ORGO - Earnings call 4 2023 | Organogenesis Holdings Inc.

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Operator

Welcome, ladies and gentlemen, to the Fourth Quarter and Fiscal Year 2023 Earnings Conference Call for Organogenesis Holdings Inc. [Operator Instructions] Please note that this conference call is being recorded, and 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 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 -- excuse me, including Item 1A, Risk Factors, of the company's most recent annual report and a sequential filing with quarterly reports.

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

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

references accordance financial principles with includes not that or also in calculated general call to measures certain are GAAP. This accepted accounting refer generally to as financial We these measures. non-GAAP comparable with GAAP available financial to non-GAAP the those release earnings are and of Investor of accordance the Relations in Reconciliation portion most in presented measures press measures on the calculated website. our

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

Gary Gillheeney

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

fourth begin agenda what and the a in-op me of Dave during and with fourth with with quarter Let provide revenue for will our we introduced in [ of update developments we'll well this guidance open closing which XXXX, review thoughts at share balance will for operating an will of as key start then our call on our our before financial you press as results overview I our brief months. condition financial our the afternoon. in release cover recent year-end ] an strategic I your some and questions. financial prepared sheet remarks. an quarter Then we results,

assumed More the business fourth call of reflects low withdrawn determinations guidance our result disruption confusion fall. specifically, range guidance coverage been by and our challenging as the significant quarter has uncertainty. of quarter customer in and end having and sales driven at conference came our subsequently local range Our results outlined on operating last continued the third announced a expected environment

impacting existing last in quarter's thus and our call, new customers year-over-year more As regaining servicing time sales growth reps outlined customer the expected customers adoption lost quarter. to our cultivating trends be spending versus on we our earnings

environment operating in which through guidance as of materialize. QX, range end the higher assumed ultimately our the did we Additionally, improvement not move

momentum customers Despite we of business the and quarter, trends we efforts challenging in are December We're positive to algorithms see towards our early relationships lost commercial and by end to to experienced that to continue broad-based into the the to with their back customer support regain the XXXX effective. see in the the continues implemented team progress existing our healing our are pleased the and bring to products accounts encouraged reengage commercial proving programs we formularies. enhance to evidence

majority during clarifying dedicated we share the towards Importantly, a the market. voice of misinformation time our in fourth quarter the of and

our refocused We in growth have products commercial their value. in by resources to our differentiated our clinical drive base customer emphasizing

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

evaluating use planned. to neosteoarthritis ongoing of as the III associated Our Phase progress clinical the symptoms continue renew with of management trials for

As [indiscernible] a suspension milestone rich anti-inflammatory the a reminder, containing lock in are growth or III the ASA, last-visit underway. to for matrix ReNu January last-patient database for for and symptomatic efficacy viable treatment neosteoarthritis evaluate allograft amniotic of unique cells, preparations and trial first the clinical importantly, Phase extracellular factors. is and cryopreserved of achieved the and ReNu is the We regenerative analysis and currently

intend data the release. targeting to the line of currently are top which April, publicly analysis by of end We completion press we via share

as trial, evidence approval. published regarding data BLA with the discussion valid which Advanced unmet discussed, clinical largely a the In XXX-patient combined potential to or the Phase insufficient subsequent evidence BLA, scientific first requirements for propose FDA a for we underscores existing received strength its Therapy, RMAT RCT Medicine need. have the And we intend and Regenerative to FDA's our clinical designation XXXX, and neosteoarthritis, expect of the the clinical to as the III ReNu medical [indiscernible] with previously address for

more with seeing XX pleased running clinical patients clinical in have also sites up trial now enrolled date. we're We and XXX the are and have Phase our for We than second ReNu. III to progress

has While first it's with XXXX difficult of to quarter predict enrollment line III current second us time when Phase trial precision, our last of started the clinical in in full achieving of pace the ahead we enrollment original our expectations the September. enrollment

consistent KLXs. our knee XX% also enroll track clinical Phase Additionally, most XX% population, with III severe on first trial, knownas patient and the between OA to we're of

