Q3 2025 MiMedx Group Inc Earnings Call

Speaker #4: Good afternoon and thank you for standing by . Welcome to the Mimetics Third quarter 2025 Operating and Financial Results conference call . At this time , all participants are in listen only mode .

Matthew Notarianni: Good afternoon, and thank you for standing by. Welcome to the MIMEDX Third Quarter 2025 Operating and Financial Results Conference Call. At this time, all participants are in listen-only mode. The question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Matthew Notarianni, Head of Investor Relations for MIMEDX. Thank you. You may now begin.

Speaker #4: A question and answer session will follow the formal . As a reminder , this conference is being recorded . I would now like to turn the conference over to your host , Mr. Matt Notarianni , head , Investor Relations for Mimetics .

Speaker #4: Thank you . You may now begin .

Speaker #5: Thank you . Operator , and good afternoon , everyone . Welcome to the Mimetics Third quarter 2025 operating and Financial Results conference call .

Matthew Notarianni: Thank you, Operator, and good afternoon, everyone. Welcome to the MIMEDX Group Third Quarter 2025 Operating and Financial Results Conference Call. With me on today's call are Chief Executive Officer, Joseph H. Capper, and Chief Financial Officer, Douglas 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. Joseph will kick us off with some opening remarks and a summary of our operating highlights, as well as a discussion of our financial goals. Douglas will provide a review of our financial results for the quarter. Joseph will conclude before we make ourselves available for your questions.

Speaker #5: With me on today's call are Chief Executive Officer Joseph Capper and Chief Financial Officer Douglas Rice. As part of today's webcast, we are simultaneously displaying slides that you can follow.

Speaker #5: You can access the slides from the Investor Relations website at mimetics.com . Joe will kick us off with some opening remarks and a summary of our operating highlights , as well as a discussion of our financial goals .

Speaker #5: And Doug will provide a review of our financial results for the quarter . And then Joe will conclude before we make ourselves available for your questions .

Speaker #5: Before we begin , I would like to remind you that our comments today will include forward looking statements , including statements regarding future sales , operating results and cash balance growth , future margins and expenses .

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, operating results, and cash balance growth, future margins and expenses, our product portfolios, 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, including competition, access to customers, the reimbursement environment, unforeseen circumstances, and delays. 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 report on Form 10-Q. Also, our comments today include non-GAAP financial measures, and we provide a reconciliation to the most comparable GAAP measures in our press release, which is available on our website at mimedx.com. With that, I'm now pleased to turn the call over to Joseph H.

Speaker #5: Our product portfolios and expected market sizes for our products. These expectations are subject to risks and uncertainties, and results may differ materially from those anticipated due to many factors, including competition.

Speaker #5: Access to customers . The reimbursement environment , unforeseen circumstances and delays . 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 Report on Form 10-q .

Speaker #5: Also , our comments today include non-GAAP Financial measures , and we provide a reconciliation to the most comparable GAAP measures in our press release , which is available on our website at .

Speaker #5: Com . With that , I'm now pleased to turn the call over to Joe Capper . Joe .

Matthew Notarianni: Capper. Joseph?

Speaker #6: Thanks , Matt . Good afternoon everyone . Thank you all for joining us for today's call . I'm very pleased to report that our third quarter performance was outstanding across the enterprise , generating strong top line growth in both our wound and surgical franchises .

Joseph H. Capper: Thanks, Matt, and good afternoon, everyone. Thank you all for joining us for today's call. I'm very pleased to report that our third-quarter performance was outstanding across the enterprise, generating strong top-line growth in both our wound and surgical franchises. We set new company highs for quarterly revenue, adjusted EBITDA, and adjusted EBITDA margin, which added $23 million of cash in the quarter. I am extremely proud of the team's focus, which drove these superior results. We continue to prove we can adjust to challenges and advance on opportunities whenever they arise. As such, we are once again raising our full-year 2025 revenue growth guidance and our expectations for adjusted EBITDA margin. Our goal for the remainder of the year is to maximize near-term opportunities to ensure a strong finish and usher in the pending Medicare reimbursement reforms from a position of strength.

Speaker #6: We set new company highs for quarterly revenue , adjusted EBITDA , and adjusted EBITDA margin , which added $23 million of cash in the quarter .

Speaker #6: I am extremely proud of the team's focus , which drove the superior results . We continued to prove we can adjust to challenges and advance on opportunities whenever they arise .

Speaker #6: As such, we are once again raising our full-year 2025 revenue growth guidance and our expectations for adjusted EBITDA margin. Our goal for the remainder of the year is to maximize near-term opportunities to ensure a strong finish and usher in the pending Medicare reimbursement reforms from a position of strength.

Speaker #6: The final rules are likely to be implemented at the start of 2026 , and we are well prepared for a range of potential scenarios , especially given the dramatic financial improvements we've made to the business over the last few years .

Joseph H. Capper: The final rules are likely to be implemented at the start of 2026, and we are well prepared for a range of potential scenarios, especially given the dramatic financial improvements we've made to the business over the last few years. I will touch on some of the highlights of the quarter and then provide an update on our strategic focus, which I'm confident will help you understand why we are so bullish about the future for MIMEDX Group. For the third quarter, year-over-year net sales growth was an exceptional 35%, finishing at a record $114 million. Our adjusted gross profit margin was 88% in the quarter. Adjusted EBITDA was $35 million, or 31% of net sales.

Speaker #6: I will touch on some of the highlights of the quarter , and then provide an update on our strategic focus with some confident will help you understand why we are so bullish about the future for Mimetics .

Speaker #6: For the third quarter , year over year net sales growth was an exceptional 35% , finishing at a record $114 million . Our adjusted gross profit margin was 88% in the quarter .

Speaker #6: Adjusted EBITDA was $35 million , or 31% of net sales . We continued to build cash end in Q3 , with $124 million in net cash , a sequential increase of $23 million for the quarter , and we expect to end the year with a net cash balance of more than $150 million .

Joseph H. Capper: We continue to build cash, ending Q3 with $124 million in net cash, a sequential increase of $23 million for the quarter, and we expect to end the year with a net cash balance of more than $150 million. Our surgical business was an important contributor, growing 26% this quarter, driven by the continued growth across the portfolio. We now have over half of the target patients enrolled in our EPIEFFECT® randomized controlled trial, and we have recently completed an interim analysis with favorable results. We launched a few strategic collaborations with companies offering complementary solutions in the wound care market, and we continue to evaluate additional products to expand our portfolio for both our wound and surgical businesses. In terms of our strategic focus, we continue to make excellent progress in the three areas we have consistently highlighted as the most important for our long-term growth.

Speaker #6: Our surgical business was an important contributor , growing 26% this quarter , driven by the continued growth across the portfolio . We now have over half of the target patients enrolled in our epi effect randomized controlled trial , and we have recently completed an interim analysis with favorable results .

Speaker #6: We launched a few strategic collaborations with companies offering complementary solutions in the wound care market , and we continue to evaluate additional products to expand our portfolio for both our wound and surgical businesses .

Speaker #6: In terms of our strategic focus , we continue to make excellent progress in the three areas we have consistently highlighted as the most important for our long term growth .

Speaker #6: Our top strategic priority is to continue to innovate and diversify our product portfolio . As you have witnessed , one of the ways we have been able to maintain strong momentum in the business has been with the introduction of products designed to address the numerous unmet needs in both the wound care and surgical markets .

Joseph H. Capper: Our top strategic priority is to continue to innovate and diversify our product portfolio. As you have witnessed, one of the ways we have been able to maintain strong momentum in the business has been with the introduction of products designed to address the numerous unmet needs in both the wound care and surgical markets. In this year alone, we continued with the full market release of EPIEFFECT®, licensed, and introduced HELIOGEN™, Stelara, and Emerge, and we have just begun the rollout of EPI Express. A randomized controlled trial for EPIEFFECT® continues to progress on schedule. As mentioned, we have over half of the target number of patients enrolled in randomized, which provided sufficient data for interim analysis and manuscript submission. These favorable results will be presented tomorrow at the Tissue Repair Evidence Summit.

