Organogenesis Q2 2024 Earnings Call Transcript

Quartr
Provided by Quartr
August 8, 2024

There are 7 speakers on the call.

Operator

Welcome, ladies and gentlemen, to the Second Quarter 2024 Earnings Conference Call for Organogenesis Holdings, Inc. At this time, all participants are placed in a listen only mode. Please note that this conference call is being recorded and that the recording will be available on the company's website for replay shortly. Before we begin, I would like to remind everyone that our remarks today may contain forward looking statements that are based on the current expectations of management and involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated, including the risks and uncertainties described in the company's filings with the Securities and Exchange Commission, including Item 1A Risk Factors of the company's most recent annual report and its subsequently filed quarterly reports.

Operator

You are cautioned not to place undue reliance upon any forward looking statements, which speaks only as of the date made. Although it may voluntarily do so from time to time, the company undertakes no commitment to update or revise the forward looking statements whether as a result of new information, future events or otherwise, except as required by applicable security laws. This call will also include reference to certain financial measures that are not calculated in accordance with Generally Accepted Accounting Principles or GAAP. We generally refer to these as non GAAP financial measures. Reconciliations of those non GAAP financial measures to the most comparable measures calculated and presented in accordance with the GAAP are available in the earnings press release on the Investor Relations portion of our website.

Operator

I would now like to turn the call over to Mr. Gary S. Galhaney, Senior Organogenesis Holdings President, Chief Executive Officer and Chair of the Board. Please go ahead, sir.

Speaker 1

Thank you, operator, and welcome everyone to Organogenesis Holdings' 2nd quarter fiscal year 2024 earnings conference call. I'm joined on the call today by Dave Francisco, our Chief Financial Officer. Let me start with a brief agenda of what we'll cover during our prepared remarks. I will begin with an overview of our Q2 revenue results and an update on our key operating and strategic developments in recent months. Dave will then provide you with an in-depth review of our 2nd quarter financial results, our balance sheet and financial condition at quarter end, as well as our financial guidance for 2024, which we updated in our press release this afternoon.

Speaker 1

Then I'll share some closing thoughts before we open the call up for your questions. Beginning with the review of our revenue results for Q2, our sales results came in above the high end of the guidance range outlined on our Q1 call, reflecting strong execution and execution resulted in better than expected productivity by enhancing existing customer relationships, regaining lost accounts and capturing new accounts. And despite disruption in the marketplace fueled by continued aggressive pricing strategies and in certain circumstances questionable competitive activities, we believe our 2nd quarter results support our continued confidence that we focused our commercial team on the right strategy to navigate through this challenging operating environment. We are encouraged by the further evidence that our team is driving growth in our customer base by emphasizing our differentiated product and their clinical validation. In addition to the strong commercial momentum in Q2, we were pleased to share updates on the substantial progress we have made on our RENEW program in recent months.

Speaker 1

As announced in a separate press release this afternoon, where we announced additional clinical results from our first Phase 3 trial, a prospective double blinded multicenter saline controlled parallel group clinical trial of 5 15 patients. The Phase 3 RCT results met the expectations for the study by meeting the primary endpoint of a statistically significant reduction in knee pain. And the first secondary endpoint of statistically significant maintenance of function at 6 months. The statistical power of this study was based on these key efficacy points meeting the predefined requirements supporting a BLA submission. We completed additional subgroup analysis, which revealed that the most severe patients known as KL4s treated with RENEW responded with similar reduction in pain to those patients with moderate disease, the KL3 group, which is consistent with the top line results.

Speaker 1

These results are notable given that up to 15% of knee OA patients are exhausted. By way of reminder, 30% of the enrolled patient in the 1st Phase 3 trial were KL4s. And if successful, RENEW would be the only FDA approved biologic intra articular injection to improve pain symptoms even in the most severe case of knee OA. Other sensitivity analysis found that subjects in the Saline group took substantially more acetaminophen for breakthrough pain during the study, while subjects in the RENEW group took less acetaminophen for breakthrough pain. This result further supports the improved outcomes in WOMAC pain seen in 6 months.

