UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
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(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
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(Address of principal executive offices) |
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(Zip Code) |
(Registrant’s telephone number, including area code)
Not Applicable
(Registrant’s name or former address, if change since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act: |
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On November 12, 2024, the Company announced via press release its results for the fiscal third quarter ended September 30, 2024. A copy of the Company’s press release is hereby furnished to the Commission and incorporated herein by reference as Exhibit 99.1.
The information in the press release attached as Exhibit 99.1 is intended to be furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. |
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Description |
99.1 |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Organogenesis Holdings Inc. |
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By: |
/s/ Lori Freedman |
Name: |
Lori Freedman |
Title: |
Chief Administrative and Legal Officer |
Date: November 12, 2024
Exhibit 99.1
FOR IMMEDIATE RELEASE
Organogenesis Holdings Inc. Reports Third Quarter 2024 Financial Results
CANTON, Mass., (November 12, 2024) -- 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 third quarter ended September 30, 2024.
Third Quarter 2024 Financial Results Summary:
“Our third quarter results underscore the strength of our portfolio and brand equity as customers select Organogenesis as their trusted partner while they navigate this complex market,” said Gary S. Gillheeney, Sr., President, Chief Executive Officer and Chair of the Board for Organogenesis. “We continue to work with policy and lawmakers to craft a solution that addresses spending while ensuring access to safe and effective therapies for all patients, particularly those who are most vulnerable. We believe a resolution is on the horizon.”
Third Quarter 2024 Financial Results:
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Three Months Ended September 30, |
|
|
Change |
|
||||||||||
|
|
2024 |
|
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2023 |
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$ |
|
|
% |
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||||
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(in thousands, except for percentages) |
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|||||||||||||
Advanced Wound Care |
|
$ |
107,953 |
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|
$ |
101,357 |
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|
$ |
6,596 |
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|
|
7 |
% |
Surgical & Sports Medicine |
|
|
7,224 |
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|
|
7,174 |
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|
|
50 |
|
|
|
1 |
% |
Net revenue |
|
$ |
115,177 |
|
|
$ |
108,531 |
|
|
$ |
6,646 |
|
|
|
6 |
% |
Net revenue for the third quarter of 2024 was $115.2 million, compared to $108.5 million for the third quarter of 2023, an increase of $6.6 million, or 6%. The increase in net revenue was driven by an increase of $6.6 million, or 7%, in net revenue for Advanced Wound Care products, and an increase of $0.1 million, or 1%, in net revenue for Surgical & Sports Medicine products.
Gross profit for the third quarter of 2024 was $88.4 million, or 77% of net revenue, compared to $82.7 million, or 76% of net revenue for the third quarter of 2023, an increase of $5.6 million, or 7%.
Operating expenses for the third quarter of 2024 were $82.1 million compared to $74.7 million for the third quarter of 2023, an increase of $7.4 million, or 10%. R&D expense was $10.3 million for the third quarter of 2024, compared to $10.5 million for the third quarter of 2023, a decrease of $0.2 million, or 2%. Selling, general and administrative expenses were $71.8 million for the third quarter of 2024, compared to $64.2 million for the third quarter of 2023, an increase of $7.6 million, or 12%.
Operating income for the third quarter of 2024 was $6.2 million, compared to $8.1 million for the third quarter of 2023, a decrease of $1.8 million, or 22%.
Total other expense, net, for the third quarter of 2024 was $0.4 million, relatively consistent with $0.4 million for the third quarter of 2023.
Net income for the third quarter of 2024 was $12.3 million, or $0.09 per share, compared to $3.2 million, or $0.02 per share, for the third quarter of 2023, an increase of $9.1 million, or $0.07 per share.
Adjusted EBITDA was $13.4 million for the third quarter of 2024, compared to $16.0 million for the third quarter of 2023, a decrease of $2.6 million, or 16%.
Adjusted net income was $12.9 million for the third quarter of 2024, compared to $5.3 million for the third quarter of 2023, an increase of $7.6 million, or 143%.
Non-GAAP operating income was $7.1 million for the third quarter of 2024, compared to $11.0 million for the third quarter of 2023, a decrease of $3.9 million, or 35%.
As of September 30, 2024, the Company had $94.9 million in cash, cash equivalents and restricted cash and $62.1 million in net debt obligations, compared to $104.3 million in cash, cash equivalents and restricted cash and $66.2 million in net debt obligations as of December 31, 2023.
