• Organogenesis Holdings Inc. Reports Second Quarter 2024 Financial Results

    Source: Nasdaq GlobeNewswire / 08 Aug 2024 15:05:01   America/Chicago

    CANTON, Mass., Aug. 08, 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:

      Three Months Ended June 30,  Change 
      2024  2023  $  % 
      (in thousands, except for percentages) 
    Advanced Wound Care $123,237  $110,075  $13,162   12%
    Surgical & Sports Medicine  6,997   7,241   (244)  (3%)
    Net revenue $130,234  $117,316  $12,918   11%


      Six Months Ended June 30,  Change 
      2024  2023  $  % 
      (in thousands, except for percentages) 
    Advanced Wound Care $227,101  $210,992  $16,109   8%
    Surgical & Sports Medicine  13,109   13,966   (857)  (6%)
    Net revenue $240,210  $224,958  $15,252   7%
                     

    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:

      Six Months Ended June 30,  Change 
      2024  2023  $  % 
      (in thousands, except for percentages) 
    Advanced Wound Care $227,101  $210,992  $16,109   8%
    Surgical & Sports Medicine  13,109   13,966   (857)  (6%)
    Net revenue $240,210  $224,958  $15,252   7%
                     

    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 www.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.

     
    ORGANOGENESIS HOLDINGS INC.
    UNAUDITED CONSOLIDATED BALANCE SHEETS
    (amounts in thousands, except share and per share data)
     
      June 30,  December 31, 
      2024  2023 
    Assets      
    Current assets:      
    Cash and cash equivalents $89,902  $103,840 
    Restricted cash  575   498 
    Accounts receivable, net  105,945   81,999 
    Inventories, net  26,883   28,253 
    Prepaid expenses and other current assets  10,889   10,454 
    Total current assets  234,194   225,044 
    Property and equipment, net  89,947   116,228 
    Intangible assets, net  14,136   15,871 
    Goodwill  28,772   28,772 
    Operating lease right-of-use assets, net  36,572   40,118 
    Deferred tax asset, net  33,691   28,002 
    Other assets  5,851   5,990 
    Total assets $443,163  $460,025 
    Liabilities and Stockholders’ Equity      
    Current liabilities:      
    Current portion of term loan $5,758  $5,486 
    Current portion of finance lease obligations  1,125   1,081 
    Current portion of operating lease obligations - related party  7,357   8,413 
    Current portion of operating lease obligations  4,081   4,731 
    Accounts payable  29,390   30,724 
    Accrued expenses and other current liabilities  38,016   30,074 
    Total current liabilities  85,727   80,509 
    Term loan, net of current portion  57,731   60,745 
    Finance lease obligations, net of current portion  1,314   1,888 
    Operating lease obligations, net of current portion - related party  10,139   11,954 
    Operating lease obligations, net of current portion  23,483   25,053 
    Other liabilities  1,268   1,213 
    Total liabilities  179,662   181,362 
    Commitments and contingencies (Note 15)      
    Stockholders’ equity:      
    Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued  —   — 
    Common stock, $0.0001 par value; 400,000,000 shares authorized; 133,302,786 and 132,044,944 shares issued; 132,574,238 and 131,316,396 shares outstanding at June 30, 2024 and December 31, 2023, respectively  13   13 
    Additional paid-in capital  323,602   319,621 
    Accumulated deficit  (60,114)  (40,971)
    Total stockholders’ equity  263,501   278,663 
    Total liabilities and stockholders’ equity $443,163  $460,025 


    ORGANOGENESIS HOLDINGS INC. UNAUDITEDCONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
    (amounts in thousands, except share and per share data)
     
      Three Months Ended
    June 30,    		  Six Months Ended
    June 30,    		 
      2024  2023  2024  2023 
    Net revenue $130,234  $117,316  $240,210  $224,958 
    Cost of goods sold  29,198   26,316   57,894   52,923 
    Gross profit  101,036   91,000   182,316   172,035 
    Operating expenses:            
    Selling, general and administrative  76,540   70,317   148,862   144,151 
    Research and development  15,587   10,938   28,397   22,140 
    Impairment of property and construction  18,842   —   18,842   — 
    Write down of capitalized internal-use software costs  3,959   —   3,959   — 
    Total operating expenses  114,928   81,255   200,060   166,291 
    Income (loss) from operations  (13,892)  9,745   (17,744)  5,744 
    Other expense, net:            
    Interest expense, net  (620)  (594)  (1,134)  (1,243)
    Other income (expense), net  (28)  28   (5)  51 
    Total other expense, net  (648)  (566)  (1,139)  (1,192)
    Net income (loss) before income taxes  (14,540)  9,179   (18,883)  4,552 
    Income tax expense  (2,503)  (3,863)  (260)  (2,205)
    Net income (loss) and comprehensive income (loss) $(17,043) $5,316  $(19,143) $2,347 
                 
    Net income (loss) per share:            
    Basic $(0.13) $0.04  $(0.14) $0.02 
    Diluted $(0.13) $0.04  $(0.14) $0.02 
    Weighted-average common shares outstanding            
    Basic  132,573,153   131,293,398   132,217,463   131,189,405 
    Diluted  132,573,153   133,066,010   132,217,463   132,475,908 


    ORGANOGENESIS HOLDINGS INC. UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
    (amounts in thousands, except share and per share data)
     
