FNA Paragon 28 Inc

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 02, 2023

 

 

Paragon 28, Inc.

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware			001-40902	27-3170186
(State or Other Jurisdiction of Incorporation)			(Commission File Number)	(IRS Employer Identification No.)
14445 Grasslands Drive
Englewood, Colorado				80112
(Address of Principal Executive Offices)				(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: (720) 912-1332

 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.01 par value		FNA		The New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

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Item 2.02 Results of Operations and Financial Condition.

On August 2, 2023, Paragon 28, Inc. (the “Company”) issued a press release announcing certain financial results for the second quarter ended June 30, 2023. A copy of the Company’s press release, titled “Paragon 28 Reports Second Quarter 2023 Financial Results and Reaffirms 2023 Net Revenue Guidance” is furnished pursuant to Item 2.02 as Exhibit 99.1 hereto.

 

The information in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Section 11 and 12(a)(2) of the Securities Act of 1933, as amended. The information contained in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, shall not be incorporated by reference into any filing with the U.S. Securities and Exchange Commission made by the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing, except as expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

Exhibit Number		Description of Exhibit
99.1		Press Release, dated August 2, 2023, titled “Paragon 28 Reports Second Quarter 2023 Financial Results and Reaffirms 2023 Net Revenue Guidance”
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

			PARAGON 28, INC.
Date:	August 2, 2023	By:	/s/ Stephen M. Deitsch
			Chief Financial Officer

 

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Exhibit 99.1

Paragon 28 Reports Second Quarter 2023 Financial Results
and Reaffirms 2023 Net Revenue Guidance

 

ENGLEWOOD, CO., August 2, 2023 -- 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 June 30, 2023 and reaffirmed its 2023 net revenue guidance.

 

Second Quarter 2023 and Six Months Ended June 30, 2023 Financial Results

 

“Paragon 28's second quarter 2023 net revenue grew 21% constant currency, driven by growth in each segment, highlighting the benefits of our balanced business model. Further, our Adjusted EBITDA for the second quarter and six months ended June 30, 2023 both improved meaningfully compared to last year, demonstrating strong ongoing leverage in our operations” said Albert DaCosta, Chairman and Chief Executive Officer. “There is a great energy around P28 coming from the surgeon community, and we are excited to be able to provide them innovative solutions to help foot and ankle patients around the world.”

 

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 19% and 20% reported and constant currency growth at the midpoint, respectively, compared to 2022.

 

The Company’s 2023 net revenue guidance assumes foreign currency translation rates remain consistent with current foreign currency translation rates.

 

 

 

 

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Webcast and Conference Call Information

 

Paragon 28 will host a conference call to discuss second quarter 2023 financial results on Wednesday, August 2, 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 (888-330-2446) for domestic callers or (240-789-2732) for international callers, using conference ID: 4439305. 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 June 30, 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.

 

 

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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:

 

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.

 

Investor Contact:

Matt Brinckman

Senior Vice President, Strategy and Investor Relations

mbrinckman@paragon28.com

 

 

 

 

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PARAGON 28, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, unaudited)

 

		June 30, 2023				December 31, 2022
ASSETS
Current assets:
Cash		$	56,747			$	38,468
Trade receivables			34,331				37,687
Inventories, net			85,225				60,948
Income taxes receivable			870				615
Other current assets			3,257				4,658
Total current assets			180,430				142,376
Property and equipment, net			70,936				61,938
Intangible assets, net			21,921				22,387
Goodwill			25,465				25,465
Deferred income taxes			319				148
Other assets			1,766				1,795
Total assets		$	300,837			$	254,109
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	29,681			$	14,939
Accrued expenses			24,390				26,807
Accrued legal settlement			—				22,000
Other current liabilities			1,700				3,844
Current maturities of long-term debt			652				728
Income taxes payable			20				184
Total current liabilities			56,443				68,502
Long-term liabilities:
Long-term debt net, less current maturities			42,259				42,182
Other long-term liabilities			1,842				1,628
Deferred income taxes			620				342
Income taxes payable			635				527
Total liabilities			101,799				113,181
Stockholders' equity:
Common stock, $0.01 par value, 300,000,000 shares authorized;    83,449,565 and 78,684,107 shares issued, and 82,536,046 and 77,770,588    shares outstanding as of June 30, 2023 and December 31, 2022, respectively			824				776
Additional paid in capital			292,350				213,956
Accumulated deficit			(87,739	)			(67,789	)
Accumulated other comprehensive loss			(415	)			(33	)
Treasury stock, at cost; 913,519 shares as of June 30, 2023 and December 31, 2022			(5,982	)			(5,982	)
Total stockholders' equity			199,038				140,928
Total liabilities & stockholders' equity		$	300,837			$	254,109

 

 

 

 

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PARAGON 28, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, unaudited)

 

