Vericel Raises 2026 Revenue Guidance After Record Q3 Revenue

Vericel (NASDAQ: VCEL ) reported third-quarter financial results on Thursday. The transcript from the company's third-quarter earnings call has been provided below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

View the webcast at Summary Vericel Corporation reported record third-quarter revenue of over $85 million, a 26% increase year-over-year, and significantly exceeded guidance. Full-year revenue guidance was raised to $344-$346 million, representing 25% growth year-over-year, with adjusted EBITDA margin guidance increased to 28%. MACI achieved record revenue of over $67 million, with notable growth in biopsies and implants, while Burn Care, including Epicel and NexoBrid, saw a combined 52% revenue increase. The MACI Arthro launch has been a significant growth driver, with increasing adoption and positive clinical outcomes supporting sustained future growth.

Vericel is preparing for potential MACI expansion into the UK and exploring additional international opportunities in Canada and Europe, while continuing investments in sales force expansion and commercial initiatives. Full Transcript OPERATOR Good day and welcome to the Vericel Corporation third quarter 2026 earnings call. Today's conference is being recorded. If you would like to ask a question on today's call, please press star 1 on your telephone keypad.

Now at this time I would like to turn the conference over to Eric Burns, Vericel VP of Finance and Investor Relations. Please go ahead, sir. Eric Burns (VP of Finance and Investor Relations) Thank you, operator, and good morning, everyone. Joining me on today's call are Vericel's President and Chief Executive Officer, Nick Colangelo, and our Chief Financial Officer, Joe Mara.

Before we begin, I would like to remind you that the discussions during this conference call will include forward-looking statements; factors that could cause actual results to differ materially from our expectations are discussed more fully in the company's most recent filings with the SEC. Also, the discussions today will include certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures can be found in today's press release, which is included as an exhibit to Vericel's current report on Form 8-K filed today with the SEC.

A short presentation with highlights from today's call is also available in the investor relations section of our website. I will now turn the call over to Nick. Nick Colangelo (President and Chief Executive Officer) Thank you, Eric, and good morning, everyone. The company had an outstanding third quarter, which was the strongest quarter of the year on a number of measures for the company, MACI and our burn care business, as we generated top-tier revenue growth across the portfolio, an inflection in profitability and significant free cash flow.

We delivered record third quarter total revenue of more than $85 million, which increased 26% over last year and significantly exceeded our guidance for the quarter. Based on our third quarter outperformance and the strong momentum that has continued into the fourth quarter, we're raising our full year total revenue guidance to $344 to $346 million, which represents 25% revenue growth for the year at the midpoint and an increase in revenue guidance of nearly $25 million since the start of the year.

We also had another excellent quarter from a profitability perspective, as net income nearly tripled, adjusted EBITDA grew nearly 50% to more than $25 million, and adjusted EBITDA margin increased to 30%, which was significantly higher than our guidance for the quarter. Based on this outperformance on profitability measures, we're also raising our adjusted EBITDA margin guidance for the year.

MACI had another great quarter with record third quarter revenue of more than $67 million, which exceeded our guidance for the quarter and increased 21% versus the prior year, marking the sixth consecutive quarter with MACI revenue growth of 20% or more, which was notable given the significant acceleration in MACI implant and revenue growth in the third quarter of last year. Beyond MACI's strong revenue performance, we continue to see significant momentum in the underlying business fundamentals that support sustained MACI growth. We achieved record third quarter MACI biopsies, implants, and biopsy and implanting surgeons.

Importantly, MACI's biopsy growth rate has increased each quarter this year, and we started the fourth quarter with the strongest biopsy month since launch in October, reflecting the strong demand that is translating into the robust implant procedure volume that supports our increased fourth quarter revenue guidance. With continued momentum across our key growth indicators and a strong start to the fourth quarter, we believe that MACI is exceptionally well positioned to deliver a strong finish to the year and sustain its growth trajectory in 2027 and beyond.

MACI's strong performance has been driven by the consistent high level of execution of our expanded MACI sales force, as well as the impact of the MACI Arthro launch and our commercial excellence initiatives. The primary objective of our sales force expansion and commercial initiatives is to drive deeper penetration within MACI's surgeon practices, and during the third quarter we saw continued strength in biopsies per surgeon, a clear indicator that this initiative is beginning to unlock another key growth driver for MACI.

In addition, the cohort of expansion territories has the highest biopsy growth rate for the first three quarters of the year, which we expect will lead to accelerating implant growth in our new territories in the fourth quarter and into 2027. MACI Arthro adoption also continues to gain momentum. We completed a record number of MACI Arthro procedures in the third quarter, which represented the highest percentage of total MACI procedures in any quarter since launch.

