AXGN - Earnings call transcript Q1 2020

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Operator

Greetings and welcome to the AxoGen First Quarter 2020 Financial Results Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder, this conference is being recorded. to conference like host, to now Mr. would turn over the your I Financial Mariani, Officer. Pete Chief Mr. Mariani?

Peter J. Mariani

Jerry good you, Thank and afternoon everyone.

our Today's our impact call live President. Joining on following being Karen me Investors our provide website website. of via an our will available response www.axogeninc.com. and which the and COVID-XX QX section recovery. I'll outlook of AxoGen call, Zaderej, is initiatives. performance webcast, an of mitigation begin Karen and provide will the AxoGen's Chairman, to be live at is an in cost the of the on Chief first the replay end Executive performance, today's our hour financial call with broadcast call on Investors quarter is pandemic, developing the the overview of a the Within Officer analysis available an of section the

turn or or described to to which to actual company on forward-looking this or potential, I'd operating COVID-XX product of I'd future strategies, during These call factors regarding forms differ remind our statements resources marketing and sales filings past started, to forward-looking development, that these Karen? get the environment, with business, and those materially future regarding specific with impact acquisition performance. expected may review that, statements make that product related from capital Karen. we will events over you statements. factors in the events. the like include, to and We without company's XX-Q, statements SEC the without And like regulatory company's the Before limitation, the cause limitation, to you XX-K including, encourage the identify projections the may call, conference and results

Karen Zaderej

to call with care front professionals the Thank tirelessly the you, expressing everyone. people are and admiration suffering for COVID-XX. who for good the lines start by to healthcare our appreciation I'd like working and afternoon Pete on

the sincere families. global I past in the all, their adjustment confident employees a of entire are this to also been weeks you several overcome significant AxoGen The thank a challenges the community's and our We offer including ability for us would to to have pandemic. like team.

working challenging access team our products that and nerve patients have Our and I'm under to surgeons circumstances diligently and deeply ensure to support, is for that uninterrupted grateful. repair

total the our revenue $XX.X grew to In million. quarter of first X.X% XXXX,

and revenue was Although exiting toward impact deferment elective reallocation our February had material on procedures guidance, resources of March. annual in revenue trending the negative a hospital of our

has demand nerve temporarily incidence that reduced products believe stay-at-home have orders as our injuries. for been repair of nationwide we the Additionally, traumatic lowered

Since week daily A average. in sales the volumes March early steep time, recovery. the QX first early as decline to when XX% our steady low of suggesting sales our below daily stages drop our weekly continued have demonstrated sales of began through as ran a in and our improvement, April that we're

factors, and expenses review on reduce and time. in Pete capital announced comments. expenditures caused this to designed revenue will April detail these initiative of and defer drive community In hospital encouraged well hospitals open volumes. the also to anticipated activity elective clinics beginning the now as of surgery are are We surgical restrictions we more reduction mitigation cost certain his current to in schedules, by during a will XXrd which response and this that recovery their as in

across patients. surgeon the other suppliers. adapted collection the To we support in and And objectives, of or and care, this health has safety schedules including and we've Converted to in protocols top the rotational human these social safety independent each serve, an PPE; the core hospital distancing. those and state throughout communities, as environment a and and and our to support disinfecting. of a important and employee our our achieve and our well COVID-XX we staff review operational utilization suspended clinics inventory office-based all their professionals Temporarily to at and instructed exposed wearing, to complete at patient mask a hospitals allowing virus. of teams distancing, and working established and headquarters to implement an that tissue, backup that the established been facilities manner weekly steps; facility; existing established organization continue tasks into and arrangements; of team CDC event Our divided our request to organization; as separation took and create level protocols employees, center the Alachua two and COVID-XX training only of field-based preserving or to daily priority include entering customers guidelines staff daily following the new pandemic the teams customers all to work-from-home distribution was communicate executive healthcare safety patients social support to maintain meets remotely, to and distribution new on minimizes processing contact Texas in that cleaning, their

happy measures, new our of a to I'm and environment. As these team to effectively is this that result adapted healthy say very other and has

