Earnings call transcript Q1 2023

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Operator

Welcome, ladies and gentlemen to the First Quarter of Fiscal Year 2023 Earnings Conference Call for the 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 and its subsequently filed quarterly reports.

You are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made.

of do commitment time the required to whether a voluntarily company time, forward-looking by may events as no future undertakes update result applicable it securities so except to from the statements, or laws. Although otherwise, information, as new or revise

measures non-GAAP generally the call Accounting Generally This financial Principles also financial refer calculated not or references include are will We to Accepted as these in measures. certain GAAP. to that accordance with

the be available to comparable measures press financial non-GAAP these accordance portion are of and calculated GAAP release Relations in in most presented our Investor Reconciliations measures earnings website. of on with the the

Officer. now Gillheeney, sir. Please Mr. I to call the Gary like Sr., over President S. Holdings’ to Executive go would Organogenesis ahead, turn Chief and

Gary Gillheeney

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

we up a quarter first cover Let quarter with our provide recent questions. XXXX on me and I'll we our financial revenue of review in-depth then with our results, for today's press and prepared our of in and we'll will updated you balance it during results start will our developments financial an brief with overview then sheet, months. in operating remarks. condition update first of begin an key agenda open end, an quarter Dave which at financial our guidance, and release, what

increase year-over-year, was Surgical XX% the Wound & QX, our million partially products. our the revenue sale $XXX.X Care a a the of review for XX% increase by we results X% of which an reported quarter, of sales with a our decrease Medicine net by offset Sports in Advanced for in Beginning revenue products, driven first of of

both our in call, First expectations of on Advanced Medicine our provided exceeding Sports end of of high our in and quarter with our guidance earnings fourth quarter Care results net end QX. the Surgical revenue range sales sales products above high came the we the Wound

results, both quarter. Advanced drove Wound high exceeded the the in the of QX, sales products While product the expectations our majority sales upside in prime of of Care end

were for PuraPly Advanced products fueled better-than-expected by product adoption PuraPly brand both strength the by continued for highly in technologies. amniotic driven our first and demand in and our differentiated sales Wound the non-PuraPly strong the demand and Care utilization well-established, quarter,

results office Importantly, outpatient both our expectations exceeded sales in Advanced hospital Wound of in Care the QX. physician end the and product our high the setting

guidance our centers year-over-year growth team setting office excluding outpatient position we portfolio leveraged expected, Specifically, accounts single-digit across setting growth wound in of in customer strong Additionally, hospital We served range in in delivered number the Dermagraft, the the leadership in we and in to offices the of QX. more accounts care believe a delivered clear high QX. end above growth high the have our the of diversified year-over-year that than we right represents market. deliver XX% team's proud that and another we results the as the to our and position growth execution our maximize QX sold in And in our in advanced ability are high leader As in in and U.S. physician deliver competitive -- strategy on teens physician illustration units

in update months. recent Turning to an progress on our operational

manufacturing validation our facility space Canton, center logistics new the in for activities We headquarters at Norwood, Massachusetts. as at the completion corporate we of our recently construction additional nearby continue as our well and in -- Massachusetts completed

product developing We previously that product TransCyte and in for portfolio overall and manufactured products our continue focus were capacity to for pipeline expanding specifically and our and on manufacturing invest capacity California. our manufacturing in Dermagraft our for

our to in manufacturing firms development we're region. manufacturing with working Massachusetts. the in are looking within at space And we existing for that end, headquarters space alternatives building here suitable manufacturing that To assess parallel, additional

a expect definite the we to of end communicated, previously plan As the by have third quarter.

osteoarthritis Our efficacy ReNu the X continues will progress end phase to year. knee ongoing patient the the the clinical July last completion visit for be milestone we of of by as last Phase to treatment planned. The of trial trial and completed of for in the achieve the and expect trial

made In to recent study respect Phase months, with ReNu. we've for X progress our second also

conduct our aspects to selected will conduct operational on with contract we of of timely are the end Phase remain quarter research first the with a be second of the the our the at organization expected year of operational engaging an the IND submission end the trial trial certain and We this second of FDA the the with assuming on and we management approval IND, the aspects amendment enrolled track that of plan trial, X the of to quarter. patient to by third launch data

with FDA the to June discuss for the the for meeting requirements CMC We ReNu. BLA also scheduled in have a

we combined expect subsequent We discussion XXX-patient as valid RCT sufficient as data that FDA published BLA. for with the requirements approval. the the previously have regarding propose And BLA the clinical will and discussed, the Phase current with for a to scientific a X evidence trial

our gives leverage soon us on As the advantages FDA of as to operational a options continuing our major This investigator the plan second regulatory we the reminder, that us our from essentially the more as strategy. is plan with current in site. moving belief trial with hear active enable will based forward

efficacy product to the share of to our continued portfolio's, items system. the Lastly, like to clinical I'd efforts related clinicians care with value health few noteworthy the engage awareness to expand and a our and

or posted poster category. recent conference at is scientific Advanced as SAWC. We the This chosen clinical primary Symposium presented and Organogenesis significant Wound clinical the contributor Advanced Care. a an the Care one and Wound the with in was for top research abstract Conference eight

