vcel-20240930

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, 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 October 31, 2024, 49,358,408 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	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	29
Item 3.	Defaults Upon Senior Securities	29
Item 4.	Mine Safety Disclosures	29
Item 5.	Other Information	29
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)


	September 30,		December 31,
	2024		2023
ASSETS
Current assets:
Cash and cash equivalents	$	53,681	$	69,088
Restricted cash	16,669		17,778
Short-term investments	48,053		40,469
Accounts receivable (net of allowance for doubtful accounts of $12 and $43, respectively)	48,479		58,356
Inventory	15,756		13,087
Other current assets	7,882		6,853
Total current assets	190,520		205,631
Property and equipment, net	88,413		41,635
Intangible assets, net	6,406		6,875
Right-of-use assets	71,561		73,462
Long-term investments	32,895		25,283
Other long-term assets	610		771
Total assets	$	390,405	$	353,657
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	20,884	$	22,347
Accrued expenses	14,343		17,215
Current portion of operating lease liabilities	6,119		6,187

Total current liabilities	41,346		45,749
Operating lease liabilities	91,344		81,856
Other long-term liabilities	243		100
Total liabilities	132,933		127,705
COMMITMENTS AND CONTINGENCIES (Note 12)
Shareholders’ equity:
Common stock, no par value; shares authorized — 75,000; shares issued and outstanding — 49,265 and 47,829, respectively	669,735		629,229
Accumulated other comprehensive gain (loss)	359		(100)
Accumulated deficit	(412,622)		(403,177)
Total shareholders’ equity	257,472		225,952
Total liabilities and shareholders’ equity	$	390,405	$	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 September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Product sales, net	$	57,905	$	45,581	$	161,848	$	132,520

Total revenue	57,905		45,581		161,848		132,520
Cost of product sales	16,252		14,973		48,240		45,451
Gross profit	41,653		30,608		113,608		87,069
Research and development	6,093		5,676		19,874		16,141
Selling, general and administrative	38,025		29,989		107,694		90,123
Total operating expenses	44,118		35,665		127,568		106,264
Loss from operations	(2,465)		(5,057)		(13,960)		(19,195)
Other income (expense):
Interest income	1,578		1,262		4,850		3,196
Interest expense	(154)		(150)		(460)		(444)
Other income (expense)	140		(1)		125		(18)
Total other income	1,564		1,111		4,515		2,734
Loss before income taxes	(901)		(3,946)		(9,445)		(16,461)
Income tax benefit	—		(286)		—		(286)
Net loss	$	(901)	$	(3,660)	$	(9,445)	$	(16,175)
Net loss per common share:
Basic and diluted	$	(0.02)	$	(0.08)	$	(0.19)	$	(0.34)

Weighted-average common shares outstanding:
Basic and diluted	49,085		47,649		48,639		47,537

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 September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net loss	$	(901)	$	(3,660)	$	(9,445)	$	(16,175)
Other comprehensive income (loss):
Unrealized gain on investments	632		158		459		515
Comprehensive loss	$	(269)	$	(3,502)	$	(8,986)	$	(15,660)

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
Net loss	—	—		—		(901)		(901)
Stock-based compensation expense	—	9,224		—		—		9,224
Stock option exercises	382	5,442		—		—		5,442
Shares issued under the Employee Stock Purchase Plan	9	353		—		—		353
Issuance of stock for restricted stock unit vesting	16	—		—		—		—
Restricted stock withheld for employee tax remittance	(4)	(255)		—		—		(255)
Unrealized gain on investments	—	—		632		—		632
BALANCE, SEPTEMBER 30, 2024	49,265	$	669,735	$	359	$	(412,622)	$	257,472

Table of Contents


	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		—

SEC Form 10-Q filed by Vericel Corporation