ORGO - Earnings call transcript Q2 2024 | Organogenesis Holdings Inc.

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Operator

Welcome, ladies and gentlemen, to the Second Quarter 2024 Earnings Conference Call for Organogenesis Holdings Inc. [Operator Instructions] 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.

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

Gary Gillheeney

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

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

momentum our positive results sales the call, quarter first reflecting half on business the came continuation of strong the outlined of first Our in and range above of the trends end guidance XXXX. execution a in high in

through that commercial our the new resulted competitive and aggressive lost continued this activities, challenging results focused relationships, environment. accounts. And execution navigate in right we team continued our disruption productivity customer in pricing circumstances, we regaining fueled by Our enhancing quarter and strategy our in by better-than-expected second to the marketplace, strategies questionable team's operating capturing certain believe existing despite support on accounts strong confidence

customer team in base product differentiated that driving in by by We validation. is the evidence our our are the further clinical growth our encouraged emphasizing

were to progress made pleased the recent addition we substantial updates in on share QX, months. program have to In our ReNu in on strong the commercial momentum we

for The As trial, these the first double-blinded this parallel of where prospective clinical afternoon, at the revealed multicenter successful, end-stage all enrolled only press submission. We X III the first were a exhausted. By subgroup of X of group the The are on reminder, our Phase the improved is predefined months. XX% of up results points, more pain Phase in efficacy additional disease power OA. outcomes improve case treatment subjects XXX are based a analysis symptoms replacement in severe pain. from a Phase clinical of as to patients while seen supporting group patients and maintenance took months. by study, function a announced management saline-controlled we requirements of breakthrough in the meeting further results. separate in the pain Other And patients line even patients. III release ReNu trial KLX. study announced biologic in first analysis, substantially of the that statistically most the significant when endpoint OA most the the known in FDA-approved KLXs, a key statistical top other classified BLA results that of to way results statistically patients knee XX% RCT reduction III These typically was significant acetaminophen are subjects pain knee if trial those Group which would the during that breakthrough pain the WOMAC took met expectations at ReNu result saline study sensitivity This this is for less of responded intra-articular the found additional injection options meeting in secondary and with ReNu severe, be consistent moderate which with this reduction primary the knee with given pain as these the disease, in treated the with knee of completed notable to acetaminophen group, total KLX for in endpoint severe supports similar patients

agencies positive completed We earnings During received the the confirmatory clinical the that for pursuant manufacturing on on FDA framework affirmed the confirmed XX, controlled strategy we BLA ahead of with a in September. strategy we were company's or our second discuss evaluating the requested multicenter also enrollment a we patients FDA this and and support enrollment to controls, announce randomized submission. chemistry, assay the filing the analytical the the safety calls. and meeting biologic ReNu, a process quarter, with that Type and FDA outlined expectations July the required and application guidance enrolling well for to will pleased to CMCs, to trial our and requirements meeting started we expectations second original completed validation. We study Phase the license our of on III B proposed when data Type significantly feedback outperforming trial We B with be recent and our last efficacy XXX

a track QX meeting are submission time by BLA deliver B submission, BLA on FDA, and the end for Following to the XXXX. we ReNu ReNu roadmap the line have positive clear Type our the we and with now of

the Organogenesis from market a continue new a We a ReNu represents patients for opportunity growing to pain opportunity significant believe introducing management innovative and OA introducing for of that, ReNu market represents transformational addressable solution Organogenesis. as pain an if knee to approved, large suffering approved, and if for millions management

osteoarthritis. an expected affected are to by Specifically, XX.X Americans be XXXX, knee by estimated million

osteoarthritis, is goal known of will disease We is unmet approved, no replacement serve most ReNu completely knee severe cures we there knee moderate-to-severe who suffering invasive patients, While knee the the treat nonsurgical an costly estimated clinical surgery. OA treatment believe are or knee representing ReNu, an OA, it Americans. that symptoms avoiding with delaying possible and options, symptomatic address particularly if have to million unique for the from by and need the for to limited X excited all opportunity patients

our call our over to share earnings areas the approach call, comment in on to reimbursement the MAC's update the the deadline MAC evidence-based clinical Pursuant in strategy in a last we for our and submitted brief early and to of the our reiterating progress coverage. of discussed the LCDs. recent turning the Medicare reflected letter Dave, draft advance June, wanted to in validation support I Before on

including real PuraPly of list. on As planned, our PuraPly comment should data, letter RCTs, world our be and included covered support following existing XT clinical that and NuShield, the in included AM, the case