reps for accounts representatives contact surgery and in interactive and skills sharing to multiple reengage best also to in with frequent as sessions that practice provide we their highly remain We've included with protocols sales and opportunity week used this training. with our spring to support safely been time Our our training new how guest their have on reopen additional branded to customers surgeon needs. case coverage, remote the speakers, plan schedules. each sales sessions they These provided product

to spend along would continue how as procedures market, preliminary centers. our like it could evolve this online repair back surgery hospitals I surgical with nerve of at the thoughts a pandemic impact on on the coming and detailing few minutes now

declined extremity addressed care, and Surgeons devoted significantly were the American patient believe as market segments forward. if favorable healthcare as nerve and COVID-XX elective are for meaningful emergently move These we While including trauma COVID-XX guidelines the and acute acute be repair that facility has College nerve the should recommend managed resources available. of nerve resources hand procedures to repairs we supplies of guidelines injuries

procedures are addition, recommended be If needed cases, head can to in injuries and facility defer In be addressed a trauma the urgently. repaired delayed many to nerve neck fashion.

associated recovery repair RANGER early outcomes, demonstrates While that post is data up optimal injury from nerve nerve our with typically to meaningful repaired study months XX X still to report rates. injuries

whose patient ReSensation procedures, were neuroma triaged autologous nerve delayed-immediate While We intolerable breast many with reconstruction and severe an breast COVID-XX has has based our surgery our resources nerve conservative neurotize and delayed symptoms as of are was cases. on been the allows to of deferred. surgeons schedules lifted. the We or or both pain procedures If restrictions delayed many available. treatment based with manageable pain repair deferred in typically case delayed when seek treated breast was were and reconstruction neurotization patients that of chronic with believe pain technique symptoms, therapy, injuries will deferred on severity on the the their anticipate severity

incidence Additionally, injuries activities return. shelter-in-place nerve states we the will lift as increase orders of believe and community

believe current nerve For market uncertainties these reasons a despite repair recovery. experience and can related the to COVID-XX, steady the we

our pillars areas would to of sales now sales on initiatives we of the area of progress have five quickly to XXX. impacted of I during our how representatives updates with number upon COVID-XX. execution, ending any quarter, touch we quarter, hold these In flat been growth elected by direct including like during the with the made

of the a end. the XX result, increase with sales to greater of direct months have our quarter tenure As exceeding average as company than our reps continued of XX% with team

remote sales geographies. direct XX XX% Our sales channel cover year supplemented of sales primarily Direct represented approximately XX% that a is quarter our compared agencies first accounts by in revenue independent ago. target to

largest opportunity driving representatives our deeper existing of extremity to strategically During with surgeon our we customers. the penetration market on trauma on quarter, continue our focus sales and

adoption Within by on efficiently believe these We to and reps active with exclusively team focused our oral our sales repair breast this of focused sales as we're and continued deploy progress for applications, making our reconstruction products the and continuing of strategy also eight maxillofacial of nerve selectively neurotization. we specialists development evidenced accounts. good a are accounts, grow

number accounts XX% active quarter in Our of XXX. to increased the

was by the the greater in This with AxoGen accounts. and who active used have additional X% account products increase growth frequency an by in surgeons revenue increased of Additionally, over driven number year. prior

We firmly focused build travel results scientific remain and by of lifted execution restrictions early AxoGen on geographically the quarter. of that products awareness despite COVID-XX the continue are to our we surgeon to restrictions we we encouraged disruption, commercial on second and during anticipate It improvements being as despite carefully conferences. on is important our the procedures elective

environment, customers are digital repair, the of to are especially therefore our capabilities. expanding platforms surgeons' increasingly abreast using latest nerve in developments today's online stay we and in Our

peer-to-peer more grow to continues quarter. quarter community surgeon X,XXX during engagements Matters Nerve members and more AxoGen XX,XXX clinician end at our example, For with than the than

quarter the on repair the educate Our and efforts for program a surgeons first national XXXX, education of as in focused fellows. to advocates program we OMF and held and first a mixed develop scheduled nerve the injuries including for programs motor two continued

