Q2 2026 Organogenesis Holdings Inc Earnings Call

August 6, 2026

Speaker #1: Welcome, ladies and gentlemen, to the second quarter 2026 earnings conference call for Organogenesis Holdings, Inc. At this time, all participants have been placed in listen-only mode.

Operator: Welcome, ladies and gentlemen, to the Q2 2026 earnings conference call for Organogenesis Holdings Inc. At this time, all participants have been placed in listen-only mode. Please note that this conference call is being recorded and that the recording will be available on the company's website for replay shortly. Before we begin, I would like to remind everyone that our remarks today may contain forward-looking statements that are based on the current expectations of management and involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated, including the risks and uncertainties described in the company's filings with the Securities and Exchange Commission, including Item 1A Risk Factors of the company's most recent annual report and its subsequently filed quarterly reports. You are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made.

Operator: Welcome, ladies and gentlemen, to the Q2 2026 Earnings Conference Call for Organogenesis Holdings Inc. At this time, all participants have been placed in listen-only mode. Please note that this conference call is being recorded and that the recording will be available on the company's website for replay shortly. Before we begin, I would like to remind everyone that our remarks today may contain forward-looking statements that are based on the current expectations of management and involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated, including the risks and uncertainties described in the company's filings with the Securities and Exchange Commission, including Item 1A Risk Factors of the company's most recent annual report and its subsequently filed quarterly reports. You are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made.

Speaker #1: Please note that this conference call is being recorded and that the recording will be available on the company's website for replay shortly. Before we begin, I would like to remind everyone that our remarks today may contain forward-looking statements that are based on the current expectations of management and involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated, including the risks and uncertainties described in the company's filings with the securities and exchange commission, including item 1A risk factors of the company's most recent annual report, and its subsequently filed quarterly reports.

Speaker #1: You are cautioned not to place undue reliance upon any forward-looking statements which speak only as of the date made. Although it may voluntarily do so from time to time, the company undertakes no commitment to update or revise the forward-looking statements whether as a result of new information, future events, or otherwise, except as required by applicable securities laws.

Operator: Although it may voluntarily do so from time to time, the company undertakes no commitment to update or revise the forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable securities laws. This call will also include references to certain financial measures that are not calculated in accordance with generally accepted accounting principles, or GAAP. We generally refer to these as non-GAAP financial measures. Reconciliations of those non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in the earnings press release on the investor relations portion of our website. I would now like to turn the call over to Mr. Gary S. Gillheeney, Sr., Organogenesis Holdings President, Chief Executive Officer, and Chair of the Board. Please go ahead, sir.

Speaker #1: This call will also include references to certain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP. We generally refer to these as non-GAAP financial measures.

Speaker #1: Reconciliations of those non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in the earnings press release on the investor relations portion of our website.

Speaker #1: I would now like to turn the call over to Mr. Gary S. Gillheeney, Senior, Organogenesis Holdings President, Chief Executive Officer, and Chair of the Board.

Speaker #1: Please go ahead, sir.

Gary S. Gillheeney Sr.: Thank you, operator, and welcome everyone to Organogenesis Holdings Q2 2026 earnings conference call. I'm joined on the call today by David Francisco, our Chief Financial Officer. Let me start with a brief agenda of what we'll cover during our prepared remarks. Dave will then provide you with an in-depth review of our Q2 financial results, our balance sheet, and financial condition at quarter-end, as well as our financial outlook for 2026, which we updated in our press release this afternoon. I will provide you some closing comments before we open the call for your questions. Let me begin with a review of our results and key developments in Q2.

Gary S. Gillheeney Sr.: Thank you, operator, and welcome everyone to Organogenesis Holdings Q2 2026 Earnings Conference Call. I'm joined on the call today by David Francisco, our Chief Financial Officer. Let me start with a brief agenda of what we'll cover during our prepared remarks. Dave will then provide you with an in-depth review of our Q2 financial results, our balance sheet, and financial condition at quarter-end, as well as our financial outlook for 2026, which we updated in our press release this afternoon. I will provide you some closing comments before we open the call for your questions. Let me begin with a review of our results and key developments in Q2.

Speaker #2: and welcome, everyone, to Organogenesis Holdings second quarter 2026 earnings conference call. I'm joined on the call today by David Francisco, our Chief Financial Officer.

Speaker #2: Let me start Thank you, Operator, with a brief agenda of what we'll cover during our prepared remarks. I'll begin with a brief review of our results and key developments in the second quarter and in recent months.

Speaker #2: David will then provide you with an in-depth review of our second quarter financial results, our balance sheet, and financial condition at quarter end, as well as our financial outlook for 2026, which we updated in our press release this afternoon.

Speaker #2: Then I will provide you some closing comments before we open the call for your questions. Let me begin with a review of our results and key developments in Q2.

Speaker #2: Our revenue results reflect the significant contraction and slower pace of recovery in the skin substitute market as a result of the actions and comments from CMS in late December of 2025.

Gary S. Gillheeney Sr.: Our revenue results reflect the significant contraction and slower pace of recovery in the skin substitute market as a result of the actions and comments from CMS in late December of 2025. Total revenue declined 58% year over year in the Q2, driven primarily by a 61% decline in sales of our advanced wound care products. We were pleased to see measured improvement in our business trends in the Q2. On balance, we were encouraged to see the operating environment improve from what we experienced during the Q1. Net product revenue increased 18% quarter over quarter in Q2, driven primarily by a 23% sequential increase in sales of our advanced wound care products.

Speaker #2: Total revenue declined 58% year-over-year in the second quarter, driven primarily by a 61% decline in sales of our advanced wound care products. We were pleased to see measured improvement in our business trends in the second quarter on balance.

