Financial Data and Key Metrics Changes - The company reported net revenue of $108.5 million for Q3 2023, down 7% year-over-year [4][27] - Operating expenses for Q3 were $74.7 million, a decrease of 16% from $88.9 million last year [10] - Operating income increased to $8.1 million from $1.8 million last year, while net income rose to $3.2 million from $0.2 million [11] - Adjusted net income for Q3 was $5.3 million, slightly up from $5.1 million last year [11] - The company expects 2023 net revenue to be between $433 million and $446 million, reflecting a year-over-year decrease of 1% to 4% [12] Business Line Data and Key Metrics Changes - Sales of Advanced Wound Care products decreased by 7% to $101.4 million, while Surgical & Sports Medicine products saw a 2% decline to $7.2 million [4][27] - The gross profit margin for Q3 was approximately 76.2%, down from 77.6% last year, primarily due to decreased pricing and a shift in product mix [27] Market Data and Key Metrics Changes - Sales trends in regions affected by local coverage determinations (LCDs) declined in the high teens year-over-year, while non-LCD impacted regions experienced a modest decline [22] - The company noted that confusion and uncertainty among customers due to LCDs significantly impacted sales [7][43] Company Strategy and Development Direction - The company is focusing on expanding manufacturing capacity and driving long-term efficiencies [8] - Plans to launch new products across both Advanced Wound Care and Surgical Sports Medicine markets in 2024 [16] - The company is actively engaging with customers to clarify misinformation and regain lost accounts [24] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that the second half of 2023 has been impacted by customer confusion related to LCDs, but they believe this is largely transitory [16] - Sales trends have improved in October compared to September, and management expects to regain a majority of lost accounts by the end of the year [47] Other Important Information - The company has reintroduced its 2023 financial guidance, reflecting the impact of business disruption and recovery activities [7][12] - Total interest and other expenses for the quarter were approximately $2.2 million, with a GAAP tax rate expected between 51% and 53% [31] Q&A Session Summary Question: How should the market dynamics be viewed given the recent CMS final rule? - Management indicated that while there were no significant changes in the 2024 reimbursement rules, they anticipate future changes that could stabilize the market [46] Question: How is the company preparing to inform the market post-LCD withdrawal? - Management emphasized efforts to correct misinformation and re-engage customers, particularly in hospital outpatient departments, to ensure products are back on formulary [47]

PART I. FINANCIAL INFORMATION [Unaudited Condensed Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section presents Organogenesis Holdings Inc.'s unaudited condensed consolidated financial statements and accompanying notes for the periods ended September 30, 2023 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2023, total assets increased to **$462,647 thousand** from **$449,359 thousand** at year-end 2022, with total liabilities at **$185,782 thousand** and total stockholders' equity growing to **$276,865 thousand** Condensed Consolidated Balance Sheets Table | Balance Sheet Item | September 30, 2023 ($ thousands) | December 31, 2022 ($ thousands) | | :--- | :--- | :--- | | **Total Current Assets** | 225,573 | 222,609 | | **Total Assets** | **462,647** | **449,359** | | **Total Current Liabilities** | 81,482 | 75,023 | | **Total Liabilities** | **185,782** | **183,690** | | **Total Stockholders' Equity** | **276,865** | **265,669** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q3 2023, net revenue decreased to **$108,531 thousand** from **$116,859 thousand** year-over-year, while net income significantly increased to **$3,167 thousand** from **$215 thousand** Condensed Consolidated Statements of Operations Table | Metric | Q3 2023 ($ thousands) | Q3 2022 ($ thousands) | Nine Months 2023 ($ thousands) | Nine Months 2022 ($ thousands) | | :--- | :--- | :--- | :--- | :--- | | **Net Revenue** | 108,531 | 116,859 | 333,489 | 335,377 | | **Gross Profit** | 82,742 | 90,682 | 254,777 | 257,468 | | **Income from Operations** | 8,050 | 1,779 | 13,794 | 13,586 | | **Net Income** | 3,167 | 215 | 5,513 | 8,046 | | **Diluted EPS** | $0.02 | $0.00 | $0.04 | $0.06 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2023, net cash provided by operating activities was **$20,304 thousand**, resulting in a net decrease in cash of **$4,465 thousand** Condensed Consolidated Statements of Cash Flows Table | Cash Flow Activity | Nine Months Ended Sep 30, 2023 ($ thousands) | Nine Months Ended Sep 30, 2022 ($ thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | 20,304 | 17,059 | | Net cash used in investing