We also had a record high number of surgeons perform a MACI Arthro procedure in the quarter, and more than 25% of MACI procedures to treat condylar defects under 4 square centimeters were administered via MACI Arthro, another strong indicator of increasing adoption. While the patella defect segment continues to be our highest volume and growth segment, we've also seen higher growth and activity in other defect locations, which we believe is a result of the focus MACI Arthro has created for these other defect segments. We expect that expanding MACI Arthro adoption and utilization will be further supported by a growing body of positive clinical evidence.

Of note, a recent publication evaluating patients treated arthroscopically outside the United States reported durable clinical outcomes and a higher rate of patient satisfaction at a mean follow-up of 13.6 years, reinforcing the potential long-term clinical benefits with the arthroscopic delivery of MACI.

In addition, the first MACI Arthro publication, which was published in August, highlighted several surgical and early patient outcome advantages of the MACI Arthro procedure, including minimal surgical disruption to the joint, the ability to treat multiple cartilage defects in different compartments of the knee, a more desirable cosmetic appearance, and improved early post-operative recovery. These initial results suggest positive patient outcomes that could also lead to shorter overall rehab and recovery timelines for MACI Arthro patients.

Looking ahead, we expect our MACI Clinical Outcomes Registry to expand to even more sites in 2027, leading to additional data for future publications that can further enhance MACI's strong clinical profile. Surgeon engagement with MACI also continues to significantly expand, as the number of peer-to-peer programs and training labs through the third quarter have more than tripled compared to last year.

As we move into 2027, we expect an even greater impact from the expanded MACI sales force, MACI Arthro adoption, and our commercial excellence initiatives, which together with continued overall trends towards restorative cartilage repair procedures, positions MACI for sustained strong growth in 2027 and beyond. In terms of our longer-term MACI growth drivers, we continue to activate sites and enroll patients in the MACI Ankle MASCOT study.

As a reminder, a potential MACI ankle indication represents a substantial commercial opportunity for the company with an estimated annual addressable market of nearly 20,000 patients, representing more than a $1 billion market opportunity. We also remain on track for the potential launch of MACI in the UK in the second half of 2027, which represents another meaningful market opportunity. Based on procedural data available from the UK National Health Service, we estimate an addressable market of approximately 15,000 patients annually, representing a potential market opportunity of several hundred million dollars.

As we noted on our last call, we submitted a MACI marketing authorization application to the UK in the second quarter. The MHRA completed its inspection of our new manufacturing facility in the third quarter, and earlier this month NICE accepted MACI for a single technology appraisal which will establish reimbursement and pricing, as well as a specific MACI funding guidance for the NHS. In parallel, we've begun initial market development work to assess additional MACI OUS expansion opportunities in Canada and Europe.

Finally, we're continuing to develop the next generation of MACI Arthro instruments as we remain focused on continuous innovation to further simplify and reduce surgical time for the MACI Arthro procedure and providing greater access for all areas of the knee, including for patella defects, which we expect will support sustained increases in surgeon engagement and MACI utilization.

The company also delivered an exceptional quarter for the burn care business as we built on the momentum from the first half of the year and generated the highest quarterly revenue to date for both Epicel and NexoBrid, with record quarterly burn care revenue of $18 million, representing more than 50% growth versus both the prior year and the prior quarter. Epicel's record quarterly revenue is driven by continued strength in biopsies and new biopsying centers as the burn care commercial team's cross-selling efforts continue to expand Epicel adoption and utilization.

NexoBrid's record quarterly commercial revenue was driven by the highest number of ordering burn centers and hospital orders in any quarter to date. Notably, we've added more new NexoBrid ordering centers through the third quarter this year than during all of last year and have continued to expand the number of consistent users, an important driver of further uptake. To date, more than 80 centers have placed NexoBrid orders, with approximately 70 centers having placed repeat orders as we continue to focus on driving more centers to become consistent users.

Building on the success with MACI, we've also recently implemented several commercial and operational excellence initiatives across burn care that we believe are beginning to have a meaningful impact on performance. For Epicel, we began the year with a full commercial rebranding that refreshed the product's positioning around the critical importance of achieving wound closure, significantly increased our peer-to-peer activity, and sharpened our focus on supporting our surgeon customers with a multidisciplinary approach to drive the best clinical outcomes for patients.

For NexoBrid, we've implemented similar account planning as well as stakeholder mapping initiatives that are leading to broader standardization of treatment algorithms across burn centers and more consistent adoption and utilization of NexoBrid. As we move into 2027, we believe that these commercial initiatives and our enhanced execution can drive continued strong results for the burn care franchise. Overall, we're on track to deliver a strong close to the year and another great year for the company. Our recent financial results and increased guidance demonstrate the company's unique combination of sustained high revenue growth, profitability and cash generation.