Speaker 1

During the Q2, we requested a Type B meeting with the FDA to discuss the clinical data requirements for a biologic license application filing pursuant to the strategy we outlined on our recent earnings calls. We completed the Type B meeting with the FDA on July 25 and the FDA confirmed that a confirmatory trial will be required to support a BLA submission. We receive positive feedback and guidance on our chemistry, manufacturing and controls or CMCs and the agencies affirm the company's proposed analytical assay strategy and framework for process validation. We were also pleased to announce that we completed enrollment in the 2nd Phase 3 multi centered randomized controlled trial evaluating the safety and efficacy of RENEW with 5.94 patients, significantly outperforming enrollment expectations and well ahead of our original expectations when we started enrolling this study last September. Following the positive Type B meeting with the FDA, we now have a clear roadmap and timeline for our renewed BLA submission and we are on track to deliver the renewed BLA submission by the end of Q4 2025.

Speaker 1

We continue to believe that if approved, introducing RENEW to a large and growing pain management market represents a transformational opportunity for organogenesis. And if approved, introducing RENEW as an innovative pain management solution for the millions of patients suffering from knee OA represents a significant new addressable market opportunity for organogenesis. Specifically, by 2020 7, an estimated 34,400,000 Americans are expected to be affected by knee osteoarthritis. While there is no known treatment that completely cures knee OA, it is possible to treat the disease symptoms with the goal of avoiding or delaying costly and invasive knee replacement surgery. We believe RENEW, if approved, will address an unmet clinical need for all patients suffering from moderate to severe symptomatic knee osteoarthritis.

Speaker 1

And we are particularly excited by the unique opportunity for RENEW to serve the most severe knee away patients who have limited non surgical options, representing an estimated $5,000,000 Before turning the call over to Dave, I wanted to share a brief update on our recent progress

Speaker 2

in the areas of clinical validation

Speaker 1

and Medicare reimbursement and coverage. Pursuant to the strategy discussed in our last earnings call, we submitted our comment letter to the MAX in advance of the deadline in early June, reiterating our support for the MAX evidence based approach reflected in the draft LCDs. As planned, our comment letter included the following existing clinical and real work including RCTs in support of our case that NuShield, PuraPly AM and PuraPly XT should be included on the covered list. For NuShield, a high quality published data and evidence including a recently published peer reviewed RCT with 218 patients evaluating NuShield for the treatment of DFUs that was not considered in the draft LCDs, which we believe demonstrates that NuShield meets all the criteria for coverage. The results of this RCT were published on June 6 in the Journal of Wound Care and includes compelling statistically significant data from this large and rigorously designed prospective level 1 RCT evaluating the effectiveness of NuShield for the treatment of complex DFUs in a challenging patient population.

Speaker 1

For PuraPly AM and XT currently available high quality published data from a 728 patient study supporting the coverage of PuraPly AM and XT for the treatment of DFUs and VLUs. We highlighted that PuraPly AM is supported by a large body of data across 5 peer reviewed publications showing effectiveness in treating DFUs, VLUs and pressure injuries in a complex comorbid population. This data included a comparative effectiveness study of 294 patients published in May of 2024, after the literature review for the draft LCDs was completed, which showed a non inferiority to TheraSkin, product that draft LCD proposed to cover. We are making solid progress towards new RCTs evaluating the use of PuraPly AM for DFUs that we discussed in our last earnings call. We received IRB approval, have identified sites that are targeting 1st patient enrollment in coming weeks.

