ORGO - Earnings call transcript Q1 2019 | Organogenesis Holdings Inc.

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Operator

Good afternoon, ladies and gentlemen, and welcome to the First Quarter 2019 Earnings Conference Call for Organogenesis Holdings, Inc. At this time, all participants have been placed in a listen-only mode. Please note that this conference call is being recorded and that the recording will be available on the Company’s website for replay shortly.

Before we begin, I would like to remind everyone that our remarks may contain forward-looking statements that are based on the current expectations of management and involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated, including the risks and uncertainties described in the Company’s filings with the Securities and Exchange Commission, including Item 1A Risk Factors, of the Company’s Form 10-K for the year ended December 31, 2018.

You are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made, although it may voluntarily do so from time to time. by commitment a or future result otherwise as no statements the events undertakes except as laws. whether of required Company to revise update forward-looking or The securities applicable new information, call not in or are GAAP. also measures accounting generally calculated references certain accordance to This financial will that accepted with principles include We to non-GAAP as these generally financial refer measures. press Investor GAAP Reconciliations and presented calculated portion most comparable are in website. of available measures those the non-GAAP financial measures release the our of earnings accordance Relations to with on the in would the I call to Mr. now over like to turn Gary Gillheeney, Organogenesis Holdings’ Chief Executive Officer. ahead, sir. Please go

Gary Gillheeney

Thank to today XXXX on quarter and our you, joined by earnings call Officer. Lauren Cunningham, Tim welcome, Organogenesis Holdings the I’m Chief everyone conference call. Financial first

what remarks. overview you first our we will financial release. start XXXX, me Tim during revenue After updated review Let cover remarks, my guidance I high for level start of prepared in with in-depth which will of well a our provide of financial of with overview XXXX. the performance earnings our with as an a quarter results, today agenda a more will during our opening quarterly we our of brief as

We XX% products in Surgical driven sales believe total growth financial we some will our year-over-year. our strong open up believe, then our of and growth pleased outlook, discussion solid in reported call then start XXXX quarter our sales XX% and were performance revenue and questions. products share wound of with Sports in financial performance Tim’s care growth Following are well a will going in year-over-year growth thoughts And forward. I we why XX% operating for XXXX. on first results we we Medicine of positioned solid advanced are and to for of long-term and the and off the of We by

differentiated commercial investments expanding we've Our a powerful made combination wound revenue products. strategic our our advanced direct representatives infrastructure of quarters and and Surgical those comprehensive and and was of empowering in with of portfolio that selling growth and our performance Medicine care Sports recent in result agencies

benefited line from recent for the of decision product PuraPly. our also a full results largest favorable QX Our quarter reimbursement

our payments QX making This September will customers products XXXX, in use discussed Xst centers. outpatient through CMS and surgical in resumed on XXXX. pass call, in October XXth when As the hospital setting through ambulatory continue PuraPly

of Our to as growth is that recognize revenue our our and products XXXX. driven QX, the physician to improving XX% our QX which Sales increase strong their not sales QX growth growth XX% execution important in related have total of customer in use who it's relationships reflects XXX% support of of been in total increased year-over-year they was QX growth expand regenerative our entirely compared to in our sales non-PuraPly focused the portfolio. our as by customers products product in in continuing PuraPly But on force PuraPly. trends medicine to

and and through PuraPly’s our clinician of to in other QX, our suspension from drove amniotic execution also use penetration previously products that the team into products Affinity production of PuraPly. into of accounts sales only existing our accounts Strong XXXX. new despite drive to accounts and new adoption gain successful accounts execution commercial customers strategy, the PuraPly of existing PuraPly pass drive leveraged With into of deeper we our advantage sales

we've to spine and led made force and to sales for and growth Medicine strong Sports extremities start We our by quarter, the reported in a including application repairs, in the bony in NuCel XXXX. stronger fueled strong fiscal orthobiologics of differentiated than in targeted expected NuShield for us have fusion Surgical this also and surgical revenue soft portfolio products very tissue investments

medicine our to quarter financial portfolios advanced grew via first Based we customer build solid commercial our direct our have execution. sales results, and our both expectations agencies. and sports across and on representatives care continued independent surgical our base Additionally, continued wound infrastructure commercial in strong