activities | (21,040) | (23,242) | | Net cash used in financing activities | (3,728) | (324) | | **Change in cash, cash equivalents and restricted cash** | **(4,465)** | **(6,507)** | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes detail the company's accounting policies and provide further information on financial statement line items, including revenue disaggregation and subsequent events Notes to Condensed Consolidated Financial Statements Table | Revenue by Product Category | Q3 2023 ($ thousands) | Q3 2022 ($ thousands) | Nine Months 2023 ($ thousands) | Nine Months 2022 ($ thousands) | | :--- | :--- | :--- | :--- | :--- | | Advanced Wound Care | 101,357 | 109,514 | 312,349 | 313,395 | | Surgical & Sports Medicine | 7,174 | 7,345 | 21,140 | 21,982 | | **Total net revenue** | **108,531** | **116,859** | **333,489** | **335,377** | - In February 2023, the company initiated a restructuring plan, reducing headcount by **71 employees** (approx. **7%**) and incurring a charge of **$1,600 thousand** in the first nine months of 2023[54](index=54&type=chunk) - As a subsequent event, the company committed to another workforce reduction on October 27, 2023, affecting **49 employees** (approx. **5%**) with an expected charge of **$1,700 thousand** in Q4 2023[101](index=101&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, highlighting a **7%** decrease in Q3 2023 net revenue driven by lower Advanced Wound Care sales and the impact of withdrawn Medicare LCDs [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Q3 2023 net revenue fell **7%** year-over-year to **$108,531 thousand**, primarily due to decreased Advanced Wound Care sales and lower operating expenses - Net revenue from Advanced Wound Care products decreased by **$8,200 thousand** (7%) in Q3 2023 compared to Q3 2022, attributed to changes in customer buying patterns and the anticipated impact of the now-withdrawn LCDs[131](index=131&type=chunk) - Selling, general and administrative (SG&A) expenses decreased by **$15,100 thousand** (19%) in Q3 2023, primarily due to a **$7,800 thousand** reduction in travel and marketing, and a **$4,200 thousand** one-time equipment disposal charge in Q3 2022[138](index=138&type=chunk) Results of Operations Table | Metric | Q3 2023 ($ thousands) | Q3 2022 ($ thousands) | Nine Months 2023 ($ thousands) | Nine Months 2022 ($ thousands) | | :--- | :--- | :--- | :--- | :--- | | **Net Income** | 3,167 | 215 | 5,513 | 8,046 | | **EBITDA** | 11,854 | 4,460 | 25,031 | 21,560 | | **Adjusted EBITDA** | 15,970 | 11,605 | 35,143 | 35,207 | [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2023, the company had **$98,200 thousand** in cash and equivalents and **$144,100 thousand** in working capital, with **$125,000 thousand** available under its revolving credit facility - The company reported **$98,200 thousand** in cash and cash equivalents and **$144,100 thousand** in working capital as of September 30, 2023[143](index=143&type=chunk) - There is **$125,000 thousand** available for future borrowings under the Revolving Facility[143](index=143&type=chunk) Liquidity and Capital Resources Table | Cash Flow Summary | Nine Months Ended Sep 30, 2023 ($ thousands) | Nine Months Ended Sep 30, 2022 ($ thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | 20,304 | 17,059 | | Net cash used in investing activities | (21,040) | (23,242) | | Net cash used in financing activities | (3,728) | (324) | [Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There were no material changes to the company's market risk disclosures during the nine months ended September 30, 2023 - There were no material changes to the company's market risk disclosures during the nine months ended September 30, 2023[164](index=164&type=chunk) [Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective as of September 30, 2023, due to a material weakness in internal control over financial reporting - Management concluded that disclosure controls and procedures were ineffective as of September 30, 2023[166](index=166&type=chunk) - The ineffectiveness is due to a material weakness related to controls over significant non-routine transactions and information technology general controls[166](index=166&type=chunk) - Remediation plans include implementing a new company-wide ERP system, which is anticipated to go live in 2024[170](index=170&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) The company is defending a class action lawsuit alleging federal securities law violations related to statements about revenue and sales growth for certain products - A class action complaint, Somogyi v. Organogenesis Holdings Inc., et al., alleges violations of federal securities law concerning statements about revenue, sales growth, and competition for its Affinity and PuraPly XT products[173](index=173&type=chunk) - The company believes the claims are without merit, intends to vigorously contest them, and filed a motion to dismiss which is