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Vericel reported 1Q20 orthopedic revenue of USD $20.3 million, +22.4% vs. 1Q19. Prior to mid-March, the company was on track to achieve more than +30% growth; however, procedure cancelations due to COVID-19 reduced MACI implant volume by high single digits. MACI revenue is trending toward a revenue reduction around 50% in the second quarter, but Vericel leadership believes that April will be the nadir of the slowdown.
Vericel had approximately $83 million in cash and investments as of March 31, with an additional $24 million in accounts receivable that the company expects to collect in the coming months. The company initiated expense reduction measures totaling at least $20 million, with room for further reductions. These measures include reduction of discretionary spending, suspension of hiring except for the MACI salesforce and deferral of non-essential capital expenditures, as well as reducing material purchases and inventory levels.
Several factors give company leadership confidence that deferred procedures will be recouped. The MACI patient population tends to be younger (median age 33), active and generally healthy. They are less likely to possess risk factors associated with COVID-19 that may keep older patients from seeking elective medical care. Most MACI patients suffer from repetitive stress injuries that will not heal with the passage of time, therefore Vericel does not anticipate stay at home orders to meaningfully reduce the number of patients. Finally, over 95% of MACI procedures are performed in outpatient settings that are generally less involved with the treatment of COVID-19 patients.
Revenue Data
All revenue data is provided in USD millions unless otherwise noted. Sales and growth rates are estimated on an as-reported basis.
Segment Sales
| 1Q20 | 1Q19 | $ Chg | % Chg | |
|---|---|---|---|---|
| Orthobiologics | $20.3 | $16.6 | $3.7 | 22.4% |
Earnings
| Amt | % of Sales | |
|---|---|---|
| Sales | $26.7 | |
| Cost of Sales | $9.9 | 37.2% |
| Selling and Admin | $18.1 | 67.7% |
| R & D | $3.8 | 14.1% |
| Other | ($0.3) | 1.3% |
| Net Earnings | ($4.7) | (17.6%) |
Mike Evers is ORTHOWORLD’s Digital Content Strategist. He can be reached by email.
Vericel reported 1Q20 orthopedic revenue of USD $20.3 million, +22.4% vs. 1Q19. Prior to mid-March, the company was on track to achieve more than +30% growth; however, procedure cancelations due to COVID-19 reduced MACI implant volume by high single digits. MACI revenue is trending toward a revenue reduction around 50% in the second quarter,...
Vericel reported 1Q20 orthopedic revenue of USD $20.3 million, +22.4% vs. 1Q19. Prior to mid-March, the company was on track to achieve more than +30% growth; however, procedure cancelations due to COVID-19 reduced MACI implant volume by high single digits. MACI revenue is trending toward a revenue reduction around 50% in the second quarter, but Vericel leadership believes that April will be the nadir of the slowdown.
Vericel had approximately $83 million in cash and investments as of March 31, with an additional $24 million in accounts receivable that the company expects to collect in the coming months. The company initiated expense reduction measures totaling at least $20 million, with room for further reductions. These measures include reduction of discretionary spending, suspension of hiring except for the MACI salesforce and deferral of non-essential capital expenditures, as well as reducing material purchases and inventory levels.
Several factors give company leadership confidence that deferred procedures will be recouped. The MACI patient population tends to be younger (median age 33), active and generally healthy. They are less likely to possess risk factors associated with COVID-19 that may keep older patients from seeking elective medical care. Most MACI patients suffer from repetitive stress injuries that will not heal with the passage of time, therefore Vericel does not anticipate stay at home orders to meaningfully reduce the number of patients. Finally, over 95% of MACI procedures are performed in outpatient settings that are generally less involved with the treatment of COVID-19 patients.
Revenue Data
All revenue data is provided in USD millions unless otherwise noted. Sales and growth rates are estimated on an as-reported basis.
Segment Sales
| 1Q20 | 1Q19 | $ Chg | % Chg | |
|---|---|---|---|---|
| Orthobiologics | $20.3 | $16.6 | $3.7 | 22.4% |
Earnings
| Amt | % of Sales | |
|---|---|---|
| Sales | $26.7 | |
| Cost of Sales | $9.9 | 37.2% |
| Selling and Admin | $18.1 | 67.7% |
| R & D | $3.8 | 14.1% |
| Other | ($0.3) | 1.3% |
| Net Earnings | ($4.7) | (17.6%) |
Mike Evers is ORTHOWORLD’s Digital Content Strategist. He can be reached by email.
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ME
Mike Evers is a Senior Market Analyst and writer with over 15 years of experience in the medical industry, spanning cardiac rhythm management, ER coding and billing, and orthopedics. He joined ORTHOWORLD in 2018, where he provides market analysis and editorial coverage.
