Q2 2024 Organogenesis Holdings Inc Earnings Call

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Operator: Please stand by. Welcome, ladies and gentlemen, to the second quarter 2024 earnings conference call for Organogenesis Holdings Inc. At this time, all participants are placed in listen-only mode. Please note that this conference call is being recorded and that the recording will be available on the company's website for replay shortly. 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 risk and uncertainties that could cause actual results to differ materially from those indicated, including the risk and uncertainties described in the company's filings with the Securities and Exchange Commission, including Item 1A, the risk factors in the company's most recent annual report and its subsequently filed quarterly report.

Operator: 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 security laws. This call will also include reference to certain financial measures that are not calculated in accordance with generally accepted accounting principles or gaps.

Operator: We generally refer to these as non-governmental measures. Reconsolations of those non-governmental measures to the most comparable measures calculated and presented in accordance with a cop are available in the earnings press release on the investor relations portion or website. I would now like to turn the call over to Mr. Gary Gilheeney, senior, Organogenesis Holings President, Chief Executive Officer, and Chair of the Board. Please go ahead, sir.

Speaker Change: Please stand by, welcome ladies and gentlemen to the second quarter of 2003-4 Ernest Conference Call for organic Genesis Holings Eve.

Speaker Change: At this time, all participants are placed in listen-only mode. Please note that this conference call is being recorded and that the recording will be available on the company's website for replay shortly.

Speaker Change: Before we begin, I would like to remind everyone that our remarks today may contain forward-looking statements.

Speaker Change: Their base on the current expectations of management and involved inherent risk and uncertainties that did cause aquall assaults to differ materially from those indicated, including the risk and uncertainties described in the company's file list, with the security and exchange commission, including item one-eight risk partners of the company's most.

We send annual report and it subsequently filed quarterly reports.

You are cautioned not to place undue reliance upon any forward-looking statements which speaks 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, accept a required applicable security loss.

Speaker Change: This call will also include reference to certain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP.

Speaker Change: We generally refer to these as non-GOP financial measures. Reconciliations of those non-GOP financial measures to the most comparable measures calculated and presented in accordance with the GOP are available in the earnings press release on the Investor Relations portion of our website.

Speaker Change: I would now like to turn the call over at the Mr. Gary S. Gillheeney, senior, Organic Genesis Holdings President, Chief Executive Officer, and Chair of the Board, please go ahead, sir.

Gary Gillheeney: Thank you, Operator, and welcome everyone to Organogenesis Holdings' second quarter of fiscal year 2024 earnings conference call. I'm joined on the call today by Dave Francisco, our Chief Financial Officer. Let me start with a brief agenda of what we'll cover during our prepared remarks.

Speaker Change: Thank you, operator, and welcome everyone to Organo Genesis Holdings, second quarter of fiscal year, 2024 earnings conference goal.

Speaker Change: I'm joined on the call today by Dave Francisco or Chief Financial Officer.

Gary Gillheeney: I will begin with an overview of our second quarter revenue results and an update on our key operating and strategic developments in recent months. They will then provide you with an in-depth review of our second quarter financial results, our balance sheet and financial condition at quarter end, as well as our financial guidance for 2024, which we updated in our press release this afternoon. Then I'll share some closing thoughts before we open the call up for your questions.

Speaker Change: Let me start with a brief agenda of what we'll cover during our prepared remarks.

Speaker Change: I will begin with an overview of our second quarter revenue result and an update on our key operating and strategic development in recent months.

Speaker Change: David will then provide you with an in-depth review of our second quarter financial results, our balance sheet and financial condition at quarter end, as well as our financial guidance for 2024, which we updated in our press release this afternoon.

Gary Gillheeney: Beginning with a review of our revenue results for Q2, our sales results came in above the high end of the guidance range outlined on our first quarter call, reflecting strong execution and a continuation of the positive momentum and business trends in the first half of 2024. Our team's strong execution resulted in better-than-expected productivity by enhancing existing customer relationships, regaining lost accounts, and capturing new accounts. Despite disruption in the marketplace fueled by continued aggressive pricing strategies and, in certain circumstances, questionable competitive activities, we believe our second quarter results support our continued confidence that we focused our commercial team on the right strategy to navigate through this challenging operating environment.

David: Then I'll share some closing thoughts before we open the call up for your questions.

David: Beginning with the review of our revenue results for Q2, our sales results came in above the high end of the guidance range outlined on our first quarter call reflecting strong execution in a continuation of the positive momentum in business trends in the first half of 2024.

David: Our team's strong execution resulted in better than expected productivity by enhancing existing customer relationships, regaining lost accounts, and capturing new accounts.

David: and despite disruption in the marketplace fuel-by-continued aggressive pricing strategies and in certain circumstances.

David: questionable competitive activities. We believe our second quarter results support our continued confidence that we focused our commercial team on the right strategy to navigate through this challenging operating environment.

Gary Gillheeney: We are encouraged by the further evidence that our team is driving growth in our customer base by emphasizing a differentiated product in clinical validation. In addition to the strong commercial momentum in Q2, we were pleased to share updates on the substantial progress we have made on our Renew program in recent months. As announced in a separate press release this afternoon, where we announced additional clinical results from our first phase III trial, a prospective double-blinded multi-center sailing control parallel group clinical trial of 515 patients.

David: We are encouraged by the further evidence that our team is driving growth in our customer base by emphasizing a differentiated product in the clinical validation.

David: In addition to the strong commercial momentum in Q2, we were pleased to share updates on the substantial progress we have made on our Renew program in recent months.

David: As announced in a separate press release this afternoon, where we announced additional clinical results from our first phase III trial, a prospective double-blinded multi-center sailing control parallel group clinical trial of 515 patients.

Gary Gillheeney: The Phase III RCT results met the expectations for the study by meeting the primary endpoint of a statistically significant reduction in knee pain and the first secondary endpoint of statistically significant maintenance of function at six months. The statistical power of this study was based on these key efficacy points, meeting the pre-defined requirement supporting a BLA submission.

David: The Phase III RCT results met the expectations for the study by meeting the primary end point of a statistically significant reduction in knee pain and the first secondary end point of statistically significant maintenance of function at six months.

David: The statistical power of this study was based on these key efficacy points meeting the predefined requirements supporting a BLA submission.

Gary Gillheeney: We completed additional subgroup analysis which revealed that the most severe patients, known as KL4s, treated with Renu responded with a similar reduction in pain to those patients with moderate disease, the KL3 group, which is consistent with the top line results. These results are notable given that up to 15% of knee OA patients are classified as severe, and the end stage management of this disease in these patients is typically a total knee replacement when all other treatment options are exhausted.

David: We completed additional subgroup analysis which revealed that the most severe patients, known as KL4s, treated with Renu responded with similar reduction in pain to those patients with moderate disease, the KL3 group.

David: which is consistent with the top-line results. These results are notable given that up to 15% of knee OA patients are classified as severe, and the end-stage management of this disease in these patients is typically a total knee replacement when all other treatment options are exhausted.