Speaker #6: In this year alone , we continued with the full market release of Epi Effect license and introduced Helio Solara and Emerge , and we have just begun the rollout of Epi Express , a randomized controlled trial for effect continues to progress on schedule .

Speaker #6: As mentioned, we have over half of the target number of patients enrolled in randomized trials, which provided sufficient data for analysis and manuscript submission.

Speaker #6: These favorable results will be presented tomorrow at the Tissue Repair Summit. This is excellent news, as we will then have completed all the necessary steps to request reimbursement coverage for epi effect, as required by the pending LCDs.

Joseph H. Capper: This is excellent news, as we will then have completed all the necessary steps to request reimbursement coverage for EPIEFFECT®, as required by the pending LCDs. On our last call, I mentioned that we had received a TRG letter for EPI Express, which confirmed its status as an FDA Section 361 product. EPI Express is a fenestrated allograft designed to be used in post-acute cases where the flow or extraction of fluid is of critical importance to the healing process. The full market release of EPI Express is now underway, and the early feedback is extremely positive. Stelara and Emerge, allografts we license to remain competitive in the private office marketplace until Medicare reform is enacted, both performed well in the quarter, contributing to our growth in wound care. We also continued executing on the previously announced co-marketing pilot with Vaporox Inc. As a reminder, the Vaporox Inc.

Speaker #6: On our last call , I mentioned that we had received a TRG letter for EPI express , which confirmed its status as an FDA section 361 product at the express is a fenestrated allograft designed to be used in post-acute cases where the flow or extraction of fluid is of critical importance to the healing process .

Speaker #6: The full market release of EpiExpress is now underway, and the early feedback is extremely positive. Solara and Emerge Allografts we license to remain competitive in the private office marketplace until Medicare reform is enacted.

Speaker #6: Both performed well in the quarter , contributing to our growth in wound care . We also continued executing on the previously announced Co-marketing pilot with VapoDrops .

Speaker #6: As a reminder , the vapor system named VH or Vaporous Hyperoxia therapy is a 510 K cleared device that delivers ultrasonic mist and concentrated oxygen for the treatment of nine types of heal chronic wounds , including diabetic foot ulcers .

Joseph H. Capper: system, named VHT device, or Vaporous Hyperoxytherapy, is a 510K cleared device that delivers ultrasonic mist and concentrated oxygen for the treatment of nine types of hard-to-heal chronic wounds, including diabetic foot ulcers, venous leg ulcers, and pressure ulcers. We are receiving excellent early feedback about this solution. Our second priority is to develop and deploy programs intended to expand our footprint in the surgical market. To achieve our continued success in this area, exemplified by our 26% surgical revenue growth in Q3, we have committed significant resources toward the introduction of products like our xenograft particulate Heliogen™, additional commercial resources, and development of robust real-world evidence demonstrating the potential clinical benefits for patients, the healthcare economic payoff, and the immense business opportunity for MIMEDX Group. By way of example, we've mentioned the use of our technology in anastomosis procedures a few times in the past.

Speaker #6: Venous leg ulcers , and pressure ulcers . We are receiving excellent early feedback about this solution . Our second priority is to develop and deploy programs intended to expand our footprint in the surgical market .

Speaker #6: To achieve our continued success in this area , exemplified by our 26% surgical revenue growth in Q3 . We have committed significant resources toward the introduction of products like our xenograft particulate allergen , additional commercial resources and development of robust evidence demonstrating the potential clinical benefits for patients .

Speaker #6: The healthcare , economic payoff and the immense business opportunity for mimetics by way of example , we've mentioned the use of our technology in anastomosis procedures a few times in the past .

Speaker #6: One of the most common complications from those procedures are leaks , which occur in upwards of 9% of patients who undergo colorectal surgery and are associated with statistically significant increases in morbidity , mortality , length of stay , and rehospitalization .

Joseph H. Capper: One of the most common complications from those procedures are leaks, which occur in upwards of 9% of patients who undergo colorectal surgery, and are associated with statistically significant increases in morbidity, mortality, length of stay, and rehospitalization. The cost associated with these complications is estimated to be approximately $28 million per 1,000 patients, making anastomotic leaks a nearly $14 billion challenge for the healthcare system. As we have demonstrated in peer-reviewed publications, the application of AmnioFix as a protective barrier at the surgical closure site has proven to help reduce anastomotic leaks by nearly 50% and readmissions by approximately 40%, which would provide massive savings. Given there are over 500,000 colorectal surgeries per year in the U.S., our TAM is in excess of $500 million for AmnioFix just in colorectal procedures. We will continue to make these critical investments and expect to generate evidence across a variety of procedures.

Speaker #6: The cost associated with these complications is estimated to be approximately $28 million per 1000 patients , making anastomotic leaks a nearly $14 billion challenge for the healthcare system .

Speaker #6: As we have demonstrated in peer reviewed the application of amnio fix as a protective barrier to surgical closure has proven to help reduce anastomotic leaks by nearly 50% and readmissions by approximately 40% , which would provide massive savings .

Speaker #6: Given there are over 500,000 colorectal surgeries per year in the US , our Tam is in excess of $500 million for amnio fix just in colorectal procedures .

Speaker #6: We will continue to make these critical investments and expect to generate evidence across a variety of procedures . Our third publications , initiative is to introduce programs designed to enhance customer intimacy .

Joseph H. Capper: Our third initiative is to introduce programs designed to enhance customer intimacy. As we have mentioned, we believe the way we interact with our customers and our company's comprehensive value offering will help drive engagement and retention, especially as we transition to a reimbursement environment where profit potential is no longer a primary driver in product selection. We continue to invest in ways to enhance these relationships, including increasing improved customer interaction at various levels within the company. We also continue to experience excellent adoption of MIMEDX Connect, our proprietary customer portal. In the third quarter, we saw sequential sales growth of nearly 60% for orders managed within MIMEDX Connect. We also recently added bill pay functionality within MIMEDX Connect for online payments and invoicing, and we are actively developing additional features to this system designed to improve workflow and strengthen the bond between MIMEDX and our customers.

Speaker #6: As we have mentioned , we believe the way we interact with our customers and our companies . Comprehensive value offering will help drive engagement and retention , especially as we transition to a reimbursement environment where profit potential is no longer primary driver in product selection .

Speaker #6: We continue to invest in ways to enhance these relationships , including increasing improved customer interaction at various levels within the company . We also continue to experience excellent adoption of Mimetics connect , our proprietary customer portal , in the third quarter , we saw sequential sales growth of nearly 60% for orders managed within Mimetics connect .

Speaker #6: We also recently added bill pay functionality within Connect for online payments and invoicing, and we are actively developing additional features to this system designed to improve workflow and strengthen the bond between MiMedx and our customers.

Speaker #6: We believe our commitment to this approach will lead to enhanced customer relationships, improve Net Promoter scores, higher margins, and ultimately an increase in the average lifetime value of a customer.

Joseph H. Capper: We believe our commitment to this approach will lead to enhanced customer relationships, improved net promoter scores, higher margins, and ultimately an increase in the average lifetime value of a customer. On last quarter's call, we discussed the reforms CMS plans to implement to address the runaway fraud, waste, and abuse plaguing the skin substitute market. As a reminder, CMS announced the following initiatives. First, at the end of June, CMS introduced the Wasteful and Inappropriate Service Reduction (WISR) model, which is focused on leveraging artificial intelligence and machine learning in concert with human clinical review to curb fraud, waste, and abuse in healthcare. This voluntary model, which aims to encourage safe and evidence-supported best practices for treating Medicare beneficiaries, will run from January 1, 2026, through December 31, 2031, in five states and will examine several product categories, including skin substitutes.

Speaker #6: On last quarter's call , we discussed the reforms CMS plans to implement to address the runaway fraud , waste and abuse plaguing the skin .

Speaker #6: Substitute market . As a reminder , CMS announced the following initiatives . First , at the end of June , CMS introduced the wasteful and inappropriate Service reduction , reduction or wiser model , which is focused on leveraging artificial machine learning in concert with human clinical review to curb fraud , waste and abuse in healthcare .

