ORGO - Earnings call 3 2023 | Organogenesis Holdings Inc.

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Operator

Please stand by. Welcome, ladies and gentlemen, to the Third Quarter 2023 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. recent and and in XA, reports. Exchange of company's risks with company's Risk the is the Securities and the Commission, most Including uncertainties with the described filings Factors, subsequently filed report quarterly annual including Item

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

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

the of include to refer non-GAAP Mr. calculated Please in of generally accounting to release available the to also accordance will call sir. Chair to measures over financial our are are Board. generally Gillheeney, or that principles Executive of President, Officer financial to not these This the I and measures and accordance accepted ahead, Chief those with the presented comparable portion turn would references in website. Reconciliations most certain GAAP earnings as now We measures calculated like non-GAAP Sr., Organogenesis Gary Investor GAAP. call Relations in Holdings measures. go financial press with S. the on

Gary Gillheeney

our welcome, Francisco, Holdings Chief Call. Year XXXX Financial I'm Thank everyone, Earnings to you, Dave Third Officer. operator, Conference today call joined and Organogenesis Quarter by Fiscal on the

this financial recent prepared as in-depth during financial on sheet months. third which in our an me I'll guidance well agenda quarter condition start reintroduced cover for press update and and provide quarter at what with you our will review balance of release results an end our with and in operating our our strategic remarks. we Let financial afternoon. an XXXX, with brief of revenue a begin as quarter our Dave then results, third we'll key overview developments our of

open your before call share Then the thoughts questions. I some closing for we will

Sales compared Advanced revenue medicine decreased million and for net Care quarter, our the of our revenue products result local reviewing by start we quarter year-over-year. or sports coverage contractors X which experienced QX. Medicare sales of surgical X% reported conference decreased $XXX.X the disruption second sales we products LCD prior reflects third to year. on a Wound August and the of published the business X% for our determinations as discussed me Let significant by QX call. our administrative We of on X% down X,

August, materially start September. Specifically, the quarter through impacted despite sales trends after growth the and strong were month during strong a our to of year-over-year delivering

The of tirelessly impact MAC of and the announcement, advance to mission customers to this business a team's decline acutely high Ease teens disruption declined operate, sales commitment the Max in execution impacted set. of primarily impacted non-LCD in the the in experienced in regions, we U.S. where we office regions regions modest the QX was of year-over-year And and date most proud the experienced the the and LCD to the and and LCDs throughout that X all the but [indiscernible] serve. stated organization, team field, the the the effective the protecting as in patients our just convince August parties relevant with these we worked teams engaging commercial not withdraw thereby following the of in MAX are

regarding and [indiscernible] October the me, withdrew their and in to mortality We associated and outcomes, was of the We capital including all August concerned of LCDs. that ulcers for treatment As on patient thank and and of needs stakeholders the venous and negative final diabetic advocacy coming skin putting groups -- about considering and/or treatment all in impact the products lead physicians, higher ulcers often to the the LCD CMS MAX including to take foot X LCDs announced stakeholders, serious which support the the industry the for September infection, of MAX decision. X. and grafts excuse applaud for negative on for patients effect for tissue-based XX, potential advocating scheduled withdrawal concerns substitute amputations shareholders on health prolonged first this associations clinical the leg

the We concerned of disparity the support. their higher that stakeholders thank treatment, have health about and had rates impact LCDs comorbidities would other for of and diabetes also the equity in the with on populations

said, to disruption and product customers with that and results. Clearly, affecting existing questionable utilization our among affecting ultimately adoption including we response, in circumstances, of marketplace, the impacted aggressive LCD. engage are competitive with customers our business and uncertainty new the and the the significant certain third [indiscernible] sales pleased referral capacity our as the in confusion But overall as of well quarter

pleased to created we are LCDs withdrawal, with environment their we adoption. through navigate While proposed challenging the continue by the

as XXXX healing which guidance, business quarter commercial and well The our the These year. efforts throughout reintroduced impact bring We algorithms actively to with back our disruption our reengaging have team progressing activities third are recovery our financial to reflects as formularies. the is products the customers the in of well.

of However, the been misinformation focused has clarifying on market, the limiting clinical delivering and our our customer on in expanding voice our messaging our base. resources share

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

portfolio manufacturing long-term the on future. for to enhance in focus on overall expanding as efficiencies, for drive and pipeline optionality our well as to continue our We capacity invest

identify We evaluate continue with potential to outside work options. advisers and to

by are calendar end plan here We targeting year a of currently XXXX. the final

of trial III planned. treatment Phase clinical neosteoarthritis the to ongoing RENEW continues as progress for Our for

of patient respect the to approval. clinical as me expected. study allowing of a continue for We with that, RENEW. the Phase also We expect has intention the last first the made combined and the BLA, for second XXX in for our progress discussion requirements evidence current expect to subsequent patient to published the let FDA call RCT the visit the have the the trial to previously turn last year. scientific over propose With and enrolled for patient year, early with valid as Dave. to discussed, we We've achieve end regarding the to next BLA sufficient analysis III data Phase data III September the with by milestone And

