Q2 2024 MiMedx Group Inc Earnings Call

Operator: Greetings and welcome to the MiMedx second quarter 2024 operating and financial results conference call. At this time, all participants are listening only. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Matt Notarianni, Head of Investor Relations. Thank you, sir. You may begin.

Operator: Greetings and welcome to the MiMedx second quarter 2024 operating and financial results conference call. At this time, all participants are in a listen-only mode.

Speaker Change: Greetings, and welcome to the MiMedx Second Quarter 2024 Operating and Financial Results Conference Call. At this time, all participants are in a listen-only mode.

Operator: A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press a star zero on your telephone keypad. As a reminder, this conference is being recorded.

Speaker Change: A brief question and answer session will follow the formal presentation.

Speaker Change: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

Matthew Notarianni: It is now my pleasure to introduce your host, Matt Notarianni, Head of Investor Relations.

Speaker Change: As a reminder, this conference is being recorded.

Speaker Change: It is now my pleasure to introduce your host, Matt Notarianni, Head of Investor Relations. Thank you, sir. You may begin.

Matthew Notarianni: Thank you, sir. You may begin.

Matt Notarianni: Thank you, Operator, and good afternoon, everyone. Welcome to MiMedx's second quarter 2024 Operating and Financial Results conference call. With me on today's call are Chief Executive Officer Joe Capper and Chief Financial Officer Doug Rice. As part of today's webcast, we are simultaneously displaying slides that you can follow. You can access the slides from the Investor Relations website at MiMedx.com.

Matthew Notarianni: Thank you, operator, and good afternoon, everyone. Welcome to the MiMedx Second Quarter 2024 Operating and Financial Results conference call. With me on today's call, our Chief Executive Officer, Joe Kapper, and Chief Financial Officer, Doug Rice. As part of today's webcast, we are simultaneously displaying slides that you can follow. You can access the slides from the Investor Relations website at mymedx.com.

Speaker Change: Thank you, Operator, and good afternoon, everyone. Welcome to MiMedx's second quarter 2024 Operating and Financial Results conference call. With me on today's call are Chief Executive Officer Joe Capper and Chief Financial Officer Doug Rice.

Speaker Change: As part of today's webcast, we are simultaneously displaying slides that you can follow. You can access the slides from the Investor Relations website at MiMedx.com.

Matthew Notarianni: Joe will kick us off with some opening remarks in a summary of our operating highlights, and Doug will provide a review of our financial results for the quarter, and then Joe will conclude with some additional updates, including a discussion of our financial goals. We will then be available for your question.

Matt Notarianni: Joe will kick us off with some opening remarks and a summary of our operating highlights, and Doug will provide a review of our financial results for the quarter. And then Joe will conclude with some additional updates, including a discussion of our financial goals. We will then be available for your questions.

Speaker Change: Joe will kick us off with some opening remarks and a summary of our operating highlights, and Doug will provide a review of our financial results for the quarter, and then Joe will conclude with some additional updates, including a discussion of our financial goals. We will then be available for your questions.

Matthew Notarianni: Before we begin, I would like to remind you that our comments today will include forward-looking statements, including statements regarding future sales, adjusted EBITDA, free cash flow, and cash balance growth, future margins and expenses, and expected market sizes for our products. These expectations are subject to risks and uncertainties, and actual results may differ materially from those anticipated due to many factors. Actual results in market sizes will depend on a number of factors, including competition, access to customers, the reimbursement environment, unforeseen circumstances in delays, and other factors. Additional factors that could impact outcomes and our results include those described in the risk factors section of our annual report on Form 10-K and our quarterly reports on Form 10-Q.

Matt Notarianni: Before we begin, I would like to remind you that our comments today will include forward-looking statements, including statements regarding future sales, adjusted EBITDA, free cash flow and cash balance growth, future margins and expenses, and expected market sizes for our products. These expectations are subject to risks and uncertainties, and actual results may differ materially from those anticipated due to many factors. Actual results and market sizes will depend on a number of factors, including competition, access to customers, the reimbursement environment, unforeseen circumstances and delays, and other factors.

Speaker Change: Before we begin, I would like to remind you that our comments today will include forward-looking statements, including statements regarding future sales, adjusted EBITDA, free cash flow and cash balance growth, future margins and expenses, and expected market sizes for our products.

Speaker Change: These expectations are subject to risks and uncertainties, and actual results may differ materially from those anticipated due to many factors.

Speaker Change: Actual results and market sizes will depend on a number of factors, including competition, access to customers, the reimbursement environment, unforeseen circumstances and delays, and other factors.

Matt Notarianni: Additional factors that could impact outcomes and our results include those described in the risk factor section of our annual report on Form 10-K and our quarterly reports on Form 10-Q. Also, our comments today include non-GAAP financial measures, and we provide a reconciliation to GAAP measures in our press release, which is available on our website at MiMedx.com.

Speaker Change: Additional factors that could impact outcomes and our results include those described in the risk factor section of our annual report on Form 10-K and our quarterly reports on Form 10-Q .

Matthew Notarianni: Also, our comments today include non-GAAP financial measures, and we provide a reconciliation to GAAP measures in our press release, which is available on our website at mymedics.com.

Speaker Change: Also, our comments today include non-GAAP financial measures, and we provide a reconciliation to GAAP measures in our press release, which is available on our website at MiMedx.com.

Matt Notarianni: With that, I'm now pleased to turn the call over to Joe Capper. Joe? Thanks.

Matthew Notarianni: With that, I'm now pleased to turn the call over to Joe Kapper.

Joseph Capper: Joe? Thanks, Matt, and good afternoon, everyone. We thank you for joining us on today's call, as we are very pleased to report the results of another solid quarter. For the second quarter, we continue to achieve year-over-year top-wide growth, albeit at a slower rate. There are two factors that impacted the magnitude of our growth. First, we had a very tough comparison due to our strong performance in Q2 2023. And second, there continues to be dislocation in the private office setting caused by certain competitors and providers utilizing artificially high-priced skin substitutes and questionable business practices targeted at Medicare beneficiaries.

Joseph H. Capper: Thanks Matt and good afternoon everyone. We thank you for joining us on today's call as we were very pleased to report the results of another solid quarter. For the second quarter, we continued to achieve year-over-year top-line growth, albeit at a slower rate. There are two factors that impacted the magnitude of our growth.

Speaker Change: With that, I'm now pleased to turn the call over to Joe Capper. Joe?

Joseph H. Capper: Thanks, Matt. And good afternoon, everyone. We thank you for joining us on today's call, as we are very pleased to report the results of another solid quarter.

Speaker Change: For the second quarter, we continued to achieve year-over-year top-line growth, albeit at a slower rate.

Speaker Change: There are two factors that impacted the magnitude of our growth.

Speaker Change: First, we had a very tough comparison due to our strong performance in Q2 2023.

Joseph H. Capper: First, we had a very tough comparison due to our strong performance in Q2 2023. And second, there continues to be dislocation in the private office setting caused by certain competitors and providers utilizing artificially high-priced skin substitutes and questionable business practices targeted at Medicare beneficiaries. While less than 25% of our total revenue is tied to Medicare in the private office and adjacent settings, we have felt the impact of this behavior.

Speaker Change: And second, there continues to be dislocation in the private office setting caused by certain competitors and providers utilizing artificially high-priced skin substitutes and questionable business practices targeted at Medicare beneficiaries.

Joseph Capper: Well, less than 25 percent of our total revenue is tied to Medicare in the private office and adjacent settings; we have felt the impact of this behavior. I assure you, we are working on various options. In the event no action is taken to curtail these, I will speak more on this topic later in the call. Importantly, the remainder of our business continues to flourish.

Speaker Change: While less than 25% of our total revenue is tied to Medicare in the private office and adjacent settings, we have felt the impact of this behavior.

Joseph H. Capper: I assure you that we are working on various options in the event no action is taken to curtail these practices. I will speak more on this topic later in the call. Importantly, the remainder of our business continues to flourish. We believe our industry will and must return to a more rational, data-driven regulatory and reimbursement environment. In the meantime, it is important to realize just how well we have positioned MiMedx to navigate these short-term headwinds, and we expect to emerge on the other side stronger than ever before.

Speaker Change: I assure you, we are working on various options in the event no action is taken to curtail these practices.

Speaker Change: I will speak more on this topic later in the call. Importantly, the remainder of our business continues to flourish.

Joseph Capper: We believe our industry will and must return to a more rational, data-driven regulatory and reimbursement environment. In the meantime, it is important to realize just how well we have positioned MiMedx to navigate these short-term headwinds. And we expect to emerge on the other side stronger than ever before. Over the past year, we have orchestrated a significant financial transformation for our company, and we remain laser-focused on executing our strategy, which will ensure success for years to come. This much-improved financial profile enables us greater flexibility and optionality as we navigate near-term disruption. Moreover, by incompetent, we have the right plan and team in place to continue our momentum.

Speaker Change: We believe our industry will and must return to a more rational, data-driven, regulatory and reimbursement environment.

Speaker Change: In the meantime, it is important to realize just how well we have positioned MiMedx to navigate these short-term headwinds, and we expect to emerge on the other side stronger than ever before.

Joseph H. Capper: Over the past year, we have orchestrated a significant financial transformation for our company, and we remain laser-focused on executing our strategy, which will ensure success for years to come. This much improved financial profile enables us to have greater flexibility and optionality as we navigate near-term disruptions. Moreover, I am confident we have the right plan and team in place to continue our momentum.

Speaker Change: Over the past year, we have orchestrated a significant financial transformation for our company and we remain laser-focused on executing our strategy, which will ensure success for years to come.

Speaker Change: This much improved financial profile enables us greater flexibility and optionality as we navigate near-term disruption.

Speaker Change: Moreover, I am confident we have the right plan and team in place to continue our momentum.

Joseph Capper: As an industry leader, we continue to provide input and lobby to relevant governing bodies in an effort to help restore good fiscal governance to the Medicare portion of the private office setting.

Joseph H. Capper: As an industry leader, we continue to provide input and lobby the relevant governing bodies in an effort to help restore good fiscal governance to the Medicare portion of the private office setting. Now, I'll take a few minutes to discuss the highlights of the second quarter and then update you on the progress we're making regarding our strategic priorities. For the second quarter, net sales grew year-over-year by $6 million, or 7%, to $87 million, marking another solid growth quarter. Gross profit was 83%. Adjusted EBITDA was $20 million, or 23% of net sales in the quarter, representing an increase of $6 million over the prior year period.

Speaker Change: As an industry leader we continue to provide input and lobby the relevant governing bodies in an effort to help restore good fiscal governance to the Medicare portion of the private office setting.

Joseph Capper: Now I'll take a few minutes to discuss the highlights of the second quarter, and then update you on the progress we're making regarding our strategic priorities. For the second quarter, net sales grew year over year by $6 million, or 7%, to $87 million, marking another solid growth quarter. Most profit was 83%; adjusted EBITDA was $20 million, or 23% of net sales in the quarter, representing an increase of $6 million over the prior year period. We ended with $69 million in cash, a healthy increase of $21 million in the quarter. We began the limited-market release of HelioGen, which is the commercial name for the bovine derived, particularly acquired earlier in the year.

Joseph H. Capper: We end it with $69 million in cash, a healthy increase of $21 million in the quarter. We began the limited market release of Heliogen, which is the commercial name for the bovine-derived particulate we acquired earlier in the year. We were thrilled to announce the well-deserved promotion of Kim Mohler to Chief Commercial Officer for MiMedx. Kim has done a remarkable job over the last four years building the MiMedx commercial organization into the high-performance team it is today.

Speaker Change: Now I'll take a few minutes to discuss the highlights of the second quarter and then update you on the progress we're making regarding our strategic priorities.

Speaker Change: For the second quarter, net sales grew year-over-year by $6 million, or 7% to $87 million, marking another solid growth quarter.

Speaker Change: Gross profit was 83%.

Speaker Change: Adjusted EBITDA was $20 million, or 23% of net sales in the quarter, representing an increase of $6 million over the prior year period.

Speaker Change: We end it with $69 million in cash, a healthy increase of $21 million in the quarter.

Speaker Change: We began the limited market release of Heliogen, which is the commercial name for the bovine-derived particulate we acquired earlier in the year.

Joseph Capper: We were thrilled to announce the well-deserved promotion of Kim Moore to Chief Commercial Officer for Mimetics. Kim has done a remarkable job over the last four years building the Mimetics Commercial Organization into the high-performing team it is today.

Speaker Change: We were thrilled to announce the well-deserved promotion of Kim Mohler to Chief Commercial Officer for MiMedx.

Speaker Change: Kim has done a remarkable job over the last four years building the MiMedx commercial organization into the high-performing team it is today.

Joseph Capper: And a few weeks ago, we were excited to have Nature Scientific Reports, which is a leading peer-reviewed journal with a reputation for publishing best in class scientific literature, published a study demonstrating the benefits of Mimetics' placental-based allegraves in insurgable applications for pathological fibrosis results in detrimental scarring and dysfunctional tissue.

