VCEL - Earnings call 4 2023 | Vericel Corporation

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to Vericel's Fourth Quarter 2023 Conference Call. [Operator Instructions] I would also like to remind you that this call is being recorded for replay.

I will now turn the conference call over to Julie Downs, Vericel's Head of Corporate Communications.

Unknown Executive

Thank you, operator, and good morning, everyone. Quarter business Call highlights. Fourth financial discuss Vericel's and results to XXXX to Conference our Welcome

which statements with Private Before expectations materially that XXXX. that we fully forward-looking could on more begin, These and today's under the we let our risks our website. are results in call, are will me statements may cause available be described and Act actual Litigation on from Reform Securities remind SEC, involve you covered filings of the uncertainties making differ to

In as date. addition, our not upon views all forward-looking subsequent statements representing represent be of our only views as any should today of as and relied

note release our Please financial website. of in quarter section fourth results is of a press that the copy our available Investor Relations

a from can highlights have also our today's the or with presentation viewed be accessed short that website. webcast on on directly call We

joined I and call Chief Colangelo; President Vericel's Nick am Officer, Mara. Financial on Executive this Joe Chief and our by Officer,

over turn will Nick. to I now it

Dominick C. Colangelo

to our and million Thank financial good with morning, profitability well and financial the million, top financial revenue higher begin increased then more outstanding on and full and discussing of Joe guidance I'll of you, generating our company in growth for Julie, Care by $XXX for to year year the before revenue $XXX results XX% $XX the MACI XXXX exceptionally revenue the over at delivered XXXX. detailed which nearly executed business business Burn for the and and XXXX in quarter year range, million. call a the expectations growing fourth Total even our opening will XX% revenue full and well end today's nearly quarter, top-tier was growth. results financial for fourth as highlights and provide call as guidance update everyone. this to Q&A. The

rate and generated of reached adjusted XX% line growing growth, of revenue our profitability our approximately million in and and the debt. as also $XX $XX at ending flow, profile cash top with EBITDA cash point we an million, no profitability year over company with the bottom twice million line The inflection investments with operating $XXX increased respect to to

had total a we year. of in the the $XX company to prior quarter, year of the also as strong generated very XX% close revenue The fourth an increase record over million

high XXXX, marking as represented XX% the the range underlying quarter sixth driven guidance surgeons XX-plus quarterly record fourth biopsies of million, growth straight MACI number strong and $XX Our nearly XX% by the revenue performance of the third was had performance driven strong more the fundamentals quarter end percent since over any biopsies fourth in over launch. growth our and was which was This sequential and quarter growth implanting of than of quarter MACI. revenue MACI we taking highest by quarter MACI implants, of for surgeons, outstanding business above

prior very growth fourth generated as revenue the franchise Care grew Burn also We XX% the over in strong year. quarter

generated gross with $XX for drove net of the top expansion and growing of quarter and in margin we XX% $XX margin over growth fourth significant Our income profit margin quarter XX% the than performance as XX% EBITDA doubling line to EBITDA adjusted to more million and revenue adjusted million.

of look profitability growth our revenue beyond, we our drive metrics. and continued and will As to high of forward that expect enhancement we XXXX margins expansion further

million has corresponding double-digit productivity has biopsies perspective, fueled surgeons another growth sales in continued and year our to highest growth $X.X been ever our biopsies of commercial base our the rep XXXX. growth target We're penetration surgeon of level rep its of we in helped taking at X,XXX current MACI's expansion expansion success customer surgeons. sustained a From XXXX. MACI's now The and of as drive per in base surgeon by in approaching had driven XX%

peer-to-peer commercial that continues had interest our continues and surgeon to grow. in drive to MACI help highest we demonstrating execute number the uptake, high-quality programs date to to quarter, in Our fourth team of programs

were patients showed positive growth outcomes In American Sports both in strength clinical top growth for in in a of study patients The the positioned MACI's for last MACI. the long-term the and patellofemoral XX study for maintained highlighted core the and addition, with prospective outcomes, published were strong out clinical satisfaction focus XXXX business showed of treated The of which years outcomes levels excellent line Medicine of and continued underlying MACI is long-term and clinical years study revenue ahead. treated femoral improved high performance our scores, condyle remains to also week. Journal MRI-based patient very in MACI MACI's program. MACI for on its outcomes our Based defects, Arthro drivers, well that

we Looking the core that announced last MACI and for was beyond month indication quarter of by initiatives, launch growth submission cycle third delivery arthroscopic our we our review year. the this FDA and in MACI Arthro MACI that expansion this accepted to management to expect life

