VCEL - Earnings call transcript Q1 2024

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to Vericel's First Quarter 2024 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 Eric Burns, Vericel's Vice President of Finance and Instore Relations.

Eric Burns

Thank you, operator. everyone. morning, Good

today's Officer, on Joe Vericel's and President Joining Colangelo; call and Executive Nick Officer, our Chief me are Chief Mara. Financial

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

addition, our copy highlights In section a be call Investor views call first as in of subsequent the our from of our all over as available quarter now results views presentation any that upon today's note of to release not financial are turn should our only date. forward-looking statements Relations Please of as press I and website. will represent today a the relied representing Nick. with and short

Dominick C. Colangelo

good results and our expectations begin highlights year. quarter XXXX first detailed as well Eric, review financial a today's as Q&A. provide opening for remainder to for financial the of you, of business call then our discussing morning, quarter Joe for the and Thank and more by guidance first call I'll will before our everyone. the

another that year total in profitability. top-tier a of quarter and the significant the continued growth momentum after record we quarter XXXX, great including with close through delivered entered quarter an and We deal of revenue outstanding momentum revenue first first growth as

which revenue. top top growth more of MACI was quarter in record revenue XX% increased XX% and the into line our Total Burn first more end With to $XX the Care significant translated strong revenue million, quarter than basis growth This as for company's of as adjusted continues record profit guidance than than range. generated XXX% to outpace last compared more which margin, increased revenue growth quarter the growth. than more and and EBITDA expansion first growth gross our points high profit XXX to margin we year growth above

the year revenue top guidance quarter the than quarter. above another first MACI the customer by strong quarter we're growing MACI Based to end increasing our was had we and for start year, biopsies. expand guidance range excellent million, to on $XX the base of strong to more was to MACI's driven which to XX% fundamentals in business million million. $XXX with $XXX our drive revenue the performance underlying growth full continue as surgeon

seasonally quarters, MACI highest we to the quarter highest launch had surgeon marketing While sales since making level the number the at very quarters last of only continue year, year, in high taking as any second continued the is growth. quarter of the the a quarter the first X teams both ever behind making the quarter lowest metrics of strong typically biopsies and our fourth and those building in a of last for on execute foundation biopsies

than with To the peer-to-peer quarter doubled the and tripled from in last and remains programs labs as end, and more of program number interest than training engagement MACI with surgeon that year. more overall attendance MACI compared high first

focus prospective a in the of surgeon highlighted Medicine strength quarter. Sports in driven were Arthro of excellent patellofemoral defects, The the of our is showed study MACI clinical for have Journal outcomes, level we for MACI's is as the defects federal treated long-term currently as penetration American rates MACI which both patients interest program. condyle high which by results where the in first study long-term highest of well This published

surgeons experience surgeon launch in on procedures. connection advance target expanding predominantly surgeons ] to our with base year. in continue that we're carbonate arthroscopic the of our of high quarter [ MACI prepare X,XXX where Based third Arthro In volumes through of launch, in activities, include perform Prelaunched the progress anticipated to from our commercial X,XXX to this

surgeon to continue over the be for expect biopsy achieve that base we growth a and larger years XX% more date, drivers adoption to than target important penetration growth of will MACI meaning time this in home. surgeon

of In MACI target the market X/X comprise cartilage the significant per smaller company. defects and of upside article take segment that addition, that for for these instruments will billion our MACI patients year believe representing approximately provide or greater addressable We the addressable market, a MACI. opportunity Arthro growth of largest XX,XXX share procedures $X

believe largest remain the with beyond. We represent MACI. and defects in the to development We Ankle indication defect cartilage initiate on the for Currently also study could $X continue advance the second to clinical in be XXXX. program potential significant Ankle in an MACI to the that treat track growth and billion next market opportunity addressable driver Ankle ankle for another a MACI decade MACI market estimated the in

our to franchise. care burn Turning

as over end our in meaningful the over than quarter representing growth market to delivered million increased $XX burn in the first quarter, share Epicel or above revenue Epicel grew dormant Epicel continues of revenue revenue for quarterly burn high quarter XX% another new the contribution range. $XX.X second from total accounts. the from was highest we quarter high voice our to revenue expanded First more million care revenue care guidance of with higher force Epicel. the of a as sales revenue to XX% and there benefit to ever a in

