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VC

Vericel Corp (VCEL)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered record MACI revenue ($46.3M, +15% YoY) and total revenue of $52.6M, but EPS (-$0.23) missed consensus as Epicel revenue came in below expectations due to patient health-related cancellations and lower grafts per patient .
  • Management raised full-year profitability guidance (gross margin to 74% per press release; CFO stated 75% on the call) and reaffirmed full-year revenue growth of 20–23%; Q2 revenue guided to $64–$66M with MACI ~$54M and margins stepping up meaningfully .
  • MACI Arthro launch indicators strengthened: ~400 surgeons trained, biopsy growth >30% among trained surgeons; early signs of broader use beyond femoral condyles (e.g., trochlea) support sustained growth trajectory into 2026 .
  • Burn Care mixed: NexoBrid revenue surged (+207% YoY; +31% QoQ), while Epicel revenue was soft in Q1 but showing a strong start in Q2 with graft volume already exceeding Q1 levels .
  • Tariff exposure expected to be negligible given domestic manufacturing and safety stock; this removes a macro overhang and supports guidance credibility .

What Went Well and What Went Wrong

What Went Well

  • Record MACI revenue and total company revenue in a seasonally low quarter, driven by robust MACI biopsy and surgeon activity; “record first quarter MACI revenue and total Company revenue” (CEO) .
  • Strong MACI Arthro KPIs: ~400 surgeons trained to date, biopsy growth >30% among trained surgeons, early usage expanding to trochlea defects; “we’ve trained approximately 400 MACI Arthro surgeons…year-to-date biopsy growth over 30% for trained surgeons” (CEO) .
  • NexoBrid momentum: revenue +207% YoY and +31% QoQ; consistent ordering centers grew units/order; strong ABA engagement indicates deepening adoption .

What Went Wrong

  • EPS missed consensus amid lower Epicel revenue caused by unusually high case cancellations (patient health issues), fewer grafts per patient, and timing shifting surgeries to Q2; margins were adversely impacted by Epicel shortfall in Q1 .
  • Adjusted EBITDA declined to $3.2M (6% margin) vs $7.2M (14%) in Q1 2024, reflecting higher OpEx tied to headcount and new facility depreciation and tech transfer activities .
  • Epicel variability remains a forecasting challenge; management reiterates the franchise’s lumpy cadence and focuses on trends over longer periods .

Financial Results

Consolidated Performance vs Prior Periods

MetricQ1 2024Q4 2024Q1 2025
Total Revenue ($USD Millions)$51.3 $75.4 $52.6
Diluted EPS ($)-$0.08 $0.38 -$0.23
Gross Margin (%)69% 78% 69%
Adjusted EBITDA ($USD Millions)$7.2 $29.9 $3.2
Adjusted EBITDA Margin (%)14% 40% 6%

Segment Revenue Breakdown

SegmentQ1 2024 ($M)Q4 2024 ($M)Q1 2025 ($M)
MACI$40.2 $68.3 $46.3
Epicel$10.7 $6.0 $5.0
NexoBrid$0.4 $1.0 $1.3
Burn Care Total$11.1 $7.0 $6.3

KPIs and Balance Sheet

KPIQ1 2024Q1 2025
Operating Cash Flow ($M)—$6.6
Cash, Restricted Cash & Investments ($M)—~$162
Cash & Equivalents ($M)—$73.5
Short-term Investments ($M)—$39.4
Accounts Receivable ($M)—$52.9
Total Operating Expenses ($M)$40.8 $49.1
Gross Profit ($M)$35.4 $36.3

Actual vs Wall Street Consensus (Q1 2025)

MetricActual Q1 2025Consensus Q1 2025
Total Revenue ($USD Millions)$52.6 $53.86*
Diluted EPS ($)-$0.23 -$0.153*

Values with asterisks (*) retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue Growth (%)FY 202520%–23% 20%–23% Maintained
Gross Margin (%)FY 202573%–74% 74% (press release) ; 75% (CFO on call) Raised
Adjusted EBITDA Margin (%)FY 202525%–26% 26% Raised
Total Revenue Growth (%)Q2 2025—22%–25% New
Total Revenue ($)Q2 2025—~$64–$66M; gross margin low-70% range; adj. EBITDA margin ~20% New
MACI Revenue Growth (%)Q2 2025—~22%–24% New
MACI Revenue ($)Q2 2025—~$54M New