As MACI. year targets we addressable of X the which representing patients XX,XXX of femoral previously market roughly defects segment discussed, approximately billion the comprised the square or market, centimeter condyle for our $X per addressable to MACI X largest Arthro kit X/X

procedures set of of our of the Underscoring the innovation in XXXX. procedure. complete meaningful patent the indicating instruments research shift MACI surgeons And January, expect MACI to repair market into the current Arthro usage MACI cartilage market. USPTO Arthro In MACI view covering Arthro regardless a that their meaningful to as that issued surgeons a their share orthopedic a

activities underway. commercial prelaunch are well Our

for we'll cartilage We're connection on will the growth our that date, to MACI X,XXX to surgeons achieve and growth XX% base very MACI Artho in continue than about MACI surgeon biopsy of X,XXX our represents we penetration adoption to expanding opportunity growth surgeons this of later target Based launch, forward. we'd excited arthroscopic to include predominantly it more with believe key our to this from launch and surgeon approximately be the expect anticipated ahead. that high be experience driver a the MACI business Arthro surgeon perform for value meaning drivers volumes year, addition, of through another In as procedures. moving target repair for larger years important time, over significant in base

second also in We're program significant largest beyond. in market defects $X billion the advancing next treatment opportunity believe for ankle driver with of cartilage potential a be indication our we estimated that ankle And market, MACI could ankle development the MACI. expect for the growth MACI another initiate and decade an XXXX. represent study for addressable in in ankle injuries to clinical the Cartilage and the the MACI

Burn to Turning our franchise. Care

number saw of the strength also quarter fundamentals the biopsies We as fourth start the And in a business for in XXXX. since strong the that had the with is to in we Epicel momentum carried year. Epicel XXXX underlying quarter into highest

pull-through to expanded will continue care footprint burn larger the for and further higher share belief which commercial sales in that team from voice from see of Epicel Epicel positive care We benefit a our supports market. our burn

the of of our following U.S. fourth phases burn in With the of product last care respect availability quarter the to NexoBrid, team is the beginning initial in commercial launch plan executing year. our on

cases outcomes. in to pleased for by of we supporting in launch that a the centers. for focused at initial the to performance their indicators phase quarter successful We're the strong Our patient fourth NexoBrid, P&T enable burn building foundation Committee ensure commercial supporting staffs medical and and on with training burn terms NexoBrid progress teams centers Center early to Burn approvals burn remain key surgeons access Care made onboarding

placed had centers As initial P&T order. their XX of centers Committees, gained packages the approval end of nearly XXXX, product burn and than centers submitted P&T XX XX more more than Committee had an to

defer product was number uptake or the last on timing to in delayed patterns the training availability hospitals, processes, burn impacts which and call, performance these centers and addition ordering metrics mentioned manufacturing-related typical hurdles use strong, and our P&T uncertainty the of centers. we Committee in timing our resulting XXXX the of did approval these cause many a and at ultimate around and administrative as to of NexoBrid While delay the on of

importantly, has as treating feedback removal burn Most great care potential burns. treated which for is long-term a the the with with from however, standard NexoBrid change to eschar patients positive, the for we patients surgeons look of NexoBrid severe outcomes very for for initial clinical been of those signal patients and the the

and January In time. quarter, hospitals In review addition indication and outpatient commercial a over appropriate to for additional for the code completed for pediatric granted by we of a provides progress a supplemental payment we accepted was for In build with in NexoBrid stats, over burn pathway foundation a which BLA initial Burn to access, reimbursement fourth as to NexoBrid patients J also the centers effective Center onboarding, FDA. for that treatment a success CMS the designed a initiatives our submitted became as strong in well NexoBrid turning transitional pass-through target a of NexoBrid time. the commercial permanent number

to revenue contribute have burn impact So outcomes build these strong our care XXXX, the surgeon positive the and We to this of excellent NexoBrid burn in broader is on NexoBrid, care meaningfully foundation interest to strong progress care that Epicel. enable and market sales with having believe second a enables burn overall, Burden for in treating and our high-growth a the the activities in moving team surgeons and we're will pleased year, patients centers, very company all the franchise feedback access clear onboarding company forward. that clinical portfolio factors in franchise expanded from our

to turning Finally, for guidance XXXX.

next to revenue percent third revenue level continued the core We driven year the is support more some end beyond. company Artho to $XXX contribute generate and and year strength this launch revenue, a high XX-plus with in will anticipated NexoBrid expect the growth of strong year sustained towards in our growth revenue our continued year for in so and of the first of full which growth expected MACI even the of quarter $XXX by portfolio, full the and year and million, million of MACI to of XXXX meaningfully which

drive that revenue and will growth expect growth in our We also high profitability of our our margins expansion further metrics. sustained

