Q4 2025 Organogenesis Holdings Inc Earnings Call

February 26, 2026

Speaker #1: Please stand by . Welcome , ladies and gentlemen , to the fourth quarter and full year 2025 Earnings Conference call for Organogenesis Holdings Inc. .

Operator: Please stand by. Welcome, ladies and gentlemen, to the Q4 and Full Year 2025 Earnings Conference Call for Organogenesis Holdings, Inc. At this time, all participants have been placed in listen-only mode. Please note that this conference call is being recorded and that 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 the current expectations of management and involve inherent risk and uncertainties that it 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 its subsequently filed quarterly report.

Speaker #1: At this time , all participants have been placed in listen only mode . Please note that this conference call is being recorded and that 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 looking statements that are based on the current expectations of management and involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated , including the risk and uncertainties described in the company's filings with the Securities and Exchange Commission , including item one , a risk factors of the company's most recent annual report and its subsequently filed quarterly report 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 .

Operator: 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, further events, or otherwise, except as required by applicable Securities laws. This call will also include references to certain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP. We generally refer to these as non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in the company's earnings release on the investor relations portion of our website. I would now like to turn the call over to Mr. Gary S.

Speaker #1: Future events or otherwise , except as required by applicable securities laws This call will also include references to certain financial measures that are not calculated in accordance with generally accepted .

Speaker #1: Accordingly, the accounting principles, or GAAP. We generally refer to these as non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in the company's earnings release on the Investor Relations portion of our website.

Operator: Reconciliations of these non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in the company's earnings release on the investor relations portion of our website. I would now like to turn the call over to Mr. Gary S. Doheny, Sr., Organogenesis Holdings President, Chief Executive Officer, and Chair of the Board. Please go ahead.

Speaker #1: I to turn the call over to Mr. Gary Gillheeney , senior Organogenesis President , Chief Executive Officer and Chair of the board . Please go ahead

Operator: Doheny, Sr., Organogenesis Holdings President, Chief Executive Officer, and Chair of the Board. Please go ahead.

Speaker #2: Thank you . Operator and welcome , everyone to Organogenesis fourth quarter 2020 Earnings Conference Call I'm joined on the call today by David Francisco , our chief financial officer .

Gary S. Gillheeney, Sr.: Thank you, operator, and welcome everyone to Organogenesis Holdings's Q4 2025 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're going to cover during our prepared remarks. I will begin with an overview of our Q4 revenue results and provide an update on key developments in recent months. Dave will then provide you with an in-depth review of our Q4 financial results, our balance sheet, and financial condition at quarter end, as well as our financial outlook for 2026, which we introduced in our press release this afternoon. I'll provide some closing comments before we open up the call for questions. Let's begin with a review of our revenue results in Q4.

Speaker #2: Let me start with a brief agenda we’re going to cover during our prepared remarks. I will begin with an overview of our fourth quarter revenue results and provide an update on key developments in recent months.

Speaker #2: Dave will then provide you with an in-depth review of our fourth quarter financial results . Our balance sheet and financial condition at quarter end , as well as our financial outlook for 2026 , which we introduced in our press release this afternoon .

Speaker #2: And I'll provide some closing comments before we open up the call for questions. Let's begin with the review of our revenue results in Q4.

Speaker #2: We delivered record sales results , which exceeded the high end of the guidance range outlined on our third quarter conference call driven primarily by better than expected growth in sales of our advanced wound care products , which increased 83% year over year Sales of our surgical and sports medicine products declined 2% year over year , which was within the range of our guidance assumptions .

Gary S. Gillheeney, Sr.: We delivered record sales results, which exceeded the high end of the guidance range outlined on our Q3 conference call, driven primarily by better than expected growth in sales of our advanced wound care products, which increased 83% year-over-year. Sales of our Surgical and Sports Medicine products declined 2% year-over-year, which was within the range of our guidance assumptions. The record revenue performance we delivered in Q4 reflects our team's strong execution and commitment to our strategy to build upon our deep customer relationships in promoting access to existing and recently launched products. I want to acknowledge and thank our team for continuing to show up every day for our patients amidst a very challenging environment in 2025. 2025 was a significant year for the industry, with CMS enacting the most meaningful health policy changes in decades.

Speaker #2: The record revenue performance we delivered in the fourth quarter reflects our team's strong execution and commitment to our strategy to build upon our deep customer relationships and promoting access to existing and recently launched products .

Speaker #2: I want to acknowledge and thank our team for continuing to show up every day for our patients amidst the very challenging environment In 2025 .

Speaker #2: 2025 was a significant year for the industry , with CMS enacting the most meaningful health policy changes in decades . We continue to believe these changes are favorable to our portfolio and to our mission .

Gary S. Gillheeney, Sr.: We continue to believe these changes are favorable to our portfolio and to our mission. CMS shifted reimbursement to support high-quality, evidence-backed PMA products while reducing payment for non-PMA products that have not undergone the most rigorous type of review, so that more patients have access to products that go beyond simple wound coverings. CMS has cited the clinical differentiation of PMA products and supports higher payment for the category to encourage innovation in the space. Their comments indicate that PMA products were never part of the problem and understand the higher development and manufacturing costs require sufficient reimbursement, not only to sustain the market availability of Apligraf and other high-value PMA products, but also to introduce new PMA products in the future.