Joseph H. Capper: And a few weeks ago, we were excited to have Nature Scientific Reports, which is a leading peer-reviewed journal with a reputation for publishing best-in-class scientific literature, published a study demonstrating the benefits of MiMedx placental-based allografts in surgical applications where pathological fibrosis results in detrimental scarring and dysfunctional tissue. Now, to our strategic priorities. As outlined on prior calls, our plan is focused on three areas.

Speaker Change: And, a few weeks ago, we were excited to have Nature Scientific Reports, which is a leading peer-reviewed journal with a reputation for publishing best-in-class scientific literature, published a study demonstrating the benefits of MiMedx placental-based allografts.

Speaker Change: in Surgical Applications where Pathological Fibrosis Results in Detrimental Scarring and Dysfunctional Tissue.

Joseph Capper: Turning now to our strategic priorities. As that line of fire calls, our plan is focused in three areas. First, we will continue to innovate and diversify our product portfolio. We have clearly built a strong core competency in the development and rapid commercialization of products designed to meet emerging position of patient needs in all sites of care. Two of our most recent product introductions continue to perform at a high level. Amnil Effect, who nearly 40% year-over-year in the surgical market. An FB effect, which we launched late last year, continued to show significant strength in the private office.

Speaker Change: Turning now to our strategic priorities.

Speaker Change: As outlined on prior calls, our plan is focused in three areas.

Joseph H. Capper: First, we will continue to innovate and diversify our product portfolio. We have clearly built a strong core competency in the development and rapid commercialization of products designed to meet emerging physician and patient needs at all sites of care. Two of our most recent product introductions continue to perform at a high level. AmnioEffect grew nearly 40% year-over-year in the surgical market. And EpiEffect, which we launched late last year, continued to show significant strength in the private office. Both products have received widespread market acceptance and excellent physician feedback. Additionally, but can you continue to make progress?

Speaker Change: First, we will continue to innovate and diversify our product portfolio.

Speaker Change: We have clearly built a strong core competency in the development and rapid commercialization of products designed to meet emerging physician and patient needs in all sites of care.

Speaker Change: Two of our most recent product introductions continue to perform at a high level.

Speaker Change: Amnio effect grew nearly 40% year-over-year in the surgical market, and epi effect, which we launched late last year, continued to show significant strength in the private office.

Joseph Capper: Both products have received widespread market acceptance and excellent physician feedback. Additionally, can you continue to make progress building our FB fixed business in Japan, where we posted another quarter of exceptionally high growth. Building on to the success of these recent product introductions, we expect similar performance as we move towards full market release of our first scene of graph. As a reminder, this new product is a 510 kV cleared, bovine-derived collagen matrix particulate, which we have branded Heliogen, and is indicated for the management of moderately heavily exiting wounds and to control minor bleeding. During our soft launch, the product has been successfully applied in various surgical procedures, including Achilles tendon repair.

Speaker Change: Both products have received widespread market acceptance and excellent physician feedback.

Joseph H. Capper: Building on the success of these recent product introductions, we expect a similar performance as we move towards full market release of our first xenograft. As a reminder, this new product is a 510K-cleared bovine-derived collagen matrix particulate, which we have branded Heliogen, and is indicated for the management of moderately to heavily exudating wounds and to control minor bleeding.

Speaker Change: Additionally, but can you continue to make progress?

Speaker Change: Building our EpiFix business in Japan, where we posted another quarter of exceptionally high growth.

Speaker Change: Building on the success of these recent product introductions, we expect a similar performance as we move towards full market release of our first xenograft. As a reminder, this new product is a 510K-cleared bovine-derived collagen matrix particulate

Speaker Change: which we have branded Heliogen.

Speaker Change: and is indicated for the management of moderately to heavily exudating wounds and to control minor bleeding.

Joseph H. Capper: During our soft launch, the product has been successfully applied in various surgical procedures, including Achilles tendon repair. That takes me to our second area of focus, which is to develop and deploy programs intended to expand our footprint in the surgical market. In the past, we've spoken about the importance of generating real-world evidence and scientific research demonstrating support for the use of our placental-derived allografts in a variety of surgical procedures. We are currently working with key opinion leaders to generate evidence in surgical case studies as we know data is especially critical in this part of the market.

Speaker Change: During our soft launch, the product has been successfully applied in various surgical procedures including Achilles tendon repair.

Joseph Capper: That takes me to our second area of focus, which is to develop and deploy programs intended to expand our footprint in the surgical market. In the past, we spoken about the importance of generating real-world evidence of scientific research demonstrating support for the use of our placental derived aligrafs in a variety of surgical procedures. We are currently working with key opinion leaders to produce evidence in surgical case studies, as we know data is especially critical in this part of the market. To that end, the Nature Scientific Reports article I mentioned earlier is one of the more exciting and significant publications we have seen in quite some time.

Speaker Change: That takes me to our second area of focus, which is to develop and deploy programs intended to expand our footprint in the surgical market.

Speaker Change: In the past, we've spoken about the importance of generating real-world evidence of scientific research demonstrating support for the use of our placental-derived allografts in a variety of surgical procedures.

Speaker Change: We are currently working with key opinion leaders to produce evidence in surgical case studies as we know data is especially critical in this part of the market.

Joseph H. Capper: To that end, the Nature Scientific Reports article I mentioned earlier is one of the more exciting and significant publications we have seen in quite some time. The prestige of this journal alone demonstrates the importance of the work. This study evaluated two configurations of MiMedx proprietary placental-based allografts for their ability to regulate fibrotic processes or scarring of connective tissue. The study found that both dehydrated and lyophilized human amniotic corneal membranes demonstrated in vitro modulation of collagen production, deposition, and maturation in support of the hypothesis that amniotic membranes may function to interrupt pathological fibrosis and restore tissue homeostasis. The practical implications of these findings are immense.

Speaker Change: To that end, the Nature Scientific Reports article I mentioned earlier is one of the more exciting and significant publications we have seen in quite some time.

Joseph Capper: The prestige of this journal alone demonstrates the importance of the work. This study devaluated two configurations of mimetics proprietary placental based aligrafs for the ability to regulate phybrotic processes or scarring of connected tissue. The study found that both are dehydrated and liophilized human amyonchorion membranes demonstrated in vitro modulation of collagen production, deposition, and maturation in support of the hypothesis that amyotic membranes may function to interrupt pathological fibrosis and restore tissue from your stasis. The practical implications of these findings are immense. The possibility of reduced scarring or adhesion formation through the use of mimetics proprietary technology could enable accelerated and improved quality of healing with decreased incidence of recurrence.

Speaker Change: The prestige of this journal alone demonstrates the importance of the work. This study evaluated two configurations of MiMedx proprietary placental-based allografts for their ability to regulate fibrotic processes or scarring of connective tissue.

Speaker Change: The study found that both are dehydrated and lyophilized human amnion-chorion membranes.

Speaker Change: demonstrated in vitro modulation of collagen production, deposition, and maturation in support of the hypothesis that amniotic membranes may function to interrupt pathological fibrosis and restore tissue homeostasis.

Joseph H. Capper: The possibility of reduced scarring or adhesion formation through the use of MiMedx proprietary technology could enable accelerated and improved quality of healing with decreased incidence of recurrence. This creates the potential for enhanced surgical outcomes from improved functionality to superior cosmetic results simply by incorporating MiMedx proprietary membranes into the procedure. We are already seeing the real-world benefits of such applications in a number of surgical applications. OBGYNs, for example, are using our tissue to help promote healing during C-section closure.

Speaker Change: The practical implications of these findings are immense.

Speaker Change: The possibility of reduced scarring or adhesion formation through the use of MiMedx's proprietary technology could enable accelerated and improved quality of healing with decreased incidence of recurrence.

Joseph Capper: This creates the potential for enhanced surgical outcomes, from improved functionality to superior cosmetic results, simply by incorporating mimetics' proprietary membranes into the procedure. We are already seeing the real world benefits of such applications in a number of surgical applications. OBGYNs, for example, are using our tissue to help promote healing during C-section closure, and there are numerous other use cases and novel applications starting to develop. Considering the potential benefits demonstrated in this study and applying that to the tens of millions of surgeries performed in the U.S. Annually, the size of the opportunity could be staggering for mimetics.

Speaker Change: This creates the potential for enhanced surgical outcomes from improved functionality to superior cosmetic results simply by incorporating MiMedx proprietary membranes into the procedure.

Speaker Change: We are already seeing the real-world benefits of such applications in a number of surgical applications.

Speaker Change: OBGYNs, for example, are using our tissue to help promote healing during C-section closure.

Joseph H. Capper: And there are numerous other use cases and novel applications starting to develop. Considering the potential benefits demonstrated in this study and applying that to the tens of millions of surgeries performed in the U.S. annually, the size of the opportunity could be staggering for MiMedx. The importance of this type of research and other supporting investments in order to continue to demonstrate the superiority of our technology cannot be overstated. We have the company's strategic compass pointed squarely in the direction of a greater surgical presence, and we will continue to ramp up necessary clinical and marketing investments to support these opportunities. And, of course, we're excited to move into the full market release of HelioGem, our first xenograft particulate, which we will promote for use in surgical cases where such products may be more appropriate for various reasons.

Speaker Change: And there are numerous other use cases and novel applications starting to develop.

Speaker Change: Considering the potential benefits demonstrated in this study and applying that to the tens of millions of surgeries performed in the U.S. annually, the size of the opportunity could be staggering for MiMedx.

Joseph Capper: The importance of this type of research and other supporting investments in order to continue to demonstrate the superiority of our technology cannot be overstated. We have the company's strategic compass pointed squarely in the direction of a greater surgical presence, and we will continue to ramp up necessary clinical and marketing investments to support these opportunities. Our first zina graph particular, which we will promote for use in certain cases where such products may be more appropriate for various reasons. We expect this first Zina graph product to provide for greater access in the parts of the markets we have historically been precluded from competing.

Speaker Change: The importance of this type of research and other supporting investments in order to continue to demonstrate the superiority of our technology cannot be overstated.

Speaker Change: We have the company's strategic compass pointed squarely in the direction of a greater surgical presence, and we will continue to ramp up necessary clinical and marketing investments to support these opportunities.

Speaker Change: And of course, we're excited to move into full market release of HelioGem, our first xenograft particulate, which we will promote for use in surgical cases where such products may be more appropriate for various reasons.

Joseph H. Capper: We expect this First Xenograft product to provide for greater access into parts of the markets we have historically been precluded from competing in. Our third initiative is to introduce programs designed to enhance customer intimacy. As a reminder, the primary focus of this initiative is to develop programs that improve relationships and ultimately lower our customer churn. In our markets, customer turnover is high relative to other industries, which impacts margins. We believe we have an opportunity to change this dynamic and build much stickier associations through an expanded customer-centric offering, thereby increasing the lifetime value of each customer. The long-term plan is to embed a customer-centric mindset and processes into all facets of the organization. Product Development to Inventory Visibility and Account Management.

Speaker Change: We expect this First Xenograft product to provide for greater access into parts of the markets we have historically been precluded from competing.

Joseph Capper: Our third initiative is to introduce programs designed to enhance customer intimacy. As a reminder, the primary focus of this initiative is to develop programs which improve relationships and ultimately lower our customer charm. In our markets, customer turnover is high relative to other industries, which impacts margins. We believe we have an opportunity to change this dynamic and build much thicker associations to an expanded customer centric offering, thereby increasing the lifetime value of each customer. A long-term plan is to embed a customer centric mindset and processes into all facets of the organization and product development to inventory visibility and account management.

Speaker Change: Our third initiative is to introduce programs designed to enhance customer intimacy.

Speaker Change: As a reminder, the primary focus of this initiative is to develop programs which improve relationships and ultimately lower our customer churn.

Speaker Change: In our markets, customer turnover is high relative to other industries, which impacts margins.

Speaker Change: We believe we have an opportunity to change this dynamic and build much stickier associations through an expanded, customer-centric offering, thereby increasing the lifetime value of each customer.

Speaker Change: The long-term plan is to embed a customer-centric mindset and processes into all facets of the organization from product development to inventory visibility and account management.

Joseph Capper: As mentioned a few months ago, we recently launched My Medics Connect, our new customer portal providing a far more streamlined digital connection with referring practices. The adoption rate is exceeding our expectations, with nearly 25% of our active customers now using My Medics Connect interface with the company for processes such as insurance verification and product ordering. We will continue to enhance the feature set of the platform and believe it will eventually become another distinct competitive advantage for the company.

Joseph H. Capper: As mentioned a few months ago, we recently launched MiMedx Connect, our new customer portal, providing a far more streamlined digital connection with referring practices. The adoption rate is exceeding our expectations, with nearly 25% of our active customers now using MiMedx Connect to interface with the company for processes such as insurance verification and product ordering. We will continue to enhance the feature-centered platform and believe it will eventually become another distinct competitive advantage for the company. Now, I will turn the call over to Doug for more detail on our financial results, and then I will close with comments about the private office reimbursement dynamic and full-year guidance. Doug? Thank you, Jim.

