MARIETTA, Ga., Dec. 16, 2015 /PRNewswire/ — MiMedx Group, Inc. (NASDAQ: MDXG), the leading regenerative medicine company utilizing human amniotic tissue and patent-protected processes to develop and market advanced products and therapies for the Wound Care, Surgical, Orthopedic, Spine, Sports Medicine, Ophthalmic, and Dental sectors of healthcare, announced today its outlook for 2016.
On December 15, 2015, the MiMedx Board of Directors approved the Company’s 2016 Business Plan and related budget. To supplement its 2016 guidance, the Company is also reporting certain strategic and tactical detail associated with its 2016 Business Plan.
2016 Guidance Highlights
The Company’s full year 2016 expectations include:
- Full year 2016 revenue guidance in the range of $245 to $255 million
- Gross profit margins for 2016 expected to be in the range of 87% to 90%
- 2016 Operating Earnings projected to grow by 80% or greater
- Adjusted EPS* for 2016 forecasted to be in the range of $0.31 to $0.35
- 2016 Adjusted EBITDA* expected to increase by more than 45%
- 2016 Adjusted EBITDA* projected to be in the range of 27% to 31% of revenue
The Company’s guidance for the first quarter of 2016 includes:
- First quarter of 2016 revenue estimated to be in the range of $53 to $55 million
- Adjusted EPS* for first quarter of 2016 forecasted to range from $0.06 to $0.07
The Company classifies its revenue between two primary regenerative medicine specialties, “Wound Care,” and “SSO.” MiMedx defines SSO as surgical, sports medicine and orthopedics. To further clarify SSO, spinal procedures are included in orthopedics and surgical encompasses abdominal and pelvic procedures.
Guidance Explanations and Commentary
MiMedx has been quietly building its presence in certain SSO sectors that are unrelated to the advanced wound care sector of healthcare. In 2014, SSO represented 21% of the Company’s total revenue, and in 2015, SSO is expected to be approximately 26% of total revenue. Beginning in early 2016, MiMedx plans to implement certain strategic initiatives to more intimately and aggressively focus on the market potential in SSO applications and procedures.
Parker H. “Pete” Petit, Chairman and CEO, stated, “We are pleased to report our preliminary expectations for 2016. While we expect our advanced wound care revenues will sustain significant growth in the 30% range, we believe we are now in the position to concentrate additional efforts and resources in the various surgical markets which should produce more rapid growth for the Company. We expect to soon communicate additional insight into our new focus in the SSO area. In early January 2016, we plan to make an announcement in which we will elaborate on our SSO initiatives, as well as pre-release our fourth quarter 2015 revenue. We intend to expand on the sources of our projected SSO growth from product offerings and explain certain strategic alliances. We expect to issue this press release prior to the J.P. Morgan conference, which starts on January 11, 2016. At that conference, our presentation will provide further details and insight into our SSO initiatives.”
MiMedx reported that the opportunities in SSO are in a variety of areas which will require the Company to have a more diverse sales organization and sales channels consisting of direct sales employees as well as sales agents, distributors and private label entities. “This is a more complex distribution system than the direct sales organization the Company utilizes in advanced wound care. However, the Company’s early initiatives in advanced wound care did include numerous sales agents and distributors,” added Bill Taylor, President and COO.
Petit continued, “In just four years, MiMedx has developed into the national leader in advanced wound care, and we expect to demonstrate that same type of leadership in certain surgical segments in the years ahead. We expect to continue to add to our 16 consecutive quarters of meeting or exceeding our revenue forecasts. As we have regularly commented, it would also be beneficial for shareholders to focus on our strong gross profit margins because our consistency in keeping them at their high levels is a strong indication of our management capability and our planning and execution expertise. At the operating profit line, our results are affected by well-planned decisions that we formulate in order to take advantage of near term investment opportunities. In 2016, we will start reporting Adjusted EPS*, which removes certain noncash charges and adjusts for other items affecting comparability in our reported GAAP EPS. Many companies have currently adopted this reporting approach. It is also important to note that with Adjusted EBITDA in the range of 27% to 31% of revenues, the Company plans to continue to build significant amounts of cash.”
“We are still in our early years of building market share infrastructure with a strong and disciplined sales organization so we will necessarily take advantage of certain investment opportunities that will move our operating profit and Adjusted EPS* around somewhat. However, that should not be disconcerting to our shareholders. We continue to build a strong asset base at MiMedx related to patents and other intellectual property, new product developments, reimbursement and management and executive talent. We have become one of the most respected regenerative medicine companies in advanced wound care, and we believe we will quickly build the same reputation in certain sectors of the surgical area,” noted Petit.
Taylor stated, “In late 2015 and in 2016, we expect to increase our wound care sales force by approximately 25%. Approximately 50 additional sales professionals are planned to be based in predominately secondary markets. In addition, we anticipate adding approximately 30 direct sales professionals in our various surgical sales verticals. In certain surgical markets, there will also be a number of independent sales representatives and distributors. We expect that certain strategic alliances will significantly expedite the growth of those sales verticals.”
