Organogenesis (NasdaqCM:ORGO) Q4 2025 Earnings call February 26, 2026 05:00 PM ET Company ParticipantsDave Francisco - CFOGary S. Gillheeney, Senior - President, CEO, and Chair of the BoardNone - Company RepresentativeOperatorWelcome, ladies and gentlemen, to the Fourth Quarter and Full Year 2025 Earnings Conference Call for Organogenesis Holdings, Inc At this time, all participants have been placed in listen-only mode. Please note that this conference call is being recorded and that the recording will be a ...

Organogenesis (NasdaqCM:ORGO) Q4 2025 Earnings call February 26, 2026 05:00 PM ET Company ParticipantsDave Francisco - CFOGary S. Gillheeney, Senior - President, CEO, and Chair of the BoardNone - Company RepresentativeOperatorWelcome, ladies and gentlemen, to the fourth quarter and full year 2025 earnings conference call for Organogenesis Holdings, Inc. At this time, all participants have been placed in listen-only mode. Please note that this conference call is being recorded and that the recording will be ...

Financial Data and Key Metrics Changes - The company reported record sales results for Q4 2025, with net product revenue of $225.1 million, up 78% year-over-year and up 50% sequentially, exceeding the high end of guidance [14][5] - Advanced wound care net product revenue was $217.2 million, reflecting an 83% increase year-over-year, while Surgical and Sports Medicine products saw a 2% decline to $7.9 million [14][5] - Gross profit for Q4 was $175.2 million, or 78% of net product revenue, compared to 75% in the previous year, primarily due to a shift in product mix [16] - Operating income surged to $63.3 million, a 519% increase from $10.2 million last year, with adjusted net income reaching $52.9 million compared to $8.8 million last year [18][19] Business Line Data and Key Metrics Changes - Advanced wound care products drove significant revenue growth, while Surgical and Sports Medicine products experienced a slight decline [14][5] - The PuraPly family of products contributed to a 12% increase in sales for the full year 2025 [15] Market Data and Key Metrics Changes - The company anticipates a decline in total net revenue for 2026 in the range of 25%-38% year-over-year due to clinician confusion stemming from recent CMS comments [21] - The first quarter of 2026 is expected to see revenue declines of approximately 50% year-over-year, with a recovery anticipated in the second half of the year [22] Company Strategy and Development Direction - The company is focused on expanding its portfolio and capabilities, including a new manufacturing and R&D center in Rhode Island to support growth and product development [11] - The ReNu program is positioned as a transformational opportunity, with a rolling BLA submission expected to be completed in the first half of 2026 [12] - The company aims to leverage its comprehensive portfolio across multiple FDA classifications to gain market share in the evolving reimbursement landscape [21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth despite challenges in early 2026, citing the potential for significant market share gains in the latter half of the year [10][26] - The company believes that the recent CMS policy changes represent a watershed moment for the industry, enhancing access to PMA products [10] Other Important Information - The company had $94.3 million in cash equivalents as of December 31, 2025, down from $136.2 million the previous year, but remains well-capitalized with no outstanding debt [20] Q&A Session Summary Question: How much of the advanced wound care growth is due to inventory pull-forward ahead of reimbursement changes? - Management indicated that there was not a significant amount of inventory pull-forward as products are primarily used on patients, and aggressive pricing tactics were not observed [28] Question: Can you bridge the gap between Q4 results and the forecasted decline for 2026? - Management noted that while Q1 will be challenging due to clinician confusion, they expect to gain market share and improve competitive dynamics throughout the year [29][30] Question: Are there signs of confidence in share gains moving forward? - Management observed early signs of changes in competitive dynamics and noted that aggressive pricing pressure is expected to be transitory [32][33]

