase of office building |
|
|
(18,300 |
) |
|
|
— |
|
Purchases of property and equipment |
|
|
(22,813 |
) |
|
|
(18,296 |
) |
Proceeds from sale of property and equipment |
|
|
897 |
|
|
|
799 |
|
Purchases of intangible assets |
|
|
(1,973 |
) |
|
|
(2,993 |
) |
Acquisition, net of cash received |
|
|
(18,504 |
) |
|
|
(15,000 |
) |
Net cash used in investing activities |
|
|
(60,693 |
) |
|
|
(35,490 |
) |
Cash flows from financing activities |
|
|
|
|
|
|
||
Payments on note payable - related party |
|
|
— |
|
|
|
— |
|
Payments on revolving credit facility |
|
|
— |
|
|
|
— |
|
Proceeds from draw on term loan |
|
|
20,000 |
|
|
|
— |
|
Proceeds from issuance of long-term debt |
|
|
16,000 |
|
|
|
10,000 |
|
Payments on long-term debt |
|
|
(570 |
) |
|
|
(6,034 |
) |
Payments of debt issuance costs |
|
|
(732 |
) |
|
|
(3,139 |
) |
Proceeds from issuance of common stock |
|
|
— |
|
|
|
1,001 |
|
Proceeds from IPO, net of issuance costs |
|
|
— |
|
|
|
129,384 |
|
Proceeds from issuance of Series B capital stock, net of issuance costs |
|
|
— |
|
|
|
— |
|
Payments on treasury stock repurchased |
|
|
— |
|
|
|
(561 |
) |
Proceeds from exercise of stock options |
|
|
5,271 |
|
|
|
445 |
|
Proceeds from employee stock purchase plan |
|
|
518 |
|
|
|
— |
|
Payments on earnout liability |
|
|
(1,000 |
) |
|
|
— |
|
Net cash provided by financing activities |
|
|
39,487 |
|
|
|
131,096 |
|
Effect of exchange rate changes on cash |
|
|
(497 |
) |
|
|
(438 |
) |
Net (decrease) increase in cash |
|
|
(70,884 |
) |
|
|
91,851 |
|
Cash at beginning of period |
|
|
109,352 |
|
|
|
17,501 |
|
Cash at end of period |
|
$ |
38,468 |
|
|
$ |
109,352 |
|
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
||
Cash paid for taxes |
|
$ |
1,103 |
|
|
$ |
678 |
|
Cash paid for interest |
|
|
3,073 |
|
|
|
1,086 |
|
Purchase of property and equipment included in accounts payable |
|
|
3,402 |
|
|
|
881 |
|
Series B convertible preferred stock dividend |
|
|
— |
|
|
|
— |
|
RECONCILIATION OF NET LOSS TO NON-GAAP ADJUSTED EBITDA (in thousands, unaudited) |
||||||||||||||||
|
|
Three Months Ended |
|
|
Years Ended |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Net loss |
|
$ |
(38,763 |
) |
|
$ |
(6,174 |
) |
|
$ |
(67,326 |
) |
|
$ |
(13,693 |
) |
Interest expense |
|
|
1,264 |
|
|
|
545 |
|
|
|
4,129 |
|
|
|
1,719 |
|
Income tax (benefit) expense |
|
|
(370 |
) |
|
|
276 |
|
|
|
(64 |
) |
|
|
713 |
|
Depreciation and amortization expense |
|
|
4,104 |
|
|
|
2,884 |
|
|
|
13,728 |
|
|
|
8,987 |
|
Stock based compensation expense |
|
|
3,313 |
|
|
|
2,201 |
|
|
|
10,365 |
|
|
|
4,948 |
|
Employee stock purchase plan expense |
|
|
113 |
|
|
|
— |
|
|
|
213 |
|
|
|
— |
|
Change in fair value of earnout liability (1) |
|
|
1,855 |
|
|
|
380 |
|
|
|
1,280 |
|
|
|
440 |
|
Legal Settlement (2) |
|
|
27,000 |
|
|
|
— |
|
|
|
27,000 |
|
|
|
— |
|
Adjusted EBITDA |
|
$ |
(1,484 |
) |
|
$ |
112 |
|
|
$ |
(10,675 |
) |
|
$ |
3,114 |
|
__________________ | |
(1) | Represents non-cash change in the fair value of earnout liabilities. |
(2) | Represents a non-recurring expense to settle the Wright Medical litigation claims |
Constant-Currency Revenue Growth (in thousands, unaudited) |
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
Three Months Ended |
|
|
Years Ended |
|
||||||||||||||||||
|
|
2022 |
|
|
2021 |
|
|
% Increase
|
|
|
2022 |
|
|
2021 |
|
|
% Increase
|
|
||||||
Total Consolidated Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
As Reported |
|
$ |
51,508 |
|
|
$ |
42,774 |
|
|
|
20.4 |
% |
|
$ |
181,383 |
|
|
$ |
147,464 |
|
|
|
23.0 |
% |
Impact of foreign currency exchange rates |
|
|
706 |
|
|
|
— |
|
|
* |
|
|
|
2,149 |
|
|
|
— |
|
|
* |
|
||
Constant-currency net revenues |
|
$ |
52,214 |
|
|
$ |
42,774 |
|
|
|
22.1 |
% |
|
$ |
183,532 |
|
|
$ |
147,464 |
|
|
|
24.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total International Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
As Reported |
|
$ |
6,184 |
|
|
$ |
4,677 |
|
|
|
32.2 |
% |
|
$ |
23,278 |
|
|
$ |
17,352 |
|
|
|
34.2 |
% |
Impact of foreign currency exchange rates |
|
|
706 |
|
|
|
— |
|
|
* |
|
|
|
2,149 |
|
|
|
— |
|
|
* |
|
||
Constant-currency net revenues |
|
$ |
6,890 |
|
|
$ |
4,677 |
|
|
|
47.3 |
% |
|
$ |
25,427 |
|
|
$ |
17,352 |
|
|
|
46.5 |
% |
______________ | ||||||||||||||||||||||||
* Not Meaningful |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230302005696/en/
Investor Contact:
Senior Vice President, Strategy and Investor Relations
mbrinckman@paragon28.com
Source:
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