Gary Gillheeney: By way of reminder, 30% of the enrolled patients in the first phase 3 trial were KL4. And if successful, Renu would be the only FDA-approved biologic intra-articular injection to improve pain symptoms even in the most severe cases of NeoA. Other sensitivity analyses found that subjects in the saline group took substantially more acetaminophen for breakthrough pain during the study, while subjects in the renewed group took less acetaminophen for breakthrough pain.

David: By way of reminder, 30% of the enrol patients in the first phase 3 trial were kale force.

David: And if successful renew would be the only FDA approved biologic interarticular injection to improve pain symptoms, even in the most severe case of NEOA.

David: Other sensitivity analysis found that subjects in the saline group took substantially more acetaminophen for breakthrough pain during the study, while subjects in the renewed group took less acetaminophen for breakthrough pain.

Gary Gillheeney: This result further supports the improved outcomes in Wal-Mac pain, seeing it after six months. During the second quarter, we requested a Type B meeting with the FDA to discuss the clinical data requirements for a biologic license application filing pursuant to the strategy we outlined on our recent earnings call. We completed the Type B meeting with the FDA on July 25th, and the FDA confirmed that a confirmatory trial will be required to support a BLA submission. We received positive feedback and guidance on our Chemistry, Manufacturing, and Controls, or CMCs, and the agencies affirmed the company's proposed analytical assay strategy and framework for process validation.

David: This result further supports the improved outcomes in WOMAC pain seen at six months.

David: During the second quarter, we requested a Type B meeting with the FDA to discuss the clinical data requirements for a biologic license application filing pursuant to the strategy we outlined on our recent earning calls.

David: We completed the type B meeting with the FDA on July 25th and the FDA confirmed that a confirmatory trial will be required to support a BLA submission.

David: We received positive feedback and guidance on our Chemistry, Manufacturing, and Controls, or CMCs, and the agencies affirmed the company's proposed analytical assay strategy and framework for process validation.

Gary Gillheeney: We are also pleased to announce that we completed enrollment in the second phase 3 multi-center randomized control trial evaluating the safety and efficacy of RENEW with 594 patients, significantly outperforming enrollment expectations and well ahead of our original expectations when we started enrolling this study last September. Following the positive Type B meeting with the FDA, we now have a clear road map and timeline for our renewed BLA submission, and we are on track to deliver the renewed BLA submission by the end of Q4 2025.

David: We were also pleased to announce that we completed enrollment in the second phase three multi-centred randomized control trial, evaluating the safety and efficacy of renew with 594 patients.

David: Significantly outperforming enrollment expectations and well ahead of our original expectations when we started enrolling this study last September.

David: Following the positive type B meeting with the FDA, we now have a clear roadmap and timeline for our renewed BLA submission, and we are on track to deliver the renewed BLA submission by the end of Q4 2025.

Gary Gillheeney: We continue to believe that, if approved, introducing RENEW to a large and growing pain management market represents a transformational opportunity for organogenesis. And, if approved, introducing Renu as an innovative pain management solution for the millions of patients suffering from Neo-A represents a significant new addressable market opportunity for organogenesis. Specifically, by 2027, an estimated 34.4 million Americans are expected to be affected by need. I'll see you all at the right time.

David: We continue to believe that if approved, introducing renewed to a large and growing pain management market, represents a transformational opportunity for organogenesis.

David: And if approved, introducing Renu as an innovative pain management solution for the millions of patients suffering from Neo-A represents a significant new addressable market opportunity for organogenesis.

David: Specifically, by 2027, an estimated 34.4 million Americans are expected to be affected by need, osteoarthritis.

Gary Gillheeney: While there is no known treatment that completely cures knee OA, it is possible to treat the disease symptoms with the goal of avoiding or delaying costly and invasive knee replacement surgery. We believe RENEW, if approved, will address an unmet clinical need for all patients suffering from moderate to severe symptomatic knee osteoarthritis. And we are particularly excited by the unique opportunity for renewed service to the most severe neoy patients who have limited non-surgical options, representing an estimated 5 million patients. Before turning the call over to Dave, I wanted to share a brief update on our recent progress in the areas of clinical validation and Medicare reimbursement and coverage.

David: While there is no known treatment that completely cures knee OA, it is possible to treat the disease symptoms with the goal of avoiding or delaying costly and invasive knee replacement surgery.

David: We believe RENEW, if approved, will address an unmet clinical need for all patients suffering from moderate to severe symptomatic knee osteoarthritis.

David: And we are particularly excited by the unique opportunity for Renew to serve the most severe knee OA patients who have limited non-surgical options, representing an estimated 5 million Americans.

Speaker Change: Before turning the call over the day, I wanted to share a brief update in our recent progress in the areas of clinical validation and Medicare reimbursement and coverage.

Gary Gillheeney: Pursuant to the strategy discussed in our last earnings call, we submitted our comment letter to the MACS in advance of the deadline in early June, reiterating our support for the MACS' evidence-based approach reflected in the draft LCD.

David: For soon to the strategy discussed in our last earnings call, we submitted our comment letter to the max in advance of the deadline in early June reiterating our support for the max evidence-based approach reflected in the draft LCDs.

Gary Gillheeney: As planned, our comment letter included the following existing clinical and real work, including our CTs, in support of our case that NuShield, PurApply AM, and PurApply XT should be included on the covered list. For NuShield, high-quality published data and evidence, including a recently published peer-reviewed RCT with 218 patients evaluating NuShield for the treatment of DFUs that was not considered in the draft LCGs, which we believe demonstrates that NuShield meets all the criteria for coverage.

David: As planned, our comment letter included the following existing clinical and real-world data, including RCTs, in support of our case that new SHIELD, PureApply AM, and PureApply XT should be included on the covered list.

David: For NuShield, a high-quality published data and evidence including a recently published peer-reviewed RCT.

David: with 218 patients evaluating NuShield for the treatment of DFUs that was not considered in the draft LCDs, which we believe demonstrates that NuShield meets all the criteria for coverage.

Gary Gillheeney: The results of this RCT were published on June 6th in the Journal of Wound Care and include compelling, statistically significant data from this large and rigorously designed prospective Level 1 RCT evaluating the effectiveness of NuShield for the treatment of complex DFUs in a challenging patient population. PurePly AM and XT, currently available high-quality public data from a 728 patient study supporting the coverage of PurePly AM and XT for the treatment of DFUs and VLU. We highlighted that PureFly AM is supported by a large body of data across five peer-reviewed publications showing effectiveness in treating DFUs, VLUs, and pressure injuries in a complex comorbid population.

David: The result of this RCT were published on June 6th in the Journal of Wunkair, and includes compelling.

David: Statistically significant data from this large and rigorously designed, respected level one RCT, evaluating the effectiveness of new shield for the treatment of complex DFUs and a challenging patient population.

David: For Pure Apply AM and XT, currently available high-quality published data from a 728 patient study supporting the coverage of Pure Apply AM and XT for the treatment of DFUs and VLUs.

