ENGLEWOOD, Colo. - Paragon 28, Inc. (NYSE: FNA), a medical device company focused on the foot and ankle orthopedic market, has announced the appointment of Chadi Chahine as Chief Financial Officer and Executive Vice-President of Supply Chain Operations, effective last Monday. Concurrently, the company reported its financial results for the quarter ending June 30, 2024, and updated its revenue guidance for the year.
Chadi Chahine brings over two decades of financial and operational experience to his new role at Paragon 28, having previously held senior positions at Zimmer Biomet Holdings (NYSE:ZBH) Inc. and Stanley Black & Decker. His appointment follows the interim tenure of Kristina Wright, who will continue to serve on the company's board.
For the second quarter of 2024, Paragon 28 reported a global revenue of $61.0 million, which is a 19.6% increase in reported growth and a 19.7% increase in constant currency growth compared to the same period last year. The company also improved its operating expense ratio by 840 basis points year-over-year.
The company has initiated an operational efficiency strategy aimed at optimizing organizational structure and minimizing costs. This includes a workforce reduction of approximately 7% expected to occur in August 2024, which is anticipated to save up to $8 million annually, offset by around $1 million in severance costs.
Paragon 28 has narrowed its net revenue guidance for 2024 to between $249 million and $255 million, which represents a reported growth of 15.1% to 17.8% compared to 2023. The guidance is based on current foreign currency translation rates.
The company has also filed amended financial statements for the fiscal year 2023 and the first quarter of 2024 due to previously identified accounting errors. These restatements correct overstatements of inventory and understatements of cost of goods sold.
The company's CEO, Albert DaCosta, expressed confidence in the company's momentum, particularly in the U.S. market, and highlighted the progress made in cost optimization plans.
In other recent news, Paragon 28 Inc. has announced plans to restate its financial statements for the fiscal year ended December 31, 2023, and the quarterly periods ended March 31, 2023, June 30, 2023, September 30, 2023, and March 31, 2024, following the discovery of inventory accounting errors. These errors led to an overstatement of inventory and an understatement in the cost of goods sold, resulting in a material weakness in its internal control over financial reporting. The company's independent public accounting firm, Deloitte & Touche LLP, has been informed of these matters.
The company also reported robust growth in Q1 of 2024, with global revenue rising to $61.1 million, a 17.4% increase from the previous year. This growth was driven by balanced increases across all foot and ankle subsegments, with U.S. net revenue up by 13.5% to $51.1 million and international revenue surging by over 42%. Paragon 28 launched six new products and expanded both its U.S. sales representatives and surgeon customer base.
Despite reporting a $5.5 million loss in adjusted EBITDA, Paragon 28 maintains its full-year net revenue guidance of $249 million to $259 million. The firm anticipates continued growth propelled by market share gains, especially in the bunion market. These are some of the recent developments that investors should be aware of.
InvestingPro Insights
As Paragon 28, Inc. (NYSE: FNA) welcomes Chadi Chahine to the executive team and reports positive revenue growth, insights from InvestingPro reveal a nuanced financial landscape for the company. Notably, Paragon 28's market capitalization stands at $655.32 million, reflecting its valuation in the competitive medical device market. Despite a strong gross profit margin of 79.21% over the last twelve months as of Q1 2024, the company is not expected to be profitable this year, as indicated by a negative P/E ratio of -13.6. This aligns with the company's recent restatements and cost optimization efforts.
InvestingPro Tips suggest that Paragon 28 operates with a moderate level of debt, which is a critical factor to consider in the context of its operational efficiency strategy and workforce reduction plans. Additionally, the company's liquid assets exceed its short-term obligations, providing some financial flexibility in the near term. Although the company does not pay a dividend, it has seen a strong return over the last month, with a 15.16% price total return, which may interest investors looking for capital appreciation rather than income.
For investors seeking a deeper dive into the financial health and future prospects of Paragon 28, there are more InvestingPro Tips available at https://www.investing.com/pro/FNA. These tips could provide valuable context for the company's strategic initiatives and market position as it continues to navigate the dynamic foot and ankle orthopedic sector.
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