pending as of the report date[173](index=173&type=chunk) [Risk Factors](index=33&type=section&id=Item%201A%20Risk%20Factors) This section highlights material changes to risk factors, including potential future Medicare coverage changes and the impact of general economic conditions - A key risk is that Medicare Administrative Contractors (MACs) may adopt new LCDs in the future that could eliminate or reduce coverage for the company's products, which would materially impact business and revenue, despite the withdrawal of proposed LCDs in September 2023[176](index=176&type=chunk) - The company faces risks from adverse general economic conditions and recent turmoil in the global banking system (e.g., the failure of Silicon Valley Bank), which could decrease product demand, strain suppliers, and impact the ability to raise capital[177](index=177&type=chunk)[178](index=178&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None[179](index=179&type=chunk) [Defaults Upon Senior Securities](index=34&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - None[180](index=180&type=chunk) [Mine Safety Disclosures](index=34&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not Applicable[181](index=181&type=chunk) [Other Information](index=34&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the third quarter of 2023 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended September 30, 2023[182](index=182&type=chunk) [Exhibits](index=35&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including required certifications by executive officers - The report includes certifications from the Principal Executive Officer and Principal Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[183](index=183&type=chunk)

Financial Data and Key Metrics Changes - The company reported net revenue of $117.3 million for Q2 2023, a decrease of 3% year-over-year, driven by a 3% decrease in Advanced Wound Care product sales and a 5% decrease in Surgical & Sports Medicine product sales [3][28] - Gross profit for Q2 was $91 million, approximately 77.6% of net revenue, compared to 78% in the previous year [28] - Net income for Q2 was $5.3 million, down from $8.7 million in the prior year, reflecting a decrease of $3.4 million [17] Business Line Data and Key Metrics Changes - Advanced Wound Care net revenue for Q2 was $110.1 million, down 3%, while Surgical & Sports Medicine products generated $7.2 million, down 5% [28] - The company experienced mid-single-digit growth in units sold year-over-year in Q2, driven by double-digit growth in the hospital outpatient setting [5] Market Data and Key Metrics Changes - The recent local coverage determinations (LCDs) from Medicare contractors have created uncertainty regarding revenue outlook for products used in treating diabetic foot ulcers (DFUs) and venous leg ulcers (VLUs) [20][33] - The company estimates that the revenue related to DFUs and VLUs for the first half of 2023 was approximately $35 million to $40 million [23] Company Strategy and Development Direction - The company is focusing on expanding manufacturing capacity for its product portfolio, particularly for Dermagraft and TransCyte products [12] - The management expressed confidence in their strategy to maximize competitive positioning in the advanced wound care market [11] Management Comments on Operating Environment and Future Outlook - Management withdrew the fiscal year 2023 guidance due to uncertainties arising from the recent LCDs, which limit coverage for certain products [21] - The management remains optimistic about addressing the coverage issues and believes that their products meet the necessary criteria to be classified as skin substitutes [36][44] Other Important Information - The company has received FDA approval to proceed with a second Phase III trial for its ReNu product, with patient enrollment expected by the end of Q3 [13] - Adjusted net income for Q2 was $6.1 million, down from $11.3 million in the previous year [30] Q&A Session Summary Question: What is the reason for the withdrawn guidance? - Management believes that five products were improperly excluded from coverage and is engaging with relevant parties to address this issue [21][22] Question: What is the expected revenue impact from the LCDs? - The company estimates a potential revenue impact of $70 million to $80 million over the next four quarters if the LCDs remain unchanged [38] Question: How does the company plan to address the coverage issues? - The company plans to prepare a legal memo to CMS explaining the errors and will engage directly with them to rectify the situation [37][44] Question: What are the expectations for the surgical business? - The surgical business exceeded expectations in Q2, and management is optimistic about capturing incremental market share due to competitor recalls [82]

