ANIK - Earnings call transcript Q2 2022 | Anika Therapeutics, Inc.

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Operator

Good evening, ladies and gentlemen, and welcome to Anika's Second Quarter 2022 Earnings Conference Call. [Operator Instructions] I will now turn the call over to Mark Namaroff, Vice President of Investor Relations, ESG and Corporate Communications. Please proceed.

Mark Namaroff

Thank you, and good evening, everyone. Thank you for joining us for Anika's second quarter conference call and webcast.

are release and after Investor for is located www.anika.com press the close Relations the earnings slides at today PowerPoint market available as discussion QX today. was be the issued of website that Our will supplementary used the on our With the are call Dr. me on today Officer; Cheryl and Treasurer. Executive Levitz, Vice and Blanchard, President and President, Executive Mike Chief Chief Officer Financial to open Slide moment Please and the slide and take two. number refer a presentation

performance today are call forward-looking no information certain Act for and statements differ that also our to today. Before defined The affect future and our subject made the We statements should see achievements. performance. current recent statements certain these we our anticipated are begin, presented obligation filings understand factors in update materially uncertainties. the financial any data the more events as make future most company's please of that Please during XXXX. based about beliefs could constitute Securities forward-looking risk results Exchange statements actual from differ results, risks that and These or expectations statements to from on occur or could SEC

our we presented with financial performance. to an available Blanchard. financial with CEO, income gross the may the end slide our GAAP and even like now adjusted And results accordance adjusted considered measures. that or of business. the in earnings over of our I'd GAAP several addition of at results and way reconciliation the call per non-GAAP Cheryl? A are non-GAAP adjusted and quarter additional during most provide to viewing and and Dr. to deck Cheryl addition, adjusted non-GAAP an when turn believe of adjust reconciliation results measures -- press financial aspects GAAP understanding in But EBITDA, In measures, these used are the our operation measures, We in of call, adjusted they include measurements second net XXXX to which comparable financial of complete to release. presentation refer margin, adjusted GAAP share, more the provide which President

Cheryl Blanchard

turn Mark. thanks working We're full challenges on and Thanks even our progress the the our to three. through. us. execute through halfway the we're face Please and continued everyone, financial now, Slide macroeconomic objectives year strategy making for we to the of industry joining year Good strong evening, transformational is in the meet as that for

growth, by quarter elective OA certain The across grew second revenue driven solid remained a in Joint and industry. our X% procedures orthopedic Preservation Pain staffing X% Management, growth while X% top on with our headwind business line was as shortages Restoration

focused execution We to continue business. to on be in accelerate Preservation Joint our laser growth

happen robust uses commercial as distributor our excitement we hospital hybrid sales to right that weeks model and distributors. us During team energized feel can to with in customers, time, they about give portfolio our our Nashville the need win sales product held experienced At organization disruption, we the in-person the ago first independent we national ASC both and combined the that have opportunities growing and distributors. is hybrid mix The product and to the brings we settings. a few in some just sales generated the when U.S. our meeting great same with quarter, Anika's a we

in of of procedures. use healing knotted tissue tissue on soft Anika's deploys execution, a I'm and rotator knotless right preservation the of bring are during portfolio insertion broad to been a Rob board in and suture hospital on anchors the that fixation options performed. Lastly, The Anika now a increase new our pleased ankle, with hybrid sports of commercial portfolio a look the X-Twist platform sales further sliding our suture half of regions this in quarter, multiple to and to in One Fixation medicine provides is product system X-Spline the of VP soft to enter support single the received along quarter say systems. QX, great strategy year. technology, relative combination positions preferred Anika during already as cornerstone XXXX. led for to will in anchor of clearance to strong, Delp, System force also for much the U.S. mix release we X-Twist, team we're our system tape drive anchor growth products. including cuff the our joint surgeon's or soft streamline competitive affords product track portfolio, be the system, a establishing and has for new repair medicine our to ability tendon our expand and our be XXX(k) with The sports Achilles designed procedures, range preservation, repair settings for to to which accelerated our tissue Sales, easy fixation second support a shoulder as execute surgeons X-Twist in has work foot to we for presence on continued and variety X-Twist with focus The a and joint ASC in we market which, the where platform the unique and easier repair configurations. limited