Speaker #2: We were encouraged to see the operating environment improve from what we experienced during the first quarter. Net product revenue increased 18% quarter over quarter in Q2, driven primarily by a 23% sequential increase in sales of our advanced wound care products.

Speaker #2: As a leader in the industry, we leveraged our most comprehensive portfolio across multiple FDA classifications including the only biologic, PMA-approved product Applegraph, to enhance our market share position with a 30% increase in wound care unit volume on a quarter-over-quarter basis, outperforming the declines that have been reported across the industry.

Gary S. Gillheeney Sr.: As a leader in the industry, we leveraged our most comprehensive portfolio across multiple FDA classifications, including the only biologic PMA-approved product, Apligraf, to enhance our market share position with a 30% increase in wound care unit volume on a quarter-over-quarter basis, outperforming the declines that have been reported across the industry. That said, revenue results for Q2 were below the expectations we outlined in our first-quarter call. We attribute the majority of this performance to a slower pace of recovery from the significant contraction in the skin substitute market as a result of the sweeping changes from CMS to reform coverage and payment. The prolonged recovery has also prompted us to make important strategic decisions that are intended not only to reduce our cost structure, but also better position Organogenesis for success going forward.

Speaker #2: That said, revenue results for Q2 were below the expectations we outlined in our first quarter call. We attribute the majority of this performance to a slower pace of recovery from the significant contraction in the skin substitute market as a result of the sweeping changes from CMS to reform coverage and payment.

Speaker #2: The prolonged recovery has also prompted us to make important strategic decisions that are intended not only to reduce our cost structure, but also to better position Organogenesis for success going forward.

Speaker #2: While our operating and financial results in 2026 have been significantly impacted by the contraction in the skin substitute market this year, I want to make it clear that I remain very optimistic about our future.

Gary S. Gillheeney Sr.: While our operating and financial results in 2026 have been significantly impacted by the contraction in the skin substitute market this year, I want to make it clear that I remain very optimistic about our future. CMS efforts to overhaul coverage and payment for the skin substitute market have addressed the waste, fraud, and abuse from bad actors exploiting the system. With the proposed Hospital Outpatient Prospective Payment System and the Physician Fee Schedule announced last month, we believe CMS is now seeking to promote stabilization in the market. They've held payment rates steady. They've reinforced the differentiation of PMA products and the importance of clinical data in determining coverage. We applaud these actions and look forward to expanding access to patients who need these products.

Speaker #2: CMS efforts to overhaul coverage and payment for the skin substitute market have addressed the waste, fraud, and abuse from bad actors exploiting the system.

Speaker #2: With the proposed hospital outpatient prospective payment system and the physician fee schedule announced last month, we believe CMS is now seeking to promote stabilization in the market.

Speaker #2: They've held payment rates steady. They've reinforced the differentiation of PMA products and the importance of clinical data in determining coverage. And we applaud these actions and look forward to expanding access to patients who need these products.

Speaker #2: With more than 40 years in regenerative medicine and the most diverse evidence-based portfolio, with technologies in each FDA category, we believe we are best positioned in the skin substitute market and will continue to be a leader in the space with the best evidence-based portfolio on the market.

Gary S. Gillheeney Sr.: With more than 40 years in regenerative medicine and the most diverse evidence-based portfolio with technologies in each FDA category, we believe we are best positioned in the skin substitute market and will continue to be a leader in the space with the best evidence-based portfolio on the market. It is from this strong long-term market position that we are making important strategic decisions and prioritizing our investments that will support our company's future growth and continued leadership in this market. We are increasing our focus on clinical evidence with new published studies because science and evidence have been and always will be the core of our foundation. As coverage policies evolve, evidence will be the currency of credibility, and we intend to remain in the lead. Importantly, we continue to advance our strategic initiative to expand the company's mission into entirely new markets with the Renew program.

Speaker #2: It is from this strong long-term market position that we are prioritizing our investments that will support our company's future growth and continue leadership in this market.

Speaker #2: We are increasing our focus on clinical evidence with new published studies because science and evidence have been and always will be the core of our foundation.

Speaker #2: As coverage policies evolve, evidence will be the currency of credibility and we intend to remain in the lead. Importantly, we continue to advance our strategic initiative to expand the company's mission into entirely new markets with the renew program.

Speaker #2: Recently, the FDA formally accepted Immuvix as the proprietary trade name for the biologic product previously known as Renu. And if approved, Immuvix will establish a new market category for a biologic product representing a transformational opportunity for Organogenesis, and the more than 30 million Americans living with symptomatic knee osteoarthritis.

Gary S. Gillheeney Sr.: Recently, the FDA formally accepted Amnuvx as the proprietary trade name for the biologic product previously known as ReNu. If approved, Amnuvx will establish a new market category for a biologic product representing a transformational opportunity for Organogenesis and the more than 30 million Americans living with symptomatic knee osteoarthritis. Let me share a few updates on our progress in each of these important strategic initiatives in recent months. The compelling clinical results from our RCT evaluating the safety and efficacy of PuraPly AM in the management of non-healing diabetic foot ulcers, or DFUs, was submitted for publication. The results of this 170-patient study showed statistically significant DFU wound closure at 12 weeks. We believe publication of these impactful results will strongly support PuraPly AM's inclusion in any future coverage policies, underscoring its critical role in the wound healing algorithm.

Speaker #2: Let me share a few updates on our progress in each of these important strategic initiatives in recent months. The compelling clinical results from our RCT evaluating the safety and efficacy of Pureply AM in the management of non-healing diabetic foot ulcers, or DFUs, was submitted for publication.

