BVS - Earnings call 3 2023

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Operator

Thank you for standing by. My name is Dustin, and I will be your conference operator today. This time, I would like to welcome everyone to Bioventus, Inc.

Third Quarter 2023 Earnings Conference Call. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] At this time, I'd like to turn the call over to Mr. of President Vice Crawford, Investor Relations. Dave may you begin your conference. Sir,

David Crawford

XXXX good Thanks, quarter. welcome further followed thanks begin Bioventus Bihl, Conference CEO; the morning, Vice are remainder for Singleton, for and this on and business With and by review you Quarter discuss Quarter me Call. his joining the a and to and outlook Tony pleasure results CFO. Tony remarks offer guidance. everyone, Dustin, with our the will an morning update Mark of Earnings my Third our us. to Senior Mark update Third the President the detail XXXX on year, will our and of It's financial to

for our on Investors today's call We Bioventus.com. the website, will finish is section the presentation call of A with available Q&A.

the Before of like and we that with the the December XX-K the the XXXX, actual XX-Q those materially Forms from today ended contain remind based uncertainties and indicated, statements in uncertainties including to our differ could management as current and involve remarks Item everyone and of on well begin, including company's subsequent that risks company's that are as described made for year Risk filings company's other Form filings XX, risks the would SEC. forward-looking expectations XA results the to I cause Factors SEC, inherent with

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

measures whether result new in or as principles laws. This accordance time, calculated update also generally applicable accounting revise in no earnings required to refer presented Relations to with call disclosures and calculated measures events may that of the Important not voluntarily bioventus.com. on I'll financial over the or and a Tony. to are otherwise, references release the about the or time or most turn adjusted in certain do these of reconciliations the statements, company GAAP. forward-looking available those to by are it press We website definitions Investor to and so our financial U.S. non-GAAP undertakes future comparable now generally include non-GAAP with except securities accordance to accepted call at measures Although financial And from of measures. will information, the commitment portion as GAAP

Anthony Bihl

and Thanks thank continued everyone, you in your Dave, interest good and Bioventus. for morning,

our Third our Let us quarter, me of ahead that I X for again annual HA the raised begin business, return as delivered am schedule. of to of by quarter ahead consecutive guidance. The results Quarter, encouraged financial highlight the our a growth for saying expectations by we a earnings for for strength our was

commitments, challenges resilient delivering have year's processes. our our employees worked made our have diligently enhancing last and to on and improving execution, in progress Our controls business measurable address

quarter's the plan improvement want to solidify discussing we take progress predictability. performance, metrics, financial recent year us Before a our profitability to believe in made to deliver and to our growth, delivering on moment I successfully position revenue the future reflect will this on financial

increase to we earn Bioventus drivers. as that past, have quarters for solidify of believe a year's growth begin fully balance headwinds future attention trust performance. With substantial and opportunities our rebuild reverse back we long-term of will the we achieved mentioned As with our maximize strong I progress couple gradually sheet, credibility not regain financial in I investors our said, the and to last with stakeholders' our position and to

segment. ultrasonics mentioned of including business, a success, business operating indicators across drivers we we volume quarter, key the our saw earlier, Two, long-term the financial and double-digit to demonstrated future growth our achieved growth including: positive our discipline continued double-digit margin. our one, enhance I reduce revenue spending International several During gains; for and unit as HA to in return continued and three, across we

begin next investing visibility where we we areas our we prioritizing sustainable, are enhanced and and believe result business for we our the We of in growth taking drivers. As focused planning profitable will to key on increased remain steps growth. business year, believe we can deliver

While in engagement and less as engagement continue visible, are is we've our of organization. My show And XX% given of we they headline From by where an encouraged X has begun shareholders to to improvement perspective, in important look above placed empowered we positive a and X,XXX culture work in deliver inclusive, engaged a our provided the create our the together, participated scores, employees culture. we promises the challenges recent stabilizing years, communities our to a survey, as operate. which to engagement. well that on to our comments. We're our employees, over employee leadership of employee teams signs our past saw strengthen our and team of over the improvement benchmarks. survey on I is results we we sign the industry customers, committed