Speaker Change: As mentioned a few months ago, we recently launched MiMedx Connect, our new customer portal providing a far more streamlined digital connection with referring practices.

Speaker Change: The adoption rate is exceeding our expectations with nearly 25% of our active customers now using MiMedx Connect to interface with the company for processes such as insurance verification and product ordering.

Speaker Change: We will continue to enhance the feature-setting platform and believe it will eventually become another distinct competitive advantage for the company.

Douglas Rice: Now let me turn the call over to Doug for more detail on our financial results.

Douglas Rice: Then I won't close with comments about the private office reimbursement dynamic and full-year guidance.

Speaker Change: Now, let me turn the call over to Doug for more detail on our financial results. Then I will close with comments about the private office reimbursement dynamic and full year guidance.

Douglas Rice: Doug. Thank you, Joe, and good afternoon to everyone on today's call. Thank you for joining us. I'm pleased to once again share our results with you all today. As a reminder, as Matt mentioned, many of the financial measures covered in today's call are on a non-GAAP basis. So please refer to today's earnings release for further information regarding our non-GAAP reconciliation and disclosures. Beginning this quarter, in order to increase visibility, we added a few tables in the back of our press release that break out our non-GAAP adjustments by expense line item. I encourage you to review these materials alongside my comments today.

Douglas C. Rice: Thank you, Joe, and good afternoon to everyone on today's call. Thank you for joining us.

Douglas C. Rice: I'm pleased to once again share our results with you all today. As a reminder, as Matt mentioned, many of the financial measures covered in today's call are on a non-GAAP basis, so please refer to today's earnings release for further information regarding our non-GAAP reconciliations and disclosures. Beginning this quarter, in order to increase visibility, we added a few tables on the back of our press release that break out our non-GAAP adjustments by expense line item. I encourage you to review these materials alongside my comments today.

Doug: Thank you, Joe, and good afternoon to everyone on today's call. Thank you for joining us. I'm pleased to once again share our results with you all today.

Doug: As a reminder, as Matt mentioned, many of the financial measures covered in today's call are on a non-GAAP basis, so please refer to today's earnings release for further information regarding our non-GAAP reconciliations and disclosures.

Speaker Change: Beginning this quarter, in order to increase visibility, we added a few tables on the back of our press release that break out our non-GAAP adjustments by expense line item. I encourage you to review these materials alongside my comments today.

Douglas C. Rice: Additionally, and as a reminder, during the fourth quarter last year, we bifurcated our GAAP financial reporting to reflect the current and historical results of our recently disbanded regenerative medicine segment as discontinued operations. Accordingly, my comments today on our second quarter 2024 results are made on a continuing operations basis and exclude the historical costs of the Regenerative Medicine Business Unit, which was suspended beginning in late Q2 2023. For a full discussion of the impact of these discontinued operations, please refer to our most recent 10-K and 10-Q filings.

Douglas Rice: Additionally, and as a reminder, during the fourth quarter last year, we bifurcated our gap financial reporting to reflect the current and historical results by the recently disbanded regenerative medicine segment as discontinued operations. Accordingly, my comments today on our second quarter 2024 results are made on a continuing operations basis and exclude the historical costs of the regenerative medicine business unit. Which was suspended beginning in late Q2 2023. For a full discussion of the impact of these discontinued operations, please refer to our most recent 10-K and 10-Q filings. Moving on to the results, our second quarter 2024 net sales of $87 million represented 7% growth compared to the prior year period.

Speaker Change: Additionally, and as a reminder, during the fourth quarter last year, we bifurcated our GAAP financial reporting to reflect the current and historical results of our recently disbanded regenerative medicine segment as discontinued operations.

Speaker Change: Accordingly, my comments today on our second quarter 2024 results are made on a continuing operations basis and exclude the historical costs of the Regenerative Medicine Business Unit, which was suspended beginning in late Q2 2023.

Speaker Change: For a full discussion of the impact of these discontinued operations, please refer to our most recent 10-K and 10-Q filings.

Douglas C. Rice: Moving on to the results, our second quarter 2024 net sales of $87 million represented 7% growth compared to the prior year period. As Joe mentioned in his remarks, there were several factors that drove this performance in the quarter, and I would like to provide some additional color on each of them. By product category, net sales growth was relatively balanced between our wound and surgical businesses, particularly when you consider certain anomalies. Second quarter wound sales of $58 million were 8% versus the prior year period.

Speaker Change: Moving on to the results, our second quarter 2024 net sales of $87 million represented 7% growth compared to the prior year period.

Douglas Rice: As Joe mentioned in his remarks, there were several factors that drove this performance in the quarter, and I would like to provide some additional color on each of them. By product category, net sales growth was relatively balanced between our wound and surgical businesses, particularly when you consider certain anomalies. Second quarter wound sales of $58 million grew 8% versus the prior year period, and second quarter surgical sales of $39.36% is reported, and 13% excluding axial fill and the sales of the dental product in the prior year period. Two of the standout contributors in the quarter for our amni-offact and FBFAC, which continue to gain traction in the surgical and wound markets, respectively.

Speaker Change: As Joe mentioned in his remarks, there were several factors that drove this performance in the quarter, and I would like to provide some additional color on each of them. By product category, net sales growth was relatively balanced between our wound and surgical businesses, particularly when you consider certain anomalies.

Speaker Change: Second quarter wound sales of $58 million for 8% versus the prior year period, and second quarter surgical sales of $30 million for 6% as reported, and 13% excluding Axiofil and the sales of the dental product in the prior year period.

Douglas C. Rice: And second quarter surgical sales of $30 million, 6% as reported, and 13% excluding Axiofil and the sales of the dental product in the prior year period. Two of the standout contributors in the quarter were our AmnioEffect and EpiEffect products, which continue to gain traction in the surgical and wound markets, respectively. Turning to our results by site of service, while we saw positive growth in all of our sites of service during the quarter, as Drew mentioned, we have seen a sizable increase in competitive behavior related to the sale of artificially high-priced products in the private office setting for Medicare beneficiaries.

Speaker Change: Two of the standout contributors in the quarter are our AmnioEffect and EpiEffect products, which continue to gain traction in the surgical and wound markets, respectively.

Douglas Rice: Turning to our results, my side of service, while we saw positive growth in all of our sites of service during the quarter, as Joe mentioned, we have seen a sizable increase in competitive behavior related to the sale of artificially high-price products in the private office setting for Medicare beneficiaries. This has resulted in a deceleration in our growth rate compared to the first quarter of 2024 in each of these associated care settings. These competitive pressures resulted in higher-than-normal levels of employee and customer churn, beginning about midway through the second quarter. Additionally, the introduction of the proposed LCDs during the quarter prompted the beginning of some changes in behavior for portions of the private office night of service, but clearly, as evidenced by the performance of artificially high-price skin substitute, this continues to pose a challenge in the marketplace for us.

Drew: Turning through our results by site of service, while we saw positive growth in all of our sites of service during the quarter, as Drew mentioned, we have seen a sizable increase in competitive behavior related to the sale of artificially high-priced products in the private office setting for Medicare beneficiaries.

Douglas C. Rice: This has resulted in a deceleration in our growth rate compared to the first quarter of 2024 in each of these associated care settings. These competitive pressures have resulted in higher than normal levels of employee and customer churn, beginning about midway through the second quarter. Additionally, the introduction of the proposed LCDs during the quarter prompted the beginning of some changes in behavior for portions of the private office night of service, but clearly, as evidenced by the performance of artificially high-priced skin substitutes, this continues to pose a challenge in the marketplace for us.

Drew: This has resulted in a deceleration in our growth rate compared to the first quarter of 2024 in each of these associated care settings.

Speaker Change: These competitive pressures resulted in higher than normal levels of employee and customer churn beginning about midway through the second quarter.

Speaker Change: Additionally, the introduction of the proposed LCDs during the quarter prompted the beginning of some changes in behavior for portions of the private office side of service.

Speaker Change: But clearly, as evidenced by the performance of artificially high-priced skin substitutes, this continues to pose a challenge in the marketplace for us.

Douglas Rice: Finally, as I mentioned earlier, and to a lesser extent, our sales have actually failed to decline on a year-over-year and sequential basis. While we still have a number of loyal accounts routinely using and ordering this product, our ongoing matter with the FDA is having an impact on this product line's performance with certain customers. The actual fill matter with the FDA remains on schedule and will likely drive toward a ruling from the court later this year or early next year.

Douglas C. Rice: Finally, as I mentioned earlier, and to a lesser extent, our sales of Axiofil declined on a year-over-year and sequential basis. While we still have a number of loyal accounts routinely using and ordering this product, our ongoing matter with the FDA is having an impact on this product line's performance with certain customers. The axial fill matter with the FDA remains on schedule and will likely drive toward a ruling from the court later this year or early next year.

Speaker Change: Finally, as I mentioned earlier, and to a lesser extent, our sales of Axiofil declined on a year-over-year and sequential basis. While we still have a number of loyal accounts routinely using and ordering this product, our ongoing matter with the FDA is having an impact on this product line's performance with certain customers.

Speaker Change: The axial fill matter with the FDA remains on schedule and will likely drive toward a ruling from the court later this year or early next year.

Douglas Rice: Taken together, these items often are otherwise strong momentum in many market sectors and regions. For second quarter, 2024, gross profit was about $72 million compared to $68 million last year. Our gross margin was 83 percent, down slightly compared to the prior year period, due in part to incremental amortization expense from intangible assets acquired in the Heliagent transaction. Excluding this $400,000 impact, our gross margins were flat compared to the second quarter of 2023. Turning to our operating expenses, selling, general and administrative expenses, or SG&A, was $55 million in the second quarter compared to $52 million in the prior year period.

Douglas C. Rice: Taken together, these items softened our otherwise strong momentum in many market sectors and regions. Our second quarter 2024 gross profit was about $72 million compared to $68 million last year. Our gross margin was 83%, down slightly compared to the prior year period due in part to incremental amortization expense from intangible assets acquired in the Heliogen transaction. Excluding this $400,000 impact, our gross margins were flat compared to the second quarter of 2023

Speaker Change: Taken together, these items softened our otherwise strong momentum in many market sectors and regions.

Speaker Change: Our second quarter 2024 gross profit was about $72 million compared to $68 million last year. Our gross margin was 83% down slightly compared to the prior year period due in part to incremental amortization expense from intangible assets acquired in the Heliogen transaction.

Speaker Change: Excluding this $400,000 impact, our gross margins were flat compared to the second quarter of 2023.

Douglas C. Rice: Turning to our operating expenses, Selling General and Administrative Expenses, or SG&A, was $55 million in the second quarter, compared to $52 million in the prior year period. SG&A was 64% of our net sales in both periods. The increase in SG&A was related primarily to a variety of higher commercial expenses, including commissions, costs associated with the Heliogen launch, and increased other costs, including legal fees, in the quarter compared to the prior year period, offset by spending efficiencies in other areas.

Speaker Change: Turning to our operating expenses, Selling General and Administrative Expenses, or SG&A, was $55 million in the second quarter compared to $52 million in the prior year period. SG&A was 64% of our net sales in both periods.

Douglas Rice: SGNA was 64 percent of our net sales in both periods. The increase in SGNA was related primarily to a variety of higher commercial expenses, including commissions, costs associated with the Heliagent launch, and increased other costs, including legal fees in the quarter compared to the prior year period, offset by spending efficiencies in other areas. Our second quarter R&D expenses were $3 million, or about 3% of net sales, compared to $4 million, or about 5% of net sales in the prior year period. With our FAFECT RCT underway, we continue to expect our R&D spend to modestly increase on a relative basis compared to 2023 to mid-single digits as a percentage of net sales.

Speaker Change: The increase in SG&A was related primarily to a variety of higher commercial expenses, including commissions,

Speaker Change: Costs associated with the Heliogen launch and increased other costs, including legal fees in the quarter compared to the prior year period, offset by spending efficiencies in other areas.

Douglas C. Rice: Our second quarter R&D expenses were $3 million, or about 3% of net sales compared to $4 million, or about 5% of net sales in the prior year period. With our EpiEffect RCC underway, we continue to expect our R&D spend to modestly increase on a relative basis compared to 2023 to mid-single digits as a percentage of net sales. Income tax expense for Q2 2024 was $6 million, reflecting an effective tax rate of 24%.

Speaker Change: Our second quarter R&D expenses were $3 million, or about 3% of net sales, compared to $4 million, or about 5% of net sales in the prior year period.

Speaker Change: With our EpiEffect RCT underway, we continue to expect our R&D spend to modestly increase on a relative basis compared to 2023 to mid-single digits as a percentage of net sales.