We sponsored educate to further on symposium of also five portfolio Organogenesis on products. workshops in clinicians

cell Health This wound. significant Boston, economic and continues products our Conference clinical in use on ICR a presenting therapy comparative of in study an our demonstrating research are the investment with we evidence. week, of real-world effectiveness This Apligraf effectiveness in the

clinical the pilot of publication wounds biofilm by study the evaluated with prevention antimicrobial imaging detected bioburden management PuraPly and recent This pleased contamination for wound antimicrobial were PuraPly study which advanced an also We're of diagnostic the and exciting effectiveness journal. in device.

With to that, let turn results. me the over discuss financial to the call Dave

Dave Francisco

on Thank rates was first all you, basis. the remarks Gary. our a year-over-year $XXX.X my revenue otherwise XX%. for Unless a prepared I'll referenced first review of financial specified, begin with quarter quarter are up growth Net million, results. during

XX.X% & revenue net net for $X.X quarter first to Care million first Medicine for quarter Our $XXX.X XX% from million, for the of was Sports down products X%. first last the the XX.X% Surgical Advanced compared Gross or was up million, quarter Wound $XX revenue year. and revenue net was approximately profit

to year general first of in prior million a a XX% $XX.X mix products in or Wound a product gross was primarily quarter million, million, increased and increase gross or well Operating $XX.X operating shift $XX was in the to in our increase an last Change increase million increase margin first margin XX% driven in year, million compared Care $XX.X were expenses as in the expenses period. $X.X or development compared administrative the products. selling, expenses, and volume as quarter higher XX%. by research and Advanced costs by driven to sales for The in

First totaling as the million, severance associated exit in restructuring and of restructuring-related quarter $X.X well operating charges compares to other activities. non-operating GAAP $X.X with year. items prior as certain consisting costs included certain employee expenses of This benefits million

force total in to with $X.X committed the plan we Reduction a employees. in a quarter company workforce XXXX, in The X, approximately restructuring, and by of of February employees, productivity or On first count restructure to million reduced XX incurred to payments. X% of we our primarily severance improve charge consisting connection the enhance profitability. all our

both the non-cash quarter our related the Excluding $X.X studies driven our amortization in increased or restructuring by of a study-related of $XX and support sales clinical in meeting. SG&A items roughly non-GAAP of spending to expenses and periods, XX% with of half in for year-over-year, increase timing ReNu that intangible growth first XX% national operating expenses million higher million

we that non-cash press Note these a items in have and of reconciliation non-operating release. detailed earnings today's

expectations our growth growth. that our investments to operating strategy future prioritize for in areas non-GAAP mid-single-digit for enhance with growth reflects XXXX consistent expense foundation year-over-year cash Our

for last year, decrease quarter million of the was the increase an million, first first million, an $X.X operating of loss year, $X $X.X $X.X loss a Operating loss million million. quarter $X.X million or of compared compared expense last in to for to $X.X XX%. was other Total

or X.X% of X.X% to We revenue loss release. EBITDA was EBITDA in press for net quarter million. was provided last for $X.X compared revenue earnings $X or $X.X of full the our million quarter results first reconciliation million year, the Net our net million million Adjusted $X.X a increase $X first to of an loss compared adjusted year. of last in

Turning to our sheet. balance

March in had of As cash equivalents and obligations of XXXX, debt $XX.X cash XX, the in restricted compared equivalents million and cash cash, debt to million cash $XX.X This $XX.X million and December in restricted obligations. company in $XXX.X and cash, million XX, as XXXX.

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

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

compared increase XXXX, range X% expects representing million XXXX, of For of revenue of XX, December the for prior net revenue this to our million. the $XXX to million, as ended between to $XXX December XX, $XXX XX compares months the net of the now and company million year-over-year $XXX $XXX.X to X% ending million a guidance in year

Care of X%. revenue the to year-over-year flat representing net to guidance guidance The of million compares million. $XXX our products to This change and XXXX assumes $XXX net million, Wound up from million revenue prior range $XXX between Advanced range $XXX in a

Net revenue versus increase and unchanged million X% prior is million, from an of guidance XX% $XX year-over-year. Surgical This products Medicine $XX representing assumptions. between our range & to Sports

