Vericel Q2 2024 Earnings Call Transcript

Quartr
Provided by Quartr
August 1, 2024

There are 9 speakers on the call.

Operator

Ladies and gentlemen, thank you for standing by. Welcome to Vericel's Second Quarter 2024 Conference Call. At this time, all participants are in a listen only mode. I would also like to remind you that this call is being recorded for replay. I will now turn the conference call over to Eric Burns, Vericel's Vice President of Finance and Investor Relations.

Speaker 1

Thank you, operator, and good morning, everyone. Joining me on today's call are Vericel's President and Chief Executive Officer, Nick Colangelo and our Chief Financial Officer, Joe Mara. Before we begin, let me remind you on today's call, we will be making forward looking statements covered under the Private Securities Litigation Reform Act of 1995. These statements may involve risks and uncertainties that could cause actual results to differ materially from our filings with the SEC. In addition, all forward looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date.

Speaker 1

Please note that a copy of our Q2 financial results press release and a short presentation with highlights from today's call are available in the Investor Relations section of our website. I will now turn the call over to Nick.

Speaker 2

Thank you, Eric, and good morning, everyone. I'll begin today's call by discussing the company's financial and business highlights for the Q2 as well as our expectations for the remainder of the year. Joe will then provide a more detailed review of the company's Q2 financial results and guidance for 2024 before opening the call to Q and A. The company had another strong quarter as we generated record 2nd quarter revenue of nearly $53,000,000 highlighted by continued high growth for MACI and solid progression in demand for NexoBrid. We also delivered another quarter of significant margin expansion and profit growth with record second quarter gross margin of 70% and adjusted EBITDA growth of 42% compared to last year as the company's profit growth continues to outpace our high revenue growth.

Speaker 2

Through the first half of the year, the company generated 20% growth in total revenue, MACI revenue and burn care revenue, expanded gross margin by over 400 basis points and more than doubled adjusted EBITDA compared to the first half of last year. Based on the strength of our first half performance, we're reaffirming our revenue guidance of 20 plus percent growth for the full year and raising our profitability guidance for gross margin to 71% and adjusted EBITDA margin to 21% for the full year. MACI had another excellent quarter with record second quarter revenue of more than $44,000,000 which increased 21% and exceeded our guidance for the quarter. Macy's 2nd quarter performance was once again driven by strong underlying business fundamentals as we continue to expand the MACI surgeon customer base and drive growth in biopsies. We had the 2nd highest number of MACI biopsies and surgeons taking biopsies in any quarter since launch as well as the highest number of biopsies in any month since launch during the quarter.

Speaker 2

The strength of these key MACI growth drivers together with another quarter of significant increases in peer to peer programs and attendees at those programs demonstrates that surgeon interest in MACI remains high as we continue to build a strong foundation for sustained MACI growth over the long term. As our expanded surgeon base gains further experience with MACI, we also expect biopsies per surgeon and biopsy conversion rates to become more significant growth drivers. Notably, we saw a significant increase in biopsies per surgeon during the 2nd quarter, which helped drive an acceleration in biopsy growth in the quarter. We also saw an uptick in the conversion rate versus the prior year as there's a direct correlation between surgeon experience with MACI and higher conversion rates. Typically, once surgeons perform more than a few implants on average per year, their conversion rate tends to increase into the mid-forty percent range and even higher at higher average impact plant volumes per year, which is significantly above our overall conversion rate and demonstrates the clear potential for conversion rate to become an important growth driver over time as MACI utilization increases across our surgeon customer base.