Douglas Rice: Income tax expense for Q2 2024 was $6 million, reflecting an effective tax rate of 24%. This is roughly in line with our 25% long-term non-GAAP expected effective tax rate that we utilize going forward. Our second quarter gap net income inclusive of the results of our discontinued operations was $18 million compared to $1 million in the prior year period. Our gap net income for the second quarter was driven in large part by benefits we recorded associated with the resolutions of matters involving former officers. Adjusted net income for the quarter was $11 million, or $8 cents per share, compared to $6 million, or $3 cents per share, in the prior year period.

Speaker Change: Income tax expense for Q2 2024 was $6 million, reflecting an effective tax rate of 24%. This is roughly in line with our 25% long-term non-GAAP expected effective tax rate that we utilize going forward.

Douglas C. Rice: This is roughly in line with our 25% long-term non-GAAP expected effective tax rate that we will utilize going forward. Our second quarter GAAP net income, inclusive of the results of our discontinued operations, was $18 million, compared to $1 million in the prior year period. Our gap net income for the second quarter was driven, in large part, by benefits we recorded associated with the resolutions of matters involving former officers. Adjusted net income for the quarter was $11 million or $0.08 per share compared to $6 million or $0.03 per share in the prior year period.

Speaker Change: Our second quarter gap net income inclusive of the results of our discontinued operations was $18 million compared to $1 million in the prior year period. Our gap net income for the second quarter was driven in large part by benefits we recorded associated with the resolutions of matters involving former officers.

Speaker Change: Adjusted net income for the quarter was $11 million, or $0.08 per share, compared to $6 million, or $0.03 per share in the prior year period.

Douglas Rice: Second quarter 2024 adjusted to EBITDA was $20 million, or 23% of net sales, compared to an adjusted EBITDA of $14 million, or about 17% of net sales in the prior year period. Turning to our liquidity, the strong free cash flow generated by our business reached its highest level in the history of the company during the second quarter at $22 million. Nearly the entire amount of free cash flow we generated in all of 2023. This enabled us to grow our net cash balance to $50 million by the end of the second quarter.

Douglas C. Rice: Second quarter 2024 adjusted EBITDA was $20 million, or 23% of net sales compared to an adjusted EBITDA of $14 million, or about 17% of net sales in the prior year period. Turning to our liquidity, the strong free cash flow generated by our business reached its highest level in the history of the company during the second quarter, at $22 million, nearly the entire amount of free cash flow we generated in all of 2023.

Speaker Change: Second quarter 2024 adjusted EBITDA was $20 million or 23% of net sales compared to an adjusted EBITDA of $14 million or about 17% of net sales in the prior year period.

Speaker Change: Turning to our liquidity, the strong free cash flow generated by our business reached its highest level in the history of the company during the second quarter at $22 million, nearly the entire amount of free cash flow we generated in all of 2023.

Douglas C. Rice: This enabled us to grow our net cash balance to $50 million by the end of the second quarter, marking yet another significant improvement in our balance sheet as we work to strengthen our position in order to have the optionality to make investments in a number of different ways that we believe will unlock shareholder value. I will now turn the call back to Joe.

Speaker Change: This enabled us to grow our net cash balance to $50 million by the end of the second quarter, marking yet another significant improvement in our balance sheet as we work to strengthen our position in order to have the optionality to make investments in a number of different ways that we believe will unlock shareholder value.

Douglas Rice: Marking yet another significant improvement in our balance sheet because we work to strengthen our position in order to have the optionality to make investments in a number of different ways that we believe law and law to your older value.

Joseph Capper: Now we'll now turn the call back to Joe.

Joseph Capper: Joe thanks Doug. As you've just heard, we had another solid quarter and that sales were $87 million, or 7% in the quarter. Close profit was 83%. Adjusted EBITDA was $20 million or 23% of net sales in the quarter. We ended up with $69 million in cash. We began a limited market release of HelioGen at first, the integrative product, and we were excited to see the Nature publication and its foreshadowing of the vast potential for future applications of our aligrafs.

Speaker Change: I will now turn the call back to Joe. Joe?

Joseph H. Capper: As you have just heard, we had another solid quarter, and that sells for $87 million, or 7% of gross profit. Gross profit was 83%. The adjusted EBITDA was $20 million, or 23% of net sales in the quarter.

Joseph H. Capper: Thanks, Doug.

Joseph H. Capper: As you just heard, we had another solid quarter, and that sells for $87 million, or 7% in the quarter.

Speaker Change: Gross profit was 83%.

Joseph H. Capper: We ended it with $69 million in cash. We began a limited market release of Heliogen, our first Enagraft product. And we were excited to see the Nature publication and its foreshadowing of the vast potential for future applications of our allograft. Now, let's return to a discussion of the reimbursement situation in the private office. On my very first MiMedx earnings call a year and a half ago, we provided commentary on challenges we were facing in the private office and adjacent care settings due to what we described at the time as certain participants using loopholes in the Medicare reimbursement system in order to provide sizable financial incentives to physicians for using their products.

Speaker Change: The adjusted EBITDA was $20 million, or 23% of net sales in the quarter.

Speaker Change: We end it with $69 million in cash.

Speaker Change: We began a limited market release of Heliogen, our first xenograft product, and we were excited to see the Nature publication and its foreshadowing of the vast potential for future applications of our allografts.

Joseph Capper: Now let's return to a discussion of the reimbursement situation in the private office. On my very first My Medics earnings call a year and a half ago, we provided commentary on challenges we were facing in the private office and adjacent care settings due to what we described at the time as certain participants using loopholes in the Medicare reimbursement system in order to provide sizable financial incentives to positions for using their products. Since that time, the situation has gotten dramatically worse as a result of new and intricate schemes designed with the express purpose of self-interagement by massively overbilling CMS for products with sparse supporting clinical data.

Speaker Change: Now, let's return to a discussion of the reimbursement situation in the private office.

Speaker Change: On my very first MiMedx earnings call a year and a half ago, we provided commentary on challenges we were facing in the private office and adjacent care settings.

Speaker Change: due to what we described at the time as certain participants using loopholes in the Medicare reimbursement system in order to provide sizable financial incentives to physicians for using their products.

Joseph H. Capper: Since that time, the situation has gotten dramatically worse as a result of new and intricate schemes designed with the express purpose of self-enrichment by massively overbilling CMS for products with sparse supporting clinical data. Frankly, I'm shocked this has been allowed to persist for so long, but remain optimistic it will be addressed in the very near future.

Speaker Change: Since that time, the situation has gotten dramatically worse.

Speaker Change: as a result of new and intricate schemes designed with the express purpose of self-enrichment by massively overbilling CMS for products with sparse supporting clinical data.

Joseph Capper: Frankly, I am shocked this has been allowed to persist for so long but remain optimistic it will be addressed in a very near future. To put this crisis in perspective, CMS payments for skin substitutes increase by over 260% or $2.5 billion in a single year, from approximately $1.5 billion in 2022 to $4 billion in 2023. In recent months, the situation has reached a frenzied state, causing tremendous disruption and dislocation in the market, and MiMedx is not immune. While we have been fairly successful at holding this pressure in bank, the impact from what we consider improper business practices has been the task decision.

Speaker Change: Frankly, I am shocked this has been allowed to persist for so long, but remain optimistic it will be addressed in the very near future.

Joseph H. Capper: To put this crisis in perspective, CMS payments for skin substitutes increased by over 260% or $2.5 billion in a single year from approximately $1.5 billion in 2022 to $4 billion in 2023. In recent months, the situation has reached a frenzied state, causing tremendous disruption and dislocation in the market, and MiMedx is not immune. While we have been fairly successful at holding this pressure at bay, the impact of what we consider improper business practices has been metastasized. As a result, we have experienced above-average employee and customer attrition as people leave in pursuit of what could be fool's gold.

Speaker Change: To put this crisis in perspective, CMS payments for skin substitutes increase

Speaker Change: By over 260% or $2.5 billion in a single year from approximately $1.5 billion in 2022 to $4 billion in 2023.

Speaker Change: In recent months, the situation has reached a frenzied state, causing tremendous disruption and dislocation in the market, and MiMedx is not immune.

Speaker Change: While we have been fairly successful at holding this pressure at bay, the impact from what we consider improper business practices has been metastasizing.

Joseph Capper: As a result, we have experienced above-average employee and customer attrition, as people leave in pursuit of what could be fool's gold. The abuse of practices in the skin substitute market have caught the attention of the Department of Justice, which last month announced the massive case involving the criminal prosecution of several individuals who were allegedly running a scam to overbill Medicare for skin substitutes. The problem has gotten too big to ignore and needs to be addressed. While we applaud the enforcement action to round up bad actors, we are in desperate need of action on the payer front to close the barn door.

Speaker Change: As a result, we have experienced above average employee and customer attrition as people leave in pursuit of what could be fool's gold.

Joseph H. Capper: The abusive practices in the skin substitute market have caught the attention of the Department of Justice, which last month announced a massive case involving the criminal prosecution of several individuals who were allegedly running a scam to overbill Medicare for Skin Substitute. The problem has gotten too big to ignore and needs to be addressed. While we applaud the enforcement action to round up bad actors, we are in desperate need of action on the payer front to close the barn door.

Speaker Change: The abuse of practices in the skin substitute market have caught the attention of the Department of Justice, which last month announced a massive case involving the criminal prosecution of several individuals who were allegedly running a scam to overbill Medicare for skin substitutes.

Speaker Change: The problem has gotten too big to ignore and needs to be addressed.

Speaker Change: While we applaud the enforcement action to round up bad actors, we are in desperate need of action on the payer front to close the barn door.

Joseph Capper: Just prior to our call a few months ago, all seven of the Medicare Administrative Contractors are maxed, published, proposed local coverage determinations, or LCDs, in unison, which would in effect create a national coverage policy. As a reminder, the proposed LCDs call for a utilization cap of four skin substitute applications per case, with an allowance for additional applications based on medical necessity in instances when a patient's room needs more help achieving closure. The proposed LCDs will also limit the number of products approved for reimbursement at 15 based on published non-biased clinical evidence and would prohibit reimbursement for over 180 other products.

Joseph H. Capper: Just prior to our call a few months ago, all seven of the Medicare Administrative Contractors, or MACs, published proposed local coverage determinations, or LCDs, in unison, which would, in effect, create a national coverage policy. As a reminder, the proposed LCDs call for a utilization cap of four skin substitute applications per case with an allowance for additional applications based on medical necessity in instances when a patient's wound needs more help achieving closure.

Speaker Change: Just prior to our call a few months ago, all seven of the Medicare Administrative Contractors, or MACs, published proposed local coverage determinations, or LCDs, in unison, which would in effect create a national coverage policy.

Joseph H. Capper: The proposed LCDs will also limit the number of products approved for reimbursement at 15 based on published non-biased clinical evidence and would prohibit reimbursement for over 180 other products. Two of our three products offered in the private office, including our flagship EpiFix product, are among the 15 approved for reimbursement. The third, EpiEffect, is not on the list due to a lack of sufficient published evidence.

Speaker Change: As a reminder,

Speaker Change: The proposed LCDs call for a utilization cap of four skin substitute applications per case, with an allowance for additional applications based on medical necessity in instances when a patient's wound needs more help achieving closure.

Speaker Change: The proposed LCDs would also limit the number of products approved for reimbursement at 15 based on published non-biased clinical evidence and would prohibit reimbursement for over 180 other products.

Joseph Capper: Two of our three products offered in the private office, including our flagship Epi-Fix product, are among the 15 approved for reimbursement. The third, epi-effect, is not on the list due to a lack of sufficient published evidence. However, we now have a highly powered randomized control trial underway for epi-effect, which should be the coverage in the future. The industry appears to be appropriately moving towards a requirement to produce clinical evidence to prove efficacy as products come to market. Given our long-term commitment to evidence-based medicine, this plays to a mnemetic's strength. It was a comment period, which ended June 8th.

Speaker Change: Two of our three products offered in the private office, including our flagship EpiFix product, are among the 15 approved for reimbursement.

Speaker Change: The third, EpiEffect, is not on the list due to a lack of sufficient published evidence. However, we now have a highly powered, randomized controlled trial underway for EpiEffect, which should lead to coverage in the future.

Joseph H. Capper: However, we now have a highly powered randomized controlled trial underway for EpiEffect, which should lead to coverage in the future. The industry appears to be appropriately moving towards a requirement to produce clinical evidence to prove efficacy as products come to market. Given our long-term commitment to evidence-based medicine, this plays to a MiMedx strength.

Speaker Change: The industry appears to be appropriately moving towards a requirement to produce clinical evidence to prove efficacy as products come to market.

Speaker Change: Given our long-term commitment to evidence-based medicine, this plays to MiMedx's strength.

Joseph H. Capper: In addition to providing comments to the MACs, we've made recommendations directly to CMS and other stakeholders. We are now awaiting word from the MACs on their plans for implementation of the LCDs. A few weeks ago, CMS published the proposed 2025 Physician Fee Schedule, which does not include proposed changes to the pricing methodology for skin substitutes.

