ORGO - Earnings call transcript Q2 2022 | Organogenesis Holdings Inc.

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Operator

Good afternoon, ladies and gentlemen, and welcome to the Second 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 be containing 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 any 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 to 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 second Holdings, call Inc's earnings Officer. Dave joined Thank everyone quarter our Francisco, on and by operator Chief Organogenesis conference welcome XXXX call. I'm

in growth sale a products. driven QX, we and year-over-year, X% for a sales that and decrease we for some open agenda our up reported Let prepared After Dave our level will questions. results, I'll by with press the X% covering care our start our revenue surgical and sports review of quarter updated you advanced a the the decrease me XXXX for quarter results with my end the second release. net opening guidance what $XXX.X revenue products of call in-depth operating financial review second of review Beginning we'll of be a second financial sheet today's in a XX% balance of our our during of and medicine and remarks, our start recent high wound in Then at million, of highlights. a with the remarks. we'll brief of the quarter with more of the condition provide results

year. our enforcement the and expiration period commercialization last the expected, reflects products FDA of suspension sports grace surgical following NuCel medicine and in of the ReNu decline As the of

products, these an from year-over-year Excluding net net revenue adjusted on revenue basis. X% increased

we quarter our Second quarter midpoint the range call. provided on in growth expectation came results first sales at of the

GAAP revenue to the an settlement this details growth GPO $X.X we out $XXX million moments. I sales impact, million the wanted in that QX approximately Dave at our this However, a our the in excluding operational range basis the results a will But period. call included in provided high-end call. of few review of quarter expectation our settlement were in first on

and and introductions expanded leveraging we including we channels the an growth impacted in strength and experienced improvement we expected, force, well brand our and in loyalty new headwinds the the comprehensive our benefits positioning business QX, the As period COVID-related of continue our as and very competitive that execute the to against portfolio that our enjoy. team performed our of leveraging in multiple sales strategy product

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

team commercial sales into to strength and our direct has continuing back we team modalities. Organogenesis. advantage commercial our the awareness as increases advanced across benefits penetration the country grown The the sales force First, half the of competitive for XXXX. of to believe to continue expansion and continues expansion our initiative we reps, And key a deeper our us of of be team our enables our are XXX

products our Second, in drive increased of our and differentiated product sites a far line product and diversifying key broad continue our XX% and PuraPly as a new products products the strategy contemplated result to of year-over-year non-PuraPly advantage. were well-established channels. expectations highly decline amniotic product access exceeding our care year-over-year, difficult specialties in portfolio, continue competitive demand of third, growth Within products our be expected, long-term our year-over-year, and physician to than sales highly enabled to continues had to period. our and physician for in declining PuraPly prior and XX% drive of care we make strong year of specialties to multiple portfolio strategies Sales introduce have sales a guidance amniotic the to extensions brand. our across comparison revenue these while commercial our progress sites And development targeting softer in the of by differentiated

Our challenging second that a the impact more in quarter results of also reflected environment period.

of quarter, our COVID-related net to overall second our access, With respect PMA products, visit in in pleased expected by continuing to second from in lower patient staffing in look. to and and trends challenges upon that year-over-year see we the the absenteeism headwinds we other and the expected second the choppy driven moved Lastly, environment the revenue very of were operating the through country suspension XX% declined with Dermagraft impact the customers quarter while are still in better specifically depending remain region quarter, the the you that improvement as and commercialization. struggle

balance improvement the for through XXXX. we these second as a headwinds the measured impacted trends that of in in to growth we continue the amniotic products. to experienced We COVID-related see of disruption level quarter our Noticeably, expect move

our and which As incurred of our in part adoption new of voice months Affinity our plan. launch product prior have competitive recent share higher-than-expected slow launch we've discussed limited noise calls, customers of challenges and on new been a novel of amniotic the introducing our Novachor We as been national technologies. working through with our of level

better-than-expected done the diverse unexpected this successfully second as our we've have PuraPly in leveraged in drove headwinds brand. past, and While represents of our the portfolio we sales quarter,

