Organogenesis Holdings Inc. (NASDAQ: NASDAQ:) has reported a robust second quarter, with revenues surpassing expectations at $130.2 million, driven by strong sales execution and positive business trends. The company also outlined its strategic plans for the ReNu program, including an anticipated Biologic License Application (BLA) submission by the end of Q4 2025. Despite a net loss and increased operating expenses, Organogenesis remains confident in its growth trajectory and reaffirmed its revenue guidance for 2024.
Key Takeaways
- Organogenesis reported Q2 revenue of $130.2 million, exceeding expectations with strong sales execution.
- The company experienced a 41% increase in net revenue year-over-year, reaching $81.3 million for Q2 2024.
- Operating expenses rose, leading to a $13.9 million operating loss and a net loss of $17 million.
- The balance sheet showed $90.5 million in cash and $63.5 million in debt.
- Revenue guidance for 2024 is reaffirmed at $445 million to $470 million.
- Updated GAAP net loss guidance for 2024 is $27 million, with adjusted net income loss guidance ranging from $8 million to an adjusted net income of $7 million.
- Positive clinical trial results for ReNu and a clear roadmap for BLA submission by end of Q4 2025 were highlighted.
- The company discussed potential market disruptions from LCDs but expressed confidence in securing coverage for their products.
Company Outlook
- Organogenesis expects to submit the ReNu BLA by end of Q4 2025.
- The 2024 revenue guidance is maintained at $445 million to $470 million, assuming net revenue from advanced wound care products of $415 million to $435 million, and from surgical and sports medicine products of $30 million to $30.5 million.
- The company is confident in the long-term health of the wound care market despite competitive pricing challenges.
Bearish Highlights
- The company reported an operating loss of $13.9 million and a net loss of $17 million for Q2.
- Increased operating expenses, excluding noncash charges, contributed to the losses.
- Potential market disruption from upcoming LCDs could pose challenges.
Bullish Highlights
- Strong sales execution resulted in better-than-expected productivity.
- Positive business trends contributed to a significant year-over-year increase in net revenue.
- The company successfully regained accounts and experienced sequential account growth.
Misses
- The company’s operating loss and net loss for the quarter were substantial, despite revenue growth.
Q&A Highlights
- Gary Gillheeney mentioned the successful gain of accounts and a 20% increase in sales representative productivity.
- Organogenesis plans to increase its sales force to 306 representatives by year-end.
- The completion of studies for PuraPly and Neuschield is expected to strengthen the surgical and sports medicine side of the business in the latter half of the year.
Organogenesis Holdings Inc. has demonstrated a positive outlook for its future, with strong sales and strategic initiatives expected to drive growth. The company’s transparency in addressing challenges and its detailed plans for product development and market expansion provide a comprehensive view of its trajectory. As Organogenesis navigates the complexities of the healthcare market, it remains poised to maintain its momentum and achieve its financial targets for 2024.
InvestingPro Insights
Organogenesis Holdings Inc. (NASDAQ: ORGO) has shown promising performance and strategic initiatives that may interest investors. To provide further context, here are some insights based on real-time data and InvestingPro Tips:
InvestingPro Data:
- Market Capitalization stands at 338.06 million USD, reflecting the company’s current valuation in the market.
- The Price to Earnings (P/E) Ratio is at -20.36, indicating that investors are currently willing to pay more for the company’s earnings potential.
- Revenue for the last twelve months as of Q1 2024 was reported at 435.47 million USD, demonstrating the company’s ability to generate sales.
InvestingPro Tips:
- Organogenesis is trading at a high earnings multiple, which could suggest that investors have high expectations for the company’s future growth.
- The company’s stock price has been quite volatile, which may be a factor for investors who prefer stability.
Additional insights from InvestingPro include the company’s solid liquidity position, with liquid assets surpassing short-term obligations, and a moderate level of debt. Analysts predict that the company will be profitable this year, which is supported by the fact that it has been profitable over the last twelve months. It’s also worth noting that Organogenesis does not pay a dividend, which could be relevant for income-focused investors.
