Vericel Corp 10-Q for FY2021 Q1

Vericel Corp (VCEL)

10-Q 2021-05-05 For: 2021-03-31

Added on April 11, 2026

About this 10-Q

Vericel Corp filed this 10-Q on May 5, 2021, covering the quarter ended March 31, 2021 (FY2021 Q1).

Headline figures

Quarter ended March 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $34.57M; up 29.6% from $26.68M a year earlier
Net loss: $3.29M; compared with a net loss of $4.71M a year earlier
Diluted EPS: -$0.07; compared with -$0.10 a year earlier

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Michigan						94-3096597
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


Title of Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock (No par value)	VCEL	NASDAQ


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐


		Page
	PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited):	3

	Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020	3

	Condensed Consolidated Statements of Operations for the three months ended March 31, 2021 and 2020	4

	Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2021 and 2020	5

	Condensed Consolidated Statements of Shareholders' Equity from December 31, 2020 to March 31, 2021 and from December 31, 2019 to March 31, 2020	6

	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28

Item 4.	Controls and Procedures	28

	PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	29

Item 1A.	Risk Factors	29

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32

Item 3.	Defaults Upon Senior Securities	33

Item 4.	Mine Safety Disclosures	33

Item 5.	Other Information	33

Item 6.	Exhibits	34

Exhibit Index		34

Signatures		35


	March 31,		December 31,
	2021		2020
ASSETS
Current assets:
Cash and cash equivalents	$	58,154	$	33,620
Short-term investments	25,402		42,187
Accounts receivable (net of allowance for doubtful accounts of $121 and $143, respectively)	29,122		34,504
Inventory	10,322		9,356
Other current assets	4,213		3,893
Total current assets	127,213		123,560
Property and equipment, net	9,076		7,633
Restricted cash	211		211
Right-of-use assets	48,943		50,105
Long-term investments	26,021		24,099
Total assets	$	211,464	$	205,608
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	8,826	$	6,755
Accrued expenses	9,965		11,293
Current portion of operating lease liabilities	4,398		4,394
Other liabilities	41		41
Total current liabilities	23,230		22,483
Operating lease liabilities	47,968		48,789
Other long-term liabilities	57		76
Total liabilities	$	71,255	$	71,348
COMMITMENTS AND CONTINGENCIES
Shareholders’ equity:
Common stock, no par value; shares authorized — 75,000; shares issued and outstanding 46,225 and 45,804, respectively	519,360		510,061
Accumulated other comprehensive income (loss)	(47)		14
Accumulated deficit	(379,104)		(375,815)
Total shareholders’ equity	140,209		134,260
Total liabilities and shareholders’ equity	$	211,464	$	205,608


	Three Months Ended March 31,
	2021		2020
Product sales, net	$	33,627	$	26,678
Other revenue	941		—
Total revenue	34,568		26,678
Cost of product sales	11,583		9,922
Gross profit	22,985		16,756
Research and development	3,630		3,763
Selling, general and administrative	22,660		18,069
Total operating expenses	26,290		21,832
Loss from operations	(3,305)		(5,076)
Other income (expense):
Interest income	76		306
Interest expense	(1)		(2)
Other income	84		67
Total other income	159		371
Net loss before tax provision	(3,146)		(4,705)
Tax provision	(143)		—
Net loss	$	(3,289)	$	(4,705)
Net loss per share attributable to common shareholders (Basic and diluted)	$	(0.07)	$	(0.10)
Weighted average number of common shares outstanding (Basic and diluted)	45,984		44,924


	Common Stock			Accumulated Other Comprehensive Income (loss)		Accumulated Deficit		Total Shareholders' Equity
	Shares	Amount
BALANCE, DECEMBER 31, 2020	45,804	$	510,061	$	14	$	(375,815)	$	134,260
Net loss	—	—		—		(3,289)		(3,289)
Compensation expense related to stock options and restricted stock units granted, net of forfeitures	—	7,019		—		—		7,019
Stock option exercises	359	3,532		—		—		3,532
Shares issued under the Employee Stock Purchase Plan	14	249		—		—		249
Issuance of stock upon restricted stock unit vesting	76	—		—		—		—
Restricted stock withheld for employee tax remittance	(28)	(1,501)		—		—		(1,501)
Unrealized loss on investments	—	—		(61)		—		(61)
BALANCE, MARCH 31, 2021	46,225	$	519,360	$	(47)	$	(379,104)	$	140,209


