Q4 2021 Bioventus Inc Earnings Call
Yeah.
Thank you for standing by and welcome to the bio Ventas incorporated fourth quarter 2021 earnings Conference call.
At this time all participants are in a listen only mode.
After the speaker's presentation, there will be a question and answer session.
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I would now like to hand, the conference held back your speaker today, Mr. Dave Crawford, Vice President of Investor relation and fresher.
Please go ahead Sir.
Thank you and good.
Everyone and thanks for joining us it's my pleasure to welcome you to the bio <unk> 2021 fourth quarter earnings Conference call with me. This morning is Ken reality CEO .
Ken will begin his remarks with a review of the quarter and his thoughts on the current market environment.
Next you will provide an overview of our 2022 priorities.
We'll conclude with a brief comment on the hiring of Mark Singleton as our new CFO .
I will then provide further detail on our fourth quarter results and lay out our 2022 net sales and adjusted EBITDA guidance.
We will finish the call with Q&A.
A presentation for today's call is available on the investors section of our website <unk> Dot com.
Before we begin I would like to remind everyone that our remarks today may contain forward looking statements that are based on the current expectations of management and involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated including the risks and uncertainties described in the company's filings with the Securities and Exchange Commission.
Including item one a risk factors of the Companys Form 10-K for the year ended December 31, 2020, as well as our most recent 10-Q filed with the Securities and Exchange Commission.
You are cautioned not to place undue reliance upon any forward looking statements, which speak only as of the date made 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 calculated in accordance with generally accepted accounting principles or GAAP.
We generally refer to these as non-GAAP financial measures definitions and reconciliations of those non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in the earnings press release on the investors relations portion of our website at <unk> Dot Com now I will turn the call over to Ken.
Thanks, Dave and good morning, everyone and thank you for your interest in bio Ventas.
Before discussing our most recent quarter I would like to reflect on what was a transformational year at <unk>.
I am extremely proud of the way that our entire organization rallied to strengthen our long term outlook through a variety of actions.
Last month, we celebrated the one year anniversary of our IPO, which helped facilitate our acquisitions of biomass and my sonics, allowing us to build out our three customer focused verticals and enhance our scale.
These acquisitions have enabled our transformation from a company that historically reported high single digit organic sales growth to one that we believe we can consistently deliver double digit organic growth.
The acquisitions also bolstered our commercial organization by adding over 200 sales representatives to our team.
Throughout 2021, we delivered strong commercial execution, and we are resilient and our response to the challenging dynamics brought on by the pandemic.
We exceeded our initial sales plants increased our targets throughout the year and generated 19% organic revenue growth.
We couldn't have achieved this without our teams exceptional execution of the company's strategy.
Thanks to their continued hard work and dedication.
Outlook for bio Ventas has never been more exciting.
And we are looking forward to building on this momentum in 2022.
I will now review our results for the quarter.
Revenue increased 32% during the fourth quarter to $130 million. Despite some continued challenges from the pandemic.
We encountered headwinds at both the beginning and the end of the quarter from elective surgical procedure delays in specific regions of the country impacting our surgical solutions vertical.
As the quarter progressed, we saw the impact of hospital and physician office staffing challenges across all our verticals as well as increased COVID-19 rates among patients that forced delays in scheduled treatment.
Despite these challenges and the fact that we were impacted by three fewer selling days, we delivered a strong quarter, a 5% organic growth.
Adjusting for the impact of three fewer selling days growth for the quarter with project to 10%.
With this as a background I will now discuss sales performance across our three verticals in more detail.
Across pain treatments, we saw double digit revenue growth driven by continued market share gains for our single injection <unk> therapy, and our three injection jetson therapy.
We remain well positioned to take advantage of the shift towards single and three injection treatment for osteoarthritis pain.
Lane and Gjelten, each represent roughly 20% share of the single and three injection markets, respectively with significant room for additional growth in the coming years for both therapies as they increased penetration.
Meanwhile, our five injection therapy Sue partners maintains its leading share of approximately 40%.
As the only company with a portfolio of products across single three and five injection therapies. We have held the number two share position in the HSA market and look to become the market leader in the coming years.