For those seeking more in-depth analysis and additional InvestingPro Tips, there are 6 more tips available at which could further inform investment decisions regarding Organogenesis Holdings Inc.
Full transcript – Organogenesis Holdings Inc (ORGO) Q2 2024:
Operator: Please stand by. Welcome ladies and gentlemen to the Second Quarter 2024 Earnings Conference Call for Organogenesis Holdings Inc. At this time, all participants are placed in listen-only mode. Please note, that this conference call is being recorded and 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 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 a sequential filing with quarterly 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 a result of new information, future events or otherwise, except as required by applicable security laws. This call will also include references to certain financial measures that are not calculated in accordance with general accepted accounting principles or GAAP. We generally refer to these as non-GAAP financial measures. Reconciliation 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.
Gary Gillheeney: Thank you, operator and welcome, everyone, to Organogenesis Holdings second quarter fiscal year 2024 earnings conference call. I’m joined on the call today by Dave Francisco, our Chief Financial Officer. Let me start with a brief agenda of what we’ll cover during our prepared remarks. I will begin with an overview of our second quarter revenue results and an update on our key operating and strategic developments in recent months. Dave 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 guidance for 2024, which we updated in our press release this afternoon. Then I’ll share some closing thoughts before we open the call up for your questions, beginning with a review of our revenue results for Q2. Our sales results came in above the high end of the guidance range outlined on our first quarter call, reflecting strong execution in a continuation of the positive momentum in business trends in the first half of 2024. Our team’s strong execution resulted in better than expected productivity by enhancing existing customer relationships, regaining lost accounts and capturing new accounts, and despite disruption in the marketplace, fueled by continued aggressive pricing strategies and, in certain circumstances, questionable competitive activities. We believe our second quarter results support our continued confidence that we focused our commercial team on the right strategy to navigate through this challenging operating environment. We are encouraged by the further evidence that our team is driving growth in our customer base by emphasizing our differentiated products in their clinical validation. In addition to the strong commercial momentum in Q2, we were pleased to share updates on the substantial progress we have made on our ReNu program in recent months, as announced in a separate press release this afternoon, where we announced additional clinical results from our first Phase III trial, a prospective, double blinded, multicenter, saline controlled, parallel group clinical trial of 515 patients. The Phase III RCT results met the expectations for the study by meeting the primary endpoint of a statistically significant reduction in knee pain and the first secondary endpoint of statistically significant maintenance of function at six months. The statistical power of this study was based on these key efficacy points meeting the predefined requirements. Supporting a BLA submission. We completed additional subgroup analysis which revealed that the most severe patients, known as KL4s treated with ReNu responded with similar reduction in pain to those patients with moderate disease, the KL3 group, which is consistent with the top line results. These results are notable given that up to 15% of knee OA patients are classified as severe and the end stage management of this disease in these patients is typically a total knee replacement when all other treatment options are exhausted. By way of reminder, 30% of the enrolled patients in the first Phase III trial were KL4 s and if successful, ReNu would be the only FDA approved biologic intra articular injection to improve pain symptoms, even in the most severe case of NEOA. Other sensitivity analysis found that subjects in the saline group took substantially more acetaminophen for breakthrough pain during the study, while subjects in the ReNu group took less acetaminophen for breakthrough pain. This result further supports the improved outcomes in WOMAC pain seen at six months. During the second quarter, we requested a type B meeting with the FDA to discuss the clinical data requirements for a biologic license application filing pursuant to the strategy we outlined on our recent earnings calls. We completed the type B meeting with the FDA on July 