Joseph Capper: In addition to providing comments to the max, we've made recommendations directly, CMS, and other stakeholders. We are now awaiting word from the Max on their plans for implementation of the LCDs. A few weeks ago, CMS published the proposed 2025 Physician Fee Schedule, which does not include proposed changes to the pricing methodology for skin substitute. That being the case, implementation of the LCDs in a format similar to what has been proposed is the most likely near-term mechanism for Medicare to rein in this runaway spend. This will cause some level of disruption in the market, at least in a short term.

Speaker Change: It was a comment period which ended June 8th.

Speaker Change: In addition to providing comments to the MACs, we've made recommendations directly to CMS and other stakeholders.

Speaker Change: We are now awaiting word from the MACs on their plans for implementation of the LCDs.

Speaker Change: A few weeks ago, CMS published the proposed 2025 Physician Fee Schedule, which does not include proposed changes to the pricing methodology for skin substitutes.

Joseph H. Capper: That being the case, implementation of the LCDs in a format similar to what has been proposed is the most likely near-term mechanism for Medicare to rein in this runaway spend. However, this will cause some level of disruption in the market, at least in the short term. However, given the balance of our product portfolio, our commitment to evidence-based medicine, and our much improved financial profile, I believe we are well positioned to navigate the changes and expect us to benefit in the end under a more rational reimbursement structure.

Speaker Change: That being the case, implementation of the LCDs in a format similar to what has been proposed is the most likely near-term mechanism for Medicare to rein in this runaway spend.

Joseph Capper: However, given the balance of our product portfolio, our commitment to evidence-based medicine, and our much improved financial profile, I believe we are well positioned to navigate the changes and expect us to benefit in the end under a more rational reimbursement structure.

Speaker Change: This will cause some level of disruption in the market, at least in the short term.

Speaker Change: However, given the balance of our product portfolio, our commitment to evidence-based medicine

Speaker Change: and our much improved financial profile, I believe we are well positioned to navigate the changes and expect us to benefit in the end under a more rational reimbursement structure.

Joseph Capper: In terms of guidance, we think the prudent thing to do at this point is to update our full-year revenue growth guidance, bringing it from the low double digits to the mid to high single digits. To reiterate, well less than 25% of our business is in the effective care settings. Our second half overall performance will be impacted by whether or not the max implement that proposed LCDs. Again, we see the implementation as a net positive for my medics, but until CMS provides some clarity on the path forward, we have the plan for continued disruption. Obviously, we will revisit expectations as we learn more.

Joseph H. Capper: In terms of guidance, we think the prudent thing to do at this point is to update our full-year revenue growth guidance, bringing it from the low double digits to the mid to high single digits. To reiterate, less than 25% of our business is in the infected care setting. Our second half overall performance will be impacted by whether or not the MACs implement the proposed LCDs.

Speaker Change: In terms of guidance,

Speaker Change: We think the prudent thing to do at this point is to update our full year revenue growth guidance, bringing it from the low double digits to the mid to high single digits.

Speaker Change: To reiterate, while less than 25% of our business is in the affected care settings.

Speaker Change: Our second half overall performance will be impacted by whether or not the MACs implement the proposed LCDs.

Joseph H. Capper: Again, we see the implementation as a net positive for MiMedx. But until CMS provides some clarity on the path forward, we have to plan for continued disruption. Obviously, we will revisit expectations as we learn more. But I want to stress that this fine-tuning is specifically linked to this very acute reimbursement issue at the private office and adjacent settings and in no way diminishes our excitement about the long-term prospects for the business, and specifically our ability to grow the top line in the low double digits with a strong adjusted EBITDA profile above 20% once we have cleared this challenge.

Speaker Change: Again, we see the implementation as a net positive for MiMedx, but until CMS provides some clarity on the path forward, we have to plan for continued disruption.

Joseph Capper: I want to stress that this fine tuning is specifically linked to this very acute reimbursement issue in the private office and adjacent settings, and in no way diminishes our excitement about the long-term prospects for the business, and specifically our ability to grow the top line in the low double digits with a strong adjusted EBITDA profile above 20%, once we have cleared this challenge. Importantly, the LCD do not affect the efforts and strategy underpinning our surgical business, which we think has a bright future with a large and growing addressable market, particularly as we expand our product portfolio and leverage the science supporting the superiority of our technology, as demonstrated in the nature publication.

Speaker Change: Obviously, we will revisit expectations as we learn more.

Speaker Change: I want to stress that this fine-tuning is specifically linked to this very acute reimbursement issue in the private office and adjacent settings, and in no way diminishes our excitement about the long-term prospects for the business.

Speaker Change: and specifically our ability to grow the top line in the low double digits with a strong adjusted EBITDA profile above 20% once we have cleared this challenge.

Joseph H. Capper: Importantly, the LCDs do not affect the efforts and strategy underpinning our surgical business, which we think has a bright future with a large and growing addressable market, particularly as we expand our product portfolio and leverage the science supporting the superiority of our technology, as demonstrated in the Nature publication. In closing, I would like to congratulate and thank the entire MiMedx team for delivering another solid quarter. I am confident we will navigate the current challenges we discussed and continue to stay focused on helping to improve the lives of the many people who are treated with our growing portfolio of products. With that, I would like to open the call to questions. Operator, we are now ready for our first question. Please proceed.

Speaker Change: Importantly, the LCDs do not affect the efforts and strategy underpinning our surgical business.

Speaker Change: which we think has a bright future with a large and growing addressable market, particularly as we expand our product portfolio and leverage the science supporting the superiority of our technology, as demonstrated in the NATURE publication.

Joseph Capper: In closing, I would like to congratulate and thank the entire My Medics team for delivering another solid quarter. I am confident we will navigate the current challenges we discuss and continue to stay focused on helping to improve the lives of the many people who are treated with our growing portfolio of products.

Speaker Change: In closing I would like to congratulate and thank the entire MiMedx team for delivering another solid quarter. I am confident we will navigate the current challenges we discussed and continue to stay focused on helping to improve the lives of the many people who are treated with our growing portfolio of products.

Joseph Capper: With that, I would like to open up all to questions.

Operator: Operator, we are now ready for our first question. Please proceed. Thank you.

Speaker Change: With that, I would like to open the call to questions. Operator, we are now ready for our first question. Please proceed.

Operator: We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star 2.

Speaker Change: Thank you.

Speaker Change: We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad.

Speaker Change: A confirmation tone will indicate that your line is in the question queue.

Speaker Change: You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Operator: One moment, please, while we poll for questions. Our first question comes from Ross Osborne with Cantor Fitzgerald. Please proceed with your question.

Operator: One moment, please. Will we pull for questions.

Ross Osborn: Our first question comes from Ross Osburn with Cantor Fichel. Please proceed with your question. Thank you. Thanks for taking our questions.

Speaker Change: One moment, please, while we poll for questions.

Speaker Change: Our first question comes from Ross Osborne with Cantor Fitzgerald. Please proceed with your question.

Ross Osborne: Hi guys, thanks for taking our questions. So starting off, we'd be curious to hear if you think you've seen the worst of the attrition of customers and sales force to the high price products. And then, going off of this, how should we think about revenue cadence for the balance of the year to get to your mental high single-digit guide?

Joseph Capper: So starting off, we'd be curious to hear if you think you've seen the worst of the nutrition of customers and cell forests due to high price products. And then going off with this, how should we think about revenue cadence for the balance of the year to get to your mid to high single digit guide? Yeah, I do think we've seen the worst of it. We had kind of a bolus of activity in the second half of the second quarter. Like I mentioned in my commentary, higher-than-normal customer-turned-in employee turnover. So we moved pretty rapidly to kind of limit the damage there, rebuild in the areas that were most effective.

Ross Osborne: Hi guys, thanks for taking our questions. So starting off, we'd be curious to hear if you think you've seen the worst of the attrition of customers and Salesforce due to high-priced products. And then going off of this, how should we think about revenue cadence for the balance of the year to get to your mid to high single-digit guide?

Joseph H. Capper: Yeah, I do think we've seen the worst of it. We had kind of a bolus of activity in the second half of the second quarter. As I mentioned in my commentary, higher than normal customer return and employee turnover.

Speaker Change: Yeah, I do think we've seen the worst of it. We had kind of a bolus of activity in the second half of the second quarter, like I mentioned in my commentary, higher than normal customer turn and employee turnover. So we moved pretty rapidly to...

Unknown Executive: So we moved pretty rapidly to Unknown Executive, Swayampakula Ramakanth, Matthew Notarianni, Chase Knickerbocker, Douglas, to cover with, you know, adjacent folks. So we've worked through that. We think we're in pretty good shape now and expect that the worst of it is behind us. But... That being said, there's still an awful lot of activity around the sales of these, what we refer to as artificially high-priced products. So, you know, we're going to battle through it. The best thing that can happen is that the government takes some sort of remedial action as soon as humanly possible.

Speaker Change: [inaudible]

Joseph Capper: Frankly, it was concentrated in the handful of areas, which made it a little bit more difficult to cover with, you know, adjacent folks. So, we've worked through that. We think we're in pretty good shape now, and expected the worst of it is behind us. But, not being said, there's still an awful lot of activity around the sales of these, as we referred to as artificially high-price products. So, you know, we're going to battle through it. The best thing that can happen is that the government takes some sort of remedial action as soon as humanly possible.

Speaker Change: to cover with, you know, adjacent folks. So we've worked through that. We think we're in pretty good shape now and expected the worst of it is behind us. But.

Speaker Change: That being said, there's still an awful lot of activity around the sales of these, as we refer to as artificially high-priced products. So we're going to battle through it.

Speaker Change: The best thing that can happen is that the government takes some sort of remedial action as soon as humanly possible. We hope to see it.

Joseph Capper: We hope to see it in the Physician Fee Schedule which was proposed a few weeks ago. We did not. So, the next best thing that can happen is for the max to implement that proposed LCDs in their current or some similar format. Again, this would curtail most of the behavior because those super high-price products are not only approved list. But, we have to plan for the worst. That being the case, we felt it was approved to take guidance down to the mid-high single digits with potential upside if the LCDs are implemented. We planned for no upside in that guidance with LCD implementation because we can't predict when that will happen.

Joseph H. Capper: We hope to see it. In the physician fee schedule, which was proposed a few weeks ago, we did not. So, the next best thing that could happen is for the MACs to implement the proposed LCDs in their current or some similar format. Again, this would curtail most of the behavior because those super-high-priced products are not on the approved list.

Speaker Change: in the physician fee schedule which was proposed a few weeks ago. We did not.

Speaker Change: So the next best thing that can happen is for the for the MACs to implement that proposed LCDs in their current or some similar format. Again this would curtail most of the

Joseph H. Capper: But we have to plan for the worst. That being the case, we felt it was prudent to take guidance down to the mid to high single digits with potential upside if the LCDs are implemented. We plan for no upside in that guidance with LCD implementation because we can't predict when that will happen, but we thought it was the most prudent thing to do. And that assumes kind of a similar run rate in sales to what we're seeing right about now.

Speaker Change: behavior because those super high-priced products are not on the approved list.

Speaker Change: But we have to plan for the worst. That being the case, we felt it was prudent to take guidance down to the mid to high single digits with potential upside if the LCDs are implemented. We plan for no upside in that guidance with LCD implementation because we can't predict when that will happen.

Joseph Capper: But, we felt it was the most approved thing to do, and that assumes kind of a similar run rate in sales to what we're seeing right about now. You know, Ross, I'd also just add that sort of our back half guidance certainly anticipates continued momentum behind our recent launch of our Zina Graph, Heliagin. Epi-effect is off to a good start this year and certainly gaining traction with amni-effect in our surgical suite, and our international business continues to grow. But, the best majority of the turbulence we think will happen as Joe indicated because a lot of this happened in the second half of the second quarter from a cadence perspective.

Speaker Change: But we thought it was the most prudent thing to do, and that assumes kind of a similar run rate in sales to what we're seeing right about now.

Douglas C. Rice: Yeah, Ross, I'd also just add that our back half guidance certainly anticipates continued momentum behind, you know, our recent launch of our Xenograft Heliogen epi effect is off to a good start this year and certainly gaining traction with the amnio effect in our surgical suite, and our international business continues to grow. But the vast majority of the turbulence we think will happen, as Joe indicated, because a lot of this happened in the second half of the second quarter, from a cadence perspective, I'd expect that, you know, to continue to play out as we recover.

Speaker Change: Yeah, Ross, I'd also just add that sort of our back half guidance certainly anticipates continued momentum behind.

Speaker Change: Our recent launch of our xenograft, heliogen, epi effect.

Speaker Change: is off to a good start this year and certainly gaining traction with AmnioEffect and our surgical suite. And our international business continues to grow, but the vast majority of the turbulence we think will happen.

Speaker Change: As Joe indicated, because a lot of this happened in the second half.

Douglas Rice: I'd expect that to continue to play out as we recover, and we've already filled, you know, almost all the gaps at this point, you know, for Q3. So, and we've also got some traditional healthcare seasonality playing out in Q3.

