Paragon 28, Inc. (NYSE: FNA) (“PARAGON”), a leading medical device company exclusively focused on the foot and ankle orthopedic market, today reported financial results for the quarter ended September 30, 2022 and increased its 2022 net revenue guidance.

Financial Highlights

  • Net revenue $46.0 million for the third quarter of 2022, a quarterly net revenue record, representing reported growth of 28% over the third quarter of 2021.
    • Foreign currency headwinds reduced quarterly net revenue and net revenue growth by approximately $0.8 million and 2.1 percentage points, respectively, as compared to the prior year quarter.
    • U.S. quarterly revenue was a record $40.0 million, representing growth of 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 $6.0 million, representing reported growth of 52% over the prior year quarter. Foreign currency headwinds reduced quarterly international net revenue and net revenue growth by approximately $0.8 million and 19 percentage points, respectively, as compared to the prior year quarter. Growth was driven primarily by Australia, South Africa, Spain, and the United Kingdom.
  • Gross margin 81.5% for the quarter compared to 80.2% for the third quarter of 2021, reflecting lower excess and obsolete inventory expense.
  • Operating expenses $46.0 million 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.
  • Net loss $9.7 million for the third quarter of 2022 compared to net loss $5.1 million for the third quarter of 2021 and net loss of $9.6 million for the second quarter 2022.
  • Adjusted EBITDA for the quarter was negative $2.7 million compared to negative $1.0 million in the third quarter of 2021 and negative $3.2 million in the second quarter of 2022.

“I am very proud of our year-to-date results through September, as we achieved reported net revenue growth of 24% despite a challenging business environment. Our year-to-date and record third quarter net revenue results reflect the success of our targeted investments and demonstrate our team’s ability to consistently execute,” said Albert DaCosta, Chairman and Chief Executive Officer.

Increased 2022 Net Revenue Guidance

The Company increased its 2022 net revenue guidance by $3.5 million to $179.5 million. Net revenue growth for 2022 is now expected to be 22%, compared to the Company’s previous guidance of 19%. The increased net revenue guidance includes the impact of stronger foreign currency headwinds in both the third and fourth quarters of 2022, which are now expected to reduce 2022 net revenue and net revenue growth by approximately $2.4 million and 1.6 percentage points, respectively. Previously issued 2022 net revenue guidance included estimated foreign currency headwinds reducing net revenue by $1.5 million and 1.0 percentage points, respectively.

The Company’s increased 2022 annual net revenue guidance includes fourth quarter 2022 net revenue guidance of $49.6 million, representing reported net revenue growth of 16% compared to the prior year quarter. Fourth quarter net revenue guidance includes the impact of stronger foreign currency headwinds, which are now expected to reduce fourth quarter 2022 net revenue and net revenue growth by approximately $0.9 million and 2.1 percentage points, respectively. Previously issued fourth quarter 2022 revenue guidance included estimated foreign currency headwinds reducing net revenue and net revenue growth by $0.4 million and 1.0 percentage points, respectively.

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 third Quarter 2022 financial results on Thursday, November 10, 2022, 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 (844)-200-6205 for domestic callers or (929)-526-1599 for international callers, using conference ID: 703484. 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, hallux valgus – which includes bunions and hammertoe, 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 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 Securities and Exchange Commission (the “SEC”), including Paragon 28’s annual report on Form 10-K filed with the SEC on March 8, 2022. 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 and nine month period ended September 30, 2022 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 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.

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

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

(unaudited)

 

 

 

September 30, 2022

 

December 31, 2021

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

 

Goodwill

 

 

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, $0.01 par value, 300,000,000 shares authorized; 77,990,290 and 77,360,806 shares issued, and 77,076,771 and 76,447,287 shares outstanding as of September 30, 2022 and December 31, 2021, respectively

 

 

769

 

 

 

763

 

Additional paid in capital

 

 

207,109

 

 

 

197,868

 

Accumulated deficit

 

 

(29,026

)

 

 

(463

)

Accumulated other comprehensive (loss) income

 

 

(1,497

)

 

 

8

 

Treasury stock, at cost; 913,519 shares as of September 30, 2022 and December 31, 2021

 

 

(5,982

)

 

 

(5,982

)

Total stockholders' equity

 

 

171,373

 

 

 

192,194

 

Total liabilities & stockholders' equity

 

$

256,965

 

 

$

234,545

 

PARAGON 28, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except share and per share data)

(unaudited)

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

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

)

PARAGON 28, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

 

Nine Months Ended September 30,

 

 

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

 

PARAGON 28, INC. AND SUBSIDIARIES

RECONCILIATION OF NET LOSS TO NON-GAAP ADJUSTED EBITDA

(in thousands)

(unaudited)

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

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 September 30, 2022

 

Investor Contact: Matt Brinckman Senior Vice President, Strategy and Investor Relations mbrinckman@paragon28.com

Paragon 28 (NYSE:FNA)
Historical Stock Chart
Von Dez 2022 bis Jan 2023 Click Here for more Paragon 28 Charts.
Paragon 28 (NYSE:FNA)
Historical Stock Chart
Von Jan 2022 bis Jan 2023 Click Here for more Paragon 28 Charts.