ORGO - Earnings call transcript Q1 2022 | Organogenesis Holdings Inc.

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Operator

Good afternoon, ladies and gentlemen, and welcome to the First Quarter 2022 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 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.

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

Gary Gillheeney

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

guidance net questions. reported with we Beginning Medicine the of our then Advanced a agenda our Let of prepared in our sale first our level the reaffirmed XX% in I'll the our cover Care start that floor a with for & review the a financial by growth of Sports my products me quarter In open some at in-depth decrease with first of million, what opening revenue a a review we flat will results, in more sales operating the provide $XX.X XXXX a of of Wound during products. of of I'll QX, start our provide quarter today's and after X% decrease Dave driven condition high of will remarks, we'll year-over-year, review the with we of Surgical review for remarks. brief quarter balance sheet the press release. you up financial end our and highlights. Then revenue results. of first recent and results. And

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

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

First growth the expectation on exceeded the Despite growth our we leveraging Wound The & strength new of driven franchise. portfolio conference Sports well product strategy benefits primarily quarter company. competitive loyalty of differentiated product quarter call. to our channels, sales the starts quarter, yield in and and high-end team Care provided and of as Advanced by expanded our our Both came Medicine force, market. continue of above our multiple results and results for the of Surgical the advantages in range expectations, fourth introductions challenging continued and comprehensive to sales the the executed strength our the PuraPly brand

QX. these in Let one progress you of each the update of areas me on

team, direct to represent of advanced commercial Our the Organogenesis. believe penetration across to awareness key for including continues modalities. country broaden continue sales and the expand our benefits our representatives commercial XXX advantage team direct competitive a We of

PuraPly products broad products portfolio exceeding XX% us. competitive of increased key for of our another Second, advantage differentiated Sales year-over-year highly expectations. our is and

in line strong Affinity. the NuCel national in reflect drive introduce and our continue and excluding with our brand. were products Sales demand These adjusted launch specialties, for basis access on to PuraPly line of new XX% of extensions the and XX% and of physician sites strategy declined to Our of multiple products Omicron results the to and period. year-over-year prior have an the largely year of care enabled sales on declined ReNu and impact our expectation amniotic

growth revenue contributor to net fiscal midpoint And XX% to assume range the of year largest year-over-year differentiated highly our revenue XXXX. growth amniotic products be full-year of XXXX. portfolio We continue in approximately to expect company's of the continues for our to that amniotic

Lastly, impact consolidate in year-over-year plan of the the the our quarter, first campus our Dermagraft other suspension products, driven manufacturing expected PMA at Canton. by multi-year XX% of in of to our in declined revenue manufacturing net and as part

and continue across first physician revenue make call, overall elective to rising restrictions environment particularly win with specialties by limitations care to technologies. progress to challenged our first ability of Omicron commercial our discussed shortages, which in respect increased key the development patient of consultations, in our as by on results were in diversifying and case and product we With impacted these and on procedures, new engage quarter introduction QX Third, channels. strategies access, our counts, impacted supported sites new our customers, staffing operating to with targeted the the quarter, treatment

headwinds incremental our as own face impacted virus. by employees as discussed were January, in we Additionally, we the

in improvement XXXX and of We as $XXX year-over-year we XX% our remain second X% the the on improvement noted million, on to operating discussed January in of to as on range the which headwinds quarter full-year representing assume improvement QX call, our half material move XX% to trends growth we a more after confident in growth COVID-related that challenging for steady basis Importantly, that in expected. and to X% XXXX. through as our seen reported March guidance revenue measured million an business we'll the second adjusted our we we in see of And expectations, the operating to favorable continues of have environment the net show basis. continues calls XXXX a environment over in period guidance $XXX

operating increasing see progress headwinds and a of X, XXXX, to continue we on growth prior June sales by second a combination more beginning COVID-related expect comparison continue ReNu to and to easier not stronger We XXXX. environment contributing year improvements in products related to the our trends assuming normalized returned the in of NuCel an to the new contributions from half driven

few on note. highlights Now, thoughts before I Dave, some the I of to a turn operating call share of over to my want

