Organogenesis (US:ORGO)2025-05-08 22:02Financial 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]