Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Organogenesis Holdings Inc (ORGO, Financial) delivered sales results above the high end of the guidance range for Q3, indicating strong execution and better-than-expected productivity.
- The company reported a 6% increase in net revenue for the third quarter, with advanced wound care net revenue up 7%.
- Organogenesis Holdings Inc (ORGO) completed enrollment for its second phase three clinical trial ahead of schedule, exceeding the required number of patients.
- The company received a favorable outcome from the interim analysis of its second phase three trial, with the Data Monitoring Committee recommending the trial proceed without modification.
- Organogenesis Holdings Inc (ORGO) secured a $100 million investment from Avista Healthcare Partners, enhancing its balance sheet and financial flexibility for strategic growth initiatives.
Negative Points
- Operating expenses increased by 10% year-over-year, driven by a 12% rise in selling, general, and administrative expenses.
- Operating income for the third quarter decreased by 22% compared to the previous year.
- The company anticipates potential near-term disruption in the market due to expected changes in Medicare coverage for skin substitutes.
- Despite strong revenue growth, the company reported a decrease in adjusted EBITDA margin from 14.7% last year to 12% this year.
- Organogenesis Holdings Inc (ORGO) faces uncertainty regarding the final ruling from Medicare Administrative Contractors, which could impact future revenue.
Q & A Highlights
Q: Can you provide an update on your initiatives to broaden the sales force, particularly in terms of direct reps focused on the sports medicine business?
A: We increased our rep count during the quarter and are seeing good performance and productivity, especially from the wound care reps. In the sports medicine business, we currently have under 20 direct reps. - David Francisco, CFO
Q: Could you elaborate on the OpEx spend, particularly the R&D line, and how should we think about spend in 2025 with ongoing trials?
A: The R&D spend was lower than expected due to timing, but we anticipate it will be closer to Q2 levels in Q4. For 2025, we plan to continue investing similarly, especially as efforts around the BLA continue. - David Francisco, CFO
Q: Given the uncertainty around the LCDs, how does the guidance for Q4 reflect potential impacts on the Advanced Wound Care business?
A: We saw limited impact in Q3 and maintained a wide guidance range for Q4. The low end assumes potential customer pullback if the LCD is announced mid-November, while the high end assumes business as usual. - David Francisco, CFO
Q: What are the next steps for the Renew program to meet the Q4 2025 BLA submission timeline?
A: We achieved last patient, last visit in June and expect the interim analysis of the second trial by Q4 2024. Assuming we meet this deadline, we plan to submit the BLA in Q4 2025. - Gary Gillheeney, CEO
Q: How did the interim analysis for Renew impact your confidence in the program?
A: The interim analysis provided another proof point for Renew's potential, and we remain confident in meeting our submission timeline for the BLA by Q4 2025. - Gary Gillheeney, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
