ENGLEWOOD, Colo., November 7, 2023–(BUSINESS WIRE)–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 September 30, 2023 and reaffirmed its 2023 net revenue guidance.
Third Quarter 2023 and Nine Months Ended September 30, 2023 Financial Results
- Consolidated net revenue for the third quarter of 2023 was $52.8 million, representing 14.7% and 14.5% reported and constant currency growth, respectively, compared to the third quarter of 2022. Consolidated net revenue for the nine months ended September 30, 2023 was $155.8 million, representing 20.0% and 20.6% reported and constant currency growth, respectively, compared to the nine months ended September 30, 2022.
- U.S. net revenue for the third quarter of 2023 and nine months ended September 30, 2023 was $44.6 million and $131.8 million, respectively, representing 11.5% and 16.9% reported growth, respectively, compared to the prior year periods.
- International net revenue for the third quarter of 2023 and nine months ended September 30, 2023 was $8.2 million and $24.0 million, respectively, representing 36.2% and 40.6% reported growth respectively, compared to the prior year periods.
- Gross margin was 80.3% for the third quarter of 2023 compared to 81.5% in the third quarter of 2022. Gross margin was 81.9% for the nine months ended September 30, 2023, compared to 82.4% for the nine months ended September 30, 2022.
- Operating expenses were $51.4 million for the third quarter of 2023, an increase of 11.7%, compared to $46.0 million for the third quarter of 2022. Operating expenses were $153.7 million for the nine months ended September 30, 2023, an increase of 15.6%, compared to $133.0 million for the nine months ended September 30, 2022.
- Net loss was $8.3 million for the third quarter of 2023, a decrease of 14.3%, compared to a net loss of $9.7 million for the third quarter of 2022. Net loss was $28.3 million for the nine months ended September 30, 2023, a decrease of 1%, compared to net a loss of $28.6 million for the nine months ended September 30, 2022.
- Adjusted EBITDA was a $1.2 million loss for the third quarter of 2023, an improvement of 54.1%, compared to a $2.7 million loss in the third quarter of 2022. Adjusted EBITDA was a $5.3 million loss for the nine months ended September 30, 2023, an improvement of 42.4%, compared to a $9.1 million loss for the nine months ended September 30, 2022.
“Paragon 28’s business fundamentals are as strong as ever and continue to position us for sustainable long-term growth. Through the third quarter, we grew revenue 20% and ended the quarter with record numbers of U.S. sales representatives and surgeon customers while also improving EBITDA by over 50% compared the third quarter of 2022,” said Albert DaCosta, Chairman and Chief Executive Officer. “Finally, our new product pipeline is filled with meaningful and innovative technologies, and we are excited to be bringing several of these important new products to market in the next few quarters.”
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.
Webcast and Conference Call Information
Paragon 28 will host a conference call to discuss third quarter 2023 financial results on Tuesday, November 7, 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 (646-904-5544) for international callers, using conference ID: 308457. 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 September 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.
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 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.