“We have previously communicated our interest in developing our international presence. I am pleased to announce that those initiatives are progressing well. For well over a year, we have invested in resources to help expedite certain international markets, and those results are now reaching the point where we expect to see significant revenues develop in the back half of 2016 and beyond. While we are keeping the specific initiatives confidential for competitive reasons, we plan to provide more insight sometime next year into some of these initial successes. We expect to leverage our expertise and infrastructure to replicate our U.S. success in the international markets. Once the regulatory pathways and reimbursement have been established, we believe our domestic advanced wound care and surgical achievements will translate into success in our selected foreign markets,” concluded Taylor.
The Company’s initiatives in the SSO will include a number of new products in addition to AmnioFix® and OrthoFlo. Recall that the Company does not expect to have its CollaFix™ collagen fiber product in the market until 2017 as a result of the longer regulatory approval process required for this product. The Company’s products, including certain new products to be introduced, all fall into the regenerative medicine category. This includes their traditional amniotic membrane allografts along with its new product initiatives in amniotic fluid and collagen fiber products which will be manufactured from placental-based collagen.
This press announcement contains guidance on adjusted financial measurements that are not in accordance with U.S. generally accepted accounting principles (“GAAP”). These measurements are not a substitute for GAAP measurements, although the Company uses these measurements as aids in monitoring MiMedx’s on-going financial performance on a regular basis and for benchmarking against other peer group companies in related sectors of the healthcare industry.
*Adjusted EBITDA is earnings before financing expense, interest, taxes, depreciation, amortization, and share-based compensation. Adjusted EPS is diluted earnings per share before share-based compensation, amortization of intangibles, and income tax impacts of these adjustments and other income tax provisions, as well as the impact from other specific one-time events that may occur in the future such as realignments, acquisitions or divestitures.
The Company has not provided a reconciliation of these forward-looking non-GAAP financial measures due to the difficulty in forecasting and quantifying the exact amount of the items excluded from the non-GAAP financial measures that will be included in the comparable GAAP financial measures. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures will be provided when actual results are reported. Adjusted financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. Investors should consider adjusted measures in addition to, and not as a substitute for, or superior to, financial performance measures prepared in accordance with GAAP.
Share Repurchase Program
The Company also announced today the decision of its Board of Directors to authorize an increase of $10 million and extend the term of the Company’s Share Repurchase Program. Today’s action increases the total authorized to $60 million since the program commenced in May, 2014, and extends the term of the program until December 31, 2016.
Fourth Quarter and Full Year 2015 Outlook
MiMedx reiterates its fourth quarter and full year 2015 guidance that was previously communicated by the Company. That guidance included:
- Q4 2015 revenue in the range of $49.5 million to $52.5 million;
- Full year 2015 revenue of $185 million to $188 million;
- Q4 2015 operating profit margin to be in the range of 14% to 15%; and
- Full year 2015 operating profit margin to be in the range of 12% to 13%.
MiMedx will host a live broadcast of its 2016 Outlook conference call on Thursday, December 17, 2015 at 11:00 a.m. EST. A listen-only simulcast of the MiMedx conference call will be available online at the Company’s website at www.mimedx.com. A 30-day online replay will be available approximately one hour following the conclusion of the live broadcast. The replay can also be found on the Company’s website at www.mimedx.com.
MiMedx® is an integrated developer, processor and marketer of patent protected and proprietary regenerative biomaterial products and bioimplants processed from human amniotic membrane and other birth tissues. “Innovations in Regenerative Biomaterials” is the framework behind our mission to give physicians products and tissues to help the body heal itself. Our biomaterial platform technologies are AmnioFix®, EpiFix®, CollaFix™ and OrthoFlo. AmnioFix and EpiFix are our tissue technologies processed from human amniotic membrane derived from donated placentas. Elected in advance of delivery through our donor program, a mother delivering a healthy baby via scheduled full-term Caesarean section birth may donate the placenta in lieu of having it discarded as medical waste. We process the human amniotic membrane utilizing our proprietary PURION® Process, to produce a safe and effective implant. MiMedx is the leading supplier of amniotic tissue, having supplied over 500,000 allografts to date for application in the Wound Care, Surgical, Orthopedic, Spine, Sports Medicine, Ophthalmic and Dental sectors of healthcare. The Company has recently introduced OrthoFlo, an amniotic fluid derived allograft for homologous use. Amniotic fluid is donated by consenting mothers delivering a healthy baby by scheduled full-term Caesarean section births. CollaFix™, our next technology platform we plan to commercialize, is our collagen fiber technology, developed with our patented cross-linking polymers, designed to mimic the natural composition, structure and mechanical properties of musculoskeletal tissues in order to augment their repair. CollaFix™ is the only biological, biodegradable, biomimetic technology that matches human tendon in strength and stiffness. The Company distinguished its revenue in two primary regenerative medicine specialties of “Wound Care” and “SSO.” The Company defines SSO as surgical, sports medicine and orthopedics with spinal procedures included in orthopedics and abdominal and lower pelvic procedures included in surgical.