Speaker 2

Turning to our MACI lifestyle management initiatives. We're excited about the potential launch of MACIARTHOR later this quarter. Our custom MACIARTHOR instruments have already been registered with the FDA and plans are in place for the commercial launch of this innovative addition to our portfolio upon FDA approval to expand MACE's label to include arthroscopic delivery. As part of the planned launch, we're expanding our target surgeon base from 5000 to 7000 surgeons to include surgeons that perform high volumes of cartilage repair surgeries predominantly through arthroscopic procedures. Given that the VCI Arthro instruments target smaller cartilage defects that comprise the largest segment of our addressable market, representing approximately 20,000 patients for a year or 1 third of the $3,000,000,000 addressable market for MACI, we believe that MACI Arthro will have a meaningful impact on utilization and provides a significant potential upside growth opportunity for the brand and the company in the years ahead.

Speaker 2

We also remain on track to initiate the MACI ankle clinical study in 2025. Cartilage defects in the ankle represent the 2nd largest market opportunity for MACI. We believe that a potential MACI ankle indication with an estimated $1,000,000,000 addressable market could be another significant growth driver for MACI in the next decade and beyond. Turning to our burn care franchise. NexoBrid launch momentum continued to build during the Q2 as revenue nearly doubled and we made further progress with respect to our burn center key performance indicators.

Speaker 2

Through the end of the second quarter, approximately 70 burn centers had completed P and T committee submissions, more than 40 centers had gained P and T committee approval and nearly 40 centers had placed an initial product order. There also was a meaningful increase in hospital orders and patients treated in the quarter as more burn centers incorporate NexoBrid into their regular clinical practices. We also expect FDA approval of a pediatric indication for RENEXUBRID in the coming weeks, which would provide an important treatment for pediatric patients with severe thermal burns. There are approximately 20 pediatric burn centers in the U. S.

Speaker 2

That will be added to our target customer base following approval, which we believe will have a meaningful impact on overall NexoBird uptake over time. Turning to Epicel. While we had a similar number of biopsies in the Q2 as in the Q1 of this year and the Q2 of last year, which resulted in revenue in the $10,000,000 range for both of those quarters. Epicel revenue in the Q2 of this year was closer to its quarterly run rate entering the year of approximately $8,000,000 After a strong start to the quarter in April, the number of patients treated with Epicel was lower in May June due to a number of factors, including patient health issues and the timing of patient treatments. While there can be variability in Epicel quarterly results giving the relatively small patient population and the critical nature of their injuries, demand for Epicel remains strong.

Speaker 2

Over the first half of the year, the quarterly run rate for Epicel has increased as expected to more than $9,000,000 per quarter with double digit growth for the first half of the year versus last year. We're also off to a very good start in the 3rd quarter based on the strength in Epicel biopsies, patients treated and graft volumes to date in the quarter. Overall, the company delivered another strong quarter in first half of the year with sustained high revenue and profitability growth, excellent MECI results, solid progression in NexoBrid demand and meaningful growth for Epicel in the first half of the year. Based on the strength of our core portfolio and expected contributions from new product launches, we believe that the company is very well positioned for continued high revenue and profit growth in 2024 and beyond. I'll now turn the call over to Joe.

Speaker 3

Thanks, Nick, and good morning, everyone. Starting with our Q2 results, total net revenue for the quarter was $52,700,000 with MACI revenue of $44,100,000 and total burn care revenue of $8,500,000 which was made up of Epicel revenue of $7,800,000 and NexoBrid revenue of 800,000 dollars In the Q2, MACI revenue grew 21% versus the prior year and 10% versus the prior quarter, while NexoBrid increased 76% versus the prior quarter. In addition, through the first half of the year, both of our franchises delivered 20% revenue growth versus the prior year. Gross profit for the quarter was 36,600,000 or 70 percent of net revenue, an increase of 430 basis points versus the prior year, which is the company's highest 2nd quarter gross margin to date. Total operating expenses for the quarter were $42,600,000 compared to $35,900,000 for the same period in 2023.