Joseph H. Capper: of the second quarter. From a cadence perspective, I'd expect that, you know, continue to play out as we recover. And we've already filled, you know, almost all the gaps at this point.

Douglas C. Rice: And we've already filled almost all the gaps at this point for Q3. So, and we've also got some traditional healthcare seasonality playing out in Q3. So I'd see Q3 as being more impacted than Q4.

Joseph H. Capper: Q3, and we've also got some traditional health care seasonality playing out in Q3, so I'd see Q3 as being more impacted than Q4.

Ross Osborn: So, I'd say Q3 is being more impacted than Q4. Okay, got it. It's very helpful.

Ross Osborne: Okay, got it. That's very helpful. And then lastly, for us, we'll jump back in queue. Can we spend a little bit more time on the RCT for the epi effect, just in terms of the size, timeline, and cost assumptions there?

Chase Knickerbocker: And then lastly, for us, we'll jump back in Q. Could we turn a little bit more time in the RSCT for Epi-effect just in terms of the side timeline and cost assumptions there? Yeah, we did not put out the side in terms of number of patients. I would just refer to it as a highly powered, well-designed RSCT. It's already been through IRP, so the study is underway. We're at the outside of patient enrollment. We think, timeline, I think, we had talked about probably around a year with interim report-outs in like the six-month time frame, and I don't think we'd put out a number on it.

Speaker Change: Okay, got it. That's very helpful. And then, lastly for us, we'll jump back in queue. Can we spend a little bit more time in the RCT for Epi Effect, just in terms of the size, timeline, and cost assumptions there?

Joseph H. Capper: Yeah, we did not put out the size in terms of number of patients. I would just refer to it as a highly powered, well designed RCT that has already been through IRB, so the study is underway. We're at the outset of patient enrollment. We think the timeline. I think we talked about probably around a year with interim report outs and like the six-month time frame, and I don't think we put out a number on it, but well within our budget and we'll forecast, so it will have a huge impact on our R&D spend as a percent of revenue.

Speaker Change: Yeah, we did not put out the size in terms of number of patients. I would just refer to it as a highly powered, well-designed

Speaker Change: RCT has already been through IRB so the study is underway. We're at the outset of patient enrollment.

Speaker Change: We think, timeline I think, we had talked about probably around a year with minimum report outs and like the six-month time frame, and I don't think we put out a number on it, but well within our budget, our forecast. So we'll, we'll have a,

Chase Knickerbocker: Well, within our budget, it will forecast, so it will, it will have a huge impact on our R&D as a percentage of... Revenant. Got it. Thanks for taking our questions. Thank you.

Speaker Change: A huge impact on our R&D span as a percent of revenue.

Unknown Executive: Thank you for initiating coverage, Frost Sweep.

Chase Knickerbocker: We're initiating coverage for us. We appreciate our relationship with Cantor. Likewise. Thank you.

Speaker Change: Got it. Thanks for taking our questions.

Speaker Change: Thank you for appreciating coverage, Ross. We appreciate our relationship with Kantor.

Chase Knickerbocker: Our next question comes from Chase Knickerbocker with Craig Howell and Capital Group. Please proceed with your question. Good afternoon, guys. Just first, help me understand a little bit here, Joe. What was different in Q2 and kind of going forward relative to Q1 and kind of last year. Obviously, there's been these high SP products in the market. Maybe speak to what happened kind of specifically in the second half of Q2 that was driving kind of additional turn of customers and sales reps in this quarter relative to others. Was there kind of new strategy from some of these players, or just speak to exactly what was different?

Operator: Our next question comes from Chase Knickerbocker with Craig Hallam Capital Group. Please proceed with your question.

Speaker Change: Likewise. Thank you.

Speaker Change: Our next question comes from Chase Knickerbocker with Craig Hallam Capital Group. Please proceed with your question.

Chase Richard Knickerbocker: Good afternoon, guys. Just first, help me understand a little bit here, Joe, what was different in Q2 and kind of going forward relative to Q1 and kind of last year. Obviously, there were these high ASP products in the market. Maybe speak to what happened kind of specifically in the second half of Q2 that was driving kind of additional churn of customers and sales reps, you know, in this quarter relative to others. Was there kind of new strategy from some of these players, or just speak to exactly what was different? Thanks.

Chase Richard Knickerbocker: Good afternoon, guys. Just first,

Chase Richard Knickerbocker: Help me understand a little bit here, Joe, what was different in Q2.

Chase Richard Knickerbocker: and kind of going forward, relative to Q1 and kind of last year, obviously there's been these high ASP products in the market. Maybe speak to what happened kind of specifically in the second half of Q2 that was driving kind of additional churn of customers and sales reps.

Chase: You know in this quarter relative to others, was there kind of new strategy from some of these players or just speak to exactly what was different? Thanks. I think it's just more of it Chase. You know, you've been following this for a while now. We've been talking about this as an issue for

Joseph Capper: Thanks. I think it's just more of a chase. You've been following this for a while now. We've been talking about this as an issue for a couple of years. Originally, we were lobbying to have people, other participants, be required to report their ASP so that everyone's quote-unquote plan on the even plan field folks were using. You may recall a whack-and-envoys price even though I reported rebates, so that was causing a lot of issues. And then, you know, quickly people started to migrate to the ASP price list. We saw this huge spike up of the number of products on that list.

Joseph H. Capper: I think it's just more of a chase. You know, you've been following this for a while now. We've been talking about this as an issue for a couple of years. Originally, we were lobbying to have people, other participants, be required to report their ASPs so that everyone was, quote-unquote, playing on an even playing field. Folks were using, you may recall, whacking invoice pricing and not reporting rebates. That was causing a lot of issues.

Speaker Change: A couple of years. Originally...

Speaker Change: We were lobbying to have...

Chase: people.

Chase: Other participants be required to report their ASPs so that everyone is quote-unquote playing on the even playing field. Folks were using, you may recall, WACC and invoice pricing and not reporting rebates. That was causing a lot of issues.

Joseph H. Capper: And then, you know, quickly, people started to migrate to the ASP price list. We saw this huge spike in the number of products on that list. Then we saw companies start to price these things at dramatically high levels, 10 times what the normal price levels were, and using a scheme to rotate multiple products in and out of the market in order to keep that price at those high levels. So I think what's happened is a couple of things. One, there are just more and more people getting into the game.

Chase: And then, you know, quickly people started to migrate to the ASP pricelist. We saw this huge spike up of the number of products on that list.

Joseph Capper: Then we saw companies start to price these things at dramatically high levels. Ten times what the normal price levels were. And using a scheme to rotate multiple products in and out of the market in order to keep that price at those high levels. So I think what's happened is a couple of things. One, there's just more and more people get into the game, and there's a lot more product in the market. There's a lot of people making a fortune by doing this. It kind of makes my stomach a little ill when I think about it because what they're doing is using these schemes to over-build Medicare at these artificially high prices, which hurts the transplant taxpayers most of all.

Chase: Then we saw companies start to price these things at dramatically higher prices.

Chase: [inaudible]

Chase: at those high levels. So, I think what's happened is a couple of things. One, there's just more and more people getting into the game.

Joseph H. Capper: And there's a lot more products in the market. There are a lot of people making a fortune by doing this. It kind of makes my stomach a little ill when I think about it because what they're doing is using these schemes to overbill Medicare at artificially high prices, which hurts the trust fund taxpayers and, most of all, some of the most vulnerable members of our society, elderly people who are dealing with chronic wounds.

Chase: And there's a lot more product in the market, there's a lot of people making a fortune.

Chase: by doing this.

Chase: It kind of makes my stomach a little ill when I think about it because what they're doing is...

Chase: using these schemes to overbill

Chase: Medicare at these artificially high prices, which...

Joseph Capper: Some of those vulnerable members of our society, elderly people who are dealing with chronic wound. So it's unfortunate. But I think to your point, is how it accelerated. We did a pretty good job keeping it safe for a while. We've been lobbying the government to make change, and we have had no success. So frankly, we're probably losing a little credibility in that argument, telling people that this is wrong and shouldn't be doing it. It's tough when everybody else is doing it, and you see your friends making a bunch of money. And then doctors are telling you how rich they're getting.

Chase: [inaudible]

Joseph H. Capper: And so it's unfortunate, but I think, to your point, it's hot and accelerating. We did a pretty good job keeping it at bay for a while. We've been lobbying the government to make changes, and we have had no success. So, frankly, we're probably losing a little credibility in that argument, telling people that this is wrong and shouldn't be doing it. It's tough when everybody else is doing it, and you see your friends making a bunch of money, and then doctors are telling you how rich they are getting. So it's a hot mess, and it needs to be addressed.

Speaker Change: So, frankly, we're, you know, we're probably losing a little credibility in that argument. Telling people that this is wrong and shouldn't be doing it. It's tough when everybody else is doing it and you see your friends making a bunch of money and then doctors are telling you how rich they're getting. So it's, it was, it's a hot mess and it needs to be addressed.

Joseph Capper: So it's a hot mess, and it needs to be addressed.

Joseph Capper: Do you think there's any dynamic that now that these LCDs are out there and slated to potentially go into effect, that there's a little bit of some spurring of usage because some of these loopholes might be closed in the fairly near term? Your looks to God's ears. I would love to see it. I think the fact that the LCDs are looming, and we should hear something at any day or any day is helpful. The fact that the Department of Justice is now. Put a spotlight on it. There's some media coverage. Just pick it up on it.

Joseph H. Capper: Do you think there's any dynamic that, now that these LCDs are out there and, you know, slated to potentially go into effect, there's a little bit of a, um.., you know, some spurring of usage because some of these loopholes might be closed in the fairly near term?

Speaker Change: Do you think there's any dynamic that, now that these LCDs are out there and, you know, slated to potentially go into effect, that there's a little bit of a, um...

Speaker Change: Some spurring of usage because some of these loopholes might be closed in the fairly near term.

Joseph H. Capper: I would love to see it. I think the fact that the LCDs are looming and we should hear something any day, or any time, is helpful. The fact that the Department of Justice has now put a spotlight on it. There's starting to be some media coverage picking up on it. We're lobbying with CMS. We're talking to the Max.

Speaker Change: Your lips are God's ears, right? I would love to see it. I think the fact that the LCDs are looming and we should hear something at any day, or any day, is helpful. The fact that the Department of Justice has now

Joseph Capper: We're lobbying with CMS. We're talking to the Mac. We're talking to lawmakers. We're talking to media. So people are starting to see this for what it is. It's a pretty elaborate scam. And when you look at the chart from our presentation, look at the slope. When you go from like what 500 million dollars or less than 500 million dollars in 2020 to over 4 billion in 2023, there's no other product category that does that. This wasn't the introduction of a new life-saving drug. This is using fairly mature products to overbuild the government. That's what this is all about.

Speaker Change: put a spotlight on it. There's starting to be some media coverage is picking up on it. We're lobbying with CMS. We're talking to the max. We're talking to lawmakers. We're talking to media.

Joseph H. Capper: We're talking to lawmakers. We're talking to the media. So people are starting to see this for what it is. It's a pretty elaborate scam. And when you look at, if you saw the chart from our presentation, look at the slope. When you go from like $500 million or less than $500 million in 2020 to over $4 billion in 2023, there's no other product category that does that. This wasn't the introduction of a new life-saving drug.

Speaker Change: So people are starting to see this for what it is. It's a pretty elaborate scam.

Speaker Change: And if you saw the chart from our presentation, look at the slope.

Speaker Change: When you go from like, what, $500 million or less than $500 million in 2020 to over $4 billion in

Speaker Change: 2023. There's no other product category that does that. This wasn't the introduction of a new life-saving drug. This is using fairly mature products to overbill the government. That's what this is all about. It's a very elaborate scheme to overbill the government, and as I indicated, some critical

Joseph H. Capper: This is using fairly mature products to overbill the government. That's what this is all about. It's a very elaborate scheme to overbill the government.

Joseph Capper: It's a very elaborate scheme to overbuild the government. And, as I indicated, some critical or some vulnerable numbers of our society. So it has to change, right? You would think that this is going to get shut down. That being said, the people that are talking to have to work through a process or has to be a publication of proposed rule changes. There has to be comment periods, comment periods, et cetera, et cetera. So they're working through the process, which unfortunately takes time. Yeah, it's great that the DOJ is going after people that are really abusing it.

Joseph H. Capper: And, as I indicated, some critical or some vulnerable members of our society. So it has to change, right? You would think that this is gonna get shut down. That being said, the people that we're talking to have to work through a process. There has to be a publication of proposed rule changes. There has to be comment periods, et cetera, et cetera. So they're working through the process, which, unfortunately, takes time. Yeah, it's great that the DOJ is going after people that are really abusing it. But that's, you know... They still need to close the front end of this problem.

Speaker Change: There were some vulnerable members of our society, so it has to change, right? You would think that this is going to get shut down?

Speaker Change: That being said, the people that we're talking to have to work through a process. There has to be a publication of proposed rule changes, there has to be comment periods, etc. So they're working through the process, which unfortunately takes time.