Speaker #2: CMS shifted reimbursement to support high quality , evidence backed PMA products while reducing payment for non PMA products that have not undergone the most rigorous type of review so that more patients have access to products that go beyond simple wound coverings .

Speaker #2: CMS has cited the clinical differentiation of PMA products and supports higher payment for the category to encourage innovation in the space . Their comments indicate that PMA products were never part of the problem , and understand the higher development and manufacturing costs require sufficient reimbursement .

Speaker #2: Not only to sustain the market availability of Apligraf and other high value PMA products , but also to introduce new PMA products in the future .

Speaker #2: As discussed on our earnings calls last year , organogenesis has actively participated , bringing about these changes , and we remain committed to working with CMS in other stakeholders to further expand access to life saving technologies , as well as incentivize investment in innovation in the space and achieve long term stability in the market Unfortunately , withdrawal of LCD coverage policies for skin substitutes announced on December 24th and comments regarding discarded product on December 30th have resulted in clinical confusion and material disruption in the market We do not believe these actions by CMS signal any step back from the original goals outlined to reform coverage and payment of skin substitutes .

Gary S. Gillheeney, Sr.: As discussed on our earnings calls last year, Organogenesis has actively participated bringing about these changes, and we remain committed to working with CMS and other stakeholders to further expand access to life-saving technologies, as well as incentivize investment in innovation in the space and achieve long-term stability in the market. Unfortunately, withdrawal of LCD coverage policies for skin substitutes announced on 24 December, and comments regarding discarded product on 30 December, have resulted in clinical confusion and material disruption in the market. We do not believe these actions by CMS signal any step back from the original goals outlined to reform coverage and payment of skin substitutes. We believe the comments on 30 December regarding discarded products were intended to proactively address activity from certain competitors in the market that were attempting to exploit the new payment policies by focusing on larger-sized skin substitute products, specifically amniotic products....

Speaker #2: We believe the comments on December 30th regarding discarded product were intended to proactively address activity from certain competitors in the market that were attempting to exploit the new payment policies .

Speaker #2: By focusing on larger size skin substitute products , specifically amniotic products . Unfortunately , these comments have resulted in significant clinical confusion impacting utilization of our PMA approved product in the first two months of 2026 .

Gary S. Gillheeney, Sr.: Unfortunately, these comments have resulted in significant clinical confusion, impacting utilization of our PMA-approved product in the first two months of 2026. We do not believe the agency's commentary on discarded products should apply to PMA products. CMS's commentary and actions in recent years have indicated that PMA products were never part of the fraud and abuse. CMS expressly stated in the final Medicare physician fee schedule for calendar year 2026, announced on 31 October 2025, that PMA products are clinically differentiated and deserve payment at a higher rate. We believe the significant clinician confusion, which is impacting utilization of our PMA-approved product, is a result of the agency's comments on December 30th, and will be resolved in a way that's consistent with the policy CMS set by grouping products based on their FDA classification.

Speaker #2: We do not believe the agency's commentary on discarded products should apply to PMA products . CMS is commentary and actions . In recent years have indicated that PMA products were never part of the fraud and abuse Further , CMS expressly stated in the final Medicare physician fee schedule for calendar year 2026 , announced on October 31st of 2025 , that PMA products are clinically differentiated and deserve payment at a higher rate We believe the significant clinician confusion , which is impacting utilization of our PMA approved product , is a result of the agency's comments on December 30th and will be resolved in a way that's consistent with the policy .

Speaker #2: CMS set . By grouping products based on their FDA classification . As discussed on our earnings call last year , this was a key focus of our feedback and policy recommendations to the agency .

Gary S. Gillheeney, Sr.: As discussed on our earnings call last year, this was a key focus of our feedback and policy recommendations to the agency. CMS has consistently indicated one of their goals in policy reform was to increase access to PMA products. While 2026 is off to a difficult start, I want to make it clear that I'm very optimistic about our future. We believe CMS's efforts to overhaul coverage and payment for our market represent a watershed moment for the industry. The final Medicare physician fee schedule for calendar year 2026, announced on 31 October 2025, represents the most meaningful step forward towards payment reform in more than a decade. I believe our overall position is very strong. It is from this strong position that we are making capital investments that will support our company's future growth and continued leadership in the space.

Speaker #2: CMS has consistently indicated one of their goals in policy reform was to increase access to PMA products While 2026 is off to a difficult start , I want to make it clear that I'm very optimistic about our future We believe CMS efforts to overhaul coverage and payment for our market represent a watershed moment for the industry .

Speaker #2: In the final Medicare physician fee schedule for calendar year 2026 , announced on October 31st , 2025 , represents the most meaningful step forward towards payment reform in more than a decade .

Speaker #2: I believe our overall position is very strong, and it is from this strong position that we are making capital investments that will support our company's future growth and continued leadership in the space.

Speaker #2: I new manufacturing and R&D center in Smithfield , Rhode Island , is advancing well This state of the art facility once completed , will allow us to scale manufacturing of apligraf and apply am re commercialize dermagraft , strengthening our portfolio with another clinically proven PMA product and gives us the capacity to expand our product portfolio to treat burns with force shield and Transcyte , which is another PMA product .