Our leader. my market our cost and enhance impressive each maintain revenue and earnings across segment Bioventus focus We participate markets control. either so in is this and performance products for our year patients. reinforced our growth leader in reduce opportunities a ability differentiated growth a our has leverage to provide of on innovative to large business, or far we growing confidence as

quarter let of Quarter results. Now million ago. the a revenue the period compared to year The turn Third declined to me same $XXX X%

prior considering our growth was wound to impact even business the divestiture, when compared the of year. However,

also supports representing Across our higher were earlier, the volumes we we EBITDA a Gelson More favorable has course to EBITDA collections with gain $XX to adjustment continue share clinically the differentiated take over for us [ a importantly, volume saw for year, debt which treatments, in of receivable and the in DUROLANE adjusted increased control more million, improvement I to reserves. Year-to-date, have than bad and our million as our accounts was highlighted our our of significant pain expectations, increase. our part enabled in $XX adjusted significant due market offering. Overall, double-digit of stringent above to XX% as ]. expenses

price average has sequential DUROLANE steadily selling continue decline we Jolson impacted While basis. a headwind [ our for be to on declined that in and the ], by

mentioned we for selling Quarter. CMS for DUROLANE price sequentially we As the showed the was the mid-September, increase previously, to Fourth the Fourth in as for predicted. it and we published increasing DUROLANE in pricing for average expected ASP drilling Quarter

the expect the Quarter rising of contracted CMS decline we DUROLANE However, in the do sequentially to see Quarter, volume to First continued year. pricing higher ], decline selling of price has [ for for to for sequentially. the a anticipate a the Due pricing temporary sequential percentage XXXX. After we First in average rest Jolson

expect ] to ASP begin that continue rise for well. will mid-XXXX, sequentially We see we by [ to Jolson as

contracted We private growth, increase prior with HA While to ASP the in believe to to share business, coming to dynamic are single-digit combined returning now portfolio mid-single our the combined volumes headwinds an with high in meaningful year. market pricing presented HA move growth. our we improving enable and higher-than-anticipated payer growth market overall will

Surgical to will Surgical share of ultrasonics. we believe selling sales surgical up brought a next market channel in distributors our substitute and continued at the business. the for turning effort, on rate in which Now we graft Solutions. the structural leading Third solutions the across We into implemented number and provide eliminate our and In for year, and And our penetration ramp-up grew to Quarter, small technology momentum believe expect trailed change our Quarter, Ultrasonic we the Limiting Solutions slower-than-anticipated the recovery new overall market double-digit its to growth and strong sequential expectations. Beginning continue of highest improve was Fourth volume a a year. growth backdrop potential bone accounts in we've our overlap. growth portfolio

primary and declined in distributor bone driving of focus graft business we're increased vector in the digits sequentially we advanced as improved to sales Second slightly help weight-bearing reflect with our reengage any when systems our impact the distributors will on as realignment Ultrasonic prior churn after the recent in by will team revenue Within wound physicians sales substitutes, across Quarter. Exogen will primary substitutes Restorative on target, revenue organic revenue target. We BoneScalpel limit and account our direct efficiency attention was the impacted further rehabilitation trends compared force removing in double believe as increased Our our now of their conversions. business Therapies, while revenue this but continue accelerated growth U.S. divestiture, the last year, experiencing in placements improving to fell focus year.

driven Finally, and segment International by strength growth XX%. constant XX% business. Surgical was Growth our across Solutions currency our of with grew

While is expected year growth in international XXXX. to double-digit due the challenging we comparisons maintaining Fourth Quarter slow anticipate for segment temporarily prior to to our International period, in growth

financial results of business liquidity. the manage ability headwinds the our Finally, ability and meaningful year's improved achieve complex improvement demonstrated our address to our I'm last in changes. with through predictability We've HA and to pleased and

our in your profitability, our we steadfast in internal While executing driving resolve and business to controls most more balance is increased means, our believe those confidence and efficiencies we and as in sheet prioritizing our areas improving meaningful are operational enhancing work work restore plan Bioventus.

the to call turn over I'll Now Mark.