Turning to our surgical solutions vertical.
Probably referred to as bone graft substitutes.
We saw double digit organic revenue growth despite the disruption in elective procedures I mentioned earlier.
The launch of Osteo Amp global our injectable allograft bone graft substitute solution continues to contribute to our momentum.
My Sonics contributed two months of revenue in the fourth quarter. Following the closing of the acquisition and we saw strong double digit sales growth of my Sonics bone scaffold compared to the same two month period in 2020.
At the end of the quarter, we received FDA clearance for the bone scalpel access handpiece.
This handpiece provides surgeons with a new option to use and confined spaces during minimally invasive spine surgeries.
<unk> safe bone removal with maximum visualization.
This device further strengthens our presence in minimally invasive spinal fusions.
Fastest growing segment of spine and complements our already strong portfolio of bone graft substitutes, including Asti around the globe.
We have commenced a limited market release for bone scalpel access that has received positive feedback and plan to initiate a full commercial release in the second half of this year.
Finally, we saw double digit growth across our restorative therapies vertical.
Underpinned by our recently acquired advanced rehabilitation products, and my Sonics wound therapy business.
Our advanced rehabilitation business has continued to perform well since we acquired it last March.
In addition, our my Sonics wound business grew double digits for the two months post acquisition compared to the same two month period in 2020.
Across our international segment growth of 71% was enhanced by our biomass and my Sonics acquisitions, while organic growth of 9% was driven primarily by drilling.
Bolstering our international presence I am pleased to announce that during the quarter, we acquired <unk>, a three and five injection H a treatment to sell alongside <unk> in our international markets.
While not as material as our other acquisitions. This was an important strategic acquisition that allows us to leverage and expand our significant market presence and customer base.
<unk> therapy.
Additionally, later this year, we expect to begin leveraging the international distribution rights, we received through our investment in <unk> medical.
As we continue to introduce new products across multiple regions and execute our go to market strategy, we see international expansion as a catalyst for revenue growth.
Dave will give you a look at the guidance shortly but.
As we look out to the rest of the year market conditions are improving and while delays in elective procedures have improved in recent weeks, we continue to see some impact from hospital staffing challenges.
We expect some disruption over the next few months, but we are optimistic that conditions will begin to more closely resemble a normal environment in the second half of the year.
Now I'd like to update you on our 2022 priorities.
As I highlighted earlier, we accomplished a great deal in 2021 with disciplined focus and execution across our key priorities.
And we will maintain the same rigor and executing our three priorities for 2022.
Our first priority is to maintain double digit organic growth through the continued strong execution of our commercial organization.
We see three areas that are expected to deliver double digit organic growth.
Pain treatments, including <unk> acid, and PNM peripheral nerve stimulation driven by share gains across sterling and jetson and growth of pure bisque internationally.
Continued growth of our PFS business.
Surgical solutions, including our bone graft substitutes.
As our hardware agnostic strategy drives penetration into new accounts.
Keeping in mind, we only have 5% market share today and plenty of runway for growth.
And while recognizing that it isn't contributing to organic growth for the majority of the year by <unk> will allow us to leverage our scale to achieve further market share gains and enhance its historic double digit growth rate.
Our second priority focuses on completing the integrations of our recent acquisitions delivering on our cost synergy commitments and leveraging our enhanced scale to accelerate sales.
We recently incorporated <unk> into our system.
The last significant milestone in the integration process and now turn our attention to my Sonics.
Over the past few months and internal team has developed our integration plan leveraging the valuable experience from the biomass process.
We expect to be substantially completed with the integration of my Sonics by year end and remain on target for our projected $20 million of cost synergies by the end of 2023.
Besides the realization of cost synergies.
Are you.
Buying commercial teams continue to pilot opportunities to leverage our enhanced scale and customer relationships to accelerate sales growth.
As I highlighted last quarter, we initiated two sales pilot programs to utilize our call point access and further increase biomass growth.
We saw positive results from our successful pilot centered around our L. 300 go product for patients suffering gait disturbance following total knee replacement surgery.
As a result, we are educating our broader sales team to further leverage their relationships with orthopedic surgeons.