PART I. FINANCIAL INFORMATION [Item 1. Unaudited Condensed Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The unaudited condensed consolidated financial statements present the company's financial position, operational results, and cash flows for the reported periods Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $88,917 | $102,478 | | Accounts receivable, net | $93,615 | $89,450 | | Total current assets | $216,435 | $222,609 | | Total assets | $450,313 | $449,359 | | Total current liabilities | $73,455 | $75,023 | | Term loan, net | $68,969 | $70,769 | | Total liabilities | $179,031 | $183,690 | | Total stockholders' equity | $271,282 | $265,669 | Condensed Consolidated Statements of Operations Three Months Ended June 30, (in thousands, except per share data) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Net revenue | $117,316 | $121,401 | | Gross profit | $91,000 | $94,749 | | Income from operations | $9,745 | $11,935 | | Net income | $5,316 | $8,744 | | Diluted EPS | $0.04 | $0.07 | Six Months Ended June 30, (in thousands, except per share data) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Net revenue | $224,958 | $218,518 | | Gross profit | $172,035 | $166,786 | | Income from operations | $5,744 | $11,807 | | Net income | $2,347 | $7,831 | | Diluted EPS | $0.02 | $0.06 | Condensed Consolidated Statements of Stockholders' Equity - Total stockholders' equity increased from **$265.7 million** at December 31, 2022, to **$271.3 million** at June 30, 2023. The increase was primarily driven by a **net income of $2.3 million** and **stock-based compensation expense of $4.2 million** for the six-month period[18](index=18&type=chunk) Condensed Consolidated Statements of Cash Flows Cash Flow Summary for Six Months Ended June 30, (in thousands) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $3,569 | $11,606 | | Net cash used in investing activities | ($15,061) | ($12,840) | | Net cash used in financing activities | ($2,290) | ($350) | | Change in cash, cash equivalents, and restricted cash | ($13,782) | ($1,584) | Notes to Condensed Consolidated Financial Statements - The company is a regenerative medicine company focused on Advanced Wound Care and Surgical & Sports Medicine markets. It has one operating and reportable segment[25](index=25&type=chunk) - As of June 30, 2023, the company believes its cash on hand, working capital, and availability under its credit agreement are sufficient to fund operations, capital expenditures, and debt service for at least the next 12 months[27](index=27&type=chunk) - On February 3, 2023, the company initiated a restructuring plan, reducing headcount by **71 employees (approx. 7%)**, incurring a total charge of **$1.6 million** in H1 2023, primarily for severance[51](index=51&type=chunk) - As of June 30, 2023, the company had **$69.4 million** outstanding under its Term Loan Facility and **$125 million** available under its Revolving Facility[61](index=61&type=chunk)[155](index=155&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion analyzes financial performance, highlighting revenue trends, expense changes, and the company's liquidity position Overview - Organogenesis is a regenerative medicine company specializing in solutions for the Advanced Wound Care and Surgical & Sports Medicine markets, offering a comprehensive portfolio of products like Apligraf, Dermagraft, and PuraPly[100](index=100&type=chunk)[102](index=102&type=chunk) - The company's mission is to improve medical outcomes and lower overall healthcare costs by providing integrated healing solutions[100](index=100&type=chunk) Results of Operations Revenue by Product Category (in thousands) | Category | Q2 2023 | Q2 2022 | Change | H1 2023 | H1 2022 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Advanced Wound Care | $110,075 | $113,791 | -3% | $210,992 | $203,881 | +3% | | Surgical & Sports Medicine | $7,241 | $7,610 | -5% | $13,966 | $14,637 | -5% | | **Total Net Revenue** | **$117,316** | **$121,401** | **-3%** | **$224,958** | **$218,518** | **+3%** | - The decrease in Q2 Advanced Wound Care revenue was attributed to changes in customer buying patterns, while the increase for the six-month period was due to higher sales to existing and new customers[125](index=125&type=chunk)[126](index=126&type=chunk) - Selling, general and administrative (SG&A) expenses decreased by **3%** in Q2 2023 due to lower sales commissions, but increased by **6%** for the six-month period, driven by higher travel, marketing, and ERP implementation costs[133](index=133&type=chunk)[134](index=134&type=chunk) - Research and development (R&D) expenses increased by **18%** for the six months ended June 30, 2023, primarily due to costs for pipeline products, clinical studies, and increased headcount[132](index=132&type=chunk) GAAP Net Income to Non-GAAP Adjusted EBITDA Reconciliation (in thousands) | Metric | Q2 2023 | Q2 2022 | H1 2023 | H1 2022 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $5,316 | $8,744 | $2,347 | $7,831 | | EBITDA | $13,230 | $14,663 | $13,176 | $17,100 | | **Adjusted