Financial Data and Key Metrics Changes - Total revenue for the second quarter was $28.2 million, an 8% decline compared to the same period in 2024 [21] - Adjusted EBITDA from continuing operations was negative $200,000, a decline of $4.9 million compared to the same period in 2024 [28] - Gross margin for the second quarter was 51%, down 16 percentage points from the same period last year, primarily due to a one-time $3 million charge related to lower yields [25][26] Business Line Data and Key Metrics Changes - Regenerative solutions revenue grew 41% year over year, driven by the Integrity Implant System [18][22] - Revenue in the OEM channel declined 13% to $16.3 million, reflecting continued pressure on demand and pricing for OrthoVisc and lower pricing for MONOVisc [23] - International OA pain sales experienced a 10% decline, primarily due to unfilled orders stemming from lower yields [22] Market Data and Key Metrics Changes - The U.S. augmentation market remains primarily driven by the shoulder, but there is meaningful traction in other areas such as the hip, knee, and ankle, representing over $40 million in addressable market opportunity [16] - Integrity has achieved sequential growth for five consecutive quarters and is on track to more than double in 2025 [22] Company Strategy and Development Direction - The company plans to submit the third and final PMA module for HYALOFAST in the second half of the year, with an extended commercial timeline to 2027 [13][14] - The company is focused on leveraging proprietary hyaluronic acid technologies and has streamlined its organizational structure to align with future growth [28][19] Management's Comments on Operating Environment and Future Outlook - Management remains confident in the key value drivers of the business, particularly the performance of Integrity and the anticipated double-digit organic growth in the commercial channel [35] - Despite the HYALOFAST trial not meeting its primary endpoints, management believes the totality of the data supports a viable path to FDA approval [35][44] Other Important Information - The company ended the second quarter with $53 million in cash and no debt, maintaining strong liquidity [30] - The company has successfully completed divestitures of Parkis and Arthrosurface, allowing for a focused strategy on core products [19] Q&A Session Summary Question: What will drive the sequential improvement in gross margin? - Management indicated that the sequential improvement is expected due to the resolution of one-time charges and improved performance excluding those impacts [38][39] Question: Any progress on additional OEM partnerships? - Management stated that there are no new updates on additional OEM partnerships but continues to assess opportunities [40][41] Question: How should the market opportunity for Integrity be viewed with new configurations? - Management expressed optimism about the expanded market opportunity with new shapes and sizes for Integrity, which are expected to enhance market penetration [42][43] Question: What gives confidence for FDA approval of HYALOFAST despite missed primary endpoints? - Management noted that the FDA has encouraged submission of the full data package, including secondary endpoints that achieved statistical significance [44][45] Question: How should gross margin be viewed as the commercial channel grows? - Management indicated that while the commercial channel may have lower gross margins, new products like Integrity and HYALOFAST are expected to be accretive to gross margin [50][52] Question: Will cash flow improve going forward? - Management expects improvements in operating cash flow, although capital expenditures may impact cash balance [55][56] Question: Will capacity be sufficient to meet demand for new products? - Management indicated that continued investments will be necessary to meet future demand for Integrity, CINGAL, and HYALOFAST [57][58] Question: Any updates on the HYALOFAST trial's patient data? - Management confirmed that the study had a target of 200 patients, but dropout rates were higher in the microfracture arm, impacting the data set [62][63]

Financial Data and Key Metrics Changes - Total revenue for the first quarter was $26.2 million, down 10% compared to the same period in 2024, primarily due to pricing pressure in the OEM channel [9][20] - Gross margin for the first quarter was 56%, down nine percentage points year over year, driven by a $4 million drop in sales of MONOVISC and ORTHOVISC [22][23] - Operating expenses decreased by 12% year over year to $19 million, reflecting cost-saving measures [25] Business Line Data and Key Metrics Changes - Revenue in the commercial channel increased by 18% year over year to $11.3 million, with international OA pain products growing by 13% [20] - The regenerative solutions portfolio achieved 33% growth year over year, driven by the performance of the Integrity product [12][21] - OEM channel revenue decreased by 23% to $14.9 million, primarily due to lower pricing for MONOVISC and ORTHOVISC [20][22] Market Data and Key Metrics Changes - International OA pain management revenue grew by 13% year over year, indicating strong market demand [9][20] - The company is focused on expanding its global reach and strengthening distribution networks to mitigate pricing pressures in the U.S. market [10][11] Company Strategy and Development Direction - The company is advancing its strategic initiatives by focusing on proprietary hyaluronic acid technologies and optimizing its commercial channel [6][7] - Key products like the Integrity Implant System and anticipated U.S. approvals of HYALOFAST and CINGAL are seen as market drivers in tendon and cartilage repair [8][17] - The company is actively working on new product expansion programs to diversify revenue sources beyond J&J [11] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing pricing challenges in the domestic OA pain market and short-term supply production yield issues [5][6] - The company expects a modest pricing rebound in the second quarter, with overall revenue guidance for the OEM