Summary of Bioventus Conference Call Company Overview - **Company**: Bioventus - **Industry**: Medical Technology (Med Tech) - **Annual Revenue**: Over $550 million - **Market Opportunity**: $6 billion across product categories [4][5] Core Business Segments - **Business Segments**: - Pain Treatment - Surgical Solutions - Restorative Therapies - **Market Position**: Category or growth leader in all segments [4] Financial Performance - **Growth Rate**: Expected to grow nearly 2X the weighted average market growth rate despite unfavorable comparisons in the first half of the year [5] - **EBITDA Margin**: Guidance for the year is just over 20%, representing a 100 basis points improvement from the previous year [6] - **Cash Flow Improvement**: Significant progress with cash flow expected to nearly double this year, driven by higher EBITDA, lower interest expenses, and efficient working capital [17][18] Growth Drivers Core Growth Drivers - **Hyaluronic Acid (HA) Therapy**: - Focused on knee osteoarthritis pain with Durolane as a leading product - Strong clinical differentiation and largest dedicated sales force in the space [7][8] - **Bone Graft Substitutes (BGS)**: - Focused on spinal surgery with high single-digit growth [8] - **Fracture Care**: - Restored to growth with double-digit growth in recent quarters, expecting mid-single-digit growth moving forward [9] Expansion Growth Drivers - **Ultrasonics Technology**: - Aimed at changing the standard of care for bone cutting in spine surgery, expected to drive significant growth [10][11] - **International Segment**: - New leadership and plans to aggressively pursue international opportunities, expecting double-digit growth [11] Emerging Growth Drivers - **Peripheral Nerve Stimulation (PNS)**: - Current market size of $200 million in the U.S., expected to exceed $500 million by 2029 [12] - Introduction of StimTrial and Talisman PNS system to enhance treatment options [13] - **Platelet-Rich Plasma (PRP)**: - Current market size of $400 million in the U.S., growing in high single digits, with exclusive distribution agreement for Excel PRP system [14] Strategic Focus - **Value Creation**: - Combination of above-market growth and peer-leading gross margin allows for margin expansion while investing in future growth drivers [16][20] - **Cash Flow and Debt Management**: - Expected leverage to drop below 2.5x, providing optionality for capital deployment [18][19] Conclusion - **Future Outlook**: - Bioventus aims to become a $1 billion high-growth, high-profit, high-cash flow company focused on patient recovery and quality of life [20]

Financial Data and Key Metrics Changes - Third quarter revenue reached $139 million, representing an 8% organic growth, which is an acceleration of over 200 basis points compared to the first half of the year [5][14] - Adjusted EBITDA increased by 13% to $27 million, with an adjusted EBITDA margin expanding by over 200 basis points to 19% [10][15] - Adjusted earnings per diluted share were $0.15, a 200% increase compared to the prior year [11][17] Business Line Data and Key Metrics Changes - Pain Treatments revenue grew 6% in Q3, driven by strong volume growth of Durolane and recent account wins [16] - Surgical Solutions revenue increased by 9%, supported by growth in Ultrasonics and improved awareness of the value proposition [16] - Restorative Therapies revenue declined by 29% due to the divestiture of the Advanced Rehabilitation Business, but organic growth was 11% excluding this impact [16] - International segment revenue decreased by 4%, while organic growth climbed 10% [16] Market Data and Key Metrics Changes - The U.S. market for peripheral nerve stimulation (PNS) is expected to exceed $500 million by 2029, growing above 20% annually [8] - The company anticipates double-digit organic growth in its international segment for 2025, supported by new leadership and market expansion opportunities [16] Company Strategy and Development Direction - The company aims to become a $1 billion high-growth, high-margin, high-cash flow entity, focusing on above-market revenue growth, profitability expansion, and cash flow generation [12] - Key growth drivers include PNS and platelet-rich plasma (PRP) technologies, which are expected to contribute at least 200 basis points of profitable growth in 2026 [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining guidance for 2025, projecting organic revenue growth of 6%-8% and adjusted EBITDA of $112 million-$116 million [19] - The company is optimistic about growth opportunities in 2026, particularly in PNS, ultrasonics, and international markets, but refrained from providing specific guidance for that year [40][41] Other Important Information - The company absorbed over $2.5 million in unplanned impacts from foreign exchange rate movements [15] - Cash flow from operations totaled $30 million, nearly tripling compared to the prior year, with a cash conversion ratio of over 100% [11][18] Q&A Session Summary Question: Update on pain growth and Durolane performance - Management noted that Durolane led the growth in the pain business, supported by strong sales and clinical differentiation [24][26] Question: Acceleration in surgical business for Q4 - Management indicated that the surgical business, particularly bone graft substitutes, is expected to see continued growth due to strong distributor support and clinical value [27][28] Question: Competitive positioning of Talisman - Management emphasized the importance of scaling the commercial organization and increasing market awareness for the Talisman offering [31] Question: Ultrasonics penetration in spine opportunities - Management highlighted the need for increased awareness and medical education efforts to drive penetration in the spine market [33] Question: Guidance philosophy and expectations for 2026 - Management maintained guidance for 2025 and expressed excitement about growth opportunities in 2026, but did not provide specific guidance for that year [39][40]