Speaker #2: The results of this 170-patient study showed statistically significant DFU wound closure at 12 weeks. We believe publication of these impactful results will strongly support Pureply AM's inclusion in any future coverage policies underscoring its critical role in the wound healing algorithm.

Speaker #2: The RCT is complemented by an additional exciting publication in the Journal of Wound Care showing reduced rates of non-traumatic lower leg amputation among Medicare beneficiaries with DFU treated with Pureply AM versus standard of care.

Gary S. Gillheeney Sr.: The RCT is complemented by an additional exciting publication in the "Journal of Wound Care" showing reduced rates of non-traumatic lower leg amputation among Medicare beneficiaries with DFU treated with PuraPly AM versus standard of care. The use of PuraPly AM in nearly 11,000 patients was associated with a statistically significant 20% lower overall amputation rate and an even lower 40% rate for amputations above or at the level of the knee. These new studies built on a significant body of evidence of clinical benefit of PuraPly AM, adding to the previous publications on comparative effectiveness research and a prospective analysis of a large patient registry. Together, this compelling evidence spans more than 23,000 patients studied, reflecting both the primary and supporting data CMS considers when making coverage determination.

Speaker #2: The use of Pureply AM in nearly 11,000 patients was associated with a statistically significant 20% lower overall amputation rate and an even lower 40% rate for amputations above or at the level of the knee.

Speaker #2: These new studies built on a significant body of evidence of clinical benefit of Pureply AM, adding to the previous publications on comparative effectiveness research in a prospective analysis of a large patient registry.

Speaker #2: Together, this compelling evidence spans more than 23,000 patient studied, reflecting both the primary and supporting data CMS considers when making coverage determination. On July 27th, we announced peer-reviewed results published in the Journal of Wound Care demonstrating Affinity's benefit in the most challenging and complex venous leg ulcers, or VLU.

Gary S. Gillheeney Sr.: On 27 July, we announced peer-reviewed results published in the "Journal of Wound Care" demonstrating Affinity's benefit in the most challenging and complex venous leg ulcers, or VLU. The data showed statistically significant improvements in wound closure at 12 and 16 weeks for Affinity plus standard of care across both wound duration group study, offering compelling new evidence in one of the hardest to treat populations in chronic wound care. These results reinforce Affinity's benefit in the hard to heal wounds, the population that drives the greatest clinical burden and cost in VLU treatment. As those costs continue to rise, particularly within Medicare, this is a meaningful step forward for patients, clinicians, and payers. Complementing our existing Diabetic Foot Ulcer data, these results add to a growing body of RCT and real-world evidence that strengthens the case for expanded coverage across two of the most common, costly wound types.

Speaker #2: The data showed statistically significant improvements in wound closure at 12 and 16 weeks for Affinity, plus standard of care, across both wound duration group study, offering compelling new evidence in one of the hardest to treat populations in chronic wound care.

Speaker #2: These results reinforce Affinity's benefit in the hard-to-heal wounds, the population that drives the greatest clinical burden, and cost in VLU treatment. As those costs continue to rise, particularly within Medicare, this is a meaningful step forward for patients' clinicians and payers.

Speaker #2: Complementing our existing diabetic foot ulcer data, these results add to a growing body of RCT and real-world evidence that strengthens the case for expanded coverage across two of the most common costly wound types.

Speaker #2: With respect to our recent progress in our Immuvix program, on July 6th, we announced that the FDA accepted our biologic license application for Immuvix and has set up a due for target action date of April 24th, 2027.

Gary S. Gillheeney Sr.: With respect to our recent progress in our Amnuvx program, on 6 July, we announced that the FDA accepted our Biologics License Application for Amnuvx has set a PDUFA target action date of 24 April 2027. We believe this highly differentiated regenerative therapy has the potential to meaningfully change the treatment paradigm by offering a non-surgical biologic option designed to address pain and improve function, particularly in patients with severe disease who lack approved non-surgical options. We look forward to continued engagement with the FDA as they complete their review. Before turning the call over to Dave, I want to comment on our updated outlook and important strategic decisions we've made subsequent to quarter end. We have updated our expectations for total revenue in 2026 in this afternoon's press release.

Speaker #2: We believe this highly differentiated regenerative therapy has the potential to meaningfully change the treatment paradigm by offering a non-surgical biologic option designed to address pain and improve function, particularly in patients with severe disease, lack of proved non-surgical options.

Speaker #2: And we look forward to continued engagement with the FDA as they complete their review. Before turning the call over to Dave, I want to comment on our updated outlook and important strategic decisions we've made subsequent to quarter-end.

Speaker #2: We have updated our expectations for total revenue in 2026, and this afternoon's press release. While we continue to expect improvement in our revenue results on a sequential basis, in the third and fourth quarters, our 2026 revenue guidance now reflects the expectation that we see a more measured pace of recovery as compared to what was contemplated in our prior expectation for total revenue in 2026.

Gary S. Gillheeney Sr.: While we continue to expect improvement in our revenue results on a sequential basis in Q3 and Q4, our 2026 revenue guidance now reflects the expectation that we see a more measured pace of recovery as compared to what was contemplated in our prior expectation for total revenue in 2026. Given the impact of a prolonged recovery on our revenue expectations, we completed a restructuring in June. The restructuring included a workforce reduction of 138 employees and is expected to result in cost reductions of approximately $18 million on an annualized basis. This is our second restructuring announced in 2026, which together are expected to reduce annual operating expenses by more than $32 million on an annual basis. Importantly, the benefits of these activities are not limited to expense reductions.