demand the in centers XX placed gained as progress to NexoBrid metrics. we underlying and than XX XX completed performance quarter, P&T more quarter Burn fee approximately of launch [ have respect burn continued during than an centers first P&T with centers have and order. submissions, ] center product end momentum had approval made the Through NexoBrid committee Committee significant more initial the indicators growth

at prior burn addition, remain center NexoBrid very patients of as NexoBrid, the treatment increase in engagement by furbcare Annual the the high number orders recent in clear quarter level of Burn units Meeting. the of burn the quarter. by strong clinical and growth with In was We the American events onboarding in the in portfolio an executed The with outcomes impact first a excellent treating pleased search that our from interest and expanded attendance Association patients and ordered significant demonstrated broader the in there performance. NexoBird surgeon Epicel feedback centers, number hospitals teams progress the at positive and versus and is significant sales and having in

well enable franchise growth to will factors in these the and to deliver foundation NexoBrid that strong the very place. believe in that company build a now for the company positioned sustained is high-growth in second XXXX, We

company positioned Joe. on new strength the contributions call growth the core product profit our quarter continued over portfolio revenue and based company strong and believe turn I'll and the Overall, and we of is delivered in expected XXXX high well for launches another the to now very the from our beyond.

Joseph Mara

our quarter. range with was Nick, Total prior our everyone. end million, Starting XX% our quarter morning, the to of to the MACI above burn for $XX.X representing the revenue which for revenue of total was guidance good growth first quarter over net year, Thanks, quarter. $XX.X for million, the the exceeded and guidance million, care revenue both XX% top which and results. increased XX% increased $XX.X

revenue million, for in prior increase was of revenue the revenue million, Epicel was the and revenue date. $X.X as represented was similar which dynamics which, specialty prior NexoBrid the XX% fourth significantly ] quarterly quarter as grew impact patterns quarter. $XX.X units to second versus as to results. underlying can versus noted, While hospital Epicel and anticipated, [ inventory hospital an ordering orders quarterly previously the well revenue year, distributor as highest

for at highest an margin million and incremental date. very first points or quarter gross basis the increase to to profit more more than Pull-through profit was Gross in company's first of XX% versus net of the XX%. than quarter strong $XX.X of revenue gross the XXX also prior year remained quarter the revenue,

quarter the to associated million employee instruments, in compared to and $XX.X under activities primarily MACI same period construction. for expenses development due headcount for the expenses and with $XX.X operating facility for the The new increase related in is million expense increased lease expenses was Total company's XXXX. arthroscopic that operating were

Net compared first share million $X.XX loss for per Non-GAAP adjusted EBITDA million for share EBITDA growth or the compared the adjusted $X.X to of XXXX. million increased $X.XX $X.X high per or outpace was continued revenue as million XX% revenue of or revenue net $X.X to quarter or quarter quarter to for the to our X% XXX% $X.X XXXX significantly of in net growth.

what P&L leverage lowest in This EBITDA and demonstrates the the margin our seasonally the for profile year, strong the quarter X,XXX of typically points top-tier approximately in profitability is company. increase clearly basis adjusted of

investments and first $X.X million of and and $XXX generated cash in million quarter debt. company the restricted the the flow cash, cash Finally, in quarter with no ended operating

increasing to year, our million strong our total to start After revenue financial or revenue guidance. $XXX XX% to are to full total very year to growth. guidance the Turning XX% a $XXX million we

quarter, the $XX.X MACI revenue to expect For million. approximately be we

in we higher revenue sequentially approximately For another rate NexoBrid Burn expect Care, run million Epicel quarter the XXXX above second our be strong $XX quarter total with and to quarterly revenue.

revenue Burn second will and the company quarter our as XX-month growth guidance, we to on across XX% top of line rate for total both above continue franchises. high Based Care drive be MACI, our trailing growth revenue

approximately XX% expect adjusted full approximately margin approximately the of to continue to expenses year, million. of $XXX be XX%, gross margin For we EBITDA operating and

adjusted profitability the EBITDA first be margin growth start XX% second in very margins year the to we and range strong margins. growth top expansion. -- For and the and in strong to company quarter significant expect gross similar The year had with a quarter quarter, line first a to

the the XX% sustained growth, a In bottom the and trailing growth on the addition, company's profile. financial line demonstrating revenue XX% top and in line to has enhance significantly growth company high as EBITDA the total XX-month delivered continue adjusted we basis,

strong year concludes in that well place is questions. in solid call has Overall, and in will the to the foundation we positioned years another ahead. for our now we XXXX prepared This open continued strong believe company the growth for and a remarks, very

