MiMedx Announces Record Quarterly Results

                  MiMedx Announces Record Quarterly Results

Revenue Increases by 69% Over 2013 First Quarter

PR Newswire

MARIETTA, Ga., April 25, 2014

MARIETTA, Ga., April 25, 2014 /PRNewswire/ --MiMedx Group, Inc.(NASDAQ:
MDXG), an integrated developer, manufacturer and marketer of patent protected
regenerative biomaterials and bioimplants processed from human amniotic
membrane, announced today its results for the quarter ended March 31, 2014.

Highlights include:

  oRevenue exceeds upper end of guidance and increases by 69% over Q1 2013
  o10th consecutive quarter of meeting or exceeding revenue guidance
  o9th consecutive quarter of positive Adjusted EBITDA*
  oAdjusted EBITDA* increased by 77% over Q1 2013
  oAdded 46 direct sales professionals during Q1 2014
  oCompany reiterates second quarter revenue guidance of $21.5 - $23.5
    million and
  oFull year 2014 revenue guidance of $95.0 - $110.0 million

First Quarter 2014 Results
The Company recorded record revenue for the first quarter of 2014 of $19.6
million, an increase of 69% over 2013 first quarter revenue of $11.6 million,
and above the guidance of $18 million to $19.5 million. The Company's gross
margins for the quarter ended March 31, 2014 were 85% as compared to 84% in
the first quarter of 2013. Earnings before interest, taxes, depreciation,
amortization, share-based compensation (Adjusted EBITDA*) for the quarter
ended March 31, 2014 were $2.0 million, a $0.9 million or 77% improvement, as
compared to the Adjusted EBITDA* of $1.1 million for the first quarter of
2013. The Net Loss for the first quarter of 2014 was $0.9 million, as
compared to the Net Loss of $1.6 million in the prior year first quarter.

Management Commentary on Results
Parker H. "Pete" Petit, Chairman and CEO, said, "We are very pleased with our
first quarter performance. We exceeded the upper end of our guidance range
and marked our 10^th straight quarter of meeting or exceeding our revenue
forecast. Quarter-over-quarter revenue growth was extremely solid with a 77%
increase over the first quarter of 2013. I am especially pleased with our
management team's ability to handle this amount of top line growth and
continue to make progress on improving our profitability. The first quarter
was our 9^th consecutive quarter of positive Adjusted EBITDA*, and our gross
margins remained very strong at 85%. As we further accelerate the rapid
growth of our Company, we will continue to invest heavily in the critical
growth drivers of our business. These are principally investments in our
sales organization and in our clinical studies and trials."

Petit continued, "We are pleased with the way our organization responded to
the market's confusion resulting from the January 1, 2014 implementation of
the Hospital Outpatient Prospective Payment System ("OPPS") Final Rule issued
by the Centers for Medicare and Medicaid Services ("CMS"). Whenever a major
change in reimbursement methodology is implemented, there is the potential for
a temporary period of confusion with the wound care centers and physicians. We
anticipated this confusion and pursued an initiative to provide detailed
communications and education to the wound care centers and physicians' staff
to minimize the reimbursement confusion. By the end of February, it appeared
that the majority of wound care centers had effectively implemented the
necessary changes. As a result, our March revenue grew significantly. It is
important to reiterate our belief that this change in reimbursement
methodology by CMS is very favorable to MiMedx and our size appropriate and
clinically effective allografts. We expect second, third and fourth quarter's
growth rates to be favorably impacted."

Wound care sales continued to be the primary driver of the Company's first
quarter revenue growth, increasing by 136% over first quarter of 2013. Bill
Taylor, President and COO, stated, "Contributing to our rapid growth is our
aggressive expansion of our direct sales force. We ended 2013 with 76 sales
professionals in our direct sales force. We added 46 sales professionals to
our sales force during the first quarter, and ended the quarter with 122 sales
professionals in our direct sales force. The primary focus of our expansion
strategy is in the area of advanced wound care, and to a lesser extent, in the
orthopedic and spinal surgery area. We are very excited about the wealth of
experience and relationships these new professionals bring to the Company. We
expect these additions to begin impacting our sales growth in the second
quarter and beyond."

The Company reported that at this time, EpiFix® is covered for the Blue Cross
and Blue Shield members in 23 states and coverage is provided for the members
in plans offered by many additional private payers. EpiFix® also has coverage
from 18 traditional state Medicaid programs and a number of Managed Medicaid
plans throughout the country.