XXXX, change first year-over-year have We our on million and with in calls are of as year-over-year from $XXX million, the representing X% down up net full over guidance revenue increased basis for the pleased year-over-year to adjusted $XXX a which a We to X% range performance XX% up of strong on for now continued reported updated sales revenue basis. X% an XXXX. the six months of X%, brand PuraPly a

of as sources efficacious and see stronger that measured trends one, stronger of believe second largely our related amniotic utilization care. the and Wound as specialties assumption to while comparisons the the care in sales Care, driven which by progressive from will continued to commercial and customer physician more highly compared of across the from of continues planned improvement contributions now well with new we mission than discussed lead adoption product reflects year did are proposition, to -- portfolio multiple our PuraPly our our Note, the earlier on our and prior XXXX, sites guidance value expectation as the and and this the we'll and overall to that we COVID-related broad positioned half integrated a not strong headwinds; transitory on NuCel, our the continue offering of: -- solutions products Our full-year continuum half June combination space a revenue deliver reach. growing across broad in introductions. diversified continuing unique outcomes We XXXX lowering of first continually cost the launching easier and reflect to healing that noise improve Long-term, beginning highly competitive by X, contribute innovative ReNu provide to we of continue XXXX franchise. substantially products view to players guidance

I our on brief to turn efforts to share the update to our I a expand evidence. Before Dave, call clinical wanted over

the and enrollment. to Phase the seven of investigative adding treatment the ongoing team QX ReNu typical for challenges of XX% of continue pace continue X to trial, to for knee of that completion we are the patients and stages final enrollment complete further additional of clinical will in quarter in the track Notwithstanding trial in for progress sites XX% and enrollment months, target we remain of of needed has our subjects We interim the of make first our We expect COVID-related on slowdown during accelerate osteoarthritis. clinical enrolled this the summer analysis second the in year. the the by during end the QX late data of

In updated pre-clinical group PuraPly publication release. two build our With Wound completed to antimicrobial one our in the in of three four and that, XXX sheet in with results financial me the second patient quarter evidence-based products for include over press ReNu we outcomes guidance management QX, balance in a crossover as ReNu. and one manuscript review of the for pressure controlled for of foundation trial. that randomized continue Care journal turn venous from the subject our a These end review addition, today's leg call ulcers, of important let Advanced published manuscripts the Apligraf to product the for XXXX we quarter, Dave our David? ulcers of from and for our excellent for articles new condition and financial data a

Dave Francisco

rates financial down a and ReNu Net my referenced the of we adjusted of review are a with by net second otherwise begin I'll remarks Gary. was specified, for X%, growth our results. NuCel, year-over-year quarter Unless you, million, $XXX.X grew and all prepared revenue XXXX on second X%. revenue basis. quarter excluding Thank during

the ended include months in a of mentioned, historical form GPO’s included million. months financial GPO $X the in previously its June $X.X a as in three of the As filed reduction as three disputed August revenue. one ended to $X.X three net direct the settlement ended Company's Gary XXXX, $X.X issued with This settlement. XXth, a XX-Q XXst, and included million in months the XXXX XXXX, The the million with has of reduction GPO previously million XXst, was company December March XXXX a $X.X an the during Company reached to and of fees GPO impact the revenue In fees revised today. settlement to fees of of related agreement its reduction settle statements recorded a million SEC for reflected

recently in GPO growth We Importantly, with and years contract. with partnership to standing the continued in renewed we good and partner them have this our look to forward remain come.

review to results. our back of Turning QX

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

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

balance the sheet. to Turning

company to of $XXX.X XXst, cash million as cash equivalents, XXth, and and the which and equivalents As $XX.X obligations restricted and obligations debt of of total June that total XXXX, compared $X.X in had million capital million $XXX.X lease million obligations, cash cash $XX.X a of were restricted December debt in cash, million and in XXXX. cash

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

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

an year-over-year revenue representing on our from to revenue X% FDA revenue our revenue products approximately XXst, basis. period. decrease $XXX net now For X% from of of Wound $XX XX% increased the X% range in year-over-year. products of the to company XX-months adjusted assumes Surgical a by products ReNu the an and of or of PuraPly approximately and Sports to attributable Medicine X% the five the year-over-year. reminder, results way Advanced XXst, now at expects net XXXX guidance And ended NuCel approximately and XXXX, X% to X% to XXXX end approximately X% the Net ended to year-over-year. months include revenue $XXX December approximately Care XX% XXXX May during revenue growth decreases between million, The million revenue grace XX% increase products net million increases enforcement Net from