Mark Singleton

Tony, Thanks, and good everyone. morning,

in our cost by have well control leverage year delighted organization, reduction objectives. our executed Throughout so start the as internal saying environment. in financial sizable this in our improvement far structure the improvements me as with our that entire well Let I'm the our and team against

have to visibility in business predictability of our confidence increased the and we financial improved, us reaching enabling for as has addition, In planned guidance XXXX. our significantly

million, results Now the was the compared to Revenue even the X% Third lower Adjusting revenue our turning prior $XXX to business, which growth Quarter. year. wound the was for compared a prior divestiture year. of for our was when to

we also gross on offset adjusted and prior more pressure due the sales X% reduction returned prior EBITDA which operating initiated spending growth was revenue to to the due our from from as WAC million across adjusted the EBITDA lower to continued profit pricing to strong the expenses to ASP. move our restructuring compared of continued pain the from treatments, in our at to operations. Lower continuing the addition, revenue. DUROLANE of ] year start focus growth $XX volume year offset than as [ compared increased double-digit from In were benefits from year reducing Across even

As increased a its remained. similar last we now continued down headwinds up quarter, makes differentiation, share DUROLANE DUROLANE although for slightly ] overall [ HA as of year, significant compared volume result our -- from and to X/X was previewed to as its clinical revenue Gelson of last revenue. Meanwhile, gain pricing nearly momentum

Quarter. recovery year, growth. but in our As strong Surgical BoneScalpel we growth the double-digit Fourth to X%. see out we across growth look continued the to maintained In Solutions, expect overall slower-than-expected Ultrasonics impacted platform close for accelerate to grew substitutes we HA

Overall, mentioned. to Quarter below Tony growth ultrasonics the acceleration of trend we in BoneScalpel the excited major growth. prospects the to given Fourth about in remain momentum long-term franchise future revenue expect a of substitute and delay for driver We be continued it slight be our our that

XX% part points reductions the rehabilitation Earnings significant to demand Finally, accounted in percentage business organic due Restorative Therapies that accelerated sales of XX was the points Second our customer an On wound sales to by percentage fell to the by for our impact advanced previous Therapy in declined due of Restorative register, driven XX we basis, our of impact reduction in Call. business. This which Quarter partially the on highlighted decline.

were Exogen improved the In year as grow the U.S. addition, rehabilitation for to Fourth return chain sequentially. stabilization for prior low supply see recovery the to in quarter was for to Quarter. Sales continued a due higher normal advanced revenue continue the anticipate in Exogen we the in from to revenue single for digits earlier as growth disruptions. We down year than

margin general prior with across our benefits restructuring compared prior Overall, statement. year. operating prior administrative in year. The in decline reduction accrual income and overall The to from expenses. expenses divestiture, almost for Adjusted gross wound a reduction expenses the million operating incentives the was of down significant were for adjusted expense combined points to and our business of the by XX $X resulted XX% basis Moving spending compared total the year. in minimized increased management discipline

of line operations in continuing bottom million income even net a $XX adjusted compared operating while $XX quarter share increased our $X.XX Adjusted to prior financial million $XX $XX for to for with the to to per ago. were income metrics. turning prior year. the Now year. million $XX earnings Adjusted million compared $X.XX year, prior the million EBITDA was from Adjusted the in the in $X totaled year earned million

our were the down WACC Fourth to higher Quarter. and Third Now in operating ahead within claims our hand cash drawn compliance a cash outstanding. We negotiated turning of First sheet on the positive leverage the going coverage facility Quarter last liquidity pricing delay of We perspective, flow flow forecast for the well million rebate with the rebate to EBITDA the $XX since million payments and working million $XX payment expectations, ended forward. the $X balance private to Quarter. These Operating with interest rates, end credit cash From revolving as under due Third our will of are quarter the for we with capital of the and cash the of We end represented Quarter. calculated million payers normalizes. to had statement. flow year of $XXX the in on rebate at return of an the to adjusted and at covenants a remains come outflow quarter and medical debt our

has performance to which an expect our We business Finally, from previous be guidance, the the to Third $XXX increase Quarter guidance let to our in of our million, expectations. XXXX updated to XXXX Fourth now in million. of million $XXX been million midpoint Quarter the $XXX me reflect $XXX revenue review and our

Our million $XX $XX from be to for adjusted $XX to of million. expected our $XX million is increase guidance an previous to guidance now EBITDA million,

visibility now Finally, from of previous loss of $X.XX loss a of share an the guidance closing, a $X.XX, improved position. into enhanced X improved adjusted for loss has of improvement of a And and we increased, be is for our earnings will per our our and what our believe our quarters, to of expected be business to processes to $X.XX plan $X.XX. In a loss controls predictability. guidance execution to it business the our with straight liquidity leading has

remain plan performance improving our we in expense increased please the open Operator, As and questions. revenue close to financial for year, we line the management. out steadfast disciplined through