I'll the Joe. over call to now turn

Joseph Mara

fourth morning, XXXX results growing million, MACI full driven prior franchises. representing full Thanks, the growth total XX%. the $XXX.X net the of ] was revenue above by the our of XX%, year in revenue $XX good Nick, our guidance our million, range, everyone. strong and XX% was of Starting for year financial net with growth revenue Total quarter for was of from year. $XXX.X with million versus both [ results,

was business growth our quarter sixth consecutive our momentum with MACI and in million $XX.X XX%. with quarter XX% and over we MACI grew the as versus prior QX, XX% revenue year, the For continue third the over

Epicel the of of million and the Total Burn for with quarter revenue addition $XX.X the results. our In burn quarter, Epicel million, full growth revenue. consisting $XX.X and fourth NexoBrid revenue quarter, of $X.X total revenue very XX% was in revenue strong a million care Care fourth of to XX% by burn leading year of care the increased NexoBrid

revenue, was net basis Gross approximately compared of million profit an XX% for year increase of $XXX.X XXXX. the or to XXX points

quarter, also gross million increased the year highest of basis by XXX for or and margin which $XX.X was revenue, profit company For quarter to gross last net in XX% any date. represents versus the the points

year operating our to quarter to Total levels of similar XXXX the and now the for expenses XX% $XXX XXXX. for of in profit for to fourth gross nearly pull-through In incremental to million pull-through with XX% $XXX.X returned addition, full the million revenue margin compared has the year. were gross to

expenses and lease external $XX.X was variable and XXXX headcount in that same were as related to period marketing other as million increase well company's XXXX. for million is to $XX.X construction, operating under new expenses, the sales expense in operating compared quarter, increased primarily expenses The associated the the with due employee expenses For expenses. in facility

the for more XXXX. $X.XX million share of quarter $XX per fourth $X.X of fourth income doubled net million than or compared to share $X.XX income Net the or quarter per to for

per million million a full share per in $XX year-over-year loss $XX.X on year, an or XXXX, share million compared representing or was to nearly of $X.X our $X.XX improvement net basis. of For the loss $X.XX a

or EBITDA XX% $XX.X million adjusted the XX% of XXXX. net Non-GAAP or net year revenue revenue XX% for in compared $XX.X million grew of to to

of of XXX For in an fourth EBITDA the the revenue, points quarter, XX% XX% basis $XX.X year. XX% adjusted last or quarter million increase to approximately versus grew net

very top strong our our growth profile. Importantly, of for as adjusted more quarter demonstrate our of to EBITDA line full double growth our top-tier adjusted our revenue XX% XX% of P&L in a the continue results growth EBITDA XX% is the XX% profitability growth revenue fourth leverage than of year and double is and

into than to cash million now each quarter flow. and X convert more in In years addition, continue We the company cash EBITDA XXXX in adjusted cash adjusted flow $XX.X despite balance ended $XXX generated CapEx EBITDA the cash up and for million year and operating positive has generated facility. of consistently with our start the cash, no and to as $XXX.X our million debt, from investments increased for strong restricted investments year in new XXXX approximately

financial Turning XXXX. to for guidance our

a We guidance to we the for and are framework similar start that in our year burn MACI XXXX franchise. using both care use

to of total franchises. For strong in growth XX%, approximately full $XXX expect company million the million, representing of year, continued XX% of growth we to both driven revenue $XXX by our

our its to launch Epicel XX-plus higher total benefiting we With from of year. a revenue and multiple in for NexoBrid guidance voice percent have MACI another on strong paths early the phase, share track for year,

year year of revenue to we MACI, expect MACI teens price growth growth the as MACI. serve growth expect and growth, starting biopsy -- biopsy continuing in as year We another for range growth a another an key another with the drivers. for growth in surgeon full increase high strong And of of point, year percentage

significantly growth past burn expect contribution year the plus full NexoBrid. over care on for over the from the we revenue of quarters Epicel initial the XX% franchise, trends based several For improved

midpoint. For start company at representing strong the we the revenue $XX XX% million approximately approximately first of $XX expect to quarter, year to total revenue the million, growth with a

from XXXX, and close similar Care, Burn total in expect based revenue $XX.X QX. revenue as coming revenue to We our be of million majority quarter with of trending expect $X.X million, rates Epicel to biopsies for which $XX.X be above run is of $XX.X And to the million in first the the we NexoBrid QX to vast recent out on range million. to MACI revenue strength a

the P&L. down Moving to

of seasonality operating for million for we gross another year, be the margin the XX%, the of terms $XXX very approximately full would margin in similar EBITDA For adjusted and we margin throughout would approximately EBITDA which would both We and XX% of adjusted XX%. imply of year. of expenses growth trends and full expect strong around gross adjusted to EBITDA year And quarterly progression approximately margin our percentages expect expect year.