Financial Data and Key Metrics Changes - Net product revenue for Q2 was $100.8 million, down 23% year over year, within the guidance range of $100 million to $110 million [16] - Advanced Wound Care net product revenue was $92.7 million, down 25%, while Surgical and Sports Medicine products revenue increased by 16% to $8.1 million [16][20] - Gross profit for Q2 was $73.1 million, representing 73% of net product revenue, down from 78% the previous year [17] - Operating expenses decreased to $113.6 million from $144.1 million, a reduction of 21% year over year [17] - GAAP net loss for Q2 was $9.4 million, compared to a net loss of $17 million last year, showing improvement [18] Business Line Data and Key Metrics Changes - Advanced Wound Care products saw a revenue decline of 25%, attributed to customer demand disruptions and competitive pricing strategies [5][16] - Surgical and Sports Medicine products experienced a revenue increase of 16%, indicating strong performance in this segment [16] Market Data and Key Metrics Changes - The proposed Medicare payment reform for skin substitutes is expected to significantly impact the market, with a proposed rate of approximately $125 per square centimeter [30] - The current market for Aplograft is only 3% of units sold, indicating substantial growth potential with the new payment structure [31] Company Strategy and Development Direction - The company is focused on gathering clinical and real-world evidence to enhance its product portfolio and market penetration [10] - Expansion of biomanufacturing capabilities is underway, with a new facility in Smithfield, Rhode Island, aimed at supporting product reintroduction and new launches [11] - The RENEW program is on track for submission by the end of the year, targeting a significant market of over 30 million Americans suffering from knee osteoarthritis [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the proposed CMS payment reforms, viewing them as a transformational opportunity for the company and the industry [30] - The company anticipates aggressive pricing strategies from competitors in the latter half of 2025 but remains confident in its product momentum [33] - The guidance for 2025 has been updated, expecting net revenue between $480 million and $510 million, reflecting a year-over-year change of flat to a 6% increase [19][20] Other Important Information - The company has no outstanding debt obligations and reported cash and equivalents of $73.7 million as of June 30, 2025, down from $136.2 million at the end of 2024 [19] - Adjusted EBITDA loss for Q2 was $3.6 million, compared to adjusted EBITDA income of $15.6 million last year, indicating a significant shift in profitability [18] Q&A Session Summary Question: How does the CMS proposal for 2026 impact the company? - Management views the CMS proposal as a transformational event, providing a significant opportunity for their products and leveling the playing field in reimbursement [30][31] Question: Has the guidance reduction accounted for aggressive market behavior? - Management believes the guidance reduction reflects the current market conditions and anticipates strong performance from recently launched products in the second half of the year [34][35] Question: What is the timing for the reintroduction of Dermagraft? - Management indicated that Dermagraft is expected to be launched by 2027 [37] Question: How does RENEW position itself in the knee OA treatment landscape? - Management highlighted the strength of RENEW's data, indicating it will compete well against existing injectable options [41] Question: What drove the strength in the Surgical and Sports Medicine segment? - The segment's growth was attributed to strong performance and the implementation of hybrid sales strategies, with a 16% increase in Q2 [42]

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 net revenue for Q1 2025 of $86.7 million, a decrease of 21% year-over-year [15] - Advanced Wound Care net revenue was $79.9 million, down 23%, while Surgical and Sports Medicine products revenue increased by 11% to $6.8 million [16] - Gross profit for Q1 was $63 million, representing 72.6% of net revenue, compared to 73.9% in the previous year [16] - Operating loss for Q1 was $26.7 million, significantly higher than the operating loss of $3.9 million in the prior year [17] - GAAP net loss for Q1 was $18.8 million, compared to a net loss of $2.1 million last year [17] - Adjusted EBITDA loss for Q1 was $12.5 million, compared to adjusted EBITDA of $2.6 million in the previous year [18] Business Line Data and Key Metrics Changes - Advanced Wound Care experienced a revenue decline of 23%, while Surgical and Sports Medicine products saw an increase of 11% [16] - The company expects net revenue from Advanced Wound Care products for 2025 to be between $450 million and $500 million, indicating a year-over-year change of a decline of 1% to an increase of 10% [19] - Surgical and Sports Medicine products are projected to generate revenue between $30 million and $35 million, representing a year-over-year increase of 6% to 23% [19] Market Data and Key Metrics Changes - The company noted disruptions in customer demand and ordering patterns due to uncertainty surrounding the effective date of the final LCD for skin substitute grafts [5] - The delay in the LCD implementation until January 1, 2026, is expected to provide an opportunity for the company to serve more patients and positively impact the wound care market [10] Company Strategy and Development Direction - The company is focused on gathering robust clinical and real-world evidence to enhance its product portfolio and market penetration [11] - The RENEW program is on track, with expectations to complete the second Phase III study by the end of Q2 2025 and submit a BLA by the end of the year [12] - The company is expanding its manufacturing capabilities with a new biomanufacturing facility in Smithfield, Rhode Island, which will support the reintroduction of key products [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term opportunities for the company, particularly with the expected changes in coverage policies in 2026 [10] - The company anticipates a challenging environment in the first half of 2025, followed by significant improvement in business trends starting in Q3 [19] - Management emphasized the importance of educating customers to stabilize buying behaviors and return to previous purchasing patterns [53] Other Important Information - The company reaffirmed its financial guidance for 2025, expecting net revenue between $480 million and $535 million, with a year-over-year change of roughly flat to an increase of 11% [19] - The company has $110.5 million in cash and cash equivalents as of March 31, 2025, with no outstanding debt obligations [18] Q&A Session Summary Question: Inquiry about the cadence throughout the year and guidance confidence - Management expressed confidence in the guidance, highlighting the optionality in the portfolio and the execution capabilities despite market uncertainties [22][23] Question: Clarification on gross margin expectations - Management indicated that gross margins should improve in the second half of the year due to a mix shift in the product portfolio and reduced expiries [26][27] 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 [34] Question: Discussion on the delay of the LCD and its implications - Management explained that the delay allows for more data collection and could expand the number of products eligible for coverage, which is seen as positive [40][41] Question: Further clarification on guidance and expected inflection points - Management reiterated that the full portfolio is now available, which supports revenue stabilization and growth despite the LCD delay [48][49]