Vericel Corporation (NASDAQ:VCEL) Q2 2020 Earnings Conference Call - Final Transcript
Aug 05, 2020 • 08:30 am ET
The reductions in expenditures, together with a significant accounts receivable balance entering the quarter, allowed us to minimize cash utilization. We ended the second quarter with approximately $81 million in cash and investments and no debt compared to $79 million at the end of 2019. So all in all, we were able to deliver a solid financial performance for the second quarter in the midst of a very challenging environment.
In terms of product performance, MACI had a strong recovery in the quarter in terms of both implants and importantly, biopsies, a leading indicator of future growth. We estimate that only about 10% of elective surgical capacity was available in April, with approximately 60% available in May and 80% available in June. MACI implant and biopsy volumes generally followed the available surgical capacity in April and May, but we saw a strong rebound in implants and biopsies in June. MACI implants, which declined approximately 84% in April and 37% in May compared to the same periods in 2019, increased approximately 21% in June. Based on our historical biopsy conversion rates, we estimate that about a third of MACI volume in June was catch-up of deferred cases, while two-thirds of the business was from normal patient flow. Overall, we estimate that nearly 50% of national surgical capacity was off-line in the second quarter and 25% was offline in the first half of the year. Yet MACI revenue declined only 27% in the second quarter and 5% in the first half of the year.
Likewise, while MACI biopsies declined approximately 79% in April and 22% in May compared to the same periods in 2019, biopsies increased approximately 23% in June, and the growth in biopsies that we saw in June continued through July. We believe that this strong recovery for MACI, in outperformance versus available surgical capacity, demonstrates not only the strong underlying demand for MACI, but that for a number of reasons, MACI is well positioned to resume its growth trajectory despite the current COVID-19 headwinds. First, MACI procedures are performed on an outpatient basis over 95% of the time in either a hospital outpatient surgery center, or an ambulatory surgical center, so, we don't expect MACI to be significantly impacted by restrictions focused on procedures that utilized in-patient hospital beds. MACI patients are typically young, active and otherwise healthy individuals who are less likely to have risk factors associated with COVID-19. And given the symptomatic nature of their injuries, including chronic pain and loss of function, we believe that they are far less likely to defer treatment compared to patients for other orthopedic procedures. MACI also has a favorable reimbursement profile for both surgeons and facilities. And finally, despite any restrictions on procedures, our case management team is generally able to maintain normal functionality and work with surgeon offices and patients to move cases through the pipeline and schedule or reschedule cases in a timely manner.
In terms of refilling the pipeline, the recovery in biopsies also demonstrates the strong