• Total Revenue: $57.9 million, a 27% increase from the prior year.
• Maci Revenue: $44.7 million, a 19% increase in the third quarter.
• Burn Care Revenue: $13.2 million, a 66% increase, with Epicel revenue at $12.2 million.
• NexoBrid Revenue: $1.1 million for the quarter.
• Gross Profit: $41.7 million, representing 72% of net revenue, an increase of 480 basis points from 2023.
• Operating Expenses: $44.1 million, up from $35.7 million in 2023.
• Net Loss: $0.9 million or 2 per share, compared to $3.7 million or 8 per share in the prior year.
• Adjusted EBITDA: $10 million, an 84% increase, representing 17% of revenue.
• Operating Cash Flow: Over $10 million generated in the third quarter.
• Cash and Investments: $151 million with no debt.
• Full Year Revenue Guidance: $238 million to $242 million, implying 20% to 23% total revenue growth.
• Gross Margin Guidance: Increased to 72% for the full year.
• Adjusted EBITDA Margin Guidance: Increased to 22% for the full year.

• Warning! GuruFocus has detected 4 Warning Sign with VCEL.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Vericel Corp (NASDAQ:VCEL) reported a 27% increase in total revenue for the third quarter, reaching approximately $58 million, surpassing their guidance.
• The company achieved significant margin expansion and operating cash flow, with profit growth outpacing revenue growth.
• Vericel Corp (NASDAQ:VCEL) received FDA approval for Macy Arthro and the NRI pediatric indication, positioning the company for sustained high revenue and profit growth.
• Macy revenue grew 19% in the third quarter to $44.7 million, with strong growth drivers such as increased biopsies and surgeon engagement.
• The company generated over $10 million in operating cash flow and ended the quarter with $151 million in cash and investments, maintaining a strong financial position with no debt.

Negative Points

• Operating expenses increased to $44.1 million from $35.7 million in the same period last year, primarily due to development and commercial launch activities.
• Net loss for the quarter was $0.9 million, although this was an improvement from the previous year's $3.7 million loss.
• The company anticipates some impact on margins due to the depreciation of their new manufacturing facility starting next year.
• Despite strong performance, the company remains cautious about predicting future growth rates for Nexobrid and Macy Arthro, indicating potential variability.
• The burn care segment, while showing strong growth, remains difficult to predict due to variability in quarterly performance.

Q & A Highlights

Q: Can you discuss the growth drivers for Nexobrid in 2025 and whether Macy Arthro will be an accelerant or a sustainable driver for current Macy expectations? A: Joseph Mara, CFO, explained that for 2025, the company expects continued strong growth, similar to 2024. Macy is projected to maintain around 20% growth, driven by strong leading indicators and a modest contribution from Macy Arthro. Nexobrid is expected to progress each quarter, with burn care growth aligning with company growth. Both Macy Arthro and Nexobrid have potential to outperform initial expectations if adoption accelerates faster than anticipated.

Q: What are you seeing from the new 2000 doctors targeted for Macy Arthro, and is there an uplift in existing Macy customers due to Arthro? A: Dominick Colangelo, CEO, noted that early Macy Arthro cases have been performed by surgeons from all targeted segments, including new and existing users. This indicates strong interest and potential for Arthro to drive both new adoption and increased utilization among existing customers.

Q: How are the early Macy Arthro procedures guiding your outlook for Q4 and 2025? A: Colangelo stated that while some incremental cases are expected in Q4, the significant impact of Macy Arthro is anticipated in 2025 and beyond. The enthusiasm for the less invasive procedure is high, and the company expects it to contribute meaningfully to growth next year.

Q: Can you provide insights into the potential synergies on operating margins with the introduction of Macy Arthro? A: Mara explained that Macy Arthro introduces some revenue from instrument sales, but the impact on margins is minimal. The existing field force will manage Arthro, and the company expects to maintain its long-term margin outlook without significant changes due to Arthro.

Q: How is the company addressing the expanded surgeon base with Macy Arthro, and what are the plans for sales force adjustments? A: Colangelo mentioned that the company plans to reassess sales force sizing early next year to ensure adequate reach and frequency. Historically, expanding the sales force has increased rep productivity, and a similar approach may be taken to support the expanded surgeon base with Macy Arthro.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.