Operator

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

Ryan Zimmerman

a of want Congrats here. a strong multi-part start on I questions ask manner. to couple in

do understand I guidance, NexoBrid me you you you it but level by the here, had and expect -- do of can't X things. could million beat that in $X million. to guidance $X this the range you -- I'm Joe, wrong still of expect that million is you exactly correct to Do before second if on NexoBrid the million. to want of component $X $X or I think sales year? question what about mentioned million still And First, I $X was, remember sales

And year? -- moving think a you where Epicel million, you're I the X is talk of kind and if you then up just back kind that holding for franchises, for guidance so about MACI of about $X to the guidance You question. split the have second between us between

Joseph Mara

right. Well, and start for I'll those question. thanks the with All

So a kind on I thinking basis. may start talk of the full a burn little bit on guidance the about then year and care we're total how

terms million. year of total in our a we So in to guidance strong million to $XXX the the start $XXX raising QX. We're to guide, very had

look there, you quarter. at focus, We've so where up our the $XXX into we're if $XXX midpoint million. million coming So increased the million, $X is which midpoint our was to that

of MACI. to mix through kind of of I side and to on start, the is terms increase assume In $X would that franchises the on kind MACI's million the flows

it terms was QX expectations in and ahead our in guidance. MACI, $X Given million roughly of

are metrics strong very into Our QX.

the the estimate in high had and to framework But quarter, the million. point relative I we last for starting which, gave referenced MACI think, which was the scenarios. there's again, we teens, $XXX gave, I multiple

well, I you and range. $XXX up ], range million about it, million in you to call [ million comes picks the our to will, case, if think of if high-teens $XXX can assume as you that think kind up $XXX base

of The total. on would to and in kind your question. around the remaining you that $XXX couple of Care, Burn things $XX gets million million stay A

expectation vary it's very not you a So were well It about if don't the quarter, adjust adjust after had the where share doing our care then we voice. typically of can last first quite first into our first of of one, of did going Care year. from don't think portfolio and a situation we similar had where We clearly, adjust rate so higher kind is benefiting We burn Epicel still the the guidance, run quarter. the and We quarter basis. particularly quarterly although year that. a it ahead on we Burn after just rather vary,

And difficult launch what it's to exactly looks predict I still the would shape uptake the say NexoBrid curve like. of

in it's So still early year the there.

full is still that above a recognize XX% at guidance nearly Burn Care total, basis. holding $XX to of well important of well company It at kind on is kind million, in So there. this year the growth the above

expectations Burn had strong we the Care very franchises. have we quarter both a side on high So a for a perspective we of in still -- as from very well. have profitability course, first And the start

balance terms to-date obviously, of for of on quarter and mix, the question the year, start Epicel had a second its of your great on say, In million XX with the kind you will, I the would nearly highest its to own. if year

as got probably And kind on burn we that the total range Epicel think and I $XX That a scenarios. referenced If, called to the example, of call million run us we be, maintained it, To closer of million numbers that so Burn balance on point, last $X of the, million-ish call higher what think for in number throughout range about in of your the $XX Care, would there's $XX year NexoBrid. start and $X Epicel quarter I in you it, we million year. care. on for gets balance to the million the a rate where

think I it's still in Again, the early year.

a But think us bit. scenarios I XX%. little there's both to products could think get I multiple to shift

point, at contribute, rate. but exactly year. still to at a is clearly, this to predict So expect products run like, And what both build higher operating NexoBrid looks a I in difficult it's think is Epicel but it we

Ryan Zimmerman

helpful, No, Joe. all Yes. appreciate that's very color. the I

want bit. it to away -- nice MACI On I to MACI and little see. a I not of should Arthro not from about And question, MACI, profitability, launch take Second ask say. to again, anything the was

can about maybe two, about should time had that you over As about penetration mean the then expense your that you my talked an you segment expanding today. standpoint. force? we you thinking from doctors you X,XXX I are think broader about estimates. of And target, by operating I docs one, think XX% sales have

XX%? call XX% higher, it, just driving it's X,XXX curious So Why not docs, not of what's Why I'm kind X,XXX is so. thinking? why more. that or

Dominick C. Colangelo

Ryan, Nick. this is

add expansion, we discussed throw of all, will a thousand sales force first couple it we I the So think of XX [ continue targets on of -- without that territories. launch not ECR this ] absorb realign year be last we in is high-volume territories know, as is increase territories. disruptive. having over of of as instance, That's that sort think territory for What which, the do to before can adding you volumes that managers to we've can something to well we will some development had,

who [ then really in And surgeons new or to ] can arthroscopic specialists me, CRT help who MACI are general.