wound therapies. A their properties of a controlling to CME real-world who panel the leading Affinity. and and engage care years Care at Arizona. Advanced in in evaluating use spring of most excited on in First, opportunity program and care determine wound products maximizing with Symposium their And and conference they've to our differentiated SAWC our wounds. portfolio professionals the health across the use opportunity clinical had with highlight of our led evidence by a healing surgeon speaker team prominent on indicators was of led in the three environment based make wound chronic shared on Organogenesis or attendees. A practices. with also At a and the treatment featuring leading to sponsor brand. the our Symposium a our presence over they benefits experts, by conference, live team's this that other key first was the was discussion focus am the opinion success for with the spoke many plastic our patient I multispecialty AM trials how out cost two the of SAWC professionals the supports Spring the with X,XXX physicians translates Wound appropriate This valuable portfolio their specialties on in investigating PuraPly innovative XXXX wound symposium to controlled evidence leaders pleased healthcare randomized Conference at strong clinical body And product to Organogenesis how discussing of

made significant clinical osteoarthritis of also progress QX Phase treatment of for ReNu trial the challenges. III ongoing We our notwithstanding in COVID-related knee in

was clinical QX. of investigational added complete Our the in enrollment needed team able for the patients to sites of XX% and trial

patients complete enrollment track to a the we for result, the by data year. of analysis in the on enrolled remain of As first of interim end the XX%

the In on as evidence-based product the publications regarding further XX portfolio treatment addition, of and cartilage two building the utility product's the provided evidence for three use preliminary The general released of in QX ReNu ReNu publications for new in our bolstering on leader last the publications osteoarthritis. defects position years. an were our for

we the for publication the antimicrobial our of for were chronic two wounds summer. During manuscripts product notified accepted quarter, PuraPly were this management for also that important

quarter, two experience to significant With respective Korfin last has working evidenced and companies company's effective of Gilberto built five added the recent XXXX. for Quintero Gilberto their of of appointments Lastly, and our of ranging release. and like experience announcement at the of talent careers, breadth independent review sheet our will XXXX to we of going to May highlight Board for Directors Dave of and be I'd size our condition me by that let financial the in results the brings extremely Michele affair. a call years. over Michele Michele X, regulatory that, over financial over in across and Organogenesis I insight roles, in the Dave? as first experience And a for forward represent strategic leadership our quarter-end look compliance valuable their Gilberto set priority their quality, industry. leadership broad review to financial enhancement is scale and The of of turn press today's development, and from the directors and to reaffirmed as new Directors, healthcare notable including Board a we've of Board and guidance and the forward. further balance the operation, clinical our diversity Directors

David Francisco

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

XXXX to challenging Net the revenue the As were excluding the Gary quarter solid we net down X%. of by and environment. for the adjusted $XX.X was grew revenue we million, mentioned, NuCel, start first and pleased X% ReNu with year, operating given

million, for essentially products Medicine Wound Sports with on ReNu down Advanced Net the our suspension XXXX first the NuCel $XX enforcement in XX, was of year-over-year. Our for the the XXXX. flat driven period of FDA's Care net $X.X Surgical of quarter grace of first of the revenue from & XX% products connection quarter was million, XXXX revenue May expiration marketing by and

of was for XXXX were expenses year. $X.X Gross for year-over-year approximately up Excluding million QX. The to $XX.X quarter XXXX. Surgical prior or of quarter of income in $X.X of an other step-up NuCel Adjusted million travel of headcount, to under administrative of for for by adjusted last million COVID-XX year-over-year period, and first increase and of for a to the XX% for $XX.X planned $XX.X XXXX million, related programs of the the by for was restrictions. decrease a million to increase X% of Medicine first release from revenue the increase issued the million a XXXX a net in million. revenue first primarily clinical an the costs of direct products XX%. net to of $X study increased a Net selling, credit we in XX% profit million million in year of year a borrowings was or million driven first prior revenue expenses primarily and EBITDA year-over-year $XX compared compared operating and the million of $X.X $XX.X $X.X a Net the quarter year, driven provided year, by the revenue certain increase expenses for this research net EBITDA $X quarter Operating of results and XX% million $X.X $X.X to rate compared to million in general and agreement decrease related relaxed XXXX increase interest and our Sports XXXX products million quarter general expense of marketing The last spend million reconciliation was driven of approvals due additional compared in increase to the related or XX% travel decrease quarter last million earnings was first was Total of August XXXX afternoon. products. year, was quarter of last quarter our XX.X% a $X.X was of of early operating administrative $X.X our compared & in $X.X period. in the adjusted or our net $XX million EBITDA $X.X income last new million. amid $X.X year, in sales to regulatory first million of signed compared to reduced selling, increase first income The increase expenses cost and the XX%. of revenue or $XX.X in PuraPly in year sales compared primarily in and first force ReNu XXXX to press development the income full seek million from for last Operating R&D necessary