Gary S. Gillheeney, Sr.: Our new manufacturing and R&D center in Smithfield, Rhode Island, is advancing well. This state-of-the-art facility, once completed, will allow us to scale manufacturing of Apligraf and PuraPly AM, re-commercialize Dermagraft, strengthening our portfolio with another clinically proven PMA product, and gives us the capacity to expand our product portfolio to treat burns with FortiShield and TransCyte, which is another PMA product. We are increasing our focus on clinical evidence by investing in trials and published studies, because science and evidence have always been core to our foundation. As coverage policies evolve, evidence will be the currency of credibility, and we intend to remain in the lead. Looking beyond wound care, we are closer than ever to expanding our mission into entirely new markets with our ReNu program. Late last year, we initiated our rolling BLA submission, which we expect to complete in the first half of 2026.

Speaker #2: We are increasing our focus on clinical evidence by investing in trials in published studies , because science and evidence have always been core to our foundation .

Speaker #2: And as coverage policies evolve , evidence will be the currency of credibility . And we intend to remain in the lead Looking beyond wound care , we are closer than ever to expanding our mission into entirely new markets .

Speaker #2: With our renew program late last year , we initiated our rolling Bla submission , which we expect to complete in the first half of 2026 .

Speaker #2: And if approved by the FDA , renew represents a transformational opportunity not just for organogenesis , but for the millions of Americans living with knee osteoarthritis pain , particularly those whose only alternative today is a total knee replacement .

Gary S. Gillheeney, Sr.: If approved by the FDA, ReNu represents a transformational opportunity, not just for Organogenesis, but for the millions of Americans living with knee osteoarthritis pain, particularly those whose only alternative today is a total knee replacement. We can change the treatment paradigm and improve the lives of these patients as part of our vision, to be a force for meaningful change and set a higher expectation in healing and recovery. With more than 40 years in regenerative medicine and a diverse evidence-based portfolio with technologies in each FDA category, we believe we are best positioned in the skin sub-substitute market and will continue to be a leader in the space with highly innovative, highly efficacious products that deliver on our mission of advancing healing and recovery beyond our customers' expectations. With that, I'll turn it over to Dave.

Speaker #2: We can change the treatment paradigm and improve the lives of these patients as part of our vision to be a force for meaningful change and set a higher expectation in healing and recovery .

Speaker #2: With more than 40 years in regenerative medicine and a diverse evidence based portfolio with technologies in each FDA category , we believe we have best positioned in the skin substitute market and will continue to be a leader in the space with highly innovative , highly efficacious products that deliver on our mission of advancing healing and recovery beyond our customers expectations .

Speaker #2: With that , I'll turn it over to Dave

Speaker #3: Thanks , Gary . I'll begin with a review of our fourth quarter financial results , unless otherwise specified , all growth rates referenced during my prepared remarks are on a year over year basis Net product revenue for the fourth quarter was 225.1 million , up 78% year over year and up 50% sequentially .

David C. Francisco: Thanks, Gary. I'll begin with a review of our Q4 financial results. Unless otherwise specified, all growth rates referenced during my prepared remarks are on a year-over-year basis. Net product revenue for Q4 was $225.1 million, up 78% year-over-year, and up 50% sequentially. As Gary mentioned, these results came in above the high end of expectations we provided on our Q3 call, which called for total revenue range of $162 million to $187 million. Our advanced wound care net product revenue for Q4 was $217.2 million, up 83%. Net revenue from Surgical and Sports Medicine products for Q4 was $7.9 million, down 2% year-over-year.

Dave Francisco: Thanks, Gary. I'll begin with a review of our Q4 financial results. Unless otherwise specified, all growth rates referenced during my prepared remarks are on a year-over-year basis. Net product revenue for Q4 was $225.1 million, up 78% year-over-year, and up 50% sequentially. As Gary mentioned, these results came in above the high end of expectations we provided on our Q3 call, which called for total revenue range of $162 million to $187 million. Our advanced wound care net product revenue for Q4 was $217.2 million, up 83%. Net revenue from Surgical and Sports Medicine products for Q4 was $7.9 million, down 2% year-over-year.

Speaker #3: As Gary mentioned , these results came in above the high end of expectations we provided on our Q3 call , which called for total revenue range of 162 million to 187 million .

Speaker #3: Our advanced wound care net product revenue for the fourth quarter was 217.2 million , up 83% . Net revenue from surgical and sports medicines products for the fourth quarter was 7.9 million , down 2% year over year Surgical and sports medicine product sales were up 12% for the full year .

David C. Francisco: Surgical and Sports Medicine product sales were up 12% for the full year 2025 period, fueled by continued strong growth in sales of our PuraPly family of products. Our total revenue results for Q4 included $0.5 million of grant income related to the grant issued from the Rhode Island Life Science Hub, offsetting our employee-related costs in our Smithfield facility. This compares to no impact in the prior year period. Gross profit for Q4 was $175.2 million, or 78% of net product revenue, compared to 75% last year. The change in gross profit was primarily due to a shift in product mix.

Dave Francisco: Surgical and Sports Medicine product sales were up 12% for the full year 2025 period, fueled by continued strong growth in sales of our PuraPly family of products. Our total revenue results for Q4 included $0.5 million of grant income related to the grant issued from the Rhode Island Life Science Hub, offsetting our employee-related costs in our Smithfield facility. This compares to no impact in the prior year period. Gross profit for Q4 was $175.2 million, or 78% of net product revenue, compared to 75% last year. The change in gross profit was primarily due to a shift in product mix.