Nine Months ended September 30, 2024, Financial Results:
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Nine Months Ended September 30, |
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Change |
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2024 |
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2023 |
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$ |
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% |
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(in thousands, except for percentages) |
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Advanced Wound Care |
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$ |
335,054 |
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$ |
312,349 |
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$ |
22,705 |
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7 |
% |
Surgical & Sports Medicine |
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20,333 |
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21,140 |
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(807 |
) |
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(4 |
%) |
Net revenue |
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$ |
355,387 |
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$ |
333,489 |
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$ |
21,898 |
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7 |
% |
Net revenue for the nine months ended September 30, 2024 was $355.4 million, compared to $333.5 million for the nine months ended September 30, 2023, an increase of $21.9 million, or 7%. The increase in net revenue was driven by an increase of $22.7 million, or 7%, in net revenue for Advanced Wound Care products partially offset by a decrease of $0.8 million, or 4%, in net revenue for Surgical & Sports Medicine products.
Gross profit for the nine months ended September 30, 2024 was $270.7 million, or 76% of net revenue, compared to $254.8 million, or 76% of net revenue for nine months ended September 30, 2023, an increase of $15.9 million, or 6%.
Operating expenses for the nine months ended September 30, 2024 were $282.2 million compared to $241.0 million for the nine months ended September 30, 2023, an increase of $41.2 million or 17%. R&D expense was $38.7 million for the nine months ended September 30, 2024, compared to $32.6 million for the nine months ended September 30, 2023, an increase of $6.1 million, or 19%. Selling, general and administrative expenses were $220.7 million for the nine months ended September 30, 2024, compared to $208.4 million for the nine months ended September 30, 2023, an increase of $12.3 million, or 6%. For the nine months ended September 30, 2024, the Company recorded impairment and write down expenses of $18.8 million and $4.0 million, respectively.
Operating loss for the nine months ended September 30, 2024 was $11.5 million, compared to operating income of $13.8 million for the nine months ended September 30, 2023, a decrease in operating income of $25.3 million, or 183%.
Total other expense, net, for the nine months ended September 30, 2024 was $1.6 million, consistent with $1.6 million for the nine months ended September 30, 2023.
Net loss for the nine months ended September 30, 2024 was $6.8 million, or $(0.05) per share, compared to net income of $5.5 million or $0.04 per share, for the nine months ended September 30, 2023, a decrease in net income of $12.3 million, or $(0.09) per share.
Adjusted EBITDA was $31.6 million for the nine months ended September 30, 2024, compared to $35.1 million for the nine months ended September 30, 2023, a decrease of $3.5 million, or 10%.
Adjusted net income was $11.7 million for the nine months ended September 30, 2024, compared to $10.7 million for the nine months ended September 30, 2023, an increase in adjusted net income of $1.0 million, or 9%.
Non-GAAP operating income was $13.9 million for the nine months ended September 30, 2024, compared to $21.0 million for the nine months ended September 30, 2023, a decrease of $7.1 million, or 34%.
As of September 30, 2024, the Company had $94.9 million in cash, cash equivalents and restricted cash and $62.1 million in net debt obligations, compared to $104.3 million in cash, cash equivalents and restricted cash and $66.2 million in net debt obligations as of December 31, 2023.
Fiscal Year 2024 Guidance:
For the year ending December 31, 2024 the Company is updating its prior revenue guidance and updating its profitability guidance and expects:
Third Quarter Earnings Conference Call:
Management will host a conference call at 5:00 p.m. Eastern Time on November 12th to discuss the results of the quarter, and provide a corporate update with a question and answer session. To access the live webcast or to register to obtain a unique pin number and telephone dial-in to access the live teleconference, visit the ‘Investors’ section of the Company’s website (investors.organogenesis.com). The webcast will be archived on the Company’s website for approximately one year.