sheet. balance the to Turning

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

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

of guidance, a to which release. net reaffirmed our we Turning in press review XXXX revenue today's

our XXXX, December year-over-year. range year-over-year. of For revenue XX, revenues between assume and net XX% representing guidance approximately decreasing the Wound products to continues ending million an The to XXXX of the FDA and approximately by company X% during XX% XX year-over-year. at from the end $XXX products enforcement period. to months sale approximately net revenue to ReNu May increased XXXX a Surgical results $XX Sports Medicine X% months net our include from increasing X% the products $XXX And ended our continues million, way, to five to grace revenue approximately X% Care revenue reminder, products PuraPly XXXX & increase in approximately X% from net Advanced million of attributable revenue XX% Net to year-over-year NuCel and revenue expect XX,

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

ended In generate million, $XX.X our of expects profitability adjusted Note million. a XXXX. the incremental terms related $XX.X December the ranges a net to and adjusted between tax for guidance net $XX.X company's months income expenses the operating assumption recently net XXXX, GAAP $XX.X between XX, net and of income guidance income of for income company restructuring reflects and activities XX rate million announced million and GAAP revised to

million. million of We approximately $XX.X of $XX.X also adjusted between expect and million EBITDA and $XX.X million EBITDA $XX.X and

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

range consolidation. guidance group of called the decrease XX% our XX% our sales growth approximately Our approximately and next which midpoint expectation operating Sales increase margins will a our interest our PMA XXXX year-over-year, which approximately increased of Gross is the of of at tax guidance, XX% million rate $X.X in in of of the GAAP to total million related non-cash GAAP and non-cash to of approximately our assumed average collectively year-over-year. of range the of and to $X.X incremental the stock tax low of other approximately non-PuraPly non-amniotic respectively approximately $XXX products, year-over-year. single-digits, other to will GAAP this and assume which net prior to X% compared amniotic expenses and rate revenue related phase diluted the approximately and range restructuring D&A the comp XX%, of of approximately $XX Canton full-year weighted approximately ranges midpoint XX% XX% full-year compared X% increase at expenses products, shares for expense million Total form $X of expenses million. million, to year-over-year

expenditures five by of cadence the multi-year phase our continues million. We timing capital of each to also million phase be quarterly to buildup manufacturing to of of campus. approximately expect and $XX the Canton XXXX $XX CapEx be The impacted

discussed Gary earlier, operating measured improvement in as environment the seeing as Finally, are expected. we

our to second We reflect improvement first trends revenue to net growth quarter as results the compared quarter. expect

prior excluding from year growth of quarter Specifically, our year-over-year revenue X% Note, to year-over-year on QX flat be the second an an back expect I'll basis. sales you. NuCel period, basis. to over call that the ReNu reported the range With we expectations operator, of as and turn to sales to on X% down the reflect adjusted our in net X% of

Operator

come SVB sir. [Operator Antalffy will our Leerink. Danielle from first And from Instructions] Thank you, question

Danielle Antalffy

the so the a on much solid Thanks guys. Congrats to question. year. for start afternoon, Good taking Hey.

I the in on specifically, we you question the and came any quick But a you bit product one to April be XXXX what number that a thinking. were it bit little then that's that amniotic a I going you guess, line the and incremental contributor little on give what as confidence it quarter can what far in so mismodeled Affinity saw how And one, the follow-up. color sort below the we that's relates line? here. then Just And growth maybe exiting primary have product trended guide? gives Thanks. to of to secondarily,

Gary Gillheeney

Sure.

