Q2 2021 Bioventus Inc Earnings Call

[music].

Good afternoon, ladies and gentlemen, and welcome to the second quarter 2021 and earnings conference call for Bio Ventas, Inc.

At this time, all participants have been placed in a listen only mode.

Please note that disc on French call is being recorded and that the recording will be available on the company's website for replay shortly after the end of the call.

Before we begin I would like to remind everyone that the RVO marks to be may be forward looking statements that there would be on the current expectation of management and involve inherent risk and uncertainties that could cause actual results to differ materially from those indicated.

Including the risks and uncertainties.

Including the risks and uncertainties described and the company's filings with the Securities and Exchange Commission, including item 1 E of the company's form 10-K for the year ended December 31, 2020, as well as our most recent 10-Q filing.

To be filed with Securities and Exchange Commission.

You are cautioned not to place undue reliance on any forward looking statements.

Which speaks only as of the deep Mi.

Although it may voluntarily do so from time to time the company undertakes no commitment to update or revise the forward looking statements whether as a result of new information future events or otherwise, except as required by applicable securities laws.

This call will also include references to certain financial measures that are not calculate that indicated with generally accepted accounting principles or GAAP.

Generally referred to this as non-GAAP financial measures definitions and reconciliation of this non-GAAP net show measure to the most comparable measures calculated and presented in accordance with GAAP.

Available and the earnings press release, and Investor Relations portion of our website at Ww dots by Ya benefits dotcom.

I would now like to turn the call over to Mr. Ken reality Bio Ventas Chief Executive Officer, Sir. Please go ahead.

Well, thank you Catherine and welcome everyone to vital Ventas second quarter 2021 earnings conference call.

I'm joined on the call today by Greg Engel, our Chief Financial Officer.

Let me provide you with a brief outline of what we intend to cover.

I'll start by discussing our second quarter revenue performance and business trends for all.

Good bye and update on our operating progress and key highlights from the quarter and in recent months.

After my opening remarks Reagan will review our financial results for the second quarter 2021, and our financial guidance for full year, 2021, which we updated and our press release this afternoon.

And then we will open the call to take your questions.

Turning to a brief review of our second quarter results we.

We are pleased to report second quarter net sales of $109.8 million up 89% year over year exceeding the expectations. We provided on our Q1 call, which assume growth and the range of 67% to 74% year over year.

Our second quarter revenue exceeded the midpoint of this guidance range by roughly $11 million for 19 percentage points of growth year over year.

Needless Needless to say, we are extremely proud of the Bible Ventas team.

And our strong growth performance, we delivered and the second quarter.

We believe our second quarter results were driven by our team's ability to build upon the momentum we saw coming out of the first quarter and importantly reflects strong organic growth overall and improving growth trends quarter over quarter spin.

Specifically, our second quarter revenue results reflect organic growth of 15% as compared to the second quarter of 2019, driven by strong organic growth versus 2019, and the U S of 18%.

While we are very pleased with this growth performance. We are even more encouraged by the fact that our growth trends over 2019 accelerated quarter to quarter.

Which reflects improvement and the overall operating environment and the period.

I would be remiss, if I did not mentioned and the other key contributor to the better than expected revenue results reported in Q2 and that is the strong growth performance from our recent acquisition of biomass.

We are very pleased with the progress we have made and the first 100 days post closing and we believe the strong execution of our integration plan and helped us deliver above plan revenue contribution from biomass and Q2.

I'll share a little more color on our integration efforts later on the call but for now let me just say that we are proud of the early evidence that our inorganic business development strategy and execution, driven plans and integrating new companies quickly and efficiently is working.

Diving, a little deeper into the drivers of our growth performance in Q2 for.

For the avoidance of doubt all growth rates referred are relative to the second quarter of 2019, and the interest of stripping out any benefit to our growth performance from an easy comparison.

Our organic growth of 15% and Q2 was driven by 18% growth and the U S, which more than offset mid single digit declines and our international sales.

By global vertical our organic sales growth versus Q2, 2019 was driven primarily by 19% growth and sales of pain treatments and joint preservation products led by 81% growth and global sales of our flagship single injection product Daryl and.

And 59% growth and global sales of our bone graft substitute products.

Offsetting partially by a 13% decline and global sales of our restorative therapies products.

As mentioned earlier, we are encouraged by the continued evidence of recovery from the pandemic debt.

And that we are seeing and our global verticals, particularly in our pain treatment and joint preservation products, which posted high single digit growth over 2019, and the first quarter and 19% and Q2.

And in our restorative therapies vertical where sales trends showed modest improvement compared to Q1.

The overall environment continues to improve and we are confident and the 26% to 29% net sales growth. We now expect as outlined in our updated guidance for full year 2021.

We continue to expect measured improvements and the operating environment as we move through 2021 fuel.

Fueled primarily by the increase and availability of vaccines and an increasing percentage of vaccinated Americans as well as Canadians and Europeans and we continue to expect a return to normalized year over year growth trends and the third quarter of 2021.

Turning to a review of our operating progress and recent highlights.

First our integration of biomass is progressing nicely and we are on target to have the integration largely completed by year end.

By all indications, we believe the acquisition of biomass checks many boxes as it relates to what we believe to be an ideal inorganic business development opportunity.

It is a substantial commercial business, serving large global and growing market opportunities with attractive growth that is accretive to our long term growth profile.

Biomass offers product solutions that align perfectly with <unk> existing product portfolio.

We believe this acquisition will allow us to leverage our significant competitive advantage of our expansive direct sales and distribution channel, which provides us with broad and differentiated customer reach.

And allows us to serve physicians spanning the orthopedic continuum, including sports Medicine total joint reconstruction.

And in upper extremities foot and ankle podiatric surgery trauma spine, neurosurgery, and <unk> and pain physicians.

We also see opportunities to leverage our significant experience commercializing high value durable medical products and expect our reimbursement team to drive improving reimbursement and order to cash performance for the <unk> business and the years to come.

As we continue to execute our integration strategy and the coming months, we will be working closely with the existing biomass peripheral nerve stimulation for Pms sales force to expand the market penetration of stim router through our large sales team and market access team.

And also prepare the market for the less invasive fully implantable talisman pnm's device expected to become a next year based on potential clearance and 2022.

We have also started a pilot with our sales team and the restorative therapies business to introduce stim router to lower extremity clinicians that are currently prescribing ex adjourn.

Biomass Neuromodulation technology is highly differentiated patent protected and ideally suited to treat pain and the periphery.

With established reimbursement coding for Stim router is the only pnm's device today with an RCT and is well positioned.

As it is a lesson on base of alternative to other modalities, while also providing or avoiding the negative effects of opioid use.

We look forward to sharing more updates on our integration progress and the coming months.

2 other operating highlights of note, we launched a new product and our bone graft substitutes business and we welcomed a new member to our board of directors.

Building on a successful launch in Q1 limited launch we entered full commercial launch of our Osteo ramped global and July.

<unk> global is an injectable allograft bone graft substitute solution.

For a variety of patient procedures, including lumbar spine fusion cervical spine fusion and foot and ankle fusion.

We have been extremely pleased with the early market response to this differentiated product and look forward to its increasing contribution to our bone graft substitutes vertical and the years to come.

Most importantly, osteo AUM flow both due to its injectable format can be used and minimally invasive spinal fusions, the fastest growing area and spine.

Also in July we announced the appointment of Mary Kay and loan to the company's board of directors.

Mary Kay is an accomplished executive serving large global healthcare companies over her more than 30 year career.

We are very pleased to welcome Mary Kay to our board.

And she will provide valuable experience and insights as we execute our strategy of growth acceleration through new product development and M&A.

For global financial and strategic planning and business development experience as well as for strong track record of leading best in class Investor Relations programs will be invaluable to <unk>.

Before turning the call over to Greg for a review of our financial results and updated guidance I want to share some thoughts on 2 items of note in recent weeks.

On July 29, we announced that <unk> and <unk> entered into a definitive agreement under which <unk> agreed to acquire Masonic and a cash and stock transaction.

Masonic stockholders will receive aggregate consideration that values Masonic at approximately $518 million on a fully diluted basis based on bio Ventas 7 day volume weighted average stock price or <unk> of $16.6 to 8.

For per share as of July 27, 2021.

As outlined on our call on the 29, we see this acquisition as a strong strategic fit given that at <unk>. We are a company focused on building a portfolio of clinically differentiated minimally invasive treatments to help patients heal faster and relief pain.

Across a $13 billion addressable market opportunity. We are the number 2 player and <unk> therapy with the fastest growing single injection therapy.

We are the number 1 player and minimally invasive fracture treatment and advanced rehabilitation.

We are the fastest growing participants and bone graft substitutes and we are the technology leader and peripheral nerve stimulation.

We believe the acquisition of Masonic represents a compelling opportunity to extend our leadership and expand the breadth and depth of our offerings by adding $2 billion to our addressable market.