Speaker 1

We will continue our efforts to build compelling cases to present to the MAX to secure coverage for additional products later this year and into next year. We continue to believe these material changes from CMS and the MAX in the reimbursement of skin substitutes, if ultimately adopted, will be positive for the long term health of the wound care market. While there will be a period of transition and disruption if these sweeping changes are implemented, we believe that Organogenesis' strong brand equity, established commercial infrastructure and plan to establish additional clinical validation to secure coverage of key commercialized products, which taken together represent a substantial competitive advantage for us that has us well positioned to maximize the enormous opportunity to serve more patients in our highly innovative and efficacious products. With that, let me turn

Speaker 3

the call over to Dave. Thanks, Gary. I'll begin with a review of our Q2 financial results. And unless otherwise specified, all growth rates referenced during my prepared remarks are on a year over year basis. Net revenue for the Q2 was $130,200,000 up 11%.

Speaker 3

As Gary mentioned, these results were ahead of expectations we provided on our Q1 call, which calls for total Q2 revenue in the range of $120,000,000 to $125,000,000 reflecting continued strong momentum in the business during the 2nd quarter. Our Advanced Wound Care net revenue for the 2nd quarter was $123,200,000 up 12%. Net revenue from Surgical and Sports Medicine products for the 2nd quarter was $7,000,000 down 3%. Gross profit for the 2nd quarter was $101,000,000 or 77.6 percent of net revenue compared to 77.6 percent last year. Operating expenses for the Q2 were $114,900,000 compared to $81,300,000 last year, an increase of $33,700,000 or 41%.

Speaker 3

Note that second quarter operating expenses included approximately $22,800,000 of non cash impairment of building and unfinished construction improvement work previously capitalized as well as the write down costs related to the development of internal use software. Excluding the aforementioned non cash charges and approximately $800,000 of non cash amortization expense, our 2nd quarter operating expenses increased $11,300,000 or 14%.

Speaker 1

The year

Speaker 3

over year change in operating expenses included excluding these non cash items was driven by a $6,600,000 or 10% increase in selling, general and administrative expenses and a $4,600,000 or 43 percent increase in research and development costs

Speaker 4

compared to the prior year period.

Speaker 3

The increase in research and development expenses was primarily due to expenses associated with clinical research and trials, primarily related to RENEW and support of our BLA efforts. Operating loss for the Q2 was $13,900,000 compared to operating income of $9,700,000 last year, a decrease of 23,600,000 Excluding non cash impairment charges, write downs, restructuring and amortization expenses in both periods, our non GAAP operating income was $9,700,000 or 7.5 percent of sales compared to $10,800,000 or 9.2 percent of sales last year. Net loss for the Q2 was $17,000,000 compared to net income of $5,300,000 last year, a decrease of $22,400,000 Adjusted net income for the Q2 was $200,000 compared to $6,100,000 last year, a decrease in adjusted net loss of 5,900,000 As a reminder, adjusted net income is defined as GAAP net income, adjusted to exclude the effect of amortization, restructuring charges, write downs, capitalized software costs and impairment of building and improvements and resulting income taxes on these items. Adjusted EBITDA for the Q2 was $15,600,000 or 12 percent of net revenue compared to $15,400,000 or 13 percent of net revenue last year. We've provided a full reconciliation of our adjusted net income and adjusted EBITDA results in our earnings press release.

Speaker 3

Turning now to the balance sheet. As of June 30, 2024, the company had $90,500,000 in cash, cash equivalents and restricted cash and $63,500,000 in debt obligations, compared to $104,300,000 in cash, cash equivalents and restricted cash and $66,200,000 dollars in debt obligations as of December 31, 2023. We also have up to $125,000,000 of available borrowings on our revolving credit facility as of June 30, 2024. Turning to a review of our 2024 financial guidance. Despite the strong continued momentum

Speaker 1

that we are experiencing in the business,

Speaker 3

we are reaffirming our prior revenue guidance that we referenced in our press release this afternoon to account for the potential near term disruption in the market that we expect from the LCDs. For the 12 months ending December 31, 2024, the company continues to expect net revenue of between $445,000,000 $470,000,000 representing

