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 fourth quarter and the year ended
December 31, 2023.
Fourth Quarter 2023 Financial Results
Summary:
- Net revenue of $99.7 million for the
fourth quarter of 2023, a decrease of 14% compared to net revenue
of $115.5 million for the fourth quarter of 2022. Net revenue for
the fourth quarter of 2023 consists of:
- Net revenue from Advanced Wound Care
products of $93.2 million, a decrease of 14% from the fourth
quarter of 2022.
- Net revenue from Surgical &
Sports Medicine products of $6.5 million, a decrease of 3% from the
fourth quarter of 2022.
- Net loss of $0.6
million for the fourth quarter of 2023, compared to net income of
$7.5 million for the fourth quarter of 2022, a decrease of $8.1
million.
- Adjusted net
income1 of $1.9 million for the fourth quarter of 2023, compared to
adjusted net income of $8.9 million for the fourth quarter of 2022,
a decrease of $7.0 million.
- Adjusted EBITDA
of $7.5 million for the fourth quarter of 2023, compared to
Adjusted EBITDA of $14.1 million for the fourth quarter of 2022, a
decrease of $6.6 million.
Fiscal Year 2023 Financial Results
Summary:
- Net revenue of $433.1 million for
the year ended December 31, 2023, a decrease of 4% compared to
net revenue of $450.9 million for the year ended December 31,
2022. Net revenue for the year ended December 31, 2023
consists of:
- Net revenue from Advanced Wound Care
products of $405.5 million, a decrease of 4% year-over-year.
- Net revenue from Surgical &
Sports Medicine products of $27.6 million, a decrease of 4%
year-over-year.
- Net income of
$4.9 million for the year ended December 31, 2023, compared to
net income of $15.5 million for the year ended December 31,
2022, a decrease of $10.5 million.
- Adjusted net
income1 of $12.7 million for the year ended December 31, 2023,
compared to an adjusted net income of $26.2 million for the year
ended December 31, 2022, a decrease of $13.5 million.
- Adjusted EBITDA
of $42.6 million for the year ended December 31, 2023,
compared to an adjusted EBITDA of $49.3 million for the year ended
December 31, 2022, a decrease of $6.7 million.
“We are building positive momentum with the many commercial
support programs implemented to enhance existing customer
relationships and regain lost accounts in a uniquely challenging
operating environment”, said Gary S. Gillheeney, Sr., President and
Chief Executive Officer of Organogenesis. "Despite the expected
operating environment challenges, we delivered revenues within the
lower end of our guidance. Looking ahead to 2024, we expect to
return to revenue growth through continued demonstration of value
to our customers and new product launches in both our Advanced
Wound Care and Surgical & Sports Medicine markets broadening
our portfolio of differentiated treatment options.”
Mr. Gillheeney, Sr. continued: “We continue to make progress
with the ReNu program, which we believe, represents a significant
value driver by addressing a critical unmet need in treating the
symptoms of knee osteoarthritis. We remain confident in the
long-term opportunity for Organogenesis and expect to continue to
lead in our space with highly innovative products that deliver on
our mission to provide integrated healing solutions that
substantially improve outcomes while lowering the overall cost of
care.”
1Defined as GAAP net income adjusted to exclude the effect of
amortization, restructuring charges, LCD legal fees and sales
retention, write-off of certain assets, facility construction
project pause, GPO settlement fee and the resulting income taxes on
these items.
Fourth Quarter 2023 Financial
Results:
|
|
Three Month Ended December 31, |
|
|
Change |
|
|
|
2023 |
|
|
2022 |
|
|
$ |
|
|
% |
|
|
|
(in thousands, except for percentages) |
|
|
|
|
|
|
|
Advanced Wound Care |
|
$ |
93,165 |
|
|
$ |
108,836 |
|
|
$ |
(15,671 |
) |
|
|
(14 |
%) |
Surgical & Sports
Medicine |
|
|
6,486 |
|
|
|
6,680 |
|
|
|
(194 |
) |
|
|
(3 |
%) |
Net revenue |
|
$ |
99,651 |
|
|
$ |
115,516 |
|
|
$ |
(15,865 |
) |
|
|
(14 |
%) |
Net revenue for the fourth quarter of 2023 was $99.7 million,
compared to $115.5 million for the fourth quarter of 2022, a
decrease of $15.9 million, or 14%. The decrease in net revenue was
driven by a decrease of $15.7 million, or 14% in net revenue of
Advanced Wound Care products and a decrease of $0.2 million, or 3%
in net revenue of Surgical & Sports Medicine products.