EBITDA** | **$15,403** | **$18,598** | **$19,171** | **$23,602** | Liquidity and Capital Resources - As of June 30, 2023, the company had **$88.9 million** in cash and cash equivalents and working capital of **$143.0 million**[138](index=138&type=chunk) - The company has **$125.0 million** available for future borrowing under its Revolving Facility[138](index=138&type=chunk) - Management expects current cash, working capital, credit availability, and cash flows from sales to be sufficient to fund operations, capital expenditures, and debt service for at least the next 12 months[138](index=138&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states that there were no material changes to its market risk disclosures during the six months ended June 30, 2023 - There were no material changes to the company's market risk disclosures during the six months ended June 30, 2023[159](index=159&type=chunk) [Item 4. Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective due to a material weakness in internal control over financial reporting - Management concluded that as of June 30, 2023, the company's disclosure controls and procedures were **ineffective**[161](index=161&type=chunk) - The ineffectiveness is due to a **material weakness** in internal control over financial reporting, specifically related to controls for non-routine transactions and IT general controls[161](index=161&type=chunk) - Remediation efforts are underway, including the implementation of a new company-wide ERP system anticipated to go live in 2024, but the material weakness has not yet been fully remediated[164](index=164&type=chunk)[165](index=165&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in a class action lawsuit alleging federal securities law violations, which it believes are without merit - A class action complaint (Somogyi v. Organogenesis Holdings Inc., et al.) was filed against the company and its CEO/CFO, alleging false and misleading statements regarding revenue and sales growth for certain products between August 2020 and August 2022[167](index=167&type=chunk) - The company believes the claims are without merit, intends to vigorously contest them, and has a pending motion to dismiss the litigation[167](index=167&type=chunk) [Item 1A. Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) Significant new risks include Medicare non-coverage for key products and adverse general economic conditions impacting the company's revenue - A major risk has arisen from three Medicare Administrative Contractors (MACs) publishing final local coverage determinations (LCDs) that list key products (PuraPly, Novachor, Affinity, NuShield) as **non-covered** for DFUs and VLUs, effective September 17, 2023[170](index=170&type=chunk)[171](index=171&type=chunk) - This non-coverage determination could have a **material adverse effect** on the utilization of these products, the company's business, and its revenue[170](index=170&type=chunk)[171](index=171&type=chunk) - The company also notes risks related to adverse general economic conditions and recent turmoil in the global banking system, such as the failure of Silicon Valley Bank (SVB), which could negatively affect business operations and financial condition[172](index=172&type=chunk)[173](index=173&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None[174](index=174&type=chunk) [Item 5. Other Information](index=33&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during Q2 2023 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during Q2 2023[177](index=177&type=chunk) [Item 6. Exhibits](index=34&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including corporate governance documents and required certifications

Financial Data and Key Metrics Changes - The company reported its Q1 2023 earnings during the conference call, indicating a focus on financial performance metrics [3]. Business Line Data and Key Metrics Changes - Specific details regarding changes in various business lines were not provided in the available content [3]. Market Data and Key Metrics Changes - The conference call did not include specific market data or key metrics changes [3]. Company Strategy and Development Direction and Industry Competition - The company emphasized its commitment to forward-looking statements and the inherent risks associated with them, indicating a cautious approach to future planning [4]. Management's Comments on Operating Environment and Future Outlook - Management highlighted the importance of not placing undue reliance on forward-looking statements, suggesting a focus on risk management and uncertainty in the current operating environment [4]. Other Important Information - The company mentioned that it may voluntarily update or revise forward-looking statements but is not committed to doing so unless required by securities laws [4]. Q&A Session All Questions and Answers - The content does not provide specific questions and answers from the Q&A session [3].