Gary. this So is

as – for relaunch the had product to was was launch. with QX. expected in QX We the for So us Affinity national again

So you rate have a change.

that issues had We we also had with discussed the everybody as Omicron.

over for So it sure. last start now [indiscernible] The quite trends the the strong. we're sales was a slow seeing are accounts We're sites of to for and very trends weeks care five positive. that new multiple four in the adding product of

of improving year second country. the able feel product the year, across the environment continue we use the the half the launch the So to we'll with with of and of the be expand national to rest that that the operating

Danielle Antalffy

Got why in PuraPly we strong is on it. Thank as and guide Thank That's PuraPly helpful. then improving the you're you around that. questions. Affinity and strength through And there, my the year? PuraPly taking so follow-up and move on just for quarter the very the given confidence for you curious much just reiterating the

Gary Gillheeney

Thank you, Danielle.

the expect do brand we well. So PuraPly to

expect of reimbursement have to people that We second change the of a with SKUs the will with readjust a product. a of also as we similar what one for year. launch had in Affinity, pause our the in And bit we've national to of half the

we product care. in So that's expect. with built multiple into what trends our But seeing of we sites positive guidance. That's are the

Danielle Antalffy

Thank you.

Operator

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

Steven Lichtman

Thank guys. you. Hi,

organization, both how thoughts an as looking reps are you give this well your the grow if you're of latest in us as to distributor could update direct what Just year? commercial the much your wondering on terms relationships

Gary Gillheeney

Sure.

approximately representatives. add new will we direct So our expectation XX is that sales

where add our agencies, also we're as agencies sell. continue to at and at to we our will but agencies, the looking competency look those We continue to

jump may our but not big in different forward. move of group see we a we agencies, see So may as a agencies certainly we

Steven Lichtman

pipeline And where if Okay. A, you're NEO the Novachor, sort and but mentioned you at maybe those? burn of then products the on Got you could course it. about of the long-term to sort pipeline with update relative and on medium-term Gary of an on

Gary Gillheeney

Sure.

So guided Novachor, started process Novachor have we've that we of in now. launch the and we're as soft

and though a reintroducing middle still right the controlled experience TransCyte, now until to end that nationally. facility to till Canton. will clinical scale product. able QX, have built is make of be in But when product be We QX. scale our a of to of out and it able launch sell it burn middle to product XXXX product, in the end be here the launch expect manufacturing national it in be that's we'll we're the the to to more We make And won't process probably of the won't

Steven Lichtman

it. Thanks, Gary. Got

Gary Gillheeney

Sure, Steve.

Operator

[Operator you. Ryan Our next comes with Thank BTIG. Instructions] from Zimmerman question

Ryan Zimmerman

Hey. taking Thanks Gary me. the Dave. for Couple questions, and for

second if So Apligraf Affinity the balance the a your set as that move doesn't you about will, pricing quarter, and part ceiling kind suspension. manufacturing but and the puts the that pretty the if think to I bit of of speak more the expectation could PuraPly second be Medicare, wondering and quarter little could just we Dermagraft I'm into are takes so year? But implied Dermagraft through around from as what was rates was with the you for the really with held B – quarter-over-quarter. Medicare down, guess down steady, matter I

Gary Gillheeney

the it's So off not correct Dermagraft, you're relevant. market. That's about really

you Then which that it's have is of PuraPly, PuraPly brand. a important think, brand. of it insignificant PuraPly, that very look the the is relates there have two as ASPs more I AM, you are when component to which you

relates in insignificant really antimicrobial AM product. much all. the it doesn't It's component, is the not which the at the to PuraPly, there's as which PuraPly So change number include

relates there So to PuraPly. as nothing significant it

the and product Moving the basically ASP the product is is forward if what and the as year, pricing it'll over for, time. you through sell move different

expectation of the is So with product. the that's pricing the it'll move

Ryan Zimmerman

should institute I to are mentioned pricing are percent expecting pricing any a off mean, we you PuraPly the to AM product, was year, or fair, But only by when you Gary. assume this changes that I Yes. those fairly moving That's point, or And quarter-to-quarter. two with steady? your mean,

Gary Gillheeney

We're the schedules. strategy, reflected when Well, but movement, to them. filed we it'll show those a there our haven't discussed price in pricing ASP up going on get will not discuss and is we if

Ryan Zimmerman

Okay. then two helpful. on That's And follow-up could other I for if questions Dave. you

David Francisco

Sure.