in headquarters million expected costs build-out with Finally, of we our our anticipate an of the for investment new $XX increase range XXXX. manufacturing and share in the capital construction facility for to be

guidance points to high this total, with of growth our revenue XXXX in continued enhancement In further top-tier profitability profile.

a would and we with strong in year continued anticipate as MACI in In profitability addition, of also revenue expansion metrics. growth as key continued acceleration our arthroscopic XXXX usage well further of full NexoBrid

This now remarks. our prepared concludes

questions. call to will the We your open

Operator

with [Operator Zimmerman Instructions] Our first question BTIG. Ryan comes from

Ryan Zimmerman

years fourth terms to third though. about guidance with of Congrats prior NexoBrid, Joe. for on line just bit I mean if all in on arthroscopic a potentially to And late of kind talk XXXX. an top year strong is benefit morning, the given is Wondering think the launch seasonality little relative abnormal a appreciate really how you this the I -- in and it expand commentary could little quarter a could year of you it pacing bit and curious on this fourth kind the seasonality MACI. a the if normal? about little that on of in maybe some

Joseph Mara

Yes.

for thanks So the question, Ryan.

that, as that. start touch can So at the with just maybe a and I make hit sure people of on just framework I then the part I'll on level and to of high understand seasonality guidance sort can

very early XX%-plus year out this messaging last for we thinking presentation consistent first we in where and this at perspective, in corporate with to our updated our and a about talked from off, year XXXX. So JPM range, year close total that company

which Importantly, higher the as last bit framework so both a the franchises, framework, part same used is on using of is we that for point same company but question, important. Obviously, a it and we're higher, starting year.

I'll -- MACI on seasonality. So on the touch

strong. a from growth, framework our to to growth which leads additional similar starting is That volumes, XXXX, the drivers MACI, assuming has it's surgeon again, are an been in biopsies in very price. So increase which year new perspective, and key

So full call a high you year it, teens into the, that gets on basis.

of say, And It's say, some wouldn't I would more, so the your from I would say QX arthroscopic we launch. really but we're changes part factored question, from a as seasonality perspective, that meaningfully impact how I in of a perspective. thinking about kind MACI from

QX. relative to an we what have an But looks in start, year sort will think it do some significant kind have be wouldn't because to I impact of average perspective, last like. a will impact think So quarterly year, from it --

MACI So of remarks, good if the formal I to start. think kind about the and want touch but about product to across guidance, think we on getting franchises. prepared we framework talked place our not in did you a We're

assume mid-XXXs that we you about, you talked in full which is than our on that kind a to high low gets if the So in of last to higher may basis. year, year point kind starting of teens, as

example, if of million. $XX $XXX or would for burn which care, of would at kind So to kind million XX% you about that our the midpoint lead be balance use

across in important things. burn as And implies is it XX% I'll a so XX% what's perspective, at pretty the range a XX product. again, I certainly a it the more be seasonality think that part certainly then there's possibilities -- midpoint of I think of strong ]. from in growth, and would that couple [ tie this One, than and call And really care of

we little a bit look think know across going and we're we'll guidance, to we and And we a can off to specific rate. I exit giving Epicel run again, that's to But perspective, last out about what came So rate not year exactly very grow year, said, of Epicel talk similar framework we think 'XX our NexoBrid. which is don't but again, that like product that ago framework.

this of kind expectation Our is the year. same

were out the back rate the if X million we around million call $X.X of at $X more run year, rate call million. ended quarters remember, of you the our it, if last coming range like, you And last in where So look it Epicel. actually, on million 'XX, run to was year, kind $X we $X-plus

actually certainly that So our is And a Epicel grow on number. rate number. we $XX reasonable million exit think it's really to

rate if to exit and prior And over XX% we more we point kind more So is generally of grew starting COVID range. $X last that XX% assume million. grew like even and the year, Epicel, you in

expectation price our had So part Epicel again a perspective, a is biopsies. year strong do the we can assume, terms call reasonable in take low of And voice. it's obviously higher But importantly, we're from increases We price. from it, quarter-to-quarter. double-digit on that growth. And vary a share to We of in increase seeing of QX certainly full think equation Epicel.

reasonable to which certainly to lower double than on it's exit the than digits, lower relative would last low So rate I be years and pre-COVID Epicel. from expect, think, year

there, you can So quarter-to-quarter. from start. But a full a we year vary obviously, know good perspective from a that pretty to think well, seasonality that's as perspective, place probably

starting million assume example, a double to for for million, I think, digit range, So example. probably of the is or double-digit you scenario it point $XX good that, kind $XX if low is, call

obviously number, let early million launch, in numbers. range. it's in And to still quarterly the in NexoBrid $X alone that absolute the would million clearly, the very predict difficult So $X NexoBrid that to scenario, be

the still on few and have and a not weeks specific given Obviously, in a month that's in the throughout to year date rather we the progression We few kind few But a expect -- NexoBrid. -- in weeks than would any a quarter guidance launch. XXXX, of difficult.