ORGANOGENESIS HOLDINGS INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share and per share data)
|
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September 30, |
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December 31, |
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2024 |
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2023 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
94,340 |
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$ |
103,840 |
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Restricted cash |
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586 |
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|
498 |
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Accounts receivable, net |
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101,272 |
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81,999 |
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Inventories, net |
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27,036 |
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|
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28,253 |
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Prepaid expenses and other current assets |
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15,275 |
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|
10,454 |
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Total current assets |
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238,509 |
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225,044 |
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Property and equipment, net |
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89,868 |
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116,228 |
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Intangible assets, net |
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13,302 |
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15,871 |
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Goodwill |
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28,772 |
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28,772 |
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Operating lease right-of-use assets, net |
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34,943 |
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40,118 |
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Deferred tax asset, net |
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35,889 |
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|
|
28,002 |
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Other assets |
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|
5,013 |
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|
|
5,990 |
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Total assets |
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$ |
446,296 |
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$ |
460,025 |
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Liabilities and Stockholders’ Equity |
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||
Current liabilities: |
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|
|
|
|
|
||
Current portion of term loan |
|
$ |
5,964 |
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|
$ |
5,486 |
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Current portion of finance lease obligations |
|
|
1,147 |
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|
|
1,081 |
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Current portion of operating lease obligations - related party |
|
|
6,172 |
|
|
|
8,413 |
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Current portion of operating lease obligations |
|
|
3,926 |
|
|
|
4,731 |
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Accounts payable |
|
|
23,971 |
|
|
|
30,724 |
|
Accrued expenses and other current liabilities |
|
|
36,101 |
|
|
|
30,074 |
|
Total current liabilities |
|
|
77,281 |
|
|
|
80,509 |
|
Term loan, net of current portion |
|
|
56,153 |
|
|
|
60,745 |
|
Finance lease obligations, net of current portion |
|
|
1,019 |
|
|
|
1,888 |
|
Operating lease obligations, net of current portion - related party |
|
|
9,217 |
|
|
|
11,954 |
|
Operating lease obligations, net of current portion |
|
|
22,785 |
|
|
|
25,053 |
|
Other liabilities |
|
|
1,294 |
|
|
|
1,213 |
|
Total liabilities |
|
|
167,749 |
|
|
|
181,362 |
|
Commitments and contingencies (Note 15) |
|
|
|
|
|
|
||
Stockholders’ equity: |
|
|
|
|
|
|
||
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued |
|
|
— |
|
|
|
— |
|
