ORGO - Earnings call transcript Q4 2021 | Organogenesis Holdings Inc.

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Operator

Good afternoon, ladies and gentlemen and welcome to the Fourth Quarter 2021 Earnings Conference Call for Organogenesis Holdings Inc. [Operator Instructions] 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 today 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 most recent annual report.

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, the company undertakes no commitment to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. include in certain accounting accordance GAAP. also are measures principles, will calculated not with call references financial to that or This generally accepted generally measures. non-GAAP We these financial to refer as the Reconciliations non-GAAP website. present accordance Investor press GAAP of with Relations earnings measures available the on financial to in in those are release calculated most measures portion and comparable the our of like I the Mr. turn now to to would And over call S. Gary Holdings’ Organogenesis Executive and President Sr., Gillheeney, Officer. Chief Please go ahead, sir.

Gary Gillheeney

fourth our quarter welcome am and you, Officer. Holdings call. call to Thank earnings everyone I XXXX Organogenesis joined today operator conference by Chief the on Dave Francisco, Financial

on XXXX our Dave in of will condition fourth end, let financial as some today with and and remarks, including results, brief my commercial, results, during we a agenda up balance review you afternoon’s review in-depth full and for questions. included start will sheet and for our operating After start we XXXX. color release remarks. our against cover progress will and XXXX the prepared year our a our have will as will strategic more I provide guidance then we financial level a quarter provide that made quarter opening Now, financial fourth we at for expectations our this our high the me well growth of in with press then year of open highlights. with I financial a what of it initiatives view

offset the company. the a Care both XX% the a segments million expectations year-over-year our our products, our growth strong decrease In & by Surgical exceeded quarter amniotic transformative strength a with to revenue in in growth driven quarter, by $XXX.X Sports Medicine in products. franchise. Wound XX% Advanced of for primarily sale our another which the of of reported net Let for rounding review results of We XX% me out QX, driven year performance, begin

expiration FDA As expected, our Sports grace the of period and & the the following on XX. NuCel headwinds Medicine decline reflects enforcement in Surgical of the ReNu products May

from increased an revenues these the adjusted net Excluding total year-over-year net fourth XX% quarter. basis on products, in revenue

In addition net EBITDA representing QX, period. sales than in adjusted $XX of a more generated in a we strong better-than-expected XX.X% million, result revenue of to the

our to increased an net Turning on increased year-over-year adjusted year-over-year for the basis. results full revenue year, XX% XX% and

$XX EBITDA the strong margins The In net well. gross revenue we this in notable increasing resulted combination addition impressive growth operating XXXX, and delivered financial year. adjusted performance million of of more than leverage to in as

quarter advantages to differentiated portfolio revenue drivers continuation and comprehensive Our have our year needs force, process product patient our fiscal of investments benefits products and wounds net we strategy of that fourth and execution XXXX focused strong strategy across results we and of growth leveraging loyalty. the new key of multiple our to years, recent treat all on competitive stages channels, brand and introductions commercial address healing the our including sales the in the of have made discussed reflect expand of the

me on you update XXXX. in of these progress Let the of each

to the the increase to of increased compared end XXXX, grow the direct we XXX of ended And of XX% X at made as number at have direct of end our direct CAGR last years over a investment have representatives, we and this investments of result, sales prioritized of area XXXX. XXXX sales a XX% with First, since representatives. significant an XXX representatives sales year-over-year. the We team of

in our recent direct commercial year the we quarter net to years. and fourth Our from fiscal revenue results have made clearly investments XXXX benefited the team grow

recent competitive is to of be impressive continues a primary growth products of advantage in portfolio comprehensive our for driver and our a Second, key Organogenesis years.

quarter and on fourth collagen Our respectively. in PuraPly market the PHMB, the well skin is growing proven component in It’s unique is with full outcomes franchise wound XX% early broad-spectrum brand. only and PuraPly a substitute the remains patent-protected patients. efficacious XX%, year, the of PuraPly the algorithm well-established for performed extremely all stages is highly third except therefore, burns. wounds, for healing PuraPly to our and antimicrobial and in back a clinical degree from clinicians with key healing

complexity. and product since we products brand. sites line continue have multiple extensions and wound expanded across strategically address have depth varying These demand to products We drive strong bringing XXXX, the access and to extensions size, the enabled for in physician brand launched to of specialties line and the and attributes new new care

products portfolio on differentiated XX% expectations. QX an our net increasing highly exceeded which adjusted XX% sales with growth Our revenue in amniotic and basis, up strong of continues experience to year-over-year