bit vary we can Epicel quarter-to-quarter. again, from a know So as

it's continue build NexoBrid safe during I to will think assume to the year. that

will be bring Epicel seasonality MACI volatility. there different a just back, So assume But typical again, quarterly as materially NexoBrid. of anything and it I degree certainly in to a wouldn't on

Ryan Zimmerman

on pretty Maybe rolled of NexoBrid, people get think I were here. appreciative. to ask would hoping just very it quickly It's kind

kind But clearly, You're a to how that the far kind many Talk sites couple NexoBrid of seeing from the wasn't. early order interest kind process of you of going. so do of launch? from have if this you're think similar is there how about fourth level a what I us wouldn't mean, guiding about the adoption to the of weeks the quarter. you of early

Dominick C. Colangelo

surgeons start research have -- then others keep the the and burn can we a of done Ryan, a about -- there level as But from independent Obviously, I that. this doubt NexoBrid. to market job referenced, centers, onboarding Joe or that the no from is the those of of There's in dynamics high mean, work great continue burn sort distribution of is interest Nick. in it's kind whether talk I'll done, of on of and team you our -- about terms has centers. system. perspective, our adding

interruption respect for making all to it the of to available, process. there last put able process And farther With delay orders. with kind an centers going that a become process many hold, were obviously. well, And when the to sort and some along, centers really on start we're of things is kind was obviously, where reengagement had they of of the really other that out was initial that those finish onboarding product did

we've care as for great. Those support And to what surgeons' removal feedback when great done been sure decades said, patient outcomes make things The changing you're treatments. burn making the Importantly, protocols, progress. term, always the applications last we for we obviously, The great. several eschar surgeons their cetera. et importantly, take this, terms the take of long initial time, and over of about been in but the care have great think has we have standard

we'd we where that of we of be sort think making thought progress we expect. So would the and kind we're

Joseph Mara

NexoBrid well side. little as Yes. to maybe add on just a And bit on the

has metrics as So very the been feedback to been strong Nick The clinical very positive. first, have start. obviously, said,

So those are great signals.

a consists again, which early And we're NexoBrid very than the specialty is to couple I in a just the different inventory. place to of is launch think And out, multiple reminder, we then that's just important Epicel. distribution as is distribution distributors. kind a the have point of understand, XPL in things it manages that of our on and network

Some multiple XPL. order recognize when distributors we and revenue have locations, specialty from those our

is like that of kind channel, -- typically if you part with one the their and likely then at from the burn for of those centers. some products the they second centers order work The hospitals most will, different

So when impact they to level additional remember SCs from and each order, which lastly, of hospitals quarterly inventory, orders important vary and to drives will then that an our it's then the some our revenue. And leads quarter can that or both the SCs impact. keep

kind as of again, that So the QX, briefly, remember, availability if quarter. just QX, you in we was you couple the very in about late of -- quarters think commercially first of launch,

and kind ordering a really channel in where SDs kind the and ordering the market, we didn't start in get So treating from SDs essentially the QX, quarter et from of that into start it's the for of was market hospitals QX. perspective and cetera. patients That's

it's process seen even lot the as burn were the in we've hospitals of generally, things -- that with more more the sorry, of P&T KOLs some what And NexoBrid, I year. were surgeon farther along when the think last were that familiar is a disrupted positioned centers as well burn

some in So that that leads was hospitals. stocking as essentially initial to anticipated,

working then to at lead QX, patients. same into of reorders. centers ones mentioned, get Now And that top these some working that use that challenges on can continued the the some use of hospitals already We're add burn new time, as ordered, some team of to start through is seeing on seeing as centers. have those we inventory administrative the the and at to Nick we're

going won't still exactly data. history particularly Epicel, few ordering for and patterns and I lastly, which until like launch. dynamics weeks SD think we this launch, the know X some unlike it's history MACI of these the both kind at normalize time in again, quarter. have would And take what in we again, say, in quarter we look the a play was of kind out, And and to FD at I the the QX. left point as in later get We early have So of orders the to anticipated, hospitals, and

there's still so of I say. range a And would outcomes,

Operator

question next Kratky with from comes Partners. Leerink our Mike

Michael Kratky

traction there's are how can population mean pent-up -- speak MACI sense how but we'll approval? you're demand doing currently about from not you using get you Can arthroscopic you presently, get quickly have that you the get once in do target to thinking implants arthroscopic surgeons approval? you serine start new the I once