Common stock, $0.0001 par value; 400,000,000 shares authorized; 133,305,050 and 132,044,944 shares issued; 132,576,502 and 131,316,396 shares outstanding at September 30, 2024 and December 31, 2023, respectively |
|
|
13 |
|
|
|
13 |
|
Additional paid-in capital |
|
|
326,317 |
|
|
|
319,621 |
|
Accumulated deficit |
|
|
(47,783 |
) |
|
|
(40,971 |
) |
Total stockholders’ equity |
|
|
278,547 |
|
|
|
278,663 |
|
Total liabilities and stockholders’ equity |
|
$ |
446,296 |
|
|
$ |
460,025 |
|
ORGANOGENESIS HOLDINGS INC. UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(amounts in thousands, except share and per share data)
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Net revenue |
|
$ |
115,177 |
|
|
$ |
108,531 |
|
|
$ |
355,387 |
|
|
$ |
333,489 |
|
Cost of goods sold |
|
|
26,796 |
|
|
|
25,789 |
|
|
|
84,690 |
|
|
|
78,712 |
|
Gross profit |
|
|
88,381 |
|
|
|
82,742 |
|
|
|
270,697 |
|
|
|
254,777 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative |
|
|
71,795 |
|
|
|
64,222 |
|
|
|
220,657 |
|
|
|
208,373 |
|
Research and development |
|
|
10,344 |
|
|
|
10,470 |
|
|
|
38,741 |
|
|
|
32,610 |
|
Impairment of property and construction |
|
|
— |
|
|
|
— |
|
|
|
18,842 |
|
|
|
— |
|
Write down of capitalized internal-use software costs |
|
|
— |
|
|
|
— |
|
|
|
3,959 |
|
|
|
— |
|
Total operating expenses |
|
|
82,139 |
|
|
|
74,692 |
|
|
|
282,199 |
|
|
|
240,983 |
|
Income (loss) from operations |
|
|
6,242 |
|
|
|
8,050 |
|
|
|
(11,502 |
) |
|
|
13,794 |
|
Other expense, net: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense, net |
|
|
(471 |
) |
|
|
(444 |
) |
|
|
(1,605 |
) |
|
|
(1,688 |
) |
Other income, net |
|
|
52 |
|
|
|
31 |
|
|
|
47 |
|
|
|
82 |
|
Total other expense, net |
|
|
(419 |
) |
|
|
(413 |
) |
|
|
(1,558 |
) |
|
|
(1,606 |
) |
Net income (loss) before income taxes |
|
|
5,823 |
|
|
|
7,637 |
|
|
|
(13,060 |
) |
|
|
12,188 |
|
Income tax benefit (expense) |
|
|
6,508 |
|
|
|
(4,470 |
) |
|
|
6,248 |
|
|
|
(6,675 |
) |
Net income (loss) and comprehensive income (loss) |
|
$ |
12,331 |
|
|
$ |
3,167 |
|
|
$ |
(6,812 |
) |
|
$ |
5,513 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
0.09 |
|
|
$ |
0.02 |
|
|
$ |
(0.05 |
) |
|
$ |
0.04 |
|
Diluted |
|
$ |
0.09 |
|
|
$ |
0.02 |
|
|
$ |
(0.05 |
) |
|
$ |
0.04 |
|
Weighted-average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
|
132,575,301 |
|
|
|
131,312,483 |
|
|
|
132,342,203 |
|
|
|
131,230,882 |
|
Diluted |
|
|
133,926,755 |
|
|
|
133,417,721 |
|
|
|
132,342,203 |
|
|
|
132,790,296 |
|
ORGANOGENESIS HOLDINGS INC. UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
(amounts in thousands, except share and per share data)
|
|
Nine Months Ended |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Cash flows from operating activities: |
|
|
|
|
|
|
||
Net income (loss) |
|
$ |
(6,812 |
) |
|
$ |
5,513 |
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
10,008 |
|
|
|
7,466 |
|
Amortization of intangible assets |
|
|
2,569 |
|
|
|
3,688 |
|
Reduction in the carrying value of right-of-use assets |
|
|
6,377 |
|
|
|
5,964 |
|
Non-cash interest expense |
|
|
313 |
|
|
|
321 |
|
Deferred interest expense |
|
|
274 |
|
|
|
367 |
|
Provision recorded for credit losses |
|
|
3,723 |
|
|
|
1,320 |
|
Deferred tax benefit |
|
|
(7,887 |
) |
|
|
— |
|
Loss on disposal of property and equipment |
|
|
444 |
|
|
|
104 |
|
Adjustment for excess and obsolete inventories |
|
|
5,884 |
|
|
|
4,351 |
|
Stock-based compensation |
|
|
7,687 |
|
|
|
6,630 |
|
Impairment of property and construction (Note 6) |
|
|
18,842 |
|
|
|
— |
|
Write down of capitalized internal-use software costs (Note 6) |
|
|
3,959 |
|
|
|
— |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Accounts receivable |
|
|
(22,996 |
) |
|
|
(1,761 |
) |
Inventories |
|
|
(5,749 |
) |
|
|
(7,473 |
) |
Prepaid expenses and other current assets and other assets |
|
|
(4,052 |
) |
|
|
(4,491 |
) |
Operating leases |
|
|
(9,253 |
) |
|
|
(6,282 |
) |
Accounts payable |
|
|
(6,022 |
) |
|
|
(3,661 |
) |
Accrued expenses and other current liabilities |
|
|
5,882 |
|
|
|
8,179 |
|
Other liabilities |
|
|
80 |
|
|
|
68 |
|
Net cash provided by operating activities |
|
|
3,271 |
|
|
|
20,303 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
||
Purchases of property and equipment |
|
|
(6,671 |
) |
|
|
(21,040 |
) |
Net cash used in investing activities |
|
|
(6,671 |
) |
|
|
(21,040 |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
||
Payments of term loan under the 2021 Credit Agreement |
|
|
(4,219 |
) |
|
|
(3,281 |
) |
Principal repayments of finance lease obligations |
|
|
(804 |
) |
|
|
(114 |
) |
Payments of withholding taxes in connection with RSUs vesting |