Financial Performance - Third quarter revenue was $139 million, comparable to the prior year, with organic growth of 8%[13, 28] - GAAP net income was $3 million, compared to a net loss of $5 million in the prior year[23, 28, 29] - Adjusted EBITDA increased by 13% to $27 million, with Adjusted EBITDA margin expanding by over 200 basis points[23, 28] - Cash from operations nearly tripled for the quarter and is up 88% year-to-date[23] - Adjusted Gross Margin increased 50 basis points due to improved product mix[37] - Adjusted Net Income nearly tripled due to increased gross margin, decreased operating expenses, and decreased interest expense[44] Segment Performance - Pain Treatments revenue grew by 6% to $67 million, driven by strong Durolane volume growth[30, 31, 36] - Surgical Solutions revenue increased by 9% to $50 million, with growth in Bone Graft Substitutes[32, 33, 36] - Restorative Therapies revenue declined by 29% to $21 million due to the divestiture of the Advanced Rehabilitation Business, but EXOGEN grew by 11%[34, 35, 36] Strategic Initiatives - The Peripheral Nerve Stimulation (PNS) market is estimated at approximately $200 million in the U S, expected to exceed $500 million by 2029, with annual growth above 20%[20] - The company expects PNS and PRP to provide at least 200 basis points of profitable growth in 2026[22] Financial Outlook - The company reaffirmed its 2025 financial guidance, with net sales expected to be in the range of $560 million to $570 million, representing organic growth of 6% to 8%[46] - Adjusted EBITDA is projected to be in the range of $112 million to $116 million, and Adjusted Earnings Per Share in the range of $0 64 to $0 68[46]

Bioventus FY Conference Summary Company Overview - Bioventus is a $550 million medical device company focused on pain, surgical solutions, and restorative therapies, participating in large and growing markets [4][5] - The company aims to become a $1 billion entity with high growth, profitability, and cash flow [5] Financial Performance - Bioventus has achieved seven quarters of above single-digit growth, with four quarters of double-digit growth [4] - The company has a gross margin in the mid-70% range, outperforming peers [5] - Expected cash flow for 2025 is projected to double from the previous year, reaching $60 million to $70 million [9] - EBITDA has increased from $66 million to $109 million, with a guidance midpoint of $114 million for the current year [48] Turnaround Strategy - The company underwent a significant turnaround by simplifying operations, including two divestitures from the wound and advanced rehabilitation businesses [6][7] - A new CEO with commercial experience was brought in to enhance growth strategies [8] - The company has successfully refinanced its debt, improving financial stability [8] Portfolio and Growth Drivers - The ultrasonics portfolio, acquired in 2022, is expected to change the standard of care and has shown double-digit growth [10][15] - The HA (Hyaluronic Acid) portfolio is a significant revenue contributor, with a complete product range that includes Duralane, Gelsyn, and Supartz [12][13] - The BGS (Bone Growth Stimulator) product is positioned competitively against Medtronic's Infuse, with opportunities for market share growth [13][14] - The Exogen fracture care device has transitioned from decline to growth, contributing positively to the portfolio [11][42] New Product Introductions - The addition of PRP (Platelet-Rich Plasma) to the portfolio is aimed at leveraging existing sales force capabilities without adding new personnel, targeting a $400 million market [23][24] - The PNS (Peripheral Nerve Stimulation) market is projected to grow significantly, with a TAM of $2 billion and expected growth to $500 million by 2029 [31][32] Market Position and Competitive Advantage - Bioventus is positioned as a market leader in several segments, with a focus on clinical differentiation and strong market access strategies [12][13] - The ultrasonics technology is noted for its revolutionary benefits, including reduced blood loss and ease of use for surgeons [18][19] Future Outlook - The company expects to maintain a growth rate of around 7% in the coming years, with potential contributions from new product launches [41] - There is a focus on organic growth rather than M&A in the near term, with an emphasis on maximizing the existing portfolio [46][54] - The company aims to reduce leverage to 2.5 times by the end of 2025, with plans to prioritize debt repayment [52][53] Challenges and Considerations - The company faces macroeconomic headwinds, including tariffs and foreign exchange impacts, but remains committed to expanding margins [49][50] - Investments in new product launches, such as PNS, are expected to be balanced with maintaining profitability [51] Conclusion - Bioventus is on a positive trajectory with a strong portfolio, effective turnaround strategies, and a focus on sustainable growth and profitability in the medical device sector [41][54]