Lastly, fourth HOPD XX% PMA setting, year-over-year. their the PMA and reflecting grew Net and in revenue products our the Apligraf of declined X% other our and other But care. full quarter, year-over-year year, products. for for headwinds COVID Dermagraft in the site primary

product in imperative. portfolio, these the increased modalities success this continue we physician our across led for reach progress of adjacent advanced to commercial strategies channels. make into factors our new through diversifying by the and commercial and and win The the key care benefits to Finally, of development our target revenue, are strategic awareness breadth of sale specialties broad of sites multiple in our

of in the physician care expand new operating various environment in the sites customers quarter. strong of QX the overall in year and to We full Respect continue specialties XXXX. growth and experienced the to fourth across number of for

and our our revenue QX financial adjusted in reach XX% recap on the revenue our facilities, implementing the technology another to expanding initiatives allowed on drive environment. in highlighted for healthcare impressive we against platforms As COVID-related experience Nonetheless, operating and our to access. and commercial growth of diversifying year. source we continue portfolio, on performance To difficult basis delivered focus prior challenging growth despite us restrictions comparisons on the net takeaways strong QX, quarter strategic product call, leveraging our

we challenging executed well strategic despite team made and initiatives. very towards Our operating our environment, the progress

to operating we adjusted the of than and building balance financial adjusted the unprecedented me, strong we and XX% from in in pandemic in in ended year, XX%. condition a million back in and excuse as $XX – strategic with year generated revenue Despite financial adjusted of where strong growth XXXX, net reflect challenges We foundation over of we significant a execution results. off more we this half team our XXXX. of plan extraordinary I XXXX, strongest impressive of sheet improvement our we entered able EBITDA the another second deliver EBITDA with – in resulted $XX XX% In margins As of EBITDA XXXX, million performance net delivered profitability the generated year our financial the in to product related adjusted history. over XXXX, the company’s of growth and were XXXX,

in gross In competitive financial team, the exceeding us advantage company’s commercial our our Massachusetts multiyear for made as margins. increased made the a plan the XXX our capacity progress our market, We long-term addition performance, We year great achieve goal we progress our to XX% goal strengthening Xx reps. capacity with direct key amniotic into our ending operations including year-end. against initiatives, the to reduce our to of X.Xx strategic sales by of to cost manufacturing structure by California part significant of consolidate from in our

XXXX. supporting continuing heritage And clinical publications our and efficacy development. We our We’ve evidence of strong also expanded finally, research opened of in adding our innovation independent of and with appointment execution up Duraibabu six Jolla new dedication center, strong Driscoll. we our I’m Directors of our of new our Board and the strengthened Directors, team’s the two Michael with La Prathyusha proud product.

Dave, over which release. review XXXX press call we in the revenue net Before I our let this turn to me introduced afternoon’s guidance,

net the to of to For XX% $XXX million, million growth full of basis. to on $XXX the year-over-year an revenues XXXX representing we year period, X% X% and adjusted range XX% in expect

of reflect our in growth has XXXX as-reported initiatives, of strategic to revenue multiyear which expectation net for resulted Our from growth XXXX XX% continuation CAGR XXXX. the

continue on range which long-term the key engage our sustainable bear target our May headwinds XXXX when Dermagraft to in very challenging That the confident and on our the our mind consolidate products new remain restrictions to growth. environment, sales said, of impacted campus; is grace XXXX a product. the We manufacturing the staffing net there elective growth the access Canton as in In our of procedures, patient FDA’s XXXX. quarter XXXX the for consultations, as-reported included plan and net facilities NuCel believe of increased impact treatment revenue of multiyear XXXX, to XXXX expiration of Organogenesis Dermagraft was we and half fourth third, sales rising growth cases our limitations first customers. compelling, three our part guidance long-term suspended in are and January, through opportunity our of XXXX double-digit here operating manufacturing challenged revenue reflects in revenue low of evaluating net included our ability in shortages, by more the our second, omicron guidance: implied marked period; particularly to XX, first, that ReNu of with

but our improvement employees in were few impacted after Additionally, the we revenue on January have it’s seen trends faced own will our the that Dave a virus. expectations in quarter moments, challenging headwinds we material color to share incremental January a first as the business by in important note more period.