Speaker Change: Yeah, it's great that the DOJ is going after people that are really abusing it, but that's, you know...

Chase Knickerbocker: But they still need to pose the front end of this problem. And Chase, I would say don't forget that this is one side of service and one payer that we're having these turbulences in. So I would expect that to normalize over time. But we believe that generally it's less than 25% of our total top line. The remainder of the business remains strong and healthy, with a lot of growth drivers. Understood. Then just last two from us. If we think about that LCD, whenever it does potentially go into effect, right? If we think about that first quarter for you guys, do you see that as being positive to the trajectory of revenue again in that first quarter that goes into effect, even despite having some the revenue from that be effect, you know, likely rolling out of the model in that quarter.

Douglas C. Rice: And Chase, I would say don't forget that this is one side of service and one payer that we're having this turbulence in, so I would expect that to normalize over time, but we believe that, generally, it's less than 25% of our total top line. The remainder of the business remains strong and healthy with a lot of growth drivers.

Speaker Change: They still need to close the front end of this problem.

Chase Richard Knickerbocker: Understandable. Then just last two from us.

Speaker Change: And Chase I would say don't forget that this is

Chase Richard Knickerbocker: One side of service and one payer that we're having.

Chase Richard Knickerbocker: So I would, you know, expect that to normalize over time, but we believe that...

Chase Richard Knickerbocker: Generally, it's less than 25%.

Chase Richard Knickerbocker: of our total top line, the remainder of the business remains.

Chase Richard Knickerbocker: If we think about, you know, that LCD, whenever it does, you know, potentially go into effect, right? If we think about that first quarter for you guys, do you see that as being positive for the trajectory of revenue? Again, in that first quarter that goes into effect, even despite having some revenue from EpiEffect, you know, likely rolling out of the model in that quarter. So again, just that quarter having a positive effect, the LCD has a positive effect on revenue that quarter. And then second, for Doug, just on EBITDA, do we still expect kind of 20% margins, or how should we be thinking about EBITDA through the remainder of the year? Thanks.

Chase Richard Knickerbocker: Strong and healthy with a lot of growth drivers.

Speaker Change: Understood. Then just last two from us, if we think about, you know, that LCD, whenever it does, you know, potentially go into effect, right?

Speaker Change: If we think about that first quarter for you guys.

Speaker Change: Do you see that as being positive?

Speaker Change: to the trajectory of revenue again in that first quarter that goes into effect.

Speaker Change: the revenue from EpiEffect, you know, likely rolling out of the model in that quarter. So again, just

Douglas Rice: So again, just that quarter having a positive effect, the LCD have a positive effect on revenue that quarter. And then second for Doug, just on EBITDA. Do we still expect kind of 20% margins, or how should we be thinking about EBITDA through the remainder of the year? Thanks. Yeah, I would expect, and I'll take into business soon after these things are implemented. I don't think there is a lot of inventory burn off when the inventory is raised at $2,000 per square centimeter. I just don't think people are carrying a lot of it. So my guess is we'll probably see the market shift pretty quickly.

Doug: that quarter having a positive effect, the LCD have a positive effect on revenue that quarter. And then second, for Doug, just on EBITDA, do we still expect kind of 20% margins? Or how should we be thinking about EBITDA through the remainder of the year? Thanks.

Joseph H. Capper: Yeah, I would expect an uptick in business soon after these things are implemented. I don't think there is a lot of inventory burn-off when inventory is priced at $2,000 per square centimeter. I just don't think people are carrying a lot of it. So my guess is we'll probably see the market shift pretty quickly.

Doug: Yeah, I would expect an uptick in the business.

Speaker Change: Soon after these things are implemented. I don't think there's a lot of inventory burn off when the inventory is priced at $2,000 per square centimeter. I just don't think people are carrying a lot of it. So my guess is We'll probably see the market shift pretty quickly.

Douglas Rice: From a just an even out perspective, we didn't guide, but the way I think about the back half of the year is we're certainly built to grow, we're built to scale and we believe that a lot of the turbulence today is transient and we'll certainly recover, and we want to maintain the good infrastructure that we already have. But I would expect that while we had about 22% even on the first half of the year, we've got it previously that we thought would be north of 20. I think we'll approach 20. I think we'll be modestly below 20 for the back half of the year.

Douglas C. Rice: Just from an Evadon perspective, we didn't guide, but the way I think about the back half of the year is that we're certainly built to grow, we're built to scale, and we believe that a lot of the turbulence today is transient, and we'll certainly recover, and we want to maintain the good infrastructure that we already have. But I would expect that while we had about 22% Evadon in the first half of the year, we've guided previously that we thought we'd be north of 20, I think we'll approach 20, and I think we'll be modestly below 20 for the back half of the year, and I would look at that as sort of a gross margin in the low 80s at this point, as we have less volume in this particular side of service to cover our fixed costs

Speaker Change: from

Speaker Change: But just to even out perspective, we didn't guide, but the way I think about the back half of the year...

Speaker Change: The Good Infrastructure that we already have, but I would expect...

Speaker Change: that while we had about 22%

Speaker Change: Joseph Capper, Matthew Notarianni

Douglas Rice: And I would look at that as sort of gross margin in the low 80s at this point, as we have less. Volume in this particular side of service to cover our fixed costs. And I think the other big driver here is that is the FB effect RCT ramps up that we would expect R&D to be closer to mid single digits at that point, instead of the three percent or so that they run on the first half of the year.

Douglas C. Rice: And I think the other big driver here is that as the FE Effect RCT ramps up, we would expect R&D to be closer to mid-single digits at that point instead of the 3% or so that they've run in the first half of the year.

Speaker Change: You know, volume in this particular side of service.

Speaker Change: to cover our fixed costs. And I think the other big driver here is that as the FE Effect RCT ramps up, that we would expect R&D to be closer to mid-single digits at that point instead of the 3% or so that they've run in the first half of the year.

Joseph Capper: Chase, it's Joe. I know we're talking a lot about LCDs, and I'm sure that the rest of the questions we're going to get are going to revolve around this as well because of the nature of the issue. And, as you indicate, it's been going on for a while. This is really the first quarter that we've talked about this much and that we've been impacted by it. We do see this transitory. We don't think it impacts the business long term. It's a nuisance that we have to deal with. However, as difficult as it is to deal with, we still recorded 87 million hours of revenue in a quarter, which is tied for the highest quarter we've ever had.

Joseph H. Capper: Chase, it's Joe. Listen, I know we're talking a lot about the LCDs, and I'm sure the rest of the questions we're going to get are going to revolve around this as well because of the nature of the issue. And as you indicated, it's been going on for a while, but this is really the first quarter that we've talked about it this much and that we've been impacted by it. We do see it as transitory.

Speaker Change: Chase, it's Joe. Listen, I know we're talking a lot about the LCDs and I'm sure the rest of the questions we're going to get are going to revolve around this as well because of the nature of the issue.

Chase Richard Knickerbocker: And as you indicated, it's been going on for a while. This is really the first quarter that we've talked about it this much and that we've been

Joseph H. Capper: We don't think it impacts the business long-term. It's a nuisance that we have to deal with. However, as difficult as it is to deal with, we still recorded $87 million in revenue in a quarter, which is tied for the highest quarter we've ever had, and we're still generating a lot of cash and a lot of adjusted earnings even that. So we will get through this, and as you have heard me indicate in the past, once we're on the other side of this reimbursement issue, and once we get more stability from a regulatory And I think in the long run, this will all play out, and we'll look back and laugh.

Speaker Change: impacted by it.

Chase Richard Knickerbocker: We do see it as transitory. We don't think it impacts the business long-term.

Chase Richard Knickerbocker: It's a nuisance that we have to deal with.

Speaker Change: However,

Speaker Change: as difficult as it is to deal with.

Speaker Change: We still recorded $87 million of revenue in the quarter, which is...

Joseph Capper: And we're still generating a lot of cash and a lot of adjustment. So we will get through this. And as you heard me indicate the past that once we're on the other side of this, this reimbursement issue, and once we get more stability from a regulatory standpoint, we fix regulatory and reimbursement in this industry. It's a lot more visible. I think in the long run, this will all play out and we'll look back and laugh about it at some point. Got it. Yeah. Thanks for seeing the question. Thanks for your time.

Speaker Change: A tie for the highest quarter we've ever had.

Speaker Change: And we're still generating a lot of cash and a lot of adjusted even that so we will get through this and as if you heard me indicate the past that

Speaker Change: Once we're on the other side of this reimbursement issue and once we get more stability from a regulatory standpoint, we fix regulatory and reimbursement in this industry, it's a lot more investable. And I think in the long run, this will all play out and we'll look back and laugh about it at some point.

Chase Richard Knickerbocker: Got it, yeah, thanks for sending the questions, guys.

Speaker Change: Got it, yeah. Thanks for sending the questions, guys.

Brooks O'Neill: Our next question comes from Brooks O'Neill with Lake Street Capital Markets. Please proceed with your question. Thank you very much. Joe, as you said, a lot of questions, a lot of coming on LCD. So following on, I've got one more. I'm just curious.

Operator: Our next question comes from Brooks O'Neill with Lake Street Capital Markets. Please proceed with your question.

Trish: Thanks, Trish.

Speaker Change: Our next question comes from Brooks O'Neill with Lake Street Capital Markets. Please proceed with your question.

Brooks O'Neill: Thank you very much, Joe. As you said, there were a lot of questions and comments on LTD. So following that, I've got one more.

Brooks O'Neill: Thank you very much, Joe. As you said, a lot of questions, a lot of comment on LTD.

Brooks O'Neill: I'm just curious, obviously. Last year, it was significantly disrupted by proposals from some of the MAP groups that were subsequently withdrawn. Then they come out with a uniform LCD across seven Macs this year. The one thing I don't think I've heard you guys comment about is do you get any indication from these MACs? following the comment period during the comment period, whether they are determined to write this wrong in the reimbursement loophole situation? Or do you think we could see, you know, additional wobbling on this topic at this time?

Brooks O'Neill: Obviously, a last year significantly disrupted by proposals from some of the Macs that were subsequently withdrawn. Then they come out with a uniform LCD across seven Macs this year.

Brooks O'Neill: So, following on, I've got one more. I'm just curious. Obviously, last year, significantly disrupted by proposals from some of the MACs.

Speaker Change: that were subsequently withdrawn.

Speaker Change: Then they come out with a uniform LCD across seven MACs this year.

Brooks O'Neill: The one thing I don't think I've heard you guys comment about is do you get any indication from these Macs following the comment period during the comment period, whether they are determined to write this wrong in the reimbursement loophole situation, or do you think we could see, you know, additional wobbling on this topic at this time. It's a good question, Brooks. And I would say that they're fairly close to the best in terms of given any sort of indication whether or not they're going to implement and when they would be implemented. So I can't, I can't handicap this for you.

Speaker Change: The one thing I don't think I've heard you guys comment about is, do you get any indication from these MACs?

Speaker Change: Following the comment period, during the comment period, whether they are determined to write this wrong in the reimbursement loophole situation, or do you think we could see, you know, additional wobbling?

Joseph H. Capper: It's a good question, folks, and I would say that they're fairly close to the best in terms of giving any sort of indication whether or not they're going to implement and when they would implement. I can't I can't handicap this for you. I wish I could.

Speaker Change: on this topic at this time.

Speaker Change: It's a good question, folks, and I would say that they're fairly close to the best.

Speaker Change: in terms of giving any sort of indication.

Speaker Change: whether or not they're going to implement and when they would be implemented.

Joseph H. Capper: I would tell you though that in my meetings with the folks that we've been able to talk to, we've had several. They're highly sensitive to what's going on, highly, Mary Inquist is asking a lot of questions and asking for follow-up calls. So they're doing the work on it, which tells me, and again, if I apply some level of logic given the escalation of the spend, which tells me some action will be taken in some format soon. But look, if I had a crystal ball, I'd have the answer for you, buddy.

Joseph Capper: I wish I could. I would tell you, though, that in my meetings with the folks that we've been able to talk to, we've had several. So they're highly sensitive to what's going on, highly sensitive and very quickly and asking a lot of questions and asking for follow calls. So they're doing the work on it, which tells me, and again, if I apply some level of logic, given the escalation of the spend, which tells me some action will be taken in some format soon. But look, I had a crystal ball. I have the answer for you, buddy.

Speaker Change: So I can't, I can't handicap this for you. I wish I could. I would tell you though that in my meetings with the folks that we've been able to talk to, we've had several,

Speaker Change: They're highly sensitive to what's going on. Highly sensitive.

Speaker Change: and Mary Inquist and asking a lot of questions and asking for follow-up calls. So they're doing the work on it.

Brooks O'Neill: Right, here we go. I totally understand. All right, let me just ask you one more different question, and that is, can you give us a sense for the timing of the full rollout of the Xenograft product? You know, I think I heard you use a word that suggested you think the market is big, a really meaningful incremental revenue this year, is it more a 25 event or more a 26 event as you look out into your crystal ball? Thanks a lot.