David: We highlighted that PureFly AM is supported by a large body of data across five peer-reviewed publications showing effectiveness in treating DFUs, VLUs, and pressure injuries in a complex comorbid population.

Dave Francisco: This data included a comparative effectiveness study of 294 patients published in May of 2024, after the literature review for the draft LCDs was completed, which showed a non-inferiority to Theraskin, a product the draft LCD proposed to cover. We are making solid progress towards new RCTs, evaluating the use of PureApply AM for DFUs, which we discussed in our last earnings call. We received IRB approval, have identified sites, and are targeting first patient enrollment in the coming week.

David: This data included a comparative effectiveness study of 294 patients.

David: published in May of 2024 after the literature review for the draft LCDs was completed, which showed a non-inferiority to Theraskin, product the draft LCD proposed to cover.

Speaker Change: We are making solid progress towards new RCTs, evaluating the use of pure plot A and for DFUs that we discussed in our last earnings call.

David: We received IRB approval, have identified sites, and are targeting first patient enrollment in coming weeks.

Dave Francisco: We will continue our efforts to build compelling cases to present to the MACs to secure coverage for additional products later this year and into next year. We continue to believe these are material changes from CMS and the Max in the reimbursement of skin subsidies. If ultimately adopted, we'll be positive for the long-term health of the One Care mark. While there will be a period of transition and disruption if these sweeping changes are implemented, we believe that Organogenesis' strong brand equity, established commercial infrastructure, and plan to establish additional clinical validation to secure coverage of key commercialized products, which taken together represent a substantial competitive advantage for us that has us well-positioned to maximize the enormous opportunity to serve more patients with our With that, let me turn the call over to Dave.

David: We will continue our efforts to build compelling cases to present to the max to secure coverage for additional products related this year and into next year.

David: We continue to believe these material changes from CMS and the MACs in the reimbursement of skin substitutes, if ultimately adopted, will be positive for the long-term health of the wound care market.

David: While there will be a period of transition and disruption if these sweeping changes are implemented, we believe that Organogenesis' strong brand equity, established commercial infrastructure, and plan to establish additional clinical validation

Dave Francisco: to secure coverage of key commercialized products which, taken together, represent a substantial competitive advantage for us that has us well-positioned to maximize the enormous opportunity to serve more patients in our highly innovative and efficacious products. With that, let me turn the call over to Dave.

Dave Francisco: Thanks, Gary. I'll begin with a review of our second quarter financial results, and unless otherwise specified, all growth rates referenced during my pair of remarks are on a year's basis. Net revenue for the second quarter was 130.2 million, up 11%. As Gary mentioned, these results were ahead of expectations we provided in our Q1 call, which called for total second quarter revenue in the range of 120 million to 125 million. Reflecting the continuing momentum in the business during the second quarter.

Dave Francisco: Thanks, Gary. I'll begin with a review of our second quarter financial results and unless otherwise specified, all growth rates referenced during my prepared remarks are on a year-over-year basis.

Dave Francisco: Net revenue for the second quarter was $130.2 million, up 11%.

Dave Francisco: As Gary mentioned, these results were ahead of expectations we provided on our Q1 call, which calls for total second quarter revenue in the range of 120 million to 125 million. Reflecting continues from momentum in the business during the second quarter.

Dave Francisco: Our advanced wound care net revenue for the second quarter was $123.2 million, up 12%. The net revenue from surgical and sports medicine products for the second quarter was $7 million, down 3%. Gross profit for the second quarter was $101 million, or 77.6% of net revenue, compared to 77.6% last year. Operating expenses for the second quarter were $114.9 million, compared to $81.3 million last year, an increase of $33.7 million, or 41%. Note that second quarter operating expenses included approximately $22.8 million of non-cash impairment of building and unfinished construction improvement work previously capitalized, as well as the write-down of costs related to the development of internal use software.

Speaker Change: Our advanced wound care net revenue for the second quarter was $123.2 million, up 12%. The net revenue from surgical and sports medicine products for the second quarter was $7 million, down 3%.

David: Gross profit for the second quarter was $101 million, or 77.6% of net revenue, compared to 77.6% last year.

David: Operating expenses for the second quarter were $114.9 million, compared to $81.3 million last year, an increase of $33.7 million, or 41%.

Dave Francisco: Note that second quarter operating expenses included approximately $22.8 million of non-cash impairment of building and unfinished construction improvement work previously capitalized, as well as the write-down of costs related to the development of internal use software.

Dave Francisco: Excluding the aforementioned non-cash charges and approximately $0.8 million of non-cash amortization expense, our second quarter operating expenses increased $11.3 million, or 14%.

Dave Francisco: Excluding the aforementioned non-cash charges and approximately $0.8 million of non-cash amortization expenses, our second quarter operating expenses increased $11.3 million, or 14%. The year-over-year change in operating expenses, excluding these non-cash items, was driven by a 6.6 million, or 10% increase in selling, general, and administrative expenses, and a 4.6 million, or 43% increase in research and development costs compared The increase in research and development expenses was primarily due to expenses associated with clinical research and trials primarily related to the renewal and support of our BLAS.

Dave Francisco: The year-over-year change in operating expenses, excluding these non-cash items, was driven by a 6.6 million, or 10% increase in selling, general, and administrative expenses, and a 4.6 million, or 43% increase in research and development costs, compared to the prior year period.

Dave Francisco: The increase in research and development expenses was primarily due to expenses associated with clinical research and trials, primarily related to renew and support of our BLA efforts.

Dave Francisco: Operating loss for the second quarter was 13.9 million compared to operating income of 9.7 million last year, a decrease of 23.6 million. Excluding non-cash impairment charges, write-downs, restructuring, and amortization expenses in both periods, our non-GAAP poverty income was $9.7 million, or 7.5% of sales, compared to $10.8 million, or 9.2% of sales last month. Net loss for the second quarter was $17 million compared to net income of $5.3 million last year, a decrease of $22.4 million.

Dave Francisco: Operating loss for the second quarter was 13.9 million compared to operating income of 9.7 million last year. The decrease of 23.6 million.

Dave Francisco: Excluding non-cash impairment charges, write downs, restructuring and amortization expenses in both periods, our non-GAAP poverty income was $9.7 million, or 7.5% of sales, compared to $10.8 million, or 9.2% of sales last year.

Dave Francisco: Net loss for the second quarter was $17 million compared to net income of $5.3 million last year, a decrease of $22.4 million.

Dave Francisco: Adjusted net income for the second quarter was $0.2 million compared to $6.1 million last year, a decrease in adjusted net loss of $5.9 million. As a reminder, adjusted net income is defined as gap net income, adjusted to exclude the effect of amortization, restructuring charges, write-downs, capitalized software costs, and impairment of building and improvements and resulting income taxes on these items. Adjusted Eva Dog for the second quarter was 15.6 million, or 12% of net revenue compared to 15.4 million, or 13% of net revenue last year.

Dave Francisco: Adjusting that income for the second quarter was 0.2 million compared to 6.1 million last year, a decrease in adjustedness loss at 5.9 million.