The second pilot explored accelerating tnf's revenue by using our existing sales force for lead generation.
Based on the results of this pilot we are moving forward and hiring additional sales representatives and our pain treatments vertical that will be solely focused on our P. N S products.
We anticipate that these products will contribute to our double digit growth in both the near and midterm.
In addition to the successful pilots. We recently received FDA five 10-K clearance for our next generation Stim router plus neuromodulation system.
New system provides the same clinically proven long term pain relief, while significantly improving the patient's control and user experience and also has enhanced battery life.
With my Sonics integration underway, we have recently initiated programs to enable deeper penetration within our customers across surgical applications in spinal fusion neurosurgery and wound treatments.
The first will leverage the existing customer relationships that the respective bio ventas and my Sonics sales forces maintain.
These two sales forces have approximately 500 customer relationships each but there was relatively little overlap due to our relatively small market penetration today, roughly 10 accounts in total.
Already we are cross trained the entire my Sonic sales team on our bone graft substitutes portfolio to leverage their customer relationships.
Also we have trained select members of our indirect sales force on our my Sonics surgical products and plan to implement a more extensive rollout in the second half of the year.
Through the early stages of implementation, we are already seeing this approach paid dividends as our sales teams have been able to utilize their relationships and cross sell incremental products to an account.
The second my Sonics program engages our exigent representatives to sell my Sonics as wound products into the office setting.
My Sonics is focused on the hospital wound center call point in the past.
Due to the pandemic more wound related treatments have shifted to the office setting.
We are leveraging our relationships with tri interest by utilizing our existing <unk> call points in the office setting to offer my Sonics as wound treatment therapies to patients suffering from debilitating conditions, such as diabetic foot ulcers.
Our third and final priority for the year centers on the pending acquisition of Carr to heal, which we believe is a revolutionary and game changing device for a multitude of patients suffering from knee osteoarthritis.
As I mentioned last quarter, there are still steps remaining for carty heel to gain PMA approval, but in the meantime, we are preparing to finance the potential acquisition with additional debt.
As a reminder, car to heal fills a significant unmet need for surgeons in the treatment of patients with cartilage defects and knee osteoarthritis and has a demonstrated superiority through a randomized controlled trial to the current surgical standard of care.
Demonstrating superiority, particularly in orthopedics is a high bar and one that speaks to the strong merits of the cardiac device.
While we don't expect the acquisition to drive material growth. During the first years post launch we anticipate car to heal will be a significant driver of growth in the midterm as private payers increasingly approved reimbursement based on its clinical superiority and economic attractiveness.
Yes.
Before turning it over to Dave I want to express how excited we are to brain Mark Singleton onboard as our new Chief Financial Officer.
During our search we were focused on finding a candidate who has demonstrated the ability and a global med Tech organization to drive revenue growth as well as consistent operating leverage both organically and through value creating M&A.
Throughout his time at IBM, Lenovo and most recently over the last seven years at Teleflex.
<unk> partnered with leadership to consistently deliver improved operating results and integrate the acquired assets.
<unk> ability to effectively manage operating spending and increased financial discipline and accountability.
It will help us to drive expanded operating margin leverage as we continue to grow organically and enhance our portfolio through M&A.
Mark brings robust experience in our industry and will be a strong cultural fit with our executive team and all of bio Ventas.
Lastly, I would like to thank Greg angle him for his financial leadership during his time at bio Ventas and wish him. The best in the next step of his career.
In conclusion, we continue to build momentum across our business as we execute on our growth strategy and drive further market penetration across all three customer focused verticals.
I am confident we will deliver on our cost synergies from our acquisitions and enhance our growth profile by leveraging our scale and commercial infrastructure to deliver consistent double digit growth now.
Now I'll turn the call over to Dave.
Thanks, Ken I will begin with a review of our fourth quarter results.
Revenue of $130 million increased 32% compared to the prior year, we saw a five percentage point increase from organic revenue along with a 27 percentage point benefit related to our acquisitions of <unk> and my Sonics as Ken mentioned sales growth was impacted by three fewer selling days compared to the prior year.
