vcel-20230630

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED: June 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-35280

VERICEL CORPORATION

(Exact name of registrant as specified in its charter)


Michigan						94-3096597
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

64 Sidney Street

Cambridge, MA 02139

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (617) 588-5555

Securities registered pursuant to Section 12(b) of the Act:


Title of Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock (No par value)	VCEL	NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

As of July 27, 2023, 47,642,194 shares of Common Stock, no par value per share, were outstanding.

Table of Contents

VERICEL CORPORATION

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS


		Page
	PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited):	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive Loss	5
	Condensed Consolidated Statements of Shareholders’ Equity	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	29
	PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3.	Defaults Upon Senior Securities	30
Item 4.	Mine Safety Disclosures	30
Item 5.	Other Information	30
Item 6.	Exhibits	31
Exhibit Index		31
Signatures		32

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

VERICEL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, amounts in thousands)


	June 30,		December 31,
	2023		2022
ASSETS
Current assets:
Cash and cash equivalents	$	43,023	$	51,067
Restricted cash	27,794		—
Short-term investments	54,808		68,471
Accounts receivable (net of allowance for doubtful accounts of $44 and $47, respectively)	38,319		46,539
Inventory	13,883		15,986
Other current assets	5,044		4,803
Total current assets	182,871		186,866
Property and equipment, net	23,408		15,837
Intangible assets, net	7,188		7,500
Right-of-use assets	75,063		41,535
Long-term investments	20,985		19,962
Other long-term assets	1,196		1,303
Total assets	$	310,711	$	273,003
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	14,401	$	16,930
Accrued expenses	13,971		16,190
Current portion of operating lease liabilities	7,218		4,302
Other current liabilities	21		41
Total current liabilities	35,611		37,463
Operating lease liabilities	76,144		43,268
Other long-term liabilities	28		—
Total liabilities	111,783		80,731
COMMITMENTS AND CONTINGENCIES (Note 12)
Shareholders’ equity:
Common stock, no par value; shares authorized — 75,000; shares issued and outstanding 47,616 and 47,253, respectively	612,059		593,245
Accumulated other comprehensive loss	(621)		(978)
Accumulated deficit	(412,510)		(399,995)
Total shareholders’ equity	198,928		192,272
Total liabilities and shareholders’ equity	$	310,711	$	273,003

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

Table of Contents

VERICEL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, amounts in thousands, except per share amounts)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Product sales, net	$	45,922	$	36,826	$	86,939	$	72,678
Other revenue	—		220		—		442
Total revenue	45,922		37,046		86,939		73,120
Cost of product sales	15,981		14,192		30,478		26,814
Gross profit	29,941		22,854		56,461		46,306
Research and development	5,253		4,792		10,465		9,652
Selling, general and administrative	30,649		27,144		60,134		53,009
Total operating expenses	35,902		31,936		70,599		62,661
Loss from operations	(5,961)		(9,082)		(14,138)		(16,355)
Other income (expense):
Interest income	1,095		148		1,934		236
Interest expense	(149)		(20)		(294)		(38)
Other (expense) income	(5)		(9)		(17)		103
Total other income	941		119		1,623		301


Net loss	$	(5,020)	$	(8,963)	$	(12,515)	$	(16,054)
Net loss per common share:
Basic and diluted	$	(0.11)	$	(0.19)	$	(0.26)	$	(0.34)

Weighted-average common shares outstanding:
Basic and diluted	47,572		47,117		47,480		47,052

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

Table of Contents

VERICEL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited, amounts in thousands)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net loss	$	(5,020)	$	(8,963)	$	(12,515)	$	(16,054)
Other comprehensive loss:
Unrealized gain (loss) on investments	15		(242)		357		(701)
Comprehensive loss	$	(5,005)	$	(9,205)	$	(12,158)	$	(16,755)

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

Table of Contents

VERICEL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited, amounts in thousands)


	Common Stock			Accumulated Other Comprehensive Gain (Loss)		Accumulated Deficit		Total Shareholders’ Equity
	Shares	Amount
BALANCE, DECEMBER 31, 2022	47,253	$	593,245	$	(978)	$	(399,995)	$	192,272
Net loss	—	—		—		(7,495)		(7,495)
Stock-based compensation expense	—	8,731		—		—		8,731
Stock option exercises	132	2,009		—		—		2,009
Shares issued under the Employee Stock Purchase Plan	11	216		—		—		216
Issuance of stock for restricted stock unit vesting	183	—		—		—		—
Restricted stock withheld for employee tax remittance	(72)	(2,097)		—		—		(2,097)
Unrealized gain on investments	—	—		342		—		342
BALANCE, MARCH 31, 2023	47,507	$	602,104	$	(636)	$	(407,490)	$	193,978
Net loss	—	—		—		(5,020)		(5,020)
Stock-based compensation expense	—	8,761		—		—		8,761
Stock option exercises	68	889		—		—		889
Shares issued under the Employee Stock Purchase Plan	18	384		—		—		384
Issuance of stock for restricted stock unit vesting	26	—		—		—		—
Restricted stock withheld for employee tax remittance	(3)	(79)		—		—		(79)
Unrealized gain on investments	—	—		15		—		15
BALANCE, JUNE 30, 2023	47,616	$	612,059	$	(621)	$	(412,510)	$	198,928


	Common Stock			Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Shareholders’ Equity
	Shares	Amount
BALANCE, DECEMBER 31, 2021	46,880	$	553,902	$	(154)	$	(383,286)	$	170,462
Net loss	—	—		—		(7,091)		(7,091)
Stock-based compensation expense	—	9,531		—		—		9,531
Stock option exercises	125	1,155		—		—		1,155
Shares issued under the Employee Stock Purchase Plan	9	310		—		—		310
Issuance of stock for restricted stock unit vesting	108	—		—		—		—
Restricted stock withheld for employee tax remittance	(41)	(1,423)		—		—		(1,423)
Unrealized loss on investments	—	—		(459)		—		(459)
BALANCE, MARCH 31, 2022	47,081	$	563,475	$	(613)	$	(390,377)	$	172,485
Net loss	—	—		—		(8,963)		(8,963)
Stock-based compensation expense	—	10,808		—		—		10,808
Stock option exercises	32	428		—		—		428
Shares issued under the Employee Stock Purchase Plan	10	318		—		—		318
Issuance of stock for restricted stock unit vesting	19	—		—		—		—
Restricted stock withheld for employee tax remittance	(1)	(18)		—		—		(18)
Unrealized loss on investments	—	—		(242)		—		(

SEC Form 10-Q filed by Vericel Corporation