Financial Data and Key Metrics Changes - For the first quarter of 2025, revenues were $651.3 million, a decline of 1.6% year-over-year, primarily due to varying late-stage clinical service fee wins and a slowing backlog burn rate [32][33] - Adjusted EBITDA for the quarter was $30.3 million, compared to $27.1 million in the prior year period, indicating year-over-year growth [32][37] - The net loss for the first quarter was $562.9 million, significantly higher than the net loss of $79.8 million in the prior year, mainly due to a goodwill impairment charge of $488.8 million [38][39] - The book-to-bill ratio for the quarter was 1.02 times, with a trailing twelve-month ratio of 1.14 times [6][37] - The backlog grew by 4% over the past twelve months, totaling over $7.7 billion [37] Business Line Data and Key Metrics Changes - The clinical pharmacology business saw increases in service fee and pass-through revenues, contributing positively to overall performance [33][37] - The company is experiencing a shift towards biotech, with a solid pipeline of opportunities, although some biotech customers are being more cautious due to funding concerns [10][11][46] - The full-service outsourcing business has shown success, with notable achievements such as completing recruitment for a renal product ahead of schedule and accelerating timelines for cancer studies [19][45] Market Data and Key Metrics Changes - The market environment remains competitive but stable, with larger customers maintaining consistent opportunities and spending [10][46] - There is a noted increase in caution among biotech customers regarding funding and regulatory confirmations, which is impacting decision-making timelines [11][90] - The pricing environment is competitive, but there is no notable lack of discipline around pricing [76] Company Strategy and Development Direction - The company is focused on improving customer relationships and enhancing its commercial strategy, including the incorporation of AI to increase efficiency [15][26] - A transformation year is anticipated for 2025, with goals to improve gross margins and reduce SG&A costs [16][48] - The company aims to achieve a 1.2 times book-to-bill ratio over time, although current economic uncertainties make it difficult to predict new business wins [46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilience and ability to navigate challenges, emphasizing the importance of innovation in drug development [12][51] - The company is targeting operating cash flow to be positive for the remainder of 2025, driven by improving DSO and adjusted EBITDA [41][86] - There is an expectation for SG&A improvements to be more pronounced in the latter half of the year as efficiency programs take effect [80] Other Important Information - The company has reduced its permanent headcount by over 8% in the past year to align costs with revenue [34][48] - A significant goodwill impairment charge was recorded due to uncertain macroeconomic conditions and a decline in share price [38] - The company has initiated transformation programs to reduce personnel costs and optimize operational expenditures [48][50] Q&A Session Summary Question: Revenue expectations and cadence - The first quarter revenue was better than expected, but guidance suggests revenue may be flat to down for the rest of the year, with margin expansion expected to be gradual [58][64] Question: Clinical pharmacology RFP volume and win rates - The clinical pharmacology business remains strong, with a return of the pipeline, and efforts are being made to convert pass-through work into revenue [67][68] Question: Bookings backdrop and competition - The biotech pipeline is growing, but there is increased caution regarding funding and decision-making timelines, with competition remaining disciplined in pricing [70][76] Question: SG&A expectations - Marginal improvement in SG&A is expected in the second quarter, with more significant improvements anticipated in the latter half of the year [78][80] Question: Cash flow improvement and DSO expectations - DSOs are expected to improve over the year, targeting low to mid-40s by year-end, with cash flow expected to be positive in Q3 and Q4 [85][86] Question: Biotech funding concerns - There is caution among biotech customers regarding funding, leading to slower decision-making, but the pipeline remains strong [90][92]

Financial Data and Key Metrics Changes - Net revenue for Q1 2025 was $86.7 million, down 21% year-over-year [16] - Advanced Wound Care net revenue was $79.9 million, down 23% [17] - Surgical and Sports Medicine products net revenue was $6.8 million, up 11% [17] - Gross profit was $63 million, or 72.6% of net revenue, compared to 73.9% last year [17] - Operating loss for Q1 was $26.7 million, compared to an operating loss of $3.9 million last year [17] - GAAP net loss for Q1 was $18.8 million, compared to a net loss of $2.1 million last year [18] - Adjusted EBITDA loss for Q1 was $12.5 million, compared to adjusted EBITDA of $2.6 million last year [19] Business Line Data and Key Metrics Changes - Advanced Wound Care products experienced a significant decline in revenue, while Surgical and Sports Medicine products showed growth [17] - The company faced challenges due to the delayed implementation of the LCD, impacting customer demand and ordering patterns [5][6] Market Data and Key Metrics Changes - The market environment remains uncertain due to the delayed LCD, which has affected customer behavior and buying patterns [5][6] - The company is optimistic about the long-term opportunity as changes in coverage policies are expected to be implemented in 2026, potentially increasing patient access [10] Company Strategy and Development Direction - The company is focused on gathering robust clinical and real-world evidence to support its product portfolio and drive market penetration [11] - The RENEW program is on track, with expectations for a BLA