Although hospital utilization was negatively impacted by the pandemic and hospital and physician office staffing shortages during the fourth quarter, we were able to deliver strong sales as we benefited from our diversified portfolio and strong execution by our commercial teams.
Our adjusted sales performance drove our sales performance drove adjusted EBITDA of $28 million and adjusted.
Diluted earnings per share of <unk> 26.
Across pain treatments, we grew 20% driven by 17 percentage points of organic growth across our portfolio and three percentage point contribution from our <unk> products, which we acquired from bonus.
As Ken mentioned, our dearly and Johnson products continue to capture market share Sue part sales were lower given the ongoing shift away from five injection therapy towards single and three injection therapy.
In surgical solutions, we grew 61% we saw 13 percentage points of organic growth across our bone graft substitutes as the business returned to double digit growth despite the challenging environment.
Quarter included a 48 percentage point contribution from two months of revenue from Mike Sonics as surgical portfolio.
And finally across restorative therapies, we delivered 35% growth organic sales growth for Mexican was down against a tough comparison as the prior year revenue benefited from the release of roughly $2 million of settlement reserves, resulting from the process improvements made following following our <unk> disclosure.
Salt in December of 2020.
This represented a two percentage point unfavorable impact to the company's overall organic growth.
While inorganic growth from the sales of the bonus advance rehabilitation portfolio and then my Sonics as wound business contributed a combined 58 percentage points.
Moving down the income statement adjusted gross margin of 76% was down 340 basis points compared to the prior year. The decline in gross margin can be attributed contributed to lower gross margins from our recent acquisitions, along with a slight increase in transportation costs due to the global supply chain challenges.
Overall, adjusted operating expenses increased $16 million driven by the costs related to bonus semi sonics public company costs and he returned to more normalized spending patterns when compared to the prior year.
Now turning to our bottom line financial metrics, adjusted EBITDA totaled $28 million, even compared to the prior year higher sales volume was offset by higher operating costs that I just mentioned.
Adjusted operating income increased to $22 million from $17 million in the prior year and adjusted net income totaled $18 million compared to $13 million a year ago.
We earned 26 of adjusted diluted earnings per share.
Now for a brief recap of our full year results.
Net sales increased to $431 million, a 34% increase compared to 2020.
Organic sales grew 19%, while the acquisitions of bonus and my Sonics contributed 15 percentage points of growth.
For the year adjusted EBITDA totaled $81 million.
Adjusted gross margin for the year was 78% compared to 79% a year ago. Our 2021 adjusted gross margin reflects the impact of our recent acquisitions, along with increased transportation costs due to global supply chain challenges, which I previously mentioned.
Adjusted operating income for the year totaled $85 million compared to $60 million in 2020.
Now turning to the balance sheet and cash flow statements. Our balance sheet provides us with strategic flexibility as we ended the quarter with $44 million of cash on hand, and $358 million of debt outstanding.
Our revolving credit facility remained undrawn at the end of the fourth quarter.
Operating cash flow.
Presented an inflow of $13 million for the quarter.
We continue to generate strong and consistent cash flow, which provides us with the capability to delever, even when taking on higher debt levels for short periods of time.
Finally, let me review, our 2022 guidance.
Based on current trends in our business, we expect net sales to be in a range of 545 million to $565 million, including bonus and my Sonics for.
For the year, we expect adjusted EBITDA to be between $94 million and 107 million Sim.
Similar to prior years, we expect our first quarter revenue and adjusted EBITDA to be the lowest for the year and the fourth quarter to be the highest for the year with the second and third quarters looking fairly similar to one another contributing.
Contributing to the acceleration of EBITA and earnings throughout the year will be a fairly consistent level of operating expenses each quarter, excluding the benefit of cost synergies synergies from <unk> integration.
I'll be weighted more towards the second half of the year and further enhance EBITDA.
Additionally, at this time, we are not providing guidance for adjusted diluted earnings per share due to the implications of the potential financing of our cardio acquisition that Ken mentioned earlier.
Once we have completed the financing for Carty heal we expect to provide adjusted diluted EPS guidance for the year.
The potential financing of Cargill require approximately $265 million of additional debt and given our higher leverage we will restructure our existing debt.