Gross profit for the fourth quarter of 2023 was $71.9 million,
or 72% of net revenue, compared to $88.4 million or 77% of net
revenue, for the fourth quarter of 2022, a decrease of $16.5
million, or 19%.
Operating expenses for the fourth quarter of 2023 were $73.2
million, compared to $79.7 million for the fourth quarter of 2022,
a decrease of $6.5 million, or 8%. R&D expenses were $11.8
million for the fourth quarter of 2023, compared to $11.4 million
in the fourth quarter of 2022, an increase of $0.4 million, or 3%.
Selling, general and administrative expenses were $61.4 million,
compared to $68.3 million in the fourth quarter of 2022, a decrease
of $6.9 million, or 10%.
Operating loss for the fourth quarter of 2023 was $1.3 million,
compared to operating income of $8.7 million for the fourth quarter
of 2022, a decrease of $10.0 million.
Total other expense, net, for the fourth quarter of 2023 was
$0.5 million, compared to other income, net of less than $0.1
million for the fourth quarter of 2022, a decrease of approximately
$0.6 million.
Net loss for the fourth quarter of 2023 was $0.6 million, or
$(0.00) per share, compared to net income of $7.5 million, or $0.06
per share, for the fourth quarter of 2022, a decrease of $8.1
million, or $0.06 per share.
Adjusted net income was $1.9 million for the fourth quarter of
2023, compared to adjusted net income of $8.9 million for the
fourth quarter of 2022, a decrease of $7.0 million, or 78%.
Adjusted EBITDA was $7.5 million for the fourth quarter of 2023,
compared to $14.1 million for the fourth quarter of 2022, a
decrease of $6.6 million, or 47%.
As of December 31, 2023, the Company had $104.3 million in
cash, cash equivalents and restricted cash and $66.2 million in
term loan debt obligations, compared to $103.3 million in cash,
cash equivalents and restricted cash and $70.8 million in term loan
debt obligations, as of December 31, 2022.
Fiscal Year 2023 ResultsThe following table
represents net revenue by product grouping for the year ended
December 31, 2023 and December 31, 2022,
respectively:
|
|
Year Ended December 31, |
|
|
Change |
|
|
|
2023 |
|
|
2022 |
|
|
$ |
|
|
% |
|
|
|
(in thousands, except for percentages) |
|
|
|
|
|
|
|
Advanced Wound Care |
|
$ |
405,514 |
|
|
$ |
422,231 |
|
|
$ |
(16,717 |
) |
|
|
(4 |
%) |
Surgical & Sports
Medicine |
|
|
27,626 |
|
|
|
28,662 |
|
|
|
(1,036 |
) |
|
|
(4 |
%) |
Net revenue |
|
$ |
433,140 |
|
|
$ |
450,893 |
|
|
$ |
(17,753 |
) |
|
|
(4 |
%) |
Net revenue for the year ended December 31, 2023 was $433.1
million, compared to $450.9 million for the year ended
December 31, 2022, a decrease of $17.8 million, or 4%. The
decrease in net revenue was driven by a decrease of $16.7 million,
or 4% in net revenue of Advanced Wound Care products and a decrease
of $1.0 million, or 4% in net revenue of Surgical & Sports
Medicine products.
Gross profit for the year ended December 31, 2023 is $326.7
million, or 75% of net revenue, compared to $345.9 million, or 77%
of net revenue, for the year ended December 31, 2022, a
decrease of $19.2 million, or 6%.
Operating expenses for the year ended December 31, 2023
were $314.1 million, compared to $323.6 million for the year ended
December 31, 2022, a decrease of $9.4 million, or 3%. R&D
expenses were $44.4 million for the year ended December 31,
2023, compared to $39.8 million for year ended December 31,
2022, an increase of $4.6 million, or 12%. Selling, general and
administrative expenses were $269.8 million for year ended
December 31, 2023, compared to $283.8 million year ended
December 31, 2022, a decrease of $14.1 million, or 5%.