reflects first half COVID-related in favorable more year. of see XXXX. operating a over second through to our headwinds improvement the the move steady half And expect guidance We of we the environment as

comparison, growth growth with growth headwinds Additionally, year-over-year multiyear products, company’s coupled has to while back from growth the changed. represent believe easier target contributions accelerating And we the we temporary year. with what an into not items the new rate, half the these to of expect profile our reported

adoption Surgical We execution will for Care in Sports the utilization our are result our & strong strategic Advanced plan solutions Wound that and product of of confident Medicine continued markets. and

to development our of plan introduction strategic continued profile. profitability products and and operational innovative progress, prioritizes commercial also efficacious continue Our highly improve long-term and continued highly

position quarter afternoon’s Dave? substantially for the we review over and a of XXXX me quarter, care. that, for financial of integrated cost this our the call of to We our improve outcomes review guidance we the financial balance as expect let sheet a deliver fourth improve industry our healing provide a overall that while to and to in solutions results the condition mission to release. press the as our introduced of turn lowering end in leader Dave as on continue the of With the financial

Dave Francisco

referenced our quarter financial Gary, Unless are specified, I review begin will a basis. you. fourth rates remarks a thank otherwise year-over-year all with of prepared growth during my results. on

As strong up adjusted And XX%. growth with excluding quarter net in operating we quarter given of grew we the pleased environment. $XXX.X and for the ReNu Net the revenue million, revenue challenging fourth Gary revenue were was mentioned, the by XXXX net XX%. NuCel,

for revenue net million fourth quarter ReNu Sports the of PuraPly driven XX%. And products net XXXX was of grace quarter Care was up due to quarter by the impact we fourth Wound Advanced May XXXX from the Surgical the sales & period. and was revenue XX, Net of from the $XX.X XX%, expiration XX%. XXXX, Medicine revenue our products, Our on up NuCel of after $X.X million, $XXX.X stopped which for FDA’s products down XXXX marketing million, enforcement the of for fourth

XXXX of expenses As related excluding R&D were sales. Gary PuraPly to $X revenue The the driven prior selling, expenses $XX.X million year-over-year $XX increase we’re to year-over-year the pleased to million step-up commissions in selling, XXXX. increasing year-over-year in period. seek Operating $XX.X by increase or compared and year, necessary of in income XXXX for compared of of related and of XX% strong and restructuring aforementioned quarter of research due fourth the the million costs. costs increase for the in million increase indicated XX% development or of $XX.X quarter for for GAAP operating margin $X.X operating fourth XX.X% of revenue, million sales performance to was a quarter with year general in last in of driven increase clinical expenses was approvals administrative continued an was compared and Operating the quarter was income the of to XX%. The compared in to was million was decrease brand, earlier, fourth year. fourth or by $XX.X regulatory net net operating a of The general to and $XX.X Gross spend million in last million Fourth higher quarter XXXX XX% increase approximately products. increase million an administrative $XX.X profit costs from year-over-year last study planned X%. primarily million strong expense $X.X in the a our certain the with XXXX year,

$XX.X a valuation in for to our of or were or share. of rate fourth million borrowings or full Total agreement under reconciliation the resulting quarter of We EBITDA allowance recorded or was compared previously earnings of interest of Adjusted release credit results operating of net U.S. quarter income expenses benefit or Note included from by increase million $XX.X fourth million million of decrease to $X.XX of in adjusted $XX XXXX the the issued $XX.X quarter our net a taxes of primarily full last a XXXX in driven tax in deferred non-GAAP XXXX. for EBITDA the an $X signed revenue reduced against adjusted the million margin $X.X of compared of for amount share other million per our of this quarter year, recognized fourth $X.XX for compared a Our assets. release the quarter XX.X% XX% $X.X a August $X.XX income of EBITDA fourth was share last income our XXXX. the to new net Net $XX.X net revenue XX.X% or year. year, of income million million net $XX.X last afternoon. provided million of fourth press XXXX XX%, the

the Turning balance to sheet.

