Paragon 28 Reports Second Quarter 2022 Financial Results and Increases 2022 Net Revenue Guidance
Paragon 28, Inc. (NYSE: FNA) reported a 19% growth in net revenue for Q2 2022, totaling $42.5 million, driven by increased productivity and new product launches. U.S. revenue was $36.8 million with a similar 19% increase. Internationally, the company achieved record revenue of $5.7 million, up 20%. Despite this growth, Paragon reported a net loss of $9.6 million and raised its 2022 revenue guidance to $176 million. Operating expenses surged to $43.9 million, influenced by one-time costs related to a new SAP launch.
- Q2 2022 net revenue reached $42.5 million, a 19% increase YoY.
- U.S. revenue for Q2 2022 was $36.8 million, reflecting 19% growth.
- International revenue hit a record $5.7 million, up 20% YoY.
- Gross margin improved to 82.0%, up from 81.3% in Q2 2021.
- Increased full-year 2022 revenue guidance to $176 million, a 19% increase.
- Net loss increased to $9.6 million in Q2 2022 from $1.9 million YoY.
- Operating expenses rose significantly to $43.9 million in Q2 2022.
Financial Highlights
-
Net revenue
$42.5 million 19% over the second quarter of 2021.-
Strengthening of the
U.S. dollar reduced second quarter 2022 net revenue growth by 140 basis points as compared to the second quarter of 2021. -
U.S. revenue for the second quarter of 2022 was$36.8 million 19% over the second quarter of 2021. Growth in the quarter was driven primarily by sales force productivity gains resulting from new product launches and continued medical education momentum. -
International revenue for the second quarter of 2022 was a record
$5.7 million 20% over the second quarter of 2021. Strengthening of theU.S. dollar reduced second quarter 2022 international net revenue growth by approximately 10 percentage points as compared to the second quarter of 2021. Growth in the quarter was driven primarily byAustralia ,South Africa , and theUnited Kingdom .
-
Strengthening of the
-
Gross margin
82.0% for the second quarter 2022 compared to81.3% for the second quarter of 2021, reflecting lower excess and obsolete inventory expense. -
Operating expenses
$43.9 million $30.2 million $43.0 million $1.2 million -
Net loss
$9.6 million $1.9 million $9.2 million -
Adjusted EBITDA for the second quarter of 2022 was negative
$3.2 million $1.6 million $3.3 million
“I am very pleased with P28’s second quarter results, including
Third Quarter 2022, Fourth Quarter 2022, and Full Year 2022 Revenue Guidance
Updated revenue guidance assumes foreign currency translation rates remain consistent with current foreign currency translation rates.
The Company has increased full year 2022 net revenue to
The Company expects third quarter and fourth quarter 2022 net revenue to be
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 net revenue for the full year and third and fourth quarters of 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 |