We believe the complementary nature of the 2 businesses will give the combined company significant diversity and scale across a range of care settings geographies and therapeutic areas.

The combined product portfolio. Following the closing will serve large market segments across orthopedics spine and lower extremity as well as neurosurgery.

Together, we believe these factors will play a spinal ventas and a unique market position with leading technologies and specialized sales forces numbering over 500 sales reps, serving a $15 billion total addressable market across the hospital ambulatory surgery.

<unk> Center in office care settings.

We believe the combination of our 2 businesses will create a differentiated growth medical technology company.

And importantly, we believe it will enhance our long term growth profile for the tune of approximately 100 basis points of additional revenue growth to the combined company on a pro forma basis.

We strongly believe the enhanced growth growth profile combined with bio ventas expected $20 million of cost synergies will create strong financial returns for bio ventas shareholders.

We are clearly excited by the opportunities and store for the combined companies and look forward to the to the close which we expect to which we continue to expect in the fourth quarter and officially welcoming and Masonic employees to bio Ventas and.

In terms of our near term milestones for the investment community to monitor and the coming months Masonic is planning to file their 10-K for the 12 months ended June 32021, and early September and are targeting the filing of and ask for a couple of weeks later.

We have designated a team to lead the integration and planning is already underway.

We expect to be prepared to hit the ground running as soon as the transaction closes and the fourth quarter.

Finally, I want to provide a brief update on our recent clinical milestone for agility, a pipeline product for bio ventas via an equity investment and a privately held company named car to heal.

The jealousy is and off the shelf scaffold implant that is designed to regenerate hyaline cartilage and sub chondral bone simultaneously.

The agility and plant has been and planted and more than 190 patients outside the United States with follow up of more than 4 years and is CE marked the.

And the product was granted breakthrough device designation by the FDA last year, and recently announced high level results from a 2 year randomized and controlled pivotal IDE study.

The study's objective was to demonstrate the superiority of the agility implant over the surgical standard of care Microfracture and debride meant for the treatment of cartilage or osteochondrosis defects and both osteoarthritis knees and needs without degenerative changes.

We estimate this to be a $1.3 billion dollar market opportunity.

This is a noteworthy clinical milestone given our equity purchase agreement with car to heal.

As disclosed in our SEC filings. The agreement provides us with an exclusive option to acquire 100% of car to heal shares upon pivotal clinical trial success, including achievement of certain secondary endpoints and FDA approval of the agility device.

With a label consistent in all respects with pivotal clinical trial success.

Consideration for the acquisition of all of the shares of car to heal would be $350 million with an additional $150 million payable.

Payable upon achievement of certain sales milestones related to agility.

On August <unk>.

2021.

Carr to heal provided us a statistical report containing the results of the pivotal clinical trial.

We are currently reviewing their report to assess if it is consistent with the terms of the agreement.

We have the right to terminate our option agreement at any time, ending 30 days after receipt of the statistical report from car to heal.

Upon payment of a breakup fee of $30 million.

If we decide to move forward with car to heal we will be required to put $50 million into escrow as a deposit towards the $315 million of consideration owed following the receipt of PMA approval.

We are not able to discuss the clinical study results or the statistical report at this time.

But we intend to announce our decision regarding the equity agreement via a press release.

Some notes to bear in mind regarding our car to heal relationship.

Number 1.

We decided to move forward with car to heal we have an option to acquire the company, but not and chill agility received PMA approval.

Number 2 car to heal submitted the PMA non clinical module and the manufacturing module to the FDA earlier this year and continues to expect the submission of the final clinical module and Q4 of 'twenty 1.

Number 3 our expectation regarding the potential timing of any acquisition of Carr to heal has not changed we continue to expect the earliest a post PMA approval acquisition would come is mid 2022 and.

And number 4 we believe we have the requisite capital to execute our strategic growth initiatives for the existing <unk> business to finance our transaction with <unk>.

And to continue to invest and our product pipeline, including agility.

With that let me turn the call over to Greg for a detailed review of our financial results and the second quarter of 2021.

Well as a review of our updated 2021 financial guidance.

Thank you Ken.

For the avoidance of doubt and unless otherwise noted my commentary will focus on the Companys non-GAAP results for the second quarters of 2021 and 2020, we have included definitions and full reconciliations from our GAAP reported results to the related non-GAAP item in our press release this afternoon.

Turning to a review of our second quarter financial results GAAP net sales increased $51.8 million were 89% year over year on a reported basis and increased 88% on a constant currency basis.

Gross profit increased $38 million or <unk>, 84% year over year and represented 76, 5% of sales compared to 78, 7% of sales in the prior year period.

The year over year change in gross margin was driven primarily by the mix of revenue by geography and by vertical as compared to the prior year period.

Note, our gross profit excludes non cash amortization expense of $5.6 million for the second quarter of 2021 compared to $5.3 million last year.

Second quarter of 2021 gross profit also excludes $2.1 million of inventory step up costs related to our acquisition of buy on us.

Total operating expense increased 31, $3 million were 79% year over year to $78 million.

The change and total operating expense by line item was driven by.

And a $29 million increase or 79% year over year, and SG&A expense and to a lesser extent and $2.2 million were 86% year over year and R&D expenses.

The increase in operating expense compared to the prior year period was primarily driven by investments in our selling and marketing organization.

Public company costs, which did not impact the prior year period results and the resumption of discretionary spending including travel and related expenses, given the more normalized business environment as compared to the significant cost reduction efforts in the prior year period as a result of the COVID-19 pandemic.

As well as operating expenses related to our acquisition of biomass, which did not impact the prior year period.

As detailed in the non-GAAP reconciliation tables in our press release. This afternoon, we exclude non cash amortization and acquisition costs and expenses and other nonrecurring costs from our non-GAAP operating expense.

Second quarter operating expense also excludes 2 non cash items that did not impact prior year period reported results specifically in zero point $6 million of non cash expense related to the change in fair value of contingent consideration and.

And $5.7 million of noncash charges related to impairment of assets related to harbor of which $5.2 million was attributable to non controlling interests.

Operating income was $13.3 million compared.

Compared to operating income of $6.2 million for the second quarter of 2020, and increase of $7.1 million or 113% year over year.

Operating margin was 12, 1% of net sales compared to 10, 7% of net sales and the prior year period.

In summary, our performance across the P&L in Q2 resulted in non-GAAP net income of $9.6 million up 168% year over year, and adjusted EBITDA of $19.9 million up 186% year over year.

As detailed in the non-GAAP reconciliation table on our press release, adjusted EBITDA excludes the impact of stock compensation expense and other noncash or nonrecurring items and we believe this provides supplemental information about the underlying operating performance of our business.

Turning to the balance sheet.

As of July 3.2021, the company had $136.1 million cash and cash equivalents, and and $181.1 million and debt obligations compared to $86.8 million and cash and cash equivalents and $188.4 million and debt.

Obligations as of December 31, 2020.

And as of July 3.2021, we had approximately $50 million of available borrowing capacity on our revolving credit facility.

Turning to a review of our fiscal year 2021 financial guidance, which we updated and our press release this afternoon.

For the avoidance of doubt our updated 2021 financial guidance includes the contributions from our acquisition of biomass. Following the closing date of March 30, <unk> 2021, but does not include contributions from the proposed acquisition of Masonic, which was announced on July 29 as it is.

To close the company expects to update its 2021 and the financial guidance to include contributions from MISO on ex following the closing which is expected in the fourth quarter of 2021.

For the 12 months ending December 31, 2021, the company is reaffirming the updated revenue guidance provided in our preliminary second quarter revenue results press release on July 29, which called for net.

Net sales of $405 million to $415 million up approximately 26% to 29% year over year.

The increase and our net sales guidance range is driven by the stronger than expected sales results and the second quarter of 2021.

The updated net sales guidance range assumes net sales from legacy <unk>, Inc of $372.5 million to $385 million, representing organic revenue growth in the range of approximately 16% to 18% year over year.

And net sales from the acquisition of biomass, Inc of approximately $32.5 million to $34.5 million.

With respect to our profitability guidance, we now expect <unk>.

GAAP net income of $13 zero million.

For $17.6 million.

Of which legacy Biomet. This is expected to contribute GAAP net income of $29.2 million to $33.3 million with biomass contributing the remaining balance.

We now expect non-GAAP net income of $67.1 million to $69.5 million of which legacy bio Ventas is expected to contribute non-GAAP net income of $75.6 billion.

To $76.6 million with biomass contributing the remaining balance.

We now expect adjusted EBITDA of $77.8 million to.

And to $82.1 billion of.

Of which legacy Biomet is expected to contribute adjusted EBITDA of $82.8 million to $86.1 million with.

With <unk> contributing the remaining balance.

In addition to the formal financial guidance provided in this afternoon's release, we would like to provide some key assumptions to bear in mind, when evaluating our growth expectations for 2021.