And in, maybe. dozen folks a it, all half dozen call to a so

So talk number for X,XXX uptake. will up cumulatively to expansion, increased we that The we with of up XX% higher to, but kind got force. reference sort XXXX the think of significant XX% it, from was X,XXX know, time we you to very Arthro as XX% aid the of and a obviously surgeons dramatically kind we of one but sales that than the about, biopsies MACI year, with roughly MACI that not launched we historically, the And call penetration. and then at increasing it XXXX the pretty targets, was

never got target of X,XXX. universe. to with terminal of Obviously, we increased a then penetration So we the size initial sort sort rate

expand approaching strongly, grow to continue penetration, we'll again. XX% and We

to rate. opportunities never it it above And business. adoption penetration the We surging we where, had go it's ultimately, drive, of But to to our the the will point view, enough expand got yes, reason in continued ultimate So not again, XX%. other just have no growth. gotten can't again, before an point sort there's matured is and

Ryan Zimmerman

Appreciate color. the

Operator

Securities. Brodovsky with Truist Sam next comes The question from

Samuel Brodovsky

on want we solid and side, I Congrats said to great to right into you number. bit, to similar expect profit think I dig a them did XQ? margins, little profit you start hear Joe, that I the should be XQ did

Joseph Mara

Yes.

Samuel Brodovsky

XX% year that. and the And off when then or can keeping you mind quarter at presumably year XX% from just lowest the taking me, the about lowest sort for of the guide step margin and XX% that hopefully, is gross presumably excuse of your in

give about you're up that Just about what gross moving and range confidence or thinking margin potentially to how for EBITDA. that can you think

Joseph Mara

certainly great I a kind obviously, appreciate of profitability No, start Yes. mean, perspective. from I the a question.

quite top over in quarters, profitability bit, margin As about the talking last is line our growth, we've particular been also few our a driving kind of the and focus metrics. but expansion

gross adjusted of So really in I from perspective, both of you think an mid-teens your kind being was EBITDA of trends will. a the bit point, to ahead obviously, and in high QX, the XXs. kind expectations, That strong if margin margin

the mean think about [ strong a ] I I the ebb bit. would and certainly is to And can as little we up very think start. obviously a still of year, is baseline right balance say, QX the that flow I

and the full a can year, to X% that expand to were to of X.X%, prior mid- You look from XX% at if XXs, on gross we range. kind last expect to you year year high margin basis, would

So the again, a and approximate think can little of your in potentially bit I ebb potential, in, to start, think the good it question, we of throughout and think kind position we're that numbers. quarter on and part are strong kind based just key the But a to be these higher initial have flow is, of guidance, we're which X certainly year. given I but I than kind a of

line margin to them focus, want and numbers updated they are continue continue yet, the we haven't both in a to of be and gross bottom that improve. but these We kind to the

of very was over strong And I of on we pull-through XX%, think well in pull-through, gross at the look side piece revenue incremental the that margin the kind XX%. quarter, which the above the other kind is

throughout I on a But the side. that. be we'll strong higher and kind we're you gross of margin if monitor kind So a of think to quarters the start particularly good side, good position year, and expect the will, in on

Samuel Brodovsky

helpful. where to Great. the of centers ask company a half bit then providing almost just of higher-level about do a the extent. into is shifting wanted just of think the to as 'XX? shift guidance. fully about good XXXX, But already be obviously, And not in That's to have without we question going as heading certain utilization? you super onboarded fully there, in NexoBrid. we I to positioned we a you and XXXX think think go a then about driving portion Should being surgeon to in most, ready changing the centers how target funnel if can to sales strategy And

Dominick C. Colangelo

this Nick. take I'll is Sam, that one.