Table of Contents ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-37906 ORGANOGENESIS HOLDINGS INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION (Exact Name of Registrant as Specified in Its Charter) WASHINGTON, DC 20549 Delaware 98-1329150 (State or Other Jurisdiction of Incorporation or Organizat ...

Financial Data and Key Metrics Changes - Net income for Q4 2022 was $7.5 million, a decrease of $43.5 million compared to $51 million in Q4 2021, primarily due to a prior year tax benefit of $32 million [2] - Adjusted EBITDA for Q4 2022 was $14.1 million, or 12% of net revenue, down from $26.3 million, or 21% of net revenue, in the previous year [2] - Operating income for Q4 2022 was $8.7 million, a decrease from $19.8 million in the prior year [67] Business Line Data and Key Metrics Changes - Net revenue for Advanced Wound Care products in Q4 2022 was $108.8 million, down 10% year-over-year, while Surgical & Sports Medicine products revenue was $6.7 million, down 6% [21][29] - PuraPly products generated $56.8 million in revenue for Q4 2022, a decline of 9% [29] - Excluding certain products, there was low double-digit growth in the number of accounts served in both hospital outpatient and physician office settings [23] Market Data and Key Metrics Changes - The company experienced a 10% decline in sales of non-PuraPly products due to reimbursement uncertainty and competitive pressures [22] - The company expects sales of non-PuraPly products to increase approximately 28% year-over-year in 2023 [3][73] Company Strategy and Development Direction - The company is in the second year of a strategic repositioning, focusing on expanding its commercial reach beyond spine fusion and foot and ankle procedures [5] - The company aims to strengthen its competitive position in the surgical sports medicine market and enhance its product offerings [34][71] - The company plans to optimize independent agency relationships and pilot new commercial strategies [5] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a challenging operating environment in Q4 2022, with expectations for continued competitive noise in 2023 [70] - The company remains confident in its long-term growth potential, targeting sustainable low double-digit growth on a normalized basis [71] - Management expects to navigate challenges in the office setting due to competitive pressures but anticipates stable growth in wound care centers and hospital outpatient settings [52][70] Other Important Information - The company has paused construction of its Canton manufacturing facility due to increased costs, with a 40% rise in estimated project investment [26] - The company has $103.3 million in cash and cash equivalents and $70.8 million in debt obligations as of December 31, 2022 [31] Q&A Session Summary Question: What are the assumptions underpinning the guidance from a macro perspective? - Management acknowledged competitive noise but indicated expectations for market growth in 2023 [6] Question: Why has PuraPly seen drastic declines in usage for 2023? - Management noted a pause in acquisition due to the publication of the physician fee schedule, which is expected to improve over time [7] Question: Can you elaborate on potential rebates from CMS? - Management indicated uncertainty regarding potential refund amounts owed to CMS [8][57] Question: What is the outlook for competitive pressures? - Management believes competitive pressures may improve as the market absorbs new product information and efficacy becomes a key differentiator [12][62]

Financial Performance - For the year ended December 31, 2022, Organogenesis generated revenue of $450.9 million and incurred operating expenses of $323.6 million[20]. - The company reported net income of $15.5 million, $94.2 million, and $17.2 million for the fiscal years 2022, 2021, and 2020, respectively, but has incurred significant losses in many years since inception, with an accumulated deficit of $45.3 million as of December 31, 2022[204]. - The company expects to incur significant sales and marketing costs to support product sales, impacting future profitability[204]. - The company reported that reimbursement rates for its products have been unstable and unpredictable, which could adversely affect its financial condition[196]. Market Opportunity - The addressable Advanced Wound Care and Surgical & Sports Medicine markets totaled