David Francisco

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

Gary As net third $XXX.X revenue for the mentioned, quarter X%. was down million,

$X.X decrease Wound for for $XXX.X the was third products Sports third primarily compared Our mix well The our approximately net period. year. pricing third XX.X% the XX.X% and to Advanced and from X%. gross certain million, the in or & as of in $XX.X X% a for Care compared quarter down to quarter shift down last a decrease revenue in net quarter net as from million Gross profit products revenue Medicine million, profit Surgical revenue for the was year margin of was resulted prior product

year, million $XX.X a period. selling, to Operating or million million million of expenses expenses in administrative a decrease decrease year driven for last XX% XX%. and were a compared the was by decrease development the $X.X offset in in general prior $XX.X or compared by $XX.X to costs in quarter $XX.X The partially operating million expenses increase research or third quarter the third and X%

to to included $X.X the quarter costs compared year the expenses million costs XXXX. $X.X withdraw efforts million Third legal MAX as the $X.X such prior to well quarter costs our as operating in million to of and of no restructuring-related compared the in convince GAAP LCDs related activities of to compensation third

progress items, XXXX X incurred the fees equipment project. facilities. also of of to certain quarter charge the nonoperating related included the construction manufacturing million disposal cancellation in expenses connection Third certain related in construction decision operating GAAP X company's $X.X to Massachusetts the with Canton, company's deposits in million facility of $X.X

timing expenses periods, the million in third reduction Excluding or quarter $X.X cost operating decreased operating of The expenses these in in operating our is strategy a our to items result intangible of for of related non-GAAP expenses to light the environment. of in noncash and XX%. proactive amortization year-over-year manage non-GAAP challenging material million both the $XX.X

initiatives recent the implemented impact quarter further weeks have from fourth mitigate in reduction revenue additional We lower outlook. to the profitability cost to

income for million to a an the was third of for was last $X.X $X.X million quarter of an million third compared $X.X an quarter $X.X last compared the net net to third year, million $X.X to for million. million million. decrease million third were income $X.X was Adjusted $X.X expenses of the million. year, the $X.X Operating net to $X.X increase income Total million last other million. quarter compared compared year, increase for increase quarter last And $X.X of year, million $X $X.X

net a the is of resulting adjusted charges those income items. defined income and income on taxes adjusted exclude As net as and restructuring effect reminder, the amortization GAAP to

X.X% or the believe decline revenue. leverage of $XX is the was EBITDA year. Adjusted third revenue XX.X% $XX.X last third in quarter in year-over-year net for compared the net to million of million light the notable We revenue operating delivered quarter in or of

We have results reconciliation provided our of full our adjusted a earnings in release. EBITDA

the to sheet. Turning balance

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

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

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

year-over-year $XXX and million guidance and of the revenue December of net The assumes the in down in $XXX.X & decrease a the year-over-year revenue million decrease year million company range in between X% million, products products range to $XXX X% X% between of $XX the net Medicine The XX, December to net a $XX XXXX, flat $XXX For from representing the revenue XX X%. XXXX. million Advanced to months X%. revenue to Care from XX, as Sports for Surgical between Wound ending year-over-year of representing million, revenue the and net $XXX net range now a decrease compared range ended representing million, XXXX expects of of

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

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

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

For total XXXX. the for midpoint our revenue the fiscal of we range year XXXX, expect now

products of will and sales approximately XX% XX% of year-over-year. approximately sales PuraPly assume non-PuraPly decrease our products Now increase year-over-year, to

Total expenses gross approximately approximately year-over-year. margins assumes flat XX.X%. will year-over-year of and decrease expenses total guidance non-GAAP Our be X% to And XX% operating X% now to GAAP profitability roughly will operating

respectively. other LCDs. intangible withdraw Total restructuring Our the items interest amortization to noncash MAX of operating efforts $X.X include XXXX to rate estimated approximately million, non-GAAP $X.X million tax million the adjustments end convince nonoperating our related of other range tax of of high the we GAAP to of of in expenses $X.X and range, to approximately And our million, and and the to $X.X expenses end XX%. on of charges at XX% rate continue guidance low non-GAAP expect XX%

depreciation expense We of of million noncash approximately approximately approximately $X now $X.X shares million of average stock noncash diluted comp and and million. weighted $XXX expect

million. We $XX year call turn be some approximately also full Gary With to remarks. XXXX over to that, $XX to for I'll expect closing million CapEx back the