Speaker #2: Given the impact of a prolonged recovery on our revenue expectations, we completed a restructuring in June. The restructuring included a workforce reduction of 138 employees and is expected to result in cost reductions of approximately $18 million on an annualized basis.

Speaker #2: This is our second restructuring announced in 2026, which together are expected to reduce annual operating expenses by more than $32 million on an annual basis.

Speaker #2: Importantly, the benefits of these activities are not limited to expense reductions. Rather, we believe our commercial team is now positioned to maximize the opportunity ahead as the skin substitute market expands from the recalibration over the first half of 2026.

Gary S. Gillheeney Sr.: Rather, we believe our commercial team is now positioned to maximize the opportunity ahead as the skin substitute market expands from the recalibration over the H1 2026. With that, let me turn the call over to Dave.

Speaker #2: With that, let me turn the call over to Dave.

Speaker #3: Thanks, Gary. I'll begin with a review of our second quarter financial results. Unless otherwise specified, all growth rates referenced in my prepared remarks are for the three-month period ending June 30, 2026, and are on a year-over-year basis.

David Francisco: Thanks, Gary. I'll begin with a review of our Q2 financial results. Unless otherwise specified, all growth rates referenced in my prepared remarks are for the three-month period ending 30 June 2026, and are on a year-over-year basis. Net product revenue was $42.8 million, down 58% year-over-year. Our advanced wound care net product revenue was $36.1 million, down 61%. Net product revenue from surgical and sports medicine products was $6.7 million, down 18% year-over-year. Our total revenue results included $1 million of income related to the grant issued by the Rhode Island Life Science Hub, offsetting our employee-related costs in our Smithfield facility. This compares to $0.2 million in the prior year period. Our Q2 results reflect notable improvement in growth trends on a sequential basis.

Speaker #3: Net product revenue was $42.8 million, down 58% year-over-year. Our advanced wound care net product revenue was $36.1 million, down 61%. Net product revenue from surgical and sports medicine products was $6.7 million, down 18% year-over-year.

Speaker #3: Our total revenue results included $1 million of income related to the grant issued by the Rhode Island Life Sciences Hub, offsetting our employee-related costs and our Smithfield facility.

Speaker #3: This compares to $0.2 million in the prior-year period. Our second quarter results reflect notable improvement in growth trends on a sequential basis. Specifically, our total revenue increased 18% quarter over quarter, driven by a 23% increase in sales of advanced wound care products.

David Francisco: Specifically, our total revenue increased 18% quarter-over-quarter, driven by a 23% increase in sales of advanced wound care products. Gross profit was $19.1 million or 45% of net product revenue, compared to 73% last year. Cost of goods included $1.8 million of restructuring-related charges. Excluding these adjustments, non-GAAP gross profit was $20.9 million or 49% of net product revenue. Operating expenses were $94.7 million compared to $113.6 million last year, a decrease of $18.8 million or 17%. Excluding cost of goods sold of $23.7 million for the Q2 and $27.6 million last year, our non-GAAP operating expenses were $63 million compared to $83.4 million last year, a decrease of $20.4 million or 25%.

Speaker #3: Gross profit was $19.1 million, or 45% of net product revenue, compared to $73% last year. Cost of goods included $1.8 million of restructuring-related charges, excluding these adjustments, non-GAAP gross profit was $20.9 million, or $49% of net product revenue.

Speaker #3: Operating expenses were $94.7 million, compared to $113.6 million last year, a decrease of 18.8 million, or 17%. Excluding cost of goods sold of $23.7 million for the second quarter and $27.6 million last year, our non-GAAP operating expenses were $63 million, compared to $83.4 million last year, a decrease of 20.4 million, or 25%.

Speaker #3: The year-over-year change in operating expenses, excluding cost of goods sold, was driven by a 19.8 million, or 27% decrease in SG&A expenses, offset partially by a 7.9 million, or 76% increase in research and development expenses.

David Francisco: The year-over-year change in operating expenses, excluding cost of goods sold, was driven by a $19.8 million or 27% decrease in SG&A expenses, offset partially by a $7.9 million or 76% increase in research and development expenses. Note, the Q2 R&D expenses included $5.6 million of non-recurring termination costs associated with various R&D programs and vendors. Operating expenses, excluding cost of goods sold, declined $9.3 million or 12% on a sequential basis, driven primarily by the company's March 2026 restructure. By way of reminder, the March 2026 restructuring is expected to reduce our operating expenses by approximately $13.4 million on an annualized basis. Operating loss was $51 million compared to an operating loss of $12.6 million last year, an increase of $38.4 million.

Speaker #3: Note the second quarter R&D expenses, included $5.6 million, of non-recurring termination costs, associated with various R&D programs and vendors. Operating expenses, excluding cost of goods sold, declined 9.3 million, or 12% on a sequential basis.

Speaker #3: Driven primarily by the company's March 2026 restructuring. By way of reminder, the March 2026 restructuring is expected to reduce our operating expenses by approximately 13.4 million, on an annualized basis.

Speaker #3: Operating loss was $51 million, compared to an operating loss of $12.6 million last year, an increase of 38.4 million. Excluding non-cash amortization and certain non-recurring costs in both periods, our non-GAAP operating loss was $41.1 million, compared to $10 million last year, an increase of 31.1 million year-over-year.

David Francisco: Excluding non-cash amortization and certain non-recurring costs in both periods, our non-GAAP operating loss was $41.1 million compared to $10 million last year, an increase of $31.1 million year-over-year. GAAP net loss was $96.3 million compared to a net loss of $9.4 million last year. Note, GAAP net loss in the period includes approximately $30 million of non-cash tax expense related to the recording of full valuation allowance on the company's deferred tax assets. Net loss to common stockholders was $99.3 million, compared to a net loss of $12.2 million last year. Net loss to common stockholders includes the impact of the cumulative dividend and the non-cash accretion to redemption value on our convertible preferred stock. Adjusted net loss was $89 million compared to $7.5 million last year. We've included a detailed reconciliation of GAAP to non-GAAP adjusted loss in our press release this afternoon.

