MIMEDX GROUP, INC. Q3 FY2024 earnings call

• Net sales grew 3% to $84 million, in line with expectations. Gross profit margin was 82%. Adjusted EBITDA was $18 million, 22% of net sales.
• Ended with $89 million in cash, an increase of $20 million in the quarter. Transitioned from net interest expense to net interest income.
• Continued market release of HELIOGEN, met with CMS, MACs, and congressional offices regarding reimbursement reform.
• New York Times article highlighted benefits of placental tissue, with MiMedx contributing.
• Strategic priorities: Innovate/diversify product portfolio (introduced 4 new products in 2 years, HELIOGEN launch), develop/support surgical market via research and expanded offerings, enhance customer intimacy via initiatives like MIMEDX Connect and customer feedback sessions.

For the third quarter, net sales grew year-over-year by $2 million or 3% to $84 million. Wound sales were $55 million, up 8% y-o-y. Surgical sales were $29 million, down 5% y-o-y but up 5% pro forma excluding dental and AXIOFILL. Private office net sales grew 11% to approximately $25 million. Hospital channel net sales declined 3% to $46 million. International, federal and other care settings net sales grew about 9% to nearly $12.5 million. Gross profit margin was 82%. Adjusted EBITDA was $18 million or 22% of net sales in the quarter, representing an increase of $600,000 over the prior year period.

• Took up full year revenue growth rate guidance from mid to high single digits to just the high single digits.
• Expect full year adjusted EBITDA margin to be above 20%, assuming LCDs not implemented in Q4.
• Anticipate resetting top line growth to low double digits with adjusted EBITDA margin above 20% post-reimbursement correction.

• Disruption in private office and adjacent care settings due to Medicare reimbursement abuse. Potential for LCD implementation and enforcement challenges.

Q: Regarding reimbursement dynamics, how confident are you in change coming and details on LCDs?

A: More confident this quarter than last, believe LCDs will be implemented in modified form. Everyone agrees problem needs addressing.

Q: Surgical business impact from dental and AXIOFILL, and HELIOGEN launch?

A: Pro forma without dental and AXIOFILL, surgical sales swing 10 points. HELIOGEN launch off to good start, working through value analysis, getting positive feedback.

Q: SG&A trends and manufacturing initiatives?

A: SG&A remained consistent near term. General expense discipline, ongoing process improvement in operations.

Q: R&D progression and margin outlook?

A: R&D spend may ramp up, adjusted EBITDA margin above 20% due to scale and margin structure.

Q: Reimbursement pricing and HELIOGEN launch differences?

A: Recommended price per square centimeter, likely next year. HELIOGEN launch similar to past product rollouts, goes through value analysis committee on hospital basis.

Q: MIMEDX Connect development?

A: Adoption increasing, developing additional capabilities to enhance customer workflow