scheduled practices education, We programs, July measures. fellows, including from alternative events travel with repair. restrictions webinars. postponed and are best to or including committed We and mid-March advances microsurgery be virtual focus will have through nerve a hand canceled our surgeon-led on to and and surgeon on program education distancing due remain social These developing in

we resume programs national can that We year. are our the later in hopeful

neuroma. training introduce to new products national portfolio expand provided of neuromas. into on important our treatment peripheral our in February, the from protect At sales reduce plans an our our and neuroma painful we solutions addition management symptomatic of of and discussed portfolio previously nerve the or meeting focused development pain, We end AxoGuard Nerve application surrounding our nerve to surgical extensive for the separate sales environment the to symptomatic team Cap, to the and launched designed a

products of have termination. we nerve and nerve With connection, for Nerve now the a portfolio nerve of addition Cap, full protection, now

portfolio be of a continues Increasing by of supported large body surgeon clinical expanding our to adoption data. and product

meaningful Our the included multicenter prior RANGER data RANGER important journal provides XX recovery allografts: up Microsurgery head of study. Results entitled, help with with These real-world donor subjects data published overall Registry findings exceed gaps toe nerve reported has repairs. The results and for of largest injuries the more sensory, XX% the The Avance the literature complications from of paper in X,XXX of registry, includes and and quantitative nerve available evidence and our conduits. the now without publication nerve site the providers. millimeters. strengthen in comparable motor team and paper proposition nerve body This enrolled, XXX with set of a and known February is the throughout to an Graft reported data than on largest processed role injuries body the show outcomes of consistent in to in XXX and rate morbidity Nerve Avance a and comprehensive repair decisions includes large from study PERIPHERAL from and from that investigator mixed nerves, and includes nerve value publication can contemporary for were healthcare that This with years historical autograft and XX effort guide surgery. over impact payers to

these impacted and study programs, strategies our we've disruptions. has clinical COVID-XX manage implemented to help

the study our to enrollment at work research of by reach RECON U.S. continue few the is few We subjects with remains Our Administration. delay only discretion The negatively a enrollment any and RECON to or with open believe completion in Drug enforcement remaining. the subjects. targeted very select enrollment impact We'll enrollment a the Food effort sites near trial not provided will centers. an to XXX

visits increased COVID-XX completion conducted home health expanded by the subject implemented of also outside environment with and a crisis. We've healthcare to be follow-up safety visit the follow-up during to precautions. professional to program allow the an appropriate support our We've of clinic efforts trained visits

windows We research disruption. and monitor with our to any potential are centers visit working follow-up closely minimize

We that RECON efforts support these to measures complete are our study. will the confident

enroll. RANGER and MATCH continue will to

slowed COVID-XX rate However, we the personnel anticipate individual response needs. to enrollment be their reassign centers reduce as will manage resources and

allows following actual qualified repair. design be to for study the nerve retrospectively enrolled subjects Fortunately, their

from REPOSE prospective, Cap of the our study randomized in the AxoGuard as also is to REPOSE controlled which clinical pain year's were to six study neurectomy established standard Nerve improvements intend We Peripheral were compared a use that enrollment pilot of that at painful evaluating the a found these Outcomes study, continue procedure. life months, presented important neuroma management scales. greater reported difference of for phase five times quality than to this at two Society study The skills for Nerve. the minimally and American in

phase intend impact date this reopen the to of subjects. continue and the study While by pilot centers to study, remain to enrollment is of small research we comparative encouraged the the study a positive reported when

made enrollment date we clinical around of and COVID-XX our with With this XXX important staff With create will this PAIN research the to study. Registry we've the pause at to significant regard related our believe RETHINK to on decided restrictions are remainder body study evidence of a for enrollment XXXX. subjects Sensation-NOW the and technique. for of pleased centers, pause ASSIST our to we've Similarly, decision registry, enrollment

to potential clinical prioritize centers meaningful programs the of repair on to continue the nerve utility at evidence We of business needs. our study and will monitor committed We fit these of recovery the to clinical providing restart best our remain and impactful activities portfolio.