is the the is avoiding or symptoms symptoms there that biologic most only [ intra-articular disease of injection the of the the completely possible If costly no severe While successful, it treat with ReNu delaying invasive ] cures goal NOA OA. known be of would cases replacement FDA-approved [ surgery. treatment ], to improve knee to

over turn let it that, me Dave. to Dave? With

David Francisco

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

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

was increase by compared prior in in X%. the the year to fourth fourth driven our or $X.X expenses the gross million partially year general $X.X decrease XX% a the decrease by million million for expenses compared decrease pricing $XX.X research or products. selling, in to and decrease were X% the $XX.X costs resulted period. decrease of The last administrative The quarter of in Operating in certain for shifts development expenses, offset primarily product $X.X in operating margin period and million year, and a a a mix or to in million from quarter prior profit compared and

million compared of well million such XXXX. related to GAAP operating million year in LCD the Fourth $X.X of costs compared the $X.X those in restructuring-related quarter expenses the quarter for fourth expenses employees prior sales impacted no of to by as retention included as compensation $X.X to charges the

reflects intangible The our in non-GAAP $X.X both decreased periods, non-GAAP of or a quarter GAAP in million operating these expenses reduction strategy in noncash light these amortization Excluding the the revenue environment. material challenging further expenses We quarter the our operating to for profitability operating cost lower proactive mitigate difficult fourth impact to XX% from fourth results. of $X.X decisions million strategic items, to made manage year-over-year. the

income of million. Operating fourth $X.X to a $X.X of $X.X of quarter was million. fourth $X.X income million compared million. decrease for $XX net decrease last fourth $X.X $X compared quarter the loss for million net million loss income a a the was last operating year, the compared decrease to was $X.X to last of $X.X for quarter million year, Adjusted year, million million Net of

the income is a As sales employees impacted these effect resulting by net income adjusted and income other compensation of reminder, items. as amortization and items, adjusted charges restructuring LCDs expenses related for including to the GAAP exclude taxes certain net to those defined retention on

compared for structure income our adjusted cost the net our million our of last EBITDA efforts XX.X% a the Adjusted revenue and was guidance year. $X.X of net ability which end We net optimize deliver positive quarter adjusted QX. ranges to our of to to fourth of both exceeded EBITDA, in believe $XX.X low was contributor key million X.X% or revenue or proactive to

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

in was of revenue quarter. $XX.X million for Wound of the of $XX.X months $XXX.X by & Sports was driven revenue or brief The Turning of a Net which million for XX, net of of or $XX.X the XX%, Medicine ended our occurred fourth a million year-over-year million decrease and of EBITDA Advanced of decrease year or was the year X%, revenue XXXX. compared of products, of XXXX, $X approximately XX.X% the XX, quarter. compared the $X.X revenue products. ended for XX, Adjusted adjusted Care in the decrease to XX% Surgical million XX or financial decrease results million or $XXX.X $XX.X in ended in XXXX, December million of revenue fourth review X.X% decrease to to December a December net a of net of X% all net which decline X% revenue or occurred EBITDA a in net million

balance the sheet. to Turning

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

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

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

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

to of guidance to income profitability the $X.X net income adjusted income of Adjusted adjusted loss $XX.X net of of net million. generate net of net XXXX, of net terms a million GAAP income $X.X expects in In loss in loss for company the million range range our $X.X million. to loss

expect in and EBITDA of and also million EBITDA range to $XX.X $X.X $XX in the $XX We million. million range adjusted the million of

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

half quarter, of LCD business early into in momentum As of expectations XXXX announcement the final of and the a our part third exceeded the first the the reminder, continued August. early ahead strong

XXXX our result, comparable the expectations are for rates. quarterly in the towards given a growth XXXX As half, skewed growth back

expect For million. in $XX revenue $XXX modeling to range approximately we first million purposes, of the quarter

total assumes of will approximately XX%. profitability XXXX XX% to non-GAAP GAAP operating approximately XX% to gross XX% in Our increase increase and approximately expenses expenses guidance to XX% year-over-year, will XX% year-over-year. operating margins

this intangible that approximately related investments in preparation operating to studies $X.X operating our regulatory-related million. for XXXX Our expected incremental noncash is expenses and renewed spending amortization primarily non-GAAP BLA the of clinical in increase in Note exclude efforts. expenses year

key year Our full investments commercial initiatives. to operating also strategic support XXXX expenses reflect

of to profitability end X% of expenses on a the GAAP full to non-GAAP tax rate and the assumed high also of XX% positive of Finally, tax at guidance range low ranges and our to range, interest the total XX%. million the negative continue million, year of rate we approximately at $X $X assume range end other adjustments

expense Noncash depreciation closing call the turn approximately back approximately million, million, a of of stock $XXX for some $XX count noncash share to that, weighted average over million $XX I'll $X.X and of of diluted comp With approximately CapEx million. remarks. Gary

