Organogenesis Holdings Inc. (NASDAQ:ORGO) Q2 2022 Earnings Conference Call August 9, 2022 5:00 PM ET Company Participants Gary Gillheeney - President and Chief Executive Officer Dave Francisco - Chief Financial Officer Conference Call Participants Steve Lichtman - Oppenheimer Ryan Zimmerman - BTIG Operator Good afternoon, ladies and gentlemen, and welcome to the Second Quarter 2022 Earnings Conference Call for Organogenesis Holdings Inc. At this time, all participants have been placed in a listen-only mode. ...

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 June 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 Incorp ...

Financial Data and Key Metrics Changes - The company reported net revenue of $98.1 million for Q1 2022, a decrease of 4% year-over-year, primarily due to flat growth in Advanced Wound Care products and a 39% decline in Surgical & Sports Medicine products [8][26] - Adjusted net revenue, excluding ReNu and NuCel, increased by 1% year-over-year [9][26] - Gross profit for Q1 2022 was $73 million, approximately 74% of revenue, compared to 75% in the previous year [27] - Operating income decreased to $0.9 million from $12.6 million year-over-year [31] - Net income for Q1 2022 was $0.1 million, down from $9.9 million in the prior year [32] Business Line Data and Key Metrics Changes - Advanced Wound Care net revenue was $91 million, essentially flat year-over-year [26] - Surgical & Sports Medicine products generated $7.2 million in revenue, down 39% due to the suspension of ReNu and NuCel marketing [26] - PuraPly products saw a 29% increase in sales year-over-year, reaching $53.3 million [27][12] - Amniotic products experienced a 32% decline year-over-year, reflecting the impact of Omicron on the national launch of Affinity [12] Market Data and Key Metrics Changes - The overall operating environment in Q1 was impacted by rising Omicron case counts, affecting patient consultations and elective procedures [15] - The company expects steady improvement in the operating environment as COVID-related headwinds diminish throughout 2022 [16] Company Strategy and Development Direction - The company aims to diversify revenue across physician specialties and sites of care through targeted product development and commercial strategies [14] - The midpoint of the full-year revenue range assumes amniotic growth of approximately 12% year-over-year in 2022 [13] - The company plans to launch new products and line extensions to drive demand and expand market presence [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the full-year 2022 guidance, expecting net revenue between $485 million and $515 million, representing growth of 4% to 10% year-over-year [17][34] - The company anticipates stronger growth trends in the second half of 2022, driven by new product contributions and a return to a normalized operating environment [17][34] Other Important Information - The company appointed Michele Korfin and Gilberto Quintero to the Board of Directors, enhancing the board's experience and diversity [23][24] - The company is making progress in its Phase III clinical trial of ReNu for knee osteoarthritis, with enrollment on track [21] Q&A Session Summary Question: Update on amniotic product line and Affinity - Management noted that Q1 performance for Affinity was as expected, with positive trends observed in recent weeks and confidence in continued expansion throughout the year [45] Question: Update on commercial organization growth - The company plans to add approximately 50 new direct sales representatives and is evaluating agency relationships for competency [51] Question: Medicare pricing expectations - Management indicated that pricing changes would be reflected in the average selling price (ASP) as they occur, but no specific pricing strategy was discussed [60] Question: Restructuring program and gross margins - The restructuring aims to increase capacity and efficiency, with expectations for gross margins to improve as revenue increases throughout the year [63]

Table of Contents ORGANOGENESIS HOLDINGS INC. 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 March 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-37906 (Exact Name of Registrant as Specified in Its Charter) Delaware 98-1329150 (State or Other Jurisdiction of (I.R ...

Organogenesis Empowering Healing Oppenheimer Annual Healthcare Conference 3/15/22 Organogenesis Empowering Healing 2 Forward Looking Statements and Other Important Cautions This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to expectations or forecasts of future events. Forward-looking statements may be identified by the use of words such as "forecast," "intend," "seek," "target," "anticipa ...

Organogenesis Holdings Inc. (NASDAQ:ORGO) Q4 2021 Earnings Conference Call March 1, 2022 5:00 PM ET Company Participants Gary Gillheeney - President and Chief Executive Officer Dave Francisco - Chief Financial Officer Conference Call Participants Ryan Zimmerman - BTIG Danielle Antalffy - SVB Leerink Steven Lichtman - Oppenheimer Operator Good afternoon, ladies and gentlemen and welcome to the Fourth Quarter 2021 Earnings Conference Call for Organogenesis Holdings Inc. [Operator Instructions] Please note tha ...

[PART I](index=3&type=section&id=PART%20I) [Business](index=3&type=section&id=Item%201.%20Business) Organogenesis is a leading regenerative medicine company specializing in Advanced Wound Care and Surgical & Sports Medicine, offering FDA-approved solutions and leveraging a direct sales force [Overview](index=3&type=section&id=Overview) Organogenesis provides regenerative medicine solutions for Advanced Wound Care and Surgical & Sports Medicine, backed by clinical data and FDA approvals, to improve patient outcomes - Organogenesis focuses on developing, manufacturing, and commercializing regenerative medicine solutions for Advanced Wound Care and Surgical & Sports Medicine markets[15](index=15&type=chunk) - The company's products, including Apligraf, Dermagraft, PuraPly AM, Affinity, Novachor, and NuShield, are supported by clinical data and FDA approvals (PMA or 510(k) clearance)[16](index=16&type=chunk)[17](index=17&type=chunk) - As of December 31, 2021, Organogenesis had approximately **950 full-time employees** worldwide[20](index=20&type=chunk) [Competitive Strengths](index=4&type=section&id=Competitive%20Strengths) Organogenesis leverages its leadership in regenerative medicine, strong brand recognition, and extensive clinical data to maintain a competitive advantage in growing markets - Organogenesis is a leader in regenerative medicine technology with strong brand recognition for products like Apligraf, Dermagraft, and PuraPly AM[21](index=21&type=chunk) - The company is well-positioned in large, attractive, and growing global markets, including Advanced Wound Care and Surgical & Sports Medicine, driven by favorable demographics and increasing adoption of regenerative medicine[21](index=21&type=chunk) - Organogenesis possesses a large and growing body of clinical data and FDA-approved products, including PMA approvals and 510(k) clearances, which provide a strong competitive advantage due to the extensive time and cost required for such approvals[21](index=21&type=chunk) [Our Business Strategy](index=5&type=section&id=Our%20Business%20Strategy) The company's strategy focuses on strengthening customer relationships, expanding market penetration in Advanced Wound Care and Surgical & Sports Medicine, and launching new products - Organogenesis aims to deepen penetration in the Advanced Wound Care market by leveraging its comprehensive product portfolio and relationships with over **4,000 healthcare facilities**[23](index=23&type=chunk) - The company plans to accelerate expansion into the Surgical & Sports Medicine market using placental-based and collagen biomaterial products, supported by its commercial and operational infrastructure and a growing direct sales force[23](index=23&type=chunk)[24](index=24&type=chunk) - Strategic growth drivers include launching a robust pipeline of products, driving innovation through R&D, expanding sales force reach and productivity, and supplementing organic growth with selective acquisitions[27](index=27&type=chunk) [Industry Overview](index=6&type=section&id=Industry%20Overview) The company operates in the $24 billion Advanced Wound Care and Surgical & Sports Medicine markets, driven by demographics, comorbidities, and regenerative medicine adoption - The addressable Advanced Wound Care and Surgical & Sports Medicine markets totaled approximately **$24 billion in 2021**, with **$10 billion** for Advanced Wound Care and **$14 billion** for Surgical & Sports Medicine[26](index=26&type=chunk) - Key growth drivers include favorable global demographics, an aging population, increased incidence of comorbidities (diabetes, obesity), and growing acceptance of advanced technologies for complex wounds and musculoskeletal injuries[31](index=31&type=chunk) - Chronic wounds, including VLUs, DFUs, pressure ulcers, and surgical wounds, are characterized by uncontrolled inflammatory