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

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

year-over-year. some formal to to we the providing to are guidance purposes year our year-over-year sales XX% fiscal addition XX% In products to which XX% PuraPly decrease of our decrease compared We the guidance of our modeling a XXXX. XXXX, for range range, expect for prior XX% assumes in deceleration of now will for

the year-over-year, approximately non-PuraPly expenses compared X% approximately of our products margins at to to X% expenses to XX% increase and increase guidance, increase which year-over-year approximately XX.X%, assumed the non-GAAP operating growth will year-over-year. to operating total our X% of midpoint prior approximately of X% approximately of XX.X% GAAP range will year-over-year. Sales XX% total Gross will of

and operating million approximately million. restructuring non-GAAP expenses charges $X.X exclude estimated of XXXX Our amortization $X.X non-cash, of intangible

now guidance, We This Total our compared expect range to GAAP rate to million. approximately the million prior to and range, low interest $X.X the and of other guidance XX%. expenses XX.X% our which compares in guidance our year end end rate prior GAAP of full XX% were tax full a our respectively. of assumed at year high $X.X of tax

on expect to adjustments continue XX%. non-GAAP We of tax rate

of prior approximately and million $XX.X stock We comp compared and million for now are estimates depreciation at approximately non-cash average to shares. non-cash shares $X.X our diluted of X.X million, XXX weighted million expect guidance unchanged approximately expense

range also or X% full a in million. $XXX approximately quarter million be to decline of million approximately $XX XXXX representing We we million, $XXX CapEx expect expect of finally, year-over-year. the the And year to second to X% $XX revenue approximately

remarks. closing turn some I'll call over that, to the With for back Gary

Gary Gillheeney

Thank you, Dave.

measured the with Our impact the updated primarily working products Advanced our launches sales growth recently office the expectations in ASP. Care for Wound physician key through national XXXX, in is guidance of by driven published in reflects products setting of

continuing CMS to initiatives under ASPs pushing significant Wound in to through year. Organogenesis. the surrounding due XXXX We differentiated publish in this office for Medicare more this clinically applaud also a treatment. growth We their the potential navigate physician our schedule skin introduce long-term proven for We opportunity substitutes patients now challenges with forward to and Care opportunity for solution uncertainty CMS' payments represents have to to fee the for customer expect change Advanced are nationwide,

advanced our on and be consistent growing to with with in on this and executing our complications healthcare such CMS' in result amputations. serious treated of again modalities is share is the XXXX. The may treated efforts to Importantly, more emphasis treated healing properly advanced more result in on strategy to system. costs patients year reduce that with wounds expected untreated modalities patients burden as resist Rising attributable the being

lives the patients the advanced and avoided. efficacy healthcare treating improving with while to have modalities, efforts tissue believe be these By a overall and these added advanced CMS' advanced greater can clinical demonstrate with can cell wounds contribute we costs. reduce to reducing cost products complications the that should healthcare Proper of and among be to priority awareness patients' benefit and system of providers technologies treatment

competitive We also the in Sports expect to position Medicine Surgical strengthen our market XXXX. & in

We of our FDA's the repositioning May of are expiration the period in year strategic in the of XXXX. following two enforcement of business grace

We fusion soft solutions identify with opportunities commercial our to of for continue our surgical procedures. fishing emphasis awareness focus wounds spine on to product expand ankle and and foot beyond increasing

continue potential optimize commercial certain areas. procedure relationships our of in to agency teams small for including progress testing pilot We using programs, independent look and our ongoing in strategies, which further are direct specialists

it to full We of commercialization strong enters this also forward look adoption product MZ PuraPly as year. market our

continue from wound across will well our strong position and strengthen right XXXX. strategy we generation in United in to Dave expect States operating mentioned market We're as we Sports Medicine competitive Surgical confident as help the are which centers highest the expense to priority our drive As earlier, to areas, EBITDA on we XXXX. in setting in that care adjusted the have prudent & leadership on investment office focused our build the in position

basis. and to that in a the target we sustainable, compelling, is normalized on growth long-term continue growth Organogenesis low-double-digit we long-term believe opportunity for Importantly, of remain very our confident

healing We deliver substantially to continue Sports care. position overall solutions Wound a Advanced while will Medicine in outcomes mission Surgical provide of be efficacious as leader products at highly markets launching we highly integrated the and in our improving by lower improved Care competitive innovative, on cost our to &

Operator? you. Thank

Operator

Thank will come the BTIG. from first you, [Operator Instructions] sir. And our Zimmerman Ryan of question with line

open. is line Your Please ahead. go

Ryan Zimmerman

on and year. start to Good nice and evening. Dave. Thanks congrats the the questions for taking the Gary

Gary Gillheeney

you, Thank Ryan.