Operator

line Chase first Instructions] Your Nickerbocker [Operator the comes from of Clerical. question from

Chase Knickerbocker

I it's how basis. of look how as on on from from activities? from of to lower other understand, just me, just much decrease SG&A year-over-year $XX year-over-year. expenses I delta the delta want the million far and divestiture from First the from wound a in much guess, savings that then is you walk through me much restructuring we kind If how as of is it sales, Can

Mark Singleton

start Yes. Thanks, down with question. we you the look expenses year-over-year Mark. are really for expenses This the than at When more is Jay, our what see. expenses, first

my we for the management year, prepared but reduction had the last in a I remember you If Quarter big mentioned this year Third incentives in remarks, last range. in $X million

drawn our of normalize be But was expenses that further. even discipline out reducing this we into will of you initiated of the gets that the areas expense down sales that continued in beginning and just So if our year.

overall, It in million. But on say about in overall, expense item with P&L progress roughly discipline really headed had $X expense. we're we debt. only and So see would a the I continued onetime of bad we that we our feel made accounts receivable where that credit there was to we was good a our

Chase Knickerbocker

want the then I through to I impact you kind DUROLANE again it. ASP just moving I'm make the walk missed kind First sorry, Can just sure it. I understand Quarter. the me pieces of Got in And there? of

Mark Singleton

Yes.

visibility factors what and formula, at the the we've and we said to as a this that lot a lot the we that's perspective. This we've into go it. handle CMS in seen. far we understanding our around the remarks, I'd from lot say, prepared our as a predictability going calculating ASP there's increase is of complicated that that's processes a CMS -- this gotten more to really improved better As say and and in what into a Quarter, that's back predictable, Fourth being did And better was our

But factors was our First will continue we're hand products. our those of at of on beyond on that second some carry increase Quarter HA unique and and reduced our major to in it sequentially. bounce saw they down, One Quarter ASP. quarter back to drawing And them, their distributors that impact of has an in confident that that that by we Third was other if days X inventory DUROLANE

a increase XXXX. to view we sequentially So and see -- over XQ in over as this that to continue reduction would temporary

Chase Knickerbocker

costs your I driven customers been ASP pieces guess, there? volume of it. quite of see kind and way, the does that about acquisition on it's the kind growth growth Got some to of volume How of we part to improve think background And other ask lower can another of impressive. of kind increase holding DUROLANE that has volume do you I start been it versus mean what kind for for in kind of by as moving

Mark Singleton

But very say and into that we'll digits in DUROLANE again, it's as that I'd we've our prices increase and we're increase of continue specifically go through the be we product prices for to to see don't HA We that to double growth don't through changing product. as Yes. seen the see we ability grow grow talked will portfolio XXXX, Quarters, to see about. the as our a to we with first continue start XXXX, differentiation differentiated the kind clinically X pleased there. sequentially continues clinical expect as the

talked to with levels that Our before, that execute we'll continue same the have to continue be they there. our position at sales we've the strong will team payers And been. about

XXXX, to XXXX. high into So a we single-digit we the script from see this in said growth as as continuing in mid-

Chase Knickerbocker

kind Yes. for moving make I in just And the me. surgical. last of to want I understand then sure pieces

kind growth to did with you shifted side. kind as get quickly of kind kind you're going thought BoneScalpel then of not get we to as that maybe that passed we double-digit when those just new kind customers of or back distributors distributors Surgical? could of on come back just the And by we to your growth of those And other those So some that off recovery kind of bag to? back driven within in customers is of

Anthony Bihl

me this one. Bihl, Tony Chase. let Thanks, take

mentioned focus as force comments, We as knew we distributors changes execution. in the Solutions. on key all, my our among our acquisition reestablish structure is thing bit a some our were do And of ultrasonic the a was overlap perhaps opportunity overlapping force think And to I of an our which in channel. sales direct were focused in was little I people, Surgical selling we selling for the of some the that product. Misonix surgical we're First the BoneScalpel we did we that demonstrate found sales with here some them bit had they in there sales synergies as the trying product

