Bioventus (US:BVS)2023-11-12 05:55Financial Data and Key Metrics Changes - Revenue for Q3 2023 was $121 million, a decline of 6% compared to the same period last year; however, when adjusting for the divestiture of the wound business, revenue growth was flat year-over-year [9][15] - Adjusted EBITDA was $22 million, consistent with the prior year, attributed to stringent expense control and improved accounts receivable collections [9][18] - Adjusted operating income increased to $20 million from $17 million in the prior year, while adjusted net income totaled $5 million compared to $11 million a year ago [18] Business Line Data and Key Metrics Changes - Pain treatments revenue returned to growth with a 3% increase compared to the prior year, driven by strong double-digit volume growth in DUROLANE [15][36] - Surgical Solutions grew by 7%, with ultrasonics achieving double-digit growth; however, the recovery in the bone graft substitute business was slower than anticipated [12][16] - Restorative Therapies sales fell by 28%, with a 15 percentage point decline attributed to the wound business divestiture; organic revenue declined by 13 percentage points [17] Market Data and Key Metrics Changes - The International segment grew by 18%, with constant currency growth of 16%, driven by strength in the Surgical Solutions business [40] - The average selling price (ASP) for DUROLANE is expected to increase sequentially in Q4 2023, while GELSYN's ASP is anticipated to stabilize by mid-2024 [10][11] Company Strategy and Development Direction - The company is focused on investing in areas that can deliver sustainable, profitable growth, with a commitment to improving financial metrics and restoring stakeholder trust [6][7] - Structural changes in the surgical solutions sales strategy aim to improve growth and eliminate channel overlap, with a focus on direct sales for ultrasonics and distributors for bone graft substitutes [39][61] - The company plans to make commercial and R&D investments starting in Q4 2023 to drive long-term growth [55] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to reduce leverage and enhance revenue and earnings growth opportunities while maintaining cost control [35] - The company anticipates a return to growth in 2024, with expectations of mid- to high single-digit growth in the HA portfolio as prices stabilize and volume continues to grow [62] - Management acknowledged the challenges faced in 2023 but highlighted significant progress in stabilizing trends and improving execution [34][64] Other Important Information - The company updated its 2023 guidance, expecting revenue between $498 million and $505 million, with adjusted EBITDA projected at $84 million to $87 million [19] - The company ended the quarter with $27 million in cash and $395 million in debt, with an operating cash flow outflow of $8 million due to delayed rebate payments [46] Q&A Session Questions and Answers Question: How to maintain volume growth for DUROLANE as ASP improves? - Management indicated that the growth in volume is driven by clinical differentiation and strong payer relationships, which will continue to support growth even as prices increase [24][52] Question: Are there any potential divestitures or M&A plans? - Management stated that there are no immediate divestitures planned and that the focus is on optimizing the current portfolio rather than pursuing M&A in the near term [28][64] Question: What are the expectations for overall revenue growth in 2024? - Management expects to see solid growth in 2024, with investments in commercial and R&D to drive this growth, although EBITDA increases may be smaller than expected due to these investments [55][62]