- Earnings call transcript Q3 2022

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Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Aziyo Biologics Third Quarter 2022 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference call over to Matt Steinberg, Fin Partners. Sir, the floor is yours.

Matt Steinberg

thank for and call. in operator, you, you participating all today's Thank today, for XXXX. results released quarter Earlier financial XX, the Aziyo ended September A release website. copy press on of company's the is available the

results matters Any you Before I'd the do safe during call which cause risks these these implied of results statements Litigation include we and limitation, actual that are statements of financial or or harbor are that statements, performance of meaning will statements historical to events statements. forward-looking the to contained or not various place securities involve this like remind forward-looking forward-looking reliance upon this within Securities begin, forward-looking and uncertainties federal Reform including, make that All Accordingly, predictions to not pursuant provision our material materially statements Private current management relate XXXX. anticipated future of by laws, or that assumptions. the those from based performance in These should call undue relate estimates without or to and our those of are facts statements. Act expectations could relating differ to events, operating statements. future you trends on to

or other only XXXX, and accessible may be period for of Form XX, business, on and SEC's Biologics the broadcast revise is time be except financial new call November or obligation, XXXX. A Form Also, which measure www.sec.gov. as on XXXX, ended filings to The the time-sensitive directly list forward-looking or with projections margin, on of information, Aziyo and is required measure filed quarterly the that, with with SEC, ended amortization, September whether live filings turn with non-GAAP September to website the during reconciliation I for of XX-Q or report accurate Aziyo’s SEC of comparable XXXX, and the in please a of the the this GAAP factors Factors Aziyo’s accessible financial refer call quarter financial statements, any asset report available information intangible events a SEC, is Mills. company's description any excluding third the otherwise. uncertainties website future contains measure. Investor of conference as year this the claims time website, our non-GAAP today, to ended update and law, presentation, XX-K the we gross for release the intention Aziyo’s public our updated quarterly the to For XX, Aziyo’s December by will to including refer the And such Randy on Risk associated with most www.aziyo.com. risks because earnings in which section to fiscal the the is over the page including from on to at XX, Aziyo’s XX, SEC's annual posted CEO, financial

Randy Mills

so today. with am as have XXX completed the now very first much. really or excited you CEO I my everyone days be Thank Aziyo. new of to I

role company. I'm of co-founder a am not the new of having the been to Of course, while new to the CEO, company, I

that unique. X Two I think days of and of which team. exceptional vision, really the the though, a is XXX proud the is vision execution for first the I'm creating During of by pleased team One clarity is things. and

those remarks things talk And so my I'm today. going to X about in

other of of for host the of poster CEO as a career been as medicine. a Regenerative the going literally back of took the President Therapeutics years child and CEO regenerative Osiris company So of XX as my I've Institute the -- public onetime and into positions. Medicine California

When is fails, have medicine device. solution it for medical how Class the a really in well. a when versus different we patient, a really, at is often, look the III in so worked body device foreign devices Class how works rare. story. for it failures, holds you medical This your as regenerative data at itself at X.XX%. completely for the reality that But And rather you often primary regenerative device. is medical pacemakers, look With or framed you devices. the -- any device medicine wouldn't is argument only And but pacemakers, the medical true II versus it comes And it's very but well

failures, time successful, often so is how implantation how procedures is often of of again, fail. And pacemaker, that that will procedure the those X% case procedure a the in this

any on And it's interface Well, all going an or the infection or matters. host And coming of hematoma host because X%. or other procedure failure failed so a of for device not you're not primary what's or of It What's doesn't where a not a the erosion or are can device between from. that's device because or failures failure matter these that failed it and whether this number device if complications the here that whether had arise. you patient, difference? X.XX% device

can don't Our or off. would it objects Same either being foreign in implanted happen them. if your inject splinter your you it does what a thing body like bodies finger, to in wall it got simply

we growth. both field device in we line and that's after concept this which bottom biggest compatibility line the we're top of as a the so and opportunity And have think where company, going for

