Release Date: October 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- MiMedx Group Inc (MDXG, Financial) achieved year-over-year top-line growth of 3% in the third quarter, reaching $84 million in net sales.
- The company maintained a strong gross profit margin of 82%, demonstrating effective cost management.
- MiMedx Group Inc (MDXG) increased its cash balance by $20 million in the quarter, ending with $89 million in cash.
- The company successfully launched Heliogen, a new xenograft product, which is expected to contribute significantly in 2025.
- MiMedx Group Inc (MDXG) continues to expand its international business, with strong growth in Japan and other markets.
Negative Points
- The company faces challenges in the private office and associated care settings due to Medicare reimbursement system abuse.
- Surgical sales declined by 5% year-over-year, impacted by the discontinuation of dental products and Axio.
- Employee turnover in the second quarter created disruption, affecting sales in certain regions.
- The ongoing reimbursement issues have caused market disruption and uncertainty, impacting business operations.
- R&D expenses remained flat, with some delays in major randomized controlled trials, potentially affecting future product development.
Q & A Highlights
Q: Can you elaborate on the confidence level regarding the upcoming reimbursement changes and the potential impact of LCDs?
A: Joseph H. Capper, CEO: Our confidence has increased due to multiple meetings with CMS, MACs, and congressional staffers. There's a strong sense of urgency to address the escalating spend on skin substitutes. While specifics can't be disclosed, we believe LCDs will be implemented in some form as they are the mechanism available to address the issue.
Q: How is the surgical business performing, and what impact do you expect from the Heliogen launch?
A: Doug Rice, CFO: Without last year's dental and Axio sales, surgical sales grew 5%. Heliogen is off to a good start, with positive feedback from clinicians. It will take time to build momentum, but we expect it to be a well-received product.
Q: What are the expectations for Heliogen's contribution in 2025, and how did the sales rep turnover impact the physician office segment?
A: Joseph H. Capper, CEO: Heliogen is expected to be a material contributor in 2025, though it may not fully replace Axio's 2023 levels immediately. The physician office segment performed well, driven by AmnioEffect, despite sales rep turnover.
Q: Can you provide insights into the SG&A expenses and any manufacturing initiatives?
A: Doug Rice, CFO: SG&A remained consistent from Q2 to Q3, and we expect it to stay in that range. We focus on ongoing process improvements and cost control, but no specific manufacturing initiatives were highlighted.
Q: How is MiMedx Connect developing, and what future plans do you have for it?
A: Joseph H. Capper, CEO: Adoption of MiMedx Connect is exceeding expectations, enhancing workflow in practices. We are developing additional capabilities based on customer feedback to integrate more into their workflow, making us harder to replace.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