Dave Francisco: As a reminder, adjusted and income is defined as gap net income, adjusted to exclude the effective amortization, restructuring charges, right down to capitalize, software costs and impairment of building an improvement and resulting income taxes on these items.

Dave Francisco: Adjusted Eva Dodd for the second quarter was 15.6 million or 12% of net revenue compared to 15.4 million or 13% of net revenue last year.

Dave Francisco: We've provided a full reconciliation of our adjusted net income and adjusted EBITDA results in our earnings professionals. Turning now to the balance sheet, as of June 30th, 2024, the company had $90.5 million in cash and Restricted Cash and 63.5 million in debt. Compared to 104.3 million in cash and cash equivalents in restricted cash and 66.2 million in debt obligations as of December 31, 2020, we also have up to $125 million of available borrowings on a revolving credit facility as of June 30, 2024.

Dave Francisco: We've provided a full reconciliation of our adjusted net income and adjusted EBITDA results and our earnings press release.

Dave Francisco: Turning out of the balance sheet as of June 30, 2024, the company had 90.5 million in cash.

Dave Francisco: and Restricted Cash, and 63.5 million in debt obligations.

Dave Francisco: compared to $104.3 million in cash, cash equivalents in restricted cash, and $66.2 million in debt obligations as of December 31, 2023.

Dave Francisco: We also have up to $125 million of available borrowings on a revolving credit facility as of June 30, 2024.

Gary Gillheeney: Turning to a review of our 2024 financial guidance. Despite the strong, continued momentum that we are experiencing in the business, we are reaffirming our prior revenue guidance that we referenced in our press release this afternoon to account for the substantial near-term disruption in the market that we expect from the competition. For the 12 months ending December 31, 2024, the company continues to expect net revenue of between $445 million and $470 million, representing a year-over-year increase in the range of 3% to 9% as compared to net revenue of $433.1 million for the year ended December 31, 2024.

Gary Gillheeney: Turning to a review of our 2024 financial guidance.

Gary Gillheeney: Despite the strong, continued momentum that we are experiencing in the business, we are reaffirming our prior revenue guidance that we referenced in our press release this afternoon to account for the potential near-term disruption in the market that we expect from the LCDs.

Speaker Change: Thank you for watching this video, and I'll see you in the next video.

Gary Gillheeney: for the 12 months ending December 31st, 2024.

Gary Gillheeney: The company continues to expect net revenue of between $445 million and $470 million, representing a year-over-year increase in the range of 3% to 9%, as it compared to net revenue of $433.1 million for the year ended December 31, 2023.

Gary Gillheeney: The 2024 net revenue guidance assumes net revenue from advanced windcare products of between 450 million and 435 million, representing a year-over-year increase in the range of 2 to 7% and net revenue from surgical and sports medicine products of between 30 million and 35 million, representing a year-over-year increase in the range of 9% to 27%. For modeling purposes, we expect third-quarter revenue to be in the range of approximately $105 million to $113 million.

Gary Gillheeney: The 2024 Net Revenue Guidance assumes net revenue from advanced wound care products of between $415 million and $435 million, representing a year-over-year increase in the range of 2 to 7 percent, and net revenue from

Gary Gillheeney: surgical and sports medicine products between 30 million and 35 million representing a year-over-year increase in the range of 9% to 27%.

Gary Gillheeney: For modeling purposes, we expect third-quarter revenue to be in the range of approximately $105 million to $113 million.

Gary Gillheeney: We have updated our GAAP profitability and EBITDA guidance for 2024 to reflect the $22.8 million of non-cash impairment charges and write-down costs and related tax impacts on these items recognized in the second quarter. Specifically, with now respect to gap net loss in the range of $27 million. NetLoss, to a $12 million net loss, head to a range of gap net loss of $10.6 million to a gap net income of $4.6 We also expect, and have a down range of a net loss of $17 million, and a positive EBITDA of $2 million, compared to a range of EBITDA generation of $5.8 million to $25 million previously.

Gary Gillheeney: We have updated our GAAP Profitability and EBITDA guidance for 2024 to reflect the $22.8 million of non-cash impairment charges and write-down costs and related tax impacts on these items recognized in the second quarter.

Gary Gillheeney: Specifically, with now respect, Gaff Neff Laws in the range of 27 million.

Gary Gillheeney: That's lost to a 12 million on that loss.

Gary Gillheeney: compared to a range of GAAP net loss of $10.6 million to a GAAP net income of $4.6 million previously. We also expect EBITDA on the range of a net loss of $17 million to positive EBITDA of $2 million compared to a range of EBITDA generation of $5.8 million to $25 million previously.

Gary Gillheeney: Our Adjusted Net Income Loss guidance remains unchanged. Specifically, we continue to expect Adjusted Net Income Loss in the range of $8 million to Adjusted Net Income of $7 million, and Adjusted EBITDA in the range of $16 million to $35 million. All other non-gap modeling considerations outlined in our fourth quarter, 2023 call have remained largely unchanged. With that, I'll turn the call back over to Gary for some closing remarks. Thanks, Dave.

Gary Gillheeney: Our adjusted net income loss guidance remains unchanged. Specifically, we continue to expect adjusted net income loss in the range of $8 million to adjusted net income of $7 million, and adjusted EBITDA in the range of $16 million to $35 million.

Gary Gillheeney: All other non-GAP modeling considerations outlined in our fourth quarter 2023 call remain largely unchanged.

Operator: Thanks Dave. In closing, our second quarter results reflect strong execution from our commercial team amidst a challenging operating environment. We strongly believe the material changes proposed by CMS and the Max and reimbursement of skin substitutes will be a positive step for the long-term health of the one who cares more. We have a strategy to leverage our existing strong clinical and real-world data, including RCTs, and have already initiated a new RCT to add additional clinical evidence.

Operator: With that, I'll turn the call back over to Gary for some closing remarks.

Operator: Thanks Dave. In closing, our second quarter results reflect strong execution from our commercial team amidst the challenging operating environment.

Operator: We strongly believe the material changes proposed by CMS and the Max and reimbursement of skin substitutes. The ultimately adopted will be a positive step for the long-term health of the one care market.

Operator: We have a strategy to leverage our existing strong clinical and real-world data, including RCTs, and have already initiated a new RCT to secure additional clinical evidence, and we expect to secure coverage for additional products on the covered list later this year and early into next year.

Speaker Change: Well, there will be a period of transition and disruption if these sweeping changes are implemented. We believe that organogenesis is strong brand equity

Operator: established commercial infrastructure and a plan to establish additional political validation.

Operator: to secure coverage of key commercialized product, which taken together to represent a substantial competitive advantage for us that has as well position to maximize the enormous opportunity to serve more patients with our highly innovative and efficacious products.

Operator: And finally, we are excited by the continued progress in our RENEW program and have a clear target for submission of our BLA by the end of Q4 of 2025. If approved, producing a new as an innovative pain management solution for the millions of patients suffering from NEOA represents a truly transformational opportunity for organogenesis and, importantly, one that is consistent with our mission to provide integrated healing solutions that substantially improve outcomes while lowering the overall cost of care.