Speaker #6: This voluntary model , which aims to encourage safe and evidence supported best practices for treating Medicare beneficiaries , will run from January 1st , 2026 through December 31st , 2031 , in five states .

Speaker #6: And will examine several product categories , including skin substitutes . Next , in July , CMO , CMS posted the proposed physician fee schedule of FFS and the outpatient prospective Payment System , or Opps for calendar year 2026 .

Joseph H. Capper: Next, in July, CMS posted the proposed Physician Fee Schedule (PFS) and the Outpatient Prospective Payment System (OPPS) for calendar year 2026. These proposed rules move away from the ASP methodology in the private office and the bundle in wound care centers in favor of a fixed payment for skin substitutes of $125.38 per square centimeter in all outpatient sites of care, private offices, and wound care centers alike. We submitted our comments to the proposed rules in September, recommending CMS consider setting a higher application fee for providers covered by the PFS, reimbursing skin substitutes as pass-through items, setting the fixed price using other reasonable inputs we highlighted, resulting in a relatively modest increase to the price per square centimeter, applying an inflationary index moving forward, and phasing in a price change over time.

Speaker #6: These proposed rules move away from the ASP methodology in the private office and the bundle in wound care centers in favor of a fixed payment for skin substitutes of $125.38 per square centimeter in all outpatient sites of care , private offices and wound care centers alike .

Speaker #6: We submitted our comments to the proposed rules in September, recommending that CMS consider setting a higher application fee for providers covered by the FFS reimbursement.

Speaker #6: Skin substitutes as pass through items , setting the fixed price using other reasonable inputs . We highlighted , resulting in a relatively modest increase to the price per square centimeter .

Speaker #6: Applying an inflationary index , moving forward and phasing in a price change over time . We believe these suggestions , taken together , would compensate providers appropriately for the important work they do eliminate perverse incentives to overutilize skin substitutes and ensure product developers continue to invest in cutting edge technologies and solutions , all while saving us taxpayers the Medicare Trust Fund and beneficiaries .

Joseph H. Capper: We believe these suggestions, taken together, would compensate providers appropriately for the important work they do, eliminate perverse incentives to overutilize skin substitutes, and ensure product developers continue to invest in cutting-edge technologies and solutions, all while saving U.S. taxpayers, the Medicare trust fund, and beneficiaries billions of dollars. Final rules are expected to be published in November to take effect at the start of the new year. Lastly, the much-discussed LCDs are scheduled to go into effect on January 1. It remains to be seen if they will be modified and/or delayed once again. As I said earlier, we are well positioned for any scenario. As we've stated in the past, we are extremely confident of the company's position post-Medicare reimbursement reform. When product performance is once again the primary factor driving product selection, our best-in-class technology will carry the day.

Speaker #6: Billions of dollars . Final rules are expected to be published in November to take effect at the start of the new year . Lastly , the much discussed LCDs are scheduled to go into effect on January 1st .

Speaker #6: It remains to be seen if they will be modified and/or delayed once again, but as I said earlier, we are well positioned for any scenario.

Speaker #6: As we stated in the past, we are extremely confident about the company's position post-Medicare reimbursement reform when product performance is once again the primary factor driving product selection.

Speaker #6: Our best in class technology will carry the day . Let me offer three facts in support of this statement . First , in 2023 , we grew our business by 20% with constant pricing .

Joseph H. Capper: Let me offer three facts in support of this statement. First, in 2023, we grew our business by 20% with constant pricing. It was all volume-related growth, driven in part by the introduction of a few new products and commercial execution. This was just about the time we started to see a rapid uptick of new high-priced skin substitutes entering the market, which subsequently caused our growth to slow. Second, in the surgical market, where profit potential does not so overwhelmingly drive product selection, we have been outperforming in the market, as evidenced by our 26% growth in the third quarter. Third, we've recently introduced a few wound products that are, quote-unquote, "more competitively priced." While these products are priced below the mean of other available products on the market, they have been enough to stem the attrition of customers in search of these opportunities.

Speaker #6: It was all volume related , growth driven in part by the introduction of a few new products and commercial execution . This was just about the time we started to see a rapid uptake of new , rapid , new high priced skin substitutes entering the market , which subsequently caused our growth to slow .

Speaker #6: Second , in the surgical market , where profit potential does not show overwhelmingly drive product selection , we have been outperforming in the market , as evidenced by our 26% growth in third quarter .

Speaker #6: And third . We've recently introduced a few wound products that are quote unquote , more competitively priced . While these products are priced below the mean of other available products on the market , they have been enough to stem the attrition of customers in search of these opportunities .

Speaker #6: These three points illustrate that when profit potential is not such an outsized motivator and product selection and performance and outcomes are of greater importance, it grows faster than the market.

Joseph H. Capper: These three points illustrate that when profit potential is not such an outsized motivator in product selection and performance and outcomes are of greater importance, MIMEDX grows faster than the market. We also expect to see a number of competitors decrease in the wound care market when the reimbursement reform goes into effect, as certain business models will become significantly less attractive. We therefore see this as an excellent opportunity to pick up market share. Before I turn the call over to Doug for a detailed financial review of the quarter, I want to share some of my thoughts on guidance. First, we had a great third quarter, and we expect to finish the year in a similar fashion. As such, we are increasing our full-year 2025 revenue growth rate outlook from the low teens to the mid to high teens.

Speaker #6: We also expect to see a number of competitors decrease in the wound care market when the reimbursement reform goes into effect, as certain business models will become significantly less attractive.

Speaker #6: We therefore see this as an excellent opportunity to pick up market share . Before I turn the call over to Doug for a detailed financial review of the quarter , I want to share some of my thoughts on guidance .

Speaker #6: First , we had a great third quarter and we expect to finish the year in similar fashion . As such , we are increasing our full year 2025 revenue growth rate outlook from the low teens to the mid to high teens .

Speaker #6: We also now expect our full year adjusted EBITDA margin to be at least in the mid 20s . As a percentage of net sales .

Joseph H. Capper: We also now expect our full-year adjusted EBITDA margin to be at least in the mid-20% as a percentage of net sales. Second, you are no doubt trying to determine how to model the business for 2026 post the implementation of the proposed reforms. We are somewhat in the same boat. However, it would not be prudent to project the base case from the proposed numbers and current volumes, given the other factors which will no doubt benefit our business. Until we have clarity on the CMS final rules for the PFS and OPPS, which have yet to be published, we do not want to overspeculate. At a higher level, we do expect some choppiness in the early part of the year as the industry navigates the changes. Still, we welcome these reforms and expect the change will bring much-needed stability and predictability to the market.

Speaker #6: Second , you are no doubt trying to determine how to model the business for 2026 post the implementation of the proposed reforms . We are somewhat in the same boat .

Speaker #6: However , it would not be prudent to project the base case from the proposed numbers and current volumes given the other factors , which will no doubt benefit our business until we have clarity on the CMS final rules for the FFS and Ops , which have yet to be published .

Speaker #6: We do not want to over-speculate at a higher level. We do expect some choppiness in the early part of the year as the industry navigates the changes.

Speaker #6: Still , we welcome these reforms and expect the change will bring much needed stability and predictability to the market . We firmly believe that the change is an opportunity for Mimetics to pick up share .

Joseph H. Capper: We firmly believe that the change is an opportunity for MIMEDX Group to pick up share due to our numerous competitive advantages. We have a fully vertically integrated business, from product development to manufacturing to commercialization, including donor recovery. We have an excellent, robust, and defensible intellectual property portfolio. We have arguably the most comprehensive and effective commercial organization in this space. Over the past two and a half years, we have dramatically improved our financial position to include an anticipated net cash balance of more than $150 million by year-end. I've been running medtech companies for decades, and I can tell you that these types of events have a way of shaking out the marginal players. Our fundamentals are solid, and we are going to leverage our competitive advantages to ensure continued success in this new area.

Speaker #6: Due to our numerous competitive advantages . We have a fully vertically integrated business and product development to manufacturing to commercialization , including donor recovery .

Speaker #6: We have an excellent, robust, and defensible intellectual property portfolio. We have arguably the most comprehensive and effective commercial organization in this space.

