Paragon 28, Inc. (NYSE: FNA) (“Paragon 28” or "Company”), a
leading medical device company exclusively focused on the foot and
ankle orthopedic market, today reported financial results for the
quarter ended March 31, 2023 and reaffirmed its 2023 net revenue
guidance.
First Quarter 2023 Financial Results
- Consolidated net revenue for the first quarter of 2023 was a
record $52.0 million, representing 25.8% and 27.1% reported and
constant currency growth, respectively, over the first quarter of
2022.
- U.S. net revenue for the first quarter of 2023 was $45.0
million, representing growth of 24.9% over the first quarter of
2022.
- International net revenue for the first quarter of 2023 was a
record $7.1 million, representing 31.9% and 42.2% reported and
constant currency growth, respectively, over the first quarter of
2022.
- Gross margin was 83% for the first quarter of 2023 compared to
84% in the first quarter of 2022.
- Operating expenses were $50.9 million for the first quarter of
2023, an increase of 18.3%, compared to $43.0 million for the first
quarter of 2022.
- Net loss was $9.1 million for the first quarter of 2023,
compared to net loss of $9.2 million for the first quarter of
2022.
- Adjusted EBITDA was a $1.4 million loss for the first quarter
of 2023, a 57.1% improvement, compared to a $3.3 million loss in
the first quarter of 2022.
“Paragon 28 is off to a great start in 2023. We are thrilled
with our 27% constant-currency net revenue growth for the first
quarter, particularly given the comparison to our very strong first
quarter of 2022, which grew 25% on a constant-currency basis. Our
impressive top-line growth, and our 57% year-over-year improvement
in Adjusted EBITDA for the quarter, was the result of excellent
execution by each of our global teams,” said Albert DaCosta,
Chairman and Chief Executive Officer. “This exceptional performance
demonstrates our leadership across the entire foot and ankle
market, and the benefits of our exclusive focus. I am extremely
confident in our prospects in 2023 and beyond.”
2023 Net Revenue Guidance
The Company reaffirms its prior 2023 net revenue guidance, and
expects net revenue to be $214 million to $218 million,
representing 18% to 20% reported growth compared to 2022.
The Company’s 2023 net revenue guidance assumes foreign currency
translation rates remain consistent with current foreign currency
translation rates.
Webcast and Conference Call Information
Paragon 28 will host a conference call to discuss first quarter
2023 financial results on Thursday, May 4, 2023, at 2:30 p.m.
Mountain Time / 4:30 p.m. Eastern Time. Investors interested in
listening to the conference call may do so by dialing
(833)-470-1428 for domestic callers or (929)-526-1599 for
international callers, using conference ID: 007721. Live audio of
the webcast will be available on the “Investors” section of the
company’s website at ir.paragon28.com. The webcast will be archived
and available for replay for at least 90 days after the event.
About Paragon 28, Inc.
Based in Englewood, Colo., Paragon 28, is a leading medical
device company exclusively focused on the foot and ankle orthopedic
market and is dedicated to improving patient lives. From the onset,
Paragon 28® has provided innovative orthopedic solutions,
procedural approaches and instrumentation that cover a wide range
of foot and ankle ailments including fracture fixation, forefoot,
ankle, progressive collapsing foot deformity (PCFD) or flatfoot,
charcot foot and orthobiologics. The company designs products with
both the patient and surgeon in mind, with the goal of improving
outcomes, reducing ailment recurrence and complication rates, and
making the procedures simpler, consistent, and reproducible.
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 Securities and Exchange Commission (the “SEC”), including
Paragon 28’s annual report on Form 10-K filed with the SEC on March
2, 2023. Paragon 28 does not undertake any obligation to update
forward‐looking statements and expressly disclaims any obligation
or undertaking to release publicly any updates or revisions to any
forward‐looking statements contained herein. These forward-looking
statements should not be relied upon as representing Paragon 28’s
views as of any date subsequent to the date of this press release.
Paragon 28’s results for the quarter ended March 31, 2023 are not
necessarily indicative of our operating results for any future
periods.
Use of Non-GAAP Financial Measures and Their
Limitations
In addition to our results and measures of performance
determined in accordance with U.S. GAAP presented in this press
release, we believe that certain non-GAAP financial measures are
useful in evaluating and comparing our financial and operational
performance over multiple periods, identifying trends affecting our
business, formulating business plans and making strategic
decisions.
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 define Adjusted
EBITDA as earnings (loss) before interest expense, income tax
expense (benefit), depreciation and amortization, stock-based
compensation expense, employee stock purchase plan expense,
non-recurring expenses and certain other non-cash expenses.
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 U.S. GAAP. Some
of these potential limitations include:
- 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 U.S. dollar into U.S. dollars. Because we are a global
company, foreign currency exchange rates used for translation may
have a significant effect on our reported results. References to
revenue growth on a constant-currency basis means without the
impact of foreign currency exchange rate fluctuations.
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.