approximately $24 billion in 2021, with an estimated $10 billion for Advanced Wound Care and $14 billion for Surgical & Sports Medicine[26]. - The immediate addressable Surgical & Sports Medicine market is estimated at approximately $14 billion, with a CAGR of about 6% through 2028[41]. - The addressable market for skin substitutes in the U.S. could exceed $9 billion if fully penetrated, highlighting significant growth potential[39]. - The worldwide wound biologics market was estimated at approximately $1.7 billion in 2021, with skin substitutes representing about 62% of this market[36]. Product Portfolio and Development - Organogenesis has a comprehensive portfolio of products, including Apligraf and Dermagraft, which have received FDA approvals, providing a strong competitive advantage[17]. - The advanced wound care product suite includes various offerings such as Affinity, Novachor, Apligraf, and Dermagraft, targeting chronic and acute wounds[56]. - The company has established a robust pipeline of products expected to launch in the coming years, enhancing its market offerings[27]. - The company has a robust product pipeline, including line extensions for PuraPly and PuraPly AM, aimed at addressing additional clinical applications[70]. Clinical Efficacy and Studies - Apligraf achieved a 56% complete wound closure rate for diabetic foot ulcers by 12 weeks, compared to 38% for conventional therapy (p=0.0042) with a median time to closure of 65 days[93]. - Apligraf demonstrated a 57% closure rate by week 24 for venous leg ulcers, compared to 40% for the control group (p=0.022)[98]. - PuraPly AM demonstrated wound closure rates of 52%, 62%, and 73% at weeks 20, 26, and 32 respectively, with a median time to closure of 17 weeks across 307 patients[81]. - ReNu treatment for knee osteoarthritis resulted in a statistically significant reduction in pain compared to hyaluronic acid and saline at 12 months follow-up[86]. Regulatory and Compliance - The company is currently evaluating regulatory pathways and market potential for products in major markets, including the European Union[115]. - Medicare coverage for the company's products is determined by each MAC for its specific jurisdiction, with all MACs currently covering the products in outpatient settings[125]. - The FDA regulates the manufacturing processes, requiring compliance with Quality System Regulation (QSR) for medical device products[158]. - The company must comply with medical device reporting regulations, including reporting serious injuries or malfunctions to the FDA[161]. Competitive Landscape - The company competes in a highly competitive market with several key competitors, including Amniox Medical, Inc. and Smith & Nephew plc, focusing on product efficacy and customer support[149]. - The company relies on a combination of intellectual property protections, including patents and trademarks, to maintain its competitive position in the market[152]. - The company emphasizes the importance of timely development and regulatory approval for new products to meet market demand, as delays could negatively impact operational results[211]. Employee and Organizational Culture - The company has approximately 1,030 employees worldwide as of December 31, 2022, with no employees represented by a collective bargaining agreement[191]. - The company has not raised employee contributions to healthcare benefits for 7 years running, indicating a commitment to employee welfare[192]. - The company aims to maintain an "open door" culture to encourage employee feedback and foster a respectful working environment[192]. - The company prioritizes employee health and safety through various programs and a dedicated Environmental Health & Safety team[193]. Risks and Challenges - The company faces potential adverse effects on its business if Medicare finalizes policies that limit reimbursement for skin substitutes in 2024 or 2025[196]. - The company has identified material weaknesses in its internal control over financial reporting, which could lead to inaccurate financial reporting and loss of investor confidence[205][207]. - The company is dependent on a limited group of suppliers for its products, which poses risks of significant product development costs or delivery delays[201]. - The company may face significant competition that could adversely affect its business and financial condition[201].