for submissions, alluded importantly, approvals, sort you sort So of attended or interest terms market you on see care KPIs community. as orders done of surgeon burn burn performing Obviously, of checks outcomes for patient I meeting high started for Association and initial to, center anyone the NexoBrid, using feedback the the the P&T or participated from product. again, on super who product those American think the instance, well to of need the Burn who's in sort most excellent in have

of think get the build as on, drum as been we've beating we sort So processes. of kind you this year is the through a

approved of the the pretty process where the well vast PT being approved. of We the year completed the it's to and in submissions expect good place by or we'll think be industry. end I think a would been hopefully in have we yes, majority understood of in

there still we and it. that through procedures are you be and the hospitals the alluded to committee able then P&T other get order product get And processes need to, as process, utilizing to start once to through

pleased centers sort level the on at we're that, focused you that with performance. the might and KPIs we're imagine, and as So hyper of running, up pretty getting and of

a thing changing excision say, know, decades. topically care surgeons the biologic. just from would standard applied for I as same procedure you a to doing I mean, been has Lastly, surgical of the

in for go so the we think not long-term NexoBrid different And the you process. at paces changed certainly through adoption, but view just I again, different moves have our hospitals,

Operator

Our next Sellers Inc. question comes Stephens, from George with

George Sellers

beat market on well. effect looks And quarter. the on what performed? on from of you Epicel. just sort potentially quarter? if Maybe like, some that? color halo I'm things Congrats a drove give NexoBrid, sizes like Maybe if some the What driver how as in significant also underlying additional the perspective firm the was could that your curious the on impact,

Dominick C. Colangelo

Nick. it's George,

So just the starting with market. care burn

around normal would body the talked large have we surface a And As to bit. XX%-plus kind about, I area to we've do of market access burns. was market little say be data down

just have wasn't So that my I than do to centers be, about driving now. as talked certainly significant to to burn we was before, contribution We're we saw Epicel as alluded larger used really certainly in performance. It a comments, more we footprint in expect we've launch additional for formerly Epicel move dormant for that halo seeing calling new an that that or I think through on Epicel. on revenue accounts that we're we're phase kind we is so the more And for NexoBird. as pull-through a NexoBrid, of initial a effect we

George Sellers

specialty really give That's if will what terms are the orders of we you're about inventory distributor how and additional think the And maybe that should then that maybe where on the some could actual seeing how utilization. see to how helpful. just the flow and this NexoBrid, as compares about you to in XX inventory now think on P&L curious impacts, Okay. we us year, really those of starting are cadence centers levels and detail I'm then of some rest through that

Joseph Mara

Yes.

I'll So that Joe. George, this is one. take

talked about if on the this during you about quarter, revenue So of last kind we range. the XXX,XXX ended expect quarter, similar last about kind ] [ revenue to up a and of similar kind about ]. think XXX we of We [ call, NexoBrid

strength the level continue very the as I in part of prepared your to KPIs there. think in strong as center question be it's talked Nick important, his about remarks, of kind

in the distributors hospital of the increasing we I significant to increases increase quarter. organ think a from our specialty in centers -- number saw patients also more treated orders and importantly, significantly

revenue as think of kind on, dynamic. launch of I much we an I this particularly our So is kind addition think kind trends, in early think about of to as early that, as

in we of the back, first market, of kind QX If destocking. think last you quarter had some the year,

amount quarter reminder, on depending particularly And inventory went where et market was get just up. patterns, a their a say quarter the and inventory product our of ordering we what as to recognize the our our can we in distributors were the to it the recognize on starting their distributors really will, And stocking, again, level. SDs you fair came again lower there first during to order, revenue that levels, down. And of managed hospital the quarter orders and specialty if XPL, cetera. second The kind hospital a means the where happened revenue in vary they I'd when But essentially, then early our QX, orders specialty from to specialty what our each adopters. distributors order shelves, this is

And kind see kind to different progress, launches of you do often levels. as of the inventory distributors will get

gates. the really a So I up think and really to of the come out as bit continue additional to metrics also centers, utilization we about going it's as add progress choppy as patients, treat see those comfortable. be little anticipated, I centers become But more launch, to additional think that throughout continuing

the ordering, lower half and of certainly kind should But and be if back be be to you there's go the forward, and this an as it's hospital year, particularly inventory on will, think generally, in component, going revenue to dynamics I side. we going we driven a as through by patient of into next really element move utilization So this.