      Six Months Ended
    June 30,    		 
      2024  2023 
    Cash flows from operating activities:      
    Net income (loss) $(19,143) $2,347 
    Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:      
    Depreciation and amortization  6,438   4,922 
    Amortization of intangible assets  1,735   2,459 
    Reduction in the carrying value of right-of-use assets  4,364   3,893 
    Non-cash interest expense  209   215 
    Deferred interest expense  213   245 
    Provision recorded for credit losses  2,032   190 
    Deferred tax benefit  (5,689)  — 
    Loss on disposal of property and equipment  434   65 
    Adjustment for excess and obsolete inventories  4,469   3,464 
    Stock-based compensation  4,975   4,213 
    Impairment of property and construction (Note 6)  18,842   — 
    Write down of capitalized internal-use software costs (Note 6)  3,959   — 
    Changes in operating assets and liabilities:      
    Accounts receivable  (25,978)  (4,970)
    Inventories  (2,009)  (4,045)
    Prepaid expenses and other current assets and other assets  (436)  (2,874)
    Operating leases  (5,908)  (4,178)
    Accounts payable  (2,147)  (3,535)
    Accrued expenses and other current liabilities  8,162   1,091 
    Other liabilities  54   67 
    Net cash provided by (used in) operating activities  (5,424)  3,569 
    Cash flows from investing activities:      
    Purchases of property and equipment  (4,102)  (15,061)
    Net cash used in investing activities  (4,102)  (15,061)
    Cash flows from financing activities:      
    Payments of term loan under the 2021 Credit Agreement  (2,813)  (1,875)
    Payments of withholding taxes in connection with RSUs vesting  (1,174)  (332)
    Proceeds from the exercise of stock options  180   — 
    Principal repayments of finance lease obligations  (528)  (83)
    Net cash used in financing activities  (4,335)  (2,290)
    Change in cash, cash equivalents and restricted cash  (13,861)  (13,782)
    Cash, cash equivalents, and restricted cash, beginning of period  104,338   103,290 
    Cash, cash equivalents, and restricted cash, end of period $90,477  $89,508 
    Supplemental disclosure of cash flow information:      
    Cash paid for interest $2,744  $2,608 
    Cash paid for income taxes $4,796  $3,022 
    Supplemental disclosure of non-cash investing and financing activities:      
    Cumulative effect adjustment for adoption of ASU No. 2016-13 $—  $615 
    Purchases of property and equipment included in accounts payable and accrued expenses $709  $1,882 
    Right-of-use assets obtained through operating lease obligations $817  $4,253 
             

    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:

    ` Three Months Ended June 30,  Six Months Ended June 30, 
      2024  2023  2024  2023 
      (Unaudited, in thousands) 
    Net income (loss) $(17,043) $5,316  $(19,143) $2,347 
    Interest expense, net  620   594   1,134   1,243 
    Income tax expense  2,503   3,863   260   2,205 
    Depreciation and amortization  3,366   2,228   6,438   4,922 
    Amortization of intangible assets  834   1,229   1,735   2,459 
    EBITDA  (9,720)  13,230   (9,576)  13,176 
    Stock-based compensation expense  2,568   2,299   4,975   4,213 
    Restructuring charge (1)  —   (126)  —   1,782 
    Impairment of building and improvements (2)  18,842   —   18,842   — 
    Write-down of capitalized software costs (3)  3,959   —   3,959   — 
    Adjusted EBITDA $15,649  $15,403  $18,200  $19,171 

    (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:

      Three Months Ended June 30,  Six Months Ended June 30, 
      2024  2023  2024  2023 
      (Unaudited, in thousands) 
    Net income (loss) $(17,043) $5,316  $(19,143) $2,347 
    Amortization  834   1,229   1,735   2,459 
    Restructuring charge (1)  —   (126)  —   1,782 
    Impairment of building and improvements (2)  18,842   —   18,842   — 
    Write-down of capitalized software costs (3)  3,959   —   3,959   — 
    Tax on above  (6,381)  (298)  (6,625)  (1,145)
    Adjusted net income (loss) $211  $6,121  $(1,232) $5,443 

    (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:

      Three Months Ended June 30,  Six Months Ended June 30, 
      2024  2023  2024  2023 
      (Unaudited, in thousands) 
    Income (loss) from operations $(13,892) $9,745  $(17,744) $5,744 
    Amortization of intangible assets  834   1,229   1,735   2,459 
    Restructuring charge (1)  —   (126)  —   1,782 
    Impairment of building and improvements (2)  18,842   —   18,842   — 
    Write-down of capitalized software costs (3)  3,959   —   3,959   — 
    Non-GAAP operating income $9,743  $10,848  $6,792  $9,985 

    (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:

      Year Ended December 31, 
      2024L  2024H 
    Net loss $(27,000) $(12,000)
    Interest expense, net  3,000   2,000 
    Income tax expense  (6,000)  (1,000)
    Depreciation and amortization  10,000   10,000 
    Amortization of intangible assets  3,000   3,000 
    EBITDA $(17,000) $2,000 
    Stock-based compensation expense  10,000   10,000 
    Impairment of building and improvements  19,000   19,000 
    Write-down of capitalized software costs  4,000   4,000 
    Adjusted EBITDA $16,000  $35,000 
     

    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:

      Year Ending December 31, 
      2024L  2024H 
    Net loss $(27,000) $(12,000)
    Amortization of intangible assets  3,000   3,000 
    Impairment of building and improvements  19,000   19,000 
    Write-down of capitalized software costs  4,000   4,000 
    Tax on above  (7,000)  (7,000)
    Adjusted net income (loss) $(8,000) $7,000 
     

    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
OrganoIR@westwicke.com
443-213-0500

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