Speaker #3: GAAP net loss was $96.3 million, compared to a net loss of $9.4 million last year. Note GAAP net loss in the period includes approximately $30 million of non-cash tax expense, related to the recording of full valuation allowance on the company's deferred tax assets.

Speaker #3: Net loss to common stockholders was $99.3 million, compared to a net loss of $12.2 million last year. Net loss to common stockholders includes the impact of the cumulative dividend and the non-cash accretion to redemption, value on our convertible preferred stock.

Speaker #3: Adjusted net loss was $89 million, compared to $7.5 million last year. We've included a detailed reconciliation of GAAP to non-GAAP adjusted loss in our press release this afternoon.

Speaker #3: Adjusted EBITDA loss was $34.4 million, compared to adjusted EBITDA loss of $3.6 million last year. Turning to the balance sheet, as of June 30, 2026, the company had $46.8 million in cash, cash equivalents, and restricted cash, and no outstanding debt obligations.

David Francisco: Adjusted EBITDA loss was $34.4 million, compared to adjusted EBITDA loss of $3.6 million last year. Turning to the balance sheet, as of 30 June 2026, the company had $46.8 million in cash equivalents and restricted cash and no outstanding debt obligations, compared to $94.3 million in cash equivalents and restricted cash and no outstanding debt obligations as of 31 December 2025.

Speaker #3: Compared to $94.3 million in cash, cash equivalents in restricted cash, and no outstanding debt obligations as of December 31st, 2025. We expect that our cash on hand and other components of working capital, as of June 30th, 2026, plus net cash flows from product sales, will be sufficient to fund our operating expenses and capital expenditure requirements for at least the next 12 months.

David Francisco: We expect that our cash on hand and other components of working capital as of 30 June 2026, plus net cash flows from product sales, will be sufficient to fund our operating expenses and capital expenditure requirements for at least the next 12 months. Today, the company entered into an ATM agreement with BTIG and Citizens JMP Securities, pursuant to which the company may offer to sell shares of its common stock, having an aggregate offering price of up to $75 million from time to time through sales agents. Sales under the ATM agreement, if any, will be made pursuant to the company's effective shelf registration statement on Form S-3 and related prospectus supplement. The company intends to use these net proceeds from any sales under the ATM agreement for working capital, general corporate purposes, research and development activities, and other strategic initiatives.

Speaker #3: Today, the company entered into an ATM agreement with BTIG and Citizens JMP Securities, pursuant to which the company may offer to sell shares of its common stock having an aggregate offering price of up to $75 million from time to time through sales agents.

Speaker #3: Sales under the ATM agreement, if any, will be made pursuant to the company's effective shelf registration statement on Form S3 and related prospectus supplement.

Speaker #3: The company intends to use these net proceeds from any sales under the ATM agreement for working capital general corporate purposes, research and development activities, and other strategic initiatives.

Speaker #3: Turning to our 2026 outlook, which we've updated in our this afternoon's press release, as Gary outlined earlier, our 2026 total revenue guidance now reflects the softer-than-expected results in the second quarter, and the expectation that we see a more measured recovery in the overall operating environment as we move into the second half of the year.

David Francisco: Turning to our 2026 outlook, which we've updated in this afternoon's press release. As Gary outlined earlier, our 2026 total revenue guidance now reflects the softer than expected results in Q2 and the expectation that we see a more measured recovery in the overall operating environment as we move into H2 of the year. As a result, we now expect total net revenue for the full year of 2026 of $179 million to $215 million, representing a decline in the range of 62% to 68% year-over-year. Compared to our prior guidance range, which assumed a decline in the range of 45% to 52% year-over-year.

Speaker #3: As a result, we now expect total net revenue for the full year of 2026 of $179 million to $215 million, representing a decline in the range of 62% to 68% year-over-year, and compared to our prior guidance range, which assumed a decline in the range of 45% to 52% year-over-year.

Speaker #3: Note our total revenue range assumes sales of advanced wound care products in the range of $151 million to $183 million, sales of our surgical and sports medicine products in the range of $26 million to $30 million, and grant income of $1.9 million.

David Francisco: Note our total revenue range assumes sales of advanced wound care products in the range of $151 to 183 million, sales of our surgical and sports medicine product in the range of $26 to 30 million, and grant income of $1.9 million. Our updated total revenue guidance continues to reflect the expectation that we see sequential improvement in our revenue trends in Q3 and Q4, however, at a more measured rate versus what our prior guidance had assumed, resulting in a H2 revenue decline in the range of approximately 64% to 74% year over year.

Speaker #3: Our updated total revenue guidance continues to reflect the expectation that we see sequential improvement in our revenue trends in the third and fourth quarters.

Speaker #3: However, at a more measured rate versus what our prior guidance had assumed. Resulting in a second-half revenue decline in the range of approximately 64% to 74% year-over-year.

Speaker #3: With respect to our profitability expectations, our updated guidance continues to assume improving quarterly adjusted EBITDA performance on a sequential basis, which is expected to result in nearly 60% reduction in adjusted EBITDA loss in the second half of 2026, as compared to the first half of 2026, at the low end of the range, and more than 90% reduction in adjusted EBITDA loss in the second half of 2026, as compared to the first half of 2026.