During as within congresses the exposure also community increased. quarter, to industry surgeon story increase at we medical the education and and portfolio meetings orthopedic the activities continued and our product Anika to

effective products. introduce new focus strategic use have now a continue existing customers. Anika will in trained person be to for as We surgeons we our area safe products year-to-date and to new XXX This the on of and

say our that more Society using broadly. AOSSM, and our joint from Medicine, validation fractures received the and the for innovation provides Tactoset, American insufficiency of This award excited cutting-edge void bone external last with prestigious hardware in sports Sports Tactoset, ACE Orthopaedic innovation and month. platform award augmented strength to underscores independent value such a regenerative augmentation When preservation, for the anchors Cingal suture the quarter, for coveted pull-out Lastly, was suture the bone their anchor suture a from procedure with inferior I'm an filler osteoporotic soft Also society compared significant medicine Tactoset more anchor repair negatively or trial that twofold HA-enhanced outcomes, often of pull-out for augmentation, and clinical innovation a final patient increase in rotator alone. bone the cuff their strength to achieved help impact trial follow-up. may in surgeons confident of feel during a completing in example, can and to tissue quality Where complicate, milestone model there's repairs. the pilot last higher shown we the

is the viscosupplement reminder, injectable pilot OA pivotal pain design Cingal III a trial. this a today. to embarked to on over and in provide As countries Phase outside term and adequately for long our XX help the information Anika U.S. sold combination study steroid both necessary short relief

clinical Our is analyzing plan and fall. to readout team data we the do a the data, in

four Now on please turn for Slide pipeline. new an product update our to

expanding that past will differentiated and market will to a our and on revenue but calls, continues new with the acceleration continued regenerative the which space in year the planned product products. to gives the with for we're I'd of hardware right progress expand win development that $XXX beyond Anika's new value the mention products platform include portfolio runway. expansion the on product launches in Tactoset expansion to to that million us I've builds significant established new result and that augmentation addressable that in regenerative highlighted the Tactoset the Tactoset technology Our joint for by to franchise increase exciting preservation Anika our making market enable has insufficiency like in fracture remainder already of of franchise with well existing creating creation

Tactoset to the additions in portfolio and now indications are New development.

and for and regenerative cuff received In QX, shoulder focus on rotator limited sports that we driving shoulder in we're you'll preserving For track discussed previously release portfolio, soft growing bone for fixation, product earlier, this System three implants a Fixation sports with our tissue market XXX(k) NPD medicine, the new X-Twist I are our medicine recall repair. as imperatives products mentioned year. clearance

drive regenerative shoulder positioned the an innovative cuff which, billion offering synergy strength repair on build later providing for joint access system This further indication shoulder opportunities in rotator system submissions track will is for our rotator to are in growth more allowing portfolio, offering, repair recently year. of build us winning in the suture procedures even suture and this the next we implants setting, new represent anchor year growth beyond. so as in Anika's procedures are this Tactoset establish soft the preservation and cuff in Our about X-Twist launched to system cuff U.S. shoulder portfolio, also with volume will into XXX(k) the and over fixation, $X Rotator excited ASC, market. tissue repair highest ASC all combination and the additional anchor one in augmenting of The the market exciting and the

We relief pain we've consistent be line repair bring to U.S. about also with single-stage stated for to OA and previously. opportunities continue cartilage the our the our knee solution to Hyalofast and with longer-term short- time long-term excited Cingal what

last of quarter, in trial development five. our strategy both Please to to Hyalofast XXXX. the the patient This and continued Slide we Cingal We're beyond projects, made accelerate follow-up on with executing trial. completing in on enrollment turn these the progress clinical growth

key I'm XXXX pleased this to of milestones. areas key five our say year, that have We Anika hitting focus we're and for