	Common Stock			Accumulated Other Comprehensive Income		Accumulated Deficit		Total Shareholders' Equity
	Shares	Amount
BALANCE, DECEMBER 31, 2019	44,864	$	489,749	$	21	$	(378,679)	$	111,091
Net loss	—	—		—		(4,705)		(4,705)
Compensation expense related to stock options and restricted stock units granted, net of forfeitures	—	3,768		—		—		3,768

Stock option exercises	57	196		—		—		196
Shares issued under the Employee Stock Purchase Plan	20	224		—		—		224
Issuance of stock upon restricted stock unit vesting	36	—						—
Restricted stock withheld for employee tax remittance	(14)	(163)						(163)
Unrealized gain on investments	—	—		41		—		41
BALANCE, MARCH 31, 2020	44,963	$	493,774	$	62	$	(383,384)	$	110,452


	Three Months Ended March 31,
(In thousands)	2021		2020
Supplementary Cash Flows information:
Non-cash information:

Right-of-use asset and lease liability recognized	$	—	$	326
Additions to property and equipment included in accounts payable	530		105
Restricted shares held for employee tax remittance included in accounts payable	65		66

Cash information:
Interest paid (net of interest capitalized)	$	1	$	2


	Three Months Ended March 31,
Revenue by product (in thousands)	2021		2020
MACI implants and kits
Implants based on contracted rate sold through a specialty pharmacy (a)	$	13,206	$	11,338
Implants subject to third party reimbursement sold through a specialty pharmacy (b)	4,280		3,730
Implants sold direct based on contracted rates (c)	4,466		3,109
Implants sold direct subject to third party reimbursement (d)	849		436
Biopsy kits - direct bill	519		466
Change in estimates related to prior periods (e)	477		1,207
Epicel
Direct bill (hospital)	9,830		6,392

Total product revenue	$	33,627	$	26,678
NexoBrid revenue (f)	941		—
Total net revenue	$	34,568	$	26,678

(a) Represents implants sold through Orsini and AllCare whereby such specialty pharmacies have a direct contract with the underlying insurance provider. The amount of reimbursement is based on contracted rates at the time of sale supported by the pharmacy's direct contracts.

(b) Represents implants sold through Orsini or AllCare whereby such specialty pharmacy does not have a direct contract with the underlying payer. The amount of reimbursement is established based on a payer or state fee schedule and/or payer history.

(c) Represents implants sold directly from the Company to the facility based on a contract and known price agreed upon prior to the surgery date. Also represents direct sales under a contract to the specialty distributor DMS.

(d) Represents implants sold directly from the Company to the facility based on a contract and known price agreed upon prior to the surgery date. The payment terms are subject to third-party reimbursement from an underlying insurance provider.

(e) Primarily represents changes in estimates related to implants sold through Orsini or AllCare in which such specialty pharmacy does not have a direct contract with the underlying payer. The initial estimate of the amount of reimbursement is established based on a payer or state fee schedule and/or payer history. The change in estimates is a result of additional information or actual cash collections received in the current period.

(f) Represents revenue based on a percentage of gross profits for sales of NexoBrid to BARDA, pursuant to the license agreement between the Company and MediWound.


(In thousands)	March 31, 2021		December 31, 2020
Raw materials	$	9,409	$	8,775
Work-in-process	884		537
Finished goods	29		44
Inventory	$	10,322	$	9,356


(In thousands)	Classification	March 31, 2021		December 31, 2020
Assets
Operating	Right-of-use assets	$	48,943	$	50,105
Finance	Property and equipment, net	102		111
		$	49,045	$	50,216
Liabilities
Current
Operating	Current portion of operating lease liabilities	$	4,398	$	4,394
Finance	Other liabilities	41		41
		$	4,439	$	4,435
Non-current
Operating	Operating lease liabilities	$	47,968	$	48,789
Finance	Other long-term liabilities	57		76
		$	48,025	$	48,865


	March 31, 2021
			Gross Unrealized						Estimated Fair Value
	Amortized Cost		Gains		Losses		Credit Losses
Money market funds	$	15,598	$	—	$	—	$	—	$	15,598
Commercial paper	9,998		—		—		—		9,998
Corporate notes	40,082		—		(47)		—		40,035
U.S. government securities	1,500		—		—		—		1,500
U.S. government agency bonds	1,074		—		—		—		1,074
U.S. asset-backed securities	1,815		—		—		—		1,815
	$	70,067	$	—	$	(47)	$	—	$	70,020
Classified as:
Cash equivalents									$	18,597
Short-term investments									25,402
Long-term investments									26,021
									$	70,020