published on DFUs For high-quality DFUs Xth evidence, criteria rigorously RCT RCT Journal of LCDs, RCT, were patients that data for draft of Wound compelling, this population. including patient data all results evaluating peer-reviewed this we in includes the NuShield, in the level of the large treatment demonstrates June designed published the considered effectiveness was I and with XXX the for Care The a not and significant a prospective and that NuShield in complex of challenging the from statistically believe for coverage. meets published a NuShield which treatment evaluating NuShield of recently

and use cover, coverage which XXX-patient For study are showed the AM PuraPly a we VLUs. was solid high-quality completed, highlighted currently of XT AM and literature progress data for and is XT PuraPly and for received PuraPly We approval, in the from AM review XXXX. of are RCTs a of supporting evaluating available the draft last that coming After the published TheraSkin, DFUs LCDs targeting of showing in to identified in sites draft large data for PuraPly DFUs, May discussed a toward in DFUs pressure proposed and a our that first peer-reviewed the a a to of body the by patient effectiveness data across on complex call. new earnings five effectiveness treating included VLUs weeks. product published LCD publications have non-inferiority comparative AM We of making XXX IRB we co-morbid enrollment supported patients injuries population. This study treatment

products MACs into this to year. coverage cases present We later will efforts and the year continue our to secure next compelling for build to additional to

We continue market. health of will care from for substitutes, the positive ultimately the material reimbursement be of CMS in skin changes to the wound and long-term the believe these if MACs adopted,

will establish more additional to substantial disruption, in believe sweeping call strong patients these represent us which if are to maximize Organogenesis' over serve highly taken a implemented, enormous me period that, and has changes validation infrastructure efficacious a be that innovative we coverage and to plan the to that let there positioned products, the competitive commercial clinical of of Dave. transition brand products. With advantage and to opportunity together turn our While commercialized for secure equity, established us key well

David Francisco

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

As business were quarter. quarter provided Gary the to which range million, reflecting $XXX mentioned, our total ahead in these of expectations strong $XXX during second continued in results QX revenue of on million for called call, the momentum we the second

capitalized $XX.X to last year. Operating revenue year, XX.X% Medicine software. noncash development revenue costs XX%. compared construction Care Our second increase $XX.X Surgical net quarter related second included Note of an Sports was X%. XX.X% was profit million, building million quarter expenses $X $XXX.X an products work quarter the & quarter $XXX.X write-down approximately unfinished for the previously compared second million, $XX.X or for Advanced million second million as XX%, million of and up $XXX internal to down of net expenses were the the Wound was for quarter operating Gross the or million of of that from net of revenue improvement to last use the for second well as impairment

charges decrease and compared to and administrative second XX%. year, items expenses of million quarter primarily $XX.X year-over-year -- support second or change period. selling, or Excluding to for $X.X increase compared or efforts. Operating and a included our million noncash in excluding noncash and the a to XX% operating general The primarily associated operating expenses these expense, $X.X million last million. the year driven increase by research XX% $X.X and amortization $XX.X $X.X clinical to the was and of increased BLA development a noncash quarter was loss in aforementioned in of expenses million was costs related with trials, expenses of expenses our due income million prior and $XX.X development million in increase approximately research research operating The ReNu

or noncash loss amortization for Excluding year. sales charges, the of X.X% million impairment operating non-GAAP last in Net compared sales or expenses restructuring was of $X.X was million X.X% to quarter our $XX.X income write-downs, and second compared both million of year, to $X.X net million. Adjusted year, for decrease million $X.X loss to net $X.X second income was compared income last a $XX.X adjusted net in million of $X.X last the decrease million million. $XX a quarter periods, of

net adjusted software a net resulting restructuring defined amortization effective the or these adjusted reminder, earnings EBITDA write-downs, EBITDA income results or to last income impairment $XX.X improvements and our adjusted adjusted million year. provided As net of Adjusted costs net of the net is reconciliation building was to of $XX.X quarter and in items. XX% on GAAP full income, our and second taxes release. revenue XX% charges, exclude of revenue a for and capitalized as press million compared We've income

million equivalents sheet, $XX.X $XX.X $XX.X cash, of $XXX.X and company as the had in XX, million equivalents obligations balance XX, of in December the to and compared as cash now cash cash XXXX, in and June XXXX. debt million debt restricted cash, in to in obligations restricted cash, million Turning