Speaker 3

The increase in operating expenses was primarily due to development and pre launch activities from AT Arthro, increased headcount and related employee expense and lease expense associated with the company's new facility that is under construction. Net loss for the quarter was 4,700,000 dollars or $0.10 per share compared to $5,000,000 or $0.11 per share for the Q2 of 2023. In addition, the company has now generated positive GAAP net income on a rolling 12 month basis as we continue to enhance our strong profitability profile. Non GAAP adjusted EBITDA for the quarter increased 42% to $6,300,000 or 12 percent of net revenue compared to $4,400,000 or 10% of net revenue in 2023. As adjusted EBITDA growth continued to significantly outpace our high revenue growth.

Speaker 3

For the first half of the year, adjusted EBITDA more than doubled to $13,500,000 and adjusted EBITDA margin increased approximately 600 basis points, demonstrating continued strong leverage across our P and L. Finally, the company generated $18,500,000 of operating cash flow in the quarter and ended the 2nd quarter with $154,000,000 in cash, restricted cash and investments and no debt. Turning to our financial guidance. For the full year after a very strong first half of the year, we are reaffirming our total company revenue guidance of $238,000,000 to $242,000,000 or 20% to 23% total revenue growth. Within our guidance framework, based on the strong first half results for MACI and the continued strength in its key leading indicators, we have increased our expectations for MACI for the full year.

Speaker 3

We now expect MACI revenue growth of approximately 20% for the full year, an increase versus our prior expectation of high teens growth to start the year with the balance of revenue coming from our burn care franchise. In addition, based on the company's strong overall financial performance, we are increasing gross margin guidance to 71% and adjusted EBITDA margin guidance to 21% for the full year compared to the previous guidance of 70% 20%, respectively. Importantly, we also expect to be GAAP profitable in 2024 on a full year basis. For the Q3, we expect sequential growth in both MACI and burn care revenue with total company revenue of approximately 55,000,000 dollars representing growth of more than 20% versus the prior year. For MACI, we expect another strong quarter with year over year growth in a similar range as the 1st 2 quarters of the year and revenue of approximately 44,500,000 dollars For burn care, we also expect a strong 3rd quarter with total burn care revenue of approximately 10,500,000 dollars Finally, we expect gross and adjusted EBITDA margins in the 3rd quarter to be similar to 2nd quarter margins.

Speaker 3

This concludes our prepared remarks. We will now open up the call to your questions.

Operator

Thank you. At this time, we will conduct the question and answer session.

Speaker 4

I want to start first on MACI and then I have a burn care question, but a 2 part question on MACI. So appreciate the guidance, Joe, both for the year and quarterly. I just want to make sure people are clear about the pacing expectations and kind of the step up implied in Q4, coupled with the Arthro launch, that may be happening over the back half of the year? And then the second part of the question, a little different, but it's around your comments, Nick, on conversion, which is you're seeing more tenure in the user base of conversion, which as you noted is going to increase conversion ratios. But at the same time, as you move to smaller cartilage defects, which in absolute value will increase, I would imagine that has some downward pressure on the conversion ratio just given that there may be less acute injuries and so maybe there's less likelihood to convert from biopsy to procedure there.

Speaker 4

And so how would you have us think about conversion against those two factors over time, just given the nature of the injuries treated in the arthro launch? And then I have one follow-up on burn care. Thanks.

Speaker 3

Yes. So good morning, Ryan. Thanks for the questions. I'll start on maybe the Macy cadence, and then we'll address kind of your conversion question second. So from a MACI perspective, I'd say 2 strong quarters to start the year, as Nick said, extremely strong leading indicators.

Speaker 3

So we do have higher expectations on a full year basis. We started in kind of the, call it, the mid to high teens, now around that 20% range. So certainly increasing expectations on MACI as it continues to perform well. In terms of the cadence for the rest of the year, so we did call out to your point a Q3 estimate of around $44,500,000 on MACI, and that's pretty similar growth that we've seen over the 1st couple of quarters, probably about an average of the 2. And then as you think about kind of the seasonality and the step up for Q4, I would generally say it follows our typical seasonal pattern.