we premise a at company Aziyo. around So this built Today, have

a rate late-stage in pipeline stage all growth. opportunity very is that. behind with a future revenue and We portfolio diversified think This significant wrapped commercial revenue tremendous represents producing units, that a we and and That's on. have And development research fully business integrated sophisticated $XX of manufacturing team. going X a around business growth with a for about million

meeting envelope. FDA RM, path accomplished the clearance we our -- which with this a off the And is important that regarding for provide I'm quarter, held perhaps at to CanGaroo the antibiotic-eluting wanted some this over comments be could responsibility Looking with the Dr. items just on I the joined I'm is to thing. our to that what approved what company getting the to going what hear approval specifically what Officer, and has and has Chief just obviously, Food most from recently directly company, before outstanding the granted. were for start Williams, is Administration, took going Scientific on recently company, Drug and joined product

us, expiration on held what the around all recently we around with going got so a really product. see we the for centered device which very forward, clarity stability And dating a wanted FDA. And meeting FDA from improving to protocol precise so

performance, FDA of the anything data efficacy product what More or importantly, the safety additional or didn't was want like. any around

we're good we now. think so shape And in very right

We provide we have wants, in know a information a in very position a to what We for and time first clear FDA clearance to good that we're of quarter product. path. FDA this think

a super Behind And executing. that, we've got excited team that's about that. so we're

net to of Shire strategy is Board really is high-growth with going with history is quarter But We our which segments XX% So is a need Colpman business, Head SimpliDerm further our CanGaroo, $XX.X we of former X% overall our Business strong growth they of increase. look of at unmet which company an in actually significant Directors. David that validating compatibility had device our forward. sales highest Development, million, growth, and medical year-over-year our a added this when you their which think

of the lot of important us obviously a certain got David's Shire. And Development Business partnerships Head as continue transaction for for strategic experience forward. to as and transactions as we moving that's contemplate Importantly,

a $XX that to little bit Lastly, guidance $XX the $XX million, to of company tighten $XX from has raised million the million to lower end up million.

fronts, story control execution cost We into great And been significant in think it but see operating of expense. just really we to on just goods so the this see We improvements Matt's at really line. going in this top of we And lowering begun. it's gross and margin. quarter. a improving has of not more, go these

to our is time different units. respect in X X different about we've really talked Just business you of company with the this first business the familiarize units

that we is The have health unit. our first women's up business

possible. makes the medical breast implant the again, make Here, We make device. primary we device the don't that

we And a procedures reconstructed. and needs woman of to primarily received diagnosis of And used breast had product expander this the breast Well, about the have used has cancer great been part as where contain in result we market? so of place some SimpliDerm in after to we that type a put like then have a as mastectomy these it's are a a the make, What therapeutic do is one, procedure. reconstruction product.

as market, market the dermis, that can large created opportunity the second The recently here. was and in company, significant exists in a stopped void centers a on paying has very acquired The sales this pretty have imagine. leader and commissions they by traditional space dynamics the pharmaceutical market acellularized that and around you

really our so is And straightforward. strategy here

that capturing also this and the of are market running space by penetration in have by that our speed distributors are market we with we We to the into and after reps market. increasing number working that share independent

significant improvements put process of going that have we place also here certain on efforts lower We with to our goods going forward. cost in

excited positioned health cardiac device women's well very The protection. very market. we're and So the next is in up

around This pacemakers the franchise. dynamics us. that about Again, opportunity pouch we like defibrillators. market a marquee goes $XXX though, million our market where have and a we is electronic here. really Here's CanGaroo for It's

an leader market. pacemaker States. market they because the envelope only market have only established We to there's United for in So players here happen the X have major on need envelope has other in the the the one. The

and where And really so that like we CanGaroo franchise. positions the Aziyo

also global we're version launched and CanGaroo think will for into the stem RM, a are and pacemaker From further the eluting product Our very sleep an product, to and a place, neuro that prevent a clearance space. this going have in here of major product. prime we apnea CID straightforward. for We space. we and postoperatively. approved there, infection CanGaroo in colonization partnership, It's the in launch position partnership products bacterial once strategy antibiotic Get that which

business. So tremendous our protection opportunity we opportunity cardiac see with card device and growth upfront