Operating income for the year ended December 31, 2023 was
$12.5 million, compared to an operating income of $22.3 million for
the year ended December 31, 2022, a decrease of $9.8
million.
Total other expense, net, for the year ended December 31,
2023 was $2.1 million, compared to $2.0 million for the year ended
December 31, 2022, a decrease of $0.1 million.
Net income of $4.9 million for the year ended December 31,
2023 or $0.04 per share, compared to net income of $15.5 million,
or $0.12 per share for the year ended December 31, 2022, a
decrease of $10.5 million, or $0.08 per share.
Adjusted net income for the year ended December 31, 2023
was $12.7 million., compared to $26.2 million for the year ended
December 31, 2022, a decrease of $13.5 million, or 52%.
Adjusted EBITDA of $42.6 million for the year ended
December 31, 2023, compared to Adjusted EBITDA of $49.3
million for the year ended December 31, 2022, a decrease of
$6.7 million, or 14%.
Fiscal Year 2024 Guidance:
For the year ending December 31, 2024, the Company expects:
- Net revenue between $445.0 million
and $470.0 million, 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
approximately 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 approximately 9% to 27% year-over-year as compared
to net revenue of $27.6 million for the year ended
December 31, 2023.
- Net income (loss) between ($10.6)
million and $4.6 million and adjusted net income (loss) between
($8.1) million and $7.1 million.
- EBITDA between $5.8 million and
$25.0 million and Adjusted EBITDA between $15.8 million and $35.0
million.
Earnings Conference Call:
Financial results for the fourth fiscal quarter and year ended
December 31, 2023 will be reported after the market closes on
Thursday, February 29th. Management will host a conference call at
5:00 p.m. Eastern Time on February 29th 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 here, or access the teleconference here. A live
webcast of the call will also be provided on the investor relations
section of the Company's website at
investors.organogenesis.com.
For those unable to participate, the webcast will be archived at
investors.organogenesis.com for approximately one year.
ORGANOGENESIS HOLDINGS INC. UNAUDITED CONSOLIDATED
BALANCE SHEETS (amounts in thousands, except share
and per share data) |
|
|
|
|
|
December 31, |
|
|
|
2023 |
|
|
2022 |
|
Assets |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
103,840 |
|
|
$ |
102,478 |
|
Restricted cash |
|
|
498 |
|
|
|
812 |
|
Accounts receivable, net |
|
|
81,999 |
|
|
|
89,450 |
|
Inventories |
|
|
28,253 |
|
|
|
24,783 |
|
Prepaid expenses and other current assets |
|
|
10,454 |
|
|
|
5,086 |
|
Total current assets |
|
|
225,044 |
|
|
|
222,609 |
|
Property and equipment, net |
|
|
116,228 |
|
|
|
102,463 |
|
Intangible assets, net |
|
|
15,871 |
|
|
|
20,789 |
|
Goodwill |
|
|
28,772 |
|
|
|
28,772 |
|
Operating lease right-of-use
assets, net |
|
|
40,118 |
|
|
|
43,192 |
|
Deferred tax asset, net |
|
|
28,002 |
|
|
|
30,014 |
|
Other assets |
|
|
5,990 |
|
|
|
1,520 |
|
Total assets |
|
$ |
460,025 |
|
|
$ |
449,359 |
|
|
|
|
|
|
|
|
Liabilities and
Stockholders’ Equity |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Current portion of term loan |
|
$ |
5,486 |
|
|
$ |
4,538 |
|
Current portion of finance lease obligations |
|
|
1,081 |
|
|
|