to this and have to steps and our to a healthcare the their in to COVID-XX certainly encouraged new and of trend develops. taken we improvement we significant safety as crisis serve, the and significant continued protect community through continue impact expect activities. on support and and our procedures restrictions general patients on as adapted We've the states begin customers by recovery had the to has business environment health on hospital our We're business. those lift

following tracing. begin of field reentering and healthcare facilities, and As contact teams we've week, national local, released guidelines this using regional our to

the tissue beginning our quarter. to return offices labs in second research and the to and are We planning processing

intact. our market the that in focus nerve with remain life continue believe our peripheral fundamentals of to restore and And quality patients mission business nerve repair We to injuries. function of underlying nerve we to on the

to financial Pete? over I'll of Now highlights. call for turn review a the Pete

Peter J. Mariani

Thanks, Karen.

million. X.X% grew to $XX.X revenue quarter First

was March mentioned, volume As revenue of was guidance, exiting patients. orders And impacted quarter of and product result as although net traumatic increases the a incidence trending unit of COVID-XX revenue our month the for resources as impact shelter-in-place price as increases treat to customers revenue annual and our the in towards changes February the growth well negatively our quarter first injuries, in Karen our as was reallocated mix. the of reduced in prepare for

for Gross QX compared Gross quarter impacted of QX year for as for compared million a decrease margin Gross to first negatively the in the in in variance lower profit of was first excess of and $XX.X and the a XX% tissue recognized quarter from suspension of of during period of March for obsolete to account increases increased margin prior was demand and slight quarter. million, $XX.X processing month in temporary in resulting recovery. to most was our reserves XX.X% costs period QX XXXX. result the expected product estimated inventory the for

Total in the million expenses $XX.X operating and head and expenses forfeitures million expanded compensation market quarter increased $X.X related stock compared was of than first was in million expenses. performance The $XX the in million to the benefits and the in footprint were reduction the a first and Increases compared marketing current count in direct expenses fees by of to $XX.X quarter primarily year. $X.X compensation $XX.X million prior increase includes salaries in more activities. from offset lower in litigation quarter quarter prior noncash decrease in million project impact awards. This stock in is our stock sales year. increased development Sales and first the the to to

As year. for XXst and percentage total three increased XX.X% months the marketing to to a XX.X% of for March compared sales ended prior expenses the revenue,

the compared XX% Nerve development prior to million including quarter research the costs in represented spend of year. in QX prior to first the for in the expenses in the compared represented expenses in compared spending of Research breadth the the clinical clinical development, development while development quarter million clinical increase BLA and XX% support in XX% include our in our year, XX% prior Graft. year. of $X.X product XXXX our the other and in clinical total approximately to Product The R&D first expanded of was and Avance expenses $X.X reflects Research portfolio.

due were restrictions prior percentage year. the to end related the XX.X% expenses research And the a to compared decreased QX at of XX% revenues, COVID-XX as in and of clinical total Our in activities clinical toward quarter sites. trial the development

expenses in million in compared first in was of administrative and of or XX.X% $XXX,XXX the related quarter performance or year. the The other General included current $X.X G&A legal, of revenue $X.X compensation as XX.X% revenue stock $X.X decrease forfeitures as of stock lower lower million primarily noncash expenses, to million in prior of and the well including general to relations, awards services. corporate quarter investor

the costs been associated the and suit this dismissed of District was dismissed action be United $X.X plaintiff, or upon an to Court The the XXst relief that of without the has claim Florida dismissed G&A million class Middle that The dismissed plaintiff class action Additionally, Neil prejudice. days litigation of filed be included could the litigated granted. complaint year. has since States X, with on file prior January case finding the which District successfully a XX Einhorn, with complaint, XXXX, or will April action state for prejudice, failed year to amended

in the $X.X $X.XX or compared loss $X.XX share per $X.X prior was Net or to per million first share year. in million the quarter

loss loss prior EBITDA compared in million in Excluding as the $X.X share and of charges, year adjusted an compensation, and $X.X million excludes the and million stock to loss quarter. million $X.X per well litigation, $X the and as share which $X.XX net compared per prior was of for loss QX charges the EBITDA impact noncash share and stock per impact litigation year. the quarter, also in to Adjusted was related $X.XX net compensation related of adjusted