|
$ |
73,002 |
|
|
$ |
109,352 |
|
Trade receivables |
|
|
32,598 |
|
|
|
25,939 |
|
Inventories, net |
|
|
51,700 |
|
|
|
40,241 |
|
Income taxes receivable |
|
|
660 |
|
|
|
920 |
|
Other current assets |
|
|
3,129 |
|
|
|
3,078 |
|
Total current assets |
|
|
161,089 |
|
|
|
179,530 |
|
|
|
|
|
|
||||
Property and equipment, net |
|
|
56,066 |
|
|
|
32,181 |
|
|
|
|
|
|
||||
Intangible assets, net |
|
|
20,352 |
|
|
|
16,505 |
|
|
|
|
26,975 |
|
|
|
6,329 |
|
|
|
|
|
|
||||
Deferred income taxes |
|
|
563 |
|
|
|
— |
|
|
|
|
|
|
||||
Total assets |
|
$ |
265,045 |
|
|
$ |
234,545 |
|
|
|
|
|
|
||||
LIABILITIES & STOCKHOLDERS' EQUITY |
|
|
|
|
||||
Current liabilities: |
|
|
|
|
||||
Accounts payable |
|
$ |
14,564 |
|
|
$ |
13,028 |
|
Accrued expenses |
|
|
21,407 |
|
|
|
18,232 |
|
Other current liabilities |
|
|
6,926 |
|
|
|
1,929 |
|
Current maturities of long-term debt |
|
|
757 |
|
|
|
153 |
|
Income taxes payable |
|
|
305 |
|
|
|
615 |
|
Total current liabilities |
|
|
43,959 |
|
|
|
33,957 |
|
|
|
|
|
|
||||
Long-term liabilities: |
|
|
|
|
||||
Long-term debt net, less current maturities |
|
|
42,519 |
|
|
|
7,476 |
|
Other long-term liabilities |
|
|
905 |
|
|
|
840 |
|
Deferred income taxes |
|
|
197 |
|
|
|
78 |
|
Income taxes payable |
|
|
527 |
|
|
|
— |
|
Total liabilities |
|
|
88,107 |
|
|
|
42,351 |
|
|
|
|
|
|
||||
Commitments and contingencies (Note 12) |
|
|
|
|
||||
|
|
|
|
|
||||
Stockholders' equity: |
|
|
|
|
||||
Common stock, |
|
|
764 |
|
|
|
763 |
|
Additional paid in capital |
|
|
202,367 |
|
|
|
197,868 |
|
Accumulated deficit |
|
|
(19,302 |
) |
|
|
(463 |
) |
Accumulated other comprehensive (loss) income |
|
|
(909 |
) |
|
|
8 |
|
|
|
|
(5,982 |
) |
|
|
(5,982 |
) |
Total stockholders' equity |
|
|
176,938 |
|
|
|
192,194 |
|
Total liabilities & stockholders' equity |
|
$ |
265,045 |
|
|
$ |
234,545 |
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (in thousands, except share and per share data) (unaudited) |
||||||||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
Net revenue |
|
$ |
42,498 |
|
|
$ |
35,734 |
|
|
$ |
83,869 |
|
|
$ |
68,838 |
|
Cost of goods sold |
|
|
7,638 |
|
|
|
6,672 |
|
|
|
14,429 |
|
|
|
13,113 |
|
Gross profit |
|
|
34,860 |
|
|
|
29,062 |
|
|
|
69,440 |
|
|
|
55,725 |
|
|
|
|
|
|
|
|
|
|
||||||||
Operating expenses |
|
|
|
|
|
|
|
|
||||||||
Research and development costs |
|
|
5,990 |
|
|
|
3,587 |
|
|
|
11,763 |
|
|
|
7,136 |
|
Selling, general, and administrative |
|
|
37,948 |
|
|
|
26,645 |
|
|
|
75,190 |
|
|
|
50,041 |
|
Total operating expenses |
|
|
43,938 |
|
|
|
30,232 |
|
|
|
86,953 |
|
|
|
57,177 |
|
|
|
|
|
|
|
|
|
|
||||||||
Operating loss |
|
|
(9,078 |
) |
|
|
(1,170 |
) |
|
|
(17,513 |
) |
|
|
(1,452 |
) |
|
|
|
|
|
|
|
|
|
||||||||
Other income (expense) |
|
|
|
|
|
|
|
|
||||||||
Other income (expense) |
|
|
652 |
|
|
|
1 |
|
|
|
551 |
|
|
|