	March 31, 2021								December 31, 2020
			Fair value measurement category								Fair value measurement category
(In thousands)	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Assets:
Money market funds	$	15,598	$	15,598	$	—	$	—	$	3,698	$	3,698	$	—	$	—

Commercial paper	9,998		—		9,998		—		8,994		—		8,994		—
Corporate notes	40,035		—		40,035		—		35,911				35,911		—
U.S. government securities	1,500		—		1,500		—		12,842				12,842		—
U.S. government agency bonds	1,074		—		1,074		—		5,001				5,001		—
U.S. asset-backed securities	1,815		—		1,815		—		3,538				3,538		—
	$	70,020	$	15,598	$	54,422	$	—	$	69,984	$	3,698	$	66,286	$	—


	Three Months Ended March 31,
(Amounts in thousands, except per share amounts)	2021		2020
Numerator:
Net loss	$	(3,289)	$	(4,705)
Denominator:
Weighted-average common shares outstanding (basic and diluted)	45,984		44,924

Net loss per share attributable to common shareholders (basic and diluted)	$	(0.07)	$	(0.10)



Anti-dilutive shares excluded from the calculation of diluted earnings per share(a) (amounts in millions):
Stock options	6.2		6.2
Restricted stock units	0.4		0.3

(a) Common equivalent shares are not included in the diluted per share calculation where the effect of their inclusion would be anti-dilutive.


	Three Months Ended March 31,
	2021		2020
Operating activities:
Net loss	$	(3,289)	$	(4,705)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization expense	811		533

Stock compensation expense	7,019		3,768



Foreign currency translation loss	2		7
Gain on sale of fixed assets	(22)		—


Amortization of premiums and discounts on marketable securities	273		(20)
Non-cash lease cost	1,171		794
Changes in operating assets and liabilities:
Inventory	(966)		(466)
Accounts receivable	5,382		7,997
Other current assets	(320)		(549)
Accounts payable	2,174		(59)
Accrued expenses	(1,328)		(1,864)
Operating lease liabilities	(821)		(750)

Net cash provided by operating activities	10,086		4,686
Investing activities:
Purchases of investments	(10,426)		(5,676)
Sales and maturities of investments	24,955		20,135


Expenditures for property, plant and equipment	(2,343)		(717)

Net cash provided by investing activities	12,186		13,742
Financing activities:

Net proceeds from common stock issuance due to stock option exercises	3,781		420
Payments on employee's behalf for taxes related to vesting of restricted stock units	(1,501)		(97)


(In thousands)	March 31, 2021		December 31, 2020
Machinery and equipment	$	3,701	$	3,672
Furniture, fixtures and office equipment	810		809
Computer equipment and software	6,967		6,846
Leasehold improvements	5,594		5,560
Construction in process	4,071		2,021
Financing right-of-use lease	102		111
Total property and equipment, gross	21,245		19,019
Less accumulated depreciation	(12,169)		(11,386)
Property and equipment, net	$	9,076	$	7,633


			Payments Due by Period
Contractual Obligations (in thousands)	Total		April 1, 2021 to December 31, 2021		2022		2023		2024		2025		More than 5 Years

Purchase commitments	$	9,504	$	8,853	$	651	$	—	$	—	$	—	$	—
Warehouse Operating Agreement	4,302		677		896		642		642		642		803
Total	$	13,806	$	9,530	$	1,547	$	642	$	642	$	642	$	803


Exhibit No.						Description

31.1**						Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2**						Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**						Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**						Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS**						Inline XBRL Instance Document

101.SCH**						Inline XBRL Taxonomy Extension Schema Document

101.CAL**						Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB**						Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE**						Inline XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF**						Inline XBRL Taxonomy Extension Definition Linkbase Document

104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).


			VERICEL CORPORATION


			/s/ DOMINICK C. COLANGELO
			Dominick C. Colangelo
			President and Chief Executive Officer
			(Principal Executive Officer)


			/s/ JOSEPH A. MARA
			Joseph A. Mara
			Chief Financial Officer
			(Principal Financial Officer)