Speaker 3

So whether we look at kind of the H1 to H2 growth, you kind of look at the step up to Q4, which is in that 50% range. You look at the kind of call it H1, H2 mix, which is around our 43% to 57 percent if you look at that guidance. So I'd say it's very similar to what we've seen in the past in terms of expectations and sort of assumptions around kind of MACI Arthro. I think we've consistently said our expectation is that's more of a 2025 driver. It's really kind of the core performance of MACI that's continuing to perform.

Speaker 3

And again, the seasonality and mix is very much in line within the guidance to what we've seen last year and what we typically see.

Speaker 2

Yes. Thanks. And so Ryan to your conversion rate, yes, as we've talked about for years now, as surgeons gain more experience and our higher volume surgeons clearly have higher conversion rates, A lot of the dynamics that we point to are that we're adding a lot of new surgeons and we continue to do so and that's what sort of balances out sort of those higher conversion rates because obviously as they're getting up to speed they have lower conversion rates. So it's remained relatively stable. In terms of the size of the defect, I'll just tell you that a 2 to 4 square centimeter defect on the surface of your knee, that's a pretty big injury.

Speaker 2

And when we look at, for instance, we're targeting maciarthro on for those 2 to 4 square centimeter femoral condyle defects. And we can see sort of how those defects are treated in the patella, which obviously MACI is a go to product there. And it's a pretty significant piece of our business now. To the best of my knowledge, it's at least the average conversion rate, if not higher for patella cases. So I don't anticipate any impact on conversion rate from that size and location of the defect.

Speaker 2

They're getting treated somehow. And we just think MACI will be able to have a greater penetration into those defects on the femoral condyle with the MACI Arthro instrument kit.

Speaker 4

Okay, very helpful, Nick and Joe. And then just on burn care, the nature of the business is volatile. I've covered you guys long enough to know that. I just want to make sure that there's no structural change in the burn market from what you saw? It sounds like you guided early May and then you saw some volatility in the patient population around Epicel in later May June.

Speaker 4

But again, just want to be clear that you're not seeing any structural change there with the Epicel.

Speaker 2

No. Yes. Thanks, Ryan. Appreciate the question and it's a fair one. But my point of we had similar biopsies, right?

Speaker 2

That's the top of the funnel. And if you saw some sort of structural change in the burn market, you would expect that that's the place you see it. We also mentioned that we had a very strong start in April. And then we just had sort of that variability that you can see in certain months based on patient health issues and again the critical nature of their injuries and right back to a strong start in July, highest biopsies of the year in the month of July. So we feel pretty good about Epicel and the continued growth first half of the year, up 12%.

Speaker 2

So I think we're again feeling pretty good about that. We also have implemented kind of our sales force optimization plan where we've added a few additional territories for the burn care sales force. So we're up to 17. As of Q3, all reps will now be promoting both Epicel and NexoBrid. And we've seen a pretty strong pull through for Epicel from the formerly dormant accounts that were being called on for NexoBrid.

Speaker 2

So we think we're set up nicely for strong burn care growth and based on the guidance we've given, it's in the 30% range for the year, so pretty robust growth.

Speaker 4

All right. Thanks for taking the questions guys.

Speaker 3

Thanks, Ryan. Thanks, Ryan.

Operator

Thank you. Please stand by. Our next question comes from Mike Kratzky from Leerink Partners. Your line is now open.

Speaker 5

Hi, everyone. Thanks for taking our questions. So it looks like MACI sales came in a bit higher than the Street during the quarter and you also started seeing the highest number of biopsies in any month since launch. So can you just confirm what month of the quarter that record number of biopsies came in and to what extent is that tied to some of your ongoing pre arthroscopic launch activities that you mentioned?