Dominick C. Colangelo

our market. Mike, Obviously, of as MACI largest we size. reasons is will for this a restorative segment to Yes. targets really excited we're the the repair for the arthroscopic It's procedure we've Arthro about these Nick. condyle the described. said, of cartilage certain addressable It be femoral only defects

the couple significant and instruments administration the say been to surgeons human since generally cetera. out to as going of an method it's is the the of Obviously, be just a approved this from very And the customer I'll through dozen for point this with been think there to et But are talking we meaningful has surgeons of be voice labs, have So us exposed additional we we study, to forward. working new who move at trainings, surgeons. not great. we factor can't enthusiasm

make So they're would be really would right about that I I that with those if would as expect excited point translate it it. And who last the aren't these for -- addressable majority just those of that, look market. are of that done arthroscopically things microfracture, chondroplasty, procedures at the up it's now, the repair the right market, will vast are surgeons, now. And familiar whether to repair cartilage our cartilage majority you

nothing repair for surgeons clinical right cartilage the they has the is that in terms kind procedures. currently do wheelhouse their of those in has. there this So MACI out of that And outcomes how there's

going So be powerful that to for as combination we think we move very forward. is us

Michael Kratky

is appreciate follow-up. getting as in as the arthroscopic available? that ultimately a it Is end lead just the rate maybe time there. to I you conversion more reasonable could And Yes, an as think color that implants done just improvement really Got to up it. then over get approval, that

Dominick C. Colangelo

one, medical outcomes. And something better that think post-surgical Yes. launch and a to what our actually believe Well, is pain, product there's procedure There's that that would a we I supports the expects that less and faster that number affairs we'll we from certainly surgeons to be obviously, everybody invasive -- perspective, data less expect on as there and postoperative generating aesthetic recoveries. believe be be the with soon case. focused as we

I that sort much thinking. in yes, So very we're what think line with is of

Operator

Truist question Securities. comes with next Newitter from Our Richard

Samuel Brodovsky

it's Sorry, actually on. Sam

us Just in of there impacting revenue? any as we first arthroscopic one. about for be XXXX should well? through price thinking changes dynamic On the price MACI, And any And can that and you from walk just then impact XXXX? sort how

Dominick C. Colangelo

Yes. Nick. is Sam, this

MACI's product will about or annual With surgeon under yes, MACI, arthroscopic a obviously is So increases change That reimbursed an whether do arthrotomy we so code. year take the that not mini arthroscopic to as procedure. -- sort typically a spoken a for midyear MACI. taken we've itself We've expect pricing J respect to MACI well. a before in this delivers We, price course, routinely of price of increase.

the So it. The impact that same. won't CPT is codes

and a procedure. This the the for disposable do So surgeon same charge do anticipate set charging. We instruments, will instruments. we will expect for be of to those the for be reimbursement the

kits filings costs potentially generate some revenue is offset driver biopsy financial MACI expect the see, revenue a implant these really, main that our for you reimbursement our the the company item like time. much we some over there's instruments other But for line will So where and the itself. can in that

Samuel Brodovsky

touch quarterly you run on for Can really that just thanks the all insight you're color sort you I have. more product this Great. really give us can And want helpful. did visibility and earlier. little confident to have more a Epicel, through so That a the into just was the detailed little volatility the year rate given into again? then of why

Dominick C. Colangelo

I'll in. chime Yes, and start Joe can

than And should kind visibility high it's and obviously. I sort now, returning. instance, over essentially referenced a assume -- And that have, share customer markets start MACI, kind it back good we say voice have been Epicel more think that. we've into But would to ever. of a I given run larger now The got X we assuming little prepared for remarks that to the was but would say double-digit has of just growth I always that some the sort but Joe that, COVID, routinely We $X-plus things I kind say, in during of place we of low even of like it facility, we quarters highest routinely kind variable year a of respect communicated, past probably that rate. for largest single-digit had mean, issues. to less been more again, place a the levels outperformed its Epicel. with historically pre-COVID, safe -- of at kind And related, their start. of of get resolved other with million seen to Epicel with back dynamics not to always not our that It's the normalized. an

that so kind And of of all normalized. is

in were we of sort into back of place kind we're that years. so prior from And

as we biopsy create quarter, had year And earlier. obviously, when know strength the discussed in fourth did the going we quarter we to so we like into that's again,

kind share we're feeling voice. a that we good it. hospitals for of than about calls, all impact. last all more Epicel impact on we larger about talked said It in So And We're continues as and having we of pretty of and earlier in previously we yes, again, from expected year had to that. an pull-through it along were the an starting of have middle

Joseph Mara

Yes.