Speaker #6: And over the past two and a half years, we have dramatically improved our financial position to include an anticipated net cash balance of more than $150 million by year-end.

Speaker #6: I've been running med tech companies for decades , and I can tell you that these types of events have a way of shaking out the marginal players .

Speaker #6: Our fundamentals are solid and we are going to leverage our competitive advantages to ensure continued success in this new area . That is why I am incredibly bullish regarding the prospects for Mimetics .

Joseph H. Capper: That is why I am incredibly bullish regarding the prospects for MIMEDX Group. Now let me turn the call over to Doug for a more detailed review of our financial results. Doug?

Speaker #6: Now , let me turn the call over to Doug for a more detailed review of our financial results . Doug . Thank you , Joe .

Speaker #7: And good afternoon to everyone on today's call . I'm pleased to review our results with you all today . As a quick reminder , as Matt mentioned , at the top , many of the financial measures covered in today's call are on a non-GAAP basis .

Douglas Rice: Thank you, Joe, and good afternoon to everyone on today's call. I'm pleased to review our results with you all today. As a quick reminder, as Matt mentioned at the top, many of the financial measures covered in today's call are on a non-GAAP basis, so please refer to our earnings release for further information regarding our non-GAAP reconciliations and disclosures. Moving on to the results, our third quarter 2025 net sales of $114 million represent 35% growth compared to the prior year period. By product category, third quarter wound sales of $77 million increased 40% versus the prior year period, while surgical sales of $37 million were up 26%, reflecting strong results across both of our franchises. We saw significant contributions across our business in the third quarter. In wound, our third quarter performance was driven by new product sales of EPIEFFECT® and Emerge.

Speaker #7: So, please refer to our earnings release for further information regarding our non-GAAP reconciliations and disclosures. Moving on to the results, our third quarter 2020 net sales of $114 million represented a 35% growth compared to the prior year period.

Speaker #7: By product category , third quarter sales of $77 million increased 40% versus the prior year period , while surgical sales of $37 million were up 26% , reflecting strong results across both of our franchises .

Speaker #7: We saw significant contributions across our business in the third quarter in wound , our third quarter performance was driven by new product sales of Solara and Emerge in our surgical franchise , amnio and Amnio effect .

Douglas Rice: In our surgical franchise, AmnioFix and AMNIOEFFECT® once again delivered strong double-digit year-over-year increases in sales, and our particulate products also demonstrated strong growth on a year-over-year and sequential basis. Our third quarter 2025 GAAP gross profit was about $95 million, a 38% increase compared to the prior year period. Our GAAP gross margin was 84% in the third quarter 2025 compared to 82% last year. Excluding the incremental acquisition-related amortization expense in the quarter, our non-GAAP adjusted gross margin was 88%, up about 540 basis points compared to the third quarter of 2024. This increase was primarily a result of product mix as well as the timing of positive production variances. In light of the strong year-to-date results, we now expect our full-year non-GAAP gross margin to be around 85%.

Speaker #7: Once again delivered strong double digit year over year increases in sales . In our particulate products . Also demonstrated strong growth on a year over year and sequential basis .

Speaker #7: Our third quarter 2020 GAAP gross profit was about $95 million , a 38% increase compared to the prior year period . Our GAAP gross margin was 84% in the third quarter of 2025 , compared to 82% last year .

Speaker #7: Excluding the incremental acquisition-related amortization expense in the quarter, our non-GAAP adjusted gross margin was 88%, up about 540 basis points compared to the third quarter of 2020.

Speaker #7: For . This increase was primarily a result of product mix as well as the timing of positive production variances . In light of the strong year to date results , we now expect our full year non-GAAP gross margin to be around 85% .

Speaker #7: Turning to our operating expenses , GAAP sales and marketing expenses were $54 million , or 47% of net sales in the . In the third quarter , compared to $42 million , or 50% of net sales in the prior year period .

Douglas Rice: Turning to our operating expenses, GAAP sales and marketing expenses were $54 million, or 47% of net sales in the third quarter, compared to $42 million, or 50% of net sales in the prior year period. The dollar increase was due to a combination of increased sales costs, including higher commissions associated with both higher sales as well as the changes we made to our sales commission plans in the middle of 2024. As a result of our year-to-date results, we now expect full-year 2025 sales and marketing expenses to be between 49% and 50% of net sales, which would be a modest improvement on a percentage of sales basis compared to 2024, albeit up in absolute dollars.

Speaker #7: The dollar increase was due to a combination of increased sales costs, including higher commissions associated with both higher sales as well as the changes we made to our sales commission plans in the middle of 2024.

Speaker #7: As a result of our year to date results , we now expect full year 2025 sales and marketing expenses to be between 49 and 50% of net sales , which would be a modest improvement on a percentage of sales basis compared to 2024 , albeit up in absolute dollars .

Speaker #7: GAAP general and administrative expenses , or G&A , were $15 million , or 13% of net sales , and the third quarter , compared to $12 million , or 14% of net sales in the prior year period .

Douglas Rice: GAAP general and administrative expenses, or G&A, were $15 million, or 13% of net sales in the third quarter, compared to $12 million, or 14% of net sales in the prior year period. The dollar increase was driven by incremental spend from legal and regulatory disputes in the current period, including our ongoing litigation with certain competitors and former employees. As with other OpEx lines, we expect GAAP G&A to grow in absolute dollars for the full year 2025 and to be about 14% to 15% of net sales. Our third quarter R&D expenses of $4 million, or 3% of net sales, was up $800,000 compared to the prior year period. Our R&D expenses are primarily comprised of the costs associated with our EPIEFFECT® randomized controlled trial, as well as additional spend related to the development of future products in our pipeline.

Speaker #7: The dollar increase was driven by incremental spend from legal and regulatory disputes in the current period , including our ongoing litigation with certain competitors and former employees .

Speaker #7: As with other OpEx lines, we expect GAAP G&A to grow in absolute dollars for the full year 2025 and to be about 14% to 15% of net sales.

Speaker #7: Our third quarter R&D expenses of $4 million , or 3% of net sales , was up $800,000 compared to the prior year period .

Speaker #7: Our R&D expenses are primarily comprised of the costs associated with our EPI effect . RCT , as well as additional spend related to the development of future products in our pipeline .

Speaker #7: As Joe mentioned , we have prepared an interim analysis of the effect RCT and have submitted it for publication and presentation later this year .

Douglas Rice: As Joe mentioned, we have prepared an interim analysis of the EPIEFFECT® randomized controlled trial and have submitted it for publication and presentation later this year in support of any potential Medicare coverage requirements. As we think about the full year, we expect R&D expenses to be about 3% of net sales. GAAP income tax expense for Q3 2025 was around $6 million, reflecting an effective GAAP tax rate of 27%. We continue to expect our long-term non-GAAP effective tax rate to be 25%. Our third quarter GAAP net income was $17 million, or $0.11 per share on a diluted basis, compared to GAAP net income of $8 million, or $0.05 per share in the prior year period. Adjusted net income for the third quarter was $23 million, or $0.15 per share, compared to $10 million, or $0.07 per share in the prior year period.

Speaker #7: In support of any potential Medicare coverage requirements . As we think about the full year , we expect R&D expenses to be about 3% of net sales , GAAP income tax expense for Q3 2025 was around $6 million , reflecting an effective GAAP tax rate of 27% .

Speaker #7: We continue to expect our long term non-GAAP effective tax rate to be 25% . Our third quarter GAAP net income was $17 million , or $0.11 per share , on a diluted basis , compared to GAAP net income of $8 million , or $0.05 per share , in the prior year period .

Speaker #7: Adjusted net income for the third quarter was $23 million , or $0.15 per share , compared to $10 million , or $0.07 per share , in the prior year period .

Speaker #7: Third quarter adjusted EBITDA was $35 million , or 31% of net sales , compared to $18 million , or 22% of net sales in the prior period .