Speaker 2

Well, yes, I mean, just it was in May for what that's worth. I think the more important part is we're continuing to see very strong engagement with surgeons in terms of the number of surgeons taking biopsies continuing to be at sort of very high levels. Obviously, that translates to more biopsies, particularly when you see an uptick in biopsies per surgeon, which is great. That's really independent of the arthroscopic prep. Obviously, the arthroscopic delivery is not approved yet.

Speaker 2

So it's really independent. It's just kind of the strength of the core MACI business that we've really been seeing for quite some time now.

Speaker 5

Understood. And maybe just as a follow-up, can you give us a sense of, A, regarding the 2,000 new target surgeons that you cited, basically just how quickly you can start targeting those surgeons, reaching out to them and at what point you really expect the sales force efficiency to start taking up?

Speaker 2

Well, there's really I mean, obviously we have the target list set and ready to go. So immediately upon FDA approval, sales reps can start calling on those surgeons. So there's really no limitation on that. So excited to have that. I'd say we probably feel like we'll see more immediate uptake potentially from MACI surgeons who are obviously familiar with the product.

Speaker 2

They also do a lot of arthroscopic procedures as we always remind folks. Anytime they're doing chondroplasties, micro fractures, oats and the vast majority of cartilage repair procedures are done arthroscopically. So they're used to treating cartilage injuries that way. So I think it's a pretty easy transition for patients with appropriate defects for experienced surgeons to kind of flip to maybe see arthroscopic delivery. Similarly though, as you know, we're those 2,000 surgeons will be adding who really do their high volumes of cartilage repair predominantly through arthroscopic procedures.

Speaker 2

They too are used to treating cartilage injuries with arthroscopic instruments and doing things like microfracture augmentation where they're also doing implants as part of that. So we think it's a pretty seamless transition that will continue it will occur over time and give us a pretty long runway we think for MACI growth as we move forward in the years ahead.

Speaker 5

Understood. Thanks very much.

Speaker 3

Okay. Thanks, Mike.

Operator

Thank you. Our next question comes from Josh Jennings from TD Cowen. Your line is now open.

Speaker 6

Hi, good morning. Thanks for taking the questions. It's nice to see that Macy momentum here. Wanted to just follow-up on the last question, just around, but in a different angle. Just thinking about the success you've had in terms of getting more surgeons in peer to peer events getting trained, I just wanted to hear from you just what's driving that?

Speaker 6

I mean, clearly, it's you're experiencing momentum, but you do have 10 year data out there early in the year. You have arthro on tap. And I guess, with the gist of the question, just trying to figure out that leading indicator, any just high level comments on the first half, the drivers of that and whether this MACIARTHRA approval is driving some of that increased interest this year?

Speaker 2

No, I'd say back to the prior response that we've just seen a lot of momentum in the core MACI business sort of as we exited sort of those COVID impacted years. And since that time, I mean, we've seen may see just in total rebound to its prior high growth profile. As it becomes more and more the standard of care for cartilage repair based on, as you mentioned, not only sort of the 2 year data in the pivotal study, the 5 year data in the extension study, 10 year data that was published earlier this year. I just think you kind of see this broadening of the customer base that has just continued for a number of years now. And then as we launch MACI Arthro, those new targets, again, they're doing high volumes of cartilage repair already.

Speaker 2

MACI will be a new option for them. But I'm pretty sure they're aware of sort of MACI and its profile from a clinical and efficacy perspective.

Speaker 6

Understood. Thanks for that. And also wanted to just get an update on business development initiatives. And I think your team is out there on the hunt, the profitability profile inflecting, how would you have investors think about those efforts and M and A opportunities out there to bring even more portfolios into the under the Vericel roof? Thanks.

Speaker 2

Yes. Our corporate development strategy has been quite consistent over the number of years. And obviously, we have a lot ahead of us with new product launches and continued high growth with our core business. But as you said, we have a dedicated effort on the business development front, always looking at opportunities in the sports medicine space that would be synergistic with MACI for our customer base in the burn care space and then probably relatively less so, but also given our expertise in advanced cell therapy development, manufacturing, commercialization, a lot of folks come to us with different opportunities as well. I'd say for us, the hurdles are relatively high.