Financial Data and Key Metrics Changes - The company reported net revenue of $116.9 million for Q3 2022, a 3% increase year-over-year, driven by a 2% increase in advanced wound care products and a 15% increase in surgical and sports medicine products [7][33] - Gross profit for Q3 2022 was $90.7 million, approximately 77.6% of net revenue, compared to 77% in the previous year [34] - Operating income decreased to $1.8 million from $16.3 million year-over-year, while net income fell to $0.2 million from $12.6 million [39][40] - Adjusted EBITDA for Q3 2022 was $11.6 million, or 10% of net revenue, down from $21.7 million, or 19% of net revenue, in the prior year [40] Business Line Data and Key Metrics Changes - Advanced wound care net revenue was $109.5 million, up 2% year-over-year, while surgical and sports medicine products generated $7.3 million, up 15% [33] - Sales of PuraPly products increased by 12% year-over-year, contributing $63.7 million to net revenue [34][33] - Non-PuraPly product sales declined by 6% year-over-year, primarily due to a 21% decline in PMA and other products [15][16] Market Data and Key Metrics Changes - The company experienced a challenging operating environment in the physician office setting, impacted by competitive pressures and staffing challenges [9][10] - The hurricane Ian affected demand in Florida during the last week of the quarter, which contributed to lower sales results [8] - The company anticipates continued competitive pressure in the amniotic products market until CMS publishes ASPs [21][22] Company Strategy and Development Direction - The company aims to diversify revenue across physician specialties and sites of care, targeting product development and commercial strategies to drive growth [12] - The company paused the construction of a manufacturing facility in Canton, Massachusetts, due to a 40% increase in expected investment costs [24][25] - The company plans to continue launching innovative products and expanding its sales force to enhance market penetration [23][11] Management's Comments on Operating Environment and Future Outlook - Management noted that competitive pressures and reimbursement confusion are significant challenges, particularly in the office setting [52][58] - The company updated its full-year 2022 guidance, expecting net revenue between $448 million and $465 million, reflecting a decline of approximately 2% year-over-year [20][43] - Management expressed confidence in the company's unique value proposition and broad product portfolio to navigate current challenges [22][23] Other Important Information - The company is progressing in its Phase 3 clinical trial for ReNu for knee osteoarthritis, with over 82% of patients enrolled [27] - The company plans to submit an IND amendment to the FDA and expects to launch a second Phase 3 trial by mid-2023 [28] Q&A Session Summary Question: What factors contributed to the decline in the amnion business? - Management indicated that competitive pressure and confusion regarding reimbursement have persisted, impacting sales [52] Question: Any updates on Novachor and its impact on TransCyte? - Novachor is currently in a soft launch phase, with expectations for a more significant impact next year. Alternatives for TransCyte manufacturing are being explored [54] Question: How do the recent challenges affect the fourth quarter outlook? - Management acknowledged that the hurricane and competitive pressures impacted sales, but they expect to remain at the lower end of guidance [57] Question: What is the expectation for pricing strategies moving forward? - Management confirmed that pricing has been affected by competition, and they are focused on understanding account dynamics to navigate the situation [61] Question: What are the expectations for growth in 2023? - Management refrained from providing specific guidance for 2023 but noted that a larger sales force and new products should positively impact growth [64] Question: How will the company manage costs in the upcoming year? - Management emphasized a prudent investment approach based on revenue outlook while maintaining strong fundamentals [66]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-37906 ORGANOGENESIS HOLDINGS INC. (Exact Name of Registrant as Specified in Its Charter) Delaware 98-1329150 (State or Other Jurisdiction of I ...