Brooks O'Neill: Right. Here we go. Totally understand. All right.

Joseph Capper: Let me just ask you one more different question. And that is, can you give us a sense for the timing of the full rollout of the xenograph product. And, you know, I think I heard you use a word that suggested you think the market is big. potentially big and can you give us any sense for you know in dollar terms or whatever how big you think it is for you guys and sort of whether you think you can begin to really see meaningful incremental revenue. Yet this year, is it more a 25 event, is more a 26 event as you look out into your crystal ball.

Speaker Change: So whether you think you can begin to really see meaningful incremental revenue yet this year Is it more a 25 event? Is it more a 26 event as you look out into your crystal ball? Thanks a lot

Joseph Capper: Thanks a lot. Yes, real excited to get this first one out into the marketplace. As a reminder, this is a college-based particularly, so it's going to be used in certain surgical procedures, tender repair, etc. So we do think that there's a good application for this product. We plan to launch other products in the Zina Web category as well. And as a reminder, that just opens up a lot more market opportunity for us. Amniotic tissue only accounts for about 45% in that neighborhood of the total skin submarket, with zina grass and synthetics covering the remainder. So big, big market opportunity for us.

Joseph H. Capper: Yes, I'm real excited to get this first one out into the marketplace, and as a reminder, this is a collagen-based particulate. So it's going to be used in certain surgical procedures, tendon repair, etc. So we do think that there's a good application for this product. We plan to launch other products in the Xenograv category as well. And as a reminder, that just opens up a lot more market opportunity for us. Amniotic tissue only accounts for about 45% in that neighborhood of the total skin sub-market, with xenografts and synthetics covering the remainder.

Speaker Change: Yes, we're real excited to get this first one out into the marketplace, and as a reminder, this is a collagen-based particulate, so it's going to be used in certain surgical procedures, tendon repair, etc. So we do think that there's a good application for this product.

Speaker Change: We plan to launch other products in the xenograft category as well and as a reminder that just opens up a lot more market opportunity for us.

Speaker Change: 45% in that neighborhood of the total skin sub-market with xenografts and synthetics.

Joseph H. Capper: So, a big market opportunity for us, probably at least doubling our TAM. These are areas in the market that we have been precluded from competing in for a variety of different reasons. Sometimes it's cost; sometimes it's other reasons. People don't want to use amniotic tissue. I think it's a pretty good-sized market opportunity for us. We'll see some upside from the product this year, but it will really start to ramp up next year. Great

Speaker Change: covering the remainder.

Joseph Capper: It's probably at least double in our time. These are areas in the market that we have been precluded from competing in for a variety of different reasons. Sometimes it's cost; sometimes it's other reasons. Some people don't want to use amniotic tissue, but I think it's a pretty good size market opportunity for us. We'll see some upside from the product this year, and but really start to ramp up next year. Great. Thank you very much. Good luck with the bad guys. Thanks, folks.

Speaker Change: So, big market opportunity for us, probably at least doubling our TAM.

Speaker Change: These are areas in the market that we have been precluded from competing in for a variety of different reasons. Sometimes it's cost, sometimes it's other reasons. People don't want to use amniotic tissue.

Speaker Change: I think it's a pretty good size market opportunity for us. We'll see some upside from the product this year, but really start to ramp up next year.

Brooks O'Neill: Great. Thank you very much. Good luck with the bad guys.

Speaker Change: Great. Thank you very much. Good luck with the bad guys.

Anthony Patrone: Our next question comes from Anthony Patrone, with this isn't good. Please proceed with your question. Thank you, and hope everyone's doing well. First one just to follow up on Zina graph. Thanks for that detail there. Confedering today in 45% of the market, zina graph gets you in the remaining 55. You know how many products do you need to sort of address that, that you know sort of large market opportunity having an initial product in. How many more zina graph products do you expect to add? And then just a quick follow-up on LCD, you know, when we sort of revert back to some of the data that was out there in terms of the overall billing into Medicare, it was over a billion dollars.

Operator: Our next question comes from Anthony Petrone with the ZooZoo Group. Please proceed with your question.

Bruce: Thanks, Bruce.

Anthony Charles Petrone: Thank you and hope everyone's doing well. First one just to follow up on Xenograft, thanks for that detail there. Competing today in 45% of the market, Xenograft gets you in the remaining 55. How many products do you need to sort of address that sort of large market opportunity? You have an initial product out; how many more Xenograft products do you expect to add? And then just a quick follow-up on LCD. You know, when we sort of revert back to some of the data that was out there in terms of the overall billing to Medicare, it was over a billion dollars.

Speaker Change: Competing today in 45% of the market, Genograph gets you in the remaining 55%.

Speaker Change: You know, how many products do you need to...

Speaker Change: Sort of address that that you know sort of large market opportunity you have an initial product in How many more xenograft products do you expect to add?

Anthony Patrone: You know the expectation is that some of that's going to go away; some of that's going to stay. But at this juncture, as this process is sort of evolving here and being extended ultimately.

Anthony Charles Petrone: You know, the expectation is that some of that's going to go away, and some of that's going to stay. But at this juncture, as this process is sort of evolving here and being extended ultimately, what do you think that opportunity is going to be in the U.S. Physician Office once this settles out and we have a definitive path forward from the MACs? Thanks again.

Anthony Patrone: What do you think that opportunity is going to be in the US position office once this settles out and we have a definitive path forward from the max. Thanks again.

Anthony Patrone: So let me get back to Zino first. So, yeah, we need to round out that product portfolio. I would think of it in terms of similar to what we're doing now. And then the tissue will have sheets of different sizes and different thickness. We're going to use different procedures sometimes with a stronger tensile strength that you can use in more complex surgeries, product that can be sutured, et cetera. So I would say I can't give you a number whether it's two, three, four, six, but we're going to have a variety of skews that meet the needs in the marketplace so that we can compete at all levels.

Joseph H. Capper: So let me get back to Xeno first. So, yeah, we need to round out that product portfolio, and I'm going to think of it in terms of similar to what we're doing now in amniotic tissue. We'll have sheets of different sizes and different thicknesses, et cetera, used in different procedures, sometimes with a stronger tensile strength that you can use in more complex surgeries, a product that can be sutured, et cetera. So I would say I can't give you a number, whether it's 2, 3, 4, or 6, but we're going to have a variety of SKUs that meet the needs of the marketplace so that we can compete at all levels.

Speaker Change: So let me get back to Xeno first. So, yeah, we need to round out that product portfolio. And I'm going to think of it in terms of similar to what we're doing now in amniotic tissue. We'll have sheets of different sizes and different thickness, et cetera, to use in different procedures.

Speaker Change: Sometimes with a stronger tensile strength that you can use in more complex surgeries, a product that can be sutured, etc. So I would say, I can't give you a number whether it's two, three, four, or six, but we're going to have a variety of SKUs that meet the needs of the marketplace so that we can compete at all levels.

Joseph Capper: The question about LCD market opportunity, how much of it is over utilization, how much of this price? Again, if you look at one of the slides we have in a presentation, you can see that the line portion of that is utilization. So there's massive over-utilization as a result of the opportunity to make these incredible amounts of money. So I think utilization is cut way back once this is shut down and cleaned up. And obviously, pricing goes back in line. We've done a lot of sort of sensitivity analysis around this. Once this market is right sized, how much of it we would have an opportunity to compete for just given our current share of amnetic tissue in some of the care settings and then looking at as patients migrate from one care setting to another.

Joseph H. Capper: The question about the LCD market opportunity, how much of it is over-utilisation, and how much of it is price? Again, if you look at one of the slides we had in the presentation, you can see that the line portion of that is utilization. So there's massive over-utilisation as a result of the opportunity to make credible amounts of money.

Speaker Change: The question about LCD market opportunity, how much of it is over-utilization, how much of it is price?

Speaker Change: Again, if you look at one of the slides we had in the presentation, you can see that the line portion of that is utilization, so there's massive over-utilization as a result of the opportunity to make these.

Joseph H. Capper: So I think utilization will be cut way back once this is shut down and cleaned up, and obviously, pricing goes back in line. We've done a lot of sort of sensitivity analysis around this once this market is right-sized, and how much of it we would have an opportunity to compete for, just given our current share of amniotic tissue in some of the care settings, and then looking at how patients migrate from one care setting to another. It's going to be a sizable opportunity for us, Anthony. I don't want to put a number out there, but it will be a pretty decent-sized opportunity. Thank you so much. Our next question comes from Carl.

Speaker Change: incredible amounts of money. So I think utilization is cut way back.

Speaker Change: Once this is shut down and cleaned up.

Speaker Change: and obviously pricing comes back in line.

Speaker Change: And we've done a lot of sort of sensitivity analysis around this once this market is right sized.

Speaker Change: How much of it?

Speaker Change: We would have an opportunity to compete for, given our current share of amniotic tissue.

Speaker Change: In some of the care settings and in looking at as patients migrate from one care setting to another It's going to be a sizable opportunity for us Anthony. I don't want to give it put a number out there But it will be a pretty decent sized opportunity for us

Anthony Patrone: It's going to be a size of opportunity for us, and I don't want to give it put a number out there, but it will be a pretty decent size opportunity for us. Thank you so much.

Carl Byrnes: Our next question comes from Carl Byrnes with Northland Capital Markets. Please proceed with your question. Thanks for the question. Most of my questions have been answered.

Operator: Our next question comes from Carl Byrnes with Northland Capital Markets. Please proceed with your question. Thanks for the question. Most of my questions...

Carl Edward Byrnes: No, I wish they did. Carl, thanks for the question. We talked a little bit about that already. You know, when we ask the question, the answer we get is, we're working through the process. I would just go back and stress the fact that, unlike this time last year, there is a much greater heightened sensitivity, at least from our perspective, to various stakeholders who are involved in setting these rules.

Anthony: Thank you so much.

Anthony: Our next question comes from Carl Byrnes with Northland Capital Markets. Please proceed with your question.

Carl Byrnes: Do you have any fuel or expectations with respect to potential timeline of events that might lead the southern Mags to adopt the LCD? Thanks. No, I wish they did.

Carl Edward Byrnes: Thanks for the question. Most of my questions have been answered. Do you have any feel or expectations with respect to potential timeline of events that might lead Seven Mags to adopt the LCD? Thanks.

Joseph Capper: Carl, thanks for the question. We talked a little bit about that already. You know, when we ask the question, the answer we get is, "we're working through the process, we'll work through the process." I would just go back and stress the fact that, unlike this time last year, there is a much more heightened sensitivity, at least from our perspective, on various stakeholders who are involved in setting these roles in our conversations. People are very into what's going on, and obviously that means they're getting asked a lot of questions as well. So I think this has been elevated to a fairly high level in the various government agencies that have responsibility to either price or implement coverage determinations on these products.

Speaker Change: No, I wish they did. Carl, thanks for the question. We talked a little bit about that already. You know, when we ask the question, the answer we get is,

Speaker Change: We'll work it through the process, we'll work it through the process.

Speaker Change: I would just go back and stress the fact that, unlike this time last year, there is a much more heightened sensitivity, at least from our perspective, on various stakeholders who are involved in setting these rules in our conversations.

Carl Edward Byrnes: In our conversations, people are, you know, very in tune with what's going on, and obviously, that means they're getting asked a lot of questions as well. So I think this has been elevated to a fairly high level in the various government agencies that have responsibility for either price or implementing coverage determinations on these products. But it can't go on for everyone. Who knew that you didn't need a gun to rob a bank; all you needed was a skin substitute?

Speaker Change: people are

Speaker Change: very in tune to what's going on, and obviously that means they're getting asked a lot of questions as well. So I think this has been elevated to a fairly high level in the various government agencies that have responsibility to either price or implement coverage determinations on these products, but it can't go on for all.

Joseph Capper: But it can't go on for all.

Unknown Executive: Who knew that you didn't need a gun to rub it back? All you needed was a skin substitute.

Speaker Change: Who knew that you didn't need a gun to rob a bank? All you needed was a skin substitute.

Carl Byrnes: Thanks so much. Thanks, Carl.

Operator: There are no further questions at this time. I would now like to turn the floor back over to Joe Capper.

Operator: There are no further questions at this time.

Speaker Change: Thanks so much.

Joseph Capper: I would now like to turn the floor back over to Joe Kaffir, sir. I appreciate it. Thanks, everybody. Appreciate your questions and your participation.

Speaker Change: There are no further questions at this time. I would now like to turn the floor back over to Joe Capper for closing comments.

Joseph H. Capper: I appreciate it. Thanks, everybody. I appreciate your questions and your participation. Thanks for your continued interest in the company, and we will talk to you next quarter.

Joseph H. Capper: I appreciate it. Thanks, everybody. Appreciate your questions and your participation. Thanks for your continued interest in the company, and we will talk to you next quarter.

Joseph Capper: Thanks for your continued interest in the company, and we will talk to you next quarter.

Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation. Thank you very much.

Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

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