25, and the FDA confirmed that a confirmatory trial will be required to support a BLA submission. We received positive feedback and guidance on our chemistry, manufacturing and controls, or CMCs, and the agencies affirmed the company’s proposed analytical assay strategy and framework for process validation. We were also pleased to announce that we completed enrollment in the second Phase III multicented randomized control trial evaluating the safety and efficacy of ReNu, with 594 patients significantly outperforming enrollment expectations and well ahead of our original expectations when we started enrolling this study last September. Following the positive type B meeting with the FDA, we now have a clear roadmap and timeline for our ReNu BLA submission, and we are on track to deliver the ReNu BLA submission by the end of Q4 2025. We continue to believe that, if approved, introducing ReNu to a large and growing pain management market represents a transformational opportunity for organogenesis and if approved, introducing ReNu as an innovative pain management solution for the millions of patients suffering from knee OA represents a significant new addressable market opportunity for organogenesis. Specifically, by 2027, an estimated 34.4 million Americans are expected to be affected by knee osteoarthritis. While there is no known treatment that completely cures knee OA, it is possible to treat the disease symptoms with the goal of avoiding or delaying costly and invasive knee replacement surgery. We believe ReNu, if approved, will address an unmet clinical need for all patients suffering from moderate to severe symptomatic knee osteoarthritis, and we are particularly excited by the unique opportunity for ReNu to serve the most severe knee away patients who have limited non surgical options, representing an estimated 5 million Americans. Before turning the call over to Dave, I wanted to share a brief update on our recent progress in the areas of clinical validation, Medicare reimbursement, and coverage. Pursuant to the strategy discussed on our last earnings call, we submitted our comment letter to the max in advance of the deadline in early June, reiterating our support for the Max evidence based approach reflected in the draft LCD’s. As planned, our comment letter included the following existing clinical and real world, including RCT’s in support of our case that new shield, PuraPly AM and PuraPly XT should be included on the covered list for Nusheel, a high quality published data and evidence, including a recently published peer reviewed RCT with 218 patients evaluating Newshield for the treatment of DFUs that was not considered in the draft LCD’s, which we believe demonstrates that Newshield meets all the criteria for coverage. The results of this RCT were published on June 6 in the Journal of Wound Care and includes compelling, statistically significant data from this large and rigorously designed prospective level one RCT evaluating the effectiveness of neuschield for the treatment of complex DFUs in a challenging patient population for PuraPly AM and XT currently available high quality published data from a 728 patient study supporting the coverage of PuraPly AM and XT for the treatment of DFUs and VLUs. We highlighted that PuraPly AM is supported by a large body of data across five peer reviewed publications showing effectiveness in treating DFUs, VLUs and pressure injuries in a complex comorbid population. This data included a comparative effectiveness study of 294 patients published in May of 2024. After the literature review for the draft LCD’s was completed, which showed a non inferiority to theraskin, a product the draft LCD proposed to cover, we are making solid progress towards new RCT’s evaluating the use of PuraPly Am for DFUs that we discussed on our last earnings call. We received IRB approval, have identified sites that are targeting first patient enrollment in coming weeks. We will continue our efforts to build compelling cases to present to the max to secure coverage for additional products later this year and into next year. We continue to believe these material changes from CMS and the max in the reimbursement of skin substitutes, if ultimately adopted, will be positive for the long term health of the wound care market. While there will be a period of transition and disruption if these sweeping changes are implemented, we believe that organogenesis is strong brand equity, established commercial infrastructure and plan to establish additional clinical validation to secure coverage of key commercialized products, which taken together represent a substantial competitive advantage for us that has us well positioned to maximize the enormous opportunity to serve more patients in our highly innovative and efficacious products. With that, let me turn the call over to Dave.