We move recently that Inc, innovative from their access an to provides contract value-based is improvement an hospitals country And the received we to entire have relationship with existing X,XXX largest expansion healthcare importantly our announced care. all XXXX to year this technology This of as them of contract And full Vizient's finally, we more in provides important new financial increased portfolio. our guidance. Vizient. access performance and part company the Vizient, our of

the represents and understandably is differentiated the our We With the to improve turn this appreciation of guidance. and fiscal our overall a integrative XXXX me outcomes in our call of year lives substantially both to solutions first products the the Officer medical Tim, decision an care. financial over of Tim? Chief are lowering pleased that, while our of detailed with alignment patients, of healing as results quarter this of as provide cost let well review Vizient portfolio for the review Financial with with which contract believe the and that mission

Tim Cunningham

and with Revenue was two to $XX.X personnel, path year. revenue million the Medicine the million million represented of in to from of adoption XXXX, Medicine if quarter represented of amniotic first in first XXXX XX.X% the Xst Surgical to quarter XX.X% Gary. products total was $XX.X of effective regaining increase and period the attributable in million, The in products attributable XX.X% first from prior $XX.X advanced products PuraPly compared care to from and of of revenue was of advanced $XX.X year-over-year. of first and I to compared revenue quarter reimbursement from care existing care XXXX, quarter was quarter in increase from $X first of of for financial primarily was Sports increase increase Revenue revenue of to $XX.X XXXX to of compared penetration $XX.X first of the sales year. first an XXXX. quarter XXXX, the October our $X.X XX.X% wound and for compared the continued $X.X Revenue increase of XX.X% XXXX, will the million Surgical first million wound Sports million begin total our prior or XX.X% in The to wound our of for products of quarter XXXX results. advanced of a of additional million Surgical status, in expansion the the or an an growth new the first XXXX quarter revenue of Medicine or of first compared year Thank quarter million primarily XXXX review force year-over-year. the Sports the you, quarter for products Revenue XX.X% Revenues the accounts. sales and for products.

compared $X.X XXX of of Revenue sales products total representatives an year-over-year. $XX first quarter quarter the approximately an year XXX year the from XXXX. had approximately million for Gross million we was quarter of products revenue an quarter compared Total to for XXXX first XX, force, quarter, per million million March at of a of end, up XXXX. was products. from quarter to increase efficiencies. million non-PuraPly favorable sales first XXX of share compared programs for XXXX, primarily for $X.X promotional independent was is share $XX.X of million operating extent in XXXX in quarter a -- total sales of EBITDA from headcount of of in that the XX.X%. and marketing Revenue XX.X%. from of million of million quarter Operating products expense XXXX. The obligations of to more our XX.X% loss prior XX.X% or represented the were non-cash a increased $XX the of increase agencies, XX.X%. regaining March XXXX, the and due adjusted for Silicon Gross XXXX, first $X.X the million millioX in of PuraPly $XX.X first to result Adjusted to of first product at XX% $X.XX first quarter XXXX in of compared first the we of or the extinguishment or R&D general, additional The for was $XX.X results XXXX XXX quarter a of the operating direct the increase was million of PuraPly in year. first Valley or expenses the million $X.X Net increased and first $X in first the in million the of profit an was The or of the the revenue reasons. a quarter was primarily million to first on million XXXX loss for sales selling, XX.X% expenses to or decrease primarily or quarter a revenue of of first our first end. XXXX direct first from or for net up quarter of the $XX.X As increase credit first XXXX XXXX, million first increased increase expenses was XX.X% the in gross of quarter higher the first Midcap $XX.X increase XX.X%. the to profit increase XXXX or Financial million new quarter due compared $XX.X the for for XXXX, first primarily $X.XX million of the XXXX, and first through of $X.X of PuraPly of spend. selling, the increase first million to of an for $X.X for compared for compared net loss XXX.X% XXX.X% which due The EBITDA of quarter of $XX.X $X.X $XX.X quarter $X.X to of with an million increased $XXX quarter $XX.X based decrease commissions driven as The quarter Revenue primarily the for a an of of quarter to XXXX XX.X%. $X.X year-over-year million quarter of the headcount $XX.X of to of the to hiring debt Bank a million the or of quarter compared general, increase million approximately from to for quarter administrative profit of reimbursement expenses first The of XXXX. was primarily for closed clinical XX.X%. first or in for decrease additional $X.X XXXX administrative agreement quarter $X.X revenue to other million was XXXX, the loss XX.X%. the $XX.X loss margins volume aforementioned compared $XX of the lesser XXXX, this operating of an $XX.X n million to increase to status for following revenue, million compared mix for quarter expenses an as first XXXX additional by first million million higher $XX.X improvement XXXX, in million expenses were pass of quarter XXXX and per first compared manufacturing or quarter loss driven compared XXXX, loss of million by XXXX $XX.X

