Business Highlights:
~ Reported $49.2 million of net sales for full year 2022
~ Fourth quarter 2022 net sales of $12.7 million, representing an increase of 17% in Q4 2022 compared to Q4 2021
~ Continued strong growth in sales of CanGaroo® and SimpliDerm® which, on an aggregate basis, increased 30% in Q4 2022 compared to Q4 2021
Improved gross margin 8 percentage points to 39% in Q4 2022 compared to Q4 2021
Entered into a U.S. distribution agreement with Sientra for the sale of SimpliDerm
“We are pleased to have closed the year with record revenues and thrilled to have helped more than 50,000 patients with our products in 2022,” said Dr. Randy Mills, President and Chief Executive Officer of Aziyo Biologics. “We believe we are on a path for continued growth in key markets where there remains significant unmet need. We are excited about our long-term potential and the opportunity to accelerate growth and enhance efficiency through strategic partnerships, as evidenced by the distribution agreement with Sientra for SimpliDerm announced earlier today.
“At the same time, following the recent feedback from the FDA delaying the market clearance of our CanGaroo RM Antibacterial Envelope, we recognize the need to extend our cash runway and have implemented significant measures to eliminate or defer expenses as we transition to a more capital efficient business model,” continued Dr. Mills. “Nevertheless, we remain committed to our CanGaroo RM development program and are confident we will be able to address the FDA’s outstanding questions.”
Fourth Quarter 2022 Financial Results
Net sales for the fourth quarter of 2022 were $12.7 million, an increase of 17% compared to the fourth quarter of 2021. This growth was led by CanGaroo and SimpliDerm, which on an aggregate basis, grew by 30% in the fourth quarter of 2022, compared to the fourth quarter of 2021.
Gross profit for the fourth quarter of 2022 was $5.0 million and gross margin was 39%, as compared to $3.4 million and 31%, respectively, in the corresponding prior-year period. Gross margin, excluding intangible asset amortization (a measure not presented in accordance with U.S. generally accepted accounting principles (“GAAP”)) was 46% for the fourth quarter of 2022, as compared to 39% in the fourth quarter of 2021. The increase in gross margin was primarily due to efficiency improvements in the Company’s Orthobiologics and Women’s Health business units.
Total operating expenses were $13.8 million for the fourth quarter of 2022, as compared to $11.2 million in the corresponding prior-year period, representing an increase of 24%. The increase was primarily due to legal expenses and updated estimates of contingent liabilities in excess of currently available insurance coverage related to the 2021 recall of a single donor lot of the Company’s FiberCel Viable Bone Matrix (“FiberCel”). Increased sales and marketing also contributed to higher operating expenses, partially offset by a decrease in research and development.
Operating results for the fourth quarter of 2022 included $5.0 million of other income related to a reduction of the Company’s revenue interest obligation, which is based on the forecasted timing and extent of net sales for the Company’s CanGaroo and cardiovascular product lines and the associated royalty and milestone payments. The Company’s revenue interest obligation terminates in May 2027.
Net loss was $5.4 million in the fourth quarter of 2022, as compared to $9.1 million in the corresponding period of the prior year. Net loss per share in the fourth quarter of 2022 was $0.38 per share, compared to a loss of $0.82 per share in the fourth quarter of 2021.
Aziyo’s cash balance as of December 31, 2022 was $17.0 million, which included $10.2 million in net proceeds from the follow-on public offering completed in December 2022 and additional borrowings of $4.0 million under an existing term loan facility.
Full Year 2022 Financial Results
Net sales for the full year 2022 were $49.2 million, an increase of 4% compared to the full year 2021 net sales of $47.4 million. Excluding 2021 sales of $4.9 million from the discontinued product, FiberCel, net sales from current products increased 16% in the full year 2022 compared to the prior year.
Gross profit for the full year 2022 was $19.2 million and gross margin was 39%, as compared to $19.0 million and 40%, respectively, in the prior year. Gross margin, excluding intangible asset amortization (a non-GAAP financial measure) was 46% for the full year 2022, as compared to 47% in the full year 2021.
Total operating expenses were $51.0 million for the full year 2022, as compared to $42.1 million in the prior year, representing an increase of 21%. The increase was primarily due to higher expenses related to litigation, general and administrative and sales and marketing expenses.
Net loss was $32.9 million in the full year 2022, as compared to $24.8 million in the prior year. Loss per share in the full year 2022 was $2.38 per share, unchanged from the prior year.
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