Dave Francisco: Thanks Gary. I’ll begin with a review of our second quarter financial results and unless otherwise specified, all growth rates referenced during my prepared remarks or on a year-over-year basis. Net revenue for the second quarter was $130.2 million, up 11%. As Gary mentioned, these results were ahead of expectations. We provided in our Q1 call which called for total second quarter revenue in the range of $120 million to $125 million, reflecting continued strong momentum in the business during the second quarter. Our advanced wound care net revenue for the second quarter was $123.2 million, up 12%, and net revenue from surgical and sports medicine products for the second quarter was $7 million, down 3%. Gross profit for the second quarter was $101 million, or 77.6% of net revenue compared to 77.6% last year. Operating expenses for the second quarter were $114.9 million compared to $81.3 million last year, an increase of $33.7 million, or 41%. Note that second quarter operating expenses included approximately $22.8 million of noncash impairment of building and unfinished construction improvement work previously capitalized, as well as the write down of costs related to the development of internal use software. Excluding the aforementioned noncash charges and approximately $0.8 million of noncash amortization expense, our second quarter operating expenses increased $11.3 million, or 14% the year-over-year. Change in operating expenses included, excluding these noncash items was driven by a $6.6 million or 10% increase in selling, general and administrative expenses and a $4.6 million, or 43% increase in research and development costs compared to the prior year period. The increase in research and development expenses was primarily due to expenses associated with clinical research and trials, primarily related to ReNu and support of our BLA efforts. Operating loss for the second quarter was $13.9 million compared to operating income of $9.7 million last year, a decrease of $23.6 million excluding noncash impairment charges, write downs, restructuring and amortization expenses in both periods, our non-GAAP operating income was $9.7 million, or 7.5% of sales compared to $10.8 million, or 9.2% of sales last year. Net loss for the second quarter was $17 million compared to net income of $5.3 million last year, a decrease of $22.4 million. Adjusted net income for the second quarter was $0.2 million compared to $6.1 million last year. A decrease in adjusted net loss of $5.9 million. As a reminder, adjusted net income is defined as GAAP net income, adjusted to exclude the effective amortization restructuring charges, write downs, capitalized software costs and impairment of building and improvements and resulting income taxes on these items, adjusted EBITDA for the second quarter was $15.6 million, or 12% of net revenue compared to $15.4 million, or 13% of net revenue last year. We’ve provided a full reconciliation of our adjusted net income and adjusted EBITDA results in our earnings press release. Turning out to the balance sheet, 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 in restricted cash and $66.2 million in debt obligations as of December 31, 2023. We also have up to $125 million of available borrowings on a revolving credit facility as of June 30, 2024. Turning to a review of our 2024 financial guidance, despite the strong continued momentum that we are experiencing in the business, we are reaffirming our prior revenue guidance that we referenced in our press release this afternoon to account for the potential near-term disruption in the market that we expect from the LCD’s for the twelve months ending December 31, 2024. The company continues to expect net revenue of between $445 million to $470 million, representing a year-over-year increase in the range of 3% to 9%, as it compared to net revenue of $433.1 million for the year ended December 31, 2023. The 2024 net revenue guidance assumes net revenue from advanced wound care products of between $415 million and $435 million, representing a year-over-year increase in the range of 2% to 7% and net revenue from surgical and sports medicine products between $30 million to $30 5 million, representing a year-over-year increase in the range of 9% to 27%. For modeling purposes, we expect third quarter revenue to be in the range of approximately $105 million to $113 million. We have updated our GAAP profitability and EBITDA guidance for 2024 to reflect the $22.8 million of noncash impairment charges and write down costs and related tax impacts on these items recognized in the second quarter. Specifically, we now expect GAAP net loss in the range of $27 million, net loss to a $12 million net loss compared to a range of GAAP net loss of $10.6 million to a GAAP net income of $4.6 million previously. We also expect EBITDA in the range of a net loss of $17 million to positive EBITDA of $2 million compared to a range of EBITDA generation of $5.8 million to $25 million. Previously, our adjusted net income loss guidance remains unchanged. Specifically, we continue to expect adjusted net income loss in the range of $8 million to adjusted net income of $ 7 million and adjusted EBITDA in the range of $16 million to $35 million. All other non-GAAP modeling considerations outlined in our fourth quarter 2023 call remain largely unchanged. With that, I’ll turn the call back over to Gary for some closing remarks.