Operator: And finally, we are excited by the continued progress in our RENEW program and have a clear target for submission of our BLA by the end of Q4 of 2025.

Operator: If approved, Introducing RENEW as an innovative pain management solution for the millions of patients suffering from Neo-A represents a truly transformational opportunity for organogenesis and importantly one that is consistent with our mission

Operator: to provide integrated healing solutions that substantially improve outcomes while lowering the overall cost of care.

Operator: I would also like to acknowledge the continued hard work and dedication to our mission demonstrated by our employees throughout the organization. Our strong performance and progress towards our key strategic initiatives over the first half of 2024 are the result of their efforts. And with that, I'll turn the call back over to you, Operator, to open the call up for questions.

Operator: I would also like to acknowledge the continued hard work and dedication to our mission demonstrated by our employees throughout the organization. Our strong performance and progress towards our key strategic initiative over the first half of 2024 is the result of their efforts.

Operator: and with that I'll turn the call back over to you operator to open the call of the questions.

Operator: Thank you, sir. If you'd like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach your equipment.

Speaker Change: Thank you, sir.

Operator: If you'd like to ask a question, may signal by pressing star one on your telephone keypad. If you're using a speaker phone, please make sure your music function is turned off to allow your signal to reach your equipment.

Operator: We do ask that you limit your question to one question and one follow-up. If you would like to ask additional questions, we invite you to add yourself to the queue again by pressing star one. And our first question will come from Ryan Zimmerman from BTIG. Please go ahead. Hey guys.

Operator: We do ask that you limit your questions to one question and one follow-up.

Operator: If you would like to ask additional questions, we invite you to add yourself to the queue again by pressing star 1.

Operator: And our first question will come from Ryan Zimmerman from BTIG. Please go ahead.

Ryan Zimmerman: Hey guys, good afternoon, and congratulations on the quarter and the progress with Renew. Maybe I want to start with guidance for a second, Gary and Dave, and just talk about, you know, you've had two really strong quarters to start the year. I know there are a lot of balls in the air with the LCDs. Can you talk about you, and you kind of reference Gary a little bit in terms of some of the dynamics in the market, but can you talk about kind of what you've seen thus far through July, maybe what's given you a little pause, particularly as I think about your third quarter guidance relative to our expectations?

Ryan Zimmerman: Hey guys, good afternoon and congrats on the quarter and the progress with Renew.

Ryan Zimmerman: Maybe I want to start with guidance for a second, Gary and Dave, and just talk about, you know, you've had two really strong quarters to start the year. I know there's a lot of balls in the air with the LCDs.

Ryan Zimmerman: Can you talk about, and you kind of reference to Gary a little bit in terms of some of the dynamics in the market. Can you talk about kind of what you've seen thus far through July, maybe what's given you a little pause, particularly as I think about your third quarter guidance relative to our expectation.

Gary Gillheeney: So I'll talk a little bit about the environment. So, you know, we're still clearly seeing a positive trend in our business. We've seen it throughout this second quarter. We've increased the number of accounts that we have sequentially. We've actually ended up with more sales representatives in Q2 than in Q1. And we're continuing to see additional accounts coming back that we had lost as of last year when some of the LCDs that eventually were removed came into play.

Gary Gillheeney: So I'll talk a little bit about the environment. So we're clearly seeing still a positive trend in our business. We've seen it throughout the second quarter. We've increased the number of accounts that we have. It's a quenchily. We've actually ended up with...

Gary Gillheeney: and more sales representatives.

Gary Gillheeney: in Q2 and then in Q1, and we're continuing to see additional accounts, you know, coming back that we had lost as of last year when some of the LCDs that eventually were removed came into play.

Gary Gillheeney: So we see that trend keep moving forward. We also see a lot of the competitive pricing challenges that I think everyone is seeing. We've been fortunate to continue to grow through that, but that competitive pressure is still there. At times, it seems like it's increasing instead of decreasing. So those pressures are still there, but we're still seeing some positive trends in our base business. As for guidance, I think, as it relates to all of the uncertainty, you know, with the LCDs coming out and the continuing escalation of some of the competitive practices and pricing. Every day, it seems like there's another product on the market with a high price. You know, we think that it's going to continue until it stops, which could potentially be with the LCDs or some other action. That's, you know, that's in our thoughts when we look at our guidance.

Gary Gillheeney: So, you know, we see that trend keep moving forward. We also see a lot of the competitive pricing challenges that I think everyone is seeing. We've been fortunate too.

Gary Gillheeney: to continue to grow through that, but that competitive pressure is still there.

Gary Gillheeney: And at times, it seems like it's increasing instead of decreasing. So those pressures are still there. But, you know, we're still seeing some positive trends in our base business.

Gary Gillheeney: As it relates to guidance, I think, as it relates to all of the uncertainty, you know, with the LCDs coming out and the continuing escalation of some of the competitive practices and pricing, every day seems like there's another product on the market with a high price.

Gary Gillheeney: You know, we we think that that's going to continue until it stops, which would.

Gary Gillheeney: potentially be with the LCDs or some other actions, but...

Dave Francisco: Yeah, so Ryan, great question. I mean, obviously, we established that guidance early in the year. It was prior to the proposed LCD that came out in late April. We have beat both quarters, and we feel great about that, which, you know, gives us a high level of confidence in delivering that low end to the range. But, you know, to Gary's point, the dynamics are still challenging, and there are a lot of unknowns about when customer buying behavior might change.

Gary Gillheeney: That's in our thoughts when we look at our guidance.

Dave Francisco: [inaudible]

Dave Francisco: Yeah, so Ryan great question. I mean obviously we established that guidance early in the year

Dave Francisco: it was prior to the proposed LCD that came out in late April. We have beat both quarters and we feel great about that which gives us a high level of confidence in delivering that low end to the range. But to Gary's point that dynamics are still challenging and there's a lot of unknowns about when the customer buying behavior might change.

Speaker Change: So you can see, you know, obviously we gave guidance for Q3.

Speaker Change: which was a pretty wide range and then that implied guidance for Q4 which was also a even wider range. So we still think it's biased towards Q4 but there may be some spillage into Q3 as well which is what we're just a little bit concerned about.

Speaker Change: As far as July is concerned, I mean, we're seeing the normal summer seasonality. But we expect to move away from that as long as the customer buying behavior doesn't change dramatically in the back half of this quarter.

Ryan Zimmerman: Okay, and just a quick follow-up on that, and then I have some questions on Renew. Any expected timelines for updates to the LCD? I know I've asked you this before, and it's hard to, you know, pin the max down specifically, but anything that we should be on the lookout for from a timing perspective on those LCDs?

Ryan Zimmerman: Okay, and just a quick follow-up on that and I have some questions on Renew.