Speaker #3: 2025 , period , fueled by continued strong growth in sales of our Pure play family of products . Our total revenue results for the fourth quarter included 0.5 million of grant income related to the grant issued from the Rhode Island Life Sciences Hub , offsetting our employee related costs in our Smithfield facility .

Speaker #3: This compares to no impact in the prior year period Gross profit for the fourth quarter was 175.2 million , or 78% of net product revenue , compared to 75% last year .

Speaker #3: The change in gross profit was primarily due to a shift in product mix , operating expenses . For the fourth quarter , 162.3 million , compared to 116.4 million last year , an increase of 45.9 million , or 39% , excluding cost of goods sold of 49.9 million for the fourth quarter and 31.1 million last year .

David C. Francisco: Operating expenses for Q4 were $162.3 million, compared to $116.4 million last year, an increase of $45.9 million or 39%. Excluding cost of goods sold of $49.9 million for Q4 and $31.1 million last year, our non-GAAP operating expenses for Q4 were $112.4 million, compared to $85.4 million last year, an increase of $27 million, or 32%. The year-over-year change in operating expenses, excluding cost of goods sold, was driven by $26.3 million or 36% increase in SG&A expenses, and a $1.9 million write-down of certain non-recurring expenses, offset partially by a $1.2 million, or 11% decrease in research and development expenses.

Dave Francisco: Operating expenses for Q4 were $162.3 million, compared to $116.4 million last year, an increase of $45.9 million or 39%. Excluding cost of goods sold of $49.9 million for Q4 and $31.1 million last year, our non-GAAP operating expenses for Q4 were $112.4 million, compared to $85.4 million last year, an increase of $27 million, or 32%. The year-over-year change in operating expenses, excluding cost of goods sold, was driven by $26.3 million or 36% increase in SG&A expenses, and a $1.9 million write-down of certain non-recurring expenses, offset partially by a $1.2 million, or 11% decrease in research and development expenses.

Speaker #3: Our non-GAAP operating expenses for the fourth quarter were 112.4 million , compared to 85.4 million last year , an increase of 27 million , or 32% .

Speaker #3: Year over year . Change in operating expenses , excluding cost of goods sold , was driven by 26.3 million , or 36% increase in G&A expenses and a $1.9 million writedown of certain non-recurring expenses , offset partially by a 1.2 million or 11% decrease in research and development expenses Operating income for the fourth quarter was 63.3 million , compared to operating income of 10.2 million last year , an increase of 53.1 million , or 519% .

David C. Francisco: Operating income for Q4 was $63.3 million, compared to operating income of $10.2 million last year, an increase of $53.1 million, or 519%. Excluding non-cash amortization and certain non-recurring costs in both periods, our non-GAAP operating income was $75.9 million, compared to $11.7 million last year, an increase of $64.2 million, or 549% year-over-year. GAAP net income for Q4 was $43.7 million, compared to a net income of $7.7 million last year, an increase of $36 million. Net income to common for Q4 was $31.5 million, compared to a net income of $5.1 million last year.

Dave Francisco: Operating income for Q4 was $63.3 million, compared to operating income of $10.2 million last year, an increase of $53.1 million, or 519%. Excluding non-cash amortization and certain non-recurring costs in both periods, our non-GAAP operating income was $75.9 million, compared to $11.7 million last year, an increase of $64.2 million, or 549% year-over-year. GAAP net income for Q4 was $43.7 million, compared to a net income of $7.7 million last year, an increase of $36 million. Net income to common for Q4 was $31.5 million, compared to a net income of $5.1 million last year.

Speaker #3: Excluding non-cash amortization and certain non-recurring costs in both periods . Our non-GAAP operating income was 75.9 million , compared to 11.7 million last year , an increase of 64.2 million , or 549% year over year .

Speaker #3: GAAP net income for the fourth quarter was 43.7 million , compared to a net income of 7.7 million last year , an increase of 36 million .

Speaker #3: Net income to common for the fourth quarter was 31.5 million , compared to a net income of 5.1 million last year . Net income to common includes the impact of the cumulative dividend , the non-cash accretion to redemption value of our convertible preferred stock , and undistributed earnings allocated to participating redeemable convertible preferred stock .

David C. Francisco: Net income to common includes the impact of the cumulative dividend, the non-cash accretion to redemption value of our convertible preferred stock, and undistributed earnings allocated to participating redeemable convertible preferred stock. Adjusted net income for Q4 was $52.9 million, compared to $8.8 million last year. Adjusted net income excludes after-tax impacts of intangible amortization, write-down of assets held for sale, disposal of construction in progress, FDA BLA fees for ReNu, PFS regulation-related charges, specifically non-recurring inventory write-down adjustments for excess and obsolete inventory, and upfront licensing costs resulting from the shift in product lines, and additional inventory write-downs related to one-time loss of a key distributor in a certain international location. We have included a detailed reconciliation of GAAP to non-GAAP adjusted income to in our press release this afternoon.

