AxoGen’s Earnings Call: Growth Amid Challenges

AxoGen ((AXGN)) has held its Q1 earnings call. Read on for the main highlights of the call.

During AxoGen’s recent earnings call, the company conveyed a generally positive sentiment, emphasizing strong revenue growth and strategic advancements. Despite some challenges, such as a decline in gross margin and delays in hiring for the breast segment, the overall tone was optimistic, with positive aspects like revenue growth and strategic execution taking precedence.

Strong Revenue Growth

AxoGen reported a significant increase in revenue for the first quarter of 2025, reaching $48.6 million, which marks a 17.4% rise compared to the previous year. This growth was primarily driven by the continued adoption of AxoGen’s nerve repair algorithm across its target markets, showcasing the company’s successful market penetration and product acceptance.

High-Potential Accounts Performance

The company surpassed its target of achieving 66% growth from high-potential accounts, with a notable 24% increase in average account productivity, exceeding the planned 21%. This performance underscores AxoGen’s effective strategy in leveraging high-potential accounts to drive growth.

Expansion of Commercial Infrastructure

To bolster its capabilities and capacity, AxoGen completed multiple strategic hires across its sales, marketing, and market access teams. This expansion is aimed at strengthening the company’s commercial infrastructure, positioning it for sustained growth.

Progress on BLA for Avance Nerve Graft

The BLA process for AxoGen’s Avance Nerve Graft remains on track, with successful clinical trial site inspections and FDA meetings. The company anticipates approval in September, which would grant it market exclusivity, marking a significant milestone in its strategic roadmap.

Improved Financial Metrics

AxoGen reported a reduction in net loss to $3.8 million from $6.6 million in the first quarter of 2024. Additionally, adjusted EBITDA increased to $2.9 million from $1 million, reflecting improved financial health and operational efficiency.

Gross Margin Decline

The company experienced a decline in gross margin, dropping to 71.9% from 78.8%, attributed to higher costs of goods and increased inventory reserves and related write-offs. This remains a challenge that AxoGen is addressing as part of its financial strategy.

Delayed Breast Sales Specialist Hiring

Recruitment and hiring of additional sales specialists for the breast segment have been delayed, falling behind the original plan. This delay poses a challenge to the company’s expansion efforts in this segment.

Process Improvements Limited by BLA Process

Significant process and quality system improvements are currently on hold, pending the BLA approval. This limitation affects potential operational efficiencies, highlighting the importance of the BLA process in AxoGen’s strategic execution.

Forward-Looking Guidance

AxoGen provided guidance for the full year 2025, maintaining expectations for revenue growth between 15% and 17%. The company plans to achieve a full-year gross margin between 73% and 75%, despite the current decline, and aims to be cash flow positive, self-funding its strategic plan through operational cash flow. The anticipated approval of the BLA for Avance Nerve Graft in September is expected to provide a 12-year market exclusivity, further supporting the company’s growth strategy.

In summary, AxoGen’s earnings call reflected a positive outlook, driven by strong revenue growth and strategic advancements. While challenges such as gross margin decline and hiring delays were noted, the company’s focus on high-potential accounts and progress in the BLA process for Avance Nerve Graft highlight its commitment to sustained growth and market leadership.