Paragon 28 Reports Third Quarter 2022 Financial Results and Increases 2022 Net Revenue Guidance
Paragon 28, Inc. (NYSE: FNA) reported a record net revenue of $46.0 million for Q3 2022, marking a 28% increase from the previous year. U.S. revenue reached $40.0 million, up 25%, driven by improved sales productivity and new product launches. International revenue also set a record at $6.0 million, growing 52%. Despite foreign currency headwinds impacting revenue by $0.8 million, the company raised its 2022 net revenue guidance to $179.5 million, reflecting a 22% growth. However, net loss expanded to $9.7 million, contributing to a negative adjusted EBITDA of $2.7 million.
- Q3 2022 net revenue rose to $46.0 million, a record and 28% year-over-year growth.
- U.S. revenue set a record at $40.0 million, growing 25% YoY.
- International revenue reached $6.0 million, representing growth of 52% YoY.
- Increased 2022 net revenue guidance to $179.5 million, up from $176.0 million.
- Net loss increased to $9.7 million from $5.1 million YoY.
- Adjusted EBITDA was negative $2.7 million, worsening from negative $1.0 million YoY.
- Foreign currency headwinds expected to reduce 2022 net revenue by approximately $2.4 million.
Financial Highlights
-
Net revenue
for the third quarter of 2022, a quarterly net revenue record, representing reported growth of$46.0 million 28% over the third quarter of 2021.-
Foreign currency headwinds reduced quarterly net revenue and net revenue growth by approximately
and 2.1 percentage points, respectively, as compared to the prior year quarter.$0.8 million -
U.S. quarterly revenue was a record , representing growth of$40.0 million 25% over the prior year quarter. Growth was driven primarily by sales force productivity gains resulting from new product launches, an expanded customer base, and continued medical education momentum. -
International quarterly net revenue was a record
, representing reported growth of$6.0 million 52% over the prior year quarter. Foreign currency headwinds reduced quarterly international net revenue and net revenue growth by approximately and 19 percentage points, respectively, as compared to the prior year quarter. Growth was driven primarily by$0.8 million Australia ,South Africa ,Spain , and theUnited Kingdom .
-
Foreign currency headwinds reduced quarterly net revenue and net revenue growth by approximately
-
Gross margin
81.5% for the quarter compared to80.2% for the third quarter of 2021, reflecting lower excess and obsolete inventory expense. -
Operating expenses
for the third quarter of 2022, representing a 3.3 percentage point improvement in operating expenses as a percentage of net revenue as compared to the second quarter of 2022.$46.0 million -
Net loss
for the third quarter of 2022 compared to net loss$9.7 million for the third quarter of 2021 and net loss of$5.1 million for the second quarter 2022.$9.6 million -
Adjusted EBITDA for the quarter was negative
compared to negative$2.7 million in the third quarter of 2021 and negative$1.0 million in the second quarter of 2022.$3.2 million