for at $XX was $XX.X million million fourth cash to as of end March costs, to compared million and equivalents, in of of sales our Tampa balance Dayton unique and to $XX.X payments our cash, related balance insurance the the sheet, QX, change our sales cash investments The performance annual meeting. all-employee the construction prepaid quarter payments bonus, annual and million in including facilities, XXst XXXX of items $XXX.X our the payment of awards Turning quarter. and included

we company received Business the Small million of during necessary physicians original period because guidance the in providing business loan XX, effects the preserve we COVID-XX. SBA Administration. to the negative had to this surgical Protection economic from a volumes Paycheck relief April announced obtained $X.X On loan Program reduced the that of a of We by of pursuant

guidance we stating that it by program subsequent be to noted we be issued companies original loan. receiving the the for unlikely would release, today's that able of in Treasury changed believe the that intent that the However, standards the Department would meet by the public

As a May on result of the this change, company Xth. the returned loan

reduced mitigation anticipated April cost XXrd, revenue capital fees reduction included for of initiative the implemented by reduced a designed one other approximately compensation in COVID-XX On XX% pandemic. ongoing certain caused certain of salary to to This processing also Dayton, compensation response to discretionary we year new our XX% our layoff reduce defer the and expenses workforce, by to and completion exempt XX% and all cash by and biologics reduced initiative announced a employee an freeze. expenditures XX%; by Board executive and hiring Ohio center of up Deferred employees completed of in and spending.

are education, preserving clinical, by and including company surgeon occurred the not the salary patient travel, recovery. the the primarily to current projects need and care. while certain cost impacted in The for tissue took the layoff in collection most spend other recognition reductions and We areas processing, critical lower that conferences, directly restrictions and programs of capability across for reductions

studies, developing spending RANGER, Sensation-NOW clinical fully we'll or RETHINK see As we're Registry well to programs. clinical fund reduced PAIN But RECON, MATCH, as continuing REPOSE. Karen clinical and certain as other in and noted, including trials

of allow from of will $XX us the million The to deferred Dayton XXXX facility XXXX. to construction CAPEX defer

return. demonstrates lease provide mitigation new extended business a approach the our commercial also a maintain cost our processing validated. the complete us of We building as focus this on existing at surgical taken model is adequate to execution the with volumes and flexibility believe facility initiative tissue to we've the while allowing until capacity that required We balanced

the cash of allow anticipate cash in lower Dayton work will we higher construction, several and initiative facility the due the more burn prior quarters on the primarily completed of and efficient mitigation QX run impact to suspension next us will preserve revenue for business on payments Although reset a over rate. to to this the cost

additional on measures COVID-XX business flexibility recovery loan, because as impact we volumes The surgical additional but cost alternatives. PPP we loan the would we the of the may reduction the non-dilutive monitor explore have our financing returned take and upon of other provided based

recovery like will we of stages While are we be that indications encouraged hand stronger, from leaner, be and the And we recovery, resilient to emerge path more are of uncertain, to in Karen. call back will we may this confident organization that, the believe the to path a and a over pace downturn and the the profitability. on with we're by that early I'd

Karen Zaderej

Pete. Thanks,

by momentum in were encouraged seeing We we are the to the our prior downturn. strategy commercial

more We the place confident to this normalized it strategy right the line point, demand have Jerry? At and for to that to up like returns support are levels. current in open the questions. for I'd highly environment once we

Operator

you. [Operator Thank Instructions].

is question from Please Newitter, sir. first SVB Leerink. go ahead, Richard The

Unidentified Analyst

are are later the starting of the Hey Hi, about I'm encouraging from rescheduling conversations the Rich. seeing guys. some you or of you potentially going reach a on just that, kind role for many Jaime ASCs maybe to are are in so them strategy so, from that from in guys capacity, recovery there that a are can you off forward? how we currently this playing challenges this you just the your things see you're you're on expand ASCs talk is low And done of them and of some we're point potentially having active move rest the help one many this date, procedures about with like bigger curious, have of hearing bit is can improve hearing potentially April. could capacity maybe at To beginning you that of a broaden that things ASCs as the customers, start, be standpoint to just to the thirdly then -- throughout talk on year? a point little you your of just that procedures how accounts for a