processes and shortages of critical healing factors[30](index=30&type=chunk) [Advanced Wound Care Market](index=7&type=section&id=Advanced%20Wound%20Care%20Market) The $10 billion Advanced Wound Care market, driven by chronic wounds, sees skin substitutes as a fast-growing segment where Organogenesis is a leader - The Global Advanced Wound Care market was estimated at approximately **$10 billion in 2021** and is expected to grow at a CAGR of **4% through 2028**[36](index=36&type=chunk) - Skin substitutes, a category within wound biologics, are one of the fastest-growing segments, projected to grow from **$1.1 billion in 2021 to $2 billion in 2026**[39](index=39&type=chunk) - Organogenesis is a leading skin substitute company in the U.S., with a diverse product array and experienced sales force, addressing a market where penetration remains low despite vast need[43](index=43&type=chunk) [Surgical & Sports Medicine Market](index=10&type=section&id=Surgical%20%26%20Sports%20Medicine%20Market) The $14 billion Surgical & Sports Medicine market, driven by aging and injuries, focuses on wound coverings and soft tissue healing solutions - The immediate addressable Surgical & Sports Medicine market for Organogenesis's products is approximately **$14 billion**, with a CAGR of approximately **6% through 2028**[44](index=44&type=chunk)[50](index=50&type=chunk) - This market includes surgical/acute wounds, chronic inflammatory and degenerative conditions (e.g., OA, tendonitis), and tendon and ligament injuries[28](index=28&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk) - Organogenesis's strategy in this market focuses on providing wound covering and soft tissue healing solutions with placental-based technologies in the short term, and addressing chronic inflammatory and degenerative conditions like OA in the long term[50](index=50&type=chunk) [Our Products](index=12&type=section&id=Our%20Products) The company offers a diverse portfolio of Advanced Wound Care and Surgical & Sports Medicine products, including FDA-approved skin substitutes and placental-based solutions - The Advanced Wound Care portfolio includes Apligraf (PMA-approved for VLUs and DFUs), Dermagraft (PMA-approved for DFUs, manufacturing suspended for transition), PuraPly AM (510(k) cleared antimicrobial barrier), and placental-based products Affinity, Novachor, and NuShield[17](index=17&type=chunk)[60](index=60&type=chunk) - Surgical & Sports Medicine products include NuShield (surgical barrier), Affinity, Novachor, PuraPly AM (wound coverings for acute surgical wounds), PuraForce (collagen surgical matrix for soft tissue reinforcement), and bone allograft products (FiberOS, OCMP) for bony fusion[69](index=69&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk) - PuraPly AM is designed to control biofilm and excessive inflammation in wounds, functioning as an antimicrobial barrier via PHMB[67](index=67&type=chunk)[68](index=68&type=chunk) [Ongoing Clinical Studies](index=16&type=section&id=Ongoing%20Clinical%20Studies) Organogenesis conducts ongoing clinical studies for Advanced Wound Care and Surgical & Sports Medicine products to generate data and enhance sales and reimbursement - Organogenesis has **six ongoing prospective trials** and comparative effectiveness studies, with additional studies planned for 2022, to generate clinical data for its Advanced Wound Care and Surgical & Sports Medicine products[72](index=72&type=chunk) - Ongoing Advanced Wound Care studies include RESPOND Registry for PuraPly AM, Comparative Effectiveness Analyses for PuraPly AM and Apligraf against competitors, and RCTs for NuShield and Affinity in DFUs and VLUs[74](index=74&type=chunk) - In Sports Medicine, a Phase 3 prospective, multicenter, double-blind, randomized, placebo-controlled study is underway to evaluate the efficacy of ReNu for knee osteoarthritis, with an estimated completion date in Q3 2023[75](index=75&type=chunk) [Recently Published Clinical Studies](index=18&type=section&id=Recently%20Published%20Clinical%20Studies) Recent clinical studies demonstrate the efficacy of products like PuraPly AM, Affinity, NuShield, and ReNu in wound closure and pain reduction - PuraPly AM achieved **73% wound closure at 32 weeks** in a multicenter cohort study of 307 patients with various cutaneous wounds[76](index=76&type=chunk) - Affinity, in a randomized controlled trial for diabetic foot ulcers, resulted in **60% wound closure at 12 weeks** compared to **38% for standard of care** (p=0.04)[77](index=77&type=chunk) - ReNu demonstrated a clinically meaningful and statistically significant reduction in VAS pain and higher OMERACT-OARSI responder rate at 12 months for knee OA patients compared to hyaluronic acid or saline[80](index=80&type=chunk) [Previously Published Clinical Studies for FDA-Approved Products](index=20&type=section&id=Previously%20Published%20Clinical%20Studies%20for%20FDA-Approved%20Products) Extensive clinical evidence supports FDA-approved Apligraf and Dermagraft for wound healing, demonstrating efficacy and cost-effectiveness in various patient populations - Apligraf is the only product with FDA approval for both Venous Leg Ulcers (VLUs) and Diabetic Foot Ulcers (DFUs)[84](index=84&type=chunk) Apligraf DFU Pivotal Trial Results (12 Weeks) | Treatment Group | 100% Wound Closure | | :---------------- | :------------------- | | Apligraf + Conventional Therapy | 56% (63 of 112 patients) | | Conventional Therapy Alone | 38% (36 of 96 subjects) | - A study showed Medicare treatment costs for DFUs treated with Apligraf were **$5,253 lower per patient** and for Dermagraft were **$6,991 lower per patient** compared to standard of care, due to reduced amputations, hospitalizations, and emergency visits[96](index=96&type=chunk) [Product Pipeline](index=25&type=section&id=Product%20Pipeline) The company maintains a robust product pipeline for Advanced Wound Care and Surgical & Sports Medicine, including PuraPly MZ, Cord Membrane, and re-introduction of TransCyte - The product pipeline includes PuraPly MZ, a micronized particulate version of PuraPly for deep and tunneling wounds, with a 510(k) application submitted and commercial launch planned for early 2022 if FDA cleared[108](index=108&type=chunk) - Organogenesis is developing a Cord Membrane product as a thick, strong wound covering with a long shelf life, and is researching other placental products[109](index=109&type=chunk)[110](index=110&type=chunk) - The company plans to re-introduce TransCyte for deep second- and third-degree burns and launch FortiShield as a temporary wound covering, pending FDA clearance and manufacturing facility completion[112](index=112&type=chunk)[113](index=113&type=chunk) [Platform Technologies](index=27&type=section&id=Platform%20Technologies) Organogenesis's R&D leverages bioengineered cellular, collagen biomaterial, placental-based, and PHMB antimicrobial technology platforms for product development - Organogenesis possesses deep expertise in bioengineered cultured cellular products, exemplified by Apligraf, Dermagraft, and TransCyte[118](index=118&type=chunk) - The company utilizes a collagen biomaterial technology platform for products like the PuraPly family, allowing for bioengineering products with controlled thickness, strength, and remodeling rates[118](index=118&type=chunk) - Proprietary processing methods like AlloFresh and LayerLoc are used for placental-based products (Affinity, NuShield, Novachor) to preserve native tissue benefits and structure[118](index=118&type=chunk) [Commercial Infrastructure](index=27&type=section&id=Commercial%20Infrastructure) The company maintains a robust U.S. commercial infrastructure with a direct sales force and extensive in-house customer support for Advanced Wound Care and Surgical & Sports Medicine - Organogenesis has a multi-faceted sales capability in the United States, with approximately **340 direct sales representatives** and **160 independent agencies** as of December 31, 2021[116](index=116&type=chunk) - The company offers extensive in-house customer support services, including third-party reimbursement, medical, and technical support through its 'Circle of Care' program[119](index=119&type=chunk) - While historically focused on the U.S., Organogenesis has obtained marketing registrations and is selling products in several countries outside the U.S., including Switzerland, Saudi Arabia, and Kuwait[117](index=117&type=chunk) [Research and Development](index=28&type=section&id=Research%20and%20Development) The R&D team focuses on developing regenerative medicine products to improve patient outcomes, simplify techniques, and reduce costs, with expertise across regulatory classifications - The R&D team is focused on designing products that improve patient outcomes, simplify techniques, shorten procedures, and reduce hospitalization/rehabilitation times and costs[120](index=120&type=chunk) - Organogenesis has proven competencies in bringing products to market via a broad range of regulatory classifications, including PMA, BLA, 510(k) clearance, and 361 HCT/P allograft