“I am very proud of our year-to-date results through September, as we achieved reported net revenue growth of
Increased 2022 Net Revenue Guidance
The Company increased its 2022 net revenue guidance by
The Company’s increased 2022 annual net revenue guidance includes fourth quarter 2022 net revenue guidance of
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 the full year and fourth quarter 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 |
|
$ |
56,325 |
|
|
$ |
109,352 |
|
Trade receivables |
|
|
35,960 |
|
|
|
25,939 |
|
Inventories, net |
|
|
54,771 |
|
|
|
40,241 |
|
Income taxes receivable |
|
|
705 |
|
|
|
920 |
|
Other current assets |
|
|
1,947 |
|
|
|
3,078 |
|
Total current assets |
|
|
149,708 |
|
|
|
179,530 |
|
|
|
|
|
|
||||
Property and equipment, net |
|
|
58,591 |
|
|
|
32,181 |
|
|
|
|
|
|
||||
Intangible assets, net |
|
|
20,850 |
|
|
|
16,505 |
|
|
|
|
26,975 |
|
|
|
6,329 |
|
|
|
|
|
|
||||
Deferred income taxes |
|
|
841 |
|
|
|
— |
|
|
|
|
|
|
||||
Total assets |
|
$ |
256,965 |
|
|
$ |
234,545 |
|
|
|
|
|
|
||||
LIABILITIES & STOCKHOLDERS' EQUITY |
|
|
|
|
||||
Current liabilities: |
|
|
|
|
||||
Accounts payable |
|
$ |
13,979 |
|
|
$ |
13,028 |
|
Accrued expenses |
|
|
19,507 |
|
|
|
18,232 |
|
Other current liabilities |
|
|
6,889 |
|
|
|
1,929 |
|
Current maturities of long-term debt |
|
|
735 |
|
|
|
153 |
|
Income taxes payable |
|
|
497 |
|
|
|
615 |
|
Total current liabilities |
|
|
41,607 |
|
|
|
33,957 |
|
|
|
|
|
|
||||
Long-term liabilities: |
|
|
|
|
||||
Long-term debt net, less current maturities |
|
|
42,492 |
|
|
|
7,476 |
|
Other long-term liabilities |
|
|
907 |
|
|
|
840 |
|
Deferred income taxes |
|
|
59 |
|
|
|
78 |
|
Income taxes payable |
|
|
527 |
|
|
|
— |
|
Total liabilities |
|
|
85,592 |
|
|
|
42,351 |
|
|
|
|
|
|
||||
Commitments and contingencies (Note 12) |
|
|
|
|
||||
|
|
|
|
|
||||
Stockholders' equity: |
|
|
|
|
||||
Common stock, |
|
|
769 |
|
|
|
763 |
|
Additional paid in capital |
|
|
207,109 |
|
|
|
197,868 |
|
Accumulated deficit |
|
|
(29,026 |
) |
|
|
(463 |
) |
Accumulated other comprehensive (loss) income |
|
|
(1,497 |
) |
|
|
8 |
|
|
|
|
(5,982 |
) |
|
|
(5,982 |
) |
Total stockholders' equity |
|
|
171,373 |
|
|
|
192,194 |
|
Total liabilities & stockholders' equity |
|
$ |
256,965 |
|
|
$ |
234,545 |
|
|
||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS |
||||||||||||||||
(in thousands, except share and per share data) |
||||||||||||||||
(unaudited) |
||||||||||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
Net revenue |
|
$ |
46,006 |
|
|
$ |
35,851 |
|
|
$ |
129,875 |
|
|
$ |
104,689 |
|
Cost of goods sold |
|
|
8,491 |
|
|
|
7,096 |
|
|
|
22,920 |
|
|
|
20,209 |
|
Gross profit |
|
|
37,515 |
|
|
|
28,755 |
|
|
|
106,955 |
|
|
|
84,480 |
|
|
|
|
|
|
|
|
|
|
||||||||
Operating expenses |
|
|
|
|
|
|
|
|
||||||||
Research and development costs |
|
|
6,337 |
|
|
|
4,118 |
|
|
|
18,100 |
|
|
|
11,254 |
|
Selling, general, and administrative |
|
|
39,667 |
|
|
|
28,968 |
|
|
|
114,857 |
|
|
|
79,009 |
|
Total operating expenses |
|
|
46,004 |
|
|
|
33,086 |
|
|
|
132,957 |
|
|
|
90,263 |
|
|
|
|
|
|
|
|
|
|
||||||||
Operating loss |
|
|
(8,489 |