Petit added, "A crucial factor in gaining expanded reimbursement coverage is
the continued initiation and management of clinical trials. We are increasing
our investment in this vital contributor to our Company's growth. Commercial
health plans diligently evaluate the clinical efficacy of products approved
for reimbursement. Their evaluation is focused on the results of published
evidence-based clinical studies. We have presented health plans with a large
portfolio of study data, including clinical data and results from Randomized
Controlled Trials (RCTs) and cross-over clinical studies. With our
continually expanding sources of evidenced-based results, we are gaining
significant momentum in receiving awards of coverage."

"In March, we had our first Pre-Investigational New Drug ("IND") meeting at
the FDA. We had an extremely productive meeting regarding our plans for our
first targeted Biologics License Application ("BLA"), and we anticipate
additional interactions as we finalize our study protocols and review
additional information. We are expanding our R&D function and our related
investments for our BLA application, including those resources supporting the
clinical studies in support of this regulatory process. We are also
increasing the number of studies and trials supporting our reimbursement
initiatives for our AmnioFix® surgical products," noted Taylor.

Balance Sheet and Cash Flow
As of March 31, 2014, total assets increased by $2.6 million to $87.3 million,
compared to $84.7 million as of December 31, 2013. Cash on hand as of March
31, 2014, was $43.0 million, a decrease of $1.1 million, as compared to $44.1
million as of December 31, 2013. Cash flow from operating activities for the
quarter ended March 31, 2014, was a negative $1.6 million, due to increased
working capital requirements in support of sales growth as compared to a
negative $2.1 million in the first quarter of 2013.

Accounts receivable increased to $19 million as of March 31, 2014, from $16.1
million as of December 31, 2013. This was largely due to the higher sales
volume and the buildup of the Company's commercial wound care sales.
Inventory decreased by $240,000 to $3.6 million as of March 31, 2014, from
$3.9 million as of December 31, 2013. Total liabilities remained unchanged at
$11.1 million as of March 31, 2014. Stockholders' equity increased by $2.7
million to $76.2 million as of March 31, 2014.

GAAP Earnings
The Company recorded a Net Loss of $0.9 million for the quarter ended March
31, 2014, or $0.01 per diluted common share, as compared to a Net Loss of $1.6
million, or $0.02 per diluted common share, for the quarter ended March 31,
2013.

For the first quarter of 2014, Research and Development (R&D) expenses were
$1.4 million or 7% of Net Sales, an increase of $0.1 million over the first
quarter of 2013 R&D expenses. Due to the continuation of the accelerated
investment in clinical trials for reimbursement purposes, the R&D expenses
remained level with the $1.4 million recorded in the fourth quarter of 2013.

Selling, general and administrative (SG&A) expenses for the first quarter of
2014 were $15.9 million, or 81% of Net Sales, a $7.5 million increase over
first quarter of 2013 SG&A expenses of $8.4 million, or 72% of Net Sales, and
an increase of $1.6 million over fourth quarter of 2013 SG&A expenses of $14.3
million, or 79% of Net Sales. Increases in SG&A were due to the continuation
of the buildup of the Company's direct sales force in the government accounts
and commercial accounts sales channels. The addition of key management and
infrastructure-related resources necessary to support the Company's growth,
including key resources in support of our reimbursement activities, also
impacted the increase in SG&A expenses.

Use of Non-GAAP Financial Measures
Management has disclosed adjusted financial measurements in this press
announcement that present financial information that is not in accordance with
generally accepted accounting principles (GAAP). These measurements are not a
substitute for GAAP measurements, although Company management uses these
measurements as aids in monitoring the Company's on-going financial
performance from quarter-to-quarter and year-to-year on a regular basis, and
for benchmarking against other medical technology companies. Adjusted EBITDA*
is earnings before financing expense, interest, taxes, depreciation,
amortization, and share-based compensation. For a reconciliation of this
non-GAAP financial measure to the most directly comparable financial measure,
see accompanying table to this release. 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.

Revenue Breakdown
The Company distinguishes and reports revenue in two categories: (1) Wound
Care and (2) Surgical, Sports Medicine and OEM applications. Revenue for the
Company's Wound Care category comprises both the sheet and powdered form. The
"Surgical, Sports Medicine and OEM" category includes primarily AmnioFix®
sales for orthopedic, soft tissue repair, surgical, dental and ophthalmic
uses. This category also includes grafts in both sheet and injectable form.
In the first quarter of 2014, Wound Care represented 75% of revenue, and
Surgical, Sports Medicine and OEM represented 25% of revenue.