(26 |
) |
Interest expense, net |
|
|
(1,104 |
) |
|
|
(537 |
) |
|
|
(1,772 |
) |
|
|
(601 |
) |
Total other expense |
|
|
(452 |
) |
|
|
(536 |
) |
|
|
(1,221 |
) |
|
|
(627 |
) |
|
|
|
|
|
|
|
|
|
||||||||
Loss before income taxes |
|
|
(9,530 |
) |
|
|
(1,706 |
) |
|
|
(18,734 |
) |
|
|
(2,079 |
) |
Income tax expense |
|
|
73 |
|
|
|
178 |
|
|
|
105 |
|
|
|
332 |
|
|
|
|
|
|
|
|
|
|
||||||||
Net loss |
|
$ |
(9,603 |
) |
|
$ |
(1,884 |
) |
|
$ |
(18,839 |
) |
|
$ |
(2,411 |
) |
Less: cumulative dividends on Series B convertible preferred stock |
|
|
— |
|
|
|
(473 |
) |
|
|
— |
|
|
|
(942 |
) |
Net loss attributable to common stockholders |
|
$ |
(9,603 |
) |
|
$ |
(2,357 |
) |
|
$ |
(18,839 |
) |
|
$ |
(3,353 |
) |
Foreign currency translation adjustment |
|
|
(593 |
) |
|
|
84 |
|
|
|
(917 |
) |
|
|
(454 |
) |
Comprehensive loss |
|
$ |
(10,196 |
) |
|
$ |
(2,273 |
) |
|
$ |
(19,756 |
) |
|
$ |
(3,807 |
) |
Weighted average number of common stocks outstanding: |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
|
76,481,709 |
|
|
|
46,919,443 |
|
|
|
76,465,082 |
|
|
|
46,885,995 |
|
Diluted |
|
|
76,481,709 |
|
|
|
46,919,443 |
|
|
|
76,465,082 |
|
|
|
46,885,995 |
|
Net loss per share attributable to common stockholders: |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
$ |
(0.13 |
) |
|
|
(0.05 |
) |
|
$ |
(0.25 |
) |
|
$ |
(0.07 |
) |
Diluted |
|
$ |
(0.13 |
) |
|
|
(0.05 |
) |
|
$ |
(0.25 |
) |
|
$ |
(0.07 |
) |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) |
||||||||
|
|
Six Months Ended |
||||||
|
|
2022 |
|
2021 |
||||
Cash flows from operating activities |
|
|
|
|
||||
Net loss |
|
$ |
(18,839 |
) |
|
$ |
(2,411 |
) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
||||
Depreciation and amortization |
|
|
6,566 |
|
|
|
3,678 |
|
Allowance for doubtful accounts |
|
|
— |
|
|
|
127 |
|
Provision for excess and obsolete inventories |
|
|
(446 |
) |
|
|
1,232 |
|
Stock-based compensation |
|
|
4,465 |
|
|
|
1,715 |
|
Amortization of debt issuance costs |
|
|
248 |
|
|
|
126 |
|
Change in fair value of earnout liabilities |
|
|
(1,040 |
) |
|
|
— |
|
Deferred income taxes |
|
|
(707 |
) |
|
|
— |
|
Loss on disposal of property and equipment |
|
|
623 |
|
|
|
223 |
|
Other |
|
|
(638 |
) |
|
|
— |
|
Changes in other assets and liabilities, net of acquisitions: |
|
|
|
|
||||
Accounts receivable |
|
|
(6,825 |
) |
|
|
(105 |
) |
Inventories |
|
|
(11,518 |
) |
|
|
(4,561 |
) |
Other current assets |
|
|
289 |
|
|
|
(1,323 |
) |
Accounts payable |
|
|
1,537 |
|
|
|
3,483 |
|
Accrued expenses and other current liabilities |
|
|
1,992 |
|
|
|
1,725 |
|
Income tax receivable/payable |
|
|
454 |
|
|
|
(43 |
) |
Net cash (used in) provided by operating activities |
|
|
(23,839 |
) |
|
|
3,866 |
|
|
|
|
|
|
||||
Cash flows from investing activities |
|
|
|
|
||||
Purchases of property and equipment |
|
|
(29,204 |
) |
|
|
(6,517 |
) |