Gary Gillheeney: Thanks Dave. Yes, in closing, our second quarter results reflect strong execution from our commercial team amidst the challenging operating environment. We strongly believe the material changes proposed by CMS in the max and reimbursement of skin substitutes, if ultimately adopted, will be a positive step for the long term health of the wound care market. We have a strategy to leverage our existing strong clinical and real world data, including RCT’s, and have already initiated a new RCT to secure additional clinical evidence and we expect to secure coverage for additional products on the covered list later this year and early into next year. While there will be a period of transition and disruption if these sweeping changes are implemented, we believe that organogenesis is strong brand equity, established commercial infrastructure, and a plan to establish additional clinical validation to secure coverage of key commercialized products, which, taken together represent a substantial competitive advantage for us that has us well positioned to maximize the enormous opportunity to serve more patients with our highly innovative and efficacious products. And finally, we are excited by the continued progress in our ReNu program and have a clear target for submission of our BLA by the end of Q4 2025 if approved. Introducing Renu as an innovative pain management solution for the millions of patients suffering from knee OA represents a truly transformational opportunity for organogenesis and importantly, one that is consistent with our mission to provide integrated healing solutions that substantially improve outcomes while lowering the overall cost of care. I would also like to acknowledge the continued hard work and dedication to our mission demonstrated by our employees throughout the organization. Our strong performance and progress towards our key strategic initiative over the first half of 2024 is the result of their efforts. And with that, I’ll turn the call back over to you operator to open the call up for questions.
Operator: Thank you, sir. [Operator instructions]. And our first question will come from Ryan Zimmerman from BTIG. Please go ahead.
Ryan Zimmerman: Hey, guys, good afternoon and congrats on the quarter and the progress with ReNu. Maybe I want to start with guidance for a second, Gary and Dave, and just talk about you’ve had two really strong quarters to start the year. I know there’s a lot of balls in the air with the LCD’s. Can you talk about. And you kind of referenced the carry a little bit in terms of some of the dynamics in the market, but can you talk about kind of what you’ve seen thus far through July maybe what’s giving you a little pause, particularly as I think about your third quarter guidance relative to our expectations?
Gary Gillheeney: Yes, so I’ll talk a little bit about the environment. So we’re clearly seeing still a positive trend in our business. We’ve seen it throughout the second quarter. We’ve increased the number of accounts that we have sequentially. We’ve actually ended up with more sales representatives in Q2 than in Q1. And we’re continuing to see additional accounts coming back. That we had lost as of last year. When some of the LCD’s that eventually were removed came into play, so we see that trend keep moving forward. We also see a lot of the competitive pricing challenges. That I think everyone is seeing. We’ve been fortunate to continue to grow through that. But that competitive pressure is still there. And at times it seems like it’s increasing instead of decreasing. So those pressures are still there. But we’re still seeing some positive trends in our base business. As it relates to guidance, I think as it relates to all of the uncertainty with the LCD’s coming out and the continuing escalation of some of the competitive practices in pricing. Every day seems like there’s another product on the market with a high price. we think that that’s going to continue until it stops. Which would potentially be with the LCD’s or some other actions. But that’s, that’s in our thoughts when we look at our guidance.
Dave Francisco: Yes, so, Ryan, great question. I mean, obviously, we established that guidance early in the year. It was prior to the proposed LCD that came out in late April. We have beat both quarters, and we feel great about that, which gives us a high level of confidence in delivering that low end of the range. But to Gary’s point, the dynamics are still challenging. And there’s a lot of unknowns about when the customer buying behavior might change. So you can see, obviously, we gave guidance for Q3, which was a pretty wide range. And then that implied guidance for Q4, which was also even wider range. So we still think it’s biased towards Q4. But there may be some spillage into Q3 as well. Which is what we’re just a little bit concerned about as far as July is concerned, I mean, we’re seeing the normal summer seasonality. But we expect to move away from that. As long as the customer buying behavior doesn’t change dramatically in the back half of this quarter.
Ryan Zimmerman: Okay, and just a quick follow up on that. And then I have some questions on ReNu. Any expected timelines for updates to the LCD. I know I’ve asked you this before, and it’s hard to pin the max down specifically. But anything that we should be on the lookout for from a timing perspective on those LCD’s?
Gary Gillheeney: It’s our opinion, obviously, we don’t know, as you said, that something will happen that we think those LCD’s will come effective in the last quarter and really affecting Q1 of next year. We just see the cost still rising, rising substantially out there in the system. I mean, almost doubling from year to year. And the physician fee schedule, came out. And at this point, there’s really nothing on the payment side that would lead you to believe it’s going to control those costs. There was no bundling recommended in that proposal, so the combination of escalated costs, nothing really happening in the physician fee schedule. You know, we just believe something will drop from an LCD perspective sometime in Q4 and be effective on January 1. But those are the factors that we think about, and there does seem to be a lot of activity surrounding these LCD’s.