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

for near-term the reaffirming continued a to that our expect strong press Despite are this market we disruption the experiencing in guidance that in the our from business, referenced are LCDs. review release potential we to prior that afternoon account in Turning financial revenue of momentum the guidance. we we XXXX our the

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

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

GAAP million and on of write-down second the related profitability tax costs in charges our updated items these quarter. and EBITDA impairment the $XX.X We guidance have reflect recognized impacts to for and XXXX noncash

Specifically, in $XX.X previously. compared million, net a range loss we GAAP now $X.X million a million GAAP million $XX $XX income of of net loss loss expect loss the net GAAP net range net a of to of to to

also EBITDA loss to expect to net million previously. generation EBITDA of a million We of in $XX range $XX compared of positive $X the of range EBITDA to $X.X a million of million

remains Our net adjusted unchanged. loss income guidance

the back Specifically, considerations we some EBITDA call remain XXXX non-GAAP income continue the of call for $X in in to of to unchanged. With Gary $XX million largely to remarks. adjusted fourth modeling of expect adjusted closing net range All other $X loss range that, turn the $XX adjusted over quarter to net million in our million. million, income outlined I'll and

Gary Gillheeney

quarter Thanks, environment. MACs care believe execution We for long-term our proposed be Dave. second market. reflect if the in changes commercial from substitutes, health wound challenging closing, the operating skin strongly of by the our the positive the ultimately step and strong amidst reimbursement results will of a In adopted, CMS material team

strategy real-world next a covered to year clinical existing have to year. later RCT coverage have on already a initiated the to RCTs, list additional data, and strong for and including expect new clinical products additional into we We early secure leverage secure and this and evidence our

plan the and also strong establish with together our represent will QX additional from approved, integrated with to progress pain lowering opportunity knee continued products. And substantially be employees our products, and suffering sweeping of of submission which equity, throughout infrastructure implemented, acknowledge us to that changes highly enormous competitive us our by one importantly, has commercial validation are innovative for transformational efficacious the a disruption for to substantial of positioned by commercialized While we that patients, innovative program maximize believe if and established in a BLA we period outcome coverage that finally, solutions the taken while to serve Organogenesis' there clinical secure represents these improve that are and to overall is transition by as of introducing target key a advantage the the ReNu millions well more to the have brand end our hard our would and of to dedication our consistent mission the organization. healing like cost demonstrated for and work provide an for continued care. I mission patients solution clear a ReNu XXXX. OA opportunity If management truly a Organogenesis excited of

toward and open half over turn of the call the to over for performance strong efforts. And Our their operator up key strategic that, to progress initiative result back our the I'll XXXX of is questions. the with call first you

Operator

from question first will from BTIG. [Operator Ryan Instructions] Zimmerman Our come

Ryan Zimmerman

guidance quarters Congrats LCDs. in year. Gary I of relative balls a with about really little little know progress of strong the lot referenced the giving the to on July? some kind talk second, particularly about there's But dynamics think Maybe X about start you market. kind your to ReNu. quarter in want talk -- the to as terms quarter you've a in a you of what air and seen for I of about third with it, the what's expectations? a and and the Can I with you and you just -- talk guidance you've bit, Gary thus Dave, far had our start Maybe pause, the through can of

Gary Gillheeney

the little environment. I'll talk about bit a

with positive sales have accounts a representatives actually see last number We've we So we that increased into quarter. in it sequentially. that business. in continuing of We've QX, seen came We've that additional back more we're clearly second eventually ended we're LCDs seeing the in trend the than accounts up when the our to still had lost coming as and of of play. QX year removed some were throughout

So we forward. keep see that moving trend

challenges still instead that increasing grow it's continue of competitive been seems is that lot seeing, it to times, at the think there. but of see is And competitive through to that, everyone like a fortunate also pricing decreasing. We we've I pressure

those base still So seeing we're pressures business. our trends there, in still but positive some are

with as escalation some to on of some that's out like there's But of thoughts think the other market going it continuing the potentially guidance, the LCDs As the high that, a practices or look at until another coming our every competitive with it of uncertainty in price. it relates seems I we the when all to stops, would that's to with We think be guidance. and continue day LCDs actions. product our and which relates the pricing,

David Francisco

I early April. year. prior question. to mean, guidance out that that the in we was came Ryan, the obviously, great It proposed established LCD in late

beat a in range. buying of might are Gary's confidence the and of feel have end the We high which still unknowns of us gives we dynamics about and customer to change. quarters, that both low behavior about when lot there's delivering level a great the that, But challenging point,

see, wide can QX, was implied we also for pretty for even and QX, was guidance guidance which gave obviously, an wider range. that you a So which then range