continue soft made to for of we generating products on our flow commercial joint HA-based regenerative setting. repair, to with strengths U.S. develop understanding the technologies territories OA organization with sports we management and drive organization to deeper increasing our cash tissue pain to market Recently, a as bone MONOVISC to grow. First, investment and hybrid significant market medicine focus. sales progress U.S. continue the and preserving we in and opportunities position our streamlined U.S. ASC focus on strengthen leadership our ORTHOVISC grow market We've our an with the

be We shoulder expansion our this year to enhancements product continue with Tactoset advance portfolio targeting products additional filed, of XXX(k)s product new introductions existing and and solutions. our to

of our accelerated are orthopedic presence effective in increasing on to the programs have medical Anika's in-person products We and safe train community. and education the use our

Lastly, fall. the out we'll report the trial pilot in on Cingal

questions. call a XXXX. And with I'll then our wrap for up, take quarter along our we'll and the turn for over Now outlook to results, review second Mike things Mike? I'll of

Michael Levitz

now $XX.X an will for X% as to results Please Management walk I second Total revenue to revenues growth six. the OA you you, was $XX.X Thank to both turn financial prior well procedural XXXX. the to Pain quarter the Cheryl. rose over our quarter order for as favorable through of increase of Slide million, timing. X% million due rebound primarily year. due internationally,

more internationally, on Management and last significantly and reminder, distributors ordering quarterly a years. volatility so basis basis. our that the couple the by can quarterly As based stabilizes over partners a revenues But of annual OA on on vary United in in Pain generally patterns States an

$XX.X volume, and Preservation due some revenue saw business the shortages $XX.X in market to X% recovery the that million Joint other but was Restoration to limited million period and staffing increased Our in continued recovery as dynamics. procedure from

slightly to $X.X was to million Our down revenue compared last million Non-Orthopedic year. $X.X

in Arthrosurface and Parcus. was includes acquisition-related impact margin $X.X and noncash gross XX% XXXX expenses quarter from of the the of Our million the second of acquisitions

the of based quarter. in continue growth objectives. were of well investment we $XX.X inefficiencies From stock growth That's year XXXX period our from in from Our sales totaled restrictions and included gross year-over-year research of internal expand as our our related excludes products transformation. personnel revenue and the staffing the which to challenges. second together and and operational growth support we largely in driven development capabilities from medical SG&A spending Spending which due in as in-person $XX.X also primarily in last by emerged activities. of compensation second strategic quarter expenses supply the acquisition-related the expenses, the education, quarter and adjusted XX% in increased standpoint, from included The impact support was key last Anika's curtailed to as same as travel on development quarter, in XX% in unfavorable year million up down million XX% the margin, a mix the chain higher

loss the to $X.X net income million of the Our last share quarter for share net in quarter or of $X.XX year. $X.X was million per or second compared per $X.XX

million associated the results of per consideration non-cash contingent of $X.XX in Our acquisitions. value $X.X reduction prior our benefit XXXX tax with year associated included share a with fair effected or

down down year. million million loss compared of net EBITDA Our adjusted net per year. last revenue to chain $X.X or year-over-year share, from our from adjusted from of diluted unfavorable and acceleration was in per income $X.XX million, adjusted $X.XX decrease the and mix the support staffing million And in quarter and share incremental $X.X The in our $X.X or in the second the adjusted gross to to is was $X.X growth lower challenges supply the quarter initiatives. primarily quarter due our margin prior investments

regards Lastly, capital quarter the structure. generated in down $X.X for million our the our year. million million, to of $X.X cash with and in million from $X.X last quarter We the second operating quarter flow compared of cash $X expenditures year. last capital totaled to And

remains strong seven. sheet in no at quarter. balance the debt Slide Our $XX.X of Please the cash outstanding with end million and turn second to

like I'd our review outlook year for financial fiscal Now XXXX. to

mid-single-digit of growth the expect percentage growth over to revenue year continue low We to guidance upper end toward full of XXXX XXXX. total the range

revenues. the in of expect Joint previous Non-Orthopedic in As quarter range toward low growth performance line to we last year. with OA we be double-digit raised mid-single the upper Pain Preservation Restoration based last with fastest-growing end outlook on our product and favorable over percent full family a the In our revenue range and year Management guidance, reminder, our the to