First our full year 2021, net sales guidance range assumes the following for net sales by geography.

U S net sales growth in the range of 23% to 26% year over year and international net sales growth is expected to be and the range of 55% to 60% year over year.

These ranges assume U S sales growth on an organic basis, and the range of 15% to 18% year over year and contributions from our acquisition of buy on us.

And international sales growth on an organic basis in the range of 22% to 24% year over year as well as contributions from our acquisition of bonus.

For net sales by vertical our full year 2021 guidance now assumes low to mid 20% growth in global sales of pain treatments and joint preservation products, driven by low 20% organic growth and contributions from <unk>.

Low to mid 30% growth and global restorative therapies growth driven by low single digit organic growth and contributions from bonus.

And high <unk> to low <unk> percent growth and global sales of Bgs products.

Second we continue to expect to see measured improvement and the operating environment as we move through 2021 fueled by the increasing availability of vaccines and an increasing percentage of vaccinated Americans Canadians and Europeans are full year 2021 guidance continues to assume a return to.

<unk> year over year growth trends in the third quarter of 2021.

Finally, with respect to our expectations for financial performance in 2021, we would like to provide some of our assumptions to help evaluate our full year 2021 guidance for GAAP and non-GAAP net income.

For the full year 2021 period, we expect non-GAAP gross margins of approximately 77, 6% to 78, 1%.

GAAP operating expense growth of 23% to 26% year over year, driven primarily by the incremental operating expenses related to our acquisition of biomass low double digit growth and legacy Bioventures operating expenses compared to 2020.

Note the increase and GAAP operating expense growth range versus prior guidance is driven by the noncash impairment charges and noncash expenses from contingent consideration and the second quarter of 2021.

We also expect interest expense net of approximately $2.3 million total noncash depreciation and amortization of approximately 31 million to $32 million.

Noncash stock comp income of approximately $2.7 million to $3.7 million and weighted average diluted class a shares of approximately $42 million.

With that I'll turn the call back to you Ken.

Gregg before opening the call for Q&A I want to summarize the main points of the bio Adventist investment story.

Which I believe will illustrate why we are so enthusiastic about the long term outlook for the company.

Number 1 we are a company focused on building a portfolio of clinically differentiated minimally invasive treatments to help patients heal faster and relief pain.

We are confident and our multiyear organic growth profile, which is increasingly compelling and fueled by our market penetration strategy and both our pain treatment and joint preservation and bone graft substitutes verticals and expanding our reach and our restorative therapies vertical.

Number 2 our product pipeline is robust and is expected to fuel accretive growth and the medium term with potential products like agility by car to heal modus pro cough and talisman, the implantable less invasive pms device from biomass.

And <unk>.

Number 3 on.

Our M&A strategy is designed to bring and acquisitions that are expected to bring and accretive growth to our global business and leverage our strong commercial infrastructure to bring about consistent double digit growth.

As discussed our acquisition of biomass and March and our recently announced pending acquisition of Masonic.

<unk> represents ideal fits in terms of how our M&A strategy will enhance our long term growth profile and create further value for our shareholders.

Importantly, we will continue to be measured and prudent and our approach to M&A as we have with both the biomass and Masonic deals.

Number for operationally, we are focused on continuous improvement to positively impact our margins, including cost savings initiatives from a manufacturing and supply chain perspective, while also enhancing our quality programs to meet ongoing changes and our regulatory environment.

And number 5 and most importantly, our strategy is backed by our highly engaged results driven culture that is fueled by and employee driven mission to improve the lives of thousands of patients that are treated each day by 1 of our medical devices returning them to active <unk>.

<unk>.

With that we will open the call to take your questions Catherine.

Thank you Sir thank.

If you would like to ask a question. Please signal by pressing star 1 on your telephone keypad.

Using a speaker phone. Please make sure that your mute function is turned off to allow your signal to reach alright. Good luck.

We do ask Vic and limit yourself to 1 question and 1 follow up.

I would like to ask additional questions. We invite you to ask yourself do the queue again by pressing star 1.

We will now take a moment to allow participants to join the queue.

And our first question from Marcus of Jpmorgan. Please ask your question.

Oh, great and thanks for taking my question.

And maybe we could start on the outlook I think.

People are getting very concerned about.

The impact of Covid, and the Delta vary and particularly in the southeast.

And with some hospitals, and Texas, and Florida, and other states starting to put off elective procedures.

It doesn't sound like the guidance necessarily.

Assumes a worsening of the situation so it'd be great to get your take of what Youre seeing right now.

And the U S, particularly in the southeast and are you seeing an impact so far and in third quarter from from the rising cases. Thanks.

Yes, Thanks, Ravi and good to hear your voice and thanks for your question.

That is it is a concern and 1 that we're watching carefully.

At this point and time it is not impacting our business keeping in mind that <unk> is broadly diversified geographically across the United States where.

And where we sell in a given month to thousands of surgeons across our 3 verticals.

That really helps us where we may have some regional spikes, which is I think what we're seeing with the delta variant.

And where there is some impact on elective procedures, but we're brought enough based at this point, where we have not seen an impact were obviously continue to watch that carefully.

But our guidance assumes we return back to normalized growth and the second half of this year.

Got it okay. So it doesn't seem like it's it's really impacting you from second quarter trends at all and a material way yet no no it's not Robbie and hopefully that will continue for us.

I hope so too maybe.

And maybe a quick follow up more of a.

Strategic question and.

No.

With a couple of deals announced and courtesy of.

Cardinal Hill.

And that was the plan from the time of the S..1 so it shouldn't be much of a surprise, but how are you thinking about further M&A from here.

And particularly your ability to finance and further M&A.

And would love to get your thoughts I appreciate it.

Yes, Thanks Ravi.

Our M&A strategy as we've talked about.

Since we went public earlier this year is not to drive growth for growth's sake, with M&A, but really look at it from a strategic perspective and make sure it marries and Leverages, our commercial channel we've been fortunate defined 2 excellent acquisitions, and 2021 and biomass and.

And the pending acquisition with Masonic.

We will continue to look at other M&A.

And we'll take a prudent and measured approach that those potential deals. If we go that far are ones that will return value to all shareholders and that will be a key measurement device.

We have assessed.

Carefully where we stand relative to Masonic and.

And completing that acquisition, which we have success expect to close and the fourth quarter and.

And then car to heal and as highlighted on the call. We don't expect car to heal if we do move forward to receive PMA approval until mid 2022, which puts quite a bit of daylight between the close of Masonic and the car to heal deal.

So we are and a strong position with low debt.

Not leveraged, but very strong cash that drives down to our bottom line every month. So we will continue to.

Certainly look at our M&A pipeline and look at opportunities that drive accretive growth.

But as we've done in the past it'll be a measured and prudent approach and.

We just have and our case some very good synergies that we've been able to take advantage of here in the near term with both biomass and Masonic and we're clearly excited about car to heal and.

And we'll be assessing that technology and as mentioned, our and process of doing that right now.

Great and maybe if I could sneak in 1 more.

Now that you've had some time to digest.

The acquisition.

Since the announcement a couple of weeks ago any updated thoughts on <unk>.

<unk> for the first year and the second year on adjusted EBITDA and how that impacts.

Net income thanks.

Yes, Ravi, it's Craig I'll take that 1.

With respect to MISO and ex I don't think Theres any.

And thoughts at all on as we said at the time of that announced that we would expect that.

Acquisition to be accretive to our adjusted EBITDA and the first full year. After the completion of the transaction and accretive to our adjusted EBITDA margins by the second full year after completion and really no change to that from what we said at that point.

Yes.

And Sir our next question from.

And the person of Goldman Sachs. Please ask your question.

Hey, This is Phil on for me can you guys hear me okay.

We can Phil.

Awesome.

I wanted to circle back to Delta and maybe a slightly different way than Ravi Aspen and.

And ask about patient and risk aversion and kind of.

Independently of constraints on on facilities and hospitals. So I'm wondering what your learnings were on patient risk aversion over the last roughly year 18 months and and how youre thinking about that moving forward and any differences that you see and different divisions, obviously boosted slightly different dynamics.

And between the different segments that you guys operate on it.

Yeah.

It's a great question, Phil and let me try to answer it by by the verticals and a lot of our data will be U S based but certainly we.

Reflect on some international points is well first of all on our.

<unk> therapy, and our pain treatments area and that vertical we saw last year reticence to go into physician offices and keeping in mind that that particular population with HCA is elderly people.

Our people over the age of 65, and sometimes quite a bit older. We've seen a return a full return to our HVAC business as the vaccines have become available late last year and early this year and as you can see from our results we continue to see <unk>.

<unk> strong growth in that area and continue to gain market share and the HVA space and general ex adjourn is more of a broad based technology and our restorative therapies area.

And that particular area.

And was impacted.

Throughout 2020, because of the reduced activity level reduce trauma and then we've seen a consistent pickup.

Across the back half of 2020 and into 2021, I don't expect that to be impacted.