— |
|
Current portion of operating lease obligations - related party |
|
|
3,140 |
|
|
|
3,001 |
|
Current portion of operating lease obligations |
|
|
10,004 |
|
|
|
8,707 |
|
Accounts payable |
|
|
30,724 |
|
|
|
32,330 |
|
Accrued expenses and other current liabilities |
|
|
30,074 |
|
|
|
26,447 |
|
Total current liabilities |
|
|
80,509 |
|
|
|
75,023 |
|
Term loan, net of current
portion |
|
|
60,745 |
|
|
|
66,231 |
|
Finance lease obligations, net of
current portion |
|
|
1,888 |
|
|
|
— |
|
Operating lease obligations, net
of current portion - related party |
|
|
17,227 |
|
|
|
20,367 |
|
Operating lease obligations, net
of current portion |
|
|
19,780 |
|
|
|
20,947 |
|
Other liabilities |
|
|
1,213 |
|
|
|
1,122 |
|
Total liabilities |
|
|
181,362 |
|
|
|
183,690 |
|
Commitments and contingencies
(Note 18) |
|
|
|
|
|
|
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;
132,044,944 and 131,647,677 shares issued; 131,316,396 and
130,919,129 shares outstanding at December 31, 2023 and 2022,
respectively. |
|
|
13 |
|
|
|
13 |
|
Additional paid-in capital |
|
|
319,621 |
|
|
|
310,957 |
|
Accumulated deficit |
|
|
(40,971 |
) |
|
|
(45,301 |
) |
Total stockholders' equity |
|
|
278,663 |
|
|
|
265,669 |
|
Total liabilities and stockholders' equity |
|
$ |
460,025 |
|
|
$ |
449,359 |
|
ORGANOGENESIS HOLDINGS INC. UNAUDITED CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME(amounts in thousands, except share and per
share data) |
|
|
|
|
|
Three Months Ended December 31, |
|
|
Year Ended December 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net revenue |
|
$ |
99,651 |
|
|
$ |
115,516 |
|
|
$ |
433,140 |
|
|
$ |
450,893 |
|
Cost of goods sold |
|
|
27,769 |
|
|
|
27,110 |
|
|
|
106,481 |
|
|
|
105,019 |
|
Gross profit |
|
|
71,882 |
|
|
|
88,406 |
|
|
|
326,659 |
|
|
|
345,874 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
61,381 |
|
|
|
68,293 |
|
|
|
269,754 |
|
|
|
283,808 |
|
Research and development |
|
|
11,770 |
|
|
|
11,395 |
|
|
|
44,380 |
|
|
|
39,762 |
|
Total operating expenses |
|
|
73,151 |
|
|
|
79,688 |
|
|
|
314,134 |
|
|
|
323,570 |
|
Loss (income) from
operations |
|
|
(1,269 |
) |
|
|
8,718 |
|
|
|
12,525 |
|
|
|
22,304 |
|
Other expense, net: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
(502 |
) |
|
|
30 |
|
|
|
(2,190 |
) |
|
|
(2,009 |
) |
Other income (expense), net |
|
|
(25 |
) |
|
|
6 |
|
|
|
57 |
|
|
|
(13 |
) |
Total other expense, net |
|
|
(527 |
) |
|
|
36 |
|
|
|
(2,133 |
) |
|
|
(2,022 |
) |
Net income before income
taxes |
|
|
(1,796 |
) |
|
|
8,754 |
|
|
|
10,392 |
|
|
|
20,282 |
|
Income tax (expense) benefit |
|
|
1,228 |
|
|
|
(1,268 |
) |
|
|
(5,447 |
) |
|
|
(4,750 |
) |
Net (loss) income and
comprehensive (loss) income |
|
$ |
(568 |
) |
|
$ |
7,486 |
|
|
$ |
4,945 |
|
|
$ |
15,532 |
|
Net income, per share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.00 |
) |
|
$ |
0.06 |
|
|
$ |
0.04 |
|
|
$ |
0.12 |
|
Diluted |
|
$ |
(0.00 |
) |
|
$ |
0.06 |
|
|
$ |
0.04 |
|
|
$ |
0.12 |
|
Weighted-average common shares
outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
130,916,950 |
|
|
|
128,661,435 |
|
|
|
131,231,317 |
|
|
|
130,070,231 |
|
Diluted |
|
|
131,857,509 |
|
|
|
133,348,995 |
|
|
|
132,746,727 |
|
|
|
132,383,152 |
|
ORGANOGENESIS HOLDINGS INC. UNAUDITED CONSOLIDATED
STATEMENT OF CASH FLOWS(amounts in thousands, except share
