Bioventus (BVS) - 2024 Q3 - Quarterly Results

Company Overview & Q3 Highlights Bioventus reported strong Q3 2024 financial results with double-digit revenue growth, increased operating cash flow, and narrowed net loss, while also updating its full-year guidance and announcing a business divestiture Q3 2024 Financial Performance Summary Bioventus achieved strong financial results in Q3 2024, with revenue growing 15.0% year-over-year, marking the fourth consecutive quarter of double-digit organic growth, and significantly increasing operating cash flow. The company narrowed its net loss and grew Adjusted EBITDA by 8.4% | Metric | Q3 2024 | Q3 2023 | Year-over-Year Change | | --- | --- | --- | --- | | Global Revenue | $139.0 million | $120.8 million | +15.0% | | Net Loss (Continuing Operations) | $5.4 million | $8.8 million | Loss narrowed | | Adjusted EBITDA (Continuing Operations) | $23.6 million | $21.7 million | +8.4% | | Loss Per Share (Class A Common Stock, Continuing Operations) | $0.07 | $0.12 | Loss narrowed | | Non-GAAP Earnings Per Share (Class A Common Stock, Continuing Operations) | $0.06 | $0.05 | +$0.01 | - Gross margin expanded by 200 basis points[1] - Operating cash flow was $10.3 million, an increase of $18.6 million compared to the prior year period[1] Recent Business Highlights The company achieved double-digit revenue growth for four consecutive quarters in pain treatment and surgical solutions, and reached an agreement to divest its Advanced Rehabilitation business to reduce debt and focus on core operations - Pain treatment and surgical solutions businesses achieved double-digit revenue growth for four consecutive quarters, driving an 8.4% increase in Adjusted EBITDA[4] - Agreement reached to divest the Advanced Rehabilitation business for up to $45 million, expected to close by late 2024 or early 2025, aiming to reduce debt and enhance focus on core businesses[4] 2024 Financial Guidance Bioventus raised its full-year 2024 net sales and non-GAAP EPS guidance, reflecting positive expectations for future performance | Metric | Full-Year 2024 Guidance | Change from Prior Guidance Midpoint | | --- | --- | --- | | Net Sales | $562 million - $567 million | Increase $2.5 million | | Adjusted EBITDA | $104 million - $107 million | No explicit change | | Non-GAAP EPS | $0.40 - $0.42 | Increase $0.02 | About Bioventus Bioventus is a global leader in active healing innovations, providing clinically proven, cost-effective products across pain treatment, restorative therapies, and surgical solutions to help patients recover quickly and safely - Company's mission is to make a difference by helping patients resume and enjoy active lives[6] - Product portfolio includes pain treatment, restorative therapies, and surgical solutions[6] - The company is a trusted partner to physicians worldwide, built on high-quality standards, evidence-based medicine, and strong ethical conduct[6] Detailed Financial Results This section provides a comprehensive overview of Bioventus's Q3 2024 financial performance, including revenue by segment, consolidated balance sheets, statements of operations, and cash flows Revenue by Business Segment In Q3 2024, Bioventus's total net sales increased by 15.0% year-over-year to $139.0 million, driven by strong growth in pain treatment and surgical solutions across both US and international markets | Business Segment | Q3 2024 Net Sales (thousand USD) | Q3 2023 Net Sales (thousand USD) | Reported Change (%) | | --- | --- | --- | --- | | United States | | | | | Pain Treatment | 56,306 | 48,416 | 16.3% | | Restorative Therapies | 25,448 | 23,105 | 10.1% | | Surgical Solutions | 41,155 | 34,706 | 18.6% | | International | | | | | Pain Treatment | 6,821 | 5,274 | 29.3% | | Restorative Therapies | 4,489 | 5,223 | (14.1%) | | Surgical Solutions | 4,745 | 4,070 | 16.6% | | Total Net Sales | 138,964 | 120,794 | 15.0% | - SonicOne product sales have been reclassified from Restorative Therapies to Surgical Solutions to better reflect their soft tissue management function[3] Consolidated Balance Sheets As of September 28, 2024, Bioventus's total assets were $769 million, a decrease from $811 million at year-end 2023, primarily due to reductions in net intangible assets and property, plant, and equipment. Total liabilities and total stockholders' equity also decreased accordingly | Metric (thousand USD) | September 28, 2024 | December 31, 2023 | | --- | --- | --- | | Assets | | | | Cash and Cash Equivalents | 43,074 | 36,964 | | Total Current Assets | 298,688 | 267,999 | | Intangible Assets, Net | 414,809 | 482,350 | | Total