of market expansion of overall distributor our largely We to limited quarter, expect on the continue product X-Twist, to portfolio, to the year, sales reflecting the accelerate seasonality, execution. and fourth our the normal including weighted second focus and optimization in half growth release of the

year. low growth Our also chain to OA percent associated guidance reflects we've challenges, dynamics. over digit Management, other shortages Pain risks staffing and mentioned market last on-going with range supply we expect In continue the single previously

investments half revenues distributors the encouraged first to and to lower our decrease Non-Orthopedic partners this reflecting to development by product chain to the continue and And and year, the margin performance the to mid-XX% we time of continuing we outlined regard continue the to year. due half same and to are first we as last for order are expect including brand research that our to those investments staffing gross supporting adjusted U.S. internationally buys product approximately the and product expect are challenges. legacy such commercial timing range, in our on-going year the such of business, and low in industry launches second With medical critical smaller more we in of to our supply from part in funding associated the growth. Cheryl time, last compared in expect half revenues margin, in spending, earlier the With be Anika key from higher the results gross regards and our occurred risks timing. transformation and at favorable process programs, mature our enhancements. We order in XX% year the to much with family, awareness growth education, of accelerated system we as building year primarily products events In fund and as due to last

our to team our position our to same focused XX% remains back targets now restore mid-teens call margin. chain and low to as new spending our margin living continue will turn expect maintaining full result And in in the creation year are strong our digits. adjusted and margin we're in to our supply on multiyear to we I as accelerate of and summary, staffing adjusted In well XXXX, stakeholders. XX% be driving gross margin, investments we of the adjusted the both and support Cheryl. in over to time, the targeted products of EBITDA making growth, the investments at financial gross EBITDA laser growth commercial for challenges value a mission as revenue execution these mid-single As active impacting

Cheryl Blanchard

to we'll Please and be Slide wrap then a Mike. of take environment. We're where solid turn out reporting the questions. eight, still with a I'll challenging in while to quarter up financial macroeconomic pleased operational midst Thanks and

our engagement The Our the with new increased our is expanded commercial use business. of schedule to pipeline focus access increasing, our and portfolio hard in-person end transform restore meetings now. take transformation. continue excited living to to as through live on and mission remain We're product the preservation can't safe we the around employees finally, thanking for active the our work and dedication your and to world. for growing call to people their I our we as continues at And without provide training effective the Anika is customers products we happy on questions as joint

Operator

Please [Operator go Instructions] ahead. We'll & from take Company. Sidoti question our Jim Sidoti with first

James Sidoti

the Good questions. taking afternoon and for thanks

both? looks of based stock a SG&A by up increased current like the Is On it's or or about $X travel because combination the compensation quarter, that of increased the million.

Michael Levitz

of combination Hi Jim, Mike. It's a of things. both it's those

we're now The up in. meetings, coming travel we that is mentioned, I great medical is which news. As in-person spending education now resume the seeing picking can

sales which that We are also that now But Cheryl July. things -- occurred SG&A is But into see we we're in news. coming in-person national mentioned, have our as up, to expense. starting meeting opening good

other was compensation. increased stock-based as the you The thing, mentioned,

you over company. a putting transformation As to lot few years, the in the been support last of in transition people of leadership, the there's in know, different the place

And quarter, cost. other some weren't any the so offsetting forfeitures of things there this or and major

those And clean this to a in the And P&L. that's so in what's the is see really SG&A. increased quarter reflected costs

James Sidoti

assume it stays up maybe as or is reasonable at SG&A this the level slightly So quarters to progress?

Michael Levitz

expect SG&A will increase. would Yes. I

acceleration that the direct where business preservation As wouldn't same see that's business said, joint Management. I in OA of extent the that at part business. second our year, our you where know, the we we And look the when our half are expecting to you commissions are in of as part of Pain

see you'll the SG&A up, the And sales in going going part. so as are up

focused new into with up. and the ready like as, things beyond these say, well acceleration products. for are XXXX as on We're getting that laser opening I really So coming

will there, increase that guidance in the yes, given. change see There's guidance. we've you And in an consistent so no spend with

James Sidoti

Okay.