and per share data) |
|
|
|
|
|
Year Ended December 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
Cash flows from operating
activities: |
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
4,945 |
|
|
$ |
15,532 |
|
|
$ |
94,202 |
|
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
10,448 |
|
|
|
5,845 |
|
|
|
5,781 |
|
Amortization of intangible assets |
|
|
4,918 |
|
|
|
4,883 |
|
|
|
4,949 |
|
Amortization of operating lease right-of-use assets |
|
|
8,083 |
|
|
|
7,303 |
|
|
|
5,946 |
|
Non-cash interest expense |
|
|
427 |
|
|
|
434 |
|
|
|
346 |
|
Deferred interest expense |
|
|
490 |
|
|
|
501 |
|
|
|
1,493 |
|
Deferred tax expense (benefit) |
|
|
2,012 |
|
|
|
1,980 |
|
|
|
(31,976 |
) |
Loss on disposal of property and equipment |
|
|
235 |
|
|
|
4,482 |
|
|
|
1,407 |
|
Loss on lease termination |
|
|
559 |
|
|
|
— |
|
|
|
— |
|
Provision recorded for credit losses |
|
|
1,297 |
|
|
|
1,781 |
|
|
|
2,999 |
|
Adjustment for excess and obsolete inventories |
|
|
6,580 |
|
|
|
9,648 |
|
|
|
12,079 |
|
Stock-based compensation |
|
|
8,996 |
|
|
|
6,552 |
|
|
|
3,864 |
|
Loss on extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
1,883 |
|
Change in fair value of earnout liability |
|
|
— |
|
|
|
— |
|
|
|
(3,985 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
5,539 |
|
|
|
(8,770 |
) |
|
|
(28,654 |
) |
Inventories |
|
|
(8,179 |
) |
|
|
(9,410 |
) |
|
|
(9,302 |
) |
Prepaid expenses and other current and other assets |
|
|
(10,115 |
) |
|
|
(378 |
) |
|
|
(34 |
) |
Operating leases |
|
|
(8,439 |
) |
|
|
(7,006 |
) |
|
|
(6,156 |
) |
Accounts payable |
|
|
(108 |
) |
|
|
3,260 |
|
|
|
3,847 |
|
Accrued expenses and other current liabilities |
|
|
3,138 |
|
|
|
(11,850 |
) |
|
|
9,354 |
|
Other liabilities |
|
|
91 |
|
|
|
72 |
|
|
|
(6,065 |
) |
Net cash provided by operating activities |
|
|
30,917 |
|
|
|
24,859 |
|
|
|
61,978 |
|
Cash flows from investing
activities: |
|
|
|
|
|
|
|
|
|
Purchases of property and
equipment |
|
|
(24,364 |
) |
|
|
(33,898 |
) |
|
|
(31,220 |
) |
Net cash used in investing activities |
|
|
(24,364 |
) |
|
|
(33,898 |
) |
|
|
(31,220 |
) |
Cash flows from financing
activities: |
|
|
|
|
|
|
|
|
|
Line of credit repayments under
the 2019 Credit Agreement |
|
|
— |
|
|
|
— |
|
|
|
(10,000 |
) |
Term loan repayments under the
2019 Credit Agreement |
|
|
— |
|
|
|
— |
|
|
|
(60,000 |
) |
Proceeds from term loan under the
2021 Credit Agreement, net of debt discount and issuance cost |
|
|
— |
|
|
|
— |
|
|
|
73,174 |
|
Term loan repayments under the
2021 Credit Agreement |
|
|
(4,688 |
) |
|
|
(2,813 |
) |
|
|
(938 |
) |
Principal repayments of finance
lease obligations |
|
|
(485 |
) |
|
|
(200 |
) |
|
|
(2,630 |
) |
Proceeds from the exercise of
stock options |
|
|
— |
|
|
|
2,070 |
|
|
|
2,198 |
|
Payments of withholding taxes in
connection with RSUs vesting |
|
|
(332 |
) |
|
|
(648 |
) |
|
|
(737 |
) |
Payments of deferred acquisition
consideration |
|
|
— |
|
|
|
(608 |
) |
|
|
(483 |
) |
Payment to extinguish debt |
|
|
— |
|
|
|
— |
|
|
|
(1,620 |
) |
Net cash used in financing activities |
|
|
(5,505 |
) |
|
|
(2,199 |
) |
|
|
(1,036 |
) |
Change in cash, cash
equivalents and restricted cash |
|
|
1,048 |
|
|
|
(11,238 |
) |
|
|
29,722 |
|
Cash, cash equivalents, and
restricted cash, beginning of year |