So is a some as biased about. QX, still be we're there spillage we QX think little may it's bit well, but just which concerned what towards into

long we I move quarter. of normal in far customer change the summer the but as away mean, the doesn't we're as is July this seasonality, half expect that behavior As seeing buying concerned, back dramatically to as from

Ryan Zimmerman

on a those the I've it's on quick perspective some this questions the lookout the pin lines a that, ReNu. specifically, MACs and from and follow-up updates LCDs? you just time for be have that down before, expected but I timing LCD? to know we to asked hard on on And Any then should for anything I

Gary Gillheeney

I you from the that to will fee will you believe just schedule opinion. our proposal. of affecting came almost nothing out that payment out. substantially at lead And think those know, don't There's see it's LCDs doubling year. as the would the side cost effective We on no in the recommended control still last there's mean, come system, there we physician really I in of said, really this going costs. bundling that Obviously, happen quarter and in point, mean, year-to-year. kind And we QX next to it's something those that rising the

an on believe we from there that -- something of be physician combination QX really think the the that's of January but X, to and the activity fee effective in So those cost, happening are and be a escalated drop perspective nothing LCDs. just will sometime in schedule, about, these surrounding we LCD lot does factors seem

Ryan Zimmerman

Very Dave. and helpful, Gary

differences have available, turning to path Gary, we the but talk I'm Phase just want is ReNu see about to to you III this. your speak now. I ReNu. But for if if or Phase know -- to the Just Patrick a the study and It's confirmatory to between kind study. good clear don't III wondering nuances of us maybe,

that quickly the then follow-up fourth do could line, of if time your the about Just than and when potentially question get differ you something we And data? what as investors earlier possible, as the quarter think maybe to I do second all, studies? And you're maybe to is you able 'XX? the little lines remind see all if adjust a in done -- submit this have time have at to think then there's anything what can BLA, for you room is, room those to

Gary Gillheeney

Sure.

second we to is more study. it made in and ultimately that some so the second that So adjustments study two operational larger, study the better I power will studies, has that performance regarding lead think study, in in the we've mean,

last completed of And Obviously, June already patients June last the perspective feel expect pretty about. been next or from -- So the all we patient study of we 'XX. visit is comfortable have enrolled. of the

that gives to the a forward move aggressively So for us opportunity filing.

the responded. thank data. ask I when meeting our of So have think in days minutes consider will that's of we though come it not no on They reasonable at a a couple that move did that Though have is of of know and change the assuming formal XX is of be We'll XXXX that, possible, which get we meeting, after sure. indication quarters, file forward the the our that it as in we're QX period. all accepted, -- meeting FDA We But X-month to time trial XXXX the QX we potential could you. that XXth. XXXX, complete for would this a point,

Ryan Zimmerman

Gary. you, Thank XXXX.

Operator

O'Neil Our from question line comes the Lake Brooks with of Street. next

Brooks O'Neil

the you -- fail in that I the guess I'd is the that? And view at saying A, as expressed that, some the MACs your activity well, suggestion? again industry, elevated I by talk respond how like have some reason start might LCDs. implement What what's that players that to leave to opinion it for the to do to the on competitive suggestion that. let's various

Gary Gillheeney

been Well, we to increased happens the those likely I to and the difficult not they implement be and are think but And year, unless the it in where rule, see public, of that's change in schedule if obviously cost, dramatically. rule. the the based proposed that really very no proposed there's costs fee between on something something since wasn't not that now included it'd end physician

at there's years. payment no X.X another So least for solution

to cost try but right market. to now form me be be to believe implemented their skin control leads in current substitute that form, will the in in the LCDs not some that may the So

it -- it been it where number they make form may and it can need of changes be a needs a we make to is. that well, companies, really actionable number as not think be the us improve from of There's effective. So to some to comments in it that

will. that put the So it to and something ultimately, our opinion it's might in needs and eyes be the change, place in CMS MACs it of but

Brooks O'Neil

me. to sense Makes

their it understand clinical products? that that a that sense any end? evidence on setting. hear in actually some evidence have us your of the be and seemed your office of products well-conceived that response presented for have physician necessary for the they a you do clinical case to MACs Do is lot the You it's reimbursement Or compelling several they to silent you those evidence suggesting have