Karen Zaderej

thanks, now other geographically. New York big is the COVID-XX seeing differences disease. you compared Jaime. impact what of There's and other highly that City that run areas we're Yes, and have cities had have very lower Baltimore in a Certainly, variable between had that recovery to see significant a the as

seen we've the started so starting seeing pick things not we're up just procedures in difference. We certainly increase that but urgent of in off have opened And an geographical of trauma all the up our procedures. as in to low April volume elective in week, last procedures, types see again

we back are to starting care. or I come do patients of of really were would be think, some coming what We the We seeing, are are the will that see the our But for back. who most regular patients base. what deferred we're patients that believe procedures believe majority

complex the early volume and is We're and not the complex OR. are all day seeing the scheduled was even And have a you seeing just for and about nerve the patient to I'm being didn't That We're growing a come next stages patients as patients coming and scheduled progression. other before, of for no-show the they they this but time back the lot seeing repair. It's of particularly the on thinking that had how a -- it's spent the the disease a line to people things significant the procedures. to had get now. sure willingness because going was equation trauma OR of our they're back that there we get shows areas well, of numbers procedures, seeing sign first problem a repair rate that surgical not and back come availability that in night higher in of a earlier we're saw that drop. no In of procedures. We're was point their are it serious into done, on pickup time of a trauma March, -- at actually, both their

who if surgery You But of are see ambulatory disease they do was -- centers quarter. as was some ramping trying to procedures. the lot order benefit be weekends talked whatever see also going through our that's site they'll OR the surgeons both looking patient. We not shift we where evenings We anticipate about flexible, It the to be they're surgery a the would be maximize saying to didn't are are part time, in the up. surgeons that. care payment in able work first that to ambulatory appropriate at a schedule. of schedule a and for in the new and into be hours hospitals to of asked the of very And we centers or their of changes the

their private their While able to are to leverage that. initially payers only Medicare, increasing nerve some and in of our active centers talk interested are increasing repair or

be going simpler specifically nerve not good centers their ambulatory going they them we're those following with for go them a think able we're after where and centers, in in our after into surgery while their surgery care, So surgeons we follow ambulatory to to we're repairs. working to situation

Unidentified Analyst

on and year-over-year margins. Karen. below Pete, gross a expectations. guess, just, Street was down the standpoint from then it I And modeling Helpful, Obviously,

obviously So bit, just for COVID-XX help to year, that going calibrate remainder if we are the the to of pressure about the some revenues that cadence see little us could, due given a situation. be you should thinking how

Peter J. Mariani

see I in we'll year, more now once and first again, volume in the we the of more the see that coming Yes, from see into lower the inefficiency revenue I items think in and numbers half back that expect unique margins. believe, of recovery margins, that had QX. QX, then not the of normalization would quarter a producing we so But all think I here in impacted we we'll the

Unidentified Analyst

Thank you.

Operator

Denhoy, Please Raj The ahead, question go Jefferies. is next from sir.

Rajbir Denhoy

year. about the if Yeah, if curious people point, that's around could the how and now, about I access at into I'm One, might the given assume good I know sales COVID force hospitals maybe organization assuming freeze, that we the impact hiring going of start thinking second, how with balance you sales this given force. should have wonder think sales And you're lack I afternoon. guys the for do that the hi, I'm restrictions about how of you things, I'm stays correct? about XXX the the curious business forward? a talked high

Karen Zaderej

here sales at to ahead a thought find a really of So go is will we we wouldn't sales maximizing change, telling needed and focus productivity. be maximizing and terms our look that territory you in and productivity on to that team. of going but side, to the the we I'm our selected not continue there improving we make that

In terms fact, difference. in access, again, local -- of highly very a variable another

reps mask directly as our shown a within more come to healthcare to in test COVID-XX of into ranges time have access with have you certain the hospitals from work can be change So have that you and back NXX facilities you period before week, a be no your negative the near the fitted facility. even into over and hospitals in the go last started to

variability So there's face-to-face of direct high a of range access.