Speaker 1

a year over year increase in

Speaker 3

the range of 3% to 9%, as compared to net revenue of $433,100,000 for the year ended December 31, 2023. The 2020 4 net revenue guidance assumes net revenue from Advanced Wound Care products of between $415,000,000 $435,000,000 representing a year over year increase in the range of 2% to 7% and net revenue from Surgical and Sports Medicine products between $30,000,000 $35,000,000 representing a year over year increase in the range of 9% to 27%. For modeling purposes, we expect 3rd quarter revenue to be in the range of approximately 105,000,000 dollars to $113,000,000 We have updated our GAAP profitability and EBITDA guidance for 2024 to reflect the $22,800,000 of non cash impairment charges and write down costs and related tax impacts on these items recognized in the Q2. Specifically, we now expect GAAP net loss in the range of 27,000,000 dollars net loss to a $12,000,000 net loss compared to a range of GAAP net loss of $10,600,000 through GAAP net income of $4,600,000 previously. We also expect EBITDA in the range of a net loss of $17,000,000 to positive EBITDA of $2,000,000 compared to a range of EBITDA generation of $5,800,000 to $25,000,000 previously.

Speaker 3

Our adjusted net income loss guidance remains unchanged. Specifically, we continue to expect adjusted net income loss in the range of $8,000,000 to adjusted net income of $7,000,000 and adjusted EBITDA in the range of $16,000,000 to 35,000,000 dollars All other non GAAP modeling considerations outlined in our Q4 2023 call remain largely unchanged. With that, I'll turn the call back over to Gary for some closing remarks.

Speaker 1

Thanks, Dave. In closing, our 2nd quarter results reflect strong execution from our commercial team amidst the challenging operating environment. We strongly believe the material changes proposed by CMS in the MAX and reimbursement of skin substitutes, if ultimately adopted, will be a positive step for the long term health of the wound care market. We have a strategy to leverage our existing strong clinical and real world data, including RCTs and have already initiated a new RCTs to secure additional clinical evidence and we expect to secure coverage for additional products on the covered list later this year and early into next year. While there will be a period of transition and disruption if these sweeping changes are implemented, we believe that Organogenesis' strong brand equity, established commercial infrastructure and a plan to establish additional clinical validation to secure coverage of key commercialized products, which taken together represent a substantial competitive advantage for us that has us well positioned to maximize the enormous opportunity to serve more patients with our highly innovative and efficacious products.

Speaker 1

And finally, we are excited by the continued progress in our RENEW program and have a clear target for submission of our BLA by the end of Q4 2025. If approved, introducing RENEW as an innovative pain management solution for the millions of patients suffering from knee OA represents a truly transformational opportunity for organogenesis and importantly one that is consistent with our mission to provide integrated healing solutions that substantially improves outcomes while lowering the overall cost of care. I would also like to acknowledge the continued hard work and dedication to our mission demonstrated by our employees throughout the organization. Our strong performance and progress towards our key strategic initiative over the first half of twenty twenty four is the result of their efforts. And with that, I'll turn the call back over to you, operator, to open the call up for questions.

Operator

And our first question will come from Ryan Zimmerman from BTIG. Please go ahead.

Speaker 4

Hey, guys. Good afternoon. And congrats on the quarter and the progress with renew. Maybe I want to start with guidance for a second, Gary and Dave, and just talk about you've had 2 really strong quarters to start the year. I know there's a lot of balls in the air with the LCDs.

Speaker 4

Can you talk about and you kind of referenced it, Gary, a little bit in terms of some of the dynamics in the market. But can you talk about kind of what you've seen thus far through July, maybe what's given you a little pause, particularly as I think about your Q3 guidance relative to our expectation?

Speaker 1

Yes. So, I'll talk a little bit about the environment. So we're clearly seeing still a positive trend in our business. We've seen it throughout the Q2. We've increased the number of accounts that we have sequentially.