Assets | 769,492 | 810,910 | | Liabilities and Stockholders' Equity | | | | Total Current Liabilities | 211,492 | 175,497 | | Long-Term Debt (less current portion) | 345,021 | 366,998 | | Total Liabilities | 582,659 | 589,792 | | Total Stockholders' Equity Attributable to Bioventus Inc. | 148,738 | 173,591 | | Total Stockholders' Equity | 186,833 | 221,118 | Consolidated Statements of Operations and Comprehensive Loss In Q3 2024, the company saw increased net sales and a significant rise in gross profit, but operating income grew only slightly due to higher selling, general, and administrative expenses. Net loss narrowed to $5.4 million from $8.8 million in the prior year period | Metric (thousand USD) | Q3 2024 | Q3 2023 | Nine Months Ended 2024 | Nine Months Ended 2023 | | --- | --- | --- | --- | --- | | Net Sales | 138,964 | 120,794 | 419,638 | 376,922 | | Cost of Sales | 45,413 | 41,944 | 134,068 | 135,030 | | Gross Profit | 93,551 | 78,850 | 285,570 | 241,892 | | Selling, General and Administrative Expenses | 81,090 | 69,820 | 254,281 | 225,522 | | Research and Development Expenses | 3,808 | 3,015 | 10,393 | 10,184 | | Operating Income (Loss) | 4,074 | 2,418 | (19,967) | (82,890) | | Net Loss from Continuing Operations | (5,421) | (8,791) | (43,515) | (113,540) | | Loss Per Share (Class A Common Stock, Continuing Operations) | (0.07) | (0.12) | (0.52) | (1.45) | Consolidated Condensed Statements of Cash Flows In Q3 2024, cash flow from continuing operations was $10.3 million, a significant improvement from the prior year. Cash outflows from investing activities were minimal, while financing activities primarily involved debt repayment | Metric (thousand USD) | Q3 2024 | Q3 2023 | Nine Months Ended 2024 | Nine Months Ended 2023 | | --- | --- | --- | --- | --- | | Net Cash Flow from Continuing Operations | 10,316 | (8,315) | 19,473 | 7,139 | | Net Cash Flow from Investing Activities | (64) | (2,036) | (1,141) | 16,398 | | Net Cash Flow from Financing Activities | 362 | 8,229 | (11,725) | (26,639) | | Cash and Cash Equivalents, End of Period | 43,074 | 26,827 | 43,074 | 26,827 | Non-GAAP Financial Measures This section defines and reconciles Bioventus's non-GAAP financial measures, clarifies their limitations, and provides prior period restatements for discontinued operations Definitions of Non-GAAP Measures This section defines the company's non-GAAP financial measures, including organic revenue growth, Adjusted EBITDA, non-GAAP gross profit, non-GAAP operating income, non-GAAP net income, non-GAAP EPS, and net sales on a constant currency basis, aiming to provide a clearer view of operating performance - Organic Revenue Growth: Revenue growth excluding the impact of business acquisitions and divestitures, used to measure the long-term performance of the company's core business[14] - Adjusted EBITDA: Net loss from continuing operations adjusted for depreciation and amortization, income tax, interest expense, and specific cash, non-cash, and non-recurring items (e.g., acquisition-related costs, litigation expenses, asset impairment, restructuring charges, share-based compensation)[14] - Non-GAAP Gross Profit/Margin, Operating Income/Expenses/Margin, R&D Expenses, Net Income, and EPS: Reflect core business operating performance by adjusting for specific items such as depreciation and amortization, acquisition-related costs, and asset impairment[14][15][16] - Constant Currency Basis: Eliminates the impact of exchange rate fluctuations on sales comparisons by translating current and prior period results using the same foreign currency exchange rates[17] Prior Period Recast for Discontinued Operations The company ceased control of CartiHeal on February 27, 2023, and accounted for it as a discontinued operation, with relevant information disclosed in Form 10-Q - Bioventus ceased control of CartiHeal on February 27, 2023, and accounted for it as a discontinued operation in its consolidated financial statements[18] - CartiHeal was previously part of the company's International reporting segment[18] Limitations of Non-GAAP Measures Non-GAAP financial measures have limitations as analytical tools and should not be viewed in isolation or as substitutes for GAAP financial information, as they may exclude certain normal recurring expenses and vary in definition across companies. The company does not provide forward-looking GAAP financial measures due to the difficulty in reasonably predicting the impact of certain adjustment items - Non-GAAP measures have limitations and should not replace GAAP financial information, potentially excluding normal