Gary Gillheeney

Thank you, Dave.

wanted I our on share questions, Before your and guidance underlying XXXX. some for additional outlook to assumptions thoughts the we supporting open up call to our

While that we're accounts our the are evidence relationships environment team's to commercial to to XXXX, efforts our enhance business remains trends existing commercial proving in in We're progress continues challenging, see see the the team commitment of are effective, and programs and lost show by continued proud we their pleased encouraged the customer with to customers. regain our our reengage we support to early mission. improvement implemented and to

to Our guidance infrastructure identify product license agreement return including our Wound to commercial leverage surgical opportunities effort view leading of Advanced example Vivex new to markets, XXXX, accretive, a new as this growth in reflects agreement a both high-return valuable fueled across our and for license growth market great launches position a contributions Advanced sports from Care. Wound Biologics. with medicine and in by margin Care We revenue

solution adding share solutions. team commercial of while products our which by are providing new portfolio our offerings, expect We enhance broadening differentiated treatment we our value will to voice of customers to

our Our to including our invest growth a strategy, value support which and we financial renewed to business guidance driver regulatory in long-term ] continue our [ significant represents clinical key to also in the believe reflects intention strategically initiatives future.

and financial increased healing expect care. and solid in in remain substantially leader integrated we overall lowering will to EBITDA provide XXXX, remain to that enhance cost us operating balance Organogenesis, cash on Importantly, adjusted despite while flow innovative condition. and solutions opportunity mission efficacious which products the for long-term of that outcomes the space And investments, help with we we deliver a to improve deliver in highly our the to sheet confident our expect our continue

call the And questions. over that, the I'll up the open with call to turn to Thank your to operator you.

Operator

[Operator Instructions]

be today question first will from Zimmerman Ryan coming of Our BTIG.

Ryan Zimmerman

guys you okay? Can me hear

Gary Gillheeney

We can, Ryan.

Ryan Zimmerman

December, on it'd it first you guess, here. Gary, the just helpful be early just in your business the how for the guys but improved you trends in market I quarter certainly Great. context for given color. that the Thank of to contemplating the with I that which have mean your like guidance, get all of kind the Street recovery -- still in recovery sounds appreciate of -- the kind you the guidance thoughts you're reconciling the commentary down the quarter. with quarter? are first I business is first on sharing doing what in are

Gary Gillheeney

Sure.

of in not And we But people sales that's end the the January very sales meeting started did we seen typically a and to is end trend meeting, had has national some December. and the X see since move at at accounts see all really result experienced our then with of relaunched the out, November the actually flat. period seasonally well. January, started only which really quarter, The of with our an a improvement we October, it been our sales affected December. February. fourth some our So And improvement been efforts, that's strategy, of national in down and kind retention which our We've weeks, turnover strong. in improvement. and as flattened and was we to really of positively last effective

we're the reps. the encouraged bringing that back of with accounts the So we're productivity with

actions is to we producing effect to quarter that commercial Some in of results. the the productivity the in take streamline took fourth and improved starting operations

second things better we the quarter. continue the So get of think will to in half

David Francisco

that add is I'd growth. at the recognize was XX% thing quarter first XXXX of too too strong only quite the Ryan,