The Company also provides a revenue breakdown in terms of customer type,
distinguishing between government and commercial accounts. Government
accounts include the Veterans Administration as well as the Department of
Defense and Indian Health Services. Commercial sales include sales through
distributors, OEM sales and direct sales to non-government accounts. For the
quarter ended March 31, 2014, Commercial sales represented 53% and Government
sales represented 47% of revenue.

Outlook for Second Quarter and Full Year 2014
The Company reaffirmed its previously communicated guidance for the second
quarter and 2014 full year. As previously communicated, the Company estimates
second quarter of 2014 revenue to be in the range of $21.5 million to $23.5
million and full year 2014 revenue to be in the range of $95.0 million to $110
million.

Earnings Call
MiMedx management will host a live broadcast of its first quarter results
conference call on Friday, April 25, 2014, beginning at 10:30 a.m. eastern
time. A listen-only simulcast of the MiMedx Group conference call will be
available on-line at the Company's website at www.mimedx.com. A 30-day
on-line 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.

About MiMedx
MiMedx® is an integrated developer, processor and marketer of patent protected
regenerative biomaterial products and bioimplants processed from human
amniotic membrane. "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 include AmnioFix®
and EpiFix®, our tissue technologies processed from human amniotic membrane
that is derived from donated placentas. Through our donor program, mothers
delivering full-term Caesarean section births can elect in advance of delivery
to 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 225,000 allografts to date for
application in the Wound Care, Surgical, Sports Medicine, Ophthalmic and
Dental sectors of healthcare.

Safe Harbor Statement
This press release includes statements that look forward in time or that
express management's beliefs, expectations or hopes. Such statements are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements include, but are not limited
to, the impact of clinical trials on reimbursement coverage, the effect of
expansion of the sales force on period-over-period revenue growth, the effect
of the CMS reimbursement changes on revenue growth, the expectation for rapid
revenue growth, the ability to add additional sales and R&D professionals in
the time periods anticipated, the potential for increases in awards of
coverage, favorable outcomes of clinical trials, and the Company's projected
revenues for second quarter and full year 2014. These statements are based on
current information and belief, and are not guarantees of future performance.
Among the risks and uncertainties that could cause actual results to differ
materially from those indicated by such forward-looking statements include
that the outcome of in-process and future clinical trials will not be as
anticipated or that the Company's clinical trials may not have the desired
effect on reimbursement coverage or increased interest in our products , the
expansion of the sales force might not have the expected effect on revenue
growth in any particular territory or overall, the Company may not be
successful in further expanding its sales force and R&D function in the time
periods anticipated, the Company may not achieve its projected revenue goals,
the CMS reimbursement changes prove not to be favorable to the Company, the
Company may not obtain the anticipated increases in awards of coverage, and
the risk factors detailed from time to time in the Company's periodic
Securities and Exchange Commission filings, including, without limitation, its
10-K filing for the fiscal year ended December 31, 2013. By making these
forward-looking statements, the Company does not undertake to update them in
any manner except as may be required by the Company's disclosure obligations
in filings it makes with the Securities and Exchange Commission under the
federal securities laws.



MIMEDX GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
                                                  March 31,
                                                  2014          December 31,
                                                                 2013
                                                  (unaudited)
ASSETS
Current assets:
Cash and cash equivalents                         $ 43,019,559   $ 44,077,751
Accounts receivable, net                          18,966,543     16,092,836
Inventory, net                                    3,639,094      3,880,776
Prepaid expenses and other current assets         2,278,996      1,337,408
Total current assets                              67,904,192     65,388,771
Property and equipment, net of accumulated        4,288,743      4,086,106
depreciation
Goodwill                                          4,040,443      4,040,443
Intangible assets, net of accumulated             11,115,188     11,178,573
amortization
Total assets                                      $ 87,348,566   $ 84,693,893
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable                                  $ 2,618,753    $ 2,490,531
Accrued compensation                              5,413,595      5,588,811
Accrued expenses                                  1,369,048      1,405,974
Other current liabilities                         192,522        122,551
Total current liabilities                         9,593,918      9,607,867
Other Liabilities                                 1,516,464      1,517,956
Total liabilities                                 11,110,382     11,125,823
Commitments and contingencies (Note12)           —              —
Stockholders' equity:
Preferred stock; $.001 par value; 5,000,000
shares authorized and 0 shares issued and         —              —
outstanding
Common stock; $.001 par value; 130,000,000 shares
authorized; 105,843,137 issued and

