MiMedx Group, Inc. (OTCBB: 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 second quarter and six months ended June 30, 2011.
The Company recorded revenue for the quarter of $1,929,000, an 85 percent increase over first quarter of 2011 revenue of $1,043,000 and a six-fold increase over second quarter of 2010 revenue of $322,000. The Company recorded a net loss of $2,504,000, or $.03 per diluted common share, for the second quarter, an $844,000 improvement over the first quarter net loss of $3,348,000, or $.05 per diluted common share and a $193,000 improvement as compared to a net loss of $2,697,000 million, or $.04 per diluted common share, in the second quarter of 2010. Earnings before interest, taxes, depreciation, amortization and share based compensation (Adjusted EBITDA) for the second quarter of 2011 were a loss of $1,423,000, an $898,000 improvement as compared to the first quarter loss of $2,321,000 and a $691,000 improvement compared to a loss of $2,114,000 in the second quarter of 2010.
Revenue for the six months ended June 30, 2011, was $2,973,000, as compared to revenue of $437,000 recorded for the six months ended June 30, 2010. The Company reported a net loss of $5,851,000, or $0.08 per diluted common share, for the six months ended June 30, 2011, as compared to a net loss of $5,839,000, or $0.10 per diluted common share, for the same six month period in 2010. Adjusted EBITDA for the six months ended June 30, 2011, were a loss of $3,751,000, as compared to a loss of $4,186,000 in the same six month period of 2010.
Gross margins improved for the quarter, as compared to the first quarter of 2011 and second quarter of 2010, due to increased product demand. Research & Development costs for the quarter declined, as compared to both the first quarter of 2011 and the second quarter of 2010, due to reductions in spending related to the Company's HydroFix™ and CollaFix™ platforms. The R & D expense reductions were somewhat offset by continuing investments in support of the FDA clearance process and European CE mark process for the Company's HydroFix™ and CollaFix™ platforms and increased investments in support of the Company's amniotic tissue platform. Selling, General and Administrative expenses increased only $101,000 in the second quarter of 2011 as compared to the first quarter of 2011, despite the 85% increase in revenue. The increase was primarily due to increased sales commissions on the higher revenue. The increase in Selling, General and Administrative expenses of $1,062,000 as compared to the second quarter of 2010 includes $822,000 in Surgical Biologics related costs, including $175,000 in non-cash related charges due to the depreciation of equipment and amortization of intangibles, and sales and administrative costs of $647,000 related primarily to support of the Company's amniotic tissue platforms, AmnioFix™ and EpiFix®. The increase also included non-cash related charges of $240,000 for share based compensation expenses.
Management Commentary
Parker H. "Pete" Petit, Chairman and CEO, stated, "MiMedx Group had a very good quarter. Our amniotic membrane tissue revenue exceeded our expectations. Our HydroFix™ products fell short of expectations; however, we did receive an additional FDA clearance during the quarter which will broaden our indications for use. We continue to be gratified by the enthusiasm from physicians regarding both AmnioFix™ and EpiFix®, our amniotic membrane tissues. The results the physicians are achieving, plus the results from our ongoing clinical studies are very reassuring. We believe our tissue offerings for orthopedics, spinal procedures, wound care and burns will be one of the most unique opportunities that will truly improve the quality as well as cost effectiveness of countless procedures in these crucial areas of healthcare."
Commenting on some of the Company's other new initiatives, Petit said, "We currently have new development activities in GYN and plastic surgery procedures underway and our development partners continue to pursue new opportunities in the ophthalmic area and the dental market. In summary, we could not be more excited about the opportunities we have as a result of our amniotic membrane tissue technology. The founders of Surgical Biologics have done a great service to medicine by breaking the code of providing a commercially viable amniotic membrane tissue."
"Looking to the third and fourth quarters, we expect to see continued rapid revenue growth from AmnioFix™ and EpiFix®. Our introduction of EpiFix® into the wound care area is still in its infancy stage. As we continue the roll-out of this exciting offering, we expect robust quarter over quarter increases in our wound care revenue. In addition, we expect to have some Original Equipment Manufacturers ("OEM") business that will come online in the third quarter. We are pleased with our progress in these strategic initiatives, and we are excited to have partnerships of this nature begin to develop. Most importantly, we expect to reach Adjusted EBITDA breakeven during the third quarter," added Petit.
Mike Senken, Chief Financial Officer, stated, "Our balance sheet continues to improve with current assets totaling $3,623,000, as compared to current liabilities of $1,714,000 when you subtract the Short term earn-out liability, which is a "non-cash" payment of MiMedx stock due in Q2 of next year related to the acquisition of Surgical Biologics."
Bill Taylor, President and Chief Operating Officer, stated, "We are making progress relative to regulatory approval on our CollaFix™ collagen fiber. Sometime during the third quarter, we expect to obtain the CE Mark for our first CollaFix™ product and, shortly thereafter, have it available for sale in Europe. That will be the first in a series of collagen fiber products we will bring through the regulatory process in Europe. In the United States, we are still pursuing some 510(k) clearances for certain collagen fiber products, but at this point, we do not have insight into the timing of those clearances. We do however, have some OEM business opportunities with our collagen fiber, and we are dedicating a large portion of our prototype fiber manufacturing capability to meeting those upcoming demands."
During the second quarter, the Company commenced its initiative to consolidate its operations and completed the closing of its Tampa, Florida, facility on July 1, 2011. By the end of the third quarter, the Company expects to have all of its operations formerly based in Tampa and those currently based in its Marietta, Georgia, facility fully consolidated into its Kennesaw location. "We are consolidating into the facility in which our Surgical Biologics subsidiary is located. We are also securing additional production space nearby in order to give us adequate room for our expected near-term growth," Taylor concluded.
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