submission by the end of 2025, targeting a large pain management market [12] - The company is expanding its manufacturing capabilities with a new biomanufacturing facility, which will support the introduction of new products [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the challenging market and reaffirmed financial guidance for 2025 [9][19] - The company anticipates a stabilization of market dynamics in the second half of 2025, despite ongoing uncertainties [26][58] Other Important Information - The company has $110.5 million in cash and cash equivalents as of March 31, 2025, with no outstanding debt [19] - The 2025 revenue guidance remains between $480 million and $535 million, with expectations for a gradual improvement in business trends [20] Q&A Session Summary Question: Inquiry about the cadence throughout the year and guidance confidence - Management expressed confidence in the guidance, highlighting optionality in the portfolio and the availability of PuraPly across all indications [24][25] Question: Clarification on gross margin expectations - Management indicated that gross margins are expected to improve in the second half of the year due to a mix shift in the product portfolio and reduced expirations [28][30] Question: Comparison of Q1 performance to Q4 and market dynamics - Management noted that confusion regarding the LCD led to a contraction in the market, which was not present in Q4 [36][37] Question: Future changes in the LCD and CMS involvement - Management believes that CMS is reviewing coverage policies and that the delay allows for more data collection, which could positively impact product approvals [41][42] Question: Guidance reiteration despite LCD delays - Management explained that the broader product portfolio and higher-margin products provide flexibility to maintain guidance despite the LCD delay [50][54]

Financial Data and Key Metrics Changes - The company reported a net revenue of $240 million for the quarter, a decrease from the prior year period, primarily due to a decline in net administrative fees revenue and supply chain services [14] - GAAP net loss from continuing operations was $46 million, mainly due to a goodwill impairment charge of $127 million related to the data and technology business in the Performance Services segment [15] - Adjusted EBITDA was $50 million, translating to a margin of 20.8%, which declined largely due to lower revenue [15] - Adjusted earnings per share was $0.25, and excluding the impact of Contigo Health, it was $0.27, in line with expectations [16] Business Line Data and Key Metrics Changes - In the Supply Chain Services segment, lower net administrative fees revenue was driven by an expected increase in the aggregate blended fee share to the low 60% level [17] - Gross administrative fees grew as existing members increased penetration of contract spend, with a growth of close to 4% overall in gross administrative fees [33] - The Performance Services segment experienced a revenue decline of 19% due to lower demand in consulting services and an unfavorable product mix in Applied Sciences [18] Market Data and Key Metrics Changes - The company is seeing a shift in member interest favoring SaaS subscription engagements versus license agreements in the Performance Services segment [19] - The company expects to address greater than 75% of the fees from the group of GPO members by the end of fiscal year 2025 [18] Company Strategy and Development Direction - The company is focused on technology enabling performance improvement and supply chain excellence for healthcare, with a strategy that includes AI enabling manual back office processes and enhancing data for actionable insights [9] - The company is committed to diversifying its supplier base to build resiliency in the supply chain and mitigate potential tariff impacts [28] - The leadership transition in the Performance Services segment aims to reinvigorate the business by recruiting new talent and refocusing solutions around key areas of differentiation [10][11] Management's Comments on Operating Environment and Future Outlook - Management remains confident in the long-term strategy despite short-term headwinds in the Performance Services segment [19] - The company is encouraged by the growing demand for provider-focused data and market intelligence, which is seen as a key differentiator in the market [10] - Management believes they are well-positioned for continued success with a flexible balance sheet and meaningful cash flow [24] Other Important Information - The company completed the sale of the network assets of Contigo Health for $15 million and is working towards divesting remaining assets [13][88] - Free cash flow for the first half of fiscal year 2025 was $74 million, an increase of $33 million from the prior year period [20] Q&A Session Summary Question: What are the discussions regarding tariffs and how are you preparing customers? - The company is focusing on building resiliency and diversification of suppliers in the supply chain to mitigate tariff impacts [28] Question: Can you provide insights on the dynamics behind net administrative fees? - The company is seeing good growth in gross administrative fees and is making progress in renegotiating contracts [32] Question: What is the expectation for the Performance Services segment in the second half of the year? - The company expects stronger performance in the second half due to a strong funnel in applied sciences and timing of enterprise license agreements [55] Question: Can you clarify the nature of the $17.6 million distribution from the minority investment? - The distribution was one-time and did not come from Omnia, and it has been adjusted out of the numbers [67] Question: How does the firm for term pricing work in relation to tariffs? - The firm for term pricing is embedded in supplier contracts, meaning suppliers absorb the tariffs, not the company or its customers [76]