Gary Gillheeney

review PuraPly AM XT, mentioned, and did opportunity LCDs. as data, MACs they I to for their of some Well, have the a substantial amount before which proposed the issued have and we of NuShield not

we've those studies, product NuShield comparative a AM one PuraPly of are for XT. One the XX. for studies study RCT in effectiveness already submitted others that a that's approved and on is against So the and is PuraPly retrospective in actually list

So we in think data these sets and enough are are that that robust out. should they LCD, included large, when comes they be it the compelling if

Brooks O'Neil

last Makes go sort governance? to normal you or of think sense good I of market if you you million. that's curious ask capital? me. the either a I'm part selling company actually on to any Or filed on additional I'll and some appetite one. one raise saw the after just mixed shareholders have do the think comment close, the to I offering $XXX there's whether shelf an out

David Francisco

this Brooks, Dave. is

for not You're since was to right, certain that us, it's tremendous amount in the And individuals just I governance. shares if chose something mean their absolutely a financial good opportunity in flexibility have they gives XXXX. we is this place that do. fall something had sell for It of the corporate that of secondary, to provides a

a of really add a today, standpoint, working as of and you us $XXX this the on available point, just amount too, cash, again, might of and from governance. good million as well. then fair done, an it to your And $XX we revolver get capital have was So opportunity over liquidity corporate to just I to as know, million

get it's just good and again, it corporate a point, to that's your -- wanted done. So governance to

Operator

[Operator Instructions]

comes Our Ranieri next Drew the Stanley. of question from from line Morgan

Andrew Ranieri

it I added maybe in briefly for you of But the the was of And handful sequentially. questions. a be through seen just Q, really adders just time looking than start, we've Maybe a it's to subtractors and one net to first of number mentioned terms Gary, this quarters. like you force, earlier reps sales the the looks of you

more the about So is rep rep strategy to to just about envisioning I you're it looks and of itself here. talk increasing. sales But sounds maybe force us us side, productivity mean for the it just remainder talk XXXX? like what

Gary Gillheeney

Sure.

during we correct, add representatives You're did quarter. the

and accounts earlier, sequential mentioned have the deeper. is growth, in getting We account gaining in accounts have did our As back. we successful I depth been our

So them productive, our takes for of productivity, even completely was be up which with XX%. to a adding time representatives, bit the

continued accounts growth led accounts aggressively to and in that So us add of depth the representatives.

XXX at those as is I we're goal, the accounts And to the and But so them the continue is representatives. of seeing, when we end trends have or goal we'll think year. our our that goal that's throughout market gain the Based -- about available on share that if the and eventually additional year we to our to obviously back market want the the gaining and hit add new fewer to we're LCDs available on more the accounts. market, are -- is able market is because well. products cover be as

Operator

Ross Osborn comes line with question Cantor next of Fitzgerald. from Our the

Junwoo Park

process for the Matthew Ross. us approved following completion on strong a better mind back start wanted these list time you and walking to lines on of quarter. getting just with to off studies? on NuShield I Park, RCTs. the the is by PuraPly Do of Congrats the get the This understanding through

Gary Gillheeney

Sure.

done NuShield studies and are They PuraPly So are now. complete.

will an That are for additional We running take PuraPly a RCT about study AM. in year.

from studies. XT that completed both to about complete, year AM are new those is PuraPly we study objective well. which studies question, as and AM, Our and a is is we done, X have provided today. for to But PuraPly answer the that's NuShield, Those do your an retrospective are and and for But it's published, RCT RCT within year. a done have

Junwoo Park

products the much the guess, & That a for me. through side can of And you business? turning this understand it's makes walk for on low and hitting any to to sense. smaller side, of the And plans then the Surgical introduce Sports high guidance just some new us I the here? one I just end But I drivers pie. obviously, more Medicine of piece guess of

David Francisco

OR exactly, Yes, And applicable are the we've got products what as assumed are which being half with would done expectation the for are specifically stronger coming said, was the it in is, that larger is be you was half. always very sizes, out some we've the back first. the OR more sure. for unique the that That's than that exactly back the reason

In strategy that adding the addition obviously, expansion to that, incremental there's agencies. been with stuff all And works. to channel a in strategy is expand

those the half you're is of the be the anticipated going high to from But would upside stronger. and And strategies. to kind back always so the related low gain two

Operator

That for questions There are Instructions] conclude conference today. time. call does no [Operator our further Thank your this for participation. at you

disconnect. now may You

Gary Gillheeney

you. Thank

Organogenesis (ORGO) 8 Aug 242024 Q2 Earnings call transcript