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VC

Vericel Corp (VCEL)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered record profitability: gross margin 78%, adjusted EBITDA margin 40%, and diluted EPS $0.38, with total revenue $75.4M and net income $19.8M . MACI revenue was $68.3M (+21% YoY, +53% QoQ) and Burn Care was $7.0M (Epicel $6.0M, NexoBrid $1.0M) .
  • Margins and profitability came in ahead of both guidance and preannounced results, reinforcing top-tier P&L leverage and cash generation; operating cash flow in Q4 was $22.2M .
  • 2025 guidance reaffirmed: total revenue growth 20–23%, gross margin 73–74%, and adjusted EBITDA margin 25–26%; mid-term targets raised to high-70% gross margin and high-30% adjusted EBITDA by 2029 .
  • Launch momentum: ~250 MACI Arthro surgeons trained to date, with trained surgeons showing faster biopsy growth; NexoBrid hospital orders rose 42% QoQ in Q4, supporting adoption momentum into 2025 .

What Went Well and What Went Wrong

What Went Well

  • Record Q4 profitability: gross margin 78% (+~300 bps YoY) and adjusted EBITDA margin 40% (+~530 bps YoY) with net income up 52% to $19.8M; CFO noted margins were ahead of guidance and preannounced results .
  • MACI execution: record Q4 revenue $68.3M (+21% YoY; +53% QoQ) on broad-based strength in implants, surgeons, and biopsies; MACI rep productivity reached $2.6M per rep in 2024 .
  • Burn Care franchise built durability: NexoBrid hospital orders +42% QoQ in Q4 with momentum carrying into 2025; Epicel FY revenue grew 16% despite quarterly variability .

What Went Wrong

  • Epicel revenue below recent run rate in Q4, driven by fewer patient treatments and fewer grafts per patient, highlighting episodic variability tied to patient health and treatment timing .
  • Operating expenses increased (Q4 $40.0M; FY $167.6M) due to headcount, sales/marketing for MACI Arthro, and new facility lease costs; 2025 OpEx guided to ~$195M including ~$10M incremental depreciation/building expenses .
  • Order-to-revenue timing mismatch for NexoBrid (hospital orders vs. specialty distributor purchases) led to modest Q4 revenue despite stronger underlying demand signals .

Financial Results

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Total Revenue ($USD Millions)$65.0 $52.7 $57.9 $75.4
Diluted EPS ($)$0.26 ($0.10) ($0.02) $0.38
Gross Margin %75% 70% 72% 78%
Adjusted EBITDA Margin %34% 12% 17% 40%
Total Operating Expenses ($USD Millions)$35.8 $42.6 $44.1 $40.0
Segment Revenue ($USD Millions)Q4 2023Q2 2024Q3 2024Q4 2024
MACI$56.7 $44.1 $44.7 $68.3
Epicel$7.8 $7.8 $12.2 $6.0
NexoBrid$0.5 $0.8 $1.1 $1.0
Balance Sheet (Selected) ($USD Millions)Dec 31, 2023Dec 31, 2024
Cash & Equivalents$69.1 $74.5
Restricted Cash$17.8 $10.5
Short-term Investments$40.5 $41.7
Long-term Investments$25.3 $39.9
No Debt (Qualitative)No debt No debt

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue Growth (%)FY 202520–23% 20–23% Maintained/Reaffirmed
Gross Margin (%)FY 202573–74% 73–74% Maintained
Adjusted EBITDA Margin (%)FY 202525–26% 25–26% Maintained
MACI Revenue ($)Q1 2025N/A$45–$47M New detail
Burn Care Revenue ($)Q1 2025N/A$7–$8M New detail
Operating Expenses ($)FY 2025N/A≈$195M; includes ≈$10M incremental building-related New detail
CapEx ($)H1 2025 / LTN/AH1: $15–$20M; thereafter mid-single-digit $M run rate New detail
Mid-term Gross Margin Target (%)202970%+ (prior mid/long-term view) High-70% range Raised
Mid-term Adj. EBITDA Margin Target (%)202930%+ (prior mid-range target) High-30% range Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024, Q3 2024)Current Period (Q4 2024)Trend
MACI Arthro launch & utilizationApproval and early cases; target 7,000 surgeons; strong interest; dozens of cases scheduled ~250 trained surgeons; trained surgeons show higher biopsy growth; cases across prior MACI users and new targets Accelerating adoption
NexoBrid adoptionP&T progress; initial orders; CPT Category 3 code; building regular use Hospital orders +42% QoQ in Q4; order momentum into 2025; revenue progression expected Improving underlying demand
Margin expansionRaised 2024 GM/EBITDA guidance to 71%/21% in Q2; Q3 GM 72% Record Q4 GM 78%, EBITDA margin 40%; mid-term targets raised Structural improvement
Manufacturing facility & CapExFacility to support growth; self-funding CapEx Construction complete; tech transfer initiated; 2026 commercial manufacturing; 2025 CapEx drop post-H1 Investment peak behind; cash inflection
OUS MACI strategyFacility designed for U.S. and global; evaluation planned OUS market/regulatory assessment initiated; potential 2027–2028 country-by-country entry Pipeline for geographic expansion
MACI Ankle (R&D)IND planned 2025; $1B addressable market IND filing 1H25; Phase III start 2H25; long-term 2030+ opportunity On track

