mdxg-20210331

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

March 31, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________________to______________________

Commission File Number 001-35887

MIMEDX GROUP, INC.

(Exact name of registrant as specified in its charter)


Florida						26-2792552
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


1775 West Oak Commons Ct NE Marietta, GA						30062
(Address of principal executive offices)						(Zip Code)

(770) 651-9100

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	MDXG	The Nasdaq Stock Market

Securities registered pursuant to Section 12(g) of the Act: None.

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 ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted 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 ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See 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 x

Non-accelerated filer ¨

(Do not check if a smaller reporting company)

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. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No x

There were 111,718,544 shares of the registrant’s common stock, par value $0.001 per share, outstanding as of April 16, 2021.

Table of Contents


Part I FINANCIAL INFORMATION
Item 1	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	6
	Condensed Consolidated Statements of Operations	7
	Condensed Consolidated Statements of Stockholders’ Equity	8
	Condensed Consolidated Statements of Cash Flows	9
	Notes to the Condensed Consolidated Financial Statements	10
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4	Controls and Procedures	38
Part II OTHER INFORMATION
Item 1	Legal Proceedings	39
Item 1A	Risk Factors	39
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 3	Defaults upon Senior Securities	40
Item 4	Mine Safety Disclosures	40
Item 5	Other Information	40
Item 6	Exhibits	40
Signatures		41

As used herein, the terms “MiMedx,” “the Company,” “we,” “our” and “us” refer to MiMedx Group, Inc., a Florida corporation, and its consolidated subsidiaries as a combined entity, except where it is clear that the terms mean only MiMedx Group, Inc.

Important Cautionary Statement Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains forward-looking statements. All statements relating to events or results that may occur in the future are forward-looking statements, including, without limitation, statements regarding the following:

•the affect of the end of the period of enforcement discretion announced by the United States Food and Drug Administration (“FDA”), including our inability to market our micronized products and certain other products after May 31, 2021;

•our expectations regarding the regulatory pathway for our products, including our existing and planned investigative new drug application and pre-market approval requirements; current plans, designs, expected timelines, and expectations regarding our clinical trials; and current plans, designs, expected timelines, and expectations regarding our ability to obtain regulatory approval of certain of our products including in some cases Biologics License Applications (“BLAs”);

•our strategic focus, as illustrated by our current business priorities and our ability to implement these priorities;

•our expectations regarding the sufficiency of our liquidity and existing capital resources to implement our current business priorities;

•our expectations regarding our ability to fund our ongoing and future operating costs;

•our expectations regarding future income tax liability;

•the advantages of our products and development of new products;

•our expectations regarding the size of the potential market and any growth in such market;

•our expectations regarding ongoing regulatory obligations and oversight and the changing nature thereof impacting our products, research and clinical programs, and business, including those relating to patient privacy.

•our expectations regarding our ability to manufacture certain of our products in compliance with current Good Manufacturing Practices (“CGMP”);

•our expectations regarding costs relating to our compliance with regulatory standards, including those arising from our clinical trials, pursuit of BLAs, and CGMP compliance;

•the likelihood, timing, and scope of possible regulatory approval and commercial launch of our late-stage product candidates and new indications for our products.

•our expectations regarding government and other third-party coverage and reimbursement for our products;

•our expectations regarding future revenue growth;

•our belief in the sufficiency of our intellectual property rights in our technology;

•our expectations regarding our ability to procure sufficient supplies of human tissue to manufacture and process our products;

•our expectations regarding the outcome of pending litigation and investigations;

•our expectations regarding our ability to remain in compliance with Securities and Exchange Commission (the "SEC") reporting obligations and Nasdaq listing requirements;