Dave Francisco: Net income to common includes the impact of the cumulative dividend, the non-cash accretion to redemption value of our convertible preferred stock, and undistributed earnings allocated to participating redeemable convertible preferred stock. Adjusted net income for Q4 was $52.9 million, compared to $8.8 million last year. Adjusted net income excludes after-tax impacts of intangible amortization, write-down of assets held for sale, disposal of construction in progress, FDA BLA fees for ReNu, PFS regulation-related charges, specifically non-recurring inventory write-down adjustments for excess and obsolete inventory, and upfront licensing costs resulting from the shift in product lines, and additional inventory write-downs related to one-time loss of a key distributor in a certain international location. We have included a detailed reconciliation of GAAP to non-GAAP adjusted income to in our press release this afternoon.

Speaker #3: Adjusted net income for the fourth quarter was 52.9 million , compared to 8.8 million last year . Adjusted net income excludes after tax impacts of intangible amortization , write down of assets held for sale , disposal of construction in progress FDA fees for renew regulation related charges , specifically non-recurring inventory .

Speaker #3: Write down adjustments for excess and obsolete inventory and upfront licensing costs resulting from the shift in product lines and additional inventory write downs related to one time loss of key distributor in a certain international location .

Speaker #3: We have included a detailed reconciliation of GAAP to non-GAAP adjusted income in our press release this afternoon . Adjusted EBITDA for the fourth quarter was 84.2 million , or 37% of total revenue , compared to adjusted EBITDA of 18.2 million , or 14% of total revenue last year Turning to the balance sheet , as of December 31st , 2025 , the company had 94.3 million in cash .

David C. Francisco: Adjusted EBITDA for the Q4 was $84.2 million, or 37% of total revenue, compared to Adjusted EBITDA of $18.2 million, or 14% of total revenue last year. Turning to the balance sheet. As of 31 December 2025, the company had $94.3 million in cash equivalents, and restricted cash, with no outstanding debt obligations, compared to $136.2 million in cash equivalents, and restricted cash, with no outstanding debt obligations as of 31 December 2024. We believe that we are well capitalized with our cash on hand and other components of working capital, availability under our revolving credit facility of up to $75 million, and net cash flows from product sales. Turning to our 2026 outlook, which we introduced in this afternoon's press release.

Dave Francisco: Adjusted EBITDA for the Q4 was $84.2 million, or 37% of total revenue, compared to Adjusted EBITDA of $18.2 million, or 14% of total revenue last year. Turning to the balance sheet. As of 31 December 2025, the company had $94.3 million in cash equivalents, and restricted cash, with no outstanding debt obligations, compared to $136.2 million in cash equivalents, and restricted cash, with no outstanding debt obligations as of 31 December 2024. We believe that we are well capitalized with our cash on hand and other components of working capital, availability under our revolving credit facility of up to $75 million, and net cash flows from product sales. Turning to our 2026 outlook, which we introduced in this afternoon's press release.

Speaker #3: Cash equivalents and restricted cash , with no outstanding debt obligations , compared to 136.2 million in cash . Cash equivalents and restricted cash with no outstanding debt obligations .

Speaker #3: As of December 31st , 2020 . Four . We believe that we are well capitalized with our cash on hand and other components of working capital availability under our revolving credit facility of up to 75 million and net cash flows from product sales Turning to our 2026 outlook , which we introduced in this afternoon's press release .

Speaker #3: As Gary mentioned earlier last year , CMS announced the most meaningful health policy changes in decades , and we continue to believe these changes are advantageous to our portfolio and mission as a leader in the industry .

David C. Francisco: As Gary mentioned earlier, last year, CMS announced the most meaningful health policy changes in decades. We continue to believe these changes are advantageous to our portfolio and mission. As a leader in the industry, we expect to gain share in this new environment as we leverage the largest, most comprehensive portfolio across multiple FDA classifications. However, we are experiencing near-term challenges as we enter 2026. The operating environment remains highly uncertain given clinician confusion surrounding CMS's comments on 30 December. As a result, we expect total net revenue to decline in the range of 25% to 38% year-over-year for the full year 2026 period.

Dave Francisco: As Gary mentioned earlier, last year, CMS announced the most meaningful health policy changes in decades. We continue to believe these changes are advantageous to our portfolio and mission. As a leader in the industry, we expect to gain share in this new environment as we leverage the largest, most comprehensive portfolio across multiple FDA classifications. However, we are experiencing near-term challenges as we enter 2026. The operating environment remains highly uncertain given clinician confusion surrounding CMS's comments on 30 December. As a result, we expect total net revenue to decline in the range of 25% to 38% year-over-year for the full year 2026 period.

Speaker #3: We expect to gain share in this new environment as we leverage the largest , most comprehensive portfolio across multiple FDA classifications However , we are experiencing near-term challenges as we enter 2026 and the operating environment remains highly uncertain given clinician confusion surrounding CMS comments .

Speaker #3: On December 30th . As a result , we expect total net revenue to decline in the range of 25% to 38% year over year .

Speaker #3: For the full year 2026 period, we expect these challenges to impact our financial results in the first half of 2026, with meaningful improvement in clinical confusion and the overall operating environment, together with the strength and breadth of our portfolio, to result in substantial market share gains over the second half of 2026.

