Core Insights - The company is well positioned to compete and grow following the release of the CY 2026 Physician Fee Schedule by CMS, which is expected to bring stability and predictability to the market [1][2]. Company Strategy - The company has engaged with stakeholders to advocate for reforms in the Medicare reimbursement system for skin substitutes, aiming to reduce fraud, waste, and abuse in the industry [2]. - The final rule aligns with the proposals made in July, presenting a significant opportunity for the company due to its competitive advantages, including efficient operations, a proprietary commercial organization, advanced technology, a strong IP portfolio, and a solid balance sheet [3]. Market Outlook - The company plans to leverage its strengths to gain market share as the reimbursement environment evolves, while also prioritizing patient access to its proven technology [3]. - The company acknowledges the need for further improvements in the reimbursement system and will continue to advocate for these changes over time [3]. Company Overview - MiMedx is a leader in providing healing solutions, focusing on chronic and hard-to-heal wounds, with a vision to be the leading global provider through relentless innovation [6].

Financial Data and Key Metrics Changes - The company reported a 13% year-over-year increase in net sales, reaching a record $99 million, marking the highest quarterly revenue in its history [4][20] - Adjusted EBITDA for the quarter was $24 million, representing 25% of net sales, an increase from 23% in the prior year [27] - The adjusted gross profit margin was 84%, remaining stable compared to the previous year [22][27] - Cash and cash equivalents at the end of the quarter were $119 million, an increase of $12 million from the previous quarter [7][27] Business Line Data and Key Metrics Changes - Wound care sales were $64 million, up 12% year-over-year, while surgical sales increased by 15% to $34 million [21] - The surgical business saw strong contributions from products like AmnioEffect and AmnioFix, with HelioGen sales also accelerating [21][27] Market Data and Key Metrics Changes - The company is preparing for changes in the Medicare reimbursement system set to take effect on January 1, 2026, which is expected to impact the market dynamics significantly [5][16] - The proposed fixed payment for skin substitutes is set at $125.38 per square centimeter across all outpatient care settings [18] Company Strategy and Development Direction - The company aims to innovate and diversify its product portfolio, focusing on unmet needs in wound care and surgical markets [8][12] - Strategic priorities include expanding the surgical market footprint, enhancing customer intimacy, and developing complementary wound care solutions [12][14] - The company is actively collaborating with Vaprox Incorporated to co-market their Vaporous Hyperoxia Therapy device, which is expected to complement its existing product offerings [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that the upcoming reimbursement changes will ultimately benefit the company in the long term, as it has robust evidence supporting its technology [33][36] - The company anticipates that the market will stabilize post-reform, allowing it to compete effectively based on product efficacy rather than price [35][38] - Management raised full-year revenue growth guidance from high single digits to low double digits due to strong performance and momentum [18] Other Important Information - The company is focused on maintaining strong customer relationships through initiatives like Mimetics Connect, which aims to improve customer engagement and satisfaction [15] - The company is also preparing for potential inventory management challenges as the new reimbursement rules come into effect [56] Q&A Session Summary Question: Thoughts on the market post-reimbursement change - Management welcomed the reimbursement changes, believing they will lead to a more rational market and better long-term prospects for the company [33][34] Question: Impact of fixed pricing on market size - Management indicated that it is too early to estimate the market size under the new fixed pricing but expressed confidence in gaining market share [38] Question: Confidence in maintaining growth despite pricing changes - Management is confident that they can maintain growth by capturing market share, even with the new pricing structure [41][43] Question: Timeline for EpiEffect readout - Management expects to have data from the EpiEffect randomized controlled trial by the end of the year, although enrollment has been slower than anticipated [45] Question: CMS flexibility on the fixed rate - Management could not predict CMS's flexibility regarding the fixed rate but plans to provide comments and recommendations during the comment period [50][52] Question: Potential anomalies in stocking due to LCDs - Management will closely monitor inventory levels as the new LCDs approach, ensuring readiness for any changes [54][57] Question: Opportunities in the mobile wound care market - Management acknowledged the importance of mobile wound care but did not provide specific strategies for that segment [66] Question: Impact of LCDs on market dynamics - Management speculated that a significant portion of the current market volume may decrease due to overutilization and the introduction of new pricing [77][80]