Based on current market conditions upon the completion of the financing we expect to have approximately $625 billion of debt with an overall interest rate between six and 7%.
In closing, we continue to execute on our growth initiatives across our business and maintain our top line momentum while completing the integration of my Sonics later this year operator, please open the line for questions.
At this time, if you would like to ask a question Press Star then the number one and your telephone keypad.
Again star wanting a telephone keypad.
Your first question comes from the lineup Kyle Rose from Canaccord. Your line is open. Please ask your question.
Great. Thank you for taking the questions I Wonder if you could just talk a little bit more about some of the market trends youre seeing at least to start the year and the Q1 and how we should really think about the exit velocity in Q2, and then just a little bit more on.
The sales team build out with respect to the PFS business.
Typically how many reps do you plan on hiring and how should we think about the productivity metrics within that.
Thanks Kyle.
First of all as far as the business goes.
The start of the year was a tough start.
A lot of us have talked about.
We are different than other parts in times of the pandemic, we saw more of a broad implications not just across.
Elective surgical procedures, but patients that were deferring treatment, because they were sick or or offices shutting down because they had a sick office staff for nurses and certainly the hospital staffing issue as well.
And that was the start of the year.
We've gone through the year now, we've certainly seen a real steady progression of improvement.
And I would say the exit velocity here projected in Q2 going into Q2 should be strong.
Not quite I would say in a normalized environment.
As we talked about what we expect that to occur by the second half of the year.
Regarding peripheral nerve stimulation, we see a real opportunity here as you know this is a $6 billion total addressable market. We focus now on post surgical pain, using peripheral nerve stimulation and particularly the stim router and now the stim router plus to address this area.
Orthopedic market, particularly avoiding the prescription of opioids.
So we're very excited about the opportunity there is established reimbursement for peripheral nerve stimulation and we'll be adding to our sales force to solely focus on this area, we're not going to give direct sales numbers of how many reps.
For strategic reasons, but it will be enough to enhance our ability to really go. After this market and of course, our <unk> reps will work hand in hand, with our paint other pain treatment reps and hyaluronic acid as well as selling our long bone stimulation to really get into it.
And offices and leverage those relationships.
Great and then just if you could update us on capital allocation plans for I guess over the near to midterm I mean, obviously, you're going to bring on some debt and finished this car to heal deal you've been pretty acquisitive over the course of the last 12 months.
Relative to your size.
Should we expect deals to slowdown from a BD perspective or is it just going to continue to be status quo.
Yes, Kyle as we go forward. This year, our focus is really on digesting what we have in front of US and that includes now that biomass is fully integrated complete into my assumption integration by the end of this year and completing the Carnegie O acquisition at this point in time, there are no other acquisitions that we.
Our planning.
We really anticipate our year looking that way and of course executing on the amazing opportunity, we have driving double digit growth and continue to gain market penetration.
Thank you for taking the questions.
Thanks Kyle.
Your next question comes from the lineup ranging from Morgan Stanley . Your line is open. Please ask your question.
Hi, David Thanks, Thanks for the taking the question just maybe start on guidance for a moment can you just give us a better sense of maybe what gets you to the lower and upper end is the range maybe from a specific product launch or segment perspective, just wondering if youre seeing.
Better traction in one particular area that gets you to the top end or just more of the same.
And then is there any selling day impact that you're contemplating for 2022.
And that just throw this in here too.
Can you give us a sense of what you're expecting for organic growth for the year. Thank you.
Yes, Thanks drew.
You look back at what's driving our growth in our business. It comes down to several key areas number one in surgical solutions, it's the double digit growth of bone graft substitutes and certainly.
We feel bad.
Despite the start to the year, if things continue to go with the pandemic the way Theyre progressing today, we will be back to a normalized environment and strong double digit growth in bone graft substitutes as we go through the year bone scaffold combined with that and surgical solutions, we have a tremendous opportunity and that is also historically had.
Strong double digit growth and we expect that to continue as well once again provided electric procedures continue to go the way they have progressed here through the first quarter, which is a great improvement.
Other area of growth for the company as our HOA business, where we continue to gain market share with <unk>, our single injection and Jetson drew our three injection and we see that continuing.