Note: Press release lists FY gross margin guidance at 74%; CFO stated 75% during the call .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
MACI Arthro adoptionApproval and strong early interest; dozens of cases scheduled; 250 surgeons trained; trained surgeon cohort outperforming on biopsies ~400 surgeons trained; biopsy growth >30% among trained surgeons; expanding use to trochlea defects; planning sales force expansion in H2 2025 Accelerating
Burn Care cadenceQ3 record Epicel revenue; Q4 Epicel below run-rate due to patient health issues; NexoBrid orders +42% QoQ Q1 Epicel soft on cancellations and lower grafts; strong Q2 start with graft volume already > Q1; NexoBrid +207% YoY, +31% QoQ Variable but improving
Tariffs/macroMonitoring macro; building new facility for scale Tariffs expected negligible impact on COGS and margins 2025–2026; safety stock maintained Neutral/Low risk
Regulatory/R&DNexoBrid pediatric approval; MACI ankle IND planned H1 2025; Phase 3 to start H2 2025 On track to initiate MACI Ankle Phase 3 in H2 2025; OUS opportunity evaluation underway On track
Manufacturing/scaleNew HQ/manufacturing complete; commercial manufacturing planned in 2026 Tech transfer underway; margins to increase through year; cash generation inflecting Scaling

Management Commentary

  • “Based on the positive trends across the business to start the second quarter, we expect strong revenue growth and profitability in the second quarter and for the remainder of the year…” (CEO) .
  • “We’ve trained approximately 400 MACI Arthro surgeons…year-to-date biopsy growth over 30% for trained surgeons.” (CEO) .
  • “We expect a very strong second quarter for MACI with revenue growth of 22% to 24%…MACI revenue expected to be approximately $54 million.” (CFO) .
  • “Epicel revenue was below our initial quarterly guidance, primarily as a result of a very high percentage of canceled orders related to patient health issues…we expect margins to be significantly higher in the second quarter.” (CFO) .
  • “We anticipate that tariffs…will have minimal impact…and…negligible [impact] on cost of goods sold and gross margin in 2025 and 2026.” (Press release) .

Q&A Highlights

  • MACI Arthro market expansion: Management sees additive opportunity in femoral condyles (~20k TAM) and emerging usage in trochlea defects (~10k TAM), broadening addressable market beyond patella; learning curve viewed as quick with multiple training modes .
  • Seasonality and pacing: Despite typical seasonality, MACI growth expected to remain strong across 2025; trained surgeon cohort could drive hundreds of incremental biopsies and set a strong exit rate into 2026 .
  • Epicel cadence/guidance: Variability highlighted; Q1 softness tied to cancellations and lower grafts per patient, with much stronger performance to start Q2; high single-digit full-year Epicel growth driven primarily by price .
  • Sales force expansion: MACI sales force likely to expand in H2 2025 focusing on high-volume territories; designed to avoid disruption and support expected growth from Arthro .
  • OUS opportunities and tariffs: OUS MACI expansion evaluation ongoing; tariff impacts expected negligible due to domestic manufacturing and safety stock .

Estimates Context

  • Q1 2025 revenue and EPS missed consensus: Revenue $52.6M vs $53.86M*; EPS -$0.23 vs -$0.153*; drivers included Epicel case cancellations and fewer grafts per patient, with surgeries shifting into Q2, and one fewer selling day versus prior year impacting MACI .
  • Q2 2025 setup: Company guides total revenue ~$64–$66M and MACI ~$54M; consensus revenue is ~$64.49M*, broadly aligned with guidance. Margin guidance calls for gross margin in low-70% and adjusted EBITDA margin ~20% .

Values with asterisks (*) retrieved from S&P Global.

Key Takeaways for Investors

  • MACI growth drivers remain strong; MACI Arthro is catalyzing biopsy growth and broadening indications (including trochlea), supporting upside potential into H2 2025 and 2026 .
  • Profitability trajectory intact despite Q1 margin dip; guidance raised on gross margin and adjusted EBITDA margin, with Q2 margins expected to rebound materially .
  • Burn Care volatility persists near term, but early Q2 graft volumes and NexoBrid adoption trends point to sequential improvement and contribution consistency over time .
  • Tariff and macro risks minimal for 2025–2026 given domestic manufacturing footprint and safety stock, reducing external headwind risk to margins .
  • Near-term trading catalysts: Q2 beat potential on MACI execution and Epicel rebound; watch surgeon training cadence, biopsy conversion timing, and sales force expansion plans .
  • Medium-term thesis: MACI Arthro adoption, new facility scale-up (2026), MACI Ankle clinical progress (Phase 3 start H2 2025), and possible OUS expansion underpin sustained double-digit revenue growth with margin expansion .