channel updated to reflect a 16% to 20% decline [28][29] - Management remains optimistic about the long-term trajectory, driven by investments in regenerative solutions and upcoming product launches [32] Other Important Information - The company ended the quarter with $53 million in cash and no debt, indicating a strong liquidity position [26][70] - Adjusted EBITDA guidance for 2025 has been revised to a range of negative 3% to positive 3%, reflecting lower manufacturing yields and pricing pressures [30][32] Q&A Session Summary Question: Timeline and investment for the CINGAL bioequivalence study - Management expects to begin the study by the end of the year, with further updates to be provided as progress is made [38][39] Question: OEM revenue guidance and expected improvement - The sequential growth in OEM revenue is expected to be driven primarily by pricing, with indications of a pricing rebound in the second quarter [41] Question: Commercial revenue guidance maintenance - The decision to maintain commercial revenue guidance was based on strong Q1 performance, despite tougher comparisons in Q2 [43] Question: Timing for HYALOFAST final module filing - The final module filing for HYALOFAST is expected to be completed by the end of the year, with updates to be provided in future earnings calls [48][49] Question: Distribution plans for CINGAL - Management is exploring distribution opportunities for CINGAL, with more details to come as the regulatory process progresses [67][68] Question: Cash position and sufficiency for regulatory processes - The company has sufficient cash to navigate the regulatory filings for both HYALOFAST and CINGAL, with expectations of improvements in cash flow in the second half of the year [70][71]

Financial Data and Key Metrics Changes - Total revenue for the first quarter was $26.2 million, down 10% compared to the same period in 2024, primarily due to pricing pressure in the OEM channel [9][20] - Gross margin for the first quarter was 56%, down nine percentage points year over year, driven by a $4 million drop in MONOVISC and ORTHOVISC sales [22][23] - Operating expenses decreased by 12% year over year to $19 million, reflecting cost-saving measures [26] Business Line Data and Key Metrics Changes - Revenue in the commercial channel increased by 18% year over year to $11.3 million, with international OA pain products growing by 13% [20] - The regenerative solutions portfolio achieved 33% growth year over year, driven by the performance of the Integrity product [12][20] - OEM channel revenue decreased by 23% to $14.9 million, primarily due to lower pricing for MONOVISC and ORTHOVISC [21] Market Data and Key Metrics Changes - The company experienced ongoing pricing challenges in the domestic OA pain market, impacting overall revenue [6][9] - International OA pain management growth was reported at 13% year over year, indicating strong performance in global markets [9][20] Company Strategy and Development Direction - The company is focusing on leveraging proprietary hyaluronic acid technologies and has made progress in strategic initiatives [7][8] - Plans to diversify revenue sources and grow the OEM channel outside of existing partnerships are underway, particularly through new product expansion programs [11] - The anticipated U.S. approvals of HYALOFAST and CINGAL are seen as key drivers for future growth in tendon and cartilage repair markets [8][18] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing pricing pressures but expressed confidence in the company's ability to return to historic production levels in the second half of the year [35] - The company expects modest pricing rebounds in the second quarter and anticipates accelerated growth in the second half of the year [29][30] - Management remains optimistic about the long-term trajectory, driven by investments in regenerative solutions and upcoming product launches [33] Other Important Information - The company ended the first quarter with $53 million in cash and no debt, indicating a strong liquidity position [27][71] - Adjusted EBITDA guidance for 2025 has been updated to a range of negative 3% to positive 3%, reflecting lower pricing and manufacturing challenges [30][31] Q&A Session Summary Question: Timeline and investment for the CINGAL bioequivalence study - Management expects to begin the study by the end of the year and will provide further updates as progress is made [38][39] Question: OEM guidance and expected improvement in revenue - Sequential growth in OEM revenue is anticipated to be driven primarily by pricing adjustments [41] Question: Commercial revenue guidance maintenance - The decision to maintain guidance was based on strong Q1 performance and expected challenges in Q2 [43] Question: Timing for HYALOFAST final module filing - The final module is expected to be filed by the end of the year, with updates to be provided in future earnings calls [48][49] Question: Distribution plans for CINGAL - Management is exploring distribution opportunities and will provide more details as they develop [68] Question: Cash flow expectations and regulatory process funding - The company has sufficient cash to navigate the regulatory processes for both HYALOFAST and CINGAL [71][72]

