vcel-20240630

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, 2024

☐ 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 24, 2024, 49,030,175 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	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	28
	PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3.	Defaults Upon Senior Securities	28
Item 4.	Mine Safety Disclosures	28
Item 5.	Other Information	28
Item 6.	Exhibits	30
Exhibit Index		30
Signatures		31

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,
	2024		2023
ASSETS
Current assets:
Cash and cash equivalents	$	50,291	$	69,088
Restricted cash	25,563		17,778
Short-term investments	52,217		40,469
Accounts receivable (net of allowance for doubtful accounts of $10 and $43, respectively)	47,996		58,356
Inventory	14,887		13,087
Other current assets	6,432		6,853
Total current assets	197,386		205,631
Property and equipment, net	73,086		41,635
Intangible assets, net	6,563		6,875
Right-of-use assets	73,020		73,462
Long-term investments	26,120		25,283
Other long-term assets	664		771
Total assets	$	376,839	$	353,657
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	25,216	$	22,347
Accrued expenses	12,856		17,215
Current portion of operating lease liabilities	5,791		6,187

Total current liabilities	43,863		45,749
Operating lease liabilities	89,801		81,856
Other long-term liabilities	198		100
Total liabilities	133,862		127,705
COMMITMENTS AND CONTINGENCIES (Note 12)
Shareholders’ equity:
Common stock, no par value; shares authorized — 75,000; shares issued and outstanding — 48,862 and 47,829, respectively	654,971		629,229
Accumulated other comprehensive loss	(273)		(100)
Accumulated deficit	(411,721)		(403,177)
Total shareholders’ equity	242,977		225,952
Total liabilities and shareholders’ equity	$	376,839	$	353,657

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,
	2024		2023		2024		2023
Product sales, net	$	52,662	$	45,922	$	103,943	$	86,939

Total revenue	52,662		45,922		103,943		86,939
Cost of product sales	16,061		15,981		31,988		30,478
Gross profit	36,601		29,941		71,955		56,461
Research and development	7,363		5,253		13,781		10,465
Selling, general and administrative	35,269		30,649		69,669		60,134
Total operating expenses	42,632		35,902		83,450		70,599
Loss from operations	(6,031)		(5,961)		(11,495)		(14,138)
Other income (expense):
Interest income	1,510		1,095		3,272		1,934
Interest expense	(153)		(149)		(306)		(294)
Other expense	(8)		(5)		(15)		(17)
Total other income	1,349		941		2,951		1,623


Net loss	$	(4,682)	$	(5,020)	$	(8,544)	$	(12,515)
Net loss per common share:
Basic and diluted	$	(0.10)	$	(0.11)	$	(0.18)	$	(0.26)

Weighted-average common shares outstanding:
Basic and diluted	48,686		47,572		48,413		47,480

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,
	2024		2023		2024		2023
Net loss	$	(4,682)	$	(5,020)	$	(8,544)	$	(12,515)
Other comprehensive (loss) gain:
Unrealized (loss) gain on investments	(28)		15		(173)		357
Comprehensive loss	$	(4,710)	$	(5,005)	$	(8,717)	$	(12,158)

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, 2023	47,829	$	629,229	$	(100)	$	(403,177)	$	225,952
Net loss	—	—		—		(3,862)		(3,862)
Stock-based compensation expense	—	9,834		—		—		9,834
Stock option exercises	487	6,779		—		—		6,779
Shares issued under the Employee Stock Purchase Plan	9	247		—		—		247
Issuance of stock for restricted stock unit vesting	265	—		—		—		—
Restricted stock withheld for employee tax remittance	(101)	(4,909)		—		—		(4,909)
Unrealized loss on investments	—	—		(145)		—		(145)
BALANCE, MARCH 31, 2024	48,489	$	641,180	$	(245)	$	(407,039)	$	233,896
Net loss	—	—		—		(4,682)		(4,682)
Stock-based compensation expense	—	9,520		—		—		9,520
Stock option exercises	329	4,020		—		—		4,020
Shares issued under the Employee Stock Purchase Plan	14	414		—		—		414
Issuance of stock for restricted stock unit vesting	34	—		—		—		—
Restricted stock withheld for employee tax remittance	(4)	(163)		—		—		(163)
Unrealized loss on investments	—	—		(28)		—		(28)
BALANCE, JUNE 30, 2024	48,862	$	654,971	$	(273)	$	(411,721)	$	242,977


	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

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

Table of Contents

VERICEL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, amounts in thousands)


	Six Months Ended June 30,
	2024		2023
Operating activities:
Net loss	$	(8,544)	$	(12,515)
Adjustments to reconcile net loss to net cash flows from operating activities:
Depreciation and amortization expense	2,701		2,329
Stock-based compensation expense	19,354		17,492
Amortization of premiums and discounts on marketable securities	(365)		(504)
Amortization of debt issuance costs	108		108
Non-cash lease costs	3,480		2,466
Other	15		17
Changes in operating assets and liabilities:
Inventory	(1,800)		2,103
Accounts receivable	10,360		8,220
Other current assets	421		(241)
Accounts payable	(209)		956
Accrued expenses	(4,393)		(2,219)
Operating lease liabilities	4,511		(184)
Other non-current assets and liabilities, net	98		28
Net cash provided by operating activities	25,737		18,056
Investing activities:
Purchases of investments	(35,700)		(28,537)
Sales and maturities of investments	23,307		42,038
Expenditures for property and equipment	(30,778)

SEC Form 10-Q filed by Vericel Corporation