products[121](index=121&type=chunk) - R&D activities are conducted at laboratory facilities in Canton, MA, Birmingham, AL, and San Diego, CA, with ongoing efforts to build clinical operations for multicenter trials[120](index=120&type=chunk)[121](index=121&type=chunk) [Manufacturing and Suppliers](index=28&type=section&id=Manufacturing%20and%20Suppliers) Organogenesis manufactures non-placental products internally and uses third-party manufacturers for placental products, relying on qualified suppliers for raw materials - Organogenesis manufactures primary non-placental products internally and uses third-party manufacturers for placental-based products, with significant expansion capabilities in-house[122](index=122&type=chunk) - The company maintains robust internal compliance processes and undergoes annual internal and external audits by regulatory agencies (e.g., FDA, AATB) to monitor quality control[123](index=123&type=chunk) - Product manufacturing depends on sufficient quantities of source tissue (human, porcine, bovine) from qualified third-party suppliers, all compliant with FDA cGTP regulations and AATB standards[125](index=125&type=chunk) [Reimbursement](index=29&type=section&id=Reimbursement) Reimbursement for products is crucial, with Medicare coverage varying by setting and the loss of pass-through status impacting certain products - Medicare payment for skin substitutes in physician offices is separate from the application procedure, based on Average Sales Price (ASP) plus **6%**[129](index=129&type=chunk)[138](index=138&type=chunk) - In outpatient hospital and ASC settings, Medicare payment for all Organogenesis's products is bundled into the payment for the application procedure, with a two-tier system for high-cost vs low-cost products[129](index=129&type=chunk)[132](index=132&type=chunk) - PuraPly AM and PuraPly had pass-through status from October 2018 to September 2020, but as of October 1, 2020, payment for these products is bundled into the application procedure[130](index=130&type=chunk)[135](index=135&type=chunk) [Competition](index=32&type=section&id=Competition) The company operates in highly competitive markets, leveraging clinical efficacy, a broad product portfolio, and customer support as key competitive advantages - Organogenesis operates in highly competitive markets subject to rapid technological change, with competition based on product efficacy, ease of use, price, reimbursement, and customer support[147](index=147&type=chunk) - The company's competitive strengths include demonstrated clinical efficacy, a broad product portfolio, in-house customer support services, and FDA PMA approved and 510(k) cleared products[148](index=148&type=chunk) - Key competitors include 3M, Amniox Medical, Arthrex, Integra LifeSciences, MiMedx Group, Smith & Nephew, Bioventus Inc., and Vivex Biologics[149](index=149&type=chunk) [Intellectual Property](index=32&type=section&id=Intellectual%20Property) Organogenesis protects its intellectual property through trademarks, trade secrets, and patents, though many key products are not patent-covered - Organogenesis relies on trademarks, trade secrets, patents, copyrights, and other intellectual property rights to protect its technology and competitive position[152](index=152&type=chunk) - As of December 31, 2021, the company owned **20 issued patents globally** (**12 U.S.**) and **13 pending patent applications** (**10 U.S.**), with many issued patents expiring between 2027 and 2038[154](index=154&type=chunk) - Many key products, including Apligraf, Dermagraft, and NuShield, are not covered by the company's issued patents or pending patent applications, relying instead on trade secrets and know-how[154](index=154&type=chunk) [Government Regulation](index=33&type=section&id=Government%20Regulation) Medical products are subject to extensive FDA regulation, including premarket review, post-approval requirements, and strict healthcare fraud and abuse laws - Medical products are regulated by the FDA under the PHSA or FDCA, requiring 510(k) clearance, PMA approval, or BLA approval prior to marketing, with certain modifications also requiring review[156](index=156&type=chunk)[157](index=157&type=chunk)[158](index=158&type=chunk) - Certain HCT/Ps (e.g., Affinity, NuShield) may be regulated solely under Section 361 of the PHSA if minimally manipulated and for homologous use, exempting them from premarket clearance/approval, but subject to cGTPs and other requirements[165](index=165&type=chunk) - The company is subject to federal and state healthcare fraud and abuse laws, including the Anti-Kickback Statute and False Claims Act, which prohibit improper payments and false claims to federal healthcare programs[184](index=184&type=chunk)[185](index=185&type=chunk) [Seasonality](index=40&type=section&id=Seasonality) Revenues exhibit seasonality, with the fourth quarter typically strongest due to hospital budget cycles and patient deductible fulfillment - Revenues are typically stronger in the fourth quarter due to hospitals increasing purchases at the end of their budget cycles and patient deductibles being satisfied[191](index=191&type=chunk) - The first quarter generally has lower revenues, with the second and third quarters showing higher revenues than the first, and the fourth quarter being the highest[191](index=191&type=chunk) [Human Capital Resources](index=40&type=section&id=Human%20Capital%20Resources) As of December 31, 2021, the company had 950 employees, prioritizing diversity, competitive compensation, professional development, and employee well-being - As of December 31, 2021, Organogenesis had approximately **950 full-time employees** worldwide, with no collective bargaining agreements[192](index=192&type=chunk) - The company focuses on diversity, open communication, competitive compensation (no healthcare contribution increases for **6 years**), professional development, and employee health and safety, including COVID-19 measures[193](index=193&type=chunk)[197](index=197&type=chunk) [Available Information](index=41&type=section&id=Available%20Information) The company provides SEC filings, including annual and quarterly reports, free of charge on its investor relations website - The company provides its annual, quarterly, and current reports, along with proxy statements, free of charge on its investor relations website (http://www.organogenesis.com) after filing with the SEC[196](index=196&type=chunk) - Organogenesis is a leading regenerative medicine company focused on Advanced Wound Care and Surgical & Sports Medicine markets, offering solutions that support tissue healing and improve patient outcomes[15](index=15&type=chunk) - The company's products address large and growing markets driven by aging demographics and increased comorbidities like diabetes and obesity[15](index=15&type=chunk) 2021 Key Financials | Metric | Value (Millions USD) | | :----- | :------------------- | | Revenue | $468.1 | | Operating Expenses | $280.9 | [Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including operational fluctuations, internal control weaknesses, rapid technological change, supply chain disruptions, and evolving regulatory and reimbursement policies [Summary of Risk Factors](index=42&type=section&id=Summary%20of%20Risk%20Factors) Key risks include fluctuating operating results, uncertain reimbursement, material weakness in internal controls, intense competition, and FDA regulatory compliance - Key risks include fluctuating operating results, potential future losses, and uncertainty regarding coverage and adequate reimbursement for products from government and private payers[199](index=199&type=chunk) - The company has identified a material weakness in internal control over financial reporting, and its disclosure controls and procedures are not effective[199](index=199&type=chunk) - Other significant risks involve intense competition, rapid technological change, challenges in physician adoption of products, FDA regulatory compliance, and dependence on a limited group of suppliers and manufacturers[199](index=199&type=chunk)[202](index=202&type=chunk) [Risks Related to Organogenesis and its business](index=43&type=section&id=Risks%20Related%20to%20Organogenesis%20and%20its%20business) Business risks include fluctuating results, potential future losses, internal control weaknesses, rapid technological change, supply chain disruptions, and product liability claims - Operating results may fluctuate significantly due to factors such as competitor products, reimbursement policies, regulatory changes, and general economic conditions[203](index=203&type=chunk)[204](index=204&type=chunk) - The company has incurred significant losses since inception, and while profitable in 2020 and 2021, may incur future losses due to expansion costs[205](index=205&type=chunk) - A material weakness in internal control over financial reporting persists as of December 31, 2021, due to a lack of formal policies, inconsistent application of controls, and turnover in key positions[206](index=206&type=chunk)[209](index=209&type=chunk) [Risks