The market is very strong and certainly the reimbursement is robust and our sales force is highly focused in this area, where we have a unique combination with our three products <unk> gel 10, and sue parts. So we see that growth continuing as well and then peripheral nerve stimulation as you.
Mentioned that is that's a critical growth area, both in the near and midterm for us off a small base I would say, but we do see that as a growth driver for us not only this year, but in the years to come as we continue to penetrate that market as.
As far as sales days impact, we don't see that in 2022 as we saw in 2021 keep in mind the.
The way, we do our sales days is not necessarily on a calendar month in a calendar quarter, we do a set amount where the first month of every quarter is five weeks followed by two successive weeks two successive months of four weeks and what happened in the fourth quarter as we had the five week we had before.
A week in November and then our December was truncated by three less selling days just based on when the ended the year happened because we always end the year on the end of the year December 31, So that's what happened here in 2021.
Andrew I guess, when you think about organic growth for the business what I would tell you on that is.
Revenue for the company is just north of 500 million. So if you look at kind of the midpoint of the earnings guidance, it's kind of projecting organic revenue was around 10%.
Again, consistent with what we were trying to achieve on that double digit growth.
Target.
Got it and then.
Can you just mentioned.
DHA market remains very strong reimbursement for it.
Last I.
Heard some concerns from investors that Medicare might be potentially.
Cutting prices in the not too distant future, but can you maybe spend a moment there talk about how biotech this might be better situated versus competitors and any idea of precise timing for implementation of the pricing cuts. Thank you.
Yes, thanks for the question drew on that.
We've looked at this very carefully and this is not a Medicare cut per se, but it's focused on ASP reporting.
ASP reimbursement average selling price reimbursement.
One of the things that we've historically done at bio Ventas and our business is focused on market access and what that means is having specific contracts with insurance carriers, such as United healthcare the largest private carrier in the country today and with those contracts give it.
Gives us.
Unfettered access to accounts and the ability to cross sell to what we call non contracted non United patients, but we also spend a lot of money relative to getting those contracts through rebates back to insurance companies, where we have.
That unfettered access and that exclusive contract. So when we look at this analysis for US and this is specific to bio ventas I can't speak for other countries.
Other companies are either.
It's a net neutral.
<unk> bio ventas.
While we may lose a little on the ASP reimbursement, we gained by paying less rebates because of that reimbursement change so for bio ventas. It provides us with a.
Basically a balanced footing on the reimbursement side, we may see some choppiness as.
As we go through this and we're projecting this would occur in the third quarter. This year.
But we feel that choppiness with very short lived as we work through the Asps.
Yeah.
Reimbursement and of course, the rebate change associated with that that we pay back to insurance companies.
Thanks for taking my questions.
Thanks, Rick.
Your next question comes from the lineup Robbie Marcus from JP Morgan. Your line is open. Please ask your question.
Thanks for taking the questions.
Maybe to start.
With all the deal integration and.
The upcoming finance, how should we think about free cash flow in 2022.
I think Robbie free cash flow, we will continue to be robust for the company.
Our business model has not changed whatsoever, and we got about 90% free cash flow flowing through and we expect that should not change here in 2022, our business model.
Even with our acquisitions that we've done has not changed whatsoever, we have robust reimbursement for all of our products and the markets that we serve and it's pretty diverse.
As well, which offers a good protection for the company.
Ravi the one thing I would add and Dave here Youre going to probably see free cash flow accelerate our cash from operations accelerated during the course of the year Q1 will be by far away. The lowest amount. We have some payments that will go out management incentives. We also have a payment for former employees.
Relating to the going public and the transitioning of their stock and paid out that as well as some other just a one time or cost associated that hit in the first quarter that don't hit later on in the year. So insurance premiums for example, and then we also have some things going on relative to the acquisitions, but just kind of alluded.
We would expect free cash flow to build.
During the course of the year, obviously, the additional debt that we are likely to take on with Carnegie Hill will impact.
Some of that in the back half of the year when the financing is in place for that perspective.
Got it okay. So we shouldnt expect the deal or the refinancing to happen until second half of the year.
