Organogenesis (US:ORGO)2025-05-08 22:00Financial 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]