Organogenesis (ORGO) - 2022 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported net revenue of $98.1 million for Q1 2022, a decrease of 4% year-over-year, primarily due to flat growth in Advanced Wound Care products and a 39% decline in Surgical & Sports Medicine products [8][26] - Adjusted net revenue, excluding ReNu and NuCel, increased by 1% year-over-year [9][26] - Gross profit for Q1 2022 was$ 73 million, approximately 74% of revenue, compared to 75% in the previous year [27] - Operating income decreased to $0.9 million from$ 12.6 million year-over-year [31] - Net income for Q1 2022 was $0.1 million, down from$ 9.9 million in the prior year [32] Business Line Data and Key Metrics Changes - Advanced Wound Care net revenue was $91 million, essentially flat year-over-year [26] - Surgical & Sports Medicine products generated$ 7.2 million in revenue, down 39% due to the suspension of ReNu and NuCel marketing [26] - PuraPly products saw a 29% increase in sales year-over-year, reaching $53.3 million [27][12] - Amniotic products experienced a 32% decline year-over-year, reflecting the impact of Omicron on the national launch of Affinity [12] Market Data and Key Metrics Changes - The overall operating environment in Q1 was impacted by rising Omicron case counts, affecting patient consultations and elective procedures [15] - The company expects steady improvement in the operating environment as COVID-related headwinds diminish throughout 2022 [16] Company Strategy and Development Direction - The company aims to diversify revenue across physician specialties and sites of care through targeted product development and commercial strategies [14] - The midpoint of the full-year revenue range assumes amniotic growth of approximately 12% year-over-year in 2022 [13] - The company plans to launch new products and line extensions to drive demand and expand market presence [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the full-year 2022 guidance, expecting net revenue between$ 485 million and $515 million, representing growth of 4% to 10% year-over-year [17][34] - The company anticipates stronger growth trends in the second half of 2022, driven by new product contributions and a return to a normalized operating environment [17][34] Other Important Information - The company appointed Michele Korfin and Gilberto Quintero to the Board of Directors, enhancing the board's experience and diversity [23][24] - The company is making progress in its Phase III clinical trial of ReNu for knee osteoarthritis, with enrollment on track [21] Q&A Session Summary Question: Update on amniotic product line and Affinity - Management noted that Q1 performance for Affinity was as expected, with positive trends observed in recent weeks and confidence in continued expansion throughout the year [45] Question: Update on commercial organization growth - The company plans to add approximately 50 new direct sales representatives and is evaluating agency relationships for competency [51] Question: Medicare pricing expectations - Management indicated that pricing changes would be reflected in the average selling price (ASP) as they occur, but no specific pricing strategy was discussed [60] Question: Restructuring program and gross margins - The restructuring aims to increase capacity and efficiency, with expectations for gross margins to improve as revenue increases throughout the year [63]