AxoGen, Inc. (OTCBB: AXGN) today reported third quarter of 2011 revenues of $1.1 million, a 42.5% increase over $0.8 million reported during the third quarter of 2010. The higher revenues reflect increased penetration into targeted accounts resulting from the broadening of the Company's sales and marketing efforts.
In addition, the Company reported a net loss of $3.1 million, or $2.60 per common share, compared to a net loss of $.0.9 million, or $1.05 per common share, reported during the same period in 2010. The pro forma net loss for the quarter as if the merger had taken place on the first day of the period, was $3.0 million, or $0.28 per diluted share, compared to a pro forma net loss of $1.7 million, or $0.15 per diluted share, reported during the same period in 2010.
The reported loss for the period included approximately $643,000 of merger related expenses and $828,000 associated with a one-time, inventory write-off. These items represent $1.11 of the $2.60 loss per common share and $0.13 of the $0.28 pro forma loss per common share.
"I am pleased with our level of execution during this quarter," stated Karen Zaderej, Chief Executive Officer of AxoGen. "We delivered solid year-over-year, topline growth during a period in which our management team was focused on efforts to complete our merger with LecTec."
Gross Profit
Gross profit was $10,436 during the period and $1.59 million for the nine months and includes an $828,000 charge related to write-offs associated with expiring inventory and obsolete raw materials. The decrease in gross profit was primarily due to the inventory write-offs with additional contributing factors including a change in product mix and the resumption of manufacturing of Avance® Nerve Graft in January 2011.
Sales General and Administrative Expenses (SG&A)
Sales, general and administrative expenses (SG&A) increased to $2.0 million during the third quarter of 2011, compared to $1.1 million reported last year and is attributed to the company's strategic and continued broadening of sales and marketing efforts and approximately $643,000 of merger related expenses.
Ms. Zaderej further commented, "While we are pleased with our topline performance, our merger related efforts impeded sequential growth. With the merger behind us we are now well capitalized and positioned to focus on the execution of our commercialization plan as we move into the fourth quarter."
Financial Liquidity
At September 30, 2011 the Company had $10.5 million in cash and cash equivalents and $4.8 million in long-term debt.
Merger Accounting
For accounting purposes, AxoGen Corporation was identified as the acquiring entity and AxoGen, Inc. (formerly "LecTec") as the acquired entity. Accordingly, the condensed consolidated financial statements and related footnote disclosures presented for the period prior to the merger are those of AxoGen Corporation alone. The consolidated financial statements as of September 30, 2011 and December 31, 2010 and for the three months and nine months ended September 30, 2011 and 2010 include the operations and cash flows of AxoGen Corporation through September 30, 2011 and the combined operations and cash flows of AxoGen Corporation and AxoGen, Inc. ("LecTec") subsequent to the merger. The Consolidated Balance Sheet as of September 30, 2011 includes both companies as of such date.