Speaker 1

We've actually ended up with more sales representatives in Q2 than in Q1. And we're continuing to see additional accounts coming back that we had lost as of last year when some of the LCDs that eventually were removed came into play. So, we see that trend keep moving forward. We also see a lot of the competitive pricing challenges that I think everyone is seeing. We've been fortunate to continue to grow through that, but that competitive pressure is still there and at times it seems like it's increasing instead of decreasing.

Speaker 1

So those pressures are still there, but we're still seeing some positive trends in our base business. As it relates to guidance, I think as it relates to all of the uncertainty with the LCDs coming out and the continuing escalation of some of the competitive practices and pricing every day seems like there's another product on the market with a high price. We think that that's going to continue until it stops, which would potentially be with the LCDs or some other actions. But that's in our thoughts when we look at our guidance.

Speaker 3

Yes. So Ryan, great question. I mean, obviously, we established that guidance early in the year. It was prior to the proposed LCD that came out in late April. We have beat both quarters and we feel great about that, which gives us a high level of confidence in delivering that low end of the range.

Speaker 3

But to Gary's point, the dynamics are still challenging and there's a lot of unknowns about when the customer buying behavior might change. So you can see, obviously, we gave guidance for Q3, which was a pretty wide range and then that implied guidance for Q4, which was also even wider range. So we still think it's biased towards Q4, but there may be some spillage into Q3 as well, which what we're just a little bit concerned about. As far as July is concerned, I mean, we're seeing the normal summer seasonality, but we expect to move away from that as long as the customer buying behavior doesn't change dramatically in the back half of this quarter.

Speaker 4

Okay. And just a quick follow-up on that and I have some questions on renew. Any expected timelines for updates to the LCD? I know I've asked you this before and it's hard to pin the MAX down specifically, but anything that we should be on the lookout for from a timing perspective on those LCDs? I

Speaker 1

mean, it's our opinion. Obviously, we don't know, as you said, that something will happen that we think those LCDs will come effective in kind of the last quarter and really affecting Q1 of next year. We just see the cost still rising substantially out there in the system, I mean, almost doubling from year to year and the physician fee schedule came out and at this point there's really nothing on the payment side that would lead you to believe it's going to control those costs. There's no bundling recommended in that proposal. So the combination of escalated costs, nothing really happening in the physician fee schedule.

Speaker 1

We just believe something will drop from an LCD perspective sometime in Q4 and be effective in January 1. But that's those are the factors that we think about and it does seem to be a lot of activity surrounding these LCDs.

Speaker 4

Yes. Okay. Very helpful, Gary and Dave. Just turning to renew now, it's good to see we have a clear path for renew. I'm wondering if I don't know if Patrick is available, but maybe Gary, you want to speak to this.

Speaker 4

But just talk to us about kind of the nuances or the differences between your Phase III study and the Phase III confirmatory study. Just remind investors if there's anything that you think can differ in those studies. And then the second question to all of this is, what room do you have when I think about the timelines to submit for BLA, what room do you have to potentially adjust your timelines, if at all, maybe you're able to get the data and the follow ups done as quickly as possible and then we could see something a little maybe earlier than Q4 'twenty five? Thank you.

Speaker 1

Sure. So regarding the 2 studies, I mean the second study is larger, so it has more power in that study and we've made some operational adjustments in that study that we think will ultimately lead to better performance in the second study. So we feel pretty comfortable about obviously the study is already completed from the perspective of all of the patients have been enrolled and we expect last patient last visit next June, June of 'twenty five. So that gives us the opportunity to aggressively move forward for a filing. So it is possible though I think Q4 of 2025 is a reasonable time period.

Speaker 1

We did ask the FDA in our meeting to consider the 6 month data. They have not responded. We'll know when we get the formal minutes of that meeting, which come 30 days after our meeting on the 25th. So though we have no indication at all that that would be accepted, that's a potential change that could move it forward a couple of quarters for sure. But as of this point, we're assuming that we will complete the trial and file in Q4 of 2024.

Speaker 4

2025. Thank you, Gary.

Speaker 1

No, 25. Thank you.