were surgeon reimagining time all that was says model resource you got cases with some support team, staff, why of that did not lot we support it a be and the on did I surgeons interact a are how live our to and of spring reps and we their sales done, think, patterns. able our expanding and we with with that as the their frankly, And training the with can for that work thinking working face-to-face about us, if training treatment continue on spent you be to to selling still with help.

that. we've and we'll implement did by had to think I training continue real-life as we So that,

Peter J. Mariani

Okay.

gone. I think is he

Karen Zaderej

Raj. Thanks

Operator

a have question ahead, Securities. Danny go We sir. JMP from Please Turkaly,

David Turkaly

It's you? as are queued may in but actually have how Dave well, Danny Turkaly.

Karen Zaderej

about changed wondering was I you name. that if your

David Turkaly

Not yet.

to the that I impact any or you data kind do So in to shelter-in-place. have been? could mentioned slowdown from an of trauma at look or any of to points just that you wondered, quantify much how that way that have

Karen Zaderej

our end shelter-at-home. categories lacerations that power types and knives, incidence happening is in and they spent the back the think what can and sharp that and talking could surgeons about things think that trauma, of There of If us things they jobs is have nerve cause using the don't I you are impact tools. impacted are Yes, injuries, by those be step a up they seeing, data injuries. are saying, top We've in look you the people things that what marketplace. the we like Those glass. take can is of tool being what go up. and I all majority power of from do of see, to I what less three time point things with And

So may there job-related they may be less injuries. have --

and an On guy bit may increase hand, he of little the while home at we've have was to the an other seen that. with up unfortunately definitely who a fire chainsaw the accident decided had

balance had those bit a being Definitely, of we've injuries. down, of little types slowed So of closed and fewer with restaurants lacerations.

range. some, at of And not XX% still that a were So something greater the XX% think who likely treatment. back will those maybe we down for to half few, we're majority we it range. in But injured was come patients believe the maybe the than

David Turkaly

one reduction something sure I -- on $XX like like and that of EBITDA XX% being -- everything. a announcements in like seems prior that seems spot thoughts even ultracautious. million you the then $X.X the terms you're savings, at maybe and just have and the maybe million guess get that the your in in plenty capital? for Got Pete, cash I workforce all you're to I'd it, because quarter to it it loss, of good the just made cuts you and maybe looking

Peter J. Mariani

side and we got and we're how here, balanced I think, efficient right, set the capability sales more allows get ourselves this, quickly on level question to be we as And level. approach we're $XX that is team that that to a heading preserve I execution much -- on that do you're rate. do. through as do timing, more a to taken rate we we run can get the revenue the balance -- we think And and a come that second on like broad back the than running talk that what's confident sheet, back we'll it million you approach us have what back is going strong confirm think we efficient of towards can we to And at move And that a structure do I we then last run we've Well, maintain once were after we I -- profile were that before. that in we a level. half look investment we'll think the in that year. that about we've a additional place

David Turkaly

sufficient it have means to something that inventory, process of think that But recovery that And you talked you would sneak you guys of imagine must processing or I I be year always if new, in, you the anything amounts. one tissue. without just a can about over have having have I that suspended thought last and fair? could access your And to magnitude I kind

Peter J. Mariani

you're right that. Yes. about No,

us going time ease for into We sufficient and we in like here customers. return to not a again get to it We while to have we're processing the we gas need that quarter. said, run levels. up supply to place when not -- that. recovery We'll over we'll to a we step start the And stop as inventory it. going But that ramp don't has fast production back and real normal We're planning real tissue second normal on rates do situation to our this, soon. have run the levels into processing in normal and like ramping contingency up can impact

David Turkaly

thanks lot. Great, a

Operator

ahead, Jefferies Denhoy from has go Please Mr. sir. re-registered.

Karen Zaderej

Sorry, Raj. we lose Did you?