|
|
(1,173 |
) |
|
|
(333 |
) |
Proceeds from the exercise of stock options |
|
|
184 |
|
|
|
— |
|
Net cash used in financing activities |
|
|
(6,012 |
) |
|
|
(3,728 |
) |
Change in cash, cash equivalents and restricted cash |
|
|
(9,412 |
) |
|
|
(4,465 |
) |
Cash, cash equivalents, and restricted cash, beginning of period |
|
|
104,338 |
|
|
|
103,290 |
|
Cash, cash equivalents, and restricted cash, end of period |
|
$ |
94,926 |
|
|
$ |
98,825 |
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
||
Cash paid for interest |
|
$ |
4,105 |
|
|
$ |
3,896 |
|
Cash paid for income taxes |
|
$ |
5,493 |
|
|
$ |
3,021 |
|
Supplemental disclosure of non-cash investing and financing activities: |
|
|
|
|
|
|
||
Cumulative effect adjustment for adoption of ASU No. 2016-13 |
|
$ |
— |
|
|
$ |
615 |
|
Change in purchases of property and equipment included in accounts payable and accrued expenses and other current liabilities |
|
$ |
(222 |
) |
|
$ |
4,146 |
|
Right-of-use assets obtained through operating lease obligations |
|
$ |
1,201 |
|
|
$ |
5,138 |
|
Non-GAAP Financial Measures
Our management uses financial measures that are not in accordance with generally accepted accounting principles in the United States, or GAAP, in addition to financial measures in accordance with GAAP to evaluate our operating results. These non-GAAP financial measures should be considered supplemental to, and not a substitute for, our reported financial results prepared in accordance with GAAP. Our management uses Adjusted EBITDA, Adjusted net income, and non-GAAP operating income to evaluate our operating performance and trends and make planning decisions. Our management believes Adjusted EBITDA, Adjusted net income, and non-GAAP operating income help identify underlying trends in our business that could otherwise be masked by the effect of the items that we exclude. Accordingly, we believe that Adjusted EBITDA, Adjusted net income, and non-GAAP operating income provide useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and prospects, and allowing for greater transparency with respect to key financial metrics used by our management in its financial and operational decision-making.
Adjusted EBITDA
Adjusted EBITDA consists of GAAP net income (loss) excluding: (i) interest expense, net, (ii) income tax benefit (expense), (iii) depreciation and amortization, (iv) amortization of intangible assets, (v) stock-based compensation expense, (vi) restructuring charges, (vii) legal fees related to the issued and subsequently withdrawn local coverage determinations (LCDs), (viii) compensation expenses related to retention for sales employees impacted by the issued and subsequently withdrawn LCDs, (ix) impairment of a purchased building and improvements and (x) write-down of capitalized software costs.
The following table presents a reconciliation of GAAP net income (loss) to non-GAAP EBITDA and non-GAAP Adjusted EBITDA, for the periods presented:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
(Unaudited, in thousands) |
|
|||||||||||||
Net income (loss) |
|
$ |
12,331 |
|
|
$ |
3,167 |
|
|
$ |
(6,812 |
) |
|
$ |
5,513 |
|
Interest expense, net |
|
|
471 |
|
|
|
444 |
|
|
|
1,605 |
|
|
|
1,688 |
|
Income tax benefit (expense) |
|
|
(6,508 |
) |
|
|
4,470 |
|
|
|
(6,248 |
) |
|
|
6,675 |
|
Depreciation and amortization |
|
|
3,570 |
|
|
|
2,544 |
|
|
|
10,008 |
|
|
|
7,466 |
|
Amortization of intangible assets |
|
|
834 |
|
|
|
1,229 |
|
|
|
2,569 |
|
|
|
3,688 |
|
EBITDA |
|
|
10,698 |
|
|
|
11,854 |
|
|
|
1,122 |
|
|
|
25,030 |
|
Stock-based compensation expense |
|
|
2,712 |
|
|
|
2,417 |
|
|
|
7,687 |
|
|
|
6,630 |
|
Restructuring charge (1) |
|
|
— |
|
|
|
95 |
|
|
|
— |
|
|
|
1,878 |
|
Legal fees (2) |
|
|
— |
|
|
|
1,182 |
|
|
|
— |
|
|
|
1,182 |
|
Sales retention (3) |
|
|
— |
|
|
|
422 |
|
|
|
— |
|
|
|
422 |
|
Impairment of building and improvements (4) |
|
|
— |
|
|
|
— |
|
|
|
18,842 |
|
|
|
— |
|
Write-down of capitalized software costs (5) |
|
|
— |
|
|
|
— |
|
|
|
3,959 |
|
|
|
— |
|
Adjusted EBITDA |
|
$ |
13,410 |
|
|
$ |
15,970 |
|
|
$ |
31,610 |
|
|
$ |
35,142 |
|
Adjusted Net Income (Loss)
Adjusted Net Income (Loss) is defined as GAAP net income (loss) plus (i) amortization of intangible assets, (ii)
restructuring charges, (iii) legal fees related to the issued and subsequently withdrawn LCDs, (iv) compensation expenses related to retention for sales employees impacted by the issued and subsequently withdrawn LCDs, (v) impairment of a purchased building and improvements and (vi) write-down of capitalized software costs less the estimated tax on the above.