Ryan Zimmerman

a questions, the Talk I I of take here. latitude tonight. about I'm number maybe moment have ask there. could guidance for few start a If a and to

Just one number guidance. on

about were our to relative million at and $XX really what your think had guys versus So you expectations, we nice for guidance a time. I speed the looking

guidance Just for that's million of And to you if want of guidance? $X what back the about that you're so us the in it's relative seeing up kind around Help philosophy to market your year. the maybe conservatism? or remainder is understand holding and going thinking the understand

Dave Francisco

great No a first really nice is question Ryan, mean, Dave. It commercial was this performance. did year. Yeah, the pleased The the I quarter. obviously, about to team really start we're a a it. It's great with job.

for we days. through environment think the thinking. is some nice do I we're early see in amount things the that just It's operating that, to pass but year early entire in us what it's

Gary Gillheeney

is is the fee -- and I'm we're sure any that we July, in on about I plays market can disruption that that through the confusion all there's customers think We sorry, or Ryan, they how cautious schedule maybe anymore. to in not want out being This expecting cautiously anything. get coming physician specific, to but help Gary, our make We're anything that. we're sometimes just waiting be And see confusion. just

Ryan Zimmerman

And on point, the are is fee we how the watched that past physician challenging terms Gary. lack little been of result a few competitive rates CMS the to schedule. to of closely clarity as of has schedule see helpful, that quarters very just kind bit and fee posturing obviously in That's a of dynamics what

transparency not moderate to the in or the advantage of that fee were that of do. And I your the you have around of schedule? that that the think what again, what's as of dynamics expecting forces on will you lack right I But thinking some know if have now, current quarter. I appreciate recall, may CMS second taken

Gary Gillheeney

of improvements the and just our some of on products a of is not that some working we've regional actually seeing a launches, national effectiveness still challenges that basis, that list. are published There on the past. through of are seen the some lot We're in

XXX I been have XX about published. of think it's CTPs, about them

some But the built continue. to we're expecting see improvement improvements. expecting year, kind So regionally, continue not there's been. have to our lot what's still seeing what guidance. we're that's and That's that into We're of a throughout to

Ryan Zimmerman

or keep to I going here I'm rolling And helpful. if Very may.

other physician growth What heard it of couple outpatient a for Just the was out? in growth I think in office? think I setting. me. one, I high-teens the called you you Number Gary, the questions

Gary Gillheeney

in was Yes. single-digits It high accounts.

Ryan Zimmerman

High single-digit.

Okay.

what's competitors any -- in the having that improvement And in seen sense patient in you -- we broadly Wound seeing what are door already, of just just seeing Care some terms so is broadly are in to point, of it market? your speaking, of report expecting Space, are volumes the this your what market And quarter? the Advanced in you the

Gary Gillheeney

have clearly seen quarter. first in Well, improvement we the

think I have QX a brand which as than unit less product, from seen on fact, the is performance a In significantly which a QX major seeing seasonality a And forward. why XT brands given our lot. is we've moved growth we're bit typically our we're to across portfolio, our of lot guidance that virtually normal better we've little the sure XX% we changed all seeing expected,

we're So more expected. units or We're seeing being more than adding treated we being even definitely applied. accounts patients

So -- and see little definitely that see see some there's But right it trend want will. now, like those being market. Again, positive a continue. continue, perhaps, trends we're in to think cautious definitely we and strength trends we we'd to the

Ryan Zimmerman

want think of prove X coming your Phase to a I says for me, and to to me, I'll as I I what that for that later queue. hop one with there EBITDA you you do guidance, year? in factoring conjunction have in upside in about what don't context sense for Okay. Maybe lot of of guidance? But be to adjusted in you trial the second of have Phase on the that, are a excuse Last And if the cost X -- that ask a that secondary trial, a FDA say, back good milestones you ReNu, and obviously, this guess begins save would could cost that? in do

Gary Gillheeney

I don't you know, to Dave, want if

Dave Francisco

are I would far next financial the of so over if to and we're obviously, the with years. the Yes. the Ryan, Phase a mean, going forward profile change that able significant it only be significant go trials couple second skip X,

Ryan Zimmerman

proceed be having your built Okay. model, But your now, guidance assumed just costs forward Dave, into are right the to clear, -- and that's to in those as

Dave Francisco

course, it's the the expect of the enrollment of years Yes. We And talked amount. patient at first couple end that. We about a entire for of QX.

back-end So in this is loaded cost year. to

still more would that So of and in 'XX beyond.

Ryan Zimmerman

Yes. Makes sense.

to up there, really Okay. quarter I'm going really, good wrap but

Gary Gillheeney

Thank you, Ryan

Dave Francisco

Thanks, Ryan.

Operator

Thank you.

are We you Thank queue. the That no conclude questions currently for does conference. showing participating. remaining today's in

Organogenesis (ORGO) 10 May 232023 Q1 Earnings call transcript