•our expectations regarding the ongoing and future effects arising from the investigation conducted by the Audit Committee (the “Audit Committee”) of the Company’s Board of Directors (the “Board”) into current and prior-period matters relating to allegations regarding certain sales and distribution practices at the Company and certain other matters (the “Investigation” or the “Audit Committee Investigation”), the restatement of our consolidated financial

statements previously filed in our Annual Report on Form 10-K for the year ended December 31, 2016, as well as selected unaudited condensed consolidated financial data as of and for the years ended December 31, 2015 (Restated) and 2014 (Restated), which reflected adjustments to our previously filed consolidated financial statements as of and for the years ended December 31, 2015 and 2014 (collectively, the “Restatement”), and related litigation;

•our expectations regarding the ongoing and future effects of the Covid-19 Pandemic (“Covid-19”) on our business, employees, suppliers and other third parties with whom we do business, and our responses intended to mitigate such effects;

•demographic and market trends;

•our plans to remediate the identified material weaknesses in our internal control environment and to strengthen our internal control environment;

•our expectations regarding research and development costs, including those arising from filing additional investigative new drug applications and pursuing new BLAs; and

•our ability to compete effectively.

Forward-looking statements generally can be identified by words such as “expect,” “will,” “change,” “intend,” “seek,” “target,” “future,” “plan,” “continue,” “potential,” “possible,” “could,” “estimate,” “may,” “anticipate,” “to be” and similar expressions. These statements are based on numerous assumptions and involve known and unknown risks, uncertainties and other factors that could significantly affect the Company’s operations and may cause the Company’s actual actions, results, financial condition, performance or achievements to differ materially from any future actions, results, financial condition, performance or achievements expressed or implied by any such forward-looking statements.

Factors that may cause such a difference include, without limitation, those discussed under the heading “Risk Factors” in this Quarterly Report and in our previously-filed Annual Report on Form 10-K for the year ended December 31, 2020 (our “2020 Form 10-K”), filed with the Securities and Exchange Commission (“SEC”) on March 8, 2021.

Unless required by law, the Company does not intend, and undertakes no obligation, to update or publicly release any revision to any forward-looking statements, whether as a result of the receipt of new information, the occurrence of subsequent events, a change in circumstances or otherwise. Each forward-looking statement contained in this Quarterly Report is specifically qualified in its entirety by the aforementioned factors. Readers are advised to carefully read this Quarterly Report in conjunction with the important disclaimers set forth above prior to reaching any conclusions or making any investment decisions and not to place undue reliance on forward-looking statements, which apply only as of the date of the filing of this Quarterly Report with the SEC.

Estimates and Projections

This discussion includes certain estimates, projections and other statistical data. These estimates and projections reflect management’s best estimates based upon currently available information and certain assumptions we believe to be reasonable. These estimates are inherently uncertain, subject to risks and uncertainties, many of which are not within our control, have not been reviewed by our independent auditors and may be revised as a result of management’s further review. In addition, these estimates and projections are not a comprehensive statement of our financial results, and our actual results may differ materially from these estimates and projections due to developments that may arise between now and the time the results are final. There can be no assurance that the estimates will be realized, and our results may vary significantly from the estimates, including as a result of unexpected issues in our business and operations. Accordingly, you should not place undue reliance on such information. Projections, assumptions and estimates of our future performance and the future performance of the markets in which we operate are necessarily subject to a high degree of uncertainty and risk.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

MIMEDX GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(unaudited)


	March 31, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	84,746	$	95,812
Accounts receivable, net	35,420		35,423
Inventory	11,582		10,361
Prepaid expenses	4,695		5,605
Income tax receivable	9,991		10,045
Other current assets	3,530		3,371
Total current assets	149,964		160,617

Property and equipment, net	11,044		11,437
Right of use asset	3,567		3,623
Goodwill	19,976		19,976
Intangible assets, net	5,918		6,004

Other assets	344		375
Total assets	$	190,813	$	202,032
LIABILITIES, CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	6,925	$	8,765
Accrued compensation	16,153		18,467
Accrued expenses	30,676		30,460