The following table presents a reconciliation of GAAP net income (loss) to non-GAAP Adjusted net income, for the periods presented:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
(Unaudited, in thousands) |
|
|||||||||||||
Net income (loss) |
|
$ |
12,331 |
|
|
$ |
3,167 |
|
|
$ |
(6,812 |
) |
|
$ |
5,513 |
|
Amortization of intangible assets |
|
|
834 |
|
|
|
1,229 |
|
|
|
2,569 |
|
|
|
3,688 |
|
Restructuring charge (1) |
|
|
— |
|
|
|
95 |
|
|
|
— |
|
|
|
1,878 |
|
Legal fees (2) |
|
|
— |
|
|
|
1,182 |
|
|
|
— |
|
|
|
1,182 |
|
Sales retention (3) |
|
|
— |
|
|
|
422 |
|
|
|
— |
|
|
|
422 |
|
Impairment of building and improvements (4) |
|
|
— |
|
|
|
— |
|
|
|
18,842 |
|
|
|
— |
|
Write-down of capitalized software costs (5) |
|
|
— |
|
|
|
— |
|
|
|
3,959 |
|
|
|
— |
|
Tax on above |
|
|
(225 |
) |
|
|
(791 |
) |
|
|
(6,850 |
) |
|
|
(1,936 |
) |
Adjusted net income |
|
$ |
12,940 |
|
|
$ |
5,304 |
|
|
$ |
11,708 |
|
|
$ |
10,747 |
|
Non-GAAP Operating Income (Loss)
Non-GAAP operating income (loss) is defined as GAAP income (loss) from operations plus (i) amortization of intangible assets, (ii) restructuring charges, (iii) legal fees related to the issued and subsequently withdrawn LCDs, (iv) compensation expenses related to retention for sales employees impacted by the issued and subsequently withdrawn LCDs, (v) impairment of a purchased building and improvements and (vi) write-down of capitalized software costs.
The following table presents a reconciliation of GAAP income (loss) from operations to non-GAAP operating income, for the periods presented:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
(Unaudited, in thousands) |
|
|||||||||||||
Income (loss) from operations |
|
$ |
6,242 |
|
|
$ |
8,050 |
|
|
$ |
(11,502 |
) |
|
$ |
13,794 |
|
Amortization of intangible assets |
|
|
834 |
|
|
|
1,229 |
|
|
|
2,569 |
|
|
|
3,688 |
|
Restructuring charge (1) |
|
|
— |
|
|
|
95 |
|
|
|
— |
|
|
|
1,878 |
|
Legal fees (2) |
|
|
— |
|
|
|
1,182 |
|
|
|
— |
|
|
|
1,182 |
|
Sales retention (3) |
|
|
— |
|
|
|
422 |
|
|
|
— |
|
|
|
422 |
|
Impairment of building and improvements (4) |
|
|
— |
|
|
|
— |
|
|
|
18,842 |
|
|
|
— |
|
Write-down of capitalized software costs (5) |
|
|
— |
|
|
|
— |
|
|
|
3,959 |
|
|
|
— |
|
Non-GAAP operating income |
|
$ |
7,076 |
|
|
$ |
10,978 |
|
|
$ |
13,868 |
|
|
$ |
20,964 |
|
Projected EBITDA and Adjusted EBITDA
[The following table presents a reconciliation of projected GAAP net income (loss) to projected non-GAAP EBITDA and projected non-GAAP Adjusted EBITDA included in our guidance for the year ending December 31, 2024:
|
|
Year Ended December 31, |
|
|||||
|
|
2024L |
|
|
2024H |
|
||
Net income (loss) |
|
$ |
(12,300 |
) |
|
$ |
(600 |
) |
Interest expense, net |
|
|
3,000 |
|
|
|
3,000 |
|
Income tax expense |
|
|
(8,000 |
) |
|
|
(4,000 |
) |
Depreciation and amortization |
|
|
13,000 |
|
|
|
13,000 |
|
Amortization of intangible assets |
|
|
3,000 |
|
|
|
3,000 |
|
EBITDA |
|
$ |
(1,300 |
) |
|
$ |
14,400 |
|
Stock-based compensation expense |
|
|
10,000 |
|
|
|
10,000 |
|
Impairment of building and improvements |
|
|
19,000 |
|
|
|
19,000 |
|
Write-down of capitalized software costs |
|
|
4,000 |
|
|
|
4,000 |
|
Adjusted EBITDA |
|
$ |
31,700 |
|
|
$ |
47,400 |
|
Projected Adjusted Net Income (Loss)
The following table presents a reconciliation of projected GAAP net loss to projected non-GAAP adjusted net income included in our guidance for the year ending December 31, 2024:
|
|
Year Ending December 31, |
|
|
|||||
|
|
2024L |
|
|
2024H |
|
|
||
Net income (loss) |
|
$ |
(12,300 |
) |
|
$ |
(600 |
) |
|
Amortization of intangible assets |
|
|
3,000 |
|
|
|
3,000 |
|
|
Impairment of building and improvements |
|
|
19,000 |
|
|
|
19,000 |
|
|
Write-down of capitalized software costs |
|
|
4,000 |
|
|
|
4,000 |
|
|
Tax on above |
|
|
(7,000 |
) |
|
|
(7,000 |
) |
|
Adjusted net income |
|
$ |
