Organogenesis Holdings Inc. Reports First Quarter 2024 Financial Results

Canton, MA, August 8, 2024 (GLOBE NEWSWIRE) - Organogenesis Holdings Inc. (Nasdaq: ORGO), a leading regenerative medicine company focused on the development, manufacture, and commercialization of product solutions for the Advanced Wound Care and Surgical & Sports Medicine markets, today reported financial results for the second quarter ended June 30, 2024.

Second Quarter 2024 Financial Results Summary:

• Net revenue of $130.2 million for the second quarter of 2024, an increase of $12.9 million compared to net revenue of $117.3 million for the second quarter of 2023. Net revenue for the second quarter of 2024 consists of:
  • Net revenue from Advanced Wound Care products of $123.2 million, an increase of 12% from the second quarter of 2023.
  • Net revenue from Surgical & Sports Medicine products of $7.0 million, a decrease of 3% from the second quarter of 2023.
• Net loss of $17.0 million for the second quarter of 2024, compared to net income of $5.3 million for the second quarter of 2023, a decrease in net income of $22.4 million.
• Adjusted net income¹ of $0.2 million for the second quarter of 2024, compared to adjusted net income of $6.1 million for the second quarter of 2023, a decrease in adjusted net income of $5.9 million.
• Adjusted EBITDA of $15.6 million for the second quarter of 2024, compared to Adjusted EBITDA of $15.4 million for the second quarter of 2023, an increase of $0.2 million.

"Our progress in the second quarter reflects strong execution and validation of our strategy to expand customer relationships by emphasizing the value of our differentiated products," said Gary S. Gillheeney, Sr., President and Chief Executive Officer of Organogenesis.

Mr. Gillheeney, Sr. continued: "We continue building momentum in a challenging operating environment while achieving major clinical milestones and advancing the ReNu development program. Although we expect near-term variability in the skin substitutes market, we are extremely pleased with our progress in the first half of the year and are confident in our ability to navigate that complexity while working to expand our extensive body of clinical evidence supporting meaningful solutions that improve patients' lives."

Second Quarter 2024 Financial Results:

Net revenue for the second quarter of 2024 was $130.2 million, compared to $117.3 million for the second quarter of 2023, an increase of $12.9 million, or 11%. The increase in net revenue was driven by an increase of $13.2 million, or 12%, in net revenue for Advanced Wound Care products partially offset by a decrease of $0.2 million, or 3%, in net revenue for Surgical & Sports Medicine products.

Gross profit for the second quarter of 2024 was $101.0 million, or 78% of net revenue, compared to $91.0 million, or 78% of net revenue for the second quarter of 2023, an increase of $10.0 million, or 11%.

Operating expenses for the second quarter of 2024 were $114.9 million compared to $81.3 million for the second quarter of 2023, an increase of $33.7 million, or 41%. R&D expense was $15.6 million for the second quarter of 2024, compared to $10.9 million for the second quarter of 2023, an increase of $4.6 million, or 42%. Selling, general and administrative expenses were $76.5 million for the second quarter of 2024, compared to $70.3 million for the second quarter of 2023, an increase of $6.2 million, or 9%. For the three months ended June 30, 2024, the Company recorded impairment and write down expenses of $18.8 million and $4.0 million, respectively.

Operating loss for the second quarter of 2024 was $13.9 million, compared to operating income of $9.7 million for the second quarter of 2023, a decrease in operating income of $23.6 million, or 243%.

Total other expense, net, for the second quarter of 2024 was $0.6 million, relatively consistent with $0.6 million for the second quarter of 2023.

Net loss for the second quarter of 2024 was $17.0 million, or $(0.13) per share, compared to net income of $5.3 million, or $0.04 per share, for the second quarter of 2023, a decrease in net income of $22.4 million, or $(0.17) per share.

Adjusted net income of $0.2 million for the second quarter of 2024, compared to $6.1 million for the second quarter of 2023, a decrease of $5.9 million, or 97%.

Adjusted EBITDA was $15.6 million for the second quarter of 2024, compared to $15.4 million for the second quarter of 2023, an increase of $0.2 million, or 1%.

As of June 30, 2024, the Company had $90.5 million in cash, cash equivalents and restricted cash and $63.5 million in debt obligations, compared to $104.3 million in cash, cash equivalents and restricted cash and $66.2 million in debt obligations as of December 31, 2023.