Ryan Zimmerman: Any expected timelines for updates to the LCD, I know I've asked you this before and it's hard to, you know, pin the max down specifically, but anything that we should be on the lookout for from a timing perspective on those LCDs.

Gary Gillheeney: I mean, it's our opinion. Obviously, we don't know, as you said, that something will happen that we think those LCDs will come effective in the last quarter and really affect Q1 of next year. We just see the cost still rising substantially out there in the system. I mean, almost doubling from year to year, and the physician fee schedule came out. And at this point, really nothing on the payment side that would lead you to believe it's going to control those costs. Furthermore, there was no bundling recommended in that proposal.

Gary Gillheeney: I mean, it's our opinion, obviously we don't know, as you said, that, you know, something will happen that we think those LCDs will will.

Gary Gillheeney: become effective in the last quarter and really affecting Q1 of next year. We just see the cost still rising substantially out there in the system.

Gary Gillheeney: almost doubling from year to year, and the physical and physical schedule, you know, came out and at this point.

Speaker Change: Good evening.

Gary Gillheeney: is really nothing on the payment side that would lead you to believe it's going to control those costs. It was no bundling, recommended.

Gary Gillheeney: So the combination of escalated costs and nothing really happening in the physician fee schedule, you know, we just believe something will drop from an LCD perspective sometime in Q4 and be effective on January 1. But those are the factors that we think about. And there does seem to be a lot of activity surrounding these LCDs.

Gary Gillheeney: in that proposal. So the combination of escalated costs, nothing really happening in the physician fees schedule. You know, we just believe something will drop from an LCD perspective sometime in Q4.

Gary Gillheeney: and be effective on January 1. But those are the factors that we think about. And there does seem to be a lot of activity surrounding these LCDs.

Ryan Zimmerman: Yeah, okay. Very helpful, Gary and Dave. Just turning to Renew now, you know, it's good to see we have a clear path for Renew. I'm wondering if, I don't know if Patrick's available, but maybe Gary you want to speak to this, but just talk to us about kind of the nuances or the differences between your phase three study and the phase three confirmatory study. Just remind investors if there's anything that you think could differ in those studies.

Ryan Zimmerman: Yeah, okay, very helpful Gary and Dave, this turn into renew now, you know, it's good to see see we have a clear pass for renew.

Ryan Zimmerman: I wonder if it's, I don't know, Patrick's available, but maybe Gary, you want to speak to this, but

Ryan Zimmerman: Just talk to us about kind of the nuances or the differences between your phase three study and the phase three conformatory study, just remind investors if there's anything.

Ryan Zimmerman: And then the second question to all of this is, what room do you have when I think about the timelines to submit for BLA? What room do you have to potentially adjust your timelines, if at all, maybe you're able to get the data and the follow-up done as quickly as possible, and then we could see something, you know, a little earlier than fourth quarter 25. Thank you.

Speaker Change: that you think can differ in those studies?

Ryan Zimmerman: And then the second question to all of this is, what room do you have, when I think about the timelines, to submit for BLA?

Ryan Zimmerman: What room do you have to potentially adjust your timelines if at all, maybe you're able to get the data and the follow-up's done is quickly as, you know, possible and then we could see something, you know, a little maybe earlier than fourth quarter 25. Thank you.

Gary Gillheeney: Sure. Regarding the two studies, I mean, the second study is larger, so it has more power in that study, and we've made some operational adjustments in that study that we think will ultimately lead to better performance in the second study. So we feel pretty comfortable about the obviously completed studies from the perspective of all of the patients, you know, have been enrolled. And, you know, we expect the last patient, last visit, and next June, June 25. So that gives us the opportunity to aggressively move forward with a filing. So it is possible, though, I think, you know.

Gary Gillheeney: Sure, so regarding the two studies, I mean the second study is larger so it's it's

Gary Gillheeney: It has more power in that study and...

Gary Gillheeney: We've made some operational adjustments in that study that we think will ultimately lead to better performance in the second study. So, we feel pretty comfortable about, obviously, the studies.

Gary Gillheeney: already completed from the perspective of all of the patients, you know, have been enrolled.

Gary Gillheeney: and, you know, we expect the last patient last visit and next June, June of 25. So that gives us the opportunity to aggressively move forward for a filing. So it is possible, though, I think, you know.

Gary Gillheeney: I think Q4 of 2025 is a reasonable time period. We did ask the FDA and our meeting participants to consider the six-month data. They have not responded. We'll know when we get the form for the minutes of that meeting, which comes 30 days after our meeting on the 25th. So though we have no indication at all that that would be accepted, that's a potential change that could move it forward a couple of quarters for sure. But as of this point, we're assuming that we will complete the trial and file in Q4 2024.

Gary Gillheeney: I think Q4 of 2025 is a reasonable time period.

Gary Gillheeney: We did ask the FDA in our meeting to consider the six-month data. They have not responded. We'll know when we get the formal minutes of that meeting, which come 30 days after our meeting on the 25th. So, though we have no indication at all that that, you know...

Gary Gillheeney: know, would be accepted, that's a potential change that could move it forward a couple of quarters for sure. But as of this point, we're assuming that we will complete the trial and file in Q4 of 2024.

Gary Gillheeney: 2025. Thank you, Gary. No, 25.

Gary Gillheeney: 0.25. Thank you, Gary. No, 25. Thank you. Thank you, David. Thanks for taking the question.

Ryan Zimmerman: Thank you. Thank you. Thanks for taking the question.

Ryan Zimmerman: Thanks, Ryan.

Speaker Change: Our next question comes from the line of Brooks O'Neill with Lake Strip. Please go ahead.

Operator: Our next question comes from the line of Brooks O'Neill with Lake Strip. Please go ahead.

Brooks O'Neill: Good afternoon, guys. Thanks for taking my questions. I guess I'd like to start by saying that as I talked to various players in the industry, some have expressed the view that the reason for the elevated competitive activity is... some suggestions that the back, Might Again, fail to implement the LCD.

Brooks O'Neill: Good afternoon, guys. Thanks for taking my questions. I guess I'd like to start by

Brooks O'Neill: saying that as I talked to various players in the industry, some have expressed the view that the reason for the elevated competitive activity is

Brooks O'Neill: is some suggestion that did Max.

Brooks O'Neill: Might again

Brooks O'Neill: Hey, what's your opinion on that? Well, let's leave it at that. How do you respond to that suggestion?

Speaker Change: failed to implement the LCDs.

A: A, what's your opinion on that?

Brooks O'Neill: and

Brooks O'Neill: Well, let's leave with that. How do you respond to that suggestion?

Gary Gillheeney: Well, I think based on where we see the cost, and those costs are obviously public, that they've really increased dramatically. And since there's been no change to the position fee schedule unless something happens between now and the end of the year, but not likely if it wasn't included in the proposed rule, it would be very difficult to implement something that's not in that proposed rule. So there's no payment solution, at least for another year and a half.

Gary Gillheeney: Well, I think based on where we see the costs, and those costs are obviously public, that they've really increased dramatically.