	Three Months Ended June 30,								Six Months Ended June 30,
	2023				2022				2023				2022
Net revenue	$	51,009			$	42,498			$	103,045			$	83,869
Cost of goods sold		8,858				7,638				17,764				14,429
Gross profit		42,151				34,860				85,281				69,440
Operating expenses:
Research and development costs		7,683				5,990				14,732				11,763
Selling, general, and administrative		43,827				37,948				87,647				75,190
Total operating expenses		51,510				43,938				102,379				86,953
Operating loss		(9,359	)			(9,078	)			(17,098	)			(17,513	)
Other (expense) income :
Other (expense) income		(467	)			652				(646	)			551
Interest expense, net		(803	)			(1,104	)			(2,008	)			(1,772	)
Total other expense, net		(1,270	)			(452	)			(2,654	)			(1,221	)
Loss before income taxes		(10,629	)			(9,530	)			(19,752	)			(18,734	)
Income tax expense		269				73				198				105
Net loss	$	(10,898	)		$	(9,603	)		$	(19,950	)		$	(18,839	)

 

 

 

 

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PARAGON 28, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, unaudited)

 

		Six Months Ended June 30,
		2023					2022
Cash flows from operating activities
Net loss		$	(19,950	)			$	(18,839	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			6,414					6,566
Allowance for doubtful accounts			147					—
Reversal of excess and obsolete inventories			(205	)				(446	)
Stock-based compensation			6,782					4,465
Other			714					(1,514	)
Changes in other assets and liabilities, net of acquisitions:
Accounts receivable			3,138					(6,825	)
Inventories			(23,895	)				(11,518	)
Accounts payable			14,745					1,537
Accrued expenses			1,845					1,992
Accrued legal settlement			(22,000	)				—
Income tax receivable/payable			(359	)				454
Other assets and liabilities			(779	)				289
Net cash used in operating activities			(33,403	)				(23,839	)
Cash flows from investing activities
Purchases of property and equipment			(15,354	)				(29,204	)
Proceeds from sale of property and equipment			635					519
Purchases of intangible assets			(544	)				(783	)
Acquisition of Disior, net of cash received			—					(18,504	)
Net cash used in investing activities			(15,263	)				(47,972	)
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			(396	)				(178	)
Payments of debt issuance costs			—					(405	)
Proceeds from issuance of common stock, net of issuance costs			68,453					—
Proceeds from exercise of stock options			2,464					300
Proceeds from employee stock purchase plan			560					—
Payments on earnout liability			(4,250	)				—
Net cash provided by financing activities			66,831					35,717
Effect of exchange rate changes on cash			114					(256	)
Net increase (decrease) in cash			18,279					(36,350	)
Cash at beginning of period			38,468					109,352
Cash at end of period		$	56,747				$	73,002

 

 

 

 

 

 

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PARAGON 28, INC. AND SUBSIDIARIES

RECONCILIATION OF NET LOSS TO NON-GAAP ADJUSTED EBITDA

(in thousands, unaudited)

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2023				2022				2023				2022
		(in thousands)
Net loss		$	(10,898	)		$	(9,603	)		$	(19,950	)		$	(18,839	)
Interest expense, net			803				1,104				2,008				1,772
Income tax expense			269				73				198				105
Depreciation and amortization expense			3,297				3,536				6,414				6,566
Stock based compensation expense			3,600				2,343				6,782				4,465
Employee stock purchase plan expense			60				—				182				—
Change in fair value of earnout liability (1)			240				(620	)			320				(540	)
Adjusted EBITDA		$	(2,629	)		$	(3,167	)		$	(4,046	)		$	(6,471	)

 

 

 

 

 

 

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PARAGON 28, INC. AND SUBSIDIARIES

Constant-Currency Revenue Growth

(in thousands, unaudited)

 

		Three Months Ended June 30,								Change				Six Months Ended June 30,								Change
		2023				2022				%				2023				2022				%
Total Consolidated Revenues
As Reported		$	51,009			$	42,498				20.0	%		$	103,045			$	83,869				22.9	%
Impact of foreign currency exchange rates			345				—			*					896				—			*
Constant-currency net revenues		$	51,354			$	42,498				20.8	%		$	103,941			$	83,869				23.9	%
Total International Revenues
As Reported		$	8,745			$	5,700				53.4	%		$	15,800			$	11,048				43.0	%
Impact of foreign currency exchange rates			345				—			*					896				—			*
Constant-currency net revenues		$	9,090			$	5,700				59.5	%		$	16,696			$	11,048				51.1	%

 

* Not meaningful

 

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v3.23.2

Document And Entity Information	Aug. 02, 2023
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Aug. 02, 2023
Entity Registrant Name	Paragon 28, Inc.
Entity Central Index Key	0001531978
Entity Emerging Growth Company	true
Securities Act File Number	001-40902
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	27-3170186
Entity Address, Address Line One	14445 Grasslands Drive
Entity Address, City or Town	Englewood
Entity Address, State or Province	CO
Entity Address, Postal Zip Code	80112
City Area Code	(720)
Local Phone Number	912-1332
Entity Information, Former Legal or Registered Name	Not Applicable
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Ex Transition Period	false
Title of 12(b) Security	Common Stock, $0.01 par value
Trading Symbol	FNA
Security Exchange Name	NYSE

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