David C. Francisco: We expect these challenges to impact our financial results in the first half of 2026, with meaningful improvement in clinician confusion and the overall operating environment, together with the strength and breadth of our portfolio, to result in substantial market share gains over the second half of 2026. Specifically, our current expectations assume Q1 revenue declines approximately 50% year-over-year, driven primarily by the significant clinician confusion and related impact on utilization of our PMA-approved product as a result of CMS's commentary on 30 December 2025. We expect to drive strong sequential growth in Q2, resulting in first half revenue declines of approximately 30% to 35%.

Dave Francisco: We expect these challenges to impact our financial results in the first half of 2026, with meaningful improvement in clinician confusion and the overall operating environment, together with the strength and breadth of our portfolio, to result in substantial market share gains over the second half of 2026. Specifically, our current expectations assume Q1 revenue declines approximately 50% year-over-year, driven primarily by the significant clinician confusion and related impact on utilization of our PMA-approved product as a result of CMS's commentary on 30 December 2025. We expect to drive strong sequential growth in Q2, resulting in first half revenue declines of approximately 30% to 35%.

Speaker #3: Specifically , our current expectations assume first quarter revenue declines approximately 50% year over year , driven primarily by the significant clinician confusion and related impact on utilization of our PMA approved product .

Speaker #3: As a result of CMS commentary on December 30th , we expect to drive strong sequential growth in the second quarter , resulting in first half revenue declines of approximately 30 to 35% .

Speaker #3: We expect to deliver strong sequential revenue growth in both the third and fourth quarter of 2026 , which we expect will result in positive adjusted EBITDA , particularly in the fourth quarter , where we expect to drive high teens adjusted EBITDA margins With that , I'll turn the call back over to Gary for closing remarks .

David C. Francisco: We expect to deliver strong sequential revenue growth in both Q3 and Q4 of 2026, which we expect will result in positive adjusted EBITDA, particularly in Q4, where we expect to drive high teens adjusted EBITDA margins. With that, I'll turn the call back over to Gary for closing remarks.

Dave Francisco: We expect to deliver strong sequential revenue growth in both Q3 and Q4 of 2026, which we expect will result in positive adjusted EBITDA, particularly in Q4, where we expect to drive high teens adjusted EBITDA margins. With that, I'll turn the call back over to Gary for closing remarks.

Speaker #2: Thank you . Dave 25 , was a challenging year , but we are proud of the team's commitment to our long term growth strategies .

Gary S. Gillheeney, Sr.: Thank you, Dave. 2025 was a challenging year. We are proud of the team's commitment to our long-term growth strategies. Our team's strong execution resulted in total revenue and profitability for fiscal year 2025 that exceeded the high end of our initial financial guidance ranges we introduced in our Q4 call last year. We also advanced our strategic priorities, most notably with our RENEW program in securing our new manufacturing facility in Rhode Island to support future growth. We expect continued strong execution and operational progress as we work through the challenging year this year. While we expect the first half of 2026 to be impacted as the skin substitute market adapts to sweeping changes from CMS to reform coverage and payment for skin substitutes, we expect to drive significant market share gains in the second half of 2026 and remain confident in the long-term opportunity for Organogenesis.

Speaker #2: Our team's strong execution resulted in total revenue and profitability of fiscal year 2025 that exceeded the high end of our initial financial guidance ranges .

Speaker #2: We introduced in our fourth quarter call last year. We also advanced our strategic priorities, most notably with our renewed program in securing our new manufacturing facility in Rhode Island to support future growth.

Speaker #2: We expect continued strong execution and operational progress as we work through the challenging year . This year . While we expect the first half of 26 to be impacted as the skin substitute market adapts to sweeping changes from CMS to reform coverage and payment for skin substitutes , we expect to drive significant market share gains in the second half of 2026 and remain confident in the long term opportunity for organogenesis after a period of transition in the market in 2026 , we expect to return to normalized annual growth in 2025 .

Gary S. Gillheeney, Sr.: After a period of transition in the market in 2026, we expect to return to normalized annual growth in 2025. We continue to believe we are well positioned to win in the future. We expect to remain a leader in the space with highly innovative, highly efficacious products that deliver on our mission to provide integrated healing solutions that substantially improve outcomes while lowering the overall cost of care. With that, I'll turn the call over to the operator to open the call up for questions.

Speaker #2: We continue to believe we are well positioned to win in the future . We expect to remain a leader in the space with highly innovative , highly efficacious products that deliver on our mission to provide integrated healing solutions that substantially improve outcomes while lowering the overall cost of care With that , I'll turn the call over to the operator to open the call up for questions

Speaker #1: Thank you At this time , if you would like to ask a question , please signal by pressing star one one on your telephone keypad .

David C. Francisco: Thank you. At this time, if you would like to ask a question, please signal by pressing star one one on your telephone keypad. If you're using a speakerphone, please make sure you use your mute function is turned off to allow your signal to reach our equipment. One moment while we go for the first question.

Operator: Thank you. At this time, if you would like to ask a question, please signal by pressing star one one on your telephone keypad. If you're using a speakerphone, please make sure you use your mute function is turned off to allow your signal to reach our equipment. One moment while we go for the first question. Our first question is coming from the line of Ryan Zimmerman of BTIG. Your line is open.

Speaker #1: If you're using a speakerphone , please make sure you mute your phone . Use your mute function is turned off to allow your signal to reach our equipment One moment while we go for the first question , and our first question is coming from the line of Ryan Zimmerman of TI .