And so direct we group are and we've past. very We're our focusing that who forward people driver will decided in with group distributors believe stabilize manage that they have as BoneScalpel, efforts primary to that of will of move of a our team. our the

little So the in because here synergy if we're news some future we're ultrasonic The bit. maintain sort also going a distributors we products. of those good to selling back will, -- is going been effective also have there, to are

probably surgery they're fact, selling by XX% XX% spine with of their great or in our relationship ultrasonic standing more In total than surgeons.

going So were, believe if we reaching they them think over, they to and force opportunistically not was channel bifurcation developing allowing quotas still they have sales that to but conflict. don't a we have what where have back they're sales to have but

BoneScalpel. what's happen So going to in

a going those to stabilize big It's a allografts, of growth. the with probably bit. going been That's new and I little settle. probably globals fibers product, have think and driver driving we've been to new growth our

will double And to when to that from see so sort is of more high question growth the growth we'll than single-digit be digits. rather that. But moderating be continuing

these We're of it. feeling be I carefully. But all couple it's to look to see benefit about before So continuing now, to a and we're ideas. new going to changes, monitor you positive quarters going at think right we're the product continue of

Operator

question comes next Marcus of Robbie the The line from from JPMorgan.

Robert Marcus

some we year? early, out look seems Robbie. XXXX, revenue overall is these progress had trends. you your you've some sort still stabilizing you keeping of as in drive on This challenges, some but about think but This for has growth know good made of actually be do next Lilly headwind And year like And it's I mind? to to tailwind what should how ability it

Mark Singleton

look through single-digit return to expect We look in -- that mid- on We're going to for a and plan have as HA, growth We into to our XXXX, XXXX in looking XXXX. team we high talked now growth. solid growth. right a about we

volume And stabilize as we prices and continue the to expect to so grow.

processes -- going XXXX. at but around growth. we're We the -- in business expense we've that good in to solid also have business, team our managing culture also continue confidence developed job that talked to trends QX and that, us And we will and we'll starting disciplined the our having drive has to a predictability of we our into look I in XXXX, done to And really growth -- but and think back also on look start about return total help and in the that in the are going XXXX. investments improving

team So as drive QX growth our we'll look help sales investments start with some R&D that investments term. the over long to the will starting as commercial well at in

that So those be will make. both we would of investments

we're the EBITDA. And so guidance we in smaller of we XXXX to off look that numbers expected see a providing, at increase expect than would when the

not it's growth that drive as because in investments to you what will would expect growth much going some of of it, but the to drive back increase we're and maybe putting as be with We beyond. that the just to expect XXXX

Robert Marcus

about really portfolio any stands the where That's on there how you continuing Are And think the does And think to potentially fit right. equation into table? about helpful. M&A today? the as drive do in still you where innovation. growth All divestitures

Anthony Bihl

me Lilly, Tony Bihl, one. let that take

near term our the of not First is on yes, M&A probably all, in horizon.

a our current and in focus digest we great great of our a to of products lot that is portfolio. processes think lot I have

there. or for on. we're what the next future, focused see foreseeable you'll continue least us at for that's focus year And think the I So so, to

yes, Those where continue our very think we're activities on evaluating and are have growth that at at it. focused but comfortable standpoint we from are looking we'll make have Nothing focus what what that that that report today, in portfolio, driving have don't profitable looking ongoing. confidence a what to might and our on can to we anything new future we to constantly we to here fund have are now, change. investment evaluations we whether those I sustainable, feel we're of do. forward our businesses. And to right portfolio, of we're the But we very, with in we belongs forced portfolio -- and continue

good but generation from to We have we cash the businesses will we have -- continue and evaluate.

Operator

from Next line Plovanic question of is from coming Bill Canaccord. the

William Plovanic

My Thanks. question has been answered.

Operator

there are With questions further now this our Tony to over call to I turn time. that, at Bihl. no CEO, would like back the

Anthony Bihl

Bioventus. everyone, thanks, your interest in Well, for

We improvement continue financial through of our to generate our business strong execution position significant in plan.

us and business to earnings year. our visibility commitment with our raise confidence increased into in our Our for revenue the ability provides

team again. team on creation. value leadership focused and our Our I Thanks and lead of mission a that dedicated stakeholder are employees

Operator

for conference This you today's now Thank call. concludes joining.

now may You disconnect.

Bioventus (BVS) 7 Nov 232023 Q3 Earnings call transcript