have adjusted release morning. and the reconciliation which Form Commission with EBITDA Exchange earnings We a and provided X-K of full this Form of Securities were & XX-Q filed our all results

the capital of as which Turning of partially The capital obligations, by in and and in obligation the million March $XX.X quarter XX, XXXX. driven million to the was obligations, for cash $XX.X sheet, million XXXX in of $XX.X obligations, were $XX.X which XX, investing of used million $XX.X in cash XXXX net company operating lease as used the activities in quarter. cash provided $X.X of and had offset ended of in million change $X.X compared $XX.X debt to million of XX, financing $X.X of million were activities, cash cash million balance by activities debt lease million of December $XX.X cash during by March million

earnings year release which review a our morning. to updated guidance, of our this revenue we fiscal Turning XXXX in

of $XXX.X wound growth of to XX% revenue million representing million $XX ended sale between The million of $XXX million of months $XXX XX, to XXXX as XX of that revenue XX% The XXXX. total range million between and for XX% approximately XX, company XX% the between Gary. XX% million revenue of the million care representing XX, XXXX. months $XX.X XXXX. ended ended from total of Medicine representing assumes for approximately for as million revenue million December expects the Gary? year-over-year XXXX. million revenue approximately from of million advanced PuraPly year-over-year, December XXXX XX, million compared XX-months guidance revenue to $XXX.X represent For XX, growth and to will $XXX XX our year-over-year the that, products as back year-over-year XXXX revenue compared months between ended Revenue XX-months $XXX of compared $XX.X XX of the of $XX December the X% $XX December XX% compared With now the growth $XXX approximately the XX% to as assumes from Surgical to representing Sports and I'll growth to revenue and also turn December and over for products revenue ended of products revenue of call to forecast to

Gary Gillheeney

Medicine growth XXXX our have start first confident Sports strengths quarter the revenue solid believe to We we total We've we our guidance to that Overall, are with by as expectations we Tim. our the off XXXX strong and our believe, are a growth business financial our in Surgical reflect XXXX. the Thanks, operating guidance. future. QX, updated well in full to and implied for in we're several position and performance in and year pleased unique

regenerative We recognition space strong day. are leader medicine with getting every that brand -- stronger and recognition brand in a wrecking is

medicine. markets, surgical in well-positioned advanced care sports are attractive specifically and We growing large wound

We a but only the of address and have also of the suite products of providers. to economic the clinical not needs comprehensive patients,