6,700 |
|
|
$ |
18,400 |
|
|
Forward-Looking Statements
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to expectations or forecasts of future events. Forward-looking statements may be identified by the use of words such as “forecast,” “intend,” “seek,” “target,” “anticipate,” “believe,” “expect,” “estimate,” “plan,” “outlook,” and “project” and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. Such forward-looking statements include statements relating to the Company’s expected revenue, net income (loss), Adjusted net income, EBITDA, and Adjusted EBITDA for fiscal 2024 and the breakdown of expected revenue in both its Advanced Wound Care and Surgical & Sports Medicine categories. Forward-looking statements with respect to the operations of the Company, strategies, prospects, and other aspects of the business of the Company are based on current expectations that are subject to known and unknown risks and uncertainties, which could cause actual results or outcomes to differ materially from expectations expressed or implied by such forward-looking statements. These factors include, but are not limited to: (1) the impact of any changes to the coverage and reimbursement levels for the Company’s products (including as a result of the recently proposed LCDs); (2) the Company faces significant and continuing competition, which could adversely affect its business, results of operations and financial condition; (3) rapid technological change could cause the Company’s products to become obsolete and if the Company does not enhance its product offerings through its research and development efforts, it may be unable to effectively compete; (4) to be commercially successful, the Company must convince physicians that its products are safe and effective alternatives to existing treatments and that its products should be used in their procedures; (5) the Company’s ability to raise funds to expand its business; (6) the Company has incurred losses in the current period and prior periods and may incur losses in the future; (7) changes in applicable laws or regulations; (8) the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors; (9) the Company’s ability to maintain production or obtain supply of its products in sufficient quantities to meet demand; (10) any resurgence of the COVID-19 pandemic and its impact, if any, on the Company’s fiscal condition and results of operations; (11) the impact of the suspension of commercialization of: (a) ReNu and NuCel in connection with the expiration of the FDA’s enforcement grace period for HCT/Ps on May 31, 2021 and (b) Dermagraft in the second quarter of 2022 pending transition of manufacturing to a new manufacturing facility or a third-party manufacturer; (12) whether the Company is able to obtain regulatory approval for and successfully commercialize ReNu; and (13) other risks and uncertainties described in the Company’s filings with the Securities and Exchange Commission, including Item 1A (Risk Factors) of the Company’s Form 10-K for the year ended December 31, 2023 and its subsequently filed periodic reports. You are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made. Although it may voluntarily do so from time to time, the Company undertakes no commitment to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws.
About Organogenesis Holdings Inc.
Organogenesis Holdings Inc. is a leading regenerative medicine company focused on the development, manufacture, and commercialization of solutions for the advanced wound care and surgical and sports medicine markets. Organogenesis offers a comprehensive portfolio of innovative regenerative products to address patient needs across the continuum of care. For more information, visit www.organogenesis.com.
Investor Inquiries:
Westwicke Partners
Mike Piccinino, CFA
OrganoIR@westwicke.com
443-213-0500
Press and Media Inquiries:
Organogenesis
communications@organo.com