Operator: ... Our first question is coming from the line of Ryan Zimmerman of BTIG. Your line is open.

Speaker #1: Excuse me , Btig . Your line is open .

Speaker #4: Hi , Gary . Dave , this is Izzy on for Ryan . Thanks for taking the questions . So just to start out , I wanted to focus on your fourth quarter results for Advanced Wound Care .

[Analyst] (BTIG): Hi, Gary, Dave, this is Izzy on for Ryan. Thanks for taking the questions. Just to start out, I wanted to focus on your Q4 results for advanced wound care. That 83% was definitely really strong and much stronger than you're anticipating. I was curious how much of that growth you believe is due to customers maybe pulling forward some of the inventory ahead of the 1 January reimbursement changes?

Izzy McMahon: Hi, Gary, Dave, this is Izzy on for Ryan. Thanks for taking the questions. Just to start out, I wanted to focus on your Q4 results for advanced wound care. That 83% was definitely really strong and much stronger than you're anticipating. I was curious how much of that growth you believe is due to customers maybe pulling forward some of the inventory ahead of the 1 January reimbursement changes?

Speaker #4: That 83% was definitely really strong and much stronger than we were anticipating . So I was curious how much of that growth you believe is due to customers maybe pulling forward some of the inventory ahead of the January 1st reimbursement changes

Speaker #3: Yeah , there's really not a tremendous amount of opportunity for that because obviously the products are going on to patients . So we don't think there was a tremendous amount of that .

David C. Francisco: Yeah, there's really not a tremendous amount of opportunity for that because obviously the products are going on to patients. We don't think there was a tremendous amount of that. What we didn't see at the back end of that was an increase in aggressive pricing tactics, which we assumed was going to happen. As you said, I mean, we beat our midpoint of our guidance by about $50 million. It was an amazing quarter for us. We were quite pleased.

Dave Francisco: Yeah, there's really not a tremendous amount of opportunity for that because obviously the products are going on to patients. We don't think there was a tremendous amount of that. What we didn't see at the back end of that was an increase in aggressive pricing tactics, which we assumed was going to happen. As you said, I mean, we beat our midpoint of our guidance by about $50 million. It was an amazing quarter for us. We were quite pleased.

Speaker #3: But we didn't see at the back end of that was an increase in aggressive pricing tactics , which we assumed was going to happen .

Speaker #3: But as you said , I mean , we beat our midpoint of our guidance by about $50 million . So it was an amazing quarter for us .

Speaker #3: We were quite pleased

Speaker #4: Got it . That's helpful And as we start to think about 2026 , can you help us kind of bridge the gap between what we saw in fourth quarter and the decline that your forecasting for the rest of the year ?

[Analyst] (BTIG): Got it. That's helpful. As we start to think about 2026, can you help us kind of bridge the gap between what we saw in Q4 and the decline that you're forecasting for the rest of the year? I mean, how much is that truly mathematical with the reduced price of 127, or is that more of lower unit volumes due to the confusion that you're seeing in the market?

Izzy McMahon: Got it. That's helpful. As we start to think about 2026, can you help us kind of bridge the gap between what we saw in Q4 and the decline that you're forecasting for the rest of the year? I mean, how much is that truly mathematical with the reduced price of 127, or is that more of lower unit volumes due to the confusion that you're seeing in the market?

Speaker #4: I mean , how much is that purely mathematical with the reduced price of 127 ? Or is that more of lower unit volumes due to the confusion that you're seeing in the market now ?

David C. Francisco: No, we expect to gain share in 2026. We're quite pleased with that. We think there's a couple of things that'll happen, is that we'll continue to see the competitive dynamics improve as we move through the year. In addition to that, obviously, we'd indicated that Q1 will be quite challenging based on the customer confusion, based on all of the elements that happened late in 2025. You know, obviously, the 127 is an element there. We planned for that. We expected that. We felt that we could perform quite well with that. Also, with the LCD being pulled late last year, we figured that that would be something that we could overcome without any question.

Dave Francisco: No, we expect to gain share in 2026. We're quite pleased with that. We think there's a couple of things that'll happen, is that we'll continue to see the competitive dynamics improve as we move through the year. In addition to that, obviously, we'd indicated that Q1 will be quite challenging based on the customer confusion, based on all of the elements that happened late in 2025. You know, obviously, the 127 is an element there. We planned for that. We expected that. We felt that we could perform quite well with that. Also, with the LCD being pulled late last year, we figured that that would be something that we could overcome without any question.

Speaker #3: We expect to gain share in 2026 . So we're quite pleased with that . We think there's a couple of things that will happen is that we'll continue to see the competitive dynamics improve as we move through the the year .

Speaker #3: And then in addition to that , obviously , we indicated that Q1 will be quite challenging based on the customer confusion , based on all of the the elements happened late in the in 2025 .

Speaker #3: You know , obviously , the 127 is an element there . We plan for that . We expected that . So we felt that we could perform quite well with that .

Speaker #3: Also with the LCD being pulled late last year , we figured that would be something that we could overcome without any question . And then the last piece was the comments that were made on December 30th , which really puts some pressure on clinicians overall and really just has pulled back quite considerably .