where the CanGaroo we've extracellular ECM also space. to matrix use tremendous material leveraged in porcine-derived technology same business, or is that which the value actual so and Turning has This this Cardiovascular. cardiovascular we in our is

these to procedures. so and and ProxiCor used VasCure products, And here, [Tic] open close are cardiac

artery you're open vessel us. for children such and used is femoral major close to a the as the a undergoing or to This close then ceratoid surgery in a in child. following heart septal following often It's great where top the business, pericardium So this how or not a we an of line endarterectomy opening defects business so gross margins company. approach then significantly and out more in real round the orthobiologics This has And was growing by a to the mature a it talking but sale. about our business, it's business. nice different contribute very little lastly, procedure

And play. we companies we've literally as orthobiologics. the BXB of do, unlike a the we what manufacture And same or forward. but for do to we're supply and go don't a what sophistication others, is here a So space this have provide also to biologics relatively not proprietary level product to unencumbered perhaps them of we us. them is more able just of do other that created to spine the here, develop with able solution we're who orthopedic space turnkey product, and It's to going

And at pretty line the reasonable we growth see bottom so here, we line. see but a growth, top fantastic

Xx largely aimed by goods. income from we're driven in this fact, In operating XXXX, of our at lowering in cost targeting unit a improvements process growth

around going you to idea current just is financial Matt that's update. our an Matt to So color of give provide Ferguson. some our business.

Matt Ferguson

Randy. Thanks, Okay.

where through a probably about X we about of went prior will about that. view, there been to cell was importantly, we lot basis, when the perspective, you we also the terms we as from a of with associated of And good for and litigation. pool we've cell line were the the in continue management, number product following with actually you performance up lawsuits of insurance we the which related of for GAAP includes expense we quarter. addition had and of X we've to CEO make that done process the That's that those growth transition, in in from current receivables in And margin. million the fiber we were million information of we of that and company, the litigation. a $X.X that And turned basis, was those. been settled it gross recently, XXXX. that few more So that's quarter. estimate year. financial pretty who And at that. talked were the associated given that year We taken has the that inventory that process saw what that recall that was from related about a settled claims on to expense point saw, we've to that couple enough where top in at that Randy now also we margins, large of really anomalous. had a And XX% a expense quarter. have a improvements we've items operating And But at we for year of gross perspective, the for fiber non-GAAP then overall from million about as a making quarter, third then had performance covers real is the points that indicative the QX point XX%. those somewhat relates from with well up XX%. points $XX.X $X.X donor quarter had lawsuits and of to operating time, to, we the in of better from have liability in That's a prior just $XXX,XXX previous single on know the that and From an us the up about from the We us are and second third recognized corresponding of But have first revenue back XX that resulted quite

which is expense insurance And we there. go coverage includes the of that after $X.X have liability quarter. And so the during recognized took receivables difference we've net the the in opportunity overall that million, between we still about recovery the actually the and and to insurance receivables terms additional

clear settle the quite good are and now that us, with terms there. to to that actually situation we But and the have additional to of quite feel this It's we work continue behind forward. manage in cases. we can we overall really picture will a So we very going get was, confident what pleased cost effectively much

the beginning that, guidance take ended Randy the to other only million of range guidance on million. from it the compares XXXX. is the million $XX our will the list which And And Just here. we of the did hand million range point range, cash. full $XX then to in increase $X.X bottom for revenue touch at to to year. new I'll $XX million with quarter end with We $XX That favorably set I the we questions. back we before The