add reiterate bit, in it exited versus 'XX. is think kind little to where around I grew guidance, of of Epicel But question add, just it the cetera. Just earlier Sam, it to into ties important recognize to et a or meaningfully seasonality kind

years, in little a look last we it quarters of of to at calendar tough was $X bit but it's $X couple to running the was range. it know 'XX, $Xs high just you million. the Again, of that if kind So million use million

to were. Now lines we're components there. more up think about of above And $X that's million. a where kind just again, we historically XX% as I we multiple basis, reiterate, on kind of than mean, which growth full there's year growth, to also

So earlier, with footprint But as well. be bit voice. said there's can there the some to we I price and also, as think of and share see the we're a signs that to of starting a volume a component larger better

think on scenario care, that's referenced products, you and in on call I as mean were about, last I within can double-digit be So but guidance again, low burn our there shifts one that's the growth it, Epicel. one we And franchise where the below year.

into So that's reasonable in a expectation I how expectation. certainly think Again, the going certainly we year. it get could we terms think there, of that's quarter-to-quarter a reasonable but vary

Operator

Our from George with next Sellers Stephens. comes question

George Sellers

to related improvement of for guidance. shift curious bit what's delivery? assumed does just that terms arthroscopic assume margin what the of up? commercializing price ramping versus And and investment to in to a also gears by the Epicel driven Maybe little NexoBrid then sort I'm

Joseph Mara

the for Yes. thanks question. George,

So team. just the little sure that of make about and kind bit guidance the some we talk revenue I'll a of hit from

on around we're high as year XXs last XX%. adjusted ended -- gross be we basis can of improvement expecting from last we XX% We On So a XX. in year. that talked to EBITDA, year about, margin think number we this full year

I'd comment remarks. there. point it's off, But I prepared the would the out, important progression about say to kind just you and about also did think quarterly that trends think my First in guidance, I as of

and on QX and ends works, So we end of improving year, often the on then of business whatnot, seasonality up end. the way QX higher kind kind ends being kind which throughout typically is being margins our see of up the low the some of obviously the particularly

say, in basis can improvement the I and on So with to you the similar trajectory really a the economic assume and something would and takes be there's going puts quarters. probably piece reference year-over-year last a in progression, and year's

driving what's say about, kind OpEx and of on the the mid-XXs. improvement, last of it, guess margin I we on terms there, talk call I did thing before of the would kind go -- In side, I just

perspective, think from And XXX it's perspective. we've an OpEx things mentioned I investment the about. talking from an been I

to to some there for are spend commercial There's to a make want instruments success. sure up Arthro set make is the sure we certainly, perspective So from kind of ready. ready get

continue priority is modest, but year life NexoBrid to management So that this probably things things make track. And investment then sure of the that sure angle they're to to things cycle more like investments, make it's and other from successful. like a just or clearly kind

our our areas. last we leverage manage year, at broadly those the our we this growth driven being And level is than certainly line level. that. a investment and growth want So that that's remain We did make the year. high by top that Certainly, lower to OpEx sustained plan certainly at a sure

so helps from we're some But we're there's perspective. think of And here going overall business as a of through. through also at flow the if about, kind increases our terms to certainly, take question, talked that gross perspective, of margin that certainly I some manage into to your the what can in of then In fits kind leverage flows gross just level profile you obviously, NexoBrid margin, that, margin we the we that margin helpful. see again, that's starting to lower costs natural to a in of kind a as from revenue, price, see

talked that of line. the also the EBITDA was kind But if much the in XX% range. talk QX is of also terms margin, I that about see at about gross strong into last full remarks. in year, in -- pull-through both pull-through how we you lastly, then look And in adjusted dropped QX bottom year, Like can line you really prepared and

needed this think kind we're something be focused year year. that's last to I maintaining and So where of on it

George Sellers

I helpful all Okay. detail. That's color. that really appreciate

MACI You touched angle. on

XXXX study of think items? we How that Just in close should about beyond. what XXXX? investments we sort clinical to curious XX% also do margins for and in launching adjusted of that trial? the those reconcile talked then you've terms And with about initiating clinical getting EBITDA And X in

Dominick C. Colangelo

Nick. George, Yes. it's

has As always longer-term will study knee, sort and it, It biotech SUMMIT couple MACI about, to study that very be included in we've or of planned not a been study. for much up study was will given. we've projections standards. the call a enroll. is take the is sort large of This in this around pharma talked of XXX years pivotal patients. the That It like the somewhere, by

study. million kind of of single-digit kind dollars it's So

again, sort it's, overall of so our compared and not And it's that OpEx significant. investment, to really

Operator

from with comes question next Jeffrey Cohen Our Ladenburg.