million lease the and company $X.X $XXX.X $XX.X were restricted cash, obligations, which XXXX, $XX.X obligations, December debt XX, cash debt of which of in cash lease of and XX, to total compared December equivalents $XX.X million of million as $XX.X restricted and were And million million As in in had capital and applications. capital cash cash in cash, equivalents this obligations XXXX. million

revolving of as available We million of also on credit borrowings have our up $XXX December to year-end XX, facility XXXX.

sheet financial never As condition company’s been and the Gary mentioned, stronger. has balance

growth financial related has to in cash enhanced positioned profile generation, well improving conditions, to executing strategic profitability initiatives with and and continue the along to years balance us our Our flow sheet our come.

of a we XXXX this review to Turning guidance, which revenue our release in press net our introduced afternoon.

December XXXX, X% increase expects And sale year-over-year. assumes X% The approximately months Care year-over-year. revenue range XX, Wound net the products million, to XX% revenue Net products XXXX X% our the approximately million XX from ended net Advanced of $XXX PuraPly net an increasing decreases $XXX approximately products between revenue year-over-year. company XX% to For and guidance XX% representing net Sports Surgical & from from the Medicine revenue approximately to of year-over-year. X% increased X% revenue to

our the our As million of Gary May mentioned, XXXX $XX end revenue through the products. XX, period for ReNu NuCel results included grace approximately and XXXX,

XX% Excluding sales an growth XXXX, months first NuCel X% XXXX our to of the NuCel guidance of – implies X ReNu for on basis. of revenue adjusted and

results sales include of revenue XXXX $XX of Dermagraft million. our Additionally, product approximately

Canton. upon end manufacturing suspended and we Dermagraft facility of new mentioned, at Gary our year the the in resume As will production of last of completion

million $XX.X net $XX.X EBITDA and income $XX.X of between million million. $XX.X between net In terms $XX.X profitability and to of company XXXX, million, million, our and $XX.X $XX.X million million EBITDA GAAP adjusted $XX.X between for million of and and generate expects guidance income between the adjusted

assumptions also In to for we XXXX. supporting investment in for better revenue addition to when evaluating net community revenue intended a guidance, mind is few XXXX. understand like net to the investors color to considerations for the year help formal bear our provide additional This expectations growth fiscal the expectations would our

revenue total year-over-year our year our amniotic growth net be XXXX. range products, company XXXX of full the at fiscal approximately to will of contributor XX% the largest which in the First, midpoint assumes in sales growth amniotic revenue year of net

the the XXXX. of products, midpoint approximately in range, other and year-over-year non-amniotic our to expect we X% form at which remaining group the decrease PMA Second, collectively non-PuraPly

sales our COVID-related we to the decline and Third, reported earlier, expectations quarter-to-date, Note, reflect as basis. to headwinds first from on experienced expect excluding in have adjusted first quarter a flat January. on quarter our And Gary periods, ReNu an detailed we basis. of the sales while a trends between year-over-year revenue year-over-year on NuCel X% X% our and business improved X% net down – prior

as half in in the of guidance a assumes operating improvement the half and revenue XXXX modest normalized move XXXX. more Our through of the net environment year first second environment we the

assumes and in launches, in XXXX. in the beginning driven combination new COVID-related normalized assumption of by prior guidance that we growth headwinds increasing planned to second our stronger Importantly, XXXX, easier environment an comparison contributions not contributing from of the year half NuCel improvements X, June to ReNu progressive trends product a return operating a and to and sales more an see related

considerations guidance modeling formal addition for we some XXXX, for are financial our In purposes. to providing

XXXX year approximately GAAP diluted of $X expense to average and approximately period, of increase respectively, approximately year-over-year, total of million XX% non-cash margins approximately share million. of total million, approximately expenses expect stock the $XXX other expenses full X% non-cash D&A our we operating and to and For $XX gross XX%, $X.X count interest million, weighted