Randy Mills

to potential I Great. Thank and you, some Matt. I'll just priorities finish up our clarity moving forward. like by provide catalysts trying clarity. around

organization. And so does the

So first and from foremost FDA. is CanGaroo RM the clearance

are teams working. Our

As the would think we very a information to goes have in up. clarity coming have we the held FDA. well, if And the product all they We positive of with we need meeting the said, I requested. expect this quarter we clearance first provide FDA with

to this globally accelerate franchise, particularly are here is in franchise. the a market pacemaker we purpose manner. is growth and our Second conscious the a pacemaker opportunities global in of for CanGaroo evaluating The number partnership of

our out improving Orthobiologics is cash business Third unit. our of flow

have this As have already our unit. double mentioned, significant resulted gross beginning. improvements that's we the the think process opportunity operating improvements business of in we that We've margin. income implemented just think We certain to out in

leader. Fourth the So footprint market we're SimpliDerm our working that commercial is to market a capture share one. from expand on

has a to The we the product. after. their opportunity surgeons product. market great provides off And a and have think taken go We love the that unique leader our ball eye us

sleep neurostimulator space as our selective something is the like different adding. and platform and lastly, leveraging out device of we're technology reps our of apnea And in is Fifth infection SimpliDerm doing postoperative contemplating the RM with CanGaroo compatibility so then independent both ultimately our distributorships franchise and X% rest And into actually as a the where bigger CanGaroo partnerships. XX%. problem, strategic or then around number we're that transactions to well that build a

add product or X the shareholder partnerships for long our these We the we business units. interest well across have types opportunity in received transactions term. and the growth cash, of partnerships, to to term as through as we've significant near So value think other add of all

about really to I consider we will that However, transaction here, selective executing. we any want be clear be very

The And it this specific of good during with a hope well what both so has strategy first you are very team Aziyo quarter And fantastic, is the so a you for executing by priority from this and eye on sense in that the to much. to what I thanking has thank a aiming team just done as provides that and company from been standpoint. employees. our welcoming end days. third ball as the we beautifully forward, going do into keeping standpoint I me team, for XXX of the their period want

efforts very Your appreciated. sincerely are

will that, operator with to the I the turn it over call my the turn So to comments conclude and for -- call questions. over

Operator

our question from And Instructions]. [Operator Jennings take from Cowen. we'll Josh first

Josh Jennings

I in a be I X compatibility will appreciate or sleep just on the trajectories any any terms our to could development data in out should it laid of thorough apnea, -- you for the CanGaroo. of any get in on development neurostimulators, the device we of deal data is of, just and is those about terms steps portfolio to mean XX look -- the for just just you or CanGaroo update. building that questions. the sense accrual any going think SimpliDerm And I to on the so One, of kind out, franchise. Clearly, each wanted and requirements wanted portfolio, SimpliDerm But be what pathways of that just better guidepost compatibility com? seems that burden wanted be radar lastly, like how guess, a sets to sets RM, next the ask just just device enhance the straight then that And I initial team. clinical it development like. categories have forward months but going approval that big are RM your clinical could marketing for the to see the or data

Randy Mills

Okay. That's thank you.

questions. try I'll So X to categorize the

First is device X data business. We our actually different going device around on clinical studies in compatibility capturing have compatibility.

we're releasing of for Scientific publication overseeing something the Williams, will is back in going Chief I know affairs. But high-quality Dr. a get trials and suitable that. in be am to And more Michelle exactly new do that for be now I you Officer, medical those timing sure once on with certainly has not that. those and is to when programs around come question. completed, Our data on I both appreciate the journal. I'll expectation timing specifically

The second device franchise. and out the compatibility is building up building

Here, what we've care we're here indications looking probably at pacemaker significant really we taken pretty doing global think the of, with partnership. and once a

the into is product stop next as that reason business. And centers the implantable franchise have and Our we currently -- for space. around taking defibrillator stem the neuro as space the actually for the for that well approval

And though, apnea. that, X so stop is Right sleep next us. be behind logical the those would for

recently indication were clinical or meetings at held this the just there sorry, we great we is the Philadelphia, think quite Conference so significant. in And the need, Sleep which in ENT App -- I'm around

this real particularly device others, market just getting able market, like separation differentiation really particularly for implantable we where a part is and we're being sleep create into apnea and so stimulators there in And partner in the a to the sleep we obviously, the of -- but opportunity. about meaty think, they're space, from significant apnea the talking space,

franchise surgeon and rest And postoperative as rates franchise, we community wholly unacceptable. We of with surgeon surgery like. think demand looking is at -- to CanGaroo in of from in SimpliDerm XX% out an more the products. and the into at said, prevention reconstruction expanding well, It very pathway. reconstructive we and PMA platform -- regulatory standpoint RM about surveys and combined just our the our and it RM this through technology Kangaroo in work on you a to where the talking infection. a world but you which indication breast specifically Lastly, itself plastic easily. interest infection of through found been the active and moving side us, X% breast With process, done the range, is would concept our strong one with We've or looking the be would for doing SimpliDerm real mentioned for a just we're is we've have is our around And that the be a lends in generic obvious RM other RM not XX% into this of an that technology.