David Francisco: With respect to our profitability expectations, our updated guidance continues to assume improving quarterly adjusted EBITDA performance on a sequential basis, which is expected to result in nearly 60% reduction in adjusted EBITDA loss in H2 2026 as compared to H1 2026 at the low end of the range, and more than 90% reduction in adjusted EBITDA loss in H2 2026 as compared to H1 2026, including the expectation of positive adjusted EBITDA generation in Q4. Given the lower revenue expectations for 2026 and the related impact on gross profit, we have adjusted our assumptions for operating expenses, excluding cost of goods sold, to reduce the impact on our profitability and cash flow this year.

Speaker #3: Including the expectation of positive adjusted EBITDA generation in the fourth quarter. Given the lower revenue expectations for 2026 and the related impact on gross profit, we have adjusted our assumptions for operating expenses, excluding cost of goods sold, to reduce the impact on our profitability and cash flow this year.

Speaker #3: Specifically, we now expect to reduce our operating expenses, excluding cost of goods sold, approximately 32% year-over-year in 2026, including more than 40% year-over-year in the second half of 2026.

David Francisco: Specifically, we now expect to reduce our operating expenses, excluding cost of goods sold, approximately 32% year over year in 2026, including more than 40% year over year in H2 2026. Note these updated assumptions are inclusive of estimated cost savings in Q3 and Q4 related to our March 2026 and June 2026 restructurings of approximately $7 million and $9 million, respectively. With that, I'll turn the call back over to Gary for closing remarks.

Speaker #3: Note these updated assumptions are inclusive of estimated cost savings in the third and fourth quarters, related to our March 2026 and June 2026 restructurings of approximately $7 million and $9 million respectively.

Speaker #3: With that, I'll turn the call back over to Gary for closing remarks.

Speaker #1: Thanks, David. With more than 40 years in regenerative medicine and the most diverse evidence-based portfolio with technologies in each FDA category, we believe we are best positioned in the skin substitute market and will continue to be a leader in the space with the best evidence-based portfolio in the market.

Gary S. Gillheeney Sr.: Thanks, David. With more than 40 years in regenerative medicine in the most diverse evidence-based portfolio with technologies in each FDA category, we believe we are best positioned in the skin substitute market and will continue to be a leader in the space with the best evidence-based portfolio on the market. The competitive landscape has changed dramatically in just a few months since CMS announced sweeping changes to coverage and payment policy. Distributor-driven competitors, high-priced amniotic players, and companies engaged in fraudulent practices have been substantially reduced. Many of the remaining players are diversifying away from wound care or exiting the category altogether. Organogenesis is doubling down on wound care. We are leaders because our business is built on efficacy and outcomes, and that is driving our expanding share as the market resets.

Speaker #1: The competitive landscape has changed dramatically in just a few months since CMS announced sweeping changes to coverage and payment policies. Distributed-driven competitors, high-priced amniotic players, and companies engaged in fraudulent practices have been substantially reduced, many of the remaining players are diversifying away from wound care or exiting the category altogether.

Speaker #1: Organogenesis is doubling down on wound care. We are leaders because our business is built on efficacy and outcomes, and that is driving our expanding share as the market resets.

Speaker #1: Customer trust matters now in this new market more than ever before and simply put, we believe we have the best evidence-based skin substitute products in wound care bar none.

Gary S. Gillheeney Sr.: Customer trust matters now in this new market more than ever before. Simply put, we believe we have the best evidence-based skin substitute products in wound care, bar none. We expect to enhance our leadership position by leveraging our portfolio to provide integrated healing solutions that substantially improve outcomes while lowering the overall cost of care. With that, I'll turn the call over to the operator for questions.

Speaker #1: We expect to enhance our leadership position by leveraging our portfolio to provide integrated healing solutions that substantially improve outcomes while lowering the overall cost of care with that I'll turn the call over to the operator for questions.

Speaker #2: Thank you, sir. If you'd like to ask a question, please signal by pressing star 11 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment.

Operator: Thank you, sir. If you'd like to ask a question, please signal by pressing *11 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Our first question comes from Ryan Zimmerman from U.S. Bancorp. Please go ahead.

Speaker #2: Our first question comes from Ryan Zimmerman from US Bancorp. Please go ahead.

[Analyst] (BTIG): Hi, Gary and Dave, this is Izzy on for Ryan. Thanks for taking the question. I just want to start to get kind of your higher-level thoughts on the broader market dynamics and what is going to give you confidence that Medicare is working to stabilize the market beyond just what we had seen in the OPPS proposal.

[Analyst] (U.S Bancorp): Hi, Gary and Dave, this is Izzy on for Ryan. Thanks for taking the question. I just want to start to get kind of your higher-level thoughts on the broader market dynamics and what is going to give you confidence that Medicare is working to stabilize the market beyond just what we had seen in the OPPS proposal.

Speaker #4: Hi, Gary and Dave. This is Izzy on for Ryan. Thanks for taking the question. I just wanted to start by getting your higher-level thoughts on the broader market dynamics, and what is going to give you confidence that Medicare is working to stabilize the market beyond just what we've seen in the OPPS proposal.

Speaker #1: So, this is Gary. Hi, Izzy. What we're seeing month over month is continued growth in the space. We're seeing more clinicians getting more comfortable with the current coverage and payment structure that's in place now.

Gary S. Gillheeney Sr.: This is Gary. Hi, Izzy. What we're seeing is month over month, we're seeing continued growth in the space. We're seeing more clinicians getting more comfortable with the current coverage and payment structure that's in place now. We still have a ways to go. CMS reinstated the $127.14 reimbursement rate. I think they did that with the intention of stabilizing the market and bringing consistency to the market. They also continue to identify the tiers, where they recognize PMA products and 510K products and the 361. Maintaining that tier structure is also bringing stability and signaling evidence is still an important function here and will carry weight going forward.