So current your above goals long EBITDA level? or SG&A at term include the

Michael Levitz

our or no yes. trajectory This is There guidance as we all to Absolutely. targets change or is expected. the quarter, in

James Sidoti

And it's place? still in revenue, around now to your that think goal I double sometime XXXX Is XXXX. long-term

Michael Levitz

Jim, at has the changed Yes. talked timing not targets towards we about all. that our multiyear

So -- about those At said laid XXXX, from year, in changed we're planning the goals XXXX. this that. to to hasn't by double revenue behind four the of the said XXXX years That in company all. beginning to out at past, had within the three five as originally we we've quarters

on we're par. multiyear where was it expect no targets. This to very right make track we be. change our to on to for quarter to we that's changes So right didn't and a any there's our guidance, us, solid why And

James Sidoti

so is over that three joint the start four And open it or accelerate to to things expect reasonable business quarters? the as up, we preservation next

Cheryl Blanchard

this acceleration things question. Yes, to continuing we're Cheryl. Jim, certainly the look the at of for half Thanks some to there to this the to because Hi look opening we primarily side preservation joint up. start show on is year second see

relative that's to product going up and increased difference a start Although see starting limited are on early they extremities forward, in the space show no intervention a of year we've training going to to didn't but up. increased up going this things new execution that to But a sales as and quarter, tick We there's here the doubt face-to-face. also release too. much open in making numbers, this got that, also our

James Sidoti

product? Tactoset the That's

Cheryl Blanchard

the is That product. X-Twist

James Sidoti

okay. The X-Twist,

Cheryl Blanchard

get did additional We -- sorry, ahead. Yes. the go

James Sidoti

you. No, sorry, I I'm No. interrupted

Cheryl Blanchard

that did indication we for additional say, get Tactoset. to going was I

good that, combination together. in two There's will we're be there. used those that is excited with So products because something X-Twist, synergy really

James Sidoti

add use continue or you the three you'd you to cash portfolio the investments with the now? next generate do despite four you made, of cash. happy it to And some that quarters? over to Or think you Are

Cheryl Blanchard

think development of product deck. investments we're look Yes. I I on making, slide -- Slide our like that in terms you our the those mean, the in see what in organic four new

from In fit a we current strong sheet. dynamic very that's thing exist the positive add we have certainly with there's tuck-in sales team. to perspective. think to we the a an in bag terms We investments, good of think continue our we our look where portfolio, any balance a where you for could inorganic in all do economic which for think But acquisitions we

we financials make those yes, so continue look and for for we the to when the sense us. opportunities think valuations would And

James Sidoti

from me. Right. That Thank it was you.

Cheryl Blanchard

Jim. Thanks, Great.

Operator

Petusky We'll take our Barrington Mike with Research. go next question from Please ahead

Michael Petusky

didn't to. question I a Hi. the -- the down Can alluded nuance that distributor of that disruption you I quite catch, guess little a guess, I on you all drill bit?

Cheryl Blanchard

Cheryl. acquisition coming. major see flow can of competitor news We We to a And saw in to Thanks our from you increase uses we time, it's a talked it that to anticipated carrying of by frame. the saw we've U.S. as is to to the it is Yes, it. sales And of this an for the distributors, and disruption. new rest that see we as an started force, Hi you happen through time, Sure. little because time cost that productivity about, a question. this them hybrid look from the their good composition can the The that sales is that independent structure that time take. continuing force There's throughout with year. XXXX distributors, from on Mike, distributor not quarter. competitor The fixed you're to some back we signed disruption. significant have another time advantage would disadvantage that can

Michael Petusky

Mike of with of then And that to me Okay. or mean, sounds -- rationalized means? allusion you're to I maybe can I maybe working define you optimization. these like made may distributor sort groups think have some don't not. that I you what

Cheryl Blanchard

things, product that right Sure. they think force hybrid make check to the of always opportunity I We're develop, focused network. able sure a products. that distribution doing our ensure that again have continuing lines they're to distributors, we sales to this on mean, like there's right that I to launch that we are have that with optimizing always as especially and gut a the we sort the we're we're new represent

of our existing done geographies. some streamlining We also we mentioned that had

see and that on that ensuring forward, driving So right execution people continued there going you the we will focus. have commercial as focus be,

Michael Petusky

And internal can sales you how an I many you're figure ask how a distributors on currently folks updated figure many then and just or rough have using?