provided that hope questions. color those some I So you X around

Operator

Matthew And from we'll take Sandler. Piper our O'Brien next question from

Simran Kaur

for on This is Matt. Simran

sounds So end maybe to next be of CanGaroo on the like QX by expect it off RM, just can the starting year. we commercial product

stocking color So what the strategy? revenues? I think should we guess How any initial well? about we do additional commercial And as from on launch assume

Randy Mills

Sure.

now, right really market. device in would a in job. predicated we're where the be as a If with on we individual any quarter. transaction a what opportunity our strategy doing FDA launch of the largely product would But sales space. the the good actual we the sales liaison in exists that detailing So in pacemaker this organization case. already explode to company really in the currently for consummate clearance held this and the anticipating, be was the actual would a and to with space and -- would covered major medical particular pacemaker on they be We device position really actual conversations an are based having a will have on The by put really the this we more a science think agents first cases

significant, detail a uptake the And major to expect company. be we other we than specifics be to launch would that premature probably device in with launch the pretty done be expect organization. would for would it more point, this at so And to therefore, about not if coordination transformational

Simran Kaur

do product partnership? -- of partners additional we think until of commercial approval. won't existing an you quick a Is safe to follow-up launch just guess products get you this leverage the Or after to your assume of commercial I see that those kind going? there. can So execution it

Randy Mills

Boston Sure. opportunity distribution commercial right there Well, the tremendous this of day every Scientific is products, partner Boston our CanGaroo version that in of current non-antibiotic for we work with have on and the now a product. relationship, we Under great Scientific to relationship, for U.S., might of distribution improve sale which mechanics into make our other working enjoy would of which -- competitive the bundling us strategy. easier more much the of and more and the into a particularly with products, products much

And so the I likely the to expect prior would to the RM. that own, a would I in launch we say, be robust have to right now, of launch but that CanGaroo partnership we would our than place on ability product more more have

Simran Kaur

just if And one I the guidance. on here could quick in one squeeze

think the guidance was a low the I midpoint. that step-up on by of raised about implies my X range So percent math, at end sequential the

are from firstly, contributions So And how or thinking is business to and is you helping performance quarter? that else due there? in about something the SimpliDerm OEM bump the solely in CanGaroo

Matt Ferguson

Matt. this Simran, Yes, is

areas can have and that last You called year-end. really with out well the It of ¾ the so sense having way by we’ve the year a that. far and contributors being quarter CanGaroo to SimpliDerm speak good much been quarter fastest-growing the pretty this board, the and and across es. be The do really but during we’ll of where where both has to having period performed the year-to-date through – it

that probably growth QX good we do be that as areas, and basis. they is results forward sequential expect the said, the will forward. in, a would SimpliDerm that well. compatibility level going business, a the so you. driving being And basis driver CanGaroo we and on the be also to into year-over-year are the business. But see device driver contributor beyond as a you and seen OEM really the real that will And We’ve And going orthobiologics

Operator

our And Rescott take David from Securities. from next we'll question Truist

David Rescott

led the is the undertaking to on just then CanGaroo the first and around by FDA more the what to timing guess, -- for I you start an information provide updated get into from some guess, timing you that I updated visibility there? steps approval are what standpoint. what QX could the launch. the timing out specific just want that to I the