Ryan Zimmerman

could that income just you about, if of talk [indiscernible] is guidance. net the you steady, you're initial there of for taking gross out you below calling on program, guidance understand restructuring little XX%. over savings I just in a come And what to XX%, but of could kind The holding is Adjusted the EBITDA terms your do margins about talk if were expect time?

the that you gross remainder year? lift margin gives of for what the So

David Francisco

Sure.

really capabilities some the the shipping Canton amniotic of of into one just consolidation the portfolio It's first is So the for continuation taking a and Can. the campus. into quality

So just it's capacity that standpoint. increasing from really efficiency and

we the really margin On gross in really relatively came side, expected. mean, I we'd what consistent with

And the low quarter. really revenue was so, for it relatively

itself And leverage some will to year. the as had negative cost reverse so goes on thing, we type and it which that fixed the of

had also we of had we where as – from over impact did had of returns a see COVID impact bit we that well. some spilled where QX, a We excess little kind another

canceled impact QX, to of which sold the and procedures and such some don't we had some in we some were in so spilling QX So repeat. gross margin, and product into expect the

Ryan Zimmerman

taking for Thanks questions. the

David Francisco

Ryan. Thanks,

Gary Gillheeney

Ryan. Thanks,

Operator

question from next Our Matt Miksic Credit Suisse. from comes

Matthew Miksic

for and and Affinity. continuing a of challenges Hey kind January given question slow good on especially guys. the congrats the Thanks taking here start around

where reason as So And little the I the to maybe I staying would've backfill feels your that. I ease Affinity thoughts strength of wondering, like sort you some withdrawal full-year slowness mean, PuraPly been land from Affinity. appears or described be of how or sort and I to this PuraPly. that you team in relaunch to why versus of And I'm any as I'm products. your wondering, And just sustainable of of you love that had bit guidance? a there your back, discontinued it the just on helping absent thought And to comes to get either wanted again, those that of products much you from sort anticipate in needs to upside the guess, ask follow-up. is of is about quarter do I that one

Gary Gillheeney

Sure. you like. jump I'll you'd start. Dave, can in if

we ability have share perspective, we the into quarter our of team headwinds time-to-time shift voice certain when quarter voice do from that on correct one and a COVID. particular commercial share was will run of you're So a from

So that's helpful.

the it expect balance to out Affinity. a the the away, share going product As do have, it in to different that we to We to of year voice list on expect I that throughout have have we'll with one as go we our across balance country to be PuraPly the relaunch will guidance. as launch off do environment, with mentioned, published our but in we and come portfolio, SKU ability line

So kind still all of extremely guidance. those our moving of the brand well. is performing parts, we've But into built

Matthew Miksic

ahead. Go Okay.

David Francisco

Gary. right, that's think I

from we think brand. performance see that just to well-established continue good I

the difficult in in timeframe, we're business that pleased well, performed so the So periods, portfolio. January even with

Matthew Miksic

Okay.

Affinity, as next And So could laid this if and national portfolio products could maybe And then on mean bit SKU guide tissue follow-up just relaunch including you've for one talk but I'm kind quick little your out about the gets sorry, if the through you a you year. of did I and year I could. – then what have amniotic does this PuraPly?

Gary Gillheeney

Sure.

as launch the PuraPly will Affinity one half rate we then our in where the that we of the environment process there'll a that the the is to little it products. whatever And be we country. expect of to and bit of time. opportunity across as second go the for have all we through would at with did rate published of So launch doctor the that pause year a offices And hospitals we readjust same have

it sales launching take will their our what That's we're of as share representatives product. expecting. voice from So they're

in a of and the a little grow to in QX. decline half at QX, bit hopefully then start least So the again in year, of back we'll see

Matthew Miksic

levels, the just of But then kind in And relaunch here quickly infection things, it. and then mentioned also second that or affecting is Affinity, I accounts one, the you'd encouraged still relaunch is momentum that's you're that and execution Got activity seems that something sort mean, in new that dealing here is on obviously a you? few trends is the with feel Affinity here still we're quarter QX. somehow building and just new in and factor a you by And like do or accounts like QX? you the of disease trends, behind the on

Gary Gillheeney

seeing and the trends execution. of pause a that about, to bit primarily No, that I launch at behind and still that continuing rearview this it's of in – channel. in just little nice see of It's We're expand in the certain we're but we pretty much pockets some point. country, it's execution it the – really now. surgical it That's area what an mirror. is We that's kind pretty talk think much it's our the

Matthew Miksic

Excellent.

thanks the Well, color. for Okay.

Gary Gillheeney

Matt. Sure,

Operator

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

Gary Gillheeney

very much. you Thank

Organogenesis (ORGO) 11 May 222022 Q1 Earnings call transcript