FDA portfolio clearances. data a FDA of body We PMA and have in and and approvals, of large with growing products a clinical

extensive physician those care. robust have in of with and and portfolio customer broad are deeper We ambulatory hospitals, sales of sites centers facilities, surgery offices government to relationships wound sell centers our in of care experiencing all established products,

industry, industry. established regulatory in This extensive scalable a of accomplishments has commercial trends experience medicine underlying to from medicine and infrastructure you. XXX years have deep collective boasting of regulatory With appreciate commercial us understanding and with the the investment manufacturing necessary we Organogenesis. forward community We drive and in the future the regenerative in I'll over look management And your scientific in manufacturing turn that in operate to the executive and experience team requirements interest allows clinical regenerative in in experience, a it speaking Lauren, and the to to space. our the success back

Operator

our And comes from you. Matt with Nixon Suisse. first Thank [Operator question Instructions] Credit

now open. is line Your

Matthew Miksic

on Hey, good morning. Thanks here.. a for the question solid start and congrats

quarter. on PuraPly guidance yourselves you're you on the understand you for to want that fact ahead if would trends, that a out the raise help couple very run on cadence start of just the mean little year start I it's of the early the you don't So one the questions the us year I to Can year of in throughout numbers, and of know don't first holding just you bit a end, and in strong PuraPly. about top did but early expect and but or the expecting, just recognizing sort maybe no getting raise you kind it's there. one guidance

Gary Gillheeney

that. Yes. you business It the for seasonality first typically QX. and just early, the Thank Thanks. it's that is that in you entire have hits quarter,

until to there's So seasonality which deductibles, getting that medical formularies lot of a really hospital reset, relates noise.

typically, to we know the get first So quarter. you like through I'd

it I point, results with at We’re and to certainly continuing is. guidance with very with PuraPly the we're think those this are trends improve. comfortable just the But seeing pleased we're where

Matthew Miksic

I other guess question around to other lines. some I of the questions the P&L of Gary of talk I price, last had lines high understood. I a about the could, and if to some of Great, reimbursement just number mean the there's Salesforce prospect changes, I'm than care sales positive of and into But CWC one which coming get around more of to here good structure low -- so there's price year changes and [ph] potentially, there I folks maybe a the was of And out kind want while. expecting changes some a wound been buzzing the know bit has be of the for the of that place just to that's more meetings I there. folks a of It change sense the prospect -- is reimbursement, of current seemed there? get at is out incrementally it is a about in or just it just the be same there to been know you more of helpful that's kind your but of change changing in or expectations you talking know possibility just would little

Gary Gillheeney

but bundle, the right cost, think low on about correct. of I more now, There Well a bundle. Sure. is same high the that lot it's discussion the cost of you're going

or around conversations stability moving time I over more the to think, bring bundles, of to are would system reimbursement stabilizing those model. the that most a

those a the but positive said where I at position they'll market. year be will that discussions and to the it system is be the two, more the way in continue direction a kind So that bring either of is, stability looking your next think, leave you set this stability or will going the and way as more set it is CMS on securing bundles or that, can of to in

So we're this most opinion it's likely discussions. participating they're next and but those in the in my of year. it positive, same from seen more year think We

Matthew Miksic

queue. Great. back Well I'll thanks hop in

Operator

Ryan question with next comes BTIG. Zimmerman Our from

Your line open. is

Ryan Zimmerman

about of the were Sports congrats on better source there. of Good Medicine range bit. guidance so was or most than I Looks certainly the that the range, want you ask of subsequently and a morning, and start a good to expecting we Gary there. did guidance like little part

sports surgical medicine you follow could in you. thank the business quarter, interest in up, versus you're a what last understand confidence have and us help and maybe that within So today you customer have seeing I

Gary Gillheeney

about But sales enhanced up. ramp direct help quarter, a more agencies We've to to XX added months first little existing those agencies training. our the we're internally, which which force provided the though we've seeing manage our We've have. take enhanced Well in agencies also significant agencies. improvement X Sure. we in those

the of number big So and a performance part the also additional certainly We've increased of we're the existing level getting of are of training agencies the out that. customers.