First Half 2024 Financial Results:

Net revenue for the six months ended June 30, 2024 was $240.2 million, compared to $225.0 million for the six months ended June 30, 2023, an increase of $15.3 million, or 7%. The increase in net revenue was driven by an increase of $16.1 million, or 8%, in net revenue for Advanced Wound Care products partially offset by a decrease of $0.9 million, or 6%, in net revenue for Surgical & Sports Medicine products.

Gross profit for the six months ended June 30, 2024 was $182.3 million, or 76% of net revenue, compared to $172.0 million, or 76% of net revenue for six months ended June 30, 2023, an increase of $10.3 million, or 6%.

Operating expenses for the six months ended June 30, 2024 were $200.1 million compared to $166.3 million for the six months ended June 30, 2023, an increase of $33.8 million or 20%. R&D expense was $28.4 million for the six months ended June 30, 2024, compared to $22.1 million for the six months ended June 30, 2023, an increase of $6.3 million, or 29%. Selling, general and administrative expenses were $148.9 million for the six months ended June 30, 2024, compared to $144.2 million for the six months ended June 30, 2023, an increase of $4.7 million, or 3%. For the six months ended June 30, 2024, the Company recorded impairment and write down expenses of $18.8 million and $4.0 million, respectively.

Operating loss for the six months ended June 30, 2024 was $17.7 million, compared to operating income of $5.7 million for the six months ended June 30, 2023, a decrease in operating income of $23.5 million, or 409%.

Total other expense, net, for the six months ended June 30, 2024 was $1.1 million compared to $1.2 million for the six months ended June 30, 2023, a decrease in other expense, net of $0.1 million, or 8%.

Net loss for the six months ended June 30, 2024 was $19.1 million, or $(0.14) per share, compared to net income of $2.3 million or $0.02 per share, for the six months ended June 30, 2023, a decrease in net income of $21.5 million, or $(0.16) per share.

Adjusted net loss of $1.2 million for the six months ended June 30, 2024, compared to adjusted net income of $5.4 million for the six months ended June 30, 2023, a decrease in adjusted net income of $6.7 million, or 124%.

Adjusted EBITDA was $18.2 million for the six months ended June 30, 2024, compared to $19.2 million for the six months ended June 30, 2023, a decrease of $1.0 million, or 5%.

As of June 30, 2024, the Company had $90.5 million in cash, cash equivalents and restricted cash and $63.5 million in debt obligations, compared to $104.3 million in cash, cash equivalents and restricted cash and $66.2 million in debt obligations as of December 31, 2023.

Fiscal Year 2024 Guidance:

For the year ending December 31, 2024 the Company is reaffirming its prior revenue guidance and updating its profitability guidance and expects:

• Net revenue between $445.0 million and $470.0 million, representing an increase of approximately 3% to 9% year-over-year, as compared to net revenue of $433.1 million for the year ended December 31, 2023.
  • The 2024 net revenue guidance range assumes:
    • Net revenue from Advanced Wound Care products between $415.0 million and $435.0 million, an increase of 2% to 7% year-over-year as compared to net revenue of $405.5 million for the year ended December 31, 2023.
    • Net revenue from Surgical & Sports Medicine products between $30.0 million and $35.0 million, an increase of 9% to 27% year-over-year as compared to net revenue of $27.6 million for the year ended December 31, 2023.
• Net loss between $(27.0) million and $(12.0) million and adjusted net income (loss) between $(8.0) million and $7.0 million.
• EBITDA between $(17.0) million and $2.0 million and Adjusted EBITDA between $16.0 million and $35.0 million.

Second Quarter Earnings Conference Call:

Management will host a conference call at 5:00 p.m. Eastern Time on August 8th to discuss the results of the quarter, and provide a corporate update with a question and answer session. Those who would like to participate may access the live webcast by visiting investors.organogenesis.com or by calling (800) 715-9871 and providing access code 6679912. The live webcast can also be accessed via the company's website at investors.organogenesis.com. The webcast will be archived on the company website for approximately one year.

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Non-GAAP Financial Measures

Our management uses financial measures that are not in accordance with generally accepted accounting principles in the United States, or GAAP, in addition to financial measures in accordance with GAAP to evaluate our operating results. These non-GAAP financial measures should be considered supplemental to, and not a substitute for, our reported financial results prepared in accordance with GAAP. Our management uses Adjusted EBITDA, adjusted net income (loss), and non-GAAP operating income to evaluate our operating performance and trends and make planning decisions. Our management believes Adjusted EBITDA, adjusted net income (loss), and non-GAAP operating income help identify underlying trends in our business that could otherwise be masked by the effect of the items that we exclude. Accordingly, we believe that Adjusted EBITDA, adjusted net income (loss), and non-GAAP operating income provide useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and prospects, and allowing for greater transparency with respect to key financial metrics used by our management in its financial and operational decision-making.

