vcel-20230930

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: September 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 November 2, 2023, 47,724,543 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	8
	Notes to Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30
	PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3.	Defaults Upon Senior Securities	31
Item 4.	Mine Safety Disclosures	31
Item 5.	Other Information	31
Item 6.	Exhibits	33
Exhibit Index		33
Signatures		34

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

VERICEL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, amounts in thousands)


	September 30,		December 31,
	2023		2022
ASSETS
Current assets:
Cash and cash equivalents	$	60,473	$	51,067
Restricted cash	23,088		—
Short-term investments	44,870		68,471
Accounts receivable (net of allowance for doubtful accounts of $44 and $47, respectively)	39,729		46,539
Inventory	12,621		15,986
Other current assets	5,430		4,803
Total current assets	186,211		186,866
Property and equipment, net	30,216		15,837
Intangible assets, net	7,031		7,500
Right-of-use assets	73,294		41,535
Long-term investments	20,231		19,962
Other long-term assets	1,142		1,303
Total assets	$	318,125	$	273,003
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	15,051	$	16,930
Accrued expenses	13,628		16,190
Current portion of operating lease liabilities	7,267		4,302
Other current liabilities	—		41
Total current liabilities	35,946		37,463
Operating lease liabilities	77,734		43,268
Other long-term liabilities	65		—
Total liabilities	113,745		80,731
COMMITMENTS AND CONTINGENCIES (Note 12)
Shareholders’ equity:
Common stock, no par value; shares authorized — 75,000; shares issued and outstanding — 47,684 and 47,253, respectively	621,013		593,245
Accumulated other comprehensive loss	(463)		(978)
Accumulated deficit	(416,170)		(399,995)
Total shareholders’ equity	204,380		192,272
Total liabilities and shareholders’ equity	$	318,125	$	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 September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Product sales, net	$	45,581	$	38,326	$	132,520	$	111,004
Other revenue	—		225		—		667
Total revenue	45,581		38,551		132,520		111,671
Cost of product sales	14,973		13,318		45,451		40,132
Gross profit	30,608		25,233		87,069		71,539
Research and development	5,676		5,046		16,141		14,698
Selling, general and administrative	29,989		26,975		90,123		79,984
Total operating expenses	35,665		32,021		106,264		94,682
Loss from operations	(5,057)		(6,788)		(19,195)		(23,143)
Other income (expense):
Interest income	1,262		342		3,196		578
Interest expense	(150)		(105)		(444)		(143)
Other (expense) income	(1)		(5)		(18)		98
Total other income	1,111		232		2,734		533
Loss before income taxes	(3,946)		(6,556)		(16,461)		(22,610)
Income tax (benefit) expense	(286)		21		(286)		21
Net loss	$	(3,660)	$	(6,577)	$	(16,175)	$	(22,631)
Net loss per common share:
Basic and diluted	$	(0.08)	$	(0.14)	$	(0.34)	$	(0.48)

Weighted-average common shares outstanding:
Basic and diluted	47,649		47,182		47,537		47,096

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

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VERICEL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited, amounts in thousands)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net loss	$	(3,660)	$	(6,577)	$	(16,175)	$	(22,631)
Other comprehensive loss:
Unrealized gain (loss) on investments	158		(291)		515		(992)
Comprehensive loss	$	(3,502)	$	(6,868)	$	(15,660)	$	(23,623)

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

SEC Form 10-Q filed by Vericel Corporation