Operator

Wainwright. The comes next Swayampakula question from H.C. with

Swayampakula Ramakanth

couple questions. of A quick

X,XXX. of cartilage I'm some your and So, targeted start in we both Nick, from to the what injuries, surgeons And on the work most continues of the repair X,XXX to types surgeons of understand from sort this of just in the increase as trying as could also team the relative MACI authro. or surgeons, anticipation seeing increase Arthro. to right, business benefit of the cartilage

Dominick C. Colangelo

Yes.

to address cartilage defects is So product as MACI MACI Arthro does. current our going

of discussed, up or combine, the part a in instruments patients which makes smaller we've defects largest femoral year. on to targeted that market the the addressable the As XX,XXX is

allows larger candyle. So to go-to us [indiscernible] while a those on MACI is way the defects smaller telegeneral administer a have defects, preferred certainly product this the candyle, on to

allow think, part penetration obviously, to greater that So will largest of the the we on segment. the into mentioned have as us, call, I

impact have is an increased option. delivery basically when the So arthroscopic presumably procedures we

Swayampakula Ramakanth

Perfect. word, process for just commercialization, And sure I'm the not commercialization then NexoBrid. the understand it's trying to right

and are So trend. you But get I P&T before and time a that to they procedures are order? approval get early, between call it are know once seeing so to -- the I the still that product, initial line lag what's know between done the saying approval need additional currently the it's centers you order but there some what as time

Dominick C. Colangelo

Yes.

order able quicker So time. what what there that and a gets -- before in their that certainly, the is to is on to that it side called system. into it be the be pharmacy take differs get of which cases, essentially. there use the bit all by a some be and hospital to could are products Epic can quite can they product certain take And some system, that weeks months to In

issue. helping on happen days is an of cases. certain or said, from kind centers to have they it months process obviously varies. we focused it that -- But weeks I Like are navigate So can to be really in

to So of processes of those some hospitals have to through procedures really go ordering and product they're that kind before in start the patients. of different are able just treatment couple

Swayampakula Ramakanth

So. me. One question last for

bit think NexoBrid? year-to-year quite similar what a to trend will noticed Epicel, we a Epicel -- mean, had in smaller and [ said had for we we with we bit seen know see predict you Just franchise, NexoBrid Epicel. business at least I grow from I could comments, historically public as with a how time. do [Lorence this be growth of Are ] quarter-to-quarter that within always will going you than how I cannot Or

Dominick C. Colangelo

Well, it, ARK would surviving that only always we've is hospitalized earned the really year year. about XXX call patients it to say Epicel, the is each positioned XXX I with way each patients that you XX,XXX think if

going to leads initial what the got variability quarters and X that's basis again, you've it board obviously, centers XX,XXX time in variability. Epicel. where less view, quarters see NexoBrid, patients at got, these are once have and on that because With paces, eligible ramps numbers, get or dynamics in of treatment small become overall you've franchise very So the kind our should consistent ordering through coming and on inventory pattern for different over a up NexoBrid you you year more as

Joseph Mara

thinking just of the more would just just I'd add term to we're to about And and a near just year, of Yes. just kind comments in of as I -- add Joe, the that. kind couple

Epicel vary, baseline but quarter. we think kind to from low run the of We now quarters. of to really perspective. last kind sort have with -- over seen well in in rate think mid. strength on Obviously, exit I It's rate over we're a rate. of that ahead first quarterly an year in like certainly can't kind expecting that. some came a of to of the the several came plan We'd you into run year's We obviously, Epicel can grow

or year we rates, I these at came that certainly have and expectation will mid-Xs. we say said, that -- into an higher the I stay X kind plus of think it can

kind the second we well. we're variability is did as $X thinking So of million $XX of the rest that million, be I think there, reasonable the year, expectation. that when There but And certainly quarter, $XX think I you're think around Epicel could expect certainly about within million. that's to for range we I how kind a similarly, would be thinking Epicel of some about plus which in

sequentially build kind next close I would NexoBrid continue sort And the grow. of over there Nick, to That's we year. and certainly we So into as expectation to could would variability. time, out the year with be and of expect agree