Financial Data and Key Metrics Changes - Total revenue for the first quarter was $26.2 million, down 10% compared to the same period in 2024, primarily due to pricing pressure in the OEM channel [8][19] - Gross margin decreased to 56%, down nine percentage points year over year, driven by a $4 million drop in MONOVISC and ORTHOVISC sales [21][22] - Operating expenses were $19 million, down 12% year over year, reflecting cost-saving measures [24] Business Line Data and Key Metrics Changes - Revenue in the commercial channel increased by 18% year over year to $11.3 million, with international OA pain products growing by 13% [19] - Regenerative solutions revenue grew by 33% year over year, driven by the performance of the Integrity product [20][11] - OEM channel revenue decreased by 23% to $14.9 million, primarily due to lower pricing for MONOVISC and ORTHOVISC [20][21] Market Data and Key Metrics Changes - The U.S. market for MONOVISC and ORTHOVISC continues to face pricing volatility, which has not been fully offset by measures implemented by J and J MedTech [9][10] - The company anticipates a modest pricing rebound in the second quarter, but overall OEM revenue is expected to decline by 16% to 20% for the full year [28][29] Company Strategy and Development Direction - The company is focusing on leveraging proprietary hyaluronic acid technologies and expanding its commercial channel, which has shown strong growth [6][11] - Strategic initiatives include diversifying revenue sources and enhancing product offerings, particularly in regenerative solutions [10][12] - The company is advancing its pipeline programs, including HYALOFAST and CINGAL, with expected U.S. launches in 2026 [15][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in overcoming short-term manufacturing challenges and returning to historic production levels in the second half of the year [34] - The company remains well-positioned to fund its product pipeline and expects to see improvements in gross margins in the second half of the year [32][70] Other Important Information - The company ended the quarter with $53 million in cash and no debt, indicating strong liquidity to support ongoing operations and regulatory processes [27][69] - Adjusted EBITDA guidance for 2025 has been revised to a range of negative 3% to positive 3%, reflecting lower manufacturing yields and pricing pressures [30][32] Q&A Session Summary Question: Could you elaborate on the timeline and investment needed for the CINGAL bioequivalence study? - Management expects to begin the study by the end of the year and will provide further updates as progress is made [38][39] Question: What drives the expected improvement in OEM revenue through the year? - The improvement is primarily driven by anticipated price stabilization in the second quarter [41] Question: What factors influenced the decision to maintain commercial revenue guidance? - The decision was based on strong Q1 performance and expectations of continued growth despite tougher comparisons in Q2 [42] Question: Can you provide insight into the distribution plans for CINGAL once approved? - The company is exploring various distribution opportunities and will provide more details in the future [65][66] Question: Is there sufficient cash to get through the regulatory process? - Management confirmed that the company has adequate cash to support regulatory filings for both HYALOFAST and CINGAL [69][70]

Financial Data and Key Metrics Changes - Overall revenue in Q4 was $30.6 million, up 1% compared to the same period in 2023. For the full year, revenue was $119.9 million, a slight decrease of 1% compared to 2023 [8][27] - Gross margin for the fourth quarter was 56%, down 13 points from last year. Adjusted gross margin was 58%, down 11 points versus last year [22] - Adjusted EBITDA from continuing operations was $3.6 million, down 44% compared to 2023 [23][29] - Total adjusted EBITDA for the company was in line with previously provided guidance, totaling $15.5 million for the full year [29] Business Line Data and Key Metrics Changes - Commercial channel revenue was up 25% in Q4 and 17% for the full year, while OEM channel revenue decreased by 8% for both the quarter and the full year [8][27] - Integrity sales grew by more than 40% sequentially for the third straight quarter, with over 1,000 surgeries performed globally since its launch [9][20] - Regenerative solutions in the commercial channel grew 32% year over year, contributing to future growth [20] Market Data and Key Metrics Changes - International OA pain management growth was 22% in Q4 and 16% for the full year, driven by geographic expansion and market share gains [8][27] - MONOVISC and ORTHOVISC remain market leaders in the U.S., despite competitive pricing pressures [21] Company Strategy and Development Direction - The company divested ArthroSURFACE and Parkus Medical to focus on core products with the best value-building opportunities [7] - The strategic focus is on expanding the Integrity implant system and advancing the HYALOFAST and CINGAL products [7][36] - The company aims to grow international OA pain products and Integrity domestically while seeking regulatory approvals for new products [36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's improved growth profile and solid financial structure, indicating no need for additional capital raising [37] - The company anticipates a challenging year for the OEM channel in 2025 but expects stability in pricing and market share in the following years [31][32] Other Important Information - The company generated $1.6 million in operating cash flow in Q4, down from $3.6 million last year, but improved cash flow management in the second half of 2024 led to $6.6 million in operating cash flow [25][30] - The company completed a $15 million share repurchase plan earlier than expected and ended Q4 with $56 million in cash and no debt [26] Q&A Session Summary Question: What were the one-time legacy program expenses referred to? - Management indicated that these were related to legacy product lines that will not continue, amounting to between $1 million and $2 million [40][41] Question: Is the SG&A of around $11 million to $12 million a good proxy for 2025? - Management confirmed that this is a good approximation for future SG&A expenses, reflecting the company's focus on hyaluronic acid [42] Question: What was the magnitude of the R&D charges for Hyalofast? - The one-time filing fee for Hyalofast was about $600,000, which is not expected to recur [43] Question: Will there be major R&D expenses for CINGAL in 2025? - Management stated that the bulk of the expenses for CINGAL are already accounted for, with ongoing work related to FDA feedback [46][48] Question: What is the expected growth driver for the commercial channel in the coming years? - The primary growth driver is expected to be the Integrity product, along with continued growth in international OA pain management [55][56]