10-K: Paragon 28, Inc. Outlines Capital Stock Structure and Reports Full Year 2023 Results

• Paragon 28, Inc.'s authorized capital stock consists of 300,000,000 shares of common stock and 10,000,000 shares of preferred stock, both with a par value of $0.01.
• Common stockholders are entitled to one vote per share and do not have cumulative voting rights.
• The board of directors is authorized to issue preferred stock without stockholder approval, which could impact control of the company.
• Registration rights are granted to certain investors, expiring two years after the initial public offering.
• Anti-takeover provisions include a classified board until the 2028 annual meeting and supermajority voting requirements to amend certain charter provisions.
• The company is subject to Section 203 of the Delaware General Corporation Law, which restricts business combinations with interested stockholders.
• The company's common stock is listed on the New York Stock Exchange under the symbol FNA.
• The company reported a 19% increase in net revenue, from $181.4 million in 2022 to $216.4 million in 2023.
• The net loss decreased by 29%, from $67.3 million in 2022 to $47.8 million in 2023.
• Adjusted EBITDA improved from negative $10.7 million in 2022 to negative $9.7 million in 2023.
• The global market for foot and ankle implants is projected to grow at approximately 7% annually to reach $6.9 billion by 2028.
• The company estimates the global market for surgical implants and devices used in foot and ankle procedures was approximately $4.9 billion in 2023.
• The company has launched nearly 80 product lines since 2011, including four in 2023, and has over 30 product and system offerings in its development pipeline.
• As of December 31, 2023, the company had 569 issued or pending patents covering its portfolio.
• The company's U.S. sales force includes an estimated 266 producing sales representatives as of December 31, 2023.
• The company sells its products in 22 countries, with international business contributing approximately 15% of revenue in 2023.

Score: 6

Explanation: The document presents a mixed picture. While revenue growth and a reduction in net loss are positive, the company is still operating at a loss and faces significant risks. The sentiment is cautiously optimistic.

• The company experienced a significant increase in revenue, indicating strong market demand for its products.
• The reduction in net loss and improvement in Adjusted EBITDA suggest improved operational efficiency and financial management.
• The projected growth of the foot and ankle market presents a substantial opportunity for future expansion.
• The company's strong product pipeline and intellectual property portfolio position it well for continued innovation and growth.
• The company has a growing international presence, indicating successful expansion into new markets.

• The company continues to operate at a loss, despite improvements in financial performance.
• Adjusted EBITDA remains negative, indicating ongoing challenges with profitability.
• The company is subject to anti-takeover provisions that could make it difficult for a third party to acquire the company.
• The company is subject to Section 203 of the Delaware General Corporation Law, which restricts business combinations with interested stockholders.

• The company's success depends on broad adoption of its products by hospitals, physicians, and patients.
• The company's long-term growth depends on its ability to enhance products, expand indications, and develop new products in a timely manner.
• Failure to manage growth effectively could adversely affect the business.
• The company operates in a competitive environment and may not be able to compete successfully.
• The company may expend resources on unsuccessful products or indications.
• The company depends on third-party manufacturers and suppliers, some of which are single source.
• Additional capital may not be available on acceptable terms.
• The company is subject to extensive government regulation that could have a material adverse effect on its business.
• The market price of the company's common stock may fluctuate substantially.
• The company may face product liability claims that could be expensive and harm its reputation.
• The company's business is dependent on the broad adoption of its products by hospitals, physicians and patients.
• The company's long-term growth depends on its ability to enhance its products, expand its indications and develop and commercialize additional products in a timely manner.
• The company may expend its limited resources to pursue a particular product or indication and fail to capitalize on product or indications that may be more profitable or for which there is a greater likelihood of success.
• The company depends on third-party contract manufacturers and suppliers, some of which are single source, to produce and package all elements comprising its foot and ankle products, and if these suppliers and manufacturers fail to supply the company, its products or their components or subcomponents in sufficient quantities or at all, it will have a material adverse effect on the company's business, financial condition, and results of operations.
• The terms of the company's loan agreements require it to meet certain operating and financial covenants and place restrictions on its operating and financial flexibility.
• If the company or its licensors are unable to obtain and maintain significant patent or other intellectual property protection for its products, or if the scope of its patents and other intellectual property rights is not sufficiently broad and does not adequately protect its products, its competitors could develop and commercialize products similar or identical to its and the company may be unable to gain significant market share and be unable to operate its business profitably.
• Disruptions of critical information systems or material breaches in the security of the company's systems could have a material adverse effect on its business, customer relations, financial condition, and results of operations.
• The company faces the risk of product liability claims that could be expensive, divert managements attention and harm its reputation and business. The company may not be able to maintain adequate product liability insurance.
• Industry trends have resulted in increased downward pricing pressure on medical services and products, which may affect the company's ability to sell its products at prices necessary to support its current business strategy.
• If coverage or adequate levels of reimbursement from third-party payors for procedures using the company's products, or any future products it may seek to commercialize, are not obtained or maintained, foot and ankle specialists and patients may be reluctant to use its products and its business will suffer.
• The company is subject to substantial government regulation that could have a material adverse effect on its business.
• The seasonality of the company's business creates variance in its quarterly revenue, which makes it difficult to compare or forecast its financial results.
• If the company fails to maintain proper and effective internal control over financial reporting, its ability to produce accurate and timely financial statements could be impaired, which could harm its operating results, investors' views of it and, as a result, the value of its common stock.