Gary Gillheeney: And since there's been no change to the position fee schedule unless something happens between now and the end of the year, but not likely if it wasn't included in the proposed rule, it would be very difficult to implement something that's not in that proposed rule. So there's no payment solution.

Gary Gillheeney: So that leaves me to believe that the LCDs may not be in their current form, but in some form, they will be implemented to try to control the cost. You know, right now, in the skin substitute market. So it may not be in the form that it is. There's been a number of comments from a number of companies, including us, that we think it needs to make, you know, they need to make some changes to really improve it where it can be actionable and effective. So it might change, but it's our opinion that something needs to be put in place in the eyes of the MACs and CMS, and ultimately, it will.

Gary Gillheeney: at least for another year and a half.

Gary Gillheeney: So that leads me to believe that the LCDs, maybe not in their current form, but in some form will be implemented to try to control the cost.

Gary Gillheeney: right now in the skin substitute market.

Gary Gillheeney: It may not be in the form that it is, there's been a number of comments from a number of companies, us as well, that we think it needs to make, you know, they need to make some changes to really improve it where it can be actionable and effective.

Gary Gillheeney: So it might change, but it's our opinion that something needs to be put in place in the eyes of the MACs and CMS and ultimately it will.

Gary Gillheeney: makes sense to me. You presented to us some compelling evidence that several of your products have the clinical evidence that... The Mac seemed to be suggesting it's necessary for reimbursement in the position, office setting. Do you have any sense that they hear your case and they understand that you actually do have a lot of well-conceived clinical evidence for those products? Or is it a silent response on their end?

Gary Gillheeney: It makes sense to me. You presented to us some compelling evidence that several of your products have the clinical evidence that the MAC seems to be suggesting is necessary for...

Gary Gillheeney: reimbursement in the physician office setting. Do you have any sense that they hear your case and they understand that you actually do have a lot of well-conceived clinical evidence for those products or is it a...

Gary Gillheeney: Well, as I mentioned, for NuShield and Puriply AAM and XT, we have a substantial amount of data, some of which the MACs did not have the opportunity to review before they issued their proposed LCDs. So we've submitted those studies for NuShield and Puriply AAM and XT. One is an RCT, and the others are retrospective studies. One for Puriply is actually a comparative effectiveness study against a product that's already approved on the list of 15. So we think these are large, robust data sets that are compelling enough that they should be included in the LCD if and when it comes out.

Speaker Change: a silent response on their, on their end.

Gary Gillheeney: Lynn.

Gary Gillheeney: Well, as I mentioned, for New Shield in PurePly, AM.

Gary Gillheeney: and XT, we have a substantial amount of data, some of which the max did not have the opportunity to review before they issued their proposed LCDs.

Gary Gillheeney: So we've submitted those studies for New Shield and PurePlatm and XT. One is an RCT and the others are retrospective studies.

Gary Gillheeney: One for PureApply that actually is a comparative effectiveness study against a product that's already approved on the list of 15.

Gary Gillheeney: So, we think these are large, robust data sets that they are compelling enough that they should be included in the LCD if and when it comes out.

Brooks O'Neill: Makes sense to me. One last one. Thanks for taking my questions.

Brooks O'Neill: It makes sense to me. One last one. Thanks for taking my questions. I saw after the close, I think you filed a missed shelf offering.

Speaker Change: 250 million dollars in curious.

Speaker Change: If you have any comment on whether that's just sort of normal good governance or do you think there's either an appetite on the part of selling shareholders or the company to actually go out to the market and raise some additional capital.

Brooks O'Neill: I saw after the close, I think you filed a missed shelf offering of $250 million. I'm curious, do you have any comment on whether that's just sort of normal, good governance? Or do you think there's either an appetite on the part of selling shareholders or the company to actually go out to the market and raise some additional capital?

Dave Francisco: Yeah, Brooks, thanks. This is Dave.

Dave Francisco: Yeah, Brooks, thanks for today. Yeah, you're absolutely right. I mean, it's just good corporate governance. You know, it provides a tremendous financial flexibility for us.

Dave Francisco: Yeah, you're absolutely right. I mean, it's just good corporate governance. It provides a tremendous amount of financial flexibility for us, and gives the opportunity for certain individuals to sell their shares in a secondary market, if that was something that they chose to do. And this is something that we have not had in place since the fall of 2019.

Dave Francisco: gives the opportunity for certain individuals to, you know, sell their shares in a secondary if that was something that they

Brooks O'Neill: So it really just was an opportunity to get this done. And again, to your point, just good corporate governance. And, you know, I might add, too, as you know, from a liquidity standpoint, as of today, we have over 90 million in cash, 125 million on the revolver, and then, you know, a fair amount of working capital available to us as well. So, um, and that's again to your point, it's just good corporate governance and wanted to get it done.

Brooks O'Neill: chose to do, and this is something that we have not had in place since.

Brooks O'Neill: the fall of 2019 so it really just was an opportunity to get this done and again to your point just good.

Brooks O'Neill: Corporate Governance, and I might add, too, as you know, you know, from a liquidity standpoint, as of today, we have over 90 million a cash, 125 million on the revolver, and then, you know, a fair amount of working capital available to us as well. So, you know, that's, again, to your point, it's just a good corporate governance and wanted to get it done.

Brooks O'Neill: Makes sense. Thank you very much. Thank you, thank you. Again.

Brooks O'Neill: It makes sense. Thank you very much.

Speaker Change: Thank you. Thank you.

Speaker Change: Again, if you would like to ask a question, please press star 1 on your telephone keypad and wait for your name to be announced. Our next question comes from the line of...

Speaker Change: Again, please press star one on your telephone keypad and wait for your name to be announced.

Brooks O'Neill: [inaudible]

Speaker Change: and many more. Thank you. Thank you.

Speaker Change: Our next question comes from the line of two renewries from Morgan Stanley, please go ahead.

Drew Ranieri: Hi guys, thanks for taking the questions. Maybe just to start, Gary, I was just flipping through the queue, and you mentioned this briefly in one of the earlier questions, but in terms of the sales force, it looks like you added maybe a handful of reps sequentially. And it's really the first time we've seen you be net adders rather than subtractors for a number of quarters. So maybe just talk to us about the rep strategy here. I mean, it sounds and looks like rep productivity itself is increasing, but just talk to us more about the sales force side, and what you're envisioning for the remainder of 2024.

Drew Ranieri: Hi guys, thanks for taking the questions. Maybe just to start, Gary, I was just looking through the queue and you mentioned this briefly to one of the earlier questions, but in terms of the sales force, it looks like you added maybe a handful of reps sequentially. And it's really the first time we've seen you be net adders than subtractors for a number of quarters. So maybe just talk to us about the rep strategy here. I mean, it sounds and it looks like rep productivity itself is increasing, but just talk to us more about the sales force side, what you're envisioning for the remainder of 2024.

Gary Gillheeney: Sure, so you're correct. We did add representatives during the quarter, and as I mentioned earlier, we have been successful in gaining our accounts back, so we did have sequential account growth, and our depth in the accounts is getting deeper. So our productivity, even with adding the representatives, which takes a bit of time for them to be completely productive, was up 20%. So, you know, that continued growth of accounts and depth in the accounts led us to aggressively add representatives.