Ryan Zimmerman: Yes, okay, very helpful. Gary and Dave, just turning to ReNu now. It’s good to see we have a clear path for ReNu. I’m wondering if, I don’t know if Patrick’s available, but maybe, Gary, you want to speak to this? Just talk to us about kind of the nuances or the differences between your Phase III study and the Phase III confirmatory study. Just remind investors if there’s anything that you think can differ in those studies. And then the second question to all of this is, what room do you have? When I think about the timelines to submit for BLA, what room do you have to potentially adjust your timelines, if at all? Maybe you’re able to get the data and the follow ups done as quickly as possible, and then we could see something a little, maybe earlier than fourth quarter ’25? Thank you.
Gary Gillheeney: Sure. So regarding the two studies, I mean, the second study is larger, so it has more power in that study, and we’ve made some operational adjustments in that study that we think will ultimately lead to better performance in the second study. So we feel pretty comfortable about. Obviously, the study is already completed from the perspective of all of the patients have been enrolled, and we expect last patient, last visit next June or June of 25. So that gives us the opportunity to aggressively move forward for a filing. So it is possible, though I think Q4 of 2025 is a reasonable time period. We did ask the FDA in our meeting to consider the six month data. They have not responded. We’ll know when we get the formal minutes of that meeting, which come 30 days after our meeting on the 25, so though we have no indication at all that that would be accepted, that’s a potential change that could move it forward a couple of quarters for sure. But at the, as of this point, we’re assuming that we will complete the trial and file in Q4 2024-2025.
Operator: Our next question comes from the line of Brooks O’Neill with Lake Street. Please go ahead.
Brooks O’Neill: Good afternoon, guys. Thanks for taking my questions. I guess I’d like to start by saying that as I talked to various players in the industry, some have expressed the view that the reason for the elevated competitive activity is some suggestion that Max might again fail to implement, the LCD’s. A, what’s your opinion on that? And. Well, let’s leave it at that. What. How do you — How do you respond to that suggestion?
Gary Gillheeney: Well, I think, based on where we see the costs, and those costs are obviously public, that they really increased dramatically and since there’s been no change to the position fee schedule, unless something happens between now and the end of the year, but not likely. If it wasn’t included in the proposed rule, it would be very difficult to implement something that’s not in that proposed rule. So there’s no payment solution, at least for another year and a half. That leads me to believe that the LCD’s maybe not in their current form, but in some form, will be implemented to try to control the cost, right now in the skin substitute market. So it may not be in the form that it is. There’s been a number of comments from a number of companies, us as well, that we think it needs to make. they need to make some changes to really improve it where it can be actionable and effective. So it might change, but it’s our opinion that something needs to be put in place in the eyes of the Macs and CMS. And ultimately, it will.
Brooks O’Neill: Makes sense to me. You presented to us some compelling evidence that several of your products have the clinical evidence that the Mac seem to be suggesting is necessary for reimbursement in the physician office setting. Do you have any sense that they hear your case and they understand that you actually do have a lot of well conceived clinical evidence for those products? Or is it a silent response on their end?
Gary Gillheeney: Well, as I mentioned for Newshield and PuraPly, AM and XT, we have a substantial amount of data, some of which the Macs did not have the opportunity to review before they issued their proposed LCD’s. So we’ve submitted those studies for Neuschild, AM PuraPly, AM and XT. One is an RCT and the others are retrospective studies, one for PuraPly. That actually is a comparative effectiveness study against a product that’s already approved on the list of 15. So we think these are large, robust data sets, that they are compelling enough that they should be included in the LCD if and when it comes out.
Brooks O’Neill: Makes sense to me. I’ll ask one last one. Thanks for taking my questions. I saw after the close, I think you filed a mixed shelf, offering $250 million. I’m curious if you have any comment on whether that’s just sort of normal good governance or do you think there’s either an appetite on the part of selling shareholders or the company to actually go out to the market and raise some additional capital?