And that's more trauma related and as long as.

People will continue to remain active and we don't have shutdowns and the impact of a delta variant will not be extensive on debt restorative therapies area orexigen and for that matter.

<unk> rehabilitation area with biomass I would say the same thing.

And where it's more stroke and and.

And focused at this point and areas like that that affect gates.

Don't expect a significant impact there unless there would be some type of significant shutdown.

And then go into our bone graft substitutes area.

And that also.

Is more of a younger patient group and spinal fusion.

And that can vary and age from from 52 to 70 typically.

And we have not seen a decline and elective procedures as I mentioned, Phil there is some regional pressure on occasion.

Lending on the area, where there might be spikes, but were brought enough based with that business that we have been fortunate we have not seen any real impact to our growth profile and.

And on peripheral nerve stimulation with stem router, it's really the same thing.

That's right now focused where our focus is on post surgical pain, and some chronic and lower extremity pain, and we have not seen any impact there and and again would have to see a significant shutdown.

Pms impacted now where we have seen an impact with the pandemic has been more internationally, where we are direct in the UK and Canada and Germany, we have seen a much more of a significant impact as you can see from our numbers. They are rebounding, though and we expect and the SEC.

And half of the year with continued vaccination growth that patients will return to normal treatments and those markets as well as our distributor markets outside of those redirect markets and we continue to stay positive on on that mentality.

Alright. Thanks, Thanks for all that color that was great.

1 more if I may exit and system.

And I think growth if you look on a kind of a compound basis slowed sequentially versus <unk> I'm wondering what happened and the market. There. Obviously, we had some things going on and <unk> that I think could have actually slowed.

Growth on that side, so what happened and <unk> and what gives you confidence and the re acceleration that's implied in guidance fairly business yes.

Yes, Thanks, Bill well just to be clear, we did see sequential growth and and oxygen from Q1 to Q2, and we're very pleased with that.

And so so from our perspective ex adjourn, we continue to expect.

Low to mid single digit growth with the products and.

And we continue to be strongly optimistic on on ex agenda to deliver for.

A profitability perspective, so as far as we're concerned we have continued to see really good numbers, there and and encouraging numbers as I mentioned, we did estrogen was hit last year, particularly with the reduction and trauma.

We've seen that pick up and we've seen good sequential growth from from Q1 to Q2 now.

Alright, Thanks, I'll leave it there and come back with you.

Thanks, Phil.

And our next question from drew Ranieri of Morgan Stanley and ask for.

For your question.

Hi, everyone. Thanks for asking the question.

Taking the question just going back to the.

Third quarter for a moment just to your comments that youre expecting and returned to normalized year over year growth trends and the third quarter.

It looks like consensus has about $102 million for the third quarter, but if I kind of look back and maybe what your normalized growth rates would've been it seems like we might be coming out to like 95% to $98 million. Just curious if your if youre comfortable where consensus currently stand and just kind of given the trends that youre seeing in the business and <unk>.

And.

Yes drew thanks, it's Greg and.

Sure claim version is.

We've said all year long, we expect to get back to normalized growth.

And the second half we continue to say that if you go back and you look at our business historically.

Q2 to Q3, our business stays relatively constant.

Maybe give us just a hair, but our business certainly builds from the first quarter to the fourth quarter, but is relatively constant from Q2 to Q3.

So we remain very positive in terms of our outlook for the rest of the year.

Okay and then.

And I'll put these 2 questions together, but.

Can you maybe talk a little bit more about the pilot program between for stem router and Nextgen and then second just give us a pipeline update for for balance and notice. Thank you.

And.

Sure drew well first of all the pilot program with something we launched several months ago with our sales team that sells ex adjourn and specifically calls on lower extremity surgeons foot and ankle orthopedic surgeons and Podiatric surgeons, where there is a real.

Need for peripheral nerve stimulation, depending on the procedure and the area that they are treating.

As we brought the team in and it was 25 of our sales reps so a small percent.

That's gone quite well as they've gone out and the field they've been trained and working closely with the biomass peripheral nerve stimulation sales force. So we're very excited about that opportunity. It's an initial.

Focus for us just to gain market experience and have our reps gain experience and confidence with the stim router product.

From our perspective, we look forward to a full launch across our broader sales force and this area going into 2022, and obviously also the next generation <unk> products, which we also expect 5.10-K clearance on and availability with that in 2022 as well.

And as far as bones, Theres not a lot to update on at this point.

As highlighted before we have a deficiency letter from the FDA.

On the <unk> study and we are in discussions with FDA and expect to continue to work to resolve the deficiency letter and once again. This is a PMA supplement that does take some time as.

As the team works through that so we will have updates as we get them better material and that area and that on notice. We continue to work through our phase..1 study. It's now 2 sites in the U S and we're ready to commence our phase III study on schedule and the third quarter.

<unk>, our phase II study, rather on schedule and the third quarter. So very excited about what that product represents and the strong adjacency that we see and our HCA portfolio with motives as a placental tissue products that can have disease modifying implications as well as reduce inflammation.

And the knee joint.

So that continues.

Really progressed nicely and our team has done a terrific job moving that forward via the BLA application process.

Thanks for taking the questions.

Thanks drew.

Yeah.

And as a reminder, if you would like to ask a question. Please signal by pressing star 1 on your telephone keypad.

That is again star 1 on your telephone keypad.

And our next question from Kyle Rose of Canaccord. Please ask your question.

Great. Thank you very much for taking the questions.

So I wonder if.

And if I could just ask more of a bigger picture M&A question.

I understand that.

Your appetite for continued M&A remains strong.

When I look at the 2 deals that you've done.

Our 1 <unk> and 1 close 1 and they're a bit more tangential than I think maybe we would've expected.

Broadening into the wound care market as well as more on the operated side.

The spine market and then when I look at buy on us.

They have multiple different market segments that you are broadening into Q do you expect to continue to move into additional adjacent market segments or.

More so than invest in the existing markets that youre in now.

And it's a good question Kyle and really when you look at the segments that we're in and the verticals. These were highly adjacent areas, which is why we did them and they leveraged our commercial channel and the infrastructure that the company has I mean, if you start with biomass we're using our.

Our current sales force, obviously is just a pilot right now, but we will to continue to penetrate the peripheral nerve stimulation market, which is a significant 1 when you look at the opioid crisis and the use of opioids post surgery. These are all physicians and surgeons that we call on daily.

And so.

Leveraging that has been critical and then obviously on the advanced rehabilitation business, there is and operational synergy as well as a commercial synergy operationally with the durable medical equipment and that process that we have well honed with ex adjourn and then commercially expanding their gate restoration products.

To use and osteoarthritis and our sales force also going in that direction, where we see a lot of great synergy and then with Masada ex it is essentially the same strategy going deeper with what we have starting with spine.

The unique strategy that we have being agnostic to spine hardware and leveraging our bone graft substitutes across our broad portfolio.

Of opportunities and hospitals and surgeons Masonic has taken the same strategy with the bone scalpel and we view that as a definite 2 plus 2 equals 5 because that strategy and a relatively small market penetration and we both have will allow acceleration of growth.

Using our combined commercial channels and and certainly on the wound area.

That's a direct synergy with our <unk> and call point, there's about 4000 physicians today that we that prescribed oxygen annually that treat wounds in the office. The wound market has shifted with the pandemic to more office space treatments. Some of Thats based on patient comfort not wanting to go to the wound.

Center and that's our strong suit so we see direct synergy there and combination with the Masonic wound sales force, which largely focus is and the wound centers and the hospitals, so I'd like to call our business Kyle.

And when we started out a mile wide and an inch deep and all we're doing is taking that.

And steep and we're going 2 or 3 inches by going deeper with our customers. It might seem like it's not channel Gen show, but when you really look at it and hopefully that makes sense. The way I described it we are going deeper with the same customers using our same commercial channels. So we're very excited about that we will continue to take a measured and prudent.

Approach and a careful approach and M&A. We've just been very fortunate that we found 2 really good ones here of late that are great fits for bio ventas and our ability to drive long term accretive growth, which both acquisitions, we feel will do.

And for our shareholders.

Great and then just last question from me is it sounds like the current yield data.

It looks pretty good at least with top line perspective.

And I understand all the timelines and I'm just trying to understand video from from from your side, what would prevent you from moving forward with the deal.

As has already structured thank you.

Thanks, Kyle look.

And theres not a lot I can comment on as I said, we're viewing the data now.

And we'll we'll look at the data and the market opportunity carefully. We are excited it's a great technology. It's a great product. We just have to look at this holistically and and that's what we're and the process of doing we will announce.

Ounce our decision.

Via press release here and.

From our perspective.

That's about all we can say at this point and time.

So we'll keep everyone posted on on next steps there.

Thank you.

Thanks Kyle.

And Sir we Eric.

<unk> no additional participants and the chemo.

That does concludes our conference call for today. Thank you all for participating you may now disconnect.