We believe that the durable growth of our portfolio positions the company to sustain strong revenue and profit growth in 2027 and the years ahead as we remain on track to achieve our midterm revenue and profitability targets. I'll now turn the call over to Joe to discuss our third quarter results and updated 2026 guidance in more detail. Joe Mara (Chief Financial Officer) Thanks, Nick, and good morning, everyone. Total revenue in the third quarter increased 26% to $85.4 million, significantly above our guidance range, driven by strength across both commercial franchises.

MACI revenue was $67.4 million, representing 21% growth, and Burn Care revenue was $18 million, representing 52% growth, with both franchises continuing to deliver top-tier revenue growth. Within Burn Care, Epicel revenue increased 23% to $12.7 million, its highest quarterly revenue since launch. Commercial NexoBrid revenue was $2.3 million, also a quarterly record, increasing 54% versus the prior year and 46% versus the prior quarter as utilization continues to increase. We also recognized $3 million of NexoBrid procurement revenue under our barter agreement.

The Company also delivered very strong profitability with gross margin of more than 73% and adjusted EBITDA margin of 30%, both well above our guidance for the quarter. GAAP net income increased 179% to $14.2 million, or $0.27 per diluted share, and adjusted EBITDA increased 48% to $25.2 million, expanding over 400 basis points versus the prior year. The Company generated approximately $18 million of operating cash flow and $16 million of free cash flow, ending the quarter with $236 million in cash and investments and no debt.

We repurchased approximately 221,000 shares of common stock for $8.8 million in the third quarter, with $191 million remaining under our repurchase authorization as of the end of the quarter. Through the first nine months of the year, the Company has generated exceptional financial results with revenue growth of 26%, adjusted EBITDA growth of nearly 50% to $50 million, and more than $45 million in free cash flow, further demonstrating our top-tier financial profile. Turning to guidance.

Based on the strong results to date, the clear momentum in the business, and a strong start to the fourth quarter for both franchises and particularly for MACI, we are increasing full-year total revenue guidance to $344 to $346 million, from $330 to $340 million, an increase of $10 million at the midpoint of our guidance range. This is the third consecutive quarter that we have raised revenue guidance and our full-year guidance is now $24 million above our starting point for the year. We are increasing full-year MACI revenue guidance to $290 to $292 million from $284 to $290 million.

Importantly, we are also raising fourth-quarter MACI guidance and now expect 21% growth, or approximately $102 million of revenue in the fourth quarter. At the midpoint of our guidance, our increased fourth-quarter MACI guidance reflects the strong MACI procedure trends to start the quarter. And if these recent trends continue into December, this would result in upside to our fourth-quarter MACI guidance. We are also raising full-year Burn Care revenue guidance to approximately $54 million, from $46 to $50 million.

This implies $12 million of total fourth-quarter Burn Care revenue, with $9 million of Epicel and commercial NexoBrid revenue and $3 million of NexoBrid barter procurement revenue. Moving down the P&L, we continue to expect full-year gross margin of approximately 75%, and we are increasing full-year adjusted EBITDA margin guidance to approximately 28% from 27%, reflecting this higher revenue outlook and continued expense discipline. This concludes our prepared remarks. We will now open the call to your questions.

OPERATOR Thank you, ladies and gentlemen. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question.

We will go first to Josh Jennings with TD Cowen. Josh Jennings (Analyst at TD Cowen) Hi, good morning. Thanks. Nick and Joe, congratulations on the strong third quarter results.

Great to see the momentum continuing. Wanted to just talk about kind of the LRP targets that you have in play with a significant outperformance to date, and in 2026 you have to have even more confidence in the run there to achieve those and hit those marks. Maybe just talk about any thoughts on potential updates to LRP targets as we move into 2027 and get closer to the year where you set those. It seems to be not as ambitious targets after the first nine months of '26.

Joe Mara (Chief Financial Officer) Yeah, good morning, Josh, and thanks for the question. So this is Joe. I'll take that one. So, yeah, I mean, I would say I appreciate the question in the sense that I'd say at this point we're probably kind of outpacing our expectations to kind of hit those targets, particularly on a top-line level where it's kind of getting that half billion by the end of the decade.

Obviously, the updated guidance for this year kind of gets us into the mid-340s, which is a pretty substantial number for the Company. So I think we feel like we're very much on track, particularly from a top-line perspective. And then I would say if you look at kind of the bottom-line metrics, I think what really stands out is, number one, we're already performing well on the gross margin side. We talked about getting into the high 70s on a full-year basis.