recurring expenses[19] - Definitions of non-GAAP measures may vary across different companies[19] - The company cannot reasonably predict the impact and timing of acquisition-related expenses, accounting fair value adjustments, and other adjustment items, thus not providing forward-looking GAAP financial measures[19] Reconciliation of Net (Loss) Income from Continuing Operations to Adjusted EBITDA This section provides a detailed reconciliation of net (loss) income from continuing operations to Adjusted EBITDA, illustrating the calculation process by adding back interest, taxes, depreciation, amortization, and other non-recurring or non-cash items | Item (thousand USD) | Q3 2024 | Q3 2023 | Nine Months Ended 2024 | Nine Months Ended 2023 | | --- | --- | --- | --- | --- | | Net Loss from Continuing Operations | (5,421) | (8,791) | (43,515) | (113,540) | | Interest Expense, Net | 9,532 | 10,115 | 29,795 | 30,396 | | Income Tax Expense (Benefit), Net | 589 | 600 | (5,843) | 835 | | Depreciation and Amortization | 12,275 | 13,827 | 37,150 | 44,900 | | Acquisition and Related Costs | 483 | 1,424 | 994 | 4,047 | | Asset Impairment | 2,031 | — | 33,901 | 78,615 | | Other Items | 1,896 | 1,935 | 5,685 | 11,351 | | Adjusted EBITDA | 23,557 | 21,735 | 80,632 | 66,844 | Reconciliation of Other Reported GAAP Measures to Non-GAAP Measures This section reconciles GAAP gross profit, operating expenses, R&D expenses, operating income, net loss, and EPS to their corresponding non-GAAP measures, demonstrating the calculation process and results by adjusting for items such as depreciation, amortization, acquisition costs, litigation expenses, and asset impairment | Metric (thousand USD) | GAAP Reported (Q3 2024) | Non-GAAP (Q3 2024) | GAAP Reported (Q3 2023) | Non-GAAP (Q3 2023) | | --- | --- | --- | --- | --- | | Gross Profit | 93,551 | 103,757 | 78,850 | 90,356 | | Gross Margin | 67.3% | 74.7% | 65.3% | 74.8% | | Operating Income | 4,074 | 20,858 | 2,418 | 20,396 | | Operating Margin | 2.9% | 15.0% | 2.0% | 16.9% | | Net Loss from Continuing Operations | (5,421) | 5,144 (Non-GAAP Net Income) | (8,791) | 4,675 (Non-GAAP Net Income) | | Loss Per Share from Continuing Operations | (0.07) | 0.06 (Adjusted EPS) | (0.12) | 0.05 (Adjusted EPS) | - For the nine months ended 2024, GAAP operating loss was $(19,967) thousand, while non-GAAP operating income was $71,892 thousand[25] - For the nine months ended 2024, GAAP net loss from continuing operations was $(43,515) thousand, while non-GAAP net income from continuing operations was $25,087 thousand[25] Additional Information This section provides details on the upcoming earnings conference call, important legal disclaimers regarding forward-looking statements, and contact information for investor and media inquiries Earnings Conference Call Details Bioventus will host a conference call on November 5, 2024, at 8:30 AM ET to discuss financial results and provide business updates, with investor participation available via phone or webcast - Conference call scheduled for November 5, 2024, at 8:30 AM ET[7] - Participation via phone at 1-833-636-0497 (domestic and international) by mentioning Bioventus Inc., or via webcast on the company's investor relations website at **https://ir.bioventus.com/**[7](index=7&type=chunk) - Webcast replay will be archived on the company's website until November 4, 2025[7] Legal Notice Regarding Forward-Looking Statements This press release contains forward-looking statements concerning future financial performance, business strategy, market position, and growth, which are inherently subject to risks and uncertainties, potentially causing actual results to differ materially from expectations - Forward-looking statements cover future financial results, liquidity, the impact of the Advanced Rehabilitation business divestiture, business strategy, market position, and growth[8] - Forward-looking statements are inherently subject to risks and uncertainties, which may cause actual results to differ materially from current expectations[8] - Key risk factors include, but are not limited to: the anticipated benefits of the Advanced Rehabilitation business divestiture may not be realized, debt covenant risks, acquisition integration risks, product dependency, FDA regulatory changes, reimbursement policies, competitive pressures, supply chain disruptions, and cybersecurity risks[8][9] Investor Inquiries and Media Investors and media can obtain further information through the provided contact details - Contact: Dave Crawford, Bioventus Investor Relations[28] - Email: investor.relations@bioventus.com[28]