Thank you Catherine.

[music].

And.

[music].

[music].

Good afternoon, ladies and gentlemen, and welcome to the second quarter of 2021 and earnings conference call for everybody on Pinterest, Inc.

At this time, all participants have in place and on listen only mode.

There's no debt. This conference call is being recorded and that the recording will be available on the company's website for replay shortly after the end of the call.

Before we begin I would like to remind everyone that RVO marks to be may contain forward looking statements that there would be on the current expectation of management and involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated.

Including the risks and uncertainties.

Including dairy and and striking piece described and the company's filings with the Securities and Exchange Commission, including item 1 E of the company's form 10-K for the year and then they start and grew 31, 'twenty 'twenty as well as our most recent 10-Q filing.

Can be filed with Securities and Exchange Commission.

You are cautioned not to place undue reliance on any forward looking statements.

Which speaks only as of the date needs.

Although it may voluntarily do so from time to time the company undertakes no commitment to update or revise the forward looking statements, whether as a result of information future events or otherwise, except as required by applicable securities laws.

This call will also include references to certain financial measures that are not calculate that indicated with generally accepted accounting principles or GAAP.

Generally go for it to this non-GAAP financial measures definitions and required to Asia and is this non-GAAP and that's shown measure and the most comparable measures calculated and presented in the current day. This would GAAP are available and the earnings press release and Investor Relations portion of <unk>.

Our website at Www bio Ventas dotcom.

I would now like to turn the call over to Mr. Ken reality by Aventis, Chief Executive Officer, Sir. Please go ahead.

Well, thank you Catherine and welcome everyone to bio Ventas second quarter 2021 earnings Conference call.

I'm joined on the call today by Greg Engel, our Chief Financial Officer.

Let me provide you with a brief outline of what we intend to cover <unk>.

I'll start by discussing our second quarter revenue performance and business trends.

Followed by an update on our operating progress and key highlights from the quarter and in recent months.

After my opening remarks, Greg will review, our financial results for the second quarter 2021, and our financial guidance for full year, 2021, which we updated and our press release this afternoon.

And then we will open the call to take your questions.

Turning to a brief review of our second quarter results we.

We are pleased to report second quarter net sales of $109.8 million up 89% year over year exceeding the expectations. We provided on our Q1 call, which assumed growth and a range of 67% to 74% year over year.

Our second quarter revenue exceeded the midpoint of this guidance range by roughly $11 million for 19 percentage points of growth year over year.

Needless Needless to say, we are extremely proud of the bio ventas team.

And the strong growth performance, we delivered and the second quarter.

We believe our second quarter results were driven by our team's ability to build upon the momentum we saw coming out of the first quarter and importantly reflects strong organic growth overall and improving growth trends quarter over quarter spin.

Specifically, our second quarter revenue results reflect organic growth of 15% as compared to the second quarter of 2019, driven by strong organic growth versus 2019, and the U S of 18%.

While we are very pleased with this growth performance. We are even more encouraged by the fact that our growth trends over 2019 accelerated quarter to quarter, which reflects improvement and the overall operating environment and the period.

I would be remiss, if I did not mention on the other key contributor to the better than expected revenue results, we reported and Q2 and that is the strong growth performance from our recent acquisition of biomass.

We are very pleased with the progress we've made and the first 100 days post closing and we believe the strong execution of our integration plan and helped us deliver above plan revenue contribution from biomass and Q2.

I'll share a little more color on our integration efforts later on the call but for now let me just say that we are proud of the early evidence that our inorganic business development strategy and execution, driven plans and integrating new companies quickly and efficiently is working.

Diving, a little deeper into the drivers of our growth performance in Q2 for.

For the avoidance of doubt all growth rates referred are relative to the second quarter of 2019, and the interest of stripping out any benefit to our growth performance from an easy comparison.

Our organic growth of 15% and Q2 was driven by 18% growth and the U S, which more than offset mid single digit declines and our international sales.

By global vertical our organic sales growth versus Q2, 2019 was driven primarily by 19% growth and sales of pain treatments and joint preservation products led by 81% growth and global sales of our flagship single injection product Daryl line.

And 59% growth and global sales of our bone graft substitute products.

Offset partially by a 13% decline and global sales of our restorative therapies products.

As mentioned earlier, we are encouraged by the continued evidence of recovery from the pandemic debt.

And that we are seeing and our global verticals, particularly in our pain treatment and joint preservation products, which posted high single digit growth over 2019, and the first quarter and 19% and Q2.

And in our restorative therapies vertical where sales trends showed modest improvement compared to Q1.

The overall environment continues to improve and we are confident and the 26% to 29% net sales growth. We now expect as outlined in our updated guidance for full year 2021.

We continue to expect measured improvements and the operating environment as we move through 2021 fueled primarily by the increase and the availability of vaccines and an increasing percentage of vaccinated Americans as well as Canadians and Europeans and we continue to expect a written.

Turn to normalized year over year growth trends and the third quarter of 2021.

Turning to review of our operating progress and recent highlights.

First our integration of biomass is progressing nicely and we are on target to have the integration largely completed by year end.

By all indications, we believe the acquisition of biomass checks many boxes as it relates to what we believe to be an ideal inorganic business development opportunity.

It is a substantial commercial business, serving large global and growing market opportunities with attractive growth that is accretive to our long term growth profile.

<unk> offers products solutions that align perfectly with <unk> existing product portfolio.

We believe this acquisition will allow us to leverage our significant competitive advantage of our expansive direct sales and distribution channel, which provides us with broad and differentiated customer reach.

And allows us to serve physicians spanning the orthopedic continuum, including sports Medicine total joint reconstruction.

And in upper extremities foot and ankle podiatric surgery trauma spine neuro surgery for <unk> and pain physicians.

We also see opportunities to leverage our significant experience commercializing high value durable medical products and expect our reimbursement team to drive improving reimbursement and order to cash performance for the <unk> business and the years to come.

As we continue to execute our integration strategy and the coming months, we will be working closely with the existing biomass peripheral nerve stimulation for Pms sales force to expand the market penetration of stim router through our large sales team and market access team.

And also prepare the market for the less invasive fully implantable talisman pnm's device expected to become a next year based on potential clearance and 2022.

We have also started a pilot with our sales team and the restorative therapies business to introduce Jim router to lower extremity clinicians that are currently prescribing <unk>.

Biomass Neuromodulation technology is highly differentiated patent protected and ideally suited to treat pain and the periphery.

With established reimbursement coding the stim router is the only PFS device today with an RCT and is well positioned and as it is a lesson on basic alternative to other modalities, while also providing for avoiding the negative effects of opioid use.

We look forward to sharing more updates on our integration progress and the coming months.

2 other operating highlights of note, we launched a new product and our bone graft substitutes business and we welcomed a new member to our board of directors.

Building on a successful launch in Q1 limited launch we entered full commercial launch of our Osteo ramped slower Bowl and July.

<unk> is an injectable allograft bone graft substitute solution.

For a variety of patient procedures, including lumbar spine fusion cervical spine fusion and foot and ankle fusion.

We have been extremely pleased with the early market response to this differentiated product and look forward to its increasing contribution to our bone graft substitutes vertical and the years to come.

Most importantly, osteo and flow of bulk due to its injectable format can be used and minimally invasive spinal fusions, the fastest growing area and spine.

Also in July we announced the appointment of Mary Kay and loan to the company's board of directors.

Mary Kay is an accomplished executive serving large global healthcare companies over her more than 30 year career.

We are very pleased to welcome Mary Kay to our board.

And she will provide valuable experience and insights as we execute our strategy of growth acceleration through new product development and M&A.

For global financial and strategic planning and business development experience as well as for strong track record of leading best in class Investor Relations programs will be invaluable to <unk>.

Before turning the call over to Greg for a review of our financial results and updated guidance I want to share some thoughts on 2 items of note in recent weeks.

On July 29, we announced that <unk> and <unk> entered into a definitive agreement under which <unk> agreed to acquire Masonic and a cash and stock transaction.

Masonic stockholders will receive aggregate consideration that values Masonic at approximately $518 million on a fully diluted basis based on <unk> 7 day volume weighted average stock price or <unk> of $16.6 to 8.

For per share as of July 27, 2021.

As outlined on our call on the 29th we see this acquisition as a strong strategic fit given that at <unk>. We are a company focused on building a portfolio of clinically differentiated minimally invasive treatments to help patients heal faster and relief pain.

Across a $13 billion addressable market opportunity. We are the number 2 player and Hh therapy with the fastest growing single injection therapy.

We are the number 1 player and minimally invasive fracture treatment and advanced rehabilitation.

We are the fastest growing participants and bone graft substitutes and we are the technology leader and peripheral nerve stimulation.

We believe the acquisition of Masan ex represents a compelling opportunity to extend our leadership and expand the breadth and depth of our offerings by adding $2 billion to our addressable market.