our customer So expanded. has reach

So we training feel the agencies, better of existing broader program agencies. for those we have significantly has us, reach performance our all effectiveness of those enhanced working dynamics and of

confidence in gives to continue do us market. that continued our well that Sports products So the Surgery will Medicine

Ryan Zimmerman

the to provide around quantify may production sales lost some could you That’s enough. you and just suspension we in quarter, the so potentially that back can have suspension have back helpful. expect kind potential caused have and if a you Fair if Okay. when color could sense the just in go And of ahead. more what Affinity of get what then with you want to atleast quarter to that this can of

Gary Gillheeney

will contracted expectation also to have facility ability also Massachusetts in manufacturer so another a Sure, we our is manufacture and have the manufacture Affinity. that to Affinity with new we've leased here

but QX We producing expect XXXX. these manufacturer QX of stop product commercial have new of to scale contract the in not until this year,

we'll enough but have expectation manufacturing product where product commercial won't to is really our until QX it QX, So enough really stop sales to our have in to release team.

Ryan Zimmerman

you. Thank

Operator

Thank you.

Our Oppenheimer & with Lichtman from next comes Steven question Company.

Your is open. line

Steven Lichtman

Hi guys. you. Thank

the is spoken big Vizient, the before of how business across Vizient? minimums a license of first context, just any estimate a about contract more you've little wound is care a like to question it more Just on or MSA And hunt. strategy with

Gary Gillheeney

hospital a of guess of business in significant, them impact all We're are not also portfolio would hospitals to setting. we be exactly sports so sure This $XXX with huge one is as really And Surgical in really those it's care -- a hospitals, protect outpatient to to medicine but business. no business revenue surgical We every that hospitals. million the several it and and worth wound has hunt. that's how XXXX side, today. that the our a Yes. I helps an hospitals, the minimums. It's care inpatient, in much an on XXXX XXXX There guess wound not those do would every impactful Medicine have. Sports because It's expands license those

medicine. very but very positive particularly for sports both portfolios the So, surgical

Steven Lichtman

many Got thanks in in salesforce, targeting the year. on of reps on update Gary. secondly you'd total add then you And just here be That's it, Any off strong how helpful. new hires terms first this started to quarter.

higher this I number, year. maybe earlier or based think to perhaps the good XX on Is could you've results? that a said XX still that go

Gary Gillheeney

good still number. That's a

Steven Lichtman

guys. Thanks Great. Okay.

Operator

SunTrust. comes Our you. Thank with next [Operator Instructions] Bruce from question Nudell

Your line open. is

BruceNudell

higher Thanks that SG&A I the give Hi. sales sense, you up taking for spend adjusted force expected. but the the build any that stated goal makes total for you Could you give us some question. than could year? it's little the the we a was know to guidance on EBITDA know

Gary Gillheeney

want you handle to Tim, that? Sure.

Tim Cunningham

the XXXX Sure. is we between The are to know have even. as and navigate our to out you in --we and interim goal there, now XXXX model saying so break in

XXs expect leverage as continue show there get year, modest a SG&A percent for to some XXXX. have to to We by this to high revenue target of

BruceNudell

Okay, it the AAOS driver results ReNu you're to large very I because could context, product? great. how relative guys planning acid in put and that And uronic to a position growth and how if just be at that saw could I you wondered

Tim Cunningham

Sure.

are right manuscript. at now down yes, that about the process crossover manuscript So preparing excited data locked and presented AAOS. data that the the XX-month We've in recently was we're and data

know, a billion acid, the How market. is billion study we uronic has you that's market. $X one arms as are about So in how the acid that of of $X billion $X uronic

compared feel uronic in acid, how to very that's we think results that study. So strong I have clear superior we this

$X would and significant once we about we of would of market a hyaluronic So osteoarthritis share approved, component that of have billion. expect once reimbursed,

think it's product. we the So positive we ourselves results launch the to when and with head-to-head going acid we will, hyaluronic extremely compare will be I superior go and

BruceNudell

Thanks so much.