Related to Regulation of Our Products and Other Government Regulations](index=57&type=section&id=Risks%20Related%20to%20Regulation%20of%20Our%20Products%20and%20Other%20Government%20Regulations) Regulatory risks include clinical trial delays, challenges in obtaining FDA approvals, potential reclassification of HCT/Ps, and non-compliance with healthcare fraud and abuse laws - Substantial delays or difficulties in clinical trials, including those for ReNu, could result in additional costs or impair the ability to generate revenues[266](index=266&type=chunk)[269](index=269&type=chunk)[270](index=270&type=chunk) - The FDA may determine that certain HCT/Ps (e.g., Affinity, NuShield) do not qualify for regulation solely under Section 361 of the PHSA, requiring premarket approval or clearance and potentially disrupting marketing[285](index=285&type=chunk)[286](index=286&type=chunk) - Non-compliance with federal, state, and foreign healthcare fraud and abuse laws (e.g., Anti-Kickback Statute, False Claims Act) could lead to substantial penalties, exclusion from government programs, and reputational harm[304](index=304&type=chunk)[305](index=305&type=chunk)[311](index=311&type=chunk) [Risks Related to Reimbursement for our Products](index=69&type=section&id=Risks%20Related%20to%20Reimbursement%20for%20our%20Products) Reimbursement risks stem from uncertain government and private insurer coverage, Medicare's bundled payment policies, and cost-containment efforts by purchasing groups - The rate of reimbursement and coverage for Organogenesis's products by government and private insurance is unstable and subject to changes, which can adversely affect business, results of operations, and financial condition[322](index=322&type=chunk)[324](index=324&type=chunk) - Medicare's bundled payment policy in the hospital outpatient setting creates incentives to use competitors' cheaper products, and the loss of pass-through status for PuraPly AM and PuraPly has reduced revenue[323](index=323&type=chunk)[326](index=326&type=chunk) - Cost-containment efforts by GPOs, IDNs, and other purchasing groups can lead to pricing concessions and exclusion from contracts, adversely affecting the company's business[333](index=333&type=chunk) [Risks Related to Our Intellectual Property](index=71&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) Intellectual property risks include reliance on trade secrets, expired patents, potential litigation, and uncertainties from evolving U.S. patent law - The company's success depends on maintaining proprietary technology, but trade secrets are difficult to protect, and many key patents for marketed products (e.g., Apligraf, Dermagraft, NuShield) have expired[334](index=334&type=chunk)[336](index=336&type=chunk)[338](index=338&type=chunk) - Organogenesis operates in an industry with extensive intellectual property litigation, and defending against infringement claims can be expensive, time-consuming, and may result in significant damages or injunctions[340](index=340&type=chunk)[342](index=342&type=chunk) - Changes in U.S. patent law, including the Leahy-Smith America Invents Act and Supreme Court rulings, have narrowed patent scope and increased uncertainty regarding the value and enforceability of patents[352](index=352&type=chunk)[353](index=353&type=chunk) [Risks Related to Our Indebtedness](index=75&type=section&id=Risks%20Related%20to%20Our%20Indebtedness) Indebtedness of $74.1 million increases vulnerability to economic conditions, limits cash flow, and poses risks of covenant non-compliance and accelerated repayment - As of December 31, 2021, Organogenesis had approximately **$74.1 million in outstanding indebtedness**, increasing its vulnerability to adverse economic conditions and limiting cash flow for operations[354](index=354&type=chunk) - The company's ability to service its debt depends on future cash generation, which is subject to economic, financial, and regulatory factors beyond its control[358](index=358&type=chunk) - Failure to comply with restrictive covenants in credit agreements could result in an event of default, leading to immediate repayment of debt and potential adverse effects on business and financial condition[360](index=360&type=chunk)[362](index=362&type=chunk)[363](index=363&type=chunk) [Risks Related to Our Class A Common Stock](index=78&type=section&id=Risks%20Related%20to%20Our%20Class%20A%20Common%20Stock) Risks to Class A common stock include potential Nasdaq delisting, compliance with 'controlled company' rules, and significant stockholder group voting control - There is no assurance that the company's Class A common stock will continue to be listed on Nasdaq, and delisting could lead to reduced liquidity and trading activity[366](index=366&type=chunk)[367](index=367&type=chunk) - Organogenesis ceased to be a 'controlled company' on May 6, 2021, and must now comply with Nasdaq's independent board and committee requirements within specified phase-in periods, with potential enforcement actions if not met[369](index=369&type=chunk)[370](index=370&type=chunk)[372](index=372&type=chunk) - The Significant Stockholder Group collectively beneficially owns approximately **46% of the Class A common stock**, allowing them to effectively determine the outcome of stockholder matters, potentially conflicting with other investors' interests[373](index=373&type=chunk)[374](index=374&type=chunk) [General Risk Factors](index=81&type=section&id=General%20Risk%20Factors) General risks include intense competition, uncertain capital needs, dependence on key employees, business disruptions, and compliance with environmental and tax regulations - The company faces significant and continuing competition, which could adversely affect its business, results of operations, and financial condition due to rapid technological change and price competition[380](index=380&type=chunk) - Future capital needs are uncertain, and the company may need to raise additional funds through equity or debt, potentially leading to dilution or unfavorable terms[381](index=381&type=chunk)[383](index=383&type=chunk) - The business is highly dependent on retaining key employees, consultants, and advisors, and a shortage of skilled personnel in the industry poses a risk to success[384](index=384&type=chunk) - Operating results may fluctuate significantly due to factors like competitor product introductions, reimbursement changes, cost-containment efforts, and regulatory actions[199](index=199&type=chunk)[203](index=203&type=chunk) - The company has identified a material weakness in internal control over financial reporting, indicating a risk of inaccurate financial reporting or fraud[199](index=199&type=chunk)[206](index=206&type=chunk) - Significant risks include rapid technological change, challenges in convincing physicians of product efficacy, product liability claims, supply chain interruptions (especially for human tissue), and the potential for new products to become obsolete[202](index=202&type=chunk)[211](index=211&type=chunk)[213](index=213&type=chunk)[220](index=220&type=chunk)[222](index=222&type=chunk)[227](index=227&type=chunk) [Unresolved Staff Comments](index=86&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - There are no unresolved staff comments from the SEC[409](index=409&type=chunk) [Properties](index=87&type=section&id=Item%202.%20Properties) The company's properties include a 300,000 sq ft corporate headquarters in Canton, MA, and leased facilities in Norwood, San Diego, and Birmingham - Corporate headquarters is a four-building campus in Canton, Massachusetts, with approximately **300,000 square feet** for manufacturing, shipping, operations, and R&D[410](index=410&type=chunk) - Three Canton buildings are leased, with leases extended to December 31, 2027. The company also leases facilities in Norwood, MA (office/lab), San Diego, CA (office/lab and warehouse), and Birmingham, AL (amniotic products)[410](index=410&type=chunk)[411](index=411&type=chunk)[412](index=412&type=chunk)[413](index=413&type=chunk) [Legal Proceedings](index=87&type=section&id=Item%203.%20Legal%20Proceedings) The company faces a class action complaint alleging federal securities law violations related to product billing, which it intends to vigorously contest - A class action complaint was filed on December 10, 2021, alleging federal securities law violations related to billing for Affinity and PuraPly XT products and inducing doctors to use them through lucrative reimbursements[414](index=414&type=chunk) - Organogenesis believes the claims are without merit and intends to vigorously contest them[414](index=414&type=chunk) - Other legal proceedings arising from ordinary business are not expected to have a material adverse effect on the company's financial position, results of operations, or cash flows[415](index=415&type=chunk) [Mine Safety Disclosures](index=87&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine Safety Disclosures are not applicable to the company - Item 4, Mine Safety Disclosures, is not applicable to Organogenesis Holdings Inc[416](index=416&type=chunk) [PART II](index=88&type=section&id=PART%20II) [Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=88&type=section&id=Item%205.