We believe the complementary nature of the 2 businesses will give the combined company significant diversity and scale across a range of care settings geographies and therapeutic areas.

The combined product portfolio. Following the closing will serve large market segments across orthopedics spine and lower extremity as well as neurosurgery.

Together, we believe these factors will place bio ventas and a unique market position with leading technologies and specialized sales forces numbering over 500 sales reps, serving a $15 billion total addressable market across the hospital ambulatory <unk>.

<unk> Center in office care settings.

We believe the combination of our 2 businesses will create a differentiated growth medical technology company and.

And importantly, we believe it will enhance our long term growth profile for the tune of approximately 100 basis points of additional revenue growth to the combined company on a pro forma basis.

We strongly believe the enhanced growth growth profile can bind with bio ventas expected $20 million of cost synergies will create strong financial returns for bio ventas shareholders.

We are clearly excited by the opportunities and store for the combined companies and look forward to the to the close which we expect to which we continue to expect in the fourth quarter and officially welcoming and Masonic employees to <unk> and.

In terms of our near term milestones for the investment community to monitor and the coming months Massat ex is planning to file their 10-K for the 12 months ended June 32021, and early September and are targeting the filing of and asked for a couple of weeks later.

We have designated a team to lead the integration and planning is already underway we.

We expect to be prepared to hit the ground running as soon as the transaction closes and the fourth quarter.

Finally, I want to provide a brief update on our recent clinical milestone for agility, a pipeline product for bio ventas via an equity investment and a privately held company named car to heal.

Agility is and off the shelf scaffold implant that is designed to regenerate hyaline cartilage and subcontract bone simultaneously.

The agility and plant has been and planted and more than 190 patients outside the United States with follow up of more than 4 years and is CE marked the.

The product was granted breakthrough device designation by the FDA last year, and recently announced high level results from a 2 year randomized and controlled pivotal IDE study.

The study's objective was to demonstrate the superiority of the agility implant over the surgical standard of care Microfracture and debridement for the treatment of cartilage or osteochondrosis defects and both osteoarthritis knees and needs without degenerative changes.

We estimate this to be a $1.3 billion dollar market opportunity.

This is a noteworthy clinical milestone given our equity purchase agreement with Carty deal.

As disclosed in our SEC filings. The agreement provides us with an exclusive option to acquire 100% of car to heal shares upon pivotal clinical trial success, including achievement of certain secondary endpoints and FDA approval of the agility device.

With a label consistent in all respects with pivotal clinical trial success.

Consideration for the acquisition of all of the shares of car to heal would be $350 million with and.

<unk> $150 million payable.

Payable upon achievement of certain sales milestones related to agility.

On August <unk>.

2021.

Carr to heal provided us a statistical report containing the results of the pivotal clinical trial.

We are currently reviewing their report to assess if it is consistent with the terms of the agreement.

We have the right to terminate our option agreement at any time, ending 30 days after receipt of the statistical report from car to heal.

Upon payment of a breakup fee of $30 million.

If we decide to move forward with car to heal.

We will be required to put $50 million into escrow as a deposit towards the $315 million of consideration owed following the receipt of PMA approval.

We are not able to discuss the clinical study results or the statistical report at this time.

But we intend to announce our decision regarding the equity agreement via a press release.

Some notes to bear in mind regarding our car to heal relationship.

Number 1 if we decide to move forward with car to heal we have an option to acquire the company, but not and chill agility received PMA approval.

Number 2 car to heal submitted the PMA non clinical module and the manufacturing module to the FDA earlier this year and continues to expect the submission of the final clinical module and Q4 of 'twenty 1.

Number 3 our expectation regarding the potential timing of any acquisition of Carr to heal has not changed we continue to expect the earliest a post PMA approval acquisition would come is mid 2022 and.

And number 4 we believe we have the requisite capital to execute our strategic growth initiatives for the existing <unk> business to finance our transaction with Masonic.

And to continue to invest and our product pipeline, including agility.

With that let me turn the call over to Greg for a detailed review of our financial results and the second quarter of 2021 net.

Well as a review of our updated 2021 financial guidance.

Thank you Ken.

For the avoidance of doubt and unless otherwise noted my commentary will focus on the company's non-GAAP results for the second quarters of 2021 and 2020, we have included definitions and full reconciliations from our GAAP reported results to the related non-GAAP items in our press release this afternoon.

Okay.

Turning to a review of our second quarter financial results GAAP net sales increased $51.8 million were 89% year over year on a reported basis and increased 88% on a constant currency basis.

Gross profit increased $38 million or <unk>, 84% year over year and represented 76, 5% of sales compared to 78, 7% of sales in the prior year period.

The year over year change in gross margin was driven primarily by the mix of revenue by geography and by vertical as compared to the prior year period.

Note, our gross profit excludes non cash amortization expense of $5.6 million for the second quarter of 2021.

Third to $5.3 million last year.

Second quarter of 2021 gross profit also excludes $2.1 million of inventory step up costs related to our acquisition of buy on us.

Total operating expense increased $31.3 million were 79% year over year to $78 million.

The change and total operating expense by line item was driven by.

A $29 million increase or 79% year over year, and SG&A expense and to a lesser extent and $2.2 million were 86% year over year and R&D expenses.

The increase in operating expense compared to the prior year period was primarily driven by investments and our selling and marketing organization.

Public company costs, which did not impact the prior year period results and the resumption of discretionary spending including travel and related expenses, given the more normalized business environment as compared to the significant cost reduction efforts in the prior year period as a result of the COVID-19 pandemic.

As well as operating expenses related to our acquisition of biomass, which did not impact the prior year period.

As detailed on the non-GAAP reconciliation tables in our press release. This afternoon, we exclude non cash amortization acquisition costs and expenses and other nonrecurring costs from our non-GAAP operating expense.

Second quarter operating expense also excludes 2 non cash items that did not impact prior year period reported results, specifically, a zero point $6 million of noncash expense related to the change in fair value of contingent consideration.

And $5.7 million of noncash charges related to impairment of assets related to harbor of which $5.2 million was attributable to non controlling interests.

Operating income was $13.3 million compared to operating income of $6.2 million for the second quarter of 2020, and an increase of $7.1 million.

Our 113% year over year.

Operating margin was 12, 1% of net sales compared to 10, 7% of net sales and the prior year period.

In summary, our performance across the P&L in Q2 resulted in non-GAAP net income of $9.6 million up 168% year over year, and adjusted EBITDA of $19.9 million.

Up 186% year over year.

As detailed in the non-GAAP reconciliation table in our press release, adjusted EBITDA excludes the impact of stock compensation expense and other noncash or nonrecurring items.

We believe this provides supplemental information about the underlying operating performance of our business.

Turning to the balance sheet.

As of July 3.2021, the company had $136.1 million in cash and cash equivalents and $181.1 million and debt obligations compared to $86.8 million and cash and cash equivalents and $188.4 million and net <unk>.

Obligations as of December 31, 2020.

And as of July 3.2021, we had approximately $50 million of available borrowing capacity on our revolving credit facility.

Turning to a review of our fiscal year 2021 financial guidance, which we updated and our press release this afternoon.

For the avoidance of doubt our updated 2021 financial guidance includes the contributions from our acquisition of biomass. Following the closing date of March 30, <unk> 2021, but does not include contributions from the proposed acquisition of Massat ex which was announced on July 29 as it is.

Yet to close the company expects to update its 2021 and the financial guidance to include contributions from MISO and ex following the closing which is expected in the fourth quarter of 2021.

For the 12 months ending December 31, 2021, the company is reaffirming the updated revenue guidance provided in our preliminary second quarter revenue results press release on July 29, which called for.

Net sales of $405 million to $415 million up approximately 26% to 29% year over year.

The increase and our net sales guidance range is driven by the stronger than expected sales results and the second quarter of 2021.

The updated net sales guidance range assumes net sales from legacy <unk>, Inc of $372.5 million to $385 million.

Representing organic revenue growth in the range of approximately 16% to 18% year over year and.

And net sales from the acquisition of biomass, Inc of approximately $32.5 million to $34.5 million.

With respect to our profitability guidance, we now expect GAAP net income of $13 zero million to $17.6 million.

Of which legacy biomet debt is expected to contribute GAAP net income of $29.2 million to $33.3 million with biomass contributing the remaining balance.

We now expect non-GAAP net income of $67.1 million to $69.5 million of which legacy bio Ventas is expected to contribute non-GAAP net income of $75.6 billion to $76.6 million with biomass contributing the remaining.

Balance.

We now expect adjusted EBITDA of $77.8 million to 82.0 billion.

Of which legacy Biomet is expected to contribute adjusted EBITDA of $82.8 million to $86.1 million with biomass contributing the remaining balance.

In addition to the formal financial guidance provided in this afternoon's release, we would like to provide some key assumptions to bear in mind, when evaluating our growth expectations for 2021.