Douglas Rice: Third quarter adjusted EBITDA was $35 million, or 31% of net sales, compared to $18 million, or 22% of net sales in the prior year period. Sequentially, our third quarter adjusted EBITDA grew by nearly $11 million, as we focus on expense management that enables our sales increases to drop to the bottom line. Turning to our liquidity, we continue to bolster our balance sheet and position the company to make growth investments. In the third quarter, the business generated $29 million in free cash flow, a record for the company, and our net cash position rose to $124 million. The steady improvement in our balance sheet provides us with the ability to evaluate a range of organic and inorganic investments, and we believe we have a healthy amount of combined firepower between cash on hand and borrowing capacity to help continue to grow and diversify our business.

Speaker #7: Sequentially, our third-quarter adjusted EBITDA grew by nearly $11 million as we focus on expense management that enables our sales increases to drop to the bottom line.

Speaker #7: Turning to our liquidity . We continue to bolster our balance sheet and position the company to make growth investments in the third quarter .

Speaker #7: The business generated $29 million in free cash flow , a record for the company and our net cash position rose to $124 million .

Speaker #7: The steady improvement in our balance sheet provides us with the ability to evaluate a range of organic and inorganic investments , and we believe we have a healthy amount of combined year firepower between cash on hand and borrowing capacity to help continue to grow and diversify our business .

Speaker #7: I will now turn the call back to Joe . Joe .

Douglas Rice: I will now turn the call back to Joe. Joe.

Speaker #6: Thanks , Doug . As you just heard , we had an outstanding quarter and expect a strong finish to the year . We set record highs for revenue and adjusted EBITDA with strong growth in both the wound care and surgical businesses .

Joseph H. Capper: Thanks, Doug. As you just heard, we've had an outstanding quarter and expect a strong finish to the year. We set record highs for revenue and adjusted EBITDA, with strong growth in both the wound care and surgical businesses. We continue to generate excellent cash flow. We launched EPI Express. We advanced a few pilot programs to co-market complementary solutions in the wound care market, and we increased our 2025 guidance meaningfully to reflect our strong momentum. As far as the upcoming wound care reimbursement reform is concerned, it is a matter of when, not if, this is going to happen. The current trends are not sustainable. We hope these much-needed reforms incorporate our recommendations. We believe they would be beneficial to all stakeholders. As I said, we are confident in our ability to excel when the industry resets to the proposed guidelines.

Speaker #6: We continued to generate excellent cash flow . We launched FP express , we advanced a few pilot programs to Co-market complementary solutions in the wound care market .

Speaker #6: And we increased our 2025 guidance meaningfully to reflect our strong momentum . As far as the upcoming wound care reimbursement reform is concerned , it is a matter of when , not if , this is going to happen .

Speaker #6: The current trends are not sustainable. We hope these much-needed reforms incorporate our recommendations. We believe they would be beneficial to all stakeholders.

Speaker #6: And as I said , we are confident in our ability to excel when the industry resets to the proposed guidelines . In closing , I would like to once again thank the team for a tremendous quarterly performance and for your commitment to our mission and the many individuals we have .

Joseph H. Capper: In closing, I would like to once again thank the MIMEDX team for a tremendous quarterly performance and for your unwavering commitment to our mission and the many individuals we have the good fortune to serve. Let's now shift to Q&A and open the call to questions. Operator, we are ready for our first question. Please proceed.

Speaker #6: The good fortune to serve. Let's now shift to Q&A and open the call to questions. Operator, we are ready for our first question.

Speaker #6: Please proceed .

Speaker #4: Thank you . At this time , will be conducting the answer session . If you'd like to ask a question at this time , you question and press Star one on your telephone keypad .

Operator: Thank you. At this time, we'll be conducting the question and answer session. If you'd like to ask a question at this time, you may press star one on your telephone keypad, and the confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to withdraw your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, for our first question. Thank you. Our first question comes from the line of Frank Tachenant with Lake Street Capital Markets. Please proceed with your questions.

Speaker #4: And the confirmation tone will indicate your line is in the question queue . You may press star two . If you'd like to withdraw your question from the queue for participants using speaker equipment , it may be necessary to pick up your handset before pressing the star key's .

Speaker #4: One moment please . For our first question . Thank you . Our first question comes from the line of Frank Takkinen with Lake Street Capital Markets .

Speaker #4: Please proceed with your questions .

Speaker #8: Great . Thanks for taking the questions . Congrats on a really nice quarter . I was hoping to start with the guide for the rest of the year .

[Analyst]: Great. Thanks for taking the questions. Congrats on a really nice quarter. I was hoping to start with the guide for the rest of the year. How should we be thinking about kind of contribution from wound versus surgical? Obviously, we still have the wound policy in place through year-end, and that might change at the beginning or likely will change at the beginning. Should we continue to expect that that grows really heavily, and should we continue to expect that surgical business too as well? Just trying to kind of get a little bit more of the variables behind the Q4 guide.

Speaker #8: How should we be thinking about kind of contribution from wound versus surgical ? Obviously we still have the wound policy in place year end , and that might change at the beginning or likely will change at the beginning .

Speaker #8: But should we continue to expect grows really heavily . And then should we continue to expect that surgical business to as well ? Just trying to kind of get a little bit more of the variables behind the Q4 guide .

Speaker #7: Thanks , Frank . This is Doug . And good , good question . We're obviously super happy with with record revenue for the quarter led by 40% growth in in our wound franchise and 26% in surgical .

Douglas Rice: Thanks, Frank. This is Doug. Good question. We're obviously super happy with record revenue for the quarter, led by 40% growth in our wound franchise and 26% in surgical. With regards to the guide and how that looks going forward, we continue to expect strong uptake in the surgical suite. I would think that momentum continues into Q4, and the wound business and franchise is certainly going to continue to grow at a healthy clip. The 40% is, you have to also recall that Q3 last year was sort of the nadir of our impact from the sales turnover that we experienced in Q2. The comps are going to get a little tougher there in Q4. I'll leave it at that.

Speaker #7: With regards to the guide and how that looks going forward , I would we continue to expect strong uptake uptake in the surgical suite .

Speaker #7: And so I would think that that that momentum continues into Q4 . And the the wound business and franchise is certainly going to continue to grow at a healthy clip .

Speaker #7: So, 40% is, we have to also recall that Q3 last year was sort of the nadir of our impact from the sales turnover that we experienced in Q2.

Speaker #7: And so the comps are going to get a little tougher there . In Q4 . And I'll leave it leave it at that .

Speaker #6: The only caveat to Q4 is Doug mentioned it's going to be a tougher competition free . And as the rules , once the rules are announced and adjustments start to take place , there's probably some folks that will make those adjustments earlier .

Joseph H. Capper: The only caveat to Q4 ground is Doug mentioned that it's going to be a tougher comp in Q3. As the rules, once the rules are announced and adjustments start to take place, there's probably some folks who will make those adjustments a little bit earlier. Backing up to 10th of December, at least, will be a little bit more difficult to adapt. You know we've got great momentum going there. Obviously, the first month is our we know we're in good shape.

Speaker #6: So back in the path of December at least , will be a little bit more difficult to predict . But you know , we've got great momentum going .

Speaker #6: For obviously the first month or so . So we know we're in good shape .

Speaker #8: Got it . That's helpful . And then maybe just thinking a little bit about kind of post January 1st , I know you've mentioned you're doing a number of things to prepare for that .

[Analyst]: Got it. That's helpful. Maybe just thinking a little bit about kind of post-January 1. I know you've mentioned you're doing a number of things to prepare for that. Maybe call out some of those things that you're doing today to prepare for different reform options. Maybe if you can extend to what you feel like would be the best outcome for your company, is it kind of how your comments were structured and proposed, or is there anything else you think would be kind of the best outcome for MIMEDX?

Speaker #8: Maybe call out some of those things that you're doing today to prepare for different reform options . And maybe if you can extend to what you feel like would be the best outcome for your company , is it kind of how your comments were structured and proposed , or is there anything else you think would be kind of the best outcome for my medics ?

Speaker #9: Yeah , I think our comments are closed would be the best outcome for industry and for medics .