Speaker 4

Thank you. Thanks for taking the question.

Speaker 1

Thanks, Ryan.

Operator

Our next question comes from the line of Brooks O'Neil with Lake Street. Please go ahead.

Speaker 5

Good afternoon, guys. Thanks for taking my questions. I guess I'd like to start by saying that as I talk to various players in the industry, some have expressed the view that the reason for the elevated competitive activity is some suggestion that the MAX might again fail to implement the LCDs. A, what's your opinion on that? And well, let's leave it at that.

Speaker 5

How do you respond to that suggestion?

Speaker 1

Well, I think based on where we see the costs and those costs are obviously public, that they really increased dramatically. And since there's been no change to the position fee schedule unless it'd be very difficult to implement something that's not in that proposed rule. So there's no payment solution, at least for another year and a half. So that leads me to believe that the LCDs maybe not in their current form, but in some form will be implemented to try to control the cost right now in the skin substitute market. So it may not be in the form that it is.

Speaker 1

There's been a number of comments from a number of companies, us as well that we think it needs to make they need to make some changes to really improve it, where it can be actionable and effective. So it might change, but it's our opinion that something needs to be put in place in the eyes of the MAX and CMS and ultimately it will.

Speaker 5

Makes sense to me. You presented to us some compelling evidence that several of your products have the clinical evidence that the MAC seem to be suggesting it's necessary for reimbursement in the physician office setting. Do you have any sense that they hear your case and they understand that you actually do have a lot of well conceived clinical evidence for those products or is it a silent response on their end?

Speaker 1

Well, we for as I mentioned for NuShield and PuraPly, AAM and XT, we have a substantial amount of data, some of which the MAX did not have the opportunity to review before they issued their proposed, LCDs. So we've submitted those studies for NuShield and PuraPly AM and XT. One is an RCT and the others are retrospective studies, one for PuraPly that actually is a comparative effectiveness study against product that's already approved on the list of 15. So we think these are large robust datasets that they are compelling enough that they should be included in the LCD if and when it comes out.

Speaker 5

Makes sense to me. I'll ask one last one. Thanks for taking my questions. I saw after the close, I think you filed a mixed shelf offering $250,000,000 I'm curious, do you have any comment on whether that's just sort of normal good governance? Or do you think there's either an appetite on the part of selling shareholders or the company to actually go out to the market and raise some additional capital?

Speaker 3

Yes, Brooks, thanks. This is Dave. You're absolutely right. I mean, it's just good corporate governance. It provides a tremendous amount of financial flexibility for us, gives the opportunity for certain individuals to sell their shares in a secondary if that was something that they chose to do.

Speaker 3

And this is something that we have not had in place since the fall of 2019. So it really just was an opportunity to get this done. And again, to your point, just good corporate governance. And I might add too, as you know, from a liquidity standpoint, as of today, we have over $90,000,000 of cash, $125,000,000 on the revolver and then a fair amount of working capital available to us as well. So that's again, to your point, it's just a good corporate governance and wanted to get it done.

Speaker 5

Makes sense. Thank you very much.

Speaker 1

Thank you. Thank you.

Operator

Our next question comes from the line of Our next question comes from the line of Drew Ranieri from Morgan Stanley. Please go ahead.

Speaker 2

Hi, guys. Thanks for taking the questions. Maybe just to start, Gary, I was just looking through the queue and you mentioned this briefly to one of the earlier questions. But in terms of the sales force, it looks like you added maybe a handful of reps sequentially. And it's really the first time we've seen you beat net adders than subtractors for a number of quarters.

Speaker 2

So maybe just talk to us about the rep strategy here. I mean, it sounds and it looks like rep productivity itself is increasing, but just talk to us more about the sales force side, what you're envisioning for 20 20 remainder of 2024?

Speaker 1

Sure. So you're correct. We did add representatives during the quarter. As I mentioned earlier, we have been successful in gaining our accounts back. We did have sequential account growth and our depth in the accounts is getting deeper.