First our full year 2021, net sales guidance range assumes the following for net sales by geography.

U S net sales growth in the range of 23% to 26% year over year and international net sales growth is expected to be and a range of 55% to 60% year over year.

These ranges assume U S sales growth on an organic basis in the range of 15% to 18% year over year and contributions from our acquisition of buy on us.

And international sales growth on an organic basis, and the range of 22% to 24% year over year as well as contributions from our acquisition of bonus.

For net sales by vertical and our full year 2021 guidance now assumes.

Low to mid 20% growth in global sales of pain treatments and joint preservation products, driven by low 20% organic growth and contributions from <unk>.

Flow to mid 30% growth and global restorative therapies growth driven by low single digit organic growth and contributions from bonus.

And high <unk> to low <unk> percent growth and global sales of Bgs products.

Second we continue to expect to see measured improvement and the operating environment as we move through 2021 for you.

By the increasing availability of vaccines and an increasing percentage of vaccinated Americans Canadians and Europeans are full year 2021 guidance continues to assume a return to normalized year over year growth trends in the third quarter of 2021.

Finally, with respect to our expectations for financial performance in 2021, we would like to provide some of our assumptions to help evaluate our full year 2021 guidance for GAAP and non-GAAP net income.

For the full year 2021 period, we expect non-GAAP gross margins of approximately 77, 6% to 78, 1%.

GAAP operating expense growth of 23% to 26% year over year, driven primarily by the incremental operating expenses related to our acquisition of biomass.

Low double digit growth and legacy Bioventures operating expenses compared to 2020.

Note the increase and GAAP operating expense growth range versus prior guidance is driven by the noncash impairment charges and noncash expenses from contingent consideration and the second quarter of 2021.

We also expect interest expense net of approximately $2.3 million total noncash depreciation and amortization of approximately 31 million to $32 million.

Non cash stock comp income of approximately $2.7 million to $3.7 million and.

And weighted average diluted class a shares of approximately $42 million.

With that I'll turn the call back to you Ken.

Thanks, Greg before opening the call for Q&A.

To summarize the main points of the bio event this investment story.

Which I believe will illustrate why we are so enthusiastic about the long term outlook for the company.

Number 1 we are a company focused on building a portfolio of clinically differentiated minimally invasive treatments to help patients heal faster and relief pain.

We are confident and our multi year organic growth profile, which is increasingly compelling and fueled by our market penetration strategy and both our pain treatment and joint preservation and.

And bone graft substitutes verticals and expanding our reach and our restorative therapies vertical.

Number 2 our product pipeline is robust and is expected to fuel accretive growth and the medium term with potential products like a jealousy by car to heal modus pro cough and talisman, the implantable less invasive pms device from biomass.

Number 3.

Our M&A strategy is designed to brain and acquisitions that are expected to bring and accretive growth to our global business and leverage our strong commercial infrastructure.

To bring about consistent double digit growth.

As discussed our acquisition of biomass and March and our recently announced pending acquisition of Masonic represents ideal fits in terms of how our M&A strategy will enhance our long term growth profile and create further value for our shareholders and.

Importantly, we will continue to be measured and prudent and our approach to M&A as we have with both the biomass and Masonic deals.

Number for operationally, we are focused on continuous improvement.

Positively impact our margins, including cost savings initiatives from a manufacturing and supply chain perspective, while also enhancing our quality programs to meet ongoing changes and our regulatory environment and <unk>.

Number 5 and most importantly on.

Our strategy is backed by our highly engaged results driven culture that is fueled by and employee driven mission to improve the lives of thousands of patients that are treated each day by 1 of our medical devices returning them to active lives.

With that we will open the call to take your questions Catherine.

Thank you Sir if.

If you would like to ask a question Keith signal by pressing star 1 on your telephone keypad.

Using a speaker phone. Please make sure that your mute function is turned off to allow your signal to reach alright. Good luck.

We do ask Vic and limit yourself to 1 question and 1 follow up.

And I would like to ask additional questions and we invite you to add yourself PDQ again by pressing star 1.

We will now take a moment to allow participants to join the queue.

And our first question from Robbie Marcus of Jpmorgan. Please ask your question.

Oh, great and thanks for taking my question.

And maybe we could start on the outlook I think.

People are getting very concerned about.

The impact of Covid, and the Delta vary and particularly in the southeast.

And with some hospitals, and Texas, and Florida, and other states starting to put off elective procedures.

It doesn't sound like the guidance necessarily.

Assumes a worsening of the situation so it'd be great to get your take of what Youre seeing right now.

And the U S, particularly in the southeast and are you seeing an impact so far and third quarter from from the ryzen cases. Thanks.

Yes, Thanks, Ravi and good to hear your voice and thanks for your question.

That is it is a concern and 1 that we're watching carefully.

At this point and time it is not impacting our business keeping in mind that <unk> is broadly diversified geographically across the United States.

Where we sell on a given month to thousands of surgeons across our 3 verticals.

And that really helps us where we may have some regional spikes, which is I think what we're seeing with the delta variant.

Where there is some impact and elective procedures, but we're brought enough based at this point, where we have not seen and impacts where obviously continue to watch that carefully.

But our guidance assumes we've returned back to normalized growth and the second half of this year.

Got it okay. So it doesn't seem like it's it's really impacting you from second quarter trends at all and a material way yet no no it's not Robbie and hopefully that will continue for us.

I hope so too.

Maybe a quick follow up more of a strategic question.

No.

With a couple of deals announced and courtesy.

Cardinal Hill.

And that was the plan from the time of the S..1 so it shouldn't be much of a surprise, but how are you thinking about further M&A from here.

Sure.

And particularly your ability to finance further M&A.

Would love to get your thoughts I appreciate it.

Yes, Thanks Ravi.

Our M&A strategy as we've talked about.

Since we went public earlier this year is not to drive growth for growth's sake, with M&A, but really look at it from a strategic perspective and make sure it marries and Leverages our commercial channel.

We've been fortunate defined 2 excellent acquisitions, and 2021 and biomass and depending on acquisition with Masonic.

We will continue to look at other M&A.

And we'll take a prudent and measured approach that those potential deals. If we go that far are ones that will return value to all shareholders and that will be a key measurement device.

We have assessed.

Carefully where we stand relative to Masonic and.

And completing that acquisition, which we successfully expect to close and the fourth quarter and.

And then car to heal and as highlighted on the call. We don't expect car to heal if we do move forward to receive PMA approval until mid 2022, which puts quite a bit of daylight between the close of Masonic and the car to heal deal.

So we are and a strong position with low debt.

Not leveraged, but very strong cash that drives down to our bottom line every month. So we will continue to.

Certainly look at our M&A pipeline and look at opportunities that drive accretive growth.

But as we've done in the past it will be a measured and prudent approach and.

And we just have and our case some very good synergies that we've been able to take advantage of here in the near term with both biomass and Masonic and we're clearly excited about car to heal and we'll be assessing that technology and as mentioned our and process of doing that right now.

Great and maybe if I could sneak in 1 more now that you've had some time to digest.

The acquisition.

Since the announcement a couple of weeks ago any updated thoughts on <unk>.

Accretion for the first year and second year on adjusted EBITDA and how that impacts.

Net income thanks.

Yes, Ravi, it's Craig I'll take that 1.

With respect to MISO and ex I don't think Theres any.

Updated thoughts at all as we said at the time of that announcement, we expect that acquisition to be accretive to our adjusted EBITDA and the first full year. After the completion of the transaction and accretive to our adjusted EBITDA margins by the second full year after completion and really no change to that from what we said at that point.

Thanks.

And our next question from Amit touched on.

And of Goldman Sachs. Please ask your question.

Hey, This is Phil on for me can you guys hear me okay.

We can Phil.

Awesome.

And I wanted to circle back to Delta and maybe a slightly different way than Ravi assets and ask about patient risk aversion.

Independently of constraints on on facilities and hospitals. So I'm wondering what your learnings were on patient risk aversion over the last roughly year 18 months and and how you're thinking about that moving forward and any differences that you see and different divisions, obviously, there's slightly different dynamics.

And between the different segments that you guys operate on it.

Yeah.

It's a great question, Phil and let me try to answer it by by the verticals and a lot of our data will be U S based but certainly we.

To reflect on some international points is well first of all on our third.

Therapy, and our pain treatments area and that vertical we saw.

Last year reticence to go into physician offices, and keeping in mind that that particular population with HCA is elderly people or.

People over the age of 65, and sometimes quite a bit older. We've seen a return a full return to our HSA business as the vaccines have become available late last year and early this year and as you can see from our results. We continue to see continued strong growth and that area and.

<unk> continued to gain market share and the HVA space and general estrogen is more of a broad based technology and our restorative therapies area and.

And that particular area.

It was impacted.

Throughout 2020, because of the reduced activity level reduce trauma and then we've seen a consistent pick up and.

Across the back half of 2020 and into 2021, I don't expect that to be impacted because thats more trauma related and as long as <unk>.

