Vericel Corp. (VCEL)

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Vericel Reports Record Third Quarter Revenues of $22.5 Million and Raises Full Year 2018 Revenue Guidance
GlobeNewswire•November 6, 2018

58% Revenue Growth Over Third Quarter 2017

Conference Call Today at 8:30am Eastern Time

CAMBRIDGE, Mass., Nov. 06, 2018 (GLOBE NEWSWIRE) -- Vericel Corporation (VCEL), a leader in advanced cell therapies for the sports medicine and severe burn care markets, today reported financial results and business highlights for the third quarter ended September 30, 2018 and raised its full year 2018 revenue guidance.

Third Quarter 2018 Financial Highlights

Total net revenues increased 58% to $22.5 million compared to $14.3 million in the third quarter of 2017;
Gross margins of 64% compared to gross margins of 50% in the third quarter of 2017;
Net loss of $1.1 million, or $0.02 loss per share, compared to net loss of $5.4 million, or $0.16 per share, in the third quarter of 2017;
Non-GAAP adjusted EBITDA of $0.9 million compared to a loss of $2.9 million in the third quarter of 2017;
As of September 30, 2018, the company had $97.8 million in cash and short-term investments compared to $26.9 million in cash at December 31, 2017; and
Full year 2018 revenue guidance raised to $87 to $90 million compared to previous full year revenue guidance of $80 to $83 million.

Recent Business Highlights
During and since the third quarter of 2018, the company:

Reported record third quarter revenues, marking the sixth consecutive quarter with record revenues for the reported quarter;
Announced plans to increase the MACI® sales force by 20%, adding a sixth sales region and increasing from 40 to 48 representatives in 2019;
Expanded MACI manufacturing capacity to meet increased MACI demand;
Appointed Dr. Jonathan Hopper as Chief Medical Officer; and
Announced acceptance of four abstract podium presentations for Epicel® at the upcoming Annual North American Burn Society Conference in January 2019.

“We achieved record third quarter revenues and our consistently strong revenue growth has generated significant improvements in gross margins, profitability and cash flow,” said Nick Colangelo, president and CEO of Vericel. “Based on the strength of our performance year to date and the continued momentum in MACI uptake, we have raised our full year 2018 revenue guidance and plan to further expand the MACI sales force to meet an expanded addressable market.”

Third Quarter 2018 Results
Total net revenues for the quarter ended September 30, 2018 were $22.5 million, which included $16.4 million of MACI® (autologous cultured chondrocytes on porcine collagen membrane) net revenue and $6.0 million of Epicel® (cultured epidermal autografts) net revenue, compared to $9.9 million of MACI net revenue and $4.4 million of Epicel net revenue, respectively, in the third quarter of 2017.

Gross profit for the quarter ended September 30, 2018 was $14.3 million, or 64% of net revenues, compared to $7.1 million, or 50% of net revenues, for the third quarter of 2017.

Total operating expenses for the quarter ended September 30, 2018 were $15.7 million compared to $11.1 million for the same period in 2017. The increase in operating expenses was primarily due to $1.2 million in service fees paid to MACI pharmacy distributors, a $1.0 million increase in MACI sales force expenses as a result of the MACI sales force expansion, a $1.0 million increase in reimbursement support services as a result of increased MACI demand, and a $1.0 million increase in stock-based compensation expenses.

Loss from operations for the quarter ended September 30, 2018 was $1.3 million, compared to a loss of $4.0 million for the third quarter of 2017. Material non-cash items impacting the operating loss for the quarter included $1.9 million of stock-based compensation expense and $0.3 million in depreciation expense, compared to $0.8 million of stock-based compensation expense and $0.4 million in depreciation expense in the third quarter of 2017.

Other income for the quarter ended September 30, 2018 was $0.3 million compared to other expense of $1.4 million for the third quarter of 2017. The increase in other income is primarily due to income recognized upon the expiration of unexercised warrants in the current quarter compared to an expense for the change in the fair value of warrants in the third quarter of 2017.

Non-GAAP adjusted EBITDA was $0.9 million for the quarter ended September 30, 2018 compared to a loss of $2.9 million in the third quarter of 2017. See table reconciling non-GAAP measures for more details.

Vericel’s net loss for the quarter ended September 30, 2018 was $1.1 million, or $0.02 per share, compared to a net loss of $5.4 million, or $0.16 per share, for the third quarter of 2017.

As of September 30, 2018, the company had $97.8 million in cash and short-term investments compared to $26.9 million in cash at December 31, 2017.

Full Year 2018 Financial Guidance
The company now expects total net product revenues for the full year 2018 to be in the range of $87 to $90 million, compared to the previous full year revenue guidance of $80 to $83 million.

Conference Call Information
Today's conference call will be available live at 8:30am Eastern time in the Investor Relations section of the Vericel website at http://investors.vcel.com/events-presentations. Please access the site at least 15 minutes prior to the scheduled start time in order to download the required audio software if necessary. To participate in the live call by telephone, please call [phone] and reference Vericel Corporation's third-quarter 2018 investor conference call. If calling from outside the U.S., please use the international phone number [phone].