%20Market%20For%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Class A common stock is listed on Nasdaq under 'ORGO', with 128.8 million shares outstanding, and the company retains earnings for growth - Organogenesis Class A common stock is listed on the Nasdaq Capital Market under the symbol **"ORGO"**[418](index=418&type=chunk) Class A Common Stock Statistics (as of Feb 15, 2022) | Metric | Value | | :----- | :---- | | Shares Outstanding | 128,765,237 | | Holders of Record | 399 | - The company has never declared or paid cash dividends and intends to retain all available funds and future earnings to finance business growth, with dividend payments restricted by the 2021 Credit Agreement[419](index=419&type=chunk) [Reserved](index=89&type=section&id=Item%206.%20Reserved) Item 6 is reserved in this Annual Report on Form 10-K [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=89&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes Organogenesis's financial performance, including $468.1 million net revenue and $94.9 million net income in 2021, liquidity, and critical accounting policies [Overview](index=89&type=section&id=Overview) Organogenesis, a regenerative medicine company, reported $468.1 million net revenue and $94.9 million net income in 2021, despite an accumulated deficit - Organogenesis is a leading regenerative medicine company focused on developing, manufacturing, and commercializing solutions for Advanced Wound Care and Surgical & Sports Medicine markets[423](index=423&type=chunk) Net Revenue and Net Income (Loss) (in millions USD) | Year | Net Revenue | Net Income (Loss) | | :--- | :---------- | :---------------- | | 2021 | $468.1 | $94.9 | | 2020 | $338.3 | $17.2 | | 2019 | $261.0 | $(38.7) | - As of December 31, 2021, the company had an accumulated deficit of **$60.1 million**, despite reporting net income in the last two fiscal years[428](index=428&type=chunk) [COVID-19 pandemic](index=90&type=section&id=COVID-19%20pandemic) The COVID-19 pandemic has not materially impacted financial results through 2021, but the company continues to monitor risks and ensure business continuity - The COVID-19 pandemic has not materially adversely affected Organogenesis's financial results and business operations through December 31, 2021[429](index=429&type=chunk) - The company is closely monitoring the evolving impact of the pandemic, implementing measures to protect employee health and safety, support customers, and promote business continuity[429](index=429&type=chunk) [CPN Acquisition](index=90&type=section&id=CPN%20Acquisition) Organogenesis acquired CPN Biosciences, LLC on September 17, 2020, for $19.0 million, including cash, stock, and an Earnout liability - Organogenesis acquired CPN Biosciences, LLC on September 17, 2020, for an aggregate consideration of **$19.0 million**[430](index=430&type=chunk) - The consideration included **$6.4 million in cash**, **2,151,438 shares of Class A common stock** (fair value **$8.8 million**), and a contingent Earnout liability (fair value **$3.8 million**)[430](index=430&type=chunk) - The results of CPN's operations have been included in Organogenesis's consolidated financial statements since the acquisition date[430](index=430&type=chunk) [Dermagraft](index=90&type=section&id=Dermagraft) Dermagraft manufacturing was suspended in Q4 2021, with sales suspension in Q2 2022, for manufacturing consolidation and cost savings - Manufacturing of Dermagraft was suspended in Q4 2021, and sales will be suspended in Q2 2022, as part of a plan to consolidate manufacturing operations in Massachusetts[431](index=431&type=chunk) - The transition is expected to result in substantial long-term cost savings[431](index=431&type=chunk) - Organogenesis expects customers to substitute Apligraf for Dermagraft, anticipating no material impact on net revenue during the period of Dermagraft's unavailability[433](index=433&type=chunk) [Management's Use of Non-GAAP Measures](index=91&type=section&id=Management's%20Use%20of%20Non-GAAP%20Measures) Management uses Adjusted EBITDA, a non-GAAP measure, to evaluate operating performance and identify business trends, despite its inherent limitations - Management uses Adjusted EBITDA, a non-GAAP measure, to evaluate operating performance, identify trends, and make planning decisions[434](index=434&type=chunk) - Adjusted EBITDA is defined as net income (loss) before depreciation, amortization, interest expense, and income taxes, further adjusted for specific non-core items[435](index=435&type=chunk) - Limitations of Adjusted EBITDA include the exclusion of significant non-cash expenses (stock-based compensation, depreciation), cash interest requirements, and the impact of fair value changes and restructuring charges[436](index=436&type=chunk) [Components of Our Consolidated Results of Operations](index=92&type=section&id=Components%20of%20Our%20Consolidated%20Results%20of%20Operations) Key components of consolidated results include net revenue from product sales, cost of goods sold, operating expenses, and income taxes, all subject to management estimates - Net revenue is derived from Advanced Wound Care and Surgical & Sports Medicine products, recognized when customers obtain control, net of reserves for returns, discounts, and GPO rebates[439](index=439&type=chunk)[440](index=440&type=chunk) - Cost of goods sold includes personnel, testing, quality assurance, raw materials, and manufacturing costs, expected to increase with sales volumes[442](index=442&type=chunk) - Research and development expenses, including clinical trials and product/platform development, are expensed as incurred and are expected to increase with ongoing investments[446](index=446&type=chunk) [Results of Operations](index=94&type=section&id=Results%20of%20Operations) In 2021, net revenue grew 38% to $468.1 million, net income reached $94.9 million, and Adjusted EBITDA was $89.1 million, driven by Advanced Wound Care growth Consolidated Results of Operations (in thousands USD) | Metric | 2021 | 2020 | 2019 | | :-------------------------------- | :----- | :----- | :----- | | Net revenue | $468,059 | $338,298 | $260,981 | | Gross profit | $353,860 | $250,979 | $185,033 | | Total operating expenses | $280,942 | $224,279 | $214,887 | | Income (loss) from operations | $72,918 | $26,700 | $(29,854) | | Net income (loss) | $94,902 | $17,234 | $(38,709) | EBITDA and Adjusted EBITDA (in thousands USD) | Metric | 2021 | 2020 | 2019 | | :-------------------------------- | :----- | :----- | :----- | | EBITDA | $81,752 | $37,226 | $(19,737) | | Adjusted EBITDA | $89,143 | $38,825 | $(18,163) | - Income tax benefit of **$31.1 million in 2021** was primarily due to the release of a **$48.3 million valuation allowance** on net U.S. deferred tax assets[481](index=481&type=chunk) [Liquidity and Capital Resources](index=99&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is supported by $113.9 million cash and $125.0 million Revolving Facility, with a new 2021 Credit Agreement providing $75.0 million Term Loan Cash and Debt (in thousands USD) | Metric | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | | :-------------------- | :----------- | :----------- | :----------- | | Cash and cash equivalents | $113,929 | $84,394 | $60,174 | | Total debt | $73,625 | $84,771 | $100,606 | Cash Flows from Activities (in thousands USD) | Activity | 2021 | 2020 | 2019 | | :-------------------------------- | :----- | :----- | :----- | | Operating Activities | $61,978 | $5,466 | $(33,528) | | Investing Activities | $(31,220) | $(23,498) | $(6,234) | | Financing Activities | $(1,036) | $42,468 | $78,727 | - In August 2021, Organogenesis entered into a new 2021 Credit Agreement, providing a **$75.0 million Term Loan Facility** and a **$125.0 million Revolving Facility**, replacing previous debt agreements[498](index=498&type=chunk) [Critical Accounting Policies and Significant Judgments and Estimates](index=103&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) Financial statements rely on significant estimates and judgments in revenue recognition, inventory, goodwill, income taxes, and contingent liabilities, which can materially impact performance - Critical accounting policies involve significant judgments and estimates in revenue recognition, accounts receivable, inventory, goodwill, long-lived assets, income taxes, contingent purchase earnout, and stock-based compensation[510](index=510&type=chunk) - Revenue is recognized net of reserves for variable consideration (returns, discounts, GPO rebates) based on historical experience and market conditions[511](index=511&type=chunk) - The company assesses the realizability of deferred tax assets and released a **$48.3 million valuation allowance** in Q4 2021, based on projected future taxable income and recent financial results[523](index=523&type=chunk)[525](index=525&type=chunk) - The company reported net income for the most recent