People will continue to remain active and we don't have shutdowns and the impact of a delta variant will not be extensive on debt restorative therapies area orexigen and for that matter on the advanced rehabilitation area with biomass I would say the same thing.

And where it's more stroke and and focused at this point and.

And areas like that that affect gates.

We don't expect a significant impact there unless there would be some type of significant shutdown.

And then we're going to our bone graft substitutes area.

And that also.

And as more of a younger patient group and spinal fusion.

And that can vary and age from from 52 to 70 typically.

And we have not seen a decline and elective procedures as I mentioned, Phil there is some regional pressure on occasion.

Pending on the area, where there might be spikes, but were brought enough based with that business that we have been fortunate we have not seen any real impact to our growth profile.

And on peripheral nerve stimulation with stem router, it's really the same thing.

Thats right now focused where our focus is on post surgical pain, and some chronic and lower extremity pain, and we have not seen any impact there and and again would have to see a significant shutdown to see pms impacted now where we have seen an impact with the pandemic has been more.

<unk>, where we are direct in the UK and Canada, and Germany, we have seen a much more of a significant impact as you can see from our numbers.

Our rebound and though and we expect and the second half for the year with continued vaccination growth that patients will return to normal treatments and.

Those markets as well as our distributor markets outside of the redirect markets and we continue to stay positive on on that and mentality.

Alright. Thanks, Thanks for all that color that was great.

1 more if I may <unk> and system.

And I think growth if you look on a kind of a compound basis slowed sequentially versus <unk> I'm wondering what happened and the market. There. Obviously, we had some things going on and <unk> that I think could have actually slowed.

Growth on that side, so what happened and <unk> and what gives you confidence and the Reacceleration thats implied in guidance business. Thanks.

Yes, Thanks, Bill well just to be clear, we did see sequential growth and ex adjourn from Q1 to Q2, and we're very pleased with that.

So so from our perspective estrogen we continue to expect low.

Low to mid single digit growth with the product and we continue to be strongly optimistic on on ex agenda to deliver.

And from a profitability perspective, so as far as we're concerned we've continued to see really good numbers, there and and encouraging numbers as I mentioned, we did ex <unk> was hit last year, particularly with the reduction and trauma.

But we've seen that pick up and we've seen good sequential growth from from Q1 to Q2 now.

Alright, Thanks, I'll leave it there and come back in queue.

Thanks, Phil.

And our next question from drew Ranieri of Morgan Stanley and ask your question.

Hi, everyone. Thanks for asking the question.

Taking the question just going back to the third.

Third quarter for a moment and just your comments that youre expecting and returned to normalized year over year growth trends and the third quarter.

And it looks like consensus has about $102 million for the third quarter, but if I kind of look back and maybe what your normalized growth rates would have been it seems like we might be coming out for like 95% to $98 million. Just curious if youre if youre comfortable where consensus is currently stand and just kind of given the trends that youre seeing and the business and.

<unk>.

Yes drew thanks, it's Greg and.

Short playing version is.

We've said all year long, we expect to get back to normalized growth.

And the second half we continue to say that if you go back and you look at our business historically.

Q2 to Q3, our business stays relatively constant.

Maybe give us just a hair, but.

Our business certainly builds from the first quarter to the fourth quarter, but is relatively constant from Q2 to Q3.

So we remain very positive in terms of our outlook for the rest of the year.

Okay, and then I'll put these 2 questions together, but.

Can you maybe talk a little bit more about the pilot program between for stem router and Nextgen and then second just give us a pipeline update for for bones and notice. Thank you.

Sure drew well first of all the pilot program with something we launched several months ago with our sales team that sells ex adjourn and specifically calls on lower extremity surgeons foot and ankle orthopedic surgeons and Podiatric surgeons.

Where there's a real need for our peripheral nerve stimulation, depending on the procedure and the area that they are treating.

As we brought the team in and it was 25 of our sales reps so a small percent.

And that's gone quite well as they've gone out and the field they've been trained and working closely with the biomass peripheral nerve stimulation sales force. So we're very excited about that opportunity. It's an initial.

Focus for us just to gain market experience and have our reps gain experience and confidence with the stim router product.

From our perspective.

We look forward to a full launch across our broader sales force and this area going into 2022, and obviously also the next generation <unk> products, which we also expect 5.10-K clearance on and availability with that in 2022 as well.

And as far as Boeing's theres not a lot to update on at this point.

As highlighted before we have a deficiency letter from the FDA.

On the metatarsal study.

And we are in discussions with FDA and expect.

And to continue to work to resolve the deficiency letter and once again. This is a PMA supplement that does take some time.

As the team works through that so we'll have updates as we get them better material and that area and then on notice we continue to work through our phase..1 study. It's now 2 sites in the U S and we're ready to commence our phase III study on schedule and the third quarter.

<unk>, our phase II study, rather on schedule and the third quarter. So very excited about what that product represents and the strong adjacency that we see and our HAE portfolio with motives as a placental tissue products that can have disease modifying implications as well as reduce inflammation.

And the knee joint.

So that continues.

Really progressed nicely and our team has done a terrific job moving that forward via the BLA application process.

Thanks for taking the questions.

Thanks drew.

Okay.

And as a reminder, if you would like to ask a question E signal by pressing star 1 on your telephone keypad.

That is again star 1 on your telephone keypad.

And our next question from Kyle Rose of Canaccord. Please ask your question.

Great. Thank you very much for taking the questions.

So I wonder if I could just ask more of a bigger picture M&A question.

I understand that your appetite for continued M&A remains strong.

When I look at the 2 deals that you've done.

Our 1 <unk> and 1 closed 1 and there are a bit more tangential than I think maybe we would've expected.

Broadening into the wound care market as well as more on the operated side.

And the spine market and then when I look at buy on US you've got multiple different market segments that youre broadening and did you do you expect to continue to move into additional adjacent market segments or.

More so than invest in the existing markets that youre in now.

And it's a good question Kyle and really when you look at the segments that we're in and the verticals. These were highly adjacent areas, which is why we did them and they leveraged our commercial channel and the infrastructure that the company has I mean, if you start with biomass.

Using our current sales force obviously is just a pilot right now, but we will to continue to penetrate the peripheral nerve stimulation market, which is a significant 1 when you look at the opioid crisis and the use of opioids post surgery. These are all physicians and surgeons that we call.

On daily.

And so so.

Leveraging that has been critical and then obviously on the advanced rehabilitation business, there is and operational synergy as well as a commercial synergy operationally with the durable medical equipment and that process that we have well honed with ex adjourn and then commercially expanding their gate restoration products.

To use and osteoarthritis and our sales force also going in that direction, where we see a lot of great synergy and then with Masada ex it is essentially the same strategy going deeper with what we have starting with spine.

And the unique strategy that we have being agnostic to spine hardware and leveraging our bone graft substitutes across our broad portfolio of.

Of opportunities and hospitals and surgeons Massat ex has taken the same strategy with the bone scalpel and we view that as a definite 2 plus 2 equals 5 because that strategy and a relatively small market penetration. We both have will allow acceleration of growth using our combined commercial channels.

And certainly on the wound area.

That's a direct synergy with our <unk> and call point, there's about 4000 physicians today that we that prescribed oxygen annually that treat wounds in the office. The wound market has shifted with the pandemic to more office space treatments and some of that is based on patient comfort not wanting to go to the womb.

And center and that's our strong suit so we see direct synergy there and combination with the Masonic wound sales force, which largely focus is and the wound centers and the hospitals, so I'd like to call our business Kyle.

And when we started out a mile wide and an inch deep and all we're doing is taking that inch deep and we're going 2 or 3 inches by going deeper with our customers. It might seem like it's not channel Gen show, but when you really look at it and hopefully that makes sense. The way I described it we are going deeper with the same customers.

Using our same commercial channels. So we're very excited about that will continue to take a measured and prudent approach and a careful approach on M&A. We've just been very fortunate that we found 2 really good ones here of late that are great fits for bio ventas and our ability to drive long term accretive growth, which both acquisitions we feel.

We will do for our shareholders.

Great and then just last question from me is it sounds like the Carnival data.

It looks pretty good at least with top line perspective.

And I understand all the timelines I'm just trying to understand from you.

And what would prevent you from moving forward with the deal.

<unk> already structured thank you.

Thanks, Kyle look where theres not a lot I can comment on as I said, we're viewing the data now.

And we'll we'll look at the data and the market opportunity carefully. We are excited it's a great technology. It's a great product. We just have to look at this holistically and and that's what we're and the process of doing.

We will announce our decision.

Via press release.

Here and.

From our perspective.

That's about all we can say at this point and time.

And so we'll keep everyone posted on on next steps there.

Thank you.

Thanks Kyle.

And Sara Lee Eric here.

Showing no additional participants and the chemo.

That does concludes our conference call for today. Thank you all for participating you may now disconnect.