Speaker #1: We still have a ways to go. And CMS reinstated the 127-127 dollars and 14 cents reimbursement rate. I think they did that with the intention of stabilizing the market and bringing consistency to the market.

Speaker #1: They also continue to identify the tiers where they recognize PMA products and 510(k) products and the 361. So maintaining that tier structure is also bringing stability and signaling evidence is still an important function here.

Speaker #1: And we'll carry weight going forward. So we think the stability recognizing PMA products and we're starting to see more clinicians starting to use at least our products as we continue to take fairly significant share.

Gary S. Gillheeney Sr.: We think the stability, recognizing PMA products, and we're starting to see more clinicians starting to use at least our products as we continue to take a fairly significant share in both Q1 and Q2.

Speaker #1: And both the first and second quarters.

Speaker #4: That's helpful. Thank you. And as we start to think about the back half of the year, I was hoping you could speak a little bit more about the pacing that's baked into guidance for third quarter and fourth quarter.

[Analyst] (BTIG): That's helpful. Thank you. As we start to think about the H2, I was hoping you could speak a little bit more about the pacing that's baked into guidance for Q3 and Q4.

[Analyst] (U.S Bancorp): That's helpful. Thank you. As we start to think about the H2, I was hoping you could speak a little bit more about the pacing that's baked into guidance for Q3 and Q4.

Speaker #1: Yeah, sure. This is Dave. Hi, Izzy. How are you? Yeah, so we were as Gary mentioned, we were pleased with the strong sequential growth that we saw between Q1 and Q2.

David Francisco: Yeah, sure. This is Dave. Hi, Izzy. How are you? As Gary mentioned, we were pleased with the strong sequential growth that we saw between Q1 and Q2. Obviously, as we talked about, up fairly significantly in advanced wound care units, up 30%. That's coming off the Q1 trough. Our expectation is that the movement from here would be continued share gains, but more modest. Obviously the growth on a sequential basis would be much more modest than what we'd anticipated or what we experienced in Q1 to Q2. We see some modest growth into Q3 with a little bit more strength in Q4.

Speaker #1: Obviously, as we talked about, a fairly significantly in advanced wound care units up 30%. So that's coming off the Q1 trough. So our expectation is that the movement from here would be continued share gains, but more modest.

Speaker #1: And obviously, the growth on a sequential basis would be much more modest than what we'd anticipate or what we experienced in the first to the second quarter.

Speaker #1: So we see some modest growth into the third quarter with a little bit more strength in the fourth.

[Analyst] (BTIG): Wonderful. Thank you. If I could just squeak one more in. Could either of you speak to what products are actually being paid for versus what might be held up in the market, whether it's synthetics, amniotics, anything you can provide there? Thanks for taking the questions.

[Analyst] (U.S Bancorp): Wonderful. Thank you. If I could just squeak one more in. Could either of you speak to what products are actually being paid for versus what might be held up in the market, whether it's synthetics, amniotics, anything you can provide there? Thanks for taking the questions.

Speaker #4: Helpful, thank you. And if I could just squeak one more in—could either of you speak to what products are actually being paid for versus what might be held up in the market? Whether it's synthetics, amniotics—anything you can provide there?

Speaker #4: Thanks for taking the questions.

Gary S. Gillheeney Sr.: We don't really see any particular product being held up. The concern is post-application upon audit, would there be a potential clawback on those products? What we're seeing in the market is products without RCTs are at significant risk. Many times they're considered investigational. Clinicians are getting very concerned about products without RCTs. There's a flight to quality, which is why we're seeing the 30% growth that we're seeing and the market share gains, because our products have significant evidence. We think it's more post-application that clinicians are concerned about the clawbacks and the potential paybacks for products that just don't have evidence in the space.

Speaker #1: We don't really see any particular product being held up. The concern is post-application—upon audit, would there be a potential clawback on those products?

Speaker #1: And what we're seeing in the market is products without RCTs are at significant risk, sometimes many times they're considered investigational. So clinicians are getting very concerned about products without RCTs.

Speaker #1: There's a flight to quality, which is why we're seeing the 30% growth that we're seeing in the market share gains. Because our products have significant evidence.

Speaker #1: So we think it's more post-application that clinicians are concerned about the clawbacks and the potential paybacks for products that just don't have evidence in the space.

Speaker #2: Thank you. As a reminder, to ask a question, you will need to press *11 on your telephone and wait for your name to be announced.

Operator: Thank you. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Our next question comes from Ravi Misra from Truist. Please go ahead.

Speaker #2: To withdraw your question, please press star 11 again. Our next question comes from Ravi Misra from Truist. Please go ahead.

Speaker #1: Hi, thanks for taking the questions. I just want to return to the guidance and the outlook that you provided on the call.

Ravi Misra: Hi. Thanks for taking the questions. Just want to kind of return to the guidance and the outlook that you provided on the call. Can you help us understand what gives you comfort to get, what are the kind of the puts and takes that get us to the low end or the high end of the guide? How should we think about that, given your commentary just now on surgeon concerns, the 30% kind of sequential volume growth. How should we think of that on a Q3 versus Q4 basis? Returning maybe back to market in 2027, or is that kind of an elongated thing as well?

Speaker #1: Can you help us understand kind of what gives you comfort to get what are the kind of to puts and takes together to the low end or the high end of the guide?

Speaker #1: And then, how should we think about that, given your commentary just now on surgeon concerns? The 30% kind of sequential volume growth—how should we think of that on a Q3 versus Q4 basis?

Speaker #1: And then returning maybe back to market in '27, or is that kind of an elongated thing as well?