) |
|
|
(4,331 |
) |
|
|
(26,002 |
) |
|
|
(5,783 |
) |
|
|
|
|
|
|
|
|
|
||||||||
Other income (expense) |
|
|
|
|
|
|
|
|
||||||||
Other income (expense) |
|
|
59 |
|
|
|
(98 |
) |
|
|
610 |
|
|
|
(124 |
) |
Interest expense, net |
|
|
(1,093 |
) |
|
|
(573 |
) |
|
|
(2,865 |
) |
|
|
(1,174 |
) |
Total other expense |
|
|
(1,034 |
) |
|
|
(671 |
) |
|
|
(2,255 |
) |
|
|
(1,298 |
) |
|
|
|
|
|
|
|
|
|
||||||||
Loss before income taxes |
|
|
(9,523 |
) |
|
|
(5,002 |
) |
|
|
(28,257 |
) |
|
|
(7,081 |
) |
Income tax expense |
|
|
201 |
|
|
|
105 |
|
|
|
306 |
|
|
|
437 |
|
|
|
|
|
|
|
|
|
|
||||||||
Net loss |
|
$ |
(9,724 |
) |
|
$ |
(5,107 |
) |
|
$ |
(28,563 |
) |
|
$ |
(7,518 |
) |
Less: cumulative dividends on Series B convertible preferred stock |
|
|
— |
|
|
|
(574 |
) |
|
|
— |
|
|
|
(1,516 |
) |
Net loss attributable to common stockholders |
|
$ |
(9,724 |
) |
|
$ |
(5,681 |
) |
|
$ |
(28,563 |
) |
|
$ |
(9,034 |
) |
Foreign currency translation adjustment |
|
|
(588 |
) |
|
|
(121 |
) |
|
|
(1,505 |
) |
|
|
(575 |
) |
Comprehensive loss |
|
$ |
(10,312 |
) |
|
$ |
(5,802 |
) |
|
$ |
(30,068 |
) |
|
$ |
(9,609 |
) |
Weighted average number of common stocks outstanding: |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
|
76,850,949 |
|
|
|
47,005,334 |
|
|
|
76,595,118 |
|
|
|
46,926,344 |
|
Diluted |
|
|
76,850,949 |
|
|
|
47,005,334 |
|
|
|
76,595,118 |
|
|
|
46,926,344 |
|
Net loss per share attributable to common stockholders: |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
$ |
(0.13 |
) |
|
|
(0.12 |
) |
|
$ |
(0.37 |
) |
|
$ |
(0.19 |
) |
Diluted |
|
$ |
(0.13 |
) |
|
|
(0.12 |
) |
|
$ |
(0.37 |
) |
|
$ |
(0.19 |
) |
|
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||
(in thousands) |
||||||||
(unaudited) |
||||||||
|
|
Nine Months Ended |
||||||
|
|
2022 |
|
2021 |
||||
Cash flows from operating activities |
|
|
|
|
||||
Net loss |
|
$ |
(28,563 |
) |
|
$ |
(7,518 |
) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
||||
Depreciation and amortization |
|
|
9,624 |
|
|
|
6,094 |
|
Provision for excess and obsolete inventories |
|
|
(91 |
) |
|
|
2,226 |
|
Stock-based compensation |
|
|
7,052 |
|
|
|
2,747 |
|
Employee stock purchase program |
|
|
100 |
|
|
|
— |
|
Amortization of debt issuance costs |
|
|
417 |
|
|
|
372 |
|
Change in fair value of earnout liabilities |
|
|
(575 |
) |
|
|
60 |
|
Deferred income taxes |
|
|
(1,110 |
) |
|
|
— |
|
Loss on disposal of property and equipment |
|
|
902 |
|
|
|
118 |
|
Other |
|
|
(1,029 |
) |
|
|
317 |
|
Changes in other assets and liabilities, net of acquisitions: |
|
|
|
|
||||
Accounts receivable |
|
|
(10,227 |
) |
|
|
(807 |
) |
Inventories |
|
|
(15,316 |
) |
|
|
(7,860 |
) |
Other current assets |
|
|
1,442 |
|
|
|
(3,952 |
) |
Accounts payable |
|
|
951 |
|
|
|
3,404 |
|
Accrued expenses and other current liabilities |
|
|
176 |
|
|
|
2,935 |
|
Income tax receivable/payable |
|
|
297 |
|
|
|
668 |
|
Net cash used in operating activities |
|
|
(35,950 |
) |
|
|
(1,196 |
) |
|
|
|
|
|
||||
Cash flows from investing activities |
|
|
|
|
||||
Purchase of office building |
|
|
(18,300 |
) |
|
|
— |
|