The following table presents a reconciliation of GAAP net income (loss) to non-GAAP EBITDA and non-GAAP Adjusted EBITDA, for the periods presented:

(1) Amount reflects employee severance, retention and benefits as well as other exit costs associated with the Company's restructuring activities.
(2) Amount reflects the impairment of a purchased building and associated unfinished construction work.
(3) Amount reflects the write-down of costs previously capitalized in the development of internal-use software, that the Company determined have no future value.

The following table presents a reconciliation of GAAP net income (loss) to non-GAAP adjusted net income (loss), for the periods presented:

(1) Amount reflects employee severance, retention and benefits as well as other exit costs associated with the Company's restructuring activities.
(2) Amount reflects the impairment of a purchased building and associated unfinished construction work.
(3) Amount reflects the write-down of costs previously capitalized in the development of internal-use software, that the Company determined have no future value.

The following table presents a reconciliation of GAAP income (loss) from operations to non-GAAP operating income, for the periods presented:

(1) Amount reflects employee severance, retention and benefits as well as other exit costs associated with the Company's restructuring activities.
(2) Amount reflects the impairment of a purchased building and associated unfinished construction work.
(3) Amount reflects the write-down of costs previously capitalized in the development of internal-use software, that the Company determined have no future value.

The following table presents a reconciliation of projected GAAP net income (loss) to projected non-GAAP EBITDA and projected non-GAAP Adjusted EBITDA included in our guidance for the year ending December 31, 2024:

The following table presents a reconciliation of projected GAAP net loss to projected non-GAAP adjusted net income (loss) included in our guidance for the year ending December 31, 2024:

Forward-Looking Statements

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to expectations or forecasts of future events. Forward-looking statements may be identified by the use of words such as "forecast," "intend," "seek," "target," "anticipate," "believe," "expect," "estimate," "plan," "outlook," and "project" and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. Such forward-looking statements include statements relating to the Company's expected revenue, net income (loss), adjusted net income (loss), EBITDA, and Adjusted EBITDA for fiscal 2024 and the breakdown of expected revenue in both its Advanced Wound Care and Surgical & Sports Medicine categories. Forward-looking statements with respect to the operations of the Company, strategies, prospects, and other aspects of the business of the Company are based on current expectations that are subject to known and unknown risks and uncertainties, which could cause actual results or outcomes to differ materially from expectations expressed or implied by such forward-looking statements. These factors include, but are not limited to: (1) the impact of any changes to the coverage and reimbursement levels for the Company's products (including as a result of the recently proposed LCDs); (2) the Company faces significant and continuing competition, which could adversely affect its business, results of operations and financial condition; (3) rapid technological change could cause the Company's products to become obsolete and if the Company does not enhance its product offerings through its research and development efforts, it may be unable to effectively compete; (4) to be commercially successful, the Company must convince physicians that its products are safe and effective alternatives to existing treatments and that its products should be used in their procedures; (5) the Company's ability to raise funds to expand its business; (6) the Company has incurred losses in the current period and prior periods and may incur losses in the future; (7) changes in applicable laws or regulations; (8) the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors; (9) the Company's ability to maintain production or obtain supply of its products in sufficient quantities to meet demand; (10) any resurgence of the COVID-19 pandemic and its impact, if any, on the Company's fiscal condition and results of operations; (11) the impact of the suspension of commercialization of: (a) ReNu and NuCel in connection with the expiration of the FDA's enforcement grace period for HCT/Ps on May 31, 2021 and (b) Dermagraft in the second quarter of 2022 pending transition of manufacturing to a new manufacturing facility or a third-party manufacturer; (12) whether the Company is able to obtain regulatory approval for and successfully commercialize ReNu; and (13) other risks and uncertainties described in the Company's filings with the Securities and Exchange Commission, including Item 1A (Risk Factors) of the Company's Form 10-K for the year ended December 31, 2023 and its subsequently filed periodic reports. 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.

About Organogenesis Holdings Inc.

Organogenesis Holdings Inc. is a leading regenerative medicine company focused on the development, manufacture, and commercialization of solutions for the advanced wound care and surgical and sports medicine markets. Organogenesis offers a comprehensive portfolio of innovative regenerative products to address patient needs across the continuum of care. For more information, visit www.organogenesis.com.

Investor Inquiries:

Westwicke Partners
Mike Piccinino, CFA
[email protected]
443-213-0500

Press and Media Inquiries:

Organogenesis
[email protected]

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