PARAGON 28, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(in thousands)
March 31, 2023
December 31, 2022
ASSETS
Current assets:
Cash
$
85,883
$
38,468
Trade receivables
37,262
37,687
Inventories, net
69,174
60,948
Income taxes receivable
596
615
Other current assets
4,167
4,658
Total current assets
197,082
142,376
Property and equipment, net
66,810
61,938
Intangible assets, net
22,137
22,387
Goodwill
25,465
25,465
Deferred income taxes
354
148
Other assets
1,697
1,795
Total assets
$
313,545
$
254,109
LIABILITIES &
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
20,538
$
14,939
Accrued expenses
25,446
26,807
Accrued legal settlement
13,000
22,000
Other current liabilities
3,772
3,844
Current maturities of long-term debt
690
728
Income taxes payable
208
184
Total current liabilities
63,654
68,502
Long-term liabilities:
Long-term debt net, less current
maturities
42,204
42,182
Other long-term liabilities
1,523
1,628
Deferred income taxes
377
342
Income taxes payable
635
527
Total liabilities
108,393
113,181
Stockholders' equity:
Common stock, $0.01 par value, 300,000,000
shares authorized; 83,220,392 and 78,684,107 shares issued, and
82,306,873 and 77,770,588 shares outstanding as of March 31, 2023
and December 31, 2022, respectively
821
776
Additional paid in capital
287,286
213,956
Accumulated deficit
(76,841
)
(67,789
)
Accumulated other comprehensive loss
(132
)
(33
)
Treasury stock, at cost; 913,519 shares as
of March 31, 2023 and December 31, 2022
(5,982
)
(5,982
)
Total stockholders' equity
205,152
140,928
Total liabilities & stockholders'
equity
$
313,545
$
254,109
PARAGON 28, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except per
share data)
Three Months Ended March
31,
2023
2022
Net revenue
$
52,036
$
41,371
Cost of goods sold
8,906
6,791
Gross profit
43,130
34,580
Operating expenses
Research and development costs
7,049
5,773
Selling, general, and administrative
43,820
37,242
Total operating expenses
50,869
43,015
Operating loss
(7,739
)
(8,435
)
Other income:
Other expense
(179
)
(101
)
Interest expense
(1,205
)
(668
)
Total other expense
(1,384
)
(769
)
Loss before income taxes
(9,123
)
(9,204
)
Income tax (benefit) expense
(71
)
32
Net loss
$
(9,052
)
$
(9,236
)
PARAGON 28, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(in thousands)
Three Months Ended March
31,
2023
2022
Cash flows from operating activities
Net loss
$
(9,052
)
$
(9,236
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
3,117
3,030
Allowance for doubtful accounts
—
600
Provision for (reversal of) excess and
obsolete inventories
293
(643
)
Stock-based compensation
3,182
2,122
Other
180
387
Changes in other assets and liabilities,
net of acquisitions:
Accounts receivable
441
(2,240
)
Inventories
(8,435
)
(2,329
)
Accounts payable
5,592
(1,178
)
Accrued expenses
(877
)
(682
)
Accrued legal settlement
(9,000
)
—
Income tax receivable/payable
132
669
Other assets and liabilities
367
(3
)
Net cash used in operating activities
(14,060
)
(9,503
)
Cash flows from investing activities
Purchases of property and equipment
(7,521
)
(23,036
)
Proceeds from sale of property and
equipment
223
305
Purchases of intangible assets
(254
)
(704
)
Acquisition of Disior, net of cash
received
—
(18,201
)
Net cash used in investing activities
(7,552
)
(41,636
)
Cash flows from financing activities
Proceeds from draw on term loan
—
20,000
Proceeds from issuance of long-term
debt
—
16,000
Payments on long-term debt
(197
)
(37
)
Payments of debt issuance costs
(7
)
(405
)
Proceeds from issuance of common stock,
net of issuance costs
68,449
—
Proceeds from exercise of stock
options
1,622
12
Payments on earnout liability
(500
)
—
Net cash provided by financing
activities
69,367
35,570
Effect of exchange rate changes on
cash
(340
)
(136
)
Net increase (decrease) in cash
47,415
(15,705
)
Cash at beginning of period
38,468
109,352
Cash at end of period
$
85,883
$
93,647
PARAGON 28, INC. AND
SUBSIDIARIES
RECONCILIATION OF NET LOSS TO
NON-GAAP ADJUSTED EBITDA
(in thousands,
unaudited)
Three Months Ended December
31,
2023
2022
Net loss
$
(9,052
)
$
(9,236
)
Interest expense
1,205
668
Income tax (benefit) expense
(71
)
32
Depreciation and amortization expense
3,117
3,030
Stock based compensation expense
3,182
2,122
Employee stock purchase plan expense
122
—
Change in fair value of earnout liability
(1)
80
80
Adjusted EBITDA
$
(1,417
)
$
(3,304
)
(1) Represents non-cash change in the fair
value of earnout liabilities.
PARAGON 28, INC. AND
SUBSIDIARIES
Constant-Currency Revenue
Growth
(in thousands,
unaudited)
Three months ended March
31,
2023
2022
% Increase (Decrease)
Total Consolidated Revenues
As Reported
$
52,036
$
41,371
25.8
%
Impact of foreign currency exchange
rates
552
—
*
Constant-currency net revenues
$
52,588
$
41,371
27.1
%
Total International Revenues
As Reported
$
7,055
$
5,348
31.9
%
Impact of foreign currency exchange
rates
552
—
*
Constant-currency net revenues
$
7,607
$
5,348
42.2
%
* Not Meaningful
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230504005857/en/
Investor Contact: Matt Brinckman Senior Vice President,
Strategy and Investor Relations mbrinckman@paragon28.com
Paragon 28 (NYSE:FNA)
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