Operator

is with The from next question Partners. Leerink Mike Kratky

Michael Kratky

on This on is Mike. Brett for quarter. Congrats another great

You investments guys market into in think saw penetration operating 'XX of you then and the you strong about once existing obviously. market obviously, How in XQ should the XXXX. this And a pull-through 'XX, the arthroscopic approved. improvements while half 'XX both in the and durability second Ankle drive of or have leverage new we the

durability the the of operating impact So how leverage? is that going to

Joseph Mara

you're XQ but. I And XQ Yes, to yes. Yes. assume referring 'XX, 'XX,

level. great -- we the expansion, do talked call kind a our et a high, the think was earlier, P&L perspective to board, from I a on as pull-through quite about I very across is midterm quarter our of margin get kind but I year obviously, XX% place earlier, that side, plus so it, of I full first expectation for margin this sort of, expectation talked gross cetera. the through, to of while, think as margin year when on margins So gross at tracking in certainly, guidance is that could very is a on those kind good kind ebb a pull a basis, targets. or And get kind would you to within of about a look at to flow And XX%. and obviously, it say, year our of

cetera. important et find well. vendors, as from now processes, I couple as a move as across new that's years And about of the in gross we into I our well, thinking spend, going the way, right efforts pretty of where definitely to And our would facility be there's mean of next say within we a kind margin can a perspective efficiencies lot right in

think there. sort a lot to I work on of of of the focus of driving a So make sure side we're the kind right kind and gross margin lot of savings

the part question, need that investments on ankle some initiative. some there, referenced On the your are over make. I to But change quite costs well. for our expense talked to while Similarly mean, about next in operating way important be that target doesn't line kind but obviously, that bottom we of make P&L. perspective, that a its EBITDA of of trending we we've as toward Arthro MACI, mean, this an from development expectation few XX% kind adjusted there I years that side, will will a that's as the

kind I within the the it but line the sure top shows leverage the business, kind kind just starts of managing start but of a of So of of on operating focus with to making think P&L, particularly really lot we also scale. just growth, it as the rest

but the see continue and and to going but we I to focus, mean, leverage good So starts I great think across 'XX P&L. think we remain was a over think year, that's a and QX, that I think quarter, obviously, the we'll as a beyond, 'XX

Michael Kratky

I I more. to it. helpful. That's back guess want then go And Got X to Arthro.

out that and differences may thinking -- likely. You any then MACI couple to in new when How that thinking legacy we penetration And of existing about be how call difference target for MACI, to curve should should reps we've the of surgeons. if the for mentioned about those steepness XX be there's next curve the new be versus we outreach different X that those shape reps years? the they versus with what obviously, of seen

Dominick C. Colangelo

Yes.

So as adding, be I I will guess, profiles. different mentioned, of couple a we

biopsies arthroscopic the are one of of who of managers surgeries, cetera. at at there's number territory kind of kind can training So base. best spreading arthro et And is specialists kind for who and really of development be kind practices delivery then

you're reps be per it as again when wholesale really about you in XX new sales a of over targeted a the in -- on in so or X terms alluded I doesn't territory. call, of think easily the by require targets couple So or existing talking extra in to support Those an thousand sales territories functions, -- the force. the targets realignment a increase dozen could

I uptake, a can you When about segments. think you couple different of think about talk surgeon

have focus so where take basing imagine. ] [ users. parts a you that if We'd defects, option experience an now have lot condyle base more and an as Patels towards might user in a [ can of the on for procedures current there's So an need, amazon you've that option, less they can certainly they their the to is can very they ] expand quick they uptick treating on certain like using broadly start instance of and

biopsy time new because from months. have median who then also get the We he X implant surgeons and a roughly is to biopsy

There's always lag a time there.

have impact business prospective the there. no on be there'll a So

know will the invasively less it largest options you're again, an the of by and administered in great area a with and where offering defects. But surgeons basic differ well taking product outcomes segment. need number clinical So of the

are pretty could And CRC ]. quick so interested [ very in those a have for in you us uptake who

Operator

back question-and-answer closing to it for would Nick the now concludes remarks. Colangelo turn I like to This session.

Dominick C. Colangelo

Well, questions expect results to start Obviously, your interest a in and of for and to strong XXXX. deliver thanks, Vericel. year we full continued Okay. thanks, great operating the and company and everyone, in the another financial had year,

So we look forward day. to providing further updates on have great our next call, and a

Operator

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

You may now disconnect.

Vericel (VCEL) 8 May 242024 Q1 Earnings call transcript