We our million in approximately that, year-over-year Canton of multiyear increase I With will the with to reflecting it $XX to CapEx of the our also the you. $XX XXXX CapEx operator, build-out full million, turn expect year to campus. beginning back manufacturing

Operator

[Operator coming Zimmerman with of our from question the BTIG. Instructions] first And line is Ryan

open. Your line is

Ryan Zimmerman

growth – this, does guess might maybe appreciate Canton nice the for ReNu you for when Gary on. all at that back you facility Thanks made missed of facility Dermagraft, I and to When question that I adjusted contributing? a on you Dermagraft come have start, that this online one, mid-teens does back rate can the color guess put the and and But when I with XXXX. contribution NuCel. kind start and scale Canton year guidance guys it’s the Hey. have to or and progress out the taking Dave, for and I

Dave Francisco

to be in XXXX. going It’s

Ryan Zimmerman

Okay.

XXXX. shouldn’t expect we anything So, then in

COVID speak, am you – of of some dynamics quarter? second in in the some were products kind of the was related if in believe kind of other just significantly. And question say, yet could I that the had was headwinds quarter. But some PMA around the versus, the to the and down you dichotomy utilization were wondering pretty heard I And your you Okay. and HOPD the to PMA that correctly, amniotics other of If Gary, between I amniotics saw setting. I up, that’s in then

Gary Gillheeney

Sure.

Apligraf, where site The our is impact of PMA the the the are to as in most we the saw HOPD. was COVID that’s is So, of other correct, COVID And and for PMA you primary care products it headwinds. access. related Dermagraft, it

clear the So, – that’s we that site products. from of pretty having a result of data just access those care into it’s that have direct that for not

side, as the to On the performed then expected as decline month did well. amniotic first We – our a started better grow see expectations. and they and expected. expected slight They do did exceeded in than actually

amniotic put helped in we lot a focus portfolio in time and the So, expectations. exceeding on and QX, our of it

Ryan Zimmerman

and year? of to may the of help headwind say, dynamics that more COVID – squeeze maybe quarter. the could readjusting in Dave, through we obviously, first The And the was the you year. of last How Okay. as can end rates with the you If in There I some MAX just one kind that the reimbursement their the reimbursement. might kind a understand much at see give relative us that that about first dynamics pacing quarter the think if amniotics big in. be the quarter, focus guidance for reflects first MAX us from of

Dave Francisco

Yes.

third So, we in as the right. talked they are somewhat about comingled quarter,

right. into amount challenges that that really talking there launch But is these about it’s team got are experience new of the access this think as moves a launching products that I – of forward, markets. you has tremendous from standpoint. Affinity, And So,

been the plays the cadence And so it’s we first just that into into quarter guidance year obviously, incorporated and full and discussed.

Ryan Zimmerman

will I hop queue. back you. the Thank Thanks taking for in Okay. questions.

Operator

the And Antalffy our with coming SVB line Leerink. next from Danielle is question of

Your line is open.

Danielle Antalffy

a the and to the enter much Thanks strong guys. congrats on question taking year. afternoon Good Hi. so for

just like our relatively Just am a the of story, weeks or Organogenesis dermatology. into one little to bit into drivers, I And driver wondering expansion conference a more in about channels you talk new at spoke one I growth is XXXX? And if how could question then we be might ago meaningful that on have expansion a but the new channels growth other few about new follow-up. the

Gary Gillheeney

Sure.

jump Let Dave, in in, well. me jump and then as can you

of aren’t So, all the get we channel do but growth with certainly strategies, expect to surgical this year in of some into going we products. channel our our

like in specialties certain And in dermatology, growing seeing, that’s particular are nicely. that’s also quite growth. nice We one

adjacent expect be. what those we some aren’t But certainly exactly So, those to growth channel we from do channels. guiding opportunities support would

Dave Francisco

agree. would I Yes.

into I Gary guidance, split continues think seen as ‘XX into the mentioned, progress and that And we momentum out. we have don’t incorporated ‘XX. some in good it’s that but typically