Joseph H. Capper: I think how our comments were structured and proposed would be the best outcome for the industry and for MIMEDX. What we have been advocating for for some time is level the playing field and take this price variability out of the equation. Take its unhealthy burden, right? At least we don't need to revisit that. It looks like that is going to happen. We clearly welcome the reform. Given our experience, in competing on a level playing field, we're really comfortable that we're going to outperform the market. I don't want to go into details in terms of what types of scenario planning we have done. Again, you can imagine an environment that's less attractive from a profitability perspective. Some participants are not going to be in the market. They're probably not going to find it as attractive as it did over the last couple of years.

Speaker #6: But what we have been advocating for , for some time is level . The playing field and take this price variability out of the equation .

Speaker #6: I think it's unhealthy for right reasons . We don't need to . The reasons that it looks like that is going to happen .

Speaker #6: So we clearly welcome the reform . And given our experience in competing in on a level playing field , what we're really comfortable that we're going to outperform the market .

Speaker #6: want to go into details in terms of what types of scenario planning we have , but but again , you can imagine an environment that's less attractive from a profitability perspective .

Speaker #6: Some participants are not are not going to to be in the market . They're probably not going to find it as attractive as it did over the last couple of years .

Speaker #6: So I think there's going to be ample opportunity for market share growth . And in a number of different ways . So and look , we have plenty of evidence to that , right .

Joseph H. Capper: I think there's going to be ample opportunity for market share growth in a number of different ways. We have plenty of evidence to that, right? We've done it in the past. You see it today in our surgical market, how we're growing there, where it's much more of a level playing field. The last thing I would leave you with is we have a great balance sheet. If there's opportunities to do things, to kind of aggregate a little bit of share, a little bit of share that way, we'll look at those opportunities.

Speaker #6: We've done it in the past . You see it today in our surgical market . How we're growing there where it's much more of a level playing field .

Speaker #6: The last thing I would leave you with is we have a great balance sheet . So if there's opportunities to do things to kind of aggregate a little bit , share a little bit of share , that way we'll look at those opportunities .

Speaker #8: Got it . And then maybe if I can squeeze one more quick one in cash ending at 142 . I know you guided to greater than 150 million in cash .

[Analyst]: Got it. Maybe if I can squeak one more quick one in. Cash ending at $142 million. I know you guided to greater than $150 million in cash. That obviously leaves the door open above $150 million, but how should we maybe think about cash generation if you just put up $20 million this quarter and that $150 million is out there?

Speaker #8: That obviously leaves the door open above 150 . But how should we maybe think about cash generation ? If you just put up 20 million this quarter and at 150 is out there ?

Speaker #6: Yeah , we probably confuse people because sometimes we talk gross cash and net cash . We we still have about $18 million drawn on line .

Joseph H. Capper: Yeah. We probably confuse people because sometimes we talk gross cash and net cash. We still have about $18 million drawn on our line. When we say $150 million by year-end, think of that as net. You're probably in the high $160 million from a gross standpoint. The question is, why haven't you paid that line down? It's just, Doug yells at me every quarter. It's because, frankly, we've been looking at so many different opportunities that we thought it made sense to do it all at the same time.

Speaker #6: our

Speaker #6: So when we say 150 by year end , think of that as net . So you're probably in the high one 60s from a gross standpoint .

Speaker #6: And the question is why haven't you paid that line down . And it's just yells at me every , every quarter . It's because we've frankly , we've been looking at so many different opportunities that we thought it made sense to do it all at the same time .

Speaker #8: Got it . Okay . That's

[Analyst]: Got it. Okay, that's helpful. Thanks for taking the questions.

Speaker #8: Thanks for taking the questions .

Speaker #4: Our next question is from the line of Chase Knickerbocker with Craig-hallum . Please see for your questions .

Operator: Our next questions are from the line of Chase Knickerbocker with Craig Allen. Please proceed with your question.

Speaker #10: Good afternoon . Congrats on the quarter and thanks for taking the questions . Maybe just first , Joe was hoping you'd be willing to share

[Analyst]: Good afternoon. Congrats on the quarter, and thanks for taking the questions. Maybe just first, Joe, I was hoping you'd be willing to share, in your wound business on an overall square centimeters basis, what volume growth was either sequentially or year-over-year. I respect your comments on the uncertainty as it relates to 2026, but just trying to get some sort of guidepost for us as we think about Q4 and then 2026 as it relates to volumes.

Speaker #10: your wound business on a square . Overall , square helpful . centimeters basis . What volume growth was either sequentially or year over year ?

Speaker #10: Respect your comments on the uncertainty as it relates to 26 , but , you know , just trying to get some sort of kind of guidepost we think about Q4 and then 2026 as it relates to volumes .

Speaker #11: Yeah , yeah .

Joseph H. Capper: As you know, we have not been public about that because there are puts and takes and ups and downs. When you launch a new product, some products need less tissue, and so your cost, your volume per square centimeter may go down, may go up. There are so many factors that go into that. We tend to stay away from that. We certainly stay away from it by segment. I think the way I answered the previous question, we feel very comfortable about pending changes. We feel that we're in great, we're in the pole position to pick up share, depending on what the ultimate price is. The other thing, too, is depending on what other factors are associated with the new rules. Is there pass-through pricing? Is there opportunity to continue to discount? How much discounting is going to be permitted?

Speaker #6: As you know , not been public about that because there's puts and takes and ups and downs . And when you launch a new products , some products need less tissue .

Speaker #6: And so your cost your , your volume per square centimeter may go down , may go up . So there's so many , so many factors that go into that .

Speaker #6: We tend to stay away from that . We certainly stay away from it by segment . I think the way I answered the previous question , we feel very comfortable about pending changes .

Speaker #6: We feel that we're in great . We're in the pole position to pick up , share depending on what the ultimate price is .

Speaker #6: And the other thing too , is depending on what other factors are associated with the new rules , is , is a pass through pricing ?

Speaker #6: Is is there opportunity to continue to discount how much discounting is going to be permitted ? There's there's several other kind of kind of like mechanics .

Joseph H. Capper: There are several other mechanics, I would say, about how these rules are going to go into effect that could affect the way people market products. It is just too soon. We'll know the final rules in a couple of weeks. I'd say, I don't know, we always want the answer today, so do we, but it's right around the corner. I have to stress, I don't see another company that is in a better position than us to compete once these rules are in effect.

Speaker #6: I would say , about how these rules are going to go into effect . It could affect , you know , the way people market products .

Speaker #6: So it's just it's just too soon . We'll know the final rules in a couple of say . I know we always want the answer today .

Speaker #6: So do we . But it's right around the corner . And and I have to stress , I don't see another company that is in a better position than us to compete .

Speaker #6: Once these rules are in effect .

Speaker #10: Understood . Maybe just on that . Have you had a chance to get any feedback on the Hill or from any sort of constituents on some of those suggestions that you made ?

[Analyst]: Understood. Maybe just on that, have you had a chance to get any feedback on the Hill or from any sort of constituents on some of those suggestions that you made? I think particularly around kind of a potential pass-through mechanism or, you know, like a CPI adjustment, for example, instead of a recalculation annually. Have you gotten any feedback from that?

Speaker #10: I think particularly around kind of the potential pass through mechanism or , you know , like a CPI adjustment , for example , instead of a recalculation annually .

Speaker #10: I mean, have you gotten any feedback from that?

Speaker #11: Yeah .

Speaker #6: Nothing that we can publicly comment on . You know , we we work through third party advisors who communicate directly with as much as possible .

Joseph H. Capper: Nothing that we can publicly comment on. We work through third-party advisors who communicate directly with, as much as possible, obviously we're in a shutdown, but as much as possible directly with CMS and the MACs. We try to put together as much information on it as we can, but there's nothing that we can share publicly that we can stand behind 100% at this point today.

Speaker #6: Obviously , we're going to shut , but as much as possible directly with CMS and the Max and and we try to put together as much information on as we can .

Speaker #6: But there's nothing that we can share publicly that we can behind 100% at this point today .

Speaker #10: And then just last , maybe just on the LCDs , you know , that submission as far as the when the clinical data was , is supposed to be submitted , it's obviously coming up here very quickly .