Ryan Zimmerman

confusion XX. the customer to Thanks, on and the Dave. thoughts we're result additional And September, LCD competitive as have outlook remains to as aggressive wanted on experiencing assumptions . of open some as September underlying in circumstances, your Whilst significant well announced compared call in the a despite questions, environment certain we our improved withdrawal as sales for uncertainty business XXXX. driven response. and before questionable our updated I disruption trends October The by guidance near-term and supporting haven't been to challenging share

our quarter, customers quarter cultivating reps our sales new but of improvement guidance servicing more fourth XXXX. compared through our primary customers for the spending as versus guidance we assumes prior time in revenue assumed is lower adoptions. expectations the to This fourth we to regaining a what the lost existing as Our customer guidance reflected of move and be driver quarter expect updated

growth impacted by half confusion, trajectory related second for been LCD this customer has is believe largely the we the transitory. Organogenesis While

commercial building multiple customer existing targeted are have relationships. we base regain and and customers enhance programs out back the strategies in build our underway customer XXXX. with with we as lost accounts close engage we support actively to as momentum continue And fourth We to quarter,

up our the improve mission that a call to surgical overall Care deliver Looking the the market ahead innovative, sports highly Advanced we healing while both integrated products Thank will to solutions highly products new outcomes With that, be provide open to medicine across to space continue of will and lowering cost the XXXX, Wound in with and to that leader the operator you. for launch on questions. I'll care. call substantially turn over efficacious

Operator

Ryan our come first will question BTIG. from And Instructions] Zimmerman with [Operator

Ryan Zimmerman

And was of whether Gary. payment thinks really really about have I of the we market But a forth. in tonight, structure came if a so and rule of thinking kind how point, area CMS year just just CMS' -- your medicine. some covered at the this Juggling curious calls the view bundle dynamics continuation final did despite XXXX, recently change is to all apologize so speculation change going it skin given this few and be of terms and should a this kind of high-cost, low-cost how there substitutes in be models for in angst about out earlier, of much

Gary Gillheeney

Thanks sure. Ryan. question, for Yes, the

reimbursement have really So physician change you're all. correct, the outpatient and hospital at didn't much XXXX fee

there setting. that changes, will some forward, going the think be particularly office in I

dynamics right to I changes the think were necessary. some to of impetus that LCD the behind market I I discipline and to the and of stability was rescinded now, the the think maybe market that's market, the think bring

So appropriate I change, I in positive, think, do very could be the change quite a over will time, and frankly. office, think, there I an be think,

to X going So plus I creative some products. actually think bring also the patient that for and bring scenarios which for some industry quickly and think think I overall of be efficacy products distinction the those would the bundling advocated better more between ASP care for and more stable could model, we're really market. at looking we an But stability forward, we've the

I we'll to something think X the So in X next years. see

structural HOPD, there to changes, response think in be be will may in changes particularly office. I office. there the In a whatever the

that patients into higher more So which And there I in to setting, my those opinion, will. they in X I is they the and so push hospital, a think happen models, aren't to to will X think back coordinate the incentives years. next need X cost

Ryan Zimmerman

But think, confusion the for noted, was you being is sense. pulled, market. a And it lot is I there you And LCD whole helpful. as the Very guys. didn't make a of win in

just this I to beyond LCDs? that -- that what preparing are changes so fourth understand that year, kind you given how us of And the does inform there think mean, -- quarter continue? how happening you aren't help these market the of from

Gary Gillheeney

and typically they'll do understand take formulary it's algorithm their more particularly reimbursement formulary. when a that back a and model our MAX, HOPD, patient, of affected in those that as change, of expected And share not lot in that you there's on a them our mentioned of voice an our it's think It's products application. even particularly prepared a and a of I we're outside making sure Yes. of misinformation there's the lot share on the Great our of remarks, in are customers getting correcting quickly off if question. MAC spending misinformation efficient impact areas treatment where and the of lot change voice a you about reimbursed one with

to reimbursement from longer early it perspective it HOPD, is happened in through a they So processes that back a getting that very experienced other address and that so and process quickly have. we on back you need formulary

we're that those and we're and in addressing So process, of every each one accounts.

In those handling one-on-one. area, office pretty we're the much

to voice accounts. Organogenesis quickly. effort. have those and back Fortunately, we're them And fourth really quarter But moving share we brand a it's loyalty of in strong very accounts

in with which we of for majority the seeing we mentioned, well expect us We've growth positions those accounts November, October, improvements to the at us end I we're the trend. in through have September of As really a nice October, even the of back year, are in month and was XXXX. month. seen worst a seeing improvements

Operator

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

Gary Gillheeney

Thank you.

Organogenesis (ORGO) 9 Nov 232023 Q3 Earnings call transcript