The company expects to continue to invest in research and development, expand its commercial infrastructure, and pursue business development opportunities to drive future growth. The company anticipates launching over 30 new product and system offerings in the next 24 months.

• The company believes its passion, expertise, and exclusive focus in the foot and ankle market has allowed it to better understand the needs of its patients and physicians.
• The company strives to disrupt and transform the market by focusing exclusively on the foot and ankle to develop and commercialize differentiated, high quality orthopedic solutions, advanced procedural approaches and instrumentation that are collectively designed to enable surgeons to provide consistent, reproducible and effective outcomes.
• The company believes its entrepreneurial and clinically-oriented culture has allowed it to build a leading sales force.

The company operates in the rapidly growing foot and ankle orthopedic market, which is projected to reach $6.9 billion by 2028. The company's focus on innovation and specialized solutions positions it to capture market share from larger, less focused competitors.

• Paragon 28 competes with large multinational companies such as Stryker, Arthrex, Smith & Nephew, Johnson & Johnson, and Zimmer Biomet, as well as smaller companies focused on foot and ankle products.
• The company's focus on foot and ankle procedures differentiates it from larger competitors that have broader product portfolios.
• The company's revision rates for total ankle arthroplasty are 21.8% after 5 years and 43.5% after 10 years, which are higher than revision rates for hip and knee procedures.
• The company's estimates that revision rates for certain foot and ankle procedures can be as high as approximately 20% to 70%.

• Shareholders may experience dilution from future equity issuances.
• Employees may benefit from the company's growth and expansion.
• Customers may benefit from the company's innovative products and solutions.
• Suppliers may benefit from the company's continued growth and demand for its products.
• Creditors may be impacted by the company's debt obligations and financial performance.

• The company intends to continue to invest in research and development to further improve outcomes and expand its addressable market.
• The company plans to transform the foot and ankle market by leveraging its Smart 28 initiatives.
• The company will continue to invest in its commercial infrastructure globally to capture market share.
• The company will advance medical education and targeted marketing campaigns.
• The company will actively evaluate and pursue business development opportunities.

• The Company may in the ordinary course of business face various claims brought by third parties and the Company may, from time to time, make claims or take legal actions to assert its rights, including intellectual property rights as well as claims relating to employment matters and the safety or efficacy of its products.
• On November 28, 2022, the Company entered into a settlement agreement with Stryker Corp. to settle two complaints filed against the Company and any Company counter claims for a total amount of $ 26,000 paid by the Company to Stryker Corp.

• The company has a license agreement with an entity affiliated with a director, paying a royalty of 4% of net revenue related to the licensed intellectual property, including a minimum annual payment of $250,000.
• The company paid professional services fees to a related party totaling $327,000 in 2023.

• May 28, 2021: Date of the Asset Purchase Agreement with Additive Orthopaedics, LLC.
• October 15, 2021: Date the company's common stock began trading on the New York Stock Exchange.
• January 10, 2022: Date of the Securities Purchase Agreement with Disior LTD.
• March 24, 2022: Date of the secured term loan facility with Zions Bancorporation, N.A., dba Vectra Bank Colorado.
• November 9, 2022: Date of the amendment to the MidCap Credit Agreements.
• January 30, 2023: Date of the underwritten public offering of 6,500,000 shares of common stock.
• February 17, 2023: Date the underwriters exercised their option to purchase additional shares of common stock.
• November 2, 2023: Date of the new credit agreement with Ares Capital Corporation and termination of the MidCap Credit Agreements.
• December 31, 2023: End of the fiscal year covered by the report.