Dave Francisco: Yes, Brooks, thanks. This is Dave. Yes, you’re absolutely right. I mean, it’s just good corporate governance. It provides a tremendous amount of financial flexibility for us, gives the opportunity for certain individuals to sell their shares in a secondary if that was something that they chose to do. And this is something that we have not had in place since the fall of 2019. So it really just was an opportunity to get this done. And again, to your point, just good corporate governance. And I might add, too, as from a liquidity standpoint, as of today, we have over $90 million in cash, $125 million on the revolver, and then a fair amount of working capital available to us as well. So that’s, again, to your point, it’s just good corporate governance and wanted to get it done.
Operator: [Operator instructions] Our next question comes from the line of,[Operator instructions] Our next question comes from the line of Drew Ranieri from Morgan Stanley. Please go ahead.
Drew Ranieri: Hi, guys. Thanks for taking the questions. Maybe just to start, Gary, I was just flipping through the queue, and you mentioned this briefly to one of the earlier questions, but in terms of the sales force, it looks like you added maybe a handful of reps sequentially. And it’s really the first time we’ve seen you be net adders, then subtractors for a number of quarters. So maybe just talk to us about the rep strategy here. I mean, it sounds, and it looks like rep productivity itself is increasing, but just talk to us more about the Salesforce (NYSE:) side, what you’re envisioning for remainder of 2024?
Gary Gillheeney: Sure. So you’re correct. We did add representatives during the quarter. As I mentioned earlier, we have been successful in gaining our accounts back. We did have sequential account growth and our depth in the accounts is getting deeper. So our productivity, even with adding the representatives, which takes a bit of time for them to be completely productive, was up 20%. So that continued growth of accounts and depth in the accounts led us to aggressively, add representatives. I think our goal at the, at the end of the year is to have about 306 or so representatives based on the trends that we’re seeing. That’s our goal. And we’ll add them, through obviously throughout the year. But our goal is to, continue as we gain those accounts back and we’re gaining new accounts. And, when the, if the LCD is eventually hit and the market is available, more market is available because fewer products are on the market, we want to be able to cover that additional market share as well.
Operator: Our next question comes from the line of Ross Osborne with Cantor Fitzgerald. Please go ahead.
Matthew Park: Hi guys, this is Matthew Park on for Ross. Congrats on the strong quarter and thanks for taking the questions. I wanted to start off by getting a better understanding of timelines with the RCT’s. Do you mind just walking us through the process to get PuraPly and new shield back on the approved list following the completion of these studies?
Gary Gillheeney: Sure. So PuraPly and new shield studies are complete. They are done. Now we are running an additional study in RCT for PuraPly AM that will take about a year. So our objective is to have that RCT completed within a year. But we do have studies both for Neuschield, which is an RCT that’s done, it’s published, and the PuraPly AM and XT are retrospective studies. Those are done and complete and we provided those as well. But a new study for PuraPly, to answer your question, AM is about one year from today.
Matthew Park: Got it. That makes sense. Thanks for clarifying. And then I guess just one more for me. I guess turning to the surgical and sports medicine side, obviously I understand it’s a much smaller piece of the pie, but can you just walk us through some of the drivers on hitting the low and high end of guidance here and any plans to introduce new products for this side of the business?
Gary Gillheeney: Thanks. Yes, sure. That’s exactly what we’ve done is the expectation was it was always assumed that the back half would be stronger than the first. And the reason being is exactly as you said, we’ve got some very unique products that are specifically for the or that are coming out with larger sizes which are more applicable for the or in the back half. In addition to that, there’s been a strategy to expand channel expansion strategy with adding incremental agencies. And obviously all that stuff is in the works. And so the high and the low is related to the kind of upside you’re going to gain from those two strategies, but always anticipated the back half would be stronger.
Operator: [Operator instructions] There are no further questions at this time. That does conclude our conference for today. Thank you for your participation. You may now disconnect.
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