Purchases of property and equipment |
|
|
(15,637 |
) |
|
|
(10,270 |
) |
Proceeds from sale of property and equipment |
|
|
642 |
|
|
|
581 |
|
Purchases of intangible assets |
|
|
(1,720 |
) |
|
|
(1,196 |
) |
Acquisition, net of cash received |
|
|
(18,504 |
) |
|
|
(15,000 |
) |
Net cash used in investing activities |
|
|
(53,519 |
) |
|
|
(25,885 |
) |
|
|
|
|
|
||||
Cash flows from financing activities |
|
|
|
|
||||
Proceeds from draw on term loan |
|
|
20,000 |
|
|
|
— |
|
Proceeds from issuance of long-term debt |
|
|
16,000 |
|
|
|
25,985 |
|
Payments on long-term debt |
|
|
(367 |
) |
|
|
(5,991 |
) |
Payments of debt issuance costs |
|
|
(420 |
) |
|
|
(3,080 |
) |
Proceeds from issuance of common stock |
|
|
— |
|
|
|
1,001 |
|
Payments on treasury stock repurchased |
|
|
— |
|
|
|
(561 |
) |
Proceeds from exercise of stock options |
|
|
2,224 |
|
|
|
442 |
|
Payments on earnout liability |
|
|
(500 |
) |
|
|
— |
|
Net cash provided by financing activities |
|
|
36,937 |
|
|
|
17,796 |
|
|
|
|
|
|
||||
Effect of exchange rate changes on cash |
|
|
(495 |
) |
|
|
(340 |
) |
Net decrease in cash |
|
|
(53,027 |
) |
|
|
(9,625 |
) |
Cash at beginning of period |
|
|
109,352 |
|
|
|
17,501 |
|
Cash at end of period |
|
$ |
56,325 |
|
|
$ |
7,876 |
|
|
|
|
|
|
||||
Supplemental disclosures of cash flow information: |
|
|
|
|
||||
Cash paid for taxes |
|
$ |
788 |
|
|
$ |
381 |
|
Cash paid for interest |
|
|
2,111 |
|
|
|
670 |
|
Purchase of property and equipment included in accounts payable |
|
|
2,363 |
|
|
|
58 |
|
Series B convertible preferred stock dividend |
|
|
— |
|
|
|
1,516 |
|
|
||||||||||||||||
RECONCILIATION OF NET LOSS TO NON-GAAP ADJUSTED EBITDA |
||||||||||||||||
(in thousands) |
||||||||||||||||
(unaudited) |
||||||||||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
|
|
(in thousands) |
||||||||||||||
Net loss |
|
$ |
(9,724 |
) |
|
$ |
(5,107 |
) |
|
$ |
(28,563 |
) |
|
$ |
(7,518 |
) |
Interest expense |
|
|
1,093 |
|
|
|
573 |
|
|
|
2,865 |
|
|
|
1,174 |
|
Income tax expense |
|
|
201 |
|
|
|
105 |
|
|
|
306 |
|
|
|
437 |
|
Depreciation and amortization expense |
|
|
3,058 |
|
|
|
2,424 |
|
|
|
9,624 |
|
|
|
6,103 |
|
Stock based compensation expense |
|
|
2,587 |
|
|
|
1,032 |
|
|
|
7,052 |
|
|
|
2,747 |
|
Employee stock purchase plan expense |
|
|
100 |
|
|
|
— |
|
|
|
100 |
|
|
|
— |
|
Change in fair value of earnout liability (1) |
|
|
(35 |
) |
|
|
— |
|
|
|
(575 |
) |
|
|
— |
|
Adjusted EBITDA |
|
$ |
(2,720 |
) |
|
$ |
(973 |
) |
|
$ |
(9,191 |
) |
|
$ |
2,943 |
|
________________________ |
||||||||||||||||
(1) Represents non-cash change in the fair value of earnout liability for the three and nine months ended |
View source version on businesswire.com: https://www.businesswire.com/news/home/20221110006017/en/
Investor Contact:
Senior Vice President, Strategy and Investor Relations
mbrinckman@paragon28.com
Source:
FAQ
What are the financial results for Paragon 28 in Q3 2022?
How has Paragon 28 adjusted its 2022 revenue guidance?
What was the net loss reported by Paragon 28 for Q3 2022?
What impact did foreign currency have on Paragon 28's revenue?