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

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

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

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

the XX%, Our our guidance approximately prior range, midpoint products decrease full-year XX% amniotic to of expenses assume approximately XX% growth full-year revenue at will will XXXX our XX.X% million, compared $X XXXX, assumes approximately sales approximately range and to (ph) our comp of XX% in year-over-year [$XX.X] D&A guidance XX%. range approximately Total range net Gross XX% our now year-over-year. which of XX% of growth non-cash range and other which XXXX, year-over-year. Sales other form diluted products, were GAAP of non-PuraPly XXX tax compared rate a of million in our decrease group of and PMA the XX% X% approximately guidance, to count non-amniotic of interest GAAP of XX% prior margins called the expectation shares. operating million and of in million year-over-year. the to decrease midpoint which to compared approximately the will increase non-cash year-over-year, at average share $XX collectively and of approximately assumed and expenses a Total prior expense our of respectively stock to year-over-year weighted

the supply $XX million challenges. be to CapEx XXXX chain expenditures capital by to full-year quarterly be approximately continues $XX of to expect impacted also cadence We million as

quarter Finally, approximately will GAAP in you. we X% the X% the back of increase call revenue operator, third expect to With net to year-over-year. turn over our I to that, range

Operator

Thank moment Please for first ahead. [Operator Lichtman and the of you, with go come sir. Steve One from Oppenheimer. question that Instructions] our line will

Steve Lichtman

guys. Hi, you. Thank

bit talk you're seeing to more the you're in you you what Can wanted or be types And competition seeing, of what areas that transient confidence about will is mentioned. little the touch that you Just gives a on transient? it amniotic what it?

Gary Gillheeney

Sure, Steve.

see smaller lot share products, with and seen those is for competing amniotic more and of in of our mostly that voice players a we've space we more them. are products the what the So just competing products of

is of published the the transient component competition think that continue, could with particularly I in no ASPs it office.

think smaller we will as So players over competitive be time, not those going forward.

Steve Lichtman

they the -- just proposed the Care What I have of changes and the those impact ask business then to in on Wound professional would if on Okay space. wanted finalized? type are fee

Gary Gillheeney

aware So the is proposal, it complicated. it's the of proposal X we and are July

We are the certainly right at could this potential We don't get know that So want an advisors we outside assess impact really the really can't we this what at point. our assess with working it don't and don't of have to out. all changes speculate it finalized assessment to come point. of and will now

Steve Lichtman

Okay. Thanks, jump Gary. queue. I'll back in

Operator

next that One you. question, moment line Ryan will for our of Thank BTIG. with from come the Zimmerman

Ryan Zimmerman

Hey, on taking for just Thanks couple questions. I my follow-up And of things. want to a

I apologize, evening. So this juggling -- was and I calls

but such of, kind in can but elaborate sales apologize, if dynamics -- this, impacted drove missed I I what I And I quarter, a just the you. understand the in of quarter? jump just if have a in on, Gary, you some Thank you the PuraPly of couple follow-ups. amniotics then So significant competitive

Gary Gillheeney

start in. I'll Sure, jump can Dave, and you

PuraPly continue QX. did and QX well do So, in well in to play

QX a not happen end public and built Our announced expectation the have a there would quarter at is would the an as we from did in June of we see you published in ASP normally in once pause had PuraPly, rate. is that

So and to contributed quarterly revenue. Dave? obviously pause we that that didn't -- contributed have the

David Francisco

Yes. think, too, brand, you last it's it's I quarters component. seen very well it's Ryan the a I No differentiated several Gary, over have established antimicrobial the -- with mean obviously, very this

it the the sales items PuraPly we portfolio, on we so, to the going in that get will And voice to obviously, force share other well. some out quite lean when extent works on and of

the to XX% So were pleased in quarter. see it up

Ryan Zimmerman

back follow-up SKU in the kind a mnea, year. of half of just half you impact could year Dave. that have new PuraPly that, the of PuraPly on the have negative second I talked adoption And and for about a Gary in on the a

pricing introduce new around SKUs through the still to is come plans hasn't it yet, PuraPly? Given that impact your