Core Insights - The Centers for Medicare and Medicaid Services (CMS) proposed a new reimbursement mechanism for skin substitutes, moving from the Average Sales Price (ASP) methodology to a fixed price of $125.38 per square centimeter [2][3] - The skin substitute market has seen a significant increase in Medicare spending, rising from approximately $1.5 billion in 2022 to nearly $10 billion in 2024, highlighting the need for reimbursement reform to combat fraud, waste, and abuse [3] Company Positioning - MiMedx Group, Inc. supports the proposed reimbursement changes and believes that reform is necessary to restore rational market behavior and benefit stakeholders, taxpayers, and patients [2][3] - The company is well-positioned to thrive in an environment where product capabilities, backed by strong clinical evidence, influence selection and usage [3] Upcoming Developments - The Wasteful and Inappropriate Service Reduction (WISeR) model, Local Coverage Determinations (LCDs), and the Physician Fee Schedule (PFS) rules are set to be implemented on January 1, 2026 [3] - The Hospital Outpatient Prospective Payment System (OPPS) is also expected to be released in proposed form, with implementation slated for January 1, 2026 [4]

Financial Data and Key Metrics Changes - The company reported Q1 2025 net sales of $88 million, representing a 4% year-over-year growth, despite a tough comparison from Q1 2024 which had 18% growth [5][19] - Adjusted gross profit margin was 84% for the quarter, while GAAP gross margin was 81%, down from 85% in the prior year [21][24] - Adjusted EBITDA was $17 million, or 20% of net sales, compared to $19 million, or 22% of net sales in the prior year [24] - The company ended the quarter with $106 million in cash, an increase of $2 million during the quarter [8][25] Business Line Data and Key Metrics Changes - Surgical sales grew by 16% to $32 million, driven by strong performance from AmnioFect and HelioGen [20] - Wound sales declined by 2% to $56 million, facing challenges due to Medicare reimbursement disruptions [20][12] - The Amneal branded products grew by 22% in Q1, while HelioGen showed sequential growth from a low base [11] Market Data and Key Metrics Changes - The company noted that approximately 25% of its overall business has ASP exposure, which complicates pricing strategies in the current reimbursement environment [15][47] - The ongoing disruption in the private office and associated care settings due to Medicare reimbursement issues has impacted sales, particularly in the wound care segment [6][12] Company Strategy and Development Direction - The company aims to innovate and diversify its product portfolio, focusing on unique product configurations to meet customer needs [10] - Strategic priorities include expanding the surgical market footprint and enhancing customer relationships through programs like Mimetics Connect [16][18] - The company is actively pursuing opportunities for organic and inorganic growth, including potential acquisitions [62] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment over the delay in Medicare reimbursement reforms but remains committed to advocating for necessary changes [27][28] - The company reiterated its full-year revenue growth outlook to be at least in the high single digits, with expectations for higher growth rates in the latter half of the year [31] - Long-term prospects remain positive, with expectations of resetting top-line growth to low double digits post-reform [31] Other Important Information - The company has contingency plans in place to adapt to the current reimbursement environment and is exploring third-party manufactured products to retain customers [13][15] - Management emphasized the importance of generating clinical evidence to support product use in surgical applications [16] Q&A Session Summary Question: Adjusted gross profit margin expectations - Management confirmed that the adjusted gross profit margin of 84% in Q1 was related to product mix and expected some pressure from ASPs throughout the year [35] Question: Progress on Equifax in Japan - Management indicated that growth in Japan is on track but remains relatively small in overall contribution [37] Question: Overall reimbursement landscape and confidence in future changes - Management expressed frustration over the lack of changes in the reimbursement landscape but remains hopeful for future reforms [42][44] Question: Shifting private office volumes to new products - Management stated that the shift to higher-priced products is a necessary step to protect business but cautioned against expecting significant volume conversion [50][52] Question: Efforts to prepare for a better market environment - Management highlighted the importance of executing their plan, expanding product offerings, and investing in commercial strength and clinical research [60][62] Question: Changes in purchasing patterns due to LCD delays - Management suggested that there may be shifts in purchasing patterns as higher-priced products become more prevalent, but the overall impact remains uncertain [70][74]