Speaker 2

You all know and have seen sort of BD deals sort of go awry even in our space. And so we're very focused on maintaining the innovation profile of our portfolio. I think we're in a relatively unique position where our products are the only approved products of their kind in our space. And so that's where it all starts. And then we also have a unique financial profile.

Speaker 2

And so we're very focused on making sure we maintain our high revenue growth transaction should be pretty comfortable, we probably looked at it, but we have a pretty high bar and we'll add products and portfolios as it makes sense for us. But you're right, we certainly have the financial sort of firepower to be able to do that. And it's all about just making sure it's the right fit for us.

Speaker 1

Appreciate that Nick. Thank you.

Operator

Thank you. Our next question comes from Jeffrey Cohen from Ladenburg Thalmann and Company. Your line is now open.

Speaker 7

Hi, Nick and Joe. Good morning. Couple of questions from our end. So, firstly, could you talk about NexoBrid and pediatric indication and how that might go out as far as the kind of incentives in addition to the current 70 and we're not seeing some of the same commercial folks as well focus on that area?

Speaker 2

Yes, I think I had a little bit of a hard time hearing you, Jeff, but I think I have the gist of the question. So yes, upon approval, obviously, we have the 17 territories that I mentioned as we've implemented kind of our sales force optimization for the burn care franchise. So on average, it's about 1 center per territory. And so it's certainly they're already in the target base for these reps. But until the approval comes, they're obviously not sort of in there promoting the use of NexoBrid.

Speaker 2

We certainly have seen a few centers using it, these pediatric burn centers. They're free to do that. We just can't promote it. But on day 1, we've got a playbook for the reps to go out and sort of promote NexoBrid. And it will be we'll have to go through the same process, right, P and T committee approval and establishing ordering protocols and patient protocols, etcetera.

Speaker 2

But we do think there'll be a pretty meaningful impact over time. Roughly 25% to 30% of hospitalized burn patients are pediatric patients. And so as I mentioned on the call, we think this will certainly aid in NexoBrid uptake over time.

Speaker 7

Perfect. And then lastly, Josh, Joe, I did hear you call out the burn franchise for Q3 on your guide of 10.5%. Can you give us a composition or some flavor beneath that on NexoBrid versus Epicel, please?

Speaker 3

Sorry, Jeff. I'm having a hard time in the morning. This is Gerald. Are you asking about kind of Q3 revenue composition within the guidance? Within burns.

Speaker 7

Within burns. Yes. Thank you.

Speaker 3

Yes. So, I'd say if you kind of look at burn care and you kind of think about the framework there, Nick talked about this a bit, but in the first half of the year, Epicel obviously can vary a bit by quarter and we saw that, but pretty encouraging that it was kind of over the $9,000,000 mark, grew in the double digits from a run rate perspective, also from a year over year perspective on total revenue for Epicel. So as we think about the back half and I think Q3 is certainly part of that equation, we expect Epicel to kind of be at that higher run rate, calling in that $9,000,000 to $10,000,000 range. Don't know exactly what it's going to look like across quarters, but I think that's a reasonable assumption. And then in terms of NexoBrid, I'd say, as we talked about in the prepared remarks, some strong progression from Q1 to Q2.

Speaker 3

As we think about the second half of the year and think about the Q3, that should certainly continue that progression kind of throughout the year. So difficult to say exactly what the mix will be, but we certainly expect Epicel to kind of remain at these higher run rates and have a strong second half of the year. We're seeing strong indicators there and NexoBrid is moving in the right direction as well. So I'd say both of those are part of it, that's how we're thinking about Q3 and the back half.

Speaker 7

Perfect. Thanks for taking the questions.

Speaker 3

Thanks, Jeff. Thank you.

Operator

Thank you. Our next question comes from Swayampakula Ramakanth from HCW. Your line is now open.