Danielle Antalffy

that quick guess on the just a seeing one that. are offices? ease COVID you Yes. more difficult in is Omicron when components that little on new start Understood. I bit surges, example, calling physician seen are that And And you I to to follow-up of a up? offices, for new mean have is get you into like,

Danielle Antalffy

and will at certainly and the it the really as January. QX and of a because those see QX QX well. new in QX challenge well growth them the the integrated getting – with into of into bringing the did products getting more into wasn’t And which challenge. was staffing products traditional also end was in it help and brand was new brand it helped It issues. products facilities, That did office. really introduced was impacted But We of really our what and the

Danielle Antalffy

do And you have continue perspective will clearly, growth for in to are market on from it. me, number the so. and market, the also outpacing that’s there? moat of product but feet portfolio guys competitive a There and positioning full on are Got last you question of players the this competitive built just the a and other street. much significant how guess I strength and one

you or big little force you is to like what if a moat adding more do And today? done continue guys competitive you So, just much. maybe there? feel at wondering sales competitive a a is the the got to enough, if you big where bit like be moat just feel have feel around like or you expect needs enough you so talk about Thanks place

Gary Gillheeney

sales Sure. force. add advantage have grow And to Thank add force sites the expect that continue not to a is as what competitive the we to both we of in there. certainly strategy, size, the sales to we with but We you, believe expertise Danielle. our only that care in. additional of today participate sales we our additional force office But we expect

We and representatives are care additional would further adding TransCyte, additional our that that is surgical be down force. looking at expect added wound sales efficient get specialties which on the – within we where be sales we sales market. And would be side, we ReNu additional would space, the also be there sales force as successful, if small, a specialty with pipeline pretty in a ultimately, force an it’s there. And with burn will

growth markets the to in we that in to add expect add from. continue and to traditional our seeing we adjacencies additional So, are continue

Danielle Antalffy

much. so Thanks

the I it. appreciate for Sorry questions,

Gary Gillheeney

Great questions. Thank you, Danielle.

Operator

[Operator Instructions] is Our Steven from Oppenheimer. with coming next the of line Lichtman question

Your line open. is

Steven Lichtman

through Gary, guys. flow maybe now Can XXXX. key specifically product right Thank focus on in in the new Hi. Novachor? mentioned products of and also your you, you you some walk

Gary Gillheeney

Sure.

of a of will in MZ product physician to half. that experience half and So, launch. other more a PuraPly a one will growth second we launch kind the expect of second year us the be in Novachor is products the But it is and we we do come. It launching of to be for that growth soft have. be the some years in driver provide the

It reflect in even be it We expect it be launched. all, second we will half not and guidance the don’t our at material launch to the it in though would year. of

those year the come. products, next a contributor two year So, MZ, being a contributor this of to and more a years of are Novachor PuraPly and more

Steven Lichtman

it of on Great. Is as end? for higher the your secondly, sort the of toward sort versus the COVID? then look what the versus lower. end around at Is you it color Care Advanced it. could about upper Any year, And you of Novachor guide Got just provide gets lower mostly you ramp? sort Wound

Gary Gillheeney

start the are Yes, an prepared can remarks, are we the issues. improved have I seeing as in Omicron me, and improved access. jump and seeing Dave, Clearly, you in. our mentioned COVID-related – trend I will excuse then we We Nova February, in and –

exactly But quarter, So, Affinity, re-launching until through it other that first we as is. get and we are won’t what well. in that have speaks seasonal re-launching issues you when And know also, the we – well. quarter you the

range for is want bit noise there So, that’s But of we a before that little little see are data two what more a comfortable. we Dave? to bit the is those items.

Dave Francisco

guided Yes. paces I the would January the have year. in recovery the obviously, agree of improvement full it’s through pace really the of and for full dynamics in of that saw we extension what And the we the quarter. that dynamic quarter into and further how – how

Steven Lichtman

Thanks guys. Thank Great. you. it. Got

Gary Gillheeney

Thanks.

Operator

in remaining And for participation. does conclude at we no conference That the this are today. currently showing Thank time. questions for you queue your our

You now disconnect. may

Organogenesis (ORGO) 2 Mar 222021 Q4 Earnings call transcript