[Analyst]: Just last, maybe just on the LCDs, that submission as far as when the clinical data is supposed to be submitted is obviously coming up here very quickly. Have you heard from the MACs as far as, you know, get your data in, as in, LCDs could likely be moving forward? On that front, I know you mentioned that presentation tomorrow. Can you speak any more additional detail to that data or, I guess, your confidence that it'll be sufficient to support inclusion on the LCD as it relates to EPIEFFECT®?

Speaker #10: Have you heard from the max, as far as you know? Get your data in as in, you know, LCDs could likely be moving forward.

Speaker #10: And then on that front , I know you mentioned that that presentation tomorrow , but just kind of can you speak any more additional detail to that data or , you know , I guess your confidence that it'll be sufficient to support inclusion on on the LCD as it relates to epi effect .

Speaker #6: So I'm going to frustrate you for the third time . Chase , I apologize . There's there's really not a whole lot more I can offer in terms of LCD go no go .

Joseph H. Capper: I'm going to frustrate you for the third time, Chase. I apologize. There's really not a whole lot more I can offer in terms of LCD, go/no-go, whether they're going to be implemented, whether they're going to be modified. All of that's kind of rumor in the industry. Everybody's got their opinion. The second part of your question is whether or not we feel that we've got sufficient evidence relative to EPIEFFECT® to justify reimbursement. The answer to that is yes. The analysis was very strong, and then there are steps we have to go through. Either it has to be a presentation, and there has to be a manuscript submission, and then you can apply for reimbursement. We have those steps completed as of tomorrow. We feel comfortable that our submission is in good shape.

Speaker #6: Whether they're going to be implemented , whether they're going to be modified and all that's kind of rumor in the industry . Everybody's got their opinion .

Speaker #6: The second part of your question is whether or not we feel that we've got sufficient evidence relative to epi effect to justify reimbursement .

Speaker #6: The answer to that is yes . The analysis was very strong . And then there's steps we have to go through . Either it has to be a presentation and there has to be a manuscript submission .

Speaker #6: And then you you can apply for reimbursement . And we have those steps completed as of tomorrow . So we feel comfortable that our our submission is in good shape .

Speaker #6: Whether or not they stick to that protocol is yet to be seen , or that I would say requirement is yet yet to be seen .

Joseph H. Capper: Whether or not they stick to that protocol is yet to be seen, or that requirement is yet to be seen. That will tie back to whether or not the LCDs are once again postponed and/or modified. We're in pretty good shape with that product.

Speaker #6: That will tie back to whether or not the LCDs are once again postponed or and or modified . But we're in pretty good shape with that product .

Speaker #10: Got it . Thanks , Jeff .

[Analyst]: Got it. Thanks, Joe.

Speaker #4: Thank you. Our next question is from the line of Karl Burns with Northland Capital. Please proceed with your questions.

Operator: Thank you. Our next question is from the line of Carl Byrnes with Northland Capital. Please proceed with your question.

Speaker #12: Congratulations on the quarter and thanks for the questions . Considering the foreseeable shakeup , you know , obviously rising from reimbursement changes , which are long overdue and your cash buildup , are you seeing any compelling so-called low hanging fruit with respect to M&A prospects or business development opportunities that would fit nicely ?

[Analyst]: Congratulations on the quarter, and thanks for the questions. Considering the foreseeable shakeup, obviously rising from reimbursement changes, which are long overdue, and your cash buildup, are you seeing any compelling so-called low-hanging fruit with respect to M&A prospects or business development opportunities that would fit nicely? Thanks.

Speaker #12: Thanks .

Speaker #6: Yeah , I was . The answer is yes . There are compelling assets . We have leaned a little bit a little bit more into the surgical side of our business in terms of scouring the landscape for opportunities to license and acquire technologies and products or companies .

Joseph H. Capper: Yeah. I would say the answer is yes, there are compelling assets. We have leaned a little bit more into the surgical side of our business in terms of scouring the landscape for opportunities to license and/or acquire technologies or products or companies. That does not mean that we're dismissive of the wound care business. It's just that if assets have any exposure to pending changes, they're much more difficult to value at this juncture. I think there's ample opportunity to kind of leverage or use our balance sheet to accelerate the strategic growth plan. We've said this in the past. We're not buying for the sake of buying.

Speaker #6: That does not mean that we're dismissive of the wound care business. It's just that the assets have any exposure to pending changes are difficult to value at this juncture.

Speaker #6: But I think there's there's ample opportunity to to kind of leverage or or use our balance sheet to accelerate the strategic growth plan , you know , so we're not we've said this in the past .

Speaker #6: We're not buying for the sake of buying , but if it fits our strategic plan , if it augments our current product portfolio and wound care business , if it adds assets that are strategic fit for us in the surgical business , there , they're the kind of the types of assets that we're looking at .

Joseph H. Capper: If it fits our strategic plan, if it augments our current product portfolio in the wound care business, if it adds assets that are a strategic fit for us in the surgical business, they're the types of assets that we're looking at.

Speaker #12: Great . Thanks so much and congrats again .

[Analyst]: Great. Thanks so much. Congrats again.

Speaker #6: you .

Joseph H. Capper: Thank you.

Speaker #4: Our next question is coming from the line

Operator: Our next question is coming from the line of Ross Osborn with Hanover Cheryl. Please proceed with your questions.

Speaker #4: Russ Osborne McKinnon Fitzgerald . Please to see you for your questions .

Speaker #13: Hey guys. Congrats on the strong quarter. So, starting off, would you walk through where you're seeing adoption of Heliogen and where you stand on evidence generation?

[Analyst]: Hey, guys. Congrats on the strong quarter. Would you walk through where you're seeing adoption of Heliogen™ and where you stand on evidence generation there?

Speaker #13: There .

Speaker #6: We haven't put out a number on that . But you know it's it's .

Joseph H. Capper: We haven't put out a number on that, but you know it's increasing quarter to quarter, sequentially. It's increasing month to month, quarter to quarter. It takes a while, right? You have to get the product on contract. You have to get it through batch. You have to do a value analysis committee, just to say. Then you have to prove efficacy at the surgical level. Feedback is great. We are building evidence around it in various cases. I would expect it to be, I don't, we haven't put out a growth number on that, but let's just say it's becoming a meaningful contributor to our surgical business. I can't stress enough how important it is for us to point out the fact that the surgical business continues to grow well.

Speaker #7: It's increasing quarter to quarter sequentially .

Speaker #6: It's increasing month to month , quarter to quarter sequentially . But it takes a while . Right . So you have to get the product .

Speaker #6: On contract . You have to get it through batch to value analysis . I should say . And then you know you have to prove efficacy at the surgical level .

Speaker #6: Feedback is great . We are building evidence around it in various cases . So , you know , I would expect it to be I don't we haven't put out a growth number on that .

Speaker #6: But let's just say it's it's becoming a meaningful contributor to our , our surgical business . And I can't stress enough how important it is for us to , to point out the fact that the surgical continues to grow .

Speaker #6: Well , when we decided this to shut down the coal business about two years ago . We did that with the with the intention of pivoting more and focusing more on the surgical business .

Joseph H. Capper: When we decided to shut down the KOL business about two years ago, we did that with the intention of pivoting more and focusing more on the surgical business. We've done that. We've added human resources to that group. We've added products, as you know, launched a few new products, including Heliogen™, which we just started talking about. We spent a lot of time on the evidence. I walked through one example of that in our comments. That's about a third of our business today. The surgical business is about a third of our total business. You could do the math on that, and it's growing at 15%, 20+% all year long. If that was a standalone surgical company with that kind of growth rate, I think we would all agree that it would be traded at a much higher multiple than MIMEDX Group is trading at today.

Speaker #6: And we've done that . We've added human resources to that group . We've added products , as you know , we've launched a few new products , including helium , which we just started talking about .

Speaker #6: And we spent a lot of time on the evidence . I walked through one example of that in our comments . That's about a third of our business today .

Speaker #6: So the surgical business is about our total business . You can do the math on that . And it's growing at , you know , 15 , 20 plus percent all year long .

Speaker #6: If that was a standalone surgical company with that kind of growth rate , it would be I think we would all agree it would be trading at a much higher multiple than Biomedix is trading at today .