Speaker #3: Well, I'll start. I think as you look at our low guidance, as Dave indicated, what we've guided to, it's not what we've seen. Our second quarter growth has been fairly significant at 30%, but what we're guiding to is lower growth and lower share gains.

Gary S. Gillheeney Sr.: Well, I'll start. I think, as you look at our low guidance, as Dave indicated, what we've guided to is not what we've seen. Our Q2 growth has been fairly significant at 30%, what we're guiding to is lower growth and lower share gains on the conservative side. We're kind of guiding to where we are, but slightly less than the growth experience we had in Q2. That's why we have more confidence in the low end of the range. Now, the high end of the range, I'll let Dave jump in, is basically reflecting the growth that we are seeing right now in our business with some small, what I'd call a market expansion, at the end of Q3 and Q4.

Speaker #3: On the conservative side. So we're kind of guiding to where we are but slightly less than the experience, the growth experience we had in Q2.

Speaker #3: That's why we have more confidence in the low end of the range. Now the high end of the range, and I'll let Dave jump in, is basically reflecting the growth that we are seeing right now in our business with some small, what I call a market expansion at the end of the third quarter and fourth quarter.

Speaker #3: So we're guiding to less than the growth that we're seeing right now. And on the low end and on the high end, we're guiding to exactly what we're growing at right now with the small market expansion.

Gary S. Gillheeney Sr.: We're guiding to less than the growth that we're seeing right now, on the low end and on the high end, we're guiding to exactly what we're growing at right now with the small market expansion. That's kind of the range. David, you can jump in.

Speaker #3: So that's kind of the range Dave, you can jump in.

Speaker #1: No, absolutely. And just, Ravi, it's a little bit more biased towards Q4 than it is Q3, just because of the evolution of the business and the market.

David Francisco: No, absolutely. Just, Ravi, it's a little bit more biased towards Q4 than it is Q3, just because the evolution of the business and the market.

Speaker #5: Great. Thanks. And then maybe a follow-up. Just on Duragraph, just on your Q that you're kind of shelving that for now. Can we talk about the opportunity there that you're maybe stepping away from or the thinking around when that does come back to market and the rationale for why?

Ravi Misra: Great. Thanks. Then maybe a follow-up. Just on Dermagraft, saw in your Q that you're kind of shelving that for now. Can we talk about the opportunity there that you're maybe stepping away from or the thinking around when that does come back to market and the rationale for why?

Speaker #1: Well, we're slowing down the manufacturing build-out of Dermagraph to preserve cash. So Dermagraph is still a product that we expect to launch. We didn't have significant revenue built in '27 in our thinking or '28.

Gary S. Gillheeney Sr.: Well, we're slowing down the manufacturing build-out of Dermagraft to preserve cash. Dermagraft is still a product that we expect to launch. We didn't have significant revenue built in 2027 in our thinking or 2028. It will delay it probably a year of its intended launch, which was somewhere in the middle of 2027, probably launch in the middle of 2028. It's a focus on preserving cash and going slower with that build-out. We think that's prudent right now.

Speaker #1: But it will delay it probably a year of its intended launch, which was somewhere in the middle of '27. So probably launch in the middle of '28.

Speaker #1: But it's a focus on preserving cash and going slower with that build-out. We think that's prudent right now.

Speaker #5: I'll get back in Q. Thank you.

Ravi Misra: I'll get back in queue. Thank you.

Speaker #1: Thank you.

Gary S. Gillheeney Sr.: Thank you.

Speaker #2: Thank you. Please stand by. Thank you. Do we have another question from Ravi?

Operator: Thank you. Please stand by. Thank you. Do we have another question from Ravi?

Speaker #1: No. Well, if there's time, yeah, I guess I'll ask one more. And Nuvic, just help us think about maybe how you see this slotting into the competitive landscape if and when approved.

Ravi Misra: No. Well, if there's time, yeah, I guess I'll ask one more. Amnuvx, just help us think about maybe how you see this slotting into the competitive landscape, if and when approved. Thanks.

Speaker #1: Thanks.

Speaker #3: Sure. So in Nuvic, if approval will be the first biologic in this space, so we think it will have a unique place in the space.

Gary S. Gillheeney Sr.: Sure. Amnuvx, if approved, will be the first biologic in this space. We think it will have a unique place in this space. We don't see anything else coming to market before Amnuvx, so that's a very positive place to be. Obviously, the clinical data is strong. The safety data, the safety profile of the product is extremely strong. There's a lot of strong tailwinds driving this product. We expect, with the PDUFA date of 27 April, if approved, we would launch the product with a temporary code until we get a permanent code, which we would expect at the end of 2027, the beginning of 2028. We would expect the product to have a fairly significant ramp as we ramp our infrastructure. The product is unique. There is no other biologic in this space. We're pretty excited about it.

Speaker #3: We don't see anything else coming to market before Nuvic. So that's a very positive place to be. Obviously, the clinical data is strong. The safety data, the safety profile that the product is extremely strong.

Speaker #3: So there's a lot of strong tailwinds driving this product. We expect with the PDUFA date of April in '27, if approved, we would launch the product with a temporary code until we get a permanent code.

Speaker #3: Which we would expect at the end of '27, the beginning of '28. And we would expect the product to have a fairly significant ramp as we ramp our infrastructure.

Speaker #3: So the product is unique. There is no other biologic in this space. And we're pretty excited about it.

Operator: Thank you. I'm showing no further questions at this time. That does conclude our conference call for today. Thank you for your participation.

Q2 2026 Organogenesis Holdings Inc Earnings Call

Request DemoDemo

Organogenesis

Earnings