Rajbir Denhoy

Yes.

on was happens, mute right. from it but home, Sorry about actually as of it's that. the I joys working

into focused guys I rep the And sales are kind more physicians up curious get April accounts you to something I move activity. questions asking growth the So and in would [ph], moved any new half XX%. of you was the was are the of resumption me, which force anything support Again, quarter, or kind had really terms about now of seen that kind really, year? -- any in was into have in the into back like on XXX actually, excuse of new you as my know, wanting the you to trained, March accounts of you activity here picking up as

Karen Zaderej

been it's we about really If trying time. of care do we're are as to working -- I want started just additional to active going just soon the think with think was again. OR Well, that to get users accounts our in we're go That's working think penetration. today. as can too to they're again, we we And strategy started and think support deeper that a have I can open good to our surgeons, so we get tremendous active accounts they -- that deeper sites to we and so And was surgeon they surgeon move into continue as their have been with to opportunity has to base. them a of year, with continue that -- -- to drive the build base

And so continuing. strategy that's the we're still

Rajbir Denhoy

that terms the commissions and turnover? right, you Understood, on during how that and just mitigating cold you other reps you think period relatively turnover, about the things then last in When sales limit are sales making one of you of your are that force. and sort can this

Karen Zaderej

salespeople protected have they that entirely did something was their ask at not on go home to we issue. variable shelter them into Yeah, we mitigation not account, some compensation. that so And on not were income compensation. especially predominantly when we from their and suffering a Salespeople plans

Rajbir Denhoy

Okay.

the think? the use about we should number So year, that do of you of XXX for balance then

Karen Zaderej

Yes.

Rajbir Denhoy

thank okay, Great, you.

Operator

have ahead. now Please question from a [Operator Canaccord. Instructions]. go Kyle We Rose,

Unidentified Analyst

Ian Hi, this Kyle. for on is

numbers piggyback the bit. QX to the XXX I a little think on Right went quarter. off in from active QX XXX then and of this accounts to Just XXX Raj's here, comments in

growth. step-up, you right? in little were March you also of in that of February as step-up kind it kind a a like Was because a seems of January, of and there anything it missing So month Q-over-Q well, bit interesting saw seems like

Karen Zaderej

Right. No. were they usage all about to is they places existing And who that definitely we the predominantly again, their was the users did Yes. that was expanded really, that wanted surgery. step-up. it excited a There thing make across that surgeon sure

to sites and And of to to access then with to of to so And continue existing that allow work that drive people depth same more additional deeper users we're those care. continue our that work with surgeon continuing us course, us gain gives that growth. drive at

So our a we penetration. thought strategy driving it substantial step-up, was it based of focused was on and

Unidentified Analyst

terms user and sense, needs difference terms and is new kind versus rep like in an of in customer training education? then heavy of in what access, there kind Makes any of of existing of customer terms

Karen Zaderej

least used of going user, believe of is setting. new the than technique, any on number conversion need a user to of an user does, an that at who's established in surgical Yes, product existing more or type existing somebody a support a times we that

So remember, A types different very many injury. different tunnel than nerve really of repair a carpal is repair. repair is chainsaw

digital they're that few working and in typically surgeons considered clinical both they separate of what we have working you is the the and discussion of new trying surgeon have with tools surgery, of with are, So with have finding virtually, type we're sink use those issues environment, cases of would in first can lot repair, the a when the the about setting before the a the want before to the be would the the scrub types place, really will them that assistance during really been surgeon that repair. different What FaceTime during the what coordinators, and case, talk people case. doing every

are surgeons. of and that we've All and actually those by the welcomed tools staff we found implemented, surgical quite the

So well supplementing with in that contact, we've it that centers where continued as that. are the as direct allowing to face-to-face implement appropriate, now

Unidentified Analyst

Perfect, thank you.

Operator

closing of And back Ms. Zaderej? call turn remarks. Zaderej Ladies end to the over the session. the would and I gentlemen, reached like question-and-answer for to Karen we

Karen Zaderej

June. very us you much. want everyone to to speaking many I you today's Conference on Thank the Jefferies look Jerry. Healthcare of forward you, at in Virtual call. Thank We for joining thank upcoming with

Operator

This concludes today's conference.

Thank time. for may participation. your your at you this You disconnect lines

AxoGen (AXGN) 8 May 202020 Q1 Earnings call transcript