Speaker #6: So we're super excited about continuing to invest in that business .

Joseph H. Capper: We're super excited about continuing to invest in that business.

Speaker #13: Great . And then turning to Aquafil , what's the path forward there following the September court ruling ?

[Analyst]: Great. Turning to Axiophil, what's the path forward there following the September court ruling?

Speaker #6: We have to kind of resubmit our arguments and likely have another hearing with the judge . So we're sort of back to the beginning , which is , you know , in the meantime , axial Phil continues to do well in the marketplace , as you remember , when we brought Heliogen into the portfolio , that was part of that was mitigation .

Joseph H. Capper: We have to kind of resubmit our arguments, and I'm likely to have another hearing with the judge. We're sort of back to the beginning, which is, and you know, in the meantime, Axiophil continues to do well in the marketplace. As you remember, when we brought Heliogen™ into the portfolio, part of that was mitigation in the event that Axiophil went away. We have not overtly tried to change out that product. It has stabilized and even in some cases grown. If we looked at our particulate business, which would be Axiophil and Heliogen™ together, that's a really strong business. It continues to grow. You know we'll see. We'll get through that. We have some mitigation plans in place, including Axiophil, if for some reason that does not go our way. We think our case is really strong. The arguments are really, really strong.

Speaker #6: In the event that Axial Phil went away . So we have not overtly tried to change out that product . And it has stabilized even in some cases grown .

Speaker #6: So we looked at our particular business , which would be axial . Phil , and Heliogen together . That's a really strong business .

Speaker #6: It can it continues to grow . So you know we'll see . We'll get through that . But we have you know , we have some mitigation plans in place , including actually Phil , if for some reason that does not go our way , but we think our case is really strong arguments are really , really strong .

Speaker #6: And I wouldn't read anything into that , that delay other than it was a little bit long in the tooth from a scheduling standpoint , and that may have motivated the judge to to kind of do a reset .

Joseph H. Capper: I wouldn't read anything into that delay other than it was a little bit long in the tooth from a scheduling standpoint, and that may have motivated the judge to kind of do a reset.

Speaker #13: Okay . Got it . Thanks for taking our questions .

[Analyst]: Okay. Got it. Thanks for taking our questions.

Speaker #6: Sure .

Joseph H. Capper: Sure.

Speaker #4: Thank you . The next question is from the line of Anthony Patron with Mizuho Group . Please proceed with your question .

Operator: Thank you. The next question is from the line of Anthony Petrone with Mizuho Group. Please proceed with your question.

Speaker #14: Congrats on a great quarter . You know , very , very bullish results . All around . Maybe on the 40% wound growth in the quarter .

Joseph H. Capper: Congrats here on a great quarter, very, very bullish results all around. Maybe on the 40% wound growth in the quarter, and obviously, you mentioned the final CMS LCD outcome here coming in November. Do you think there was pull forward of demand in the physician channel specifically just ahead of that ruling? Did you notice any of that taking place? When you think of underlying volumes on the surgical side, we've heard from others in the medical device space that there's some pull forward of just surgeries generally, on the notion that potentially, ACA policies may not renew with the government shutdown happening here. Did you notice any pull-through on the surgical side from any Medicaid or ACA dynamics? I'll have one quick follow-up. We didn't notice pull-through on either side of the business.

Speaker #14: And obviously you mentioned the you know , the final you know , CMS , LCD outcome here coming in November . Do you think there was you know , pull forward of demand in the physician channel specifically just ahead of that ruling .

Speaker #14: Did you notice any any of that taking place . And then just when you think of underlying volumes on the surgical side , we've heard from others in , in the medical device space that there's some , you know , pull forward of just surgeries generally on the notion that potentially ACA policies , you know , may not renew just with the government shutdown happening here .

Speaker #14: Did you notice any pull through on the surgical side from any Medicaid or ACA dynamics ? And I'll have one quick follow up .

Speaker #6: We didn't notice . Pull through on either side of the business . It we certainly didn't notice . Pull pull forward . I should say on the surgical side of the business .

Joseph H. Capper: We certainly didn't notice pull forward, I should say, on the surgical side of the business. Frankly, I wouldn't expect it in the types of procedures where our product is being utilized. These are not elective surgeries, so I doubt we would be impacted by that. You might see it more in the orthopedic space or something like that, but you're not going to see it really where our products are being used for the most part.

Speaker #6: I frankly , I wouldn't expect it in the types of procedures where our product is being utilized , where these are not . Elective surgeries .

Speaker #6: And so I doubt we would be impacted by that . You might see it more in orthopedic space or something like that , but you're not going to you're not going to see it really where our products are being used for the most part .

Speaker #14: Okay , great . And then , you know , just to follow up again on looking at the final rule here , and I know there's just a debate out there on potentially how skin substitute products could settle on a per centimeter square basis , but also on , you know , the the allotment for how many applications could be , you know , you know , decided on in the LCD .

[Analyst]: Great. Just to follow up again on looking at the final rule here, I know there's just a debate out there on potentially how skin substitute products could settle on a per centimeter square basis, but also on the allotment for how many applications could be decided on in the LCD. Is there any way to just set expectations on what the range of scenarios could be on a per centimeter squared basis, as well as a total application basis? Thanks again.

Speaker #14: So is there any way to just set expectations on , you know , what the range of scenarios could be on a per centimeter , per centimeter squared basis .

Speaker #14: But as well as a total application basis ? Thanks again .

Speaker #6: Yeah I think it's a good point . You bring up about limitations because there are things that we still need clarity on , which is one of the reasons why I'm staying away from from speculating .

Joseph H. Capper: Yeah, I think it's a good point you bring up about limitations because there are things that we still need clarity on, which is one of the reasons why I'm staying away from speculating. I'm going to frustrate you as much as I frustrated Chase. I just can't give you that range right now. I certainly am not going to speculate on what the final price is going to be because there's all kinds of rumors running around in the marketplace, and they are just that. We're really close to this thing being public. If I were a betting person, I'd say we're going to see it sooner in November rather than later in November. We're going to know real soon, Anthony, and then we'll be able to kind of, you know, plug these inputs into the way we've been modeling potential scenarios, and we'll have more clarity.

Speaker #6: And I'm going to frustrate you as much as I frustrated Chase. I just can't give you that range right now. I certainly am not going to speculate on what the final price is going to be, because there are all kinds of rumors running around the marketplace, and they're just that. We're really close to this thing being public.

Speaker #6: If I were a betting person , I'd say we're going to see it sooner in November rather than later in November . So we're going to know real soon , Anthony .

Speaker #6: And and then we'll be able to to kind of , you know , plug these inputs into the way we've been modeling potential scenarios and we'll have more clarity .

Speaker #6: But again , I have to stress that regardless of the rules , the industry will be more stable . It will be more predictable if it resets somewhat .

Joseph H. Capper: Again, I have to stress that regardless of the rules, the industry will be more stable. It will be more predictable. If it resets somewhat, that's okay because this company will outperform the market as it has done in the past when the playing field is even. When everybody's playing by the same rules, especially relative to price and profitability, we will outperform the market. We welcome it.

Speaker #6: That's okay , because this company will outperform the market as it has done in the past . When the playing field is even when everybody is playing by the same rules , relative to to price and profitability , we will outperform the market .

Speaker #6: So we welcome it.

Speaker #14: Appreciate that . Thank you .

[Analyst]: Appreciate that. Thank you.

Speaker #4: Thank you . At this time this concludes our question and answer session . I'll hand the floor back to Joe Kapoor for closing comments .

Operator: Thank you. At this time, this concludes our question and answer session. I'll hand the floor back to Joseph H. Capper for closing comments.

Speaker #6: Thanks . Operator . And appreciate you guys being on the call today and the interest in the company that concludes today's call . And we will speak to you after our next quarter .

Joseph H. Capper: Thanks, Operator, and appreciate you guys being on the call today and the interest in the company. That concludes today's call, and we will speak to you after our next quarter. Thanks, everybody.

Speaker #6: Thanks , everybody .

Operator: Thank you. Today's conference has concluded. You may now disconnect your lines at this time and have a wonderful day.