So it's well. a issue comp as

Ryan Zimmerman

maybe for EBITDA year, at also guidance, you I out, look a this place to question, pointing that's stepping that in just putting Thank That's And little then quarter. the over been programs but those that is Yes. of of of off dovetail when Dave. helpful. bit that back reflective past kind I the adjusted you've some mean,

your thinking the profitability drive And off gas so of on we to to that little kind maybe growth, if think would taking you're you're spend drive philosophy new how foot this get love to year, products. managing a bolster about to should there bit to your

how I also to quarter, here, -- to some understand because the there. of cadence about look margin would thoughts Dave, like when XX%, bounce you think the of from materially view back How gave today. your quarter. the XX%, And the think does in gross in at margin third I it that it quickly was you in fourth that context the down XX% the was guide,

David Francisco

sure. Yes,

there's spend, over that, R&D. overall is say, one fairly time. would the time, in within on program. I a So pick in point And 'XX, up was an that ReNu inflection it's the step-up piece exciting obviously, inevitable that's And material a pretty would

And there's happening from things several that that perspective. are

as moving trial in, enrolling Gary quite The mentioned. well, second it's

And that associated so all expenses sure And BLA. that. obviously, we've got making some into then preparations we're with to submit the go ready the

I to think had X%. operating cost then at the that to X%. QX, the in guided there. of we 'XX, in a we reguided we we be then the because time, we in we minus guidance it the we And X% were operating back quarter, there's last non-GAAP expected we anticipated be and when several fourth those at took was before back on to where up And So to flat came you to expenses issued QX. time actions, bit in When expenses going quite in work think

So returned some that growth as 'XX. to building is that up, of that infrastructure in back we

of conscious And are very so the yes, we profitability.

some tried strategic to think and But have saw bottom in we on to continue we'll to that 'XX, the we'll that do and making declines moving I best 'XX, keep that. key the given as investments keep we there we line our in think are well, manage that. I forward

about You margin. asked the specifically gross

a so do we'll it to the more cadence, I think And as but comes return year start throughout will normal migrate volume to through.

But from price a about talked we mix. pressure the seeing some in on piece recently, there QX big was standpoint. As we around are

the I go specifically we and as products Some more margin from me, we dig way QX. quite contribution out through significantly to those XXXX. their were higher these expect excuse mean, impacted LCDs, of

Ryan Zimmerman

Kind If investors that XXXX? Gary, to or more guidance LCDs sneak potential there could just to in. a how view Okay. is for ultimate asking that occur and would for appreciate in your your return? factoring the is, just of into I one been resumption in question estimates have the And view the on your for that you're

Gary Gillheeney

the any there whether will be we anything our thinking or So know -- be any LCD don't the in certainly new there is won't of we beginning policies obviously, out. not year. probably significant, coming changes Again,

I think dovetailing that be around out, with the say. some what may coming might schedule physician fee there

So fee last schedule LCDs, coming transparent. I election the year, being that of the the process out more think being think will more an we issues in were be and the amount physician robust,

And so on year, I of impact don't first guidance. we obviously. the change the designed think half have an have considered year second of the think not happening expect an we the anything the our half physician in answer, with anything see LCD we but not of impact any in of that, fee don't I considered schedule significant, know -- I we all And wouldn't the have how may they're and --

Operator

coming of Ross Our next Fitzgerald. Cantor will be question from Osborn

Ross Osborn

can on reaching versus So about like looks Would in the fourth discuss hiring you as you out reps parse new productivity the maybe then turnover? just range? reps. And a follow-up, and more maybe little your guidance lost bit XX rep quarter. rep It you a XXXX

David Francisco

Yes.

the it's bit count reported misleading. -- little a So frankly, obviously, mean, is I rep

probably many categories have X We of as reps companies do.

And as significant fairly drop and associates. the fourth off quarter, kind year you associates. in those then the throughout a the and have We see there's specialists of

get specialist role the of into is there what and you're associates And seeing of really role the best maintained there. promoted has kind the so specialist

amount level ones to are you the which productivity look looks minor when the at increase has vast look of the 'XX. a at from then uptick and So quite the generating take of the standpoint, if associates But specialist it's a it of you in total the are like it specialists, that just significantly. majority revenue,

Ross Osborn

realize and then But much of growth on of large. through end range just smaller and you guidance walk one high the terms of in some And it's [indiscernible] quite is just & the Could Surgical that? Perfect. low of drivers business. piece Sports, Okay. us maybe maybe hitting the a