two years (2021 and 2020) but has an accumulated deficit of **$60.1 million** as of December 31, 2021[428](index=428&type=chunk) - Manufacturing of Dermagraft was suspended in Q4 2021, with sales suspension in Q2 2022, as part of a long-term plan to consolidate manufacturing in Massachusetts, expected to result in substantial cost savings[431](index=431&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=106&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks primarily from interest rate fluctuations and minimal foreign currency exposure, with no material impact expected from a 10% rate change - Organogenesis is exposed to market risks from fluctuations in interest rates and, minimally, foreign currency exchange rates[534](index=534&type=chunk) - Borrowings under the 2021 Credit Agreement bear variable interest rates, but a **10% immediate change** is not expected to materially impact financial position, results of operations, or cash flows[535](index=535&type=chunk) - Foreign currency risk is minimal due to short transaction durations and the U.S. dollar functional currency of its foreign subsidiary[536](index=536&type=chunk) [Financial Statements and Supplementary Data](index=106&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) Consolidated financial statements and supplementary data, along with the auditor's report, are presented on pages F-1 through F-40 - The consolidated financial statements and supplementary data, along with the auditor's report, are included on pages **F-1 through F-40** of the Annual Report on Form 10-K[537](index=537&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=106&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There have been no changes in or disagreements with accountants on accounting and financial disclosure - There have been no changes in or disagreements with accountants on accounting and financial disclosure[538](index=538&type=chunk) [Controls and Procedures](index=106&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective due to a material weakness in internal control over financial reporting, with remediation efforts underway - Management concluded that disclosure controls and procedures were not effective as of December 31, 2021, due to a material weakness in internal control over financial reporting[541](index=541&type=chunk) - The material weakness involves a lack of formal accounting, business operations, and IT policies, procedures, and controls, specifically regarding account reconciliations, journal entries, and segregation of duties[544](index=544&type=chunk)[546](index=546&type=chunk) - Remediation efforts include implementing a new ERP system in 2022, training employees, supplementing internal resources with third-party assistance, and regular control testing and reporting[548](index=548&type=chunk) [Other Information](index=108&type=section&id=Item%209B.%20Other%20Information) No other information is disclosed under Item 9B - There is no other information to disclose under Item 9B[550](index=550&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=109&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) Disclosure regarding foreign jurisdictions that prevent inspections is not applicable - Item 9C, Disclosure Regarding Foreign Jurisdictions that Prevent Inspections, is not applicable[551](index=551&type=chunk) [PART III](index=110&type=section&id=PART%20III) [Directors, Executive Officers and Corporate Governance](index=110&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) Information on Directors, Executive Officers, and Corporate Governance is incorporated by reference from the 2022 Definitive Proxy Statement - Information on Directors, Executive Officers, and Corporate Governance is incorporated by reference from the Definitive Proxy Statement for the 2022 Annual Meeting of Stockholders[553](index=553&type=chunk) [Executive Compensation](index=110&type=section&id=Item%2011.%20Executive%20Compensation) Information on Executive Compensation is incorporated by reference from the Definitive Proxy Statement - Information on Executive Compensation is incorporated by reference from the Definitive Proxy Statement[554](index=554&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=110&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on Security Ownership and Related Stockholder Matters is incorporated by reference from the Definitive Proxy Statement - Information on Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters is incorporated by reference from the Definitive Proxy Statement[555](index=555&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=110&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) Information on Related Transactions and Director Independence is incorporated by reference from the Definitive Proxy Statement - Information on Certain Relationships and Related Transactions, and Director Independence is incorporated by reference from the Definitive Proxy Statement[556](index=556&type=chunk) [Principal Accounting Fees and Services](index=110&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information on Principal Accounting Fees and Services is incorporated by reference from the Definitive Proxy Statement - Information on Principal Accounting Fees and Services is incorporated by reference from the Definitive Proxy Statement[557](index=557&type=chunk) [PART IV](index=111&type=section&id=PART%20IV) [Exhibits and Financial Statement Schedules](index=111&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all documents filed as part of the report, including financial statements, schedules, and an extensive exhibit index - This item lists documents filed as part of the report, including financial statements, financial statement schedules, and an exhibit index[559](index=559&type=chunk) - The exhibit index includes corporate documents (Certificate of Incorporation, Bylaws), various agreements (Registration Rights, Leases, License Agreements), and employee-related agreements (Key Employee, Incentive Plans)[561](index=561&type=chunk)[562](index=562&type=chunk)[563](index=563&type=chunk) - Certain exhibits are marked for confidential treatment, and others are identified as management contracts or compensatory plans/arrangements[565](index=565&type=chunk) [Form 10-K Summary](index=114&type=section&id=Item%2016.%20Form%2010-K%20Summary) No Form 10-K Summary is provided in this report - No Form 10-K Summary is provided in this report[566](index=566&type=chunk) [SIGNATURES](index=115&type=section&id=SIGNATURES) The Annual Report on Form 10-K is signed by the CEO, CFO, and other Directors as of March 1, 2022 - The Annual Report on Form 10-K is signed by Gary S. Gillheeney, Sr. (CEO and President) and David Francisco (CFO) on March 1, 2022[570](index=570&type=chunk)[571](index=571&type=chunk) - Other Directors also signed the report on March 1, 2022[571](index=571&type=chunk) [INDEX TO CONSOLIDATED FINANCIAL STATEMENTS](index=116&type=section&id=INDEX%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) [Report of Independent Registered Public Accounting Firm](index=117&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) RSM US LLP issued an unqualified opinion on financial statements but an adverse opinion on internal controls due to a material weakness, highlighting deferred tax assets as a critical audit matter - RSM US LLP issued an unqualified opinion on the consolidated financial statements for the three years ended December 31, 2021[576](index=576&type=chunk)[577](index=577&type=chunk) - An adverse opinion was issued on the effectiveness of internal control over financial reporting as of December 31, 2021, due to a material weakness in the design and maintenance of formal accounting, business operations, and IT policies, procedures, and controls[577](index=577&type=chunk) - The realizability of deferred tax assets was identified as a critical audit matter due to significant assumptions and judgments involved in management's evaluation[586](index=586&type=chunk)[588](index=588&type=chunk) [Consolidated Balance Sheets](index=120&type=section&id=Consolidated%20Balance%20Sheets) Consolidated balance sheets show total assets increased to $443.3 million in 2021, with total liabilities at $201.2 million and stockholders' equity at $242.0 million Consolidated Balance Sheet Summary (in thousands USD) | Metric | Dec 31, 2021 | Dec 31, 2020 | | :-------------------------------- | :----------- | :----------- | | Total assets | $443,259 | $290,218 | | Total liabilities | $201,224 | $148,410 | | Total stockholders' equity | $242,035 | $141,808 | Key Current Assets (in thousands USD) | Metric | Dec 31, 2021 | Dec 31, 2020 | | :-------------------------------- | :----------- | :----------- | | Cash and cash equivalents | $113,929 | $84,394 | | Accounts receivable, net | $82,460 | $56,804 | | Inventory | $25,022 | $27,799 | Key Liabilities (in thousands USD) | Metric | Dec 31, 2021 | Dec 31, 2020 | | :-------------------------------- | :----------- | :----------- | | Current portion of term loan | $2,656 | $16,666 | | Term loan, net of current portion | $70,769 | $43,044 | | Earnout liability | $— | $3,985 | [Consolidated Statements of Operations](index=121&type=section&id=Consolidated%20Statements%20of%20Operations) Consolidated statements of operations show net revenue of $468.1 million and net income of $94.9 million in 2021, with diluted EPS of $0.71 Consolidated Statements of Operations Summary (in thousands USD) | Metric | 2021 | 2020 | 2019 | | :-------------------------------- | :----- | :----- | :----- | | Net revenue | $468,059 | $338,298 | $260,981 | | Gross profit | $353,860 | $250,979 | $185,033 | | Income (loss) from operations | $72,918 | $26,700 | $(29,854) | | Net income (loss) | $94,902 | $17,234 | $(38,709) | | Diluted EPS | $0.71 | $0.15 | $(0.42) | - Net income significantly increased to **$94.9 million in 2021**, compared to **$17.2 million in 2020**, and a net loss of **$38.7 million in 2019**[593](index=593&type=chunk) - Income tax benefit of **$31.1 million in 2021** contributed to the higher net income, contrasting with tax expenses in prior years[593](index=593&type=chunk) [Consolidated Statements of Redeemable Common Stock and Stockholders' Equity](index=122&type=section&id=Consolidated%20Statements%20of%20Redeemable%20Common%20Stock%20and%20Stockholders'%20Equity) Stockholders' equity increased to $242.0 million in 2021, driven by net income and common stock issuances from warrant exchanges and public offerings Stockholders' Equity Summary (in thousands USD) | Metric | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | | :-------------------------------- | :----------- | :----------- | :----------- | | Common Stock (shares) | 128,680,192 | 127,731,833 | 104,870,886 | | Additional Paid-in Capital | $302,155 | $296,830 | $224,281 | | Accumulated Deficit | $(60,133) | $(155,035) | $(172,269) | | Total Stockholders' Equity | $242,035 | $141,808 | $52,022 | - Total stockholders' equity increased significantly from **$141.8 million in 2020 to $242.0 million in 2021**, driven by net income[597](index=597&type=chunk) - Adjustments were made in 2018 for private warrant reclassification and right-of-use asset amortization, impacting additional paid-in capital and accumulated deficit[597](index=597&type=chunk) [Consolidated Statements of Cash Flows](index=123&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash flows show $62.0 million provided by operating activities in 2021, with investing activities using cash and financing activities shifting to debt repayments Consolidated Statements of Cash Flows Summary (in thousands USD) | Activity | 2021 | 2020 | 2019 | | :-------------------------------- | :----- | :----- | :----- | | Net cash provided by (used in) operating activities | $61,978 | $5,466 | $(33,528) | | Net cash used in investing activities | $(31,220) | $(23,498) | $(6,234) | | Net cash provided by (used in) financing activities | $(1,036) | $42,468 | $78,727 | | Net increase in cash and restricted cash | $29,722 | $24,436 | $38,965 | - Operating activities generated **$62.0 million in cash in 2021**, a substantial increase from **$5.5 million in 2020**, driven by net income and non-cash charges[489](index=489&type=chunk)[599](index=599&type=chunk) - Financing activities used **$1.0 million in 2021**, primarily for debt repayments, contrasting with cash provided in prior years from equity offerings and debt proceeds[495](index=495&type=chunk)[599](index=599&type=chunk) [Notes to Consolidated Financial Statements](index=125&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes provide detailed information on business, significant accounting policies, financial statement line items, and disclosures on debt, equity, and contingencies [1. Nature of Business and Basis of Presentation](index=125&type=section&id=1.%20Nature%20of%20Business%20and%20Basis%20of%20Presentation) Organogenesis is a regenerative medicine company operating as a single segment, with no material COVID-19 impact through 2021 but future uncertainty - Organogenesis is a leading regenerative medicine company focused on Advanced Wound Care and Surgical & Sports Medicine markets[602](index=602&type=chunk) - The company operates as a single operating and reportable segment[602](index=602&type=chunk) - The COVID-19 pandemic has not materially adversely affected financial results through December 31, 2021, but its future impact is uncertain[603](index=603&type=chunk) [2. Significant Accounting Policies](index=125&type=section&id=2.%20Significant%20Accounting%20Policies) Significant accounting policies include revenue recognition, inventory, goodwill, and income taxes, with revisions for warrant reclassification and ROU asset amortization errors - The company revised prior financial statements to correct errors in private warrant classification and right-of-use asset amortization, determining these were not material to prior periods[604](index=604&type=chunk)[608](index=608&type=chunk)[609](index=609&type=chunk) - Revenue is recognized when the customer obtains control of the product, net of reserves for returns, discounts, and GPO rebates[631](index=631&type=chunk)[632](index=632&type=chunk) - Organogenesis early adopted ASC 842 (Leases) on January 1, 2021, recognizing operating lease liabilities of **$15.9 million** and right-of-use assets of **$13.5 million**[656](index=656&type=chunk)[658](index=658&type=chunk) [3. Acquisition](index=138&type=section&id=3.%20Acquisition) The company acquired CPN Biosciences, LLC for $19.0 million in 2020, with the contingent Earnout liability valued at $0 by December 31, 2021 - Organogenesis acquired CPN Biosciences, LLC on September 17, 2020, for an aggregate consideration of **$19.0 million**[664](index=664&type=chunk)[665](index=665&type=chunk) - The consideration included **$6.4 million in cash**, **2,151,438 shares of Class A common stock** (fair value **$8.8 million**), and a contingent Earnout liability (fair value **$3.8 million**)[665](index=665&type=chunk) - As of December 31, 2021, the Earnout liability was estimated at **$0** due to an updated assessment of the near-term market for the CPN product portfolio[666](index=666&type=chunk) [4. Fair Value Measurement of Financial Instruments](index=139&type=section&id=4.%20Fair%20Value%20Measurement%20of%20Financial%20Instruments) Financial instruments measured at fair value include the Earnout liability, which decreased to $0 in 2021, and previously, the warrant liability settled in 2019 Earnout Liability Fair Value (in thousands USD) | Date | Amount | | :--- | :----- | | Dec 31, 2019 | $— | | Acquisition Date | $3,782 | | Dec 31, 2020 | $3,985 | | Dec 31, 2021 | $— | - The Earnout liability, classified as a Level 3 measurement, decreased to **$0** as of December 31, 2021, due to an updated assessment of the near-term market for the CPN product portfolio[669](index=669&type=chunk) - Private warrants, initially classified as a liability and measured at fair value using a Black-Scholes model, were settled in warrant exchange transactions in Q3 2019[670](index=670&type=chunk)[671](index=671&type=chunk) [5. Accounts receivable, net](index=141&type=section&id=5.%20Accounts%20receivable,%20net) Accounts receivable, net, increased to $82.5 million in 2021, with the allowance for doubtful accounts rising to $5.2 million Accounts Receivable, Net (in thousands USD) | Metric | Dec 31, 2021 | Dec 31, 2020 | | :-------------------- | :----------- | :----------- | | Accounts receivable | $87,613 | $59,473 | | Less—allowance for doubtful accounts | $(5,153) | $(2,669) | | **Accounts receivable, net** | **$82,460** | **$56,804** | Allowance for Doubtful Accounts Roll-forward (in thousands USD) | Metric | 2021 | 2020 | 2019 | | :-------------------- | :----- | :----- | :----- | | Balance at beginning of year | $2,669 | $1,988 | $1,988 | | Additions | $2,999 | $1,183 | $239 | | Write-offs | $(515) | $(502) | $— | | **Balance at end of year** | **$5,153** | **$2,669** | **$1,988** | [6. Inventories](index=142&type=section&id=6.%20Inventories) Inventories, net, decreased to $25.0 million in 2021, with a $12.1 million charge for excess and obsolescence due to short shelf life Inventories, Net (in thousands USD) | Category | Dec 31, 2021 | Dec 31, 2020 | | :-------------------- | :----------- | :----------- | | Raw materials | $9,023 | $10,075 | | Work in process | $991 | $1,305 | | Finished goods | $15,008 | $16,419 | | **Total Inventories** | **$25,022** | **$27,799** | - The charge for inventory excess and obsolescence significantly increased to **$12.1 million in 2021**, compared to **$3.1 million in 2020** and **$1.3 million in 2019**[675](index=675&type=chunk) - The increase in obsolescence charge is primarily due to inventory with very short shelf life and uncertain production yield[675](index=675&type=chunk) [7. Prepaid Expenses and Other Current Assets](index=143&type=section&id=7.