Gary Gillheeney: Sure, so you're correct. We did add representatives during the quarter. As I mentioned earlier, we have been successful in gaining our accounts back. We did have sequential account growth.

Gary Gillheeney: and our depth in the accounts is getting deeper. So our productivity, even with adding the representatives, which takes a bit of time for them to be completely productive, was up 20%.

Gary Gillheeney: So, you know, that continued growth of accounts in depth in the accounts led us to aggressively, you know, add representatives. I think our goal at the end of the years to have about 306 are so representatives.

Gary Gillheeney: I think our goal at the end of the year is to have about 306 or so representatives based on the trends that we're seeing. That's our goal, and we'll add them, you know, obviously throughout the year. Our goal is to, you know, continue as we gain those accounts back and, and we're gaining new accounts, and when the LCDs eventually hit and the market is available, more market is available because fewer products are on the market, we want to be able to cover that additional market share as well.

Gary Gillheeney: Based on the trends that we're seeing, that's our goal. And we'll add them, you know, obviously throughout the year.

Gary Gillheeney: Our goal is to, you know, continue as we gain those accounts back and we're gaining new accounts.

Gary Gillheeney: and when the LCDs eventually hit and the market is available, more market is available because fewer products around the market we want to be able to cover that additional market share as well.

Drew Ranieri: You took my follow-up question there, Gary, but I appreciate the answers.

Drew Ranieri: You took my follow-up question there, Gary, but I appreciate the answers. Thanks.

Operator: Our next question comes from the line of Ross Osborn with Cantor Fitzgerald. Please go ahead.

Ross Osborn: Thank you.

Speaker Change: Our next question comes to the line of Ross Osborn with Cantor Fitzgerald. Please go ahead.

Matthew Park: Hi guys, this is Matthew Park on for Ross. Congratulations on the strong quarter and thanks for taking the questions. If you want to start off by getting a better understanding of timelines for the RCTs, would you mind just walking us through the process to get a new shield back on the approved list following the completion of these studies?

Matthew Park: Hi guys, this is Matthew Park on for Ross. Congrats on the strong quarter and thanks for taking the questions. If you want to start off by getting a better understanding of timelines with the RCTs, do you mind just walking us through the process to get Paraply and NuShield back on the approved list following the completion of these studies?

Gary Gillheeney: Sure, so the PureApply and New Shield studies are complete. They are done now.

Gary Gillheeney: We are running an additional study, an RCT for Pure Applied AM. That'll take about a year. Our objective is to have that, you know, that RCT completed within a year, but we do have studies both for NuShield, which is an RCT that's done, and it's published, and the PureApply AM and XT are retrospective studies. Those are done and complete, and we provided those as well, but a new study for Pure Applied Answered Question AM is about one year from today.

Gary Gillheeney: Sure, so pure apply and new shield studies are complete. They are done now. We are running an additional study in our CT for pure apply and that'll take about a year.

Gary Gillheeney: Our objective is to have that, you know, that RCT completed within a year. But we do have...

Gary Gillheeney: studies both for NuShield, which is an RCT that's done, it's published.

Gary Gillheeney: and the PURE-APPLY-AM and XT are retrospective studies. Those are done in complete.

Gary Gillheeney: And we've provided those as well. But a new study for PureApply to answer your question, AM, is about one year from today.

Matthew Park: Got it. That makes sense. Thanks for clarifying. And then, I guess, just one more for me. I guess, turning to the surgical and sports medicine side, I obviously understand it's a much smaller piece of the pie, but can you just walk us through some of the drivers for hitting the low and high end of guidance here and any plans to introduce new products for this side of the business? Thanks. Yeah, sure.

Matthew Park: Got it. That makes sense. Thanks for clarifying. And then I guess just one more from me. I guess turning to the surgical and sports medicine side.

Dave Francisco: Yeah, sure, that's exactly what we did as the expectation was that the back half would be stronger than the first. And the reason is exactly as you said; we've got some very unique products that are specifically for the OR that are coming out in larger sizes, which are more applicable to the OR in the back half. In addition to that, there's been a strategy to expand, you know, channel expansion strategy, you know, with adding incremental agencies, and obviously, all that stuff is in the works. And so, you know, the highs and the lows related to the kind of upside you're going to gain from those two strategies. But I always anticipated the back half would be strong.

Speaker Change: Obviously, I understand it's a much smaller piece of the pie, but can you just walk us through some of the drivers on hitting the low and high end of guidance here, and any plans to introduce new products for this side of the business? Thanks.

Dave Francisco: Yeah, sure, that's exactly what we've done. The expectation was, it was always assumed that the back half would be stronger than the first.

Dave Francisco: and the reason being is exactly as you said we've got some very unique products that are specifically for the OR that are coming out with larger sizes which are more applicable to for the OR in the back half. In addition to that there's been a strategy to expand.

Dave Francisco: Channel Expansion Strategy, you know, with adding incremental agencies and obviously all that stuff is in the works and so, you know, the high and the lows related to, you know, the kind of upside you're going to gain from those two strategies, but always anticipated the back half would be stronger.

Speaker Change: Got it. That makes sense. Thanks again for taking the questions and congrats on the quarter.

Speaker Change: Thank you.

Dave Francisco: [inaudible]

Speaker Change: There are no further questions at this time. That does conclude our conference call for today. Thank you for participation. You may now disconnect.

Speaker Change: Thank you.

Matthew Park: Got it. That makes sense. Thanks again for taking the questions and congrats on the quarter. Thank you.

Operator: Again, if you would like to ask a question, please press star one on your telephone keypad and wait for a name to be announced. Our next question comes from the line of... Again, please press star 1 on your telephone keypad and wait for your name to be announced. Our next question comes from the line of Drew Ranieri from Morgan Stanley. Please go ahead.

Operator: Again, it is far too early to ask for a question. There are no further questions at this time. That does conclude our conference call for the day. Thank you for your participation. You may now disconnect.

Operator: And we expect to secure coverage for additional products on the covered list later this year and early next year. While there will be a period of transition and disruption if these sweeping changes are implemented, we believe that Organogenesis' strong brand equity, established commercial infrastructure, and a plan to establish additional clinical validation to secure coverage of key commercialized products, which taken together represent a substantial competitive advantage for us that has us well positioned to maximize the enormous opportunity to serve more patients with our highly innovative and efficacious product.

Dave Francisco: So you can see, obviously, we gave guidance for Q3, which was a pretty wide range, and then that implied guidance for Q4, which was also an even wider range. So we still think it's biased towards Q4. But, you know, there may be some spillage into Q3 as well, which is what we're just a little bit concerned about. As far as July is concerned, I mean, we're seeing the normal summer seasonality, but, you know, we expect to move away from that as long as the customer buying behavior doesn't change dramatically.

Ryan Zimmerman: And in the back half of the score,