Gary Gillheeney

to this will, But contribution launch current significant get They the and products. won't at established, is in our them a them we do have year to year plan. market plan we Yes, get we need those later in that so all. the

Ryan Zimmerman

kind Okay. as and again, the more you so third say was up up in really a largely but lot And Apigraft, product from appreciate can really believe following the quarter stable you dynamic that quarter as then a third it in I of said and Dermagraft a released, down quarter second guys? Dermagraft pricing questions for on and the rates that Dermagraft Dermagraft though, I you pricing and that bit some was remind were usage with the when just you've us When Dermagraft away expect transitioned say, that can manufacturing I running? of reset you become up, and should the again manufacturing, of material should

Gary Gillheeney

the capabilities. Yes, so by manufacturing that's governed

So the that's the was Jolla quarter. second But had piece, the inventory second excuse at exhausted built the about we've me, years that of most we as La last first the facility -- the out. quarter. in end that in in the pricing talked before, on recognize we almost nothing year of There

Ryan Zimmerman

in under skin do Okay. has of substitutes? know capitated the this how asked to some to on at navigate this impact, mean, And you you changes may the I the comment but think mean, broadly ability think does point, assuming reluctant I impact reimbursement may the or about of Steve if payment we not, it proposal on your I to utilization again structure, to argue -- And on could proposal more follow-up this which on I space? what degree, reimbursement terms what that a through you're Gary, know, model go proposed the scheme and new and question some but assuming do

Gary Gillheeney

what very early a will it's of tell. out too earlier, said to I fairly be. still proposal it's This complicated to a is final the lot difficult figure proposal exactly As and unknowns really

speculate going what aren't CMS really know, may but learn, happen based we what does, share on not we or to may believe as what certainly are. as the we we So on we'll implications

Ryan Zimmerman

in queue. taking my for question. Okay. hop back I'll Thank you

Gary Gillheeney

Thanks, Ryan.

Operator

come our Please Oppenheimer. from Lichtman moment the of line One Steve next with that question, you. will go Thank ahead. for

Steve Lichtman

Hi, great, thanks.

a couple Just follow-ups. of

growth base you some once the in of PuraPly, side, amniotic PuraPly Gary, you sort see on on steady do off recovery of XXXX? potential state higher see for this what So, the

Gary Gillheeney

Sure.

you the our So in. additional mid-teen long-term, Dave, we can low do do PuraPly, to and expect jump grower. a be expect particularly with to brand product We offerings

to all the TransCyte, example, still still extremely on for believe when franchise we our that's of even our long-term, mid-teens and so this brand. surgery really that So do burn the well expectation haven't sites launched We we is implications service an the has we will grower. low in, product think penetrated as a

David Francisco

we complicating and perform but long-term. do the completely more I grow, be the Gary. brand about difficult, it obviously, to believe Gary extraordinarily we said, to to continues as family we low talked mid-teens agree, mean, obviously, product but Yes, -- yet, to 'XX well expect and I grower long-term, the as continues haven't

Steve Lichtman

What then, on And up the of a little went ticked it. I bit, but which I ticked you OpEx things the margin increase? what got some gross I that a also think up guess updated bit, beyond Okay, up else Dave, think is driving growth. guidance, non-operating

David Francisco

Yes.

is we're the talking of the second pleased confidence I bring said it in certainly with us what the of gross to in about for long-term little margin full-year, operating so in trajectory we're quarter the expense back the prepared bit a margin, here. lot the gross it a as in the really gives up did have obviously, but half the remarks, confidence and So

obviously second little increasing are There was We bit back some anticipated. expenses the was commercial we commissions the higher a in quarter incremental expand continue team that cost, to in had than half. advisory and

things. that's see, clinical So higher of including and had types the mentioned enrollment that increase Gary some the of so you those spend,

continued So around of excitement the the a we're progress making BLA. lot on

Steve Lichtman

Got it, Thanks, Dave.

David Francisco

Sure.

Operator

at this for queue you today. conclude That may [Operator conference Instructions] in remaining are showing time. Thank disconnect. Thank your participation, currently our no questions you you. for We does the now

Organogenesis (ORGO) 9 Aug 222022 Q2 Earnings call transcript