David C. Francisco: The last piece was the comments that were made on 30 December, which really put some pressure on clinicians overall and really just has pulled back quite considerably. It's really that major factor that's happening there from that standpoint.

Dave Francisco: The last piece was the comments that were made on 30 December, which really put some pressure on clinicians overall and really just has pulled back quite considerably. It's really that major factor that's happening there from that standpoint.

Speaker #3: So it's it's really that major factor that's happening there from that standpoint .

Speaker #4: Got it . That's helpful . And then the last one for me I know we are about two months into the quarter as of right now .

[Analyst] (BTIG): Got it. That's helpful. The last one for me, I know we are about two months into the quarter as of right now, I was curious if you're starting to see anything that's giving you confidence in those share gains as we move throughout the year. Are you seeing any of the smaller competitors maybe exiting the market, supply issues? If you can provide us any color there, that'd be really helpful. Thanks for taking the questions.

Izzy McMahon: Got it. That's helpful. The last one for me, I know we are about two months into the quarter as of right now, I was curious if you're starting to see anything that's giving you confidence in those share gains as we move throughout the year. Are you seeing any of the smaller competitors maybe exiting the market, supply issues? If you can provide us any color there, that'd be really helpful. Thanks for taking the questions.

Speaker #4: So I was curious if you're starting to see anything that's giving you confidence in those share gains as we move throughout the year .

Speaker #4: Are you seeing any of the smaller competitors maybe exiting the market supply issues ? If you can provide us any color there , that'd be really helpful .

Speaker #4: Thanks for taking the questions .

Speaker #3: Yeah , sure . I as I mentioned , we are seeing some aggressive pricing pressure in the quarter , which I think means that , you know exactly what we anticipated might happen in the fourth quarter .

David C. Francisco: Yeah, sure. I, well, as I mentioned, we are seeing some aggressive pricing pressure in the quarter, which I think means that, you know, exactly what we anticipated might happen in Q4, you know, people trying to clear out their inventory and that type of thing. We are seeing some early signs of, you know, that potential change in the customer and, excuse me, competitive dynamics as we move forward. Yeah.

Dave Francisco: Yeah, sure. I, well, as I mentioned, we are seeing some aggressive pricing pressure in the quarter, which I think means that, you know, exactly what we anticipated might happen in Q4, you know, people trying to clear out their inventory and that type of thing. We are seeing some early signs of, you know, that potential change in the customer and, excuse me, competitive dynamics as we move forward. Yeah.

Speaker #3: You know , people are trying to clear out their inventory and that type of thing . So we are seeing some early signs of that potential change in the customer .

Speaker #3: And excuse me , competitive dynamics as we move forward . Yeah , yeah .

Speaker #2: And just to follow up , you know , with Dave's comment that , you know , these issues that we see are transitory , we don't we do think that the the flood of low cost products will not sustain throughout the year , which is one of the reasons the back half , we believe will be better .

Gary S. Gillheeney, Sr.: Just to follow up on, you know, with Dave's comment, that, you know, these issues that we see are transitory. We do think that the flood of low-cost products will not sustain throughout the year, which is one of the reasons the back half, we believe, will be better. We think the clinician confusion as it relates to the comments on 30 December, you know, we're working our customers through that process and how to use our products, you know, with that issue. You know, we also think that, you know, there's just kind of a freeze in the market, that folks are just generally confused by the health policy changes, and they were sweeping.

Speaker #2: We think the clinician confusion as it relates to the comments on December 30th , you know , we're working our customers through that process and how to how to use our products .

Speaker #2: You know , with that , that issue and , you know , we also think that , you know , this is just kind of a freeze in the market that folks are just generally confused by the health policy changes .

Speaker #2: And they were sweeping , you know , they basically have reduced the reimbursement for non PMA products and shifted them to PMA products .

Gary S. Gillheeney, Sr.: you know, they basically have reduced the reimbursement for non-PMA products and shifted them to PMA products, and folks are trying to follow the reimbursement process and what does that mean for pricing and overall reimbursement. There's just a lot of information, and those types of issues are transitory, that we can work through. As Dave mentioned, 127, is something we contemplated and have no issues with. Feel we can grow nicely at 127. It's more the confusion that we have to work ourselves through.

Speaker #2: And folks are trying to follow the reimbursement process . And what does that mean for pricing and overall reimbursement . So there's just a lot of information .

Speaker #2: And those types of issues are transitory that we can work through . As Dave mentioned , 127 is something we contemplated and have no issues with until we can grow nicely at 127 , it's more the confusion that we have to work ourselves through

Speaker #4: Appreciate it . Thanks for taking the questions .

[Analyst] (BTIG): Appreciate it. Thanks for taking the questions.

Izzy McMahon: Appreciate it. Thanks for taking the questions.

Speaker #2: Of course .

Gary S. Gillheeney, Sr.: Of course.

Speaker #1: Thank you . As a reminder , if you would like to ask a question , please press star one one on your telephone We are currently showing no remaining questions in the queue at this time .

Operator: Thank you. As a reminder, if you would like to ask a question, please press star one one on your telephone. We are currently showing no remaining questions in the queue at this time. This does conclude our conference for today. Thank you for your participation. You may now disconnect.

Q4 2025 Organogenesis Holdings Inc Earnings Call

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