Proceeds from sale of property and equipment |
|
|
519 |
|
|
|
400 |
|
Purchases of intangible assets |
|
|
(783 |
) |
|
|
(857 |
) |
Acquisition of Disior, net of cash received |
|
|
(18,504 |
) |
|
|
(15,000 |
) |
Net cash used in investing activities |
|
|
(47,972 |
) |
|
|
(21,974 |
) |
|
|
|
|
|
||||
Cash flows from financing activities |
|
|
|
|
||||
Proceeds from draw on term loan |
|
|
20,000 |
|
|
|
— |
|
Proceeds from issuance of long-term debt |
|
|
16,000 |
|
|
|
24,846 |
|
Payments on long-term debt |
|
|
(178 |
) |
|
|
(5,945 |
) |
Payments of debt issuance costs |
|
|
(405 |
) |
|
|
(2,978 |
) |
Proceeds from issuance of common stock |
|
|
— |
|
|
|
1,000 |
|
Payments on treasury stock repurchased |
|
|
— |
|
|
|
(561 |
) |
Proceeds from exercise of stock options |
|
|
300 |
|
|
|
351 |
|
Net cash provided by financing activities |
|
|
35,717 |
|
|
|
16,713 |
|
|
|
|
|
|
||||
Effect of exchange rate changes on cash |
|
|
(256 |
) |
|
|
(62 |
) |
Net decrease in cash |
|
|
(36,350 |
) |
|
|
(1,457 |
) |
Cash at beginning of period |
|
|
109,352 |
|
|
|
17,501 |
|
Cash at end of period |
|
$ |
73,002 |
|
|
$ |
16,044 |
|
|
|
|
|
|
||||
Supplemental disclosures of cash flow information: |
|
|
|
|
||||
Cash paid for taxes |
|
$ |
386 |
|
|
$ |
374 |
|
Cash paid for interest |
|
$ |
1,520 |
|
|
$ |
178 |
|
Purchase of property and equipment included in accounts payable |
|
$ |
3,088 |
|
|
$ |
99 |
|
Series B convertible preferred stock dividend |
|
$ |
— |
|
|
$ |
942 |
|
RECONCILIATION OF NET LOSS TO NON-GAAP ADJUSTED EBITDA (in thousands) (unaudited) |
||||||||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
|
|
(in thousands) |
||||||||||||||
Net loss |
|
$ |
(9,603 |
) |
|
$ |
(1,884 |
) |
|
$ |
(18,839 |
) |
|
$ |
(2,411 |
) |
Interest expense |
|
|
1,104 |
|
|
|
537 |
|
|
|
1,772 |
|
|
|
601 |
|
Income tax expense |
|
|
73 |
|
|
|
178 |
|
|
|
105 |
|
|
|
332 |
|
Depreciation and amortization expense |
|
|
3,536 |
|
|
|
1,939 |
|
|
|
6,566 |
|
|
|
3,678 |
|
Stock based compensation expense |
|
|
2,343 |
|
|
|
857 |
|
|
|
4,465 |
|
|
|
1,715 |
|
Change in fair value of earnout liability (1) |
|
|
(620 |
) |
|
|
— |
|
|
|
(540 |
) |
|
|
— |
|
Adjusted EBITDA |
|
$ |
(3,167 |
) |
|
$ |
1,627 |
|
|
$ |
(6,471 |
) |
|
$ |
3,915 |
|
(1) Represents non-cash change in the fair value of earnout liability for the three and six months ended |
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View source version on businesswire.com: https://www.businesswire.com/news/home/20220803005804/en/
Investor Contact:
Senior Vice President, Strategy and Investor Relations
mbrinckman@paragon28.com
Source:
FAQ
What were Paragon 28's Q2 2022 financial results?
How did foreign currency impact Paragon 28's revenue?
What is Paragon 28's revenue guidance for the full year 2022?
What was the net loss for Paragon 28 in Q2 2022?
What were the operating expenses for Paragon 28 in Q2 2022?