Management Commentary

  • “For the fourth quarter, the company delivered record quarterly revenue of over $75 million as well as record profitability, highlighted by gross margin of 78%, adjusted EBITDA margin of 40% and net income of nearly $20 million.” — CEO Nick Colangelo .
  • “We are maintaining the full year [2025] guidance… revenue expected to grow 20% to 23%, gross margin of 73% to 74% and adjusted EBITDA margin of 25% to 26%.” — CFO Joe Mara .
  • “We’ve trained approximately 250 MACI Arthro surgeons to date… biopsy growth rate for MACI Arthro trained surgeons to start the year is substantially higher than surgeons that have not been trained.” — CEO Nick Colangelo .
  • “We anticipate a significant decrease in capital expenditures in 2025… after which CapEx is expected to return to significantly lower annual run rates in the mid-single-digit millions with a corresponding inflection in cash generation.” — CFO Joe Mara .

Q&A Highlights

  • MACI guidance setup: Company not assuming a large immediate MACI Arthro contribution; starting point similar to 2024 low-20% growth with potential upside if adoption exceeds early assumptions .
  • NexoBrid orders vs. revenue: Q4 saw +42% hospital orders YoY, but revenue recognized at distributor purchase levels; focus on underlying demand and progression to regular use .
  • Conversion rate dynamics: Small uptick in 2024 tied to customer base maturity; MACI Arthro could lower hurdles and lift conversion over time, not baked into 2025 guidance .
  • Epicel cadence: 2025 guide high-single-digit growth, largely price-driven with flat volume; quarterly variability expected .
  • Mid-term margin trajectory: High-70s GM and high-30s EBITDA by 2029; path may not be perfectly linear as new facility enters P&L in 2026, but overall expansion intact .

Estimates Context

  • S&P Global/Capital IQ Wall Street consensus for Q4 2024 revenue and EPS could not be retrieved due to S&P daily request limits; therefore, estimate comparisons are unavailable at this time [SPGI error].
  • Management indicated Q4 margins, net income, and adjusted EBITDA were ahead of preliminary results; revenue was in line, but without S&P consensus data, we cannot label external beats/misses .

Key Takeaways for Investors

  • Profitability inflection is durable: record Q4 margins with reaffirmed 2025 guidance and raised mid-term targets signal continued operating leverage and cash generation potential .
  • MACI Arthro is a multi-year growth catalyst: rapid training ramp (~250 surgeons) and stronger biopsy growth among trained surgeons indicate increasing utilization with upside potential to MACI growth rate .
  • Burn Care momentum under the surface: NexoBrid hospital orders +42% QoQ provide visibility into adoption; expect revenue progression as ordering patterns normalize in 2025 .
  • 2025 visibility: Q1 product-level guidance (MACI $45–$47M; Burn Care $7–$8M) and full-year margin targets support near-term modeling and potential positive estimate revisions on execution .
  • Capital intensity ebbing: facility build complete; 2025 CapEx front-loaded ($15–$20M in H1) then drops to mid-single-digit millions, supporting free cash flow inflection .
  • Longer-term optionality: OUS MACI commercialization (potential 2027–2028) and MACI Ankle program (2030+) expand TAM and sustain growth beyond current core .
  • Watch quarterly cadence: Expect typical seasonal margin progression (lowest in Q1, highest in Q4) and ongoing variability in Epicel; monitor MACI Arthro training/utilization KPIs and NexoBrid ordering consistency for upside/downside signals .