It is dependent I think upon the timing of the approval from the FDA from our planning purposes, we've kind of put something in kind of like the midpoint of the year.
Could accelerate it could be delayed again, that's in the hands of the FDA and then we have a period of time that we'll use to close that transaction and finance the transaction as well, but from a planning standpoint, I think it's probably really.
Good as a midpoint to look at it kind of.
July one timing.
And then we will definitely update everyone as that timing either accelerates our moves back.
Great and then last one for me can you you mentioned earlier about youre not looking to or you're not you don't have any other deals planned right now.
The commentary I feel like you used to say it was a biotech this will continue to look for her.
For good acquisitions, and and you know if you see something Youll go acquire it I just wanted to make sure. It's not a change in positioning here I said youre done acquiring for awhile.
Just a clarification, yes, let me be clear about Ravi will continue to build a pipeline of M&A opportunities.
But we need to digest, what we have in front of us in 2022.
With the pending acquisition.
Carr to heal, which we're very excited about and the integration of my Sonics. It's just a timing thing for us that we need to get beyond but it doesn't change our medium term strategy of continuing to build our customer verticals off both product development and R&D and enhanced M&A.
Which is what we've done in the past year that doesn't change in the medium term. It's just a timing thing of digesting, what we have in front of us today.
Great. Thanks, a lot.
Thank you Ravi.
Your next question comes from the line up.
<unk> from Goldman Sachs. Your line is open please ask your question.
Hi, it's Phil for me, Thanks for taking the questions.
I think for the first one I wanted to ask the Druze organic growth question, maybe from the other direction instead of Ah I heard the 500 ish million pro forma.
But we were trying to put together an estimate for what the inorganic contribution was to 2022.
I don't think we have an idea on care of as yet, but taking the biomass and then might sonics together it was somewhere around $75 million for us, which gets you to kind of that nine to 13 that same organic growth rates is that kind of thinking about the math right and what what's the contribution from <unk> is expected here in 2002, Yep Yep procure a biscuit.
It's going to be pretty small, we're not going to we're not going to breakout cure of risk.
That was a strategic opportunity in acquisition for us that complements <unk> internationally.
Considering <unk> as a single injection product and there is still demand for three and five injection with the accounts that we sell today.
But regarding your question on inorganic versus organic I think your numbers are correct.
We our guidance midpoint of our guidance as Dave said gets us in the double digit growth. That's what we're guiding at looking at the full year sitting here today.
Based on what we know and we feel very comfortable with our double digit growth strategy and being able to execute on that and certainly we'll update.
More fully as we go through the year.
Okay, that's great Ken Thanks for that.
A quick one on quarterly phasing I saw the roughly regular seasonality is.
If we go back pre pandemic I think that that's sort of a 22% ish of sales coming in the first quarter that it looks like it's roughly in line or maybe a little bit below where street as it is.
Is that the right kind of range to be thinking about for <unk> setup.
So with.
With the pandemic and the slow start to the year it might be a little bit lower than that this year for sure.
But historically this business Q1 has always been the low point and Q4 has always been the high point and Thats driven by elective surgical procedures, peaking in the fourth quarter insurance deductibles being reset January one all of those dynamics seem to have.
Heavy weight on our type of business and that really hasnt changed with the acquisitions that we've done either that cadence, but this year with the weakness starting now out in the <unk>.
Again into the year because of the pandemic Q1 could even be a little wider than that and as Kevin talked about it in his prepared remarks also seeing some of the acceleration of the business as we anticipate things getting more closely to normal in the second half that will wait a little bit more towards the back half of the year as well.
Okay. Thanks, Bob I appreciate it I'll jump back in queue.
Thank you.
There are no further question at this time, Mr. Ken reality.
May continue.
Thank you Justin and thank you all for your continued interest in <unk>.
21 was a transformational year for the company and we look to build on our momentum and continue our strong execution I am confident in our growth strategy and in the ability of our diversified market leading portfolio to sustain double digit organic growth, while creating stakeholder value through our <unk>.
<unk> portfolio and synergies from our recent acquisitions. Thank you very much.
Okay.
This concludes today's conference call. Thank you for participating you may now disconnect.
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Yeah.
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