David Francisco

mean sure. that it's a fairly a from wide basis, smaller I obviously range business a it's think ramp continue Yes, I up. percentage much but to we

you NuCel, know, and FDA kind growth in As been of of in we've some the to but now view. mode in upregulation repositioning time we're really for our position ReNu a both drive since

the have We the market. with that out We're reach direct and new broadening right some reps, products channel access building and to agency leadership. bringing

we've that So And of we a we about is feel forward set us for good I the going be to opportunity quite in front going think, as got of see good a us. opportunity and well. 'XX lot year,

Ross Osborn

for the for through us then license and walk with your And rationale Perfect. [indiscernible] factoring Okay. us. just agreement Could you [indiscernible] a ] . [

David Francisco

that now. that's Yes, us to for opportunity right it's a sure. ] dehydrated layer commercialized we're product product It's another to mean a market. [ an dual I bring

from standpoint, it, GM our so accretive, profit And Gary accretive EBITDA it's accretive. think and growth I -- mentioned it's

broad Care. then opportunities leverage the that to position for opportunity that our kind out in we infrastructure have really bag to add of commercial the and have Wound real Advanced identify continue that a it's think we So and there us we leadership to

and on report forward progress we So excited great out it's look We're it to there. that about to the continuing make partnership. a

Operator

question next of Ranieri Stanley. from will Drew be our And coming Morgan

Andrew Ranieri

changes? past level? to to Or But about there on the with still question. these and are run were you get ground touch can us before something up some Ryan Do you is process competitive where back actually rate the brought to immediately? you to a maybe get are what snap as his thinking of view they recapturing their all a seeing kind these first walk clinicians some of maybe like that just accounts, just of Just you back of through handholding back business you on

Gary Gillheeney

different really based of it's site Yes, care. on

committees kind So process more formulary. HOPD when like more you a it's through where get when of a a -- of setting, the back you've on and get to back got of back process hospital

the lot of that Once can Again, quicker. process. So the getting a the little that a little attention, faster. it's a takes bit office, obviously, longer. get In it's process, the just through you clinician it's and usually

they'd of that reimbursed, order what care what as to like wait sites works, in typically with historically see to and to reimbursement then we slow start to understood they'll they small see are -- as is they they how both move so a it But buying them they product the actually was. see it. on patterns then educate And is back the and like that they're start to

and you the the So they delay general follow as reimbursement fact, Particularly as you that reimbursement office, to close back there delay in hospitals. but have a the have see longer the is is in this and don't also the HOPD, real. people what change exactly is, want if it's to in

they're very cautious testing in So and reimbursement. back coming

Andrew Ranieri

help this your a And us prepared could and Advanced that Wound that Got number remarks it. give agreement of significant accretive, how a sense talked you about be your versus organic for I can appreciate you 'XX, it a discussed. a products. true like maybe also accretive, license for frame and of Care kind it's bit -- growth on in us Great. the to licensing inorganic appreciating margin business that is just new what's you just Gary,

incremental or that's So out with guidance Are to you? be for these better factored and help us just mix should your how into been look maybe able we for? more what just

David Francisco

Yes.

And kind away of So been from over quarters, we've the guidance. done our into incorporated several disclosure. product-specific Drew, moving last as it's we've

we level level. at you disclosing [ know that of it detail, into going even I in purply the discussion incorporated And But Ross been the as the guidance. with ], forward. forward we're it's how to so progresses haven't And letting mentioned looking

that out [ So ]. broken we haven't

Gary Gillheeney

and in we more But of contribute does sites give flexibility us give to growth mix. some It Drew, gives it on us, it in does expect XXXX. product some our our flexibilities certainly us it to optionality care, and

Andrew Ranieri

it. there's portfolio any products for in just should we for XXXX? on the And broadly that Got lookout be new your other

Gary Gillheeney

we'll did surgery we're launching They're that in for we that contribute, we technology. our area, in pieces that the both of products and be products expecting wound Well, mention surgery. surgical those have primarily and two will larger both care PuraPly

Operator

more at We in this This time. does your are showing for the you our conclude queue questions participation. conference for Thank today.

Gary Gillheeney

Thank you.

Organogenesis (ORGO) 29 Feb 242023 Q4 Earnings call transcript