Other current liabilities	1,657		1,470
Total current liabilities	55,411		59,162
Long term debt, net	47,799		47,697
Other liabilities	3,624		3,755
Total liabilities	$	106,834	$	110,614
Commitments and contingencies (Note 13)
Convertible preferred stock Series B; $0.001 par value; 100,000 shares authorized, issued and outstanding at March 31, 2021 and December 31, 2020	$	92,030	$	91,568
Stockholders' deficit
Preferred stock Series A; $0.001 par value; 5,000,000 shares authorized, 0 issued and outstanding at March 31, 2021 and December 31, 2020	$	—	$	—
Common stock; $0.001 par value; 187,500,000 shares authorized; 112,703,926 issued and 111,620,629 outstanding at March 31, 2021 and 112,703,926 issued and 110,930,243 outstanding at December 31, 2020	113		113
Additional paid-in capital	156,733		158,610
Treasury stock at cost; 1,083,297 shares at March 31, 2021 and 1,773,683 shares at December 31, 2020	(5,091)		(7,449)
Accumulated deficit	(159,806)		(151,424)
Total stockholders' deficit	(8,051)		(150)
Total liabilities, convertible preferred stock, and stockholders’ deficit	$	190,813	$	202,032

See notes to unaudited condensed consolidated financial statements

MIMEDX GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

(unaudited)


	Three Months Ended March 31,
	2021		2020

Net sales	$	59,967	$	61,736
Cost of sales	9,641		10,025
Gross profit	50,326		51,711

Operating expenses:
Selling, general and administrative	45,404		46,942
Investigation, restatement and related	7,196		15,592
Research and development	4,339		2,650
Amortization of intangible assets	239		271

Operating loss	(6,852)		(13,744)

Other expense, net

Interest expense, net	(1,472)		(2,387)
Other income, net	—		6
Loss before income tax provision	(8,324)		(16,125)
Income tax provision (expense) benefit	(58)		11,304
Net loss	$	(8,382)	$	(4,821)

Net loss available to common stockholders (Note 9)	$	(9,850)	$	(4,821)

Net loss per common share - basic	$	(0.09)	$	(0.04)
Net loss per common share - diluted	$	(0.09)	$	(0.04)

Weighted average common shares outstanding - basic	109,401,383		107,538,509
Weighted average common shares outstanding - diluted	109,401,383		107,538,509

See notes to unaudited condensed consolidated financial statements

MIMEDX GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(in thousands, except share data)

(unaudited)


	Common Stock Issued			Additional Paid - in		Treasury Stock			Accumulated
	Shares	Amount		Capital		Shares	Amount		Deficit		Total
Balance at December 31, 2020	112,703,926	$	113	$	158,610	1,773,683	$	(7,449)	$	(151,424)	$	(150)
Deemed dividends	—	—		(462)		—	—		—		(462)
Share-based compensation expense	—	—		3,244		—	—		—		3,244

Exercise of stock options	—	—		(1,364)		(310,813)	2,279		—		915

Issuance of restricted stock	—	—		(3,596)		(742,001)	3,596		—		—
Restricted stock canceled/forfeited	—	—		301		35,589	(301)		—		—


Shares repurchased for tax withholding	—	—		—		326,839	(3,216)		—		(3,216)
Net loss	—	—		—		—	—		(8,382)		(8,382)
Balance at March 31, 2021	112,703,926	$	113	$	156,733	1,083,297	$	(5,091)	$	(159,806)	$	(8,051)


	Common Stock Issued			Additional Paid - in		Treasury Stock			Accumulated
	Shares	Amount		Capital		Shares	Amount		Deficit		Total
Balance at December 31, 2019	112,703,926	$	113	$	147,231	1,885,277	$	(10,806)	$	(102,140)	$	34,398
Share-based compensation expense	—	—		1,915		—	—		—

SEC Form 10-Q filed by MiMedx Group, Inc