Financial Data and Key Metrics Changes - Second quarter revenue was $148 million, reflecting a 2% decrease compared to 2024, but organic growth was 6% when adjusting for the divestiture of the Advanced Rehabilitation business [19][21] - Adjusted earnings per share increased by 31% to $0.21, while adjusted EBITDA margin was 23%, indicating strong gross margin stability [8][22] - Adjusted net income rose 45% to $18 million, driven by lower interest expenses and reduced employee equity-based compensation [23] Business Line Data and Key Metrics Changes - Surgical Solutions revenue grew by 11%, with strong double-digit growth in Ultrasonics [21] - Restorative Therapies experienced a 32% decrease in revenue due to the divestiture, but organic growth was 11% when excluding this impact [22] - Pain Treatments revenue increased by 1%, with organic growth estimated at 4% to 5% [21][36] Market Data and Key Metrics Changes - International segment revenue increased by 12%, with organic growth climbing 24% [22] - The pain treatment market is expected to grow above 20% annually in the US, with a total addressable market of approximately $2 billion [12] Company Strategy and Development Direction - The company aims to drive above-market revenue growth, expand profitability, and accelerate free cash flow generation [8][18] - Focus on expanding the PNS market with the recent clearance of StimTrial and Telesman, which are expected to generate significant revenue [12][15] - Plans for a limited commercial release of new products in the third quarter, with broader rollout expected in early 2026 [15][66] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year revenue and adjusted EBITDA guidance, despite challenges from foreign exchange and tariffs [28][29] - The company is well-positioned for sustained growth, with expectations for cash flow from operations to nearly double compared to the previous year [24][25] Other Important Information - The company was recognized as one of the top 10 companies to work for in North Carolina, highlighting positive employee engagement [18] - Recent refinancing of credit facilities improved liquidity and reduced annual interest expenses [27] Q&A Session Summary Question: Can you remind us what growth would have been year over year on an organic basis if not for that favorable rebate adjustment in 2Q 2024? - Management indicated that normalized growth would be around 4% to 5% [32][33] Question: What was the volume growth for Duralane in the quarter? - Management noted that Duralane continues to be a strong driver, with performance slightly above market growth in the mid-single digits [36] Question: What was BGS growth in the quarter? - BGS experienced high single-digit growth in the second quarter, with expectations for continued acceleration [40][42] Question: Can you provide more color on Exagen's strength in the quarter? - Growth in Exagen was attributed to improved commercial effectiveness and stronger execution from the sales team [48][50] Question: What are the expectations for R&D spending in the future? - R&D investment is expected to ramp up as the company focuses on expanding its Ultrasonics and PNS platforms [56][58] Question: What drove the increase in tariff expectations? - The expected tariff impact increased to approximately $3 million, primarily affecting the back half of the year [67][68]

Second Quarter 2025 Performance - Second quarter revenue reached $148 million, with organic revenue growth of 6%[13] - Adjusted Earnings Per Share (EPS) increased 31% to $0.21, and Adjusted EBITDA margin increased 23%[13] - Surgical Solutions revenue increased 11% compared to the prior year quarter, driven by double-digit growth in Ultrasonics[39] - Restorative Therapies revenue declined 32% compared to the prior year quarter due to the divestiture of the Advanced Rehabilitation Business, while EXOGEN grew 11%[39] - Pain Treatments revenue increased 1% compared to the prior year quarter[39] Financial Metrics and Guidance - Adjusted Gross Margin increased 50 basis points due to improved product mix[40] - The company ended the second quarter with $33 million in cash and $341 million in debt outstanding[48] - Cash from operations was an inflow of $26 million in the second quarter[48] - The company reaffirms its 2025 financial guidance, projecting net sales in the range of $560 million to $570 million, representing organic growth of 6% to 8%[52] - Adjusted EBITDA is expected to be in the range of $112 million to $116 million, and Adjusted Earnings Per Share is projected to be in the range of $0.64 to $0.68[52] Strategic Initiatives and Future Outlook - The company received FDA 510(k) clearance for StimTrial and TalisMann, Peripheral Nerve Stimulation (PNS) products, targeting the chronic peripheral pain market[18, 20] - The PNS market is estimated to be growing above 20% annually in the U S and is expected to exceed $500 million by 2029, with an expected total addressable market of approximately $2 billion[20] - The company plans to invest in a direct sales force in the second half of 2025 and expects TalisMann and StimTrial to potentially generate $100 million or more of revenue[27] - The company forecasts at least 100 basis points of Adjusted EBITDA margin expansion in 2025[30] - The company expects cash from operations in 2025 to nearly double compared to 2024 and expects to reduce net leverage to below 2 5 times by the end of 2025[30, 48]