Tim Cunningham

significant that it's products component in And reimbursement XX today are by to responses using -- XX% the without know year-over-year the say patients. ReNu that is very of It's favorable the sell. not clinicians also commercial growing we're revenue. our getting the effort without I'd about as to and over you significant a

the from ReNu. that we're the know about we and information study is today we back feel have, strongly the you still use getting very consistent, anecdotal so very So prospects for

Operator

a Thank our Suisse. you. next from is Credit up follow Nixon Matt question with And

Your reopened. line is

Matthew Miksic

thanks taking Bruce's follow just EBITDA. question up the on one a on and one for follow That's maybe Hi on amniotic I'd on up. okay.

bit understanding to the account So the is build share manufacturing little on NuShield some or given success to moment at Affinity then a of and for amniotic and a color out at that the then around hold capacity. you in if the that any of in -- it's differentiated little can or least continues level the space you other could Can about talk share course feedback provide you from the leader growth bit we've gotten moment. out there, for that cede the products

I just follow-up one on As trends. EBITDA mentioned,

Tim Cunningham

Sure. Sure.

of portfolio really Affinity being to is and as our other dehydrated our market two at customers of So, other three is any strength has portfolio, factors now this an tissue are the are the half product our in our a turning NuShield, amnion. layers demonstrated point, all closest to product times amniotic the the product growth outstanding is maintaining of and natural which

substitute been those convert insurers, those or in to insurance, has skin other the Apligraf products two covered of the to commercial have. commercial many those So need commercial by insurance, XXXX other that you over particularly and that we portfolio, to no Dermagraft is have NuShield products and able know customers

NuShield, amount of is without over significant So us that continue has sell amniotic our growth our portfolio Affinity. to strength XX% allowed to

of of we're also quality are sales execution but so year one, growth coming part sure. of the does NuShield additional it for with QX the product, both future success the excited on company about to products the having very side, and we're speak the next NuShield, our both Affinity in so back this So

Matthew Miksic

color. financials Thanks. of see this the in improvement like you helpful of we on like And have then the or data sort an EBITDA, year. historically that at just throughout least seems your it That's in trend

beat despite the did operating at to in by least below that. You offsets line numbers the the our on income, quarter

of guess and I margins -- year, year we one year question should of around this generally or in this think if on change -- that, EBITDA question way that the year to and next by one associated say throughout I offset year trends or of Affinity, margins So right is trends then part year? EBITDA the guess throughout we kind any is is are or trajectory then that and the see this question EBITDA cost improving about XX, just trajectory I late are is this would there maybe level potentially the – guess PuraPly the this the does next with improving

Tim Cunningham

we In about OpEx sales expanding the grow to talked additional reflects expect of making investments But think investments $XX continue as incremental XXXX, we're the increased R&D million as when invest. business, QX of on you the the modestly, we XXXX on to OpEx for OpEx, and commissions, call. higher revenue, we about quarterly to increase

year and EBITDA the revenue of SG&A as full to target continue target XXXX and in leverage expect that per even percent XXXX show to break and by high of We XXXX. of to some XXs get

Matthew Miksic

sounds And if helpful, at doing trajectory just That’s Tim. from it you. like it got your I much isn't sounds your comments. with here Affinity like Affinity wondering affecting whatever you're really all in

Tim Cunningham

we today and we – both we guidance. reaffirmed Well our raised

Matthew Miksic

Tim. you. Yes. Thanks Well Terrific. thank

Tim Cunningham

Sure.

Operator

And you. our for does Thank you that Thank for conclude conference your today. participation.

Organogenesis (ORGO) 10 May 192019 Q1 Earnings call transcript