Speaker 8

Thank you. Good morning, Nick and Joe. A quick question on the burn franchise. If I heard everything correctly, when you're talking, Nick, about conversion rates, you are saying something about Epicel biopsy and conversion there. Did some of that spillover into the Q3 because you are also talking about some timing and I'm just trying to have an idea if

Speaker 7

any of

Speaker 8

the revenue that you would have expected in the second quarter spilled over into that?

Speaker 2

Yes. Thanks, RK. So yes, as I mentioned, just kind of the top of the funnel again was pretty consistent with prior quarters. And yes, I did mention that there's always going to be patient health variables that impact timing of treatments. And we certainly did see, particularly late in the quarter, cases that were pushed into or rescheduled into Q3.

Speaker 2

Again, that happens because these patients have a lot of other injuries or infections that prevent surgeries from taking place. So the short answer is yes, but that is relatively common.

Speaker 8

Okay. And then a quick question on the pediatric indication of NexoBrid. You said you have 70 centers, burn centers already had their PTN approval. If you get the pediatric indication on board, how many of these centers also do pediatric? And also would you add centers outside of this 70, which are just only for pediatric?

Speaker 8

I'm not very good at the burn market.

Speaker 2

Yes. So let me just kind of give a quick overview. So as you know, in the launch, there's about 140 burn centers in the U. S. That are accredited by the ABA.

Speaker 2

We target we break them up into 3 tiers and we really focused on the 90 Tier 1 and Tier 2 centers with our initial launch. And that's kind of what we've been reporting on in terms of the 70 submissions, the 40 approvals, etcetera. There's about 20 pediatric burn centers that will now we will actively promote to. So certainly in some of our existing centers, pediatric patients can be treated. They don't all get treated at the pediatric centers.

Speaker 2

But again, we can't be in there promoting. So you'll have some that pediatric centers that used the product a few, but many of them were sort of waiting for the pediatric indication. And so we think as I mentioned on the call that it will be have a meaningful impact on NexoBrid uptake as we get out there and get these centers through the process and they start treating this pediatric burn population.

Speaker 8

Thank you. Looking forward to the exciting second half with this new introductions.

Speaker 2

Okay. Thanks, RK.

Operator

Thank you. I'm showing no further questions at this time. I would now like to turn it back to Nick Colangelo for closing remarks.

Speaker 2

Hey, well, thank you everyone for your questions and continued interest in Vericel. As we mentioned, the company had a very strong first half of the year. We expect to continue to deliver sustained high revenue and profit growth for the remainder of the year and beyond. And we look forward to providing further updates on our progress on our next call. So thanks again and have a great day.

Operator

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

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Key Takeaways

  • Vericel generated record Q2 revenue of nearly $52.7M with a 70% gross margin (+430 bps YoY) and 42% adjusted EBITDA growth. The company reaffirmed its 2024 guidance of >20% revenue growth and raised gross margin and EBITDA margin to 71% and 21%, respectively.
  • MACI delivered a record $44.1M in Q2 revenue (up 21% YoY), driven by the highest monthly biopsies and surgeon adoption since launch, with increasing biopsies per surgeon and conversion rates supporting sustained growth.
  • The custom MACI Arthro instrument kit is FDA‐registered and slated to launch later this quarter, expanding the target surgeon base from 5,000 to 7,000 and addressing a ~$3 billion market of smaller cartilage defects.
  • NexoBrid revenue nearly doubled in Q2 as ~70 burn centers submitted P&T packages and >40 gained approval, and an imminent pediatric indication will add ~20 pediatric burn centers to boost uptake.
  • Epicel’s H1 run rate exceeded $9M per quarter with double‐digit YoY growth despite Q2 variability, and Q3 has started strongly in biopsies, treatments and graft volumes.
A.I. generated. May contain errors.
Earnings Conference Call
Vericel Q2 2024
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