Randy Mills

I'll firsthand much wanted do first can. David. where this I my hear best all, development that last I personally, outstanding prepared we I were to time of to participated as as participated firsthand do submission need -- this us call background be going. on affairs on did fill there. regulatory what development, in process that. Sure, able the years. it's leave leave I in going died. with very But provide medical I myself had to with and a confidence as the I and I team. built to over because had unexpectedly for this Officer. great knowledge uncovered. but Michelle in the don't trust had of didn't us -- XX year, was it it the worked Michelle some an And is not And product not is did and background fortunate Chief running And why Earlier as with that What I approval in Scientific of have well only because and product was direct Dr. in obviously I've took she understanding or our team the Williams brought the He has and and at one timing. background her probably of not addition known that head R&D, our a

the for to David, needs. they merit end was so think we provide that what its product And we no reason, to wanted. up exactly that, want without them And didn't good we do, clearance. wanted sure with didn't information FDA What specifically providing make [NSE]because were of to we we their an want obviously because warrant has really knowing

held paused of And that's That's up one submission with the held the we materials this this because ended gap meeting. we we reasons that we actually until so the meeting. of why

product has of that very we're a said I asked for shelf talked product. the only studies also them can was product Center endedly, but missing create extension jointly responded the agency. the device drugs. some the in is run for the that not. a As outstanding -- have centered not that both and X Because here, the for about this of around between call, is only item members they questions we the is the questions, Really, drug life and confusion being and there did of life there basically a else expiry open really, that stability specific forward Center and device sometimes FDA we the And between moving the component, anything that we it with and

were moving first sufficient the in said, be that decision will very gratified the vast generate we efficacy to answers to clearance actually that as really a time be answers didn't finishing get of that that With data what find we up and to and have them, for quarter. what to safety more -- able I a to hopefully them. response amount on forward, their had the majority line the we to I importantly, in, of them so or product. their new we our any said, to us give we're regards as And And enabling were we think able out questions or time

David Rescott

for That's And maybe Matt. Okay. helpful. then one

that I of are recent on P&L. recorded the a Is around of just just the pieces quarterly limited guess balance is guess, couple is liabilities the questions. Or and QX? moving kind some then some Fibre cell a on receivables raise, with I know I that kind Just are And that on this. clarification of the of that litigation, basis? there's around just there the and to something recurring

the well of from as you're about going So what forward? investment position just kind be priorities how we about wondering like that true position and thinking capital as should thinking a

Matt Ferguson

I in think so balance left or sheet, about the cash. million there in $X just is

that what Sure, balance understand perspective. to trying of position from Just is true a kind Yes. sheet cash David.

the So various – exposure claims been plus. of on year that understood over level on but really got the with the details complex some fiber the a known is a actually litigation we quantify categories, little something was the cell counsels until and it really working of hard was face-to-face there to course that were. of hard And area, and what really there, plaintiffs last but we’ve it of their bit we’ve it

that in been now terms of allowed has And lot a precedents cases, some cases so us us. settled. the given of and we of It’s the information actual what have a detailed large having number in done that’s and

million, And that small then on I have liability X. balance which recover even about we potential is basically the liability. is cover more we have those the our insurance to $XX.X proceeds with that And some from think, so for sheet, the the total of between $XX.X estimate delta insurance million,

particularly the liability something we estimates, the continue more So that of get is adjust as that information. estimate those we will to –

– instance, think for So data, right settle is and we lot by cases goes time what as have estimate. it’s we to more now, we good on a And continue more of good but information. we and and based a have

So hopefully, it there is. of helps that in what terms understanding

showed and we expense, really – definitely the amount I feel by question, But some large, of to see that balance the time covered would by is sheet time. there on So churns be we the I from could we that like original have. as to a adjustments something your estimates those back in QX, are that not recurring that

was I question. So the was – main the that think that

alluded or our very and cash terms be sheet. like strategic are feel to impactful our balance working to or In the actually could a whether we facilities on and have we position place sources shareholders contributions feel Thank on have in balance potential the you. that have that of support the forward, cash we hard we have like we terms the from we’re of of the various on cash that from and in very that hand, sheet, we current credit good going in transactions it’s overall it between

Operator

and And our We teleconference. Ladies you gentlemen, does last that this was question. for conclude today's your participation. thank

You a and day. have may at time, disconnect your lines this great

Elutia (ELUT) 15 Nov 222022 Q3 Earnings call transcript