|
|
103,290 |
|
|
|
114,528 |
|
|
|
84,806 |
|
Cash, cash equivalents, and
restricted cash, end of year |
|
$ |
104,338 |
|
|
$ |
103,290 |
|
|
$ |
114,528 |
|
Supplemental disclosure
of cash flow information: |
|
|
|
|
|
|
|
|
|
Cash paid for interest |
|
$ |
5,436 |
|
|
$ |
2,649 |
|
|
$ |
5,787 |
|
Cash paid for income taxes |
|
$ |
3,052 |
|
|
$ |
1,201 |
|
|
$ |
607 |
|
Supplemental disclosure
of non-cash investing and financing activities: |
|
|
|
|
|
|
|
|
|
Cumulative effect adjustment
for adoption of ASU No. 2016-13 (Note 2) |
|
$ |
615 |
|
|
$ |
— |
|
|
$ |
— |
|
Deferred acquisition
consideration and earnout liability recorded for business
acquisition |
|
$ |
— |
|
|
$ |
828 |
|
|
$ |
— |
|
Purchases of property and
equipment in accounts payable and accrued expenses |
|
$ |
841 |
|
|
$ |
1,928 |
|
|
$ |
3,750 |
|
Right-of-use assets obtained
through operating lease obligations |
|
$ |
5,869 |
|
|
$ |
1,350 |
|
|
$ |
53,793 |
|
Right-of-use assets obtained
through finance lease obligations |
|
$ |
3,454 |
|
|
$ |
— |
|
|
$ |
— |
|
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 and
adjusted net income to evaluate our operating performance and
trends and make planning decisions. Our management believes
Adjusted EBITDA and adjusted net 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 and adjusted net 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
to non-GAAP EBITDA and non-GAAP Adjusted EBITDA, for each of the
periods presented:
|
|
Three Months Ended December 31, |
|
|
Year Ended December 31, |
|
($, in thousands) |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net (loss) income |
|
$ |
(568 |
) |
|
$ |
7,486 |
|
|
$ |
4,945 |
|
|
$ |
15,532 |
|
Interest expense, net |
|
|
502 |
|
|
|
(30 |
) |
|
|
2,190 |
|
|
|
2,009 |
|
Income tax expense (benefit) |
|
|
(1,228 |
) |
|
|
1,268 |
|
|
|
5,447 |
|
|
|
4,750 |
|
Depreciation |
|
|
2,982 |
|
|
|
1,514 |
|
|
|
10,448 |
|
|
|
5,845 |
|
Amortization |
|
|
1,229 |
|
|
|
1,221 |
|
|
|
4,918 |
|
|
|
4,883 |
|
EBITDA |
|
|
2,917 |
|
|
|
11,459 |
|
|
|
27,948 |
|
|
|
33,019 |
|
Stock-based compensation expense |
|
|
2,366 |
|
|
|
1,855 |
|
|
|
8,996 |
|
|
|
6,552 |
|
Restructuring charge (1) |
|
|
1,918 |
|
|
|
750 |
|
|
|
3,796 |
|
|
|
2,268 |
|
Write-off of certain assets (2) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,200 |
|
Settlement fee (3) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,600 |
|
Facility construction project pause (4) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
632 |
|
Legal fees (5) |
|
|
— |
|
|
|
— |
|
|
|
1,182 |
|
|
|
— |
|
Sales retention (6) |
|
|
272 |
|
|
|
— |
|
|
|
694 |
|
|
|
— |
|
Adjusted EBITDA |
|
$ |
7,473 |
|
|
$ |
14,064 |
|
|
$ |
42,616 |
|
|
$ |
49,271 |
|
(1) Amounts reflect employee retention and benefits as well as
other exit costs associated with the Company’s restructuring
activities.
(2) Amount reflects the disposal of certain equipment related to
the same facility.
(3) Amounts reflect the fee the Company paid to a GPO to settle
previously disputed GPO fees.
(4) Amount reflects the cancellation fees incurred in connection
with the Company’s decision to pause one of its manufacturing
facility construction projects.
(5) Amount represents the legal fees incurred related to the
recently published and withdrawn local coverage determinations, or
LCDs.