Jeffrey Cohen

ones me. of Couple quick from

when might Arthro population So XX% do think about there? the surgeon as about think? X,XXX equate certainly there's X,XXX, from TAM TAM? out levers we the you to expanding Is that how to overall other when that we out talk greater in a Or MACI some

Dominick C. Colangelo

Yes.

our condyle we when MACI's of about will clearly, patient get do patella at we condyle talked femoral you we've go-to defects business lower. deeper a is X or X square to TAM, on And us arthroscopic there. and femoral knee, other as So penetration areas these just there allow on the product penetration to think in the larger but the centimeter XX,XXX rate have in look defects previously, MACI our

So I $X opportunity plus. for move for expansion market penetration addressable mentioned patients year. MACI in when play. per us deeper eligible with ankle into and addressable prepared market. MACI into for Arthro where that's as XX,XXX it's about occurs And really The of billion of joints, TAM MACI comes to billion my $X remarks, you the around a about that's other sort existing

Jeffrey Cohen

a million cash for $XX would talk cash with any be it. facility, strong could little free Got some cash? thoughts that then Any I Okay. first, flow. that you And QX thoughts on know about lastly, but the portion there? bit of of

Joseph Mara

Yes.

a So about from perspective. year I of we pretty talked think strong flow a kind cash

I end seeing higher at started, think than a great to the we it was started place even building. the year we as

kind to capital to the kind sort of of But as we I more self-fund that. think this where I to cash or is and you're building. more cash year also going of the I our continue substantial kind to allocated new remarks, mean, additional prepared of about talked some expect of see in generate

think as you XXXX. So cash flow that's about probably I say, the the would in key dynamic,

Operator

Our next question comes from Swayampakula HCW. Ramakanth with

Swayampakula Ramakanth

just most ago, about Epicel. of remember quick but give the it. centers And how product years quite But you're the dynamics what centers a how for how special I but sure and year, talk through answered, about now year. and to through have Joe had what questions with have Nick been able X.X a even not through my specialty question NexoBrid, I seen Just listened are 'XX, we guidance over to and of regarding folks think to to moves even talked you had like beyond? not Epicel, just I Joe, also, the

since similar probably learnings you what will experienced we dynamics? to dynamics with Or should commercialize have Epicel, you had earlier NexoBrid with had decent than to how Epicel? So expect some get

Dominick C. Colangelo

is you with around that to in population patient had significant per year low little outperform why COVID usually we pretty is if that. a out high bit. of it typically more Epicel Epicel parse and try the single digit you're So seen or of that for we again, historically sort bounce can terms treatments less historically just a disruptions right? or treatment revenue, have that of that's of starting double just treating, few average And is safe seen when said before digits a variability kind RK, have ground out typically that -- matter really Yes. and the smaller I'll we a

treatment. more to at With addressable of of NexoBrid XX,XXX, So it's believe, of the NexoBrid, really of more times are the the we funnel, did sort really of course, for year you're market there's kind multiple XX,XXX patients, kind top of back previously. out what where we patients hospitalized reverting playing eligible each

around -- And yes, the get you talking hospital distributor, of as Joe specialty dynamics was sort so stocking. once initial through, stocking

normalized base of NexoBrid said of see Epicel variability You help revenues kind you over of time. any -- we've that with has then more protocols, it we routine as customer long more time a grow you a kind of expect, dampen that mature or would have kind that would treatment as for will kind

play in NexoBrid. out will has how around our of belief that excitement of nothing terms our and on So changed sort

Swayampakula Ramakanth

One quick question.

place is that So sense? in with NexoBrid do NexoBrid indicators think better you to that leading in but do a then with difficult you it's better Epicel, have obviously,

Dominick C. Colangelo

they the haven't more you'll those, routine get Well, do, start get Yes. and But see yes. a will we out. think we're We've so then we go yet. patients they targeting of XXX and number burn they of once their answer you yes. have again, now approvals to tiered of early those they more P&T definitely of we in kind certainly right, emerged reordering patterns. of see initial got of into in certain visibility this again, kind of those onboard sort make certain we patterns as of that terms have right order you penetration sort The And forecasting is sort about into can centers, centers. you just as Because, routine that see, and as Committee

Operator

closing I'm showing Nick to no back it further questions turn Colangelo like remarks. I'd at for time. now this to

Dominick C. Colangelo

financial and Okay. drive momentum years growth everyone, interest in in outstanding revenue had thank we XXXX we Obviously, Well, will launches expect product Vericel. and you, and strong and ahead. continued your results for that XXXX, in questions the business and profit core and in the continued our portfolio new

at our So day. again we you to have to great call. talking And next a thanks, forward look and

Operator

your concludes program. participation This in conference. today's Thank the you for

now may disconnect. You

Vericel (VCEL) 29 Feb 242023 Q4 Earnings call transcript