Cheryl Blanchard

our over direct it's distributors, perspective, XXX. materially. And a little that our hasn't still From number XX. a independent Yes. from It's employee changed over that's

Michael Petusky

you you like that from Would is Would on year last promise. a -- now number expect expect question lower? this, I

Cheryl Blanchard

I us to would continue dig new look expect to that continue organization. in, to and optimize to portfolio construct product again, our the of at

Michael Petusky

I terms a readout, of I somewhere would before mean, around thereabouts? guess in conference that a to the would or November quarter's of next likely that expect call you that I from release be you or sort call, Cingal or assume more after? with call you guys conference would to on prior I mean, have Xst which conference something expect

Cheryl Blanchard

I would a the talking about conference that call. it fully mean, I in talked we'll fall. on readout we about that next having expect be

Michael Petusky

expect if yourselves? So do you conversations do what there are regarding to pivotal? there you at strong, Or that partnering -- are see looks on-going

Cheryl Blanchard

that at to we're of with that in with that readout; next the data. sort about we'll excited we're We're topic; that where that. Cingal we're are with to That's company a get of when we all, a talking can talk the point we made. excited excited trial But we to done be that get and to has analyzing And We're the of significant the to be to about on point. point been that. the So excited where readout. get the first think I really investment fall steps

Michael Petusky

preservation much a the an before most I easy sort that at alluded it pickup I'm be, to the in you wouldn't of comp Mike, question QX. in of in my you of working my comp as have like business? you're question to looking sort QX Last for me. guys going why easy And result sort be through looks if would is of needle to an Or Thanks. of move model, are guess in seemingly with Okay. that you the QX. you the able joint fact issue? on see not QX, distributor

Michael Levitz

great No, yes. question. Mike,

of in I One strong force, continued we on the think the key or the market sales definitely a really things are there, a seasonality launch by And important the QX dynamic. -- normal seasonality. one, traction release focused driven drivers: X-Twist limited normal is a few

As as space and everybody summer is quarter, I orthopedics, you the delay be so strong. that's the months, procedures people why the can in in quieter think, -- for things later know, in in softer elective fourth

So come release take all time that the limited back of and all and driving include with with training that The effective sales our momentum things. safe are us things things products, in-person driving those market and these meetings, the being use on and in. the aligns growth the to

come I growth third is that So has you expect We're modeling, think your we here. in as going. just trajectory do excited for we're He in is the the quarter. Rob do We're saying, new. He coming in.

are to We ramping territories. Cheryl distributor changeovers up speed. getting up just People whatnot. and he realigned and some has said, As had

doing that And XXXX on targets. toward that multiyear is so work in focused right really because and all those the beyond laser we're we as now focus acceleration

excited we portfolio expect instead One do acceleration as elements. especially the going, discrete we are so on Anika different direction very And about We're this things focus that year. of the

make drivers. clear And seasonality just normal that is trying we're as the to so of it just possible the one as key

And that's so behind what's our this at point. guide

Michael Petusky

Thanks a lot. Appreciate it.

Cheryl Blanchard

Thanks, Mike.

Operator

This session. for conference presenters time, At to conclude or additional to I'd the your remarks. Instructions] back will any this today's turn like [Operator question-and-answer closing

Cheryl Blanchard

a night, call attention quarter you your Have in very much speaking Anika. next our to forward November. for great We on Thank everybody. and interest third all look in

Operator

We gentlemen, this today's appreciate conference. and your concludes participation. Ladies

now You may disconnect.

Anika Therapeutics (ANIK) 6 Aug 222022 Q2 Earnings call transcript