Speaker 1

So our productivity, even with adding the representatives, which takes a bit of time for them to be completely productive, was up 20%. So that continued growth of accounts and depth in the accounts led us to aggressively add representatives. I think our goal at the end of the year is to have about 306 or so representatives, based on the trends that we're seeing. That's our goal. And we'll add them obviously throughout the year.

Speaker 1

But our goal is to continue as we gain those accounts back and we're gaining new accounts. And when the if the LCD is eventually hit and the market is available, more market is available because fewer products are on the market, we want to be able to cover that additional market share as well.

Speaker 2

Got it. You took my follow-up question there, Gary, but I appreciate the answers. Thanks.

Operator

Our next question comes from the line of Ross Osborne with Cantor Fitzgerald. Please go ahead.

Speaker 6

Hi, guys. This is Matthew Park on for Ross. Congrats on the strong quarter and thanks for taking the questions.

Speaker 2

I want

Speaker 6

to start off by getting a better understanding of timelines with the RCTs. Do you mind just walking us through the process to get PuraPly and NuShield back on the approved list following the completion of these studies?

Speaker 1

Sure. So PuraPly and NuShield studies are complete. They are done now. We are running an additional study in RCT for PuraPly AM that will take about a year. So our objective is to have that RCT completed within a year.

Speaker 1

But we do have studies both for NuShield, which is an RCT that's done, it's published and the PuraPly AM and XT are retrospective studies. Those are done in complete and we provided those as well. But a new study for PuraPly to answer your question AM is about 1 year from today.

Speaker 6

Got it. That makes sense. Thanks for clarifying. And then I guess just one more from me. I guess turning to the Surgical and Sports Medicine side.

Speaker 6

Obviously, I understand it's a much smaller piece of the pie, but can you just walk us through some of the drivers on hitting the low and high end of guidance here? And any plans to introduce new products for this side of the business? Thanks.

Speaker 3

Yes, sure. That's exactly what we've done is, the expectation was it was always assumed that the back half would be stronger than the first. And the reason being is exactly as you said, we've got some very unique products that are specifically for the OR that are coming out with larger sizes, which are more applicable for the OR in the back half. In addition to that, there's been a strategy to expand channel expansion strategy with adding incremental agencies and obviously all that stuff is in the works. And so, the high and the low is related to the kind of upside you're going to gain from those two strategies, but always anticipated the back half would be stronger.

Speaker 6

Got it. That makes sense. Thanks again for taking the questions and congrats on the quarter.

Speaker 1

Thank you.

Operator

There are no further questions at this time. That does conclude our conference call for today. Thank you for your participation. You may now disconnect.

Powered by Quartr

Key Takeaways

  • Net revenue for Q2 was $130.2 million, up 11% year-over-year and above guidance, driven by strong commercial execution in Advanced Wound Care (+12%) despite a 3% decline in Surgical & Sports Medicine sales.
  • GAAP operating loss of $13.9 million included $22.8 million of non-cash impairments, while non-GAAP operating income was $9.7 million (7.5% of sales); the company reaffirmed full-year 2024 revenue guidance of $445–470 million.
  • The first Phase 3 RCT of RENEW met its primary endpoint of significant knee pain reduction and a key secondary endpoint of maintained function at six months, with similar efficacy in severe (KL4) and moderate (KL3) patients.
  • Following an FDA Type B meeting, a confirmatory trial is required but enrollment of 594 patients in the second Phase 3 RCT is complete, keeping the company on track for a BLA submission by the end of Q4 2025.
  • Organogenesis submitted robust clinical and real-world data (including RCTs for NuShield and PuraPly AM/XT) to MAC/MAX and expects LCD changes to take effect in Q1 2025, positioning the company to secure expanded Medicare coverage.
AI Generated. May Contain Errors.
Earnings Conference Call
Organogenesis Q2 2024
00:00 / 00:00