(6) Amount represents the compensation expenses related to
retention for those sales employees impacted by the LCDs.
The following table presents a reconciliation of GAAP net income
to non-GAAP adjusted net income, for each of the periods
presented:
|
|
Three Months Ended December 31, |
|
|
Year Ended December 31, |
|
($, in thousands) |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net (loss) income |
|
$ |
(568 |
) |
|
$ |
7,486 |
|
|
$ |
4,945 |
|
|
$ |
15,532 |
|
Amortization |
|
|
1,229 |
|
|
|
1,221 |
|
|
|
4,918 |
|
|
|
4,883 |
|
Restructuring charge (1) |
|
|
1,918 |
|
|
|
750 |
|
|
|
3,796 |
|
|
|
2,268 |
|
Write-off of certain assets (2) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,200 |
|
Settlement fee (3) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,600 |
|
Facility construction project pause (4) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
632 |
|
Legal fees (5) |
|
|
— |
|
|
|
— |
|
|
|
1,182 |
|
|
|
— |
|
Sales retention (6) |
|
|
272 |
|
|
|
— |
|
|
|
694 |
|
|
|
— |
|
Tax on above |
|
|
(923 |
) |
|
|
(527 |
) |
|
|
(2,859 |
) |
|
|
(3,898 |
) |
Adjusted net income |
|
$ |
1,928 |
|
|
$ |
8,930 |
|
|
$ |
12,676 |
|
|
$ |
26,217 |
|
(1) Amounts reflect employee retention and benefits as well as
other exit costs associated with the Company’s restructuring
activities.
(2) Amount reflects the disposal of certain equipment related to
the same facility.
(3) Amounts reflect the fee the Company paid to a GPO to settle
previously disputed GPO fees.
(4) Amount reflects the cancellation fees incurred in connection
with the Company’s decision to pause one of its manufacturing
facility construction projects.
(5) Amount represents the legal fees incurred related to the
recently published and withdrawn local coverage determinations, or
LCDs.
(6) Amount represents the compensation expenses related to
retention for those sales employees impacted by the LCDs.
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, |
|
($, in thousands) |
|
2024L |
|
|
2024H |
|
Net (loss) income |
|
$ |
(10,565 |
) |
|
$ |
4,616 |
|
Interest expense, net |
|
|
3,000 |
|
|
|
2,200 |
|
Income tax expense (benefit) |
|
|
308 |
|
|
|
5,061 |
|
Depreciation |
|
|
9,680 |
|
|
|
9,680 |
|
Amortization |
|
|
3,400 |
|
|
|
3,400 |
|
EBITDA |
|
|
5,823 |
|
|
|
24,957 |
|
Stock-based compensation expense |
|
|
10,000 |
|
|
|
10,000 |
|
Restructuring charge |
|
|
- |
|
|
|
- |
|
Adjusted EBITDA |
|
|
15,823 |
|
|
|
34,957 |
|
The following table presents a reconciliation of projected GAAP
net income (loss) to projected non-GAAP adjusted net income
included in our guidance for the year ending December 31, 2024:
|
|
Year Ended December 31, |
|
($, in thousands) |
|
2024L |
|
|
2024H |
|
Net (loss) income |
|
$ |
(10,565 |
) |
|
$ |
4,616 |
|
Amortization |
|
|
3,400 |
|
|
|
3,400 |
|
Restructuring charge |
|
|
— |
|
|
|
— |
|
Tax on above |
|
|
(918 |
) |
|
|
(918 |
) |
Adjusted net (loss) income |
|
$ |
(8,083 |
) |
|
$ |
7,098 |
|
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, adjusted net income, 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 reimbursement levels for the Company’s products; (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 prior years 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; and (12)
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 offering a
portfolio of bioactive and acellular biomaterials products in
advanced wound care and surgical biologics, including orthopedics
and spine. Organogenesis’s comprehensive portfolio is designed to
treat a variety of patients with repair and regenerative needs. For
more information, visit www.organogenesis.com.
Investor Inquiries:
ICR Westwicke
Mike Piccinino, CFA
OrganoIR@westwicke.com
Press and Media Inquiries:
Organogenesis
Lori Freedman
LFreedman@organo.com
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