%20Prepaid%20Expenses%20and%20Other%20Current%20Assets) Prepaid expenses and other current assets remained stable at $5.0 million in 2021, primarily comprising subscriptions and deposits Prepaid Expenses and Other Current Assets (in thousands USD) | Category | Dec 31, 2021 | Dec 31, 2020 | | :-------------------- | :----------- | :----------- | | Subscriptions | $2,745 | $2,013 | | Conferences and marketing expenses | $538 | $63 | | Deposits | $1,216 | $1,438 | | Reimbursement of offering expenses | $— | $1,009 | | Insurance | $358 | $240 | | Other | $112 | $172 | | **Total** | **$4,969** | **$4,935** | [8. Property and Equipment, Net](index=143&type=section&id=8.%20Property%20and%20Equipment,%20Net) Property and equipment, net, increased to $79.2 million in 2021, driven by construction in progress and reclassification of finance leases Property and Equipment, Net (in thousands USD) | Category | Dec 31, 2021 | Dec 31, 2020 | | :-------------------- | :----------- | :----------- | | Leasehold improvements | $30,531 | $39,574 | | Building | $4,943 | $— | | Furniture, computers and equipment | $53,959 | $48,236 | | Accumulated depreciation and amortization | $(57,729) | $(73,797) | | Construction in progress | $47,456 | $41,779 | | **Total** | **$79,160** | **$55,792** | - Depreciation expense was **$5.8 million in 2021**, up from **$4.4 million in 2020**[678](index=678&type=chunk) - In 2021, the company purchased a building previously under a finance lease and reclassified other finance leases to operating leases, impacting the composition of property and equipment[678](index=678&type=chunk) [9. Goodwill and Intangible Assets](index=145&type=section&id=9.%20Goodwill%20and%20Intangible%20Assets) Goodwill remained at $28.8 million, while identifiable intangible assets, net, decreased to $25.7 million in 2021 due to amortization - Goodwill remained at **$28.8 million** as of December 31, 2021 and 2020, with no impairment charges recorded during 2021, 2020, or 2019[680](index=680&type=chunk)[626](index=626&type=chunk) Identifiable Intangible Assets, Net (in thousands USD) | Category | Dec 31, 2021 Net Book Value | Dec 31, 2020 Net Book Value | | :-------------------- | :-------------------------- | :-------------------------- | | Developed technology | $14,911 | $18,290 | | Trade names and trademarks | $897 | $1,174 | | Customer relationship | $9,309 | $10,378 | | Non-compete agreements | $556 | $780 | | **Total** | **$25,673** | **$30,622** | - Amortization expense for intangible assets was **$4.9 million in 2021**, **$3.7 million in 2020**, and **$6.0 million in 2019**[680](index=680&type=chunk) [10. Accrued Expenses and Other Current Liabilities](index=145&type=section&id=10.%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) Accrued expenses and other current liabilities increased to $36.6 million in 2021, driven by higher personnel costs and lease obligations Accrued Expenses and Other Current Liabilities (in thousands USD) | Category | Dec 31, 2021 | Dec 31, 2020 | | :-------------------- | :----------- | :----------- | | Personnel costs | $26,865 | $18,943 | | Royalties | $3,458 | $2,971 | | Accrued but unpaid lease obligations and interest | $3,963 | $— | | Other | $2,303 | $2,059 | | **Total** | **$36,589** | **$23,973** | - The increase in 2021 was primarily due to additional personnel costs and the reclassification of accrued but unpaid lease obligations and interest to current liabilities[681](index=681&type=chunk)[682](index=682&type=chunk) [11. Restructuring](index=146&type=section&id=11.%20Restructuring) A restructuring plan initiated in October 2020 to consolidate facilities has incurred $4.7 million in charges, with a $3.2 million liability remaining - Organogenesis initiated a restructuring plan in October 2020 to consolidate La Jolla facilities into Massachusetts, aiming to reduce costs[683](index=683&type=chunk) - The restructuring is estimated to result in a total charge of approximately **$7.5 million**, with **$4.0 million** for employee retention benefits and **$3.5 million** for facility closures[683](index=683&type=chunk) Restructuring Liability Roll-forward (in thousands USD) | Metric | Dec 31, 2021 | Dec 31, 2020 | | :-------------------- | :----------- | :----------- | | Liability balance | $3,168 | $618 | | Expenses incurred | $4,704 | $618 | | Cash distributions | $(2,154) | $— | [12. Long-Term Debt Obligations](index=147&type=section&id=12.%20Long-Term%20Debt%20Obligations) Total debt decreased to $73.6 million in 2021, following a new 2021 Credit Agreement providing a $75.0 million Term Loan and $125.0 million Revolving Facility Long-Term Debt Obligations (in thousands USD) | Category | Dec 31, 2021 | Dec 31, 2020 | | :-------------------- | :----------- | :----------- | | Line of credit | $— | $10,000 | | Term loan, net | $73,425 |

Organogenesis Holdings Inc. (NASDAQ:ORGO) Q3 2021 Results Conference Call November 9, 2021 5:00 PM ET Company Participants Gary Gillheeney - President and Chief Executive Officer David Francisco - Chief Financial Officer Conference Call Participants Ryan Zimmerman - BTIG Matt Miksic - Credit Suisse Steve Lichtman - Oppenheimer Operator Good afternoon, ladies and gentlemen, and welcome to the Third Quarter 2021 Earnings Conference Call for Organogenesis Holdings, Incorporated. At this time all participants h ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 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, 2021 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) (State or other jurisdiction of incorporation or or ...

Financial Data and Key Metrics Changes - The company reported a revenue growth of 79% year-over-year to $123.2 million in Q2 2021, driven by a 87% increase in Advanced Wound Care product sales [8][22] - Adjusted EBITDA increased by nearly $25 million year-over-year to $25.1 million, with an adjusted EBITDA margin of approximately 20.4% of net revenue [18][31] - Net income for Q2 2021 was $20.7 million or $0.15 per share, compared to a net loss of $5.2 million or $0.05 per share in the previous year [30] Business Line Data and Key Metrics Changes - Advanced Wound Care revenue was $111.4 million, up 87% year-over-year, with strong contributions from the amniotic portfolio [22] - Revenue from Surgical & Sports Medicine products was $11.8 million, reflecting a 27% year-over-year increase, despite headwinds from the ReNu and NuCel product lines [23] - PuraPly products generated $37.6 million in revenue, marking a 32% increase, and continued strong performance was noted [24][64] Market Data and Key Metrics Changes - The company observed improving trends across served markets during Q2, with a focus on expanding into new physician specialties and multiple sites of care [16][14] - The company is closely monitoring the impact of COVID-19 surges in key areas, particularly in Missouri, Alabama, Oklahoma, Texas, and Florida [54][55] Company Strategy and Development Direction - The company aims to diversify revenue sources and expand its commercial reach, with a focus on increasing the number of customer accounts and enhancing its sales force [11][15] - The strategic focus includes leveraging a comprehensive product portfolio and expanding into new therapeutic areas [12][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to continue executing growth strategies despite potential COVID-related impacts [17][55] - The company expects to report positive GAAP net income and adjusted EBITDA for the full year 2021, with updated revenue guidance reflecting a 35% to 40% year-over-year increase [42][34] Other Important Information - The company secured a new credit agreement that enhances financial flexibility and reduces borrowing costs [33] - A shareholder agreement was established to prevent large shareholders from selling shares until at least March 1, 2022, to mitigate market volatility [60] Q&A Session Summary Question: Current manufacturing capacity for amniotic products - Management confirmed an increase in capacity for Affinity and amnion products in Q2, which positively impacted sales [46] Question: Dynamics driving performance of non-PuraPly products - Management noted growth in non-PMA products and attributed it to the acquisition of CPN Bioscience and increased sales representative productivity [46] Question: COVID-related risks and their potential impact - Management highlighted specific regions experiencing impacts from COVID-19, particularly in hospital settings, while noting that revenue impacts have not yet been observed [54][55] Question: Contribution of amniotic products in the second half of the year - Management indicated that significant contributions from amniotic products are expected in Q4, with capacity remaining stable in Q3 [57] Question: Update on pipeline products and BLA timelines for ReNu - Management expects to launch TransCyte in 2022 and Novachor by the end of 2021, with ReNu study enrollment completion anticipated by Q1 2022 [68] Question: Impact of competitors post-FDA enforcement grace period - Management stated it is too early to assess the impact on competitors and market share due to the recent changes [72] Question: Thoughts on EBITDA margins and cash generation - Management emphasized the focus on top-line growth while recognizing the potential for significant cash flow generation in the future [79]