105,793,137 outstanding as of March 31,2014 and   105,843        104,426
104,425,614 issued and 104,375,614

outstanding as of December 31, 2013
Additional paid-in capital                        150,874,988    147,284,219
Treasury stock (50,000 shares at cost)            (25,000)       (25,000)
Accumulated deficit                               (74,717,647)   (73,795,575)
Total stockholders' equity                        76,238,184     73,568,070
Total liabilities and stockholders' equity        $ 87,348,566   $ 84,693,893





MIMEDX GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
                                                 Three Months Ended March 31,
                                                 2014           2013
Net sales                                        $ 19,559,188   $ 11,556,493
Cost of sales                                    2,977,275      1,905,020
Gross margin                                     16,581,913     9,651,473
Operating expenses:
Research and development expenses                1,390,044      1,246,757
Selling, general and administrative expenses     15,851,553     8,369,010
Amortization of intangible assets                231,331        262,596
Operating income (loss)                          (891,015)      (226,890)
Other income (expense), net
Amortization of debt discount                    —              (1,328,439)
Interest expense, net                            (21,024)       (14,804)
Income (loss) before income tax provision        (912,039)      (1,570,133)
Income tax provision                             (10,033)       (50,275)
Net Income (loss)                                $ (922,072)    $ (1,620,408)
Net income (loss) per common share - basic and   $ (0.01)       $ (0.02)
diluted
Weighted average shares outstanding - basic and  105,358,694    93,128,466
diluted





MIMEDX GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
                                                 Three Months Ended March 31,
                                                 2014           2013
Cash flows from operating activities:
Net income (loss)                                $ (922,072)    $ (1,620,408)
Adjustments to reconcile net income (loss) to
net cash from operating activities:
Depreciation                                     263,131        98,751
Amortization of intangible assets                231,331        262,596
Amortization of debt discount and deferred       —              1,328,439
financing costs
Share-based compensation                         2,372,364      984,792
Increase (decrease) in cash resulting from
changes in:
Accounts receivable                              (2,873,707)    (2,167,942)
Inventory                                        241,682        (933,555)
Prepaid expenses and other current assets        (941,588)      (555,692)
Other assets                                     —              (249,545)
 Accounts payable                               128,222        (194,977)
 Accrued compensation                           (175,216)      765,532
 Accrued expenses                               (36,926)       236,788
 Accrued interest                               —              (41,641)
 Other liabilities                              101,808        (11,324)
Net cash flows from operating activities         (1,610,971)    (2,098,186)
Cash flows from investing activities:
Purchases of equipment                           (465,768)      (73,534)
Patent application costs                         (167,946)      —
Net cash flows from investing activities         (633,714)      (73,534)
Cash flows from financing activities:
Proceeds from exercise of warrants               774,750        924,624
Proceeds from exercise of stock options          445,072        232,531
Principal payments of equipment leases           (33,329)       (14,813)
Net cash flows from financing activities         1,186,493      1,142,342
Net change in cash                               (1,058,192)    (1,029,378)
Cash and cash equivalents, beginning of period   44,077,751     6,754,485
Cash and cash equivalents, end of period         $ 43,019,559   $ 5,725,107





MiMedx Group, Inc. and Subsidiaries
Non-GAAP Financial Measures and Reconciliation
As used herein, "GAAP", refers to generally accepted accounting principles in
the United States. We use various numerical measures in conference calls,
investor meetings and other forums which are or may be considered "Non-GAAP
financial measures" under Regulation G. We have provided below for your
reference, supplemental financial disclosure for these measures, including the
most directly comparable GAAP measure and an associated reconciliation.
Reconciliation of Net Loss to "Adjusted EBITDA" defined as Earnings before
Financing expense, Interest, Taxes, Depreciation, Amortization, and Share -
Based Compensation:
                         Three Months Ended March 31,
                         2014                          2013
Net Loss (Per GAAP)      $     (922,072)               $    (1,620,408)
Add back:
Income Taxes             10,033                        50,275
Financing expense
associated with
beneficial conversion of —                             1,328,439
Senior Secured
Promissory Notes
Other interest expense,  21,024                        14,804
net
Depreciation Expense and
loss on fixed asset      263,131                       98,751
disposal
Amortization Expense     231,331                       262,596
Share - Based            2,372,364                     984,792
Compensation
Adjusted EBITDA          $     1,975,811               $    1,119,249



SOURCE MiMedx Group, Inc.

Website: http://www.mimedx.com
Contact: MICHAEL SENKEN, PHONE: (770) 651-9100
 
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