8-K
0001661181False00016611812023-11-092023-11-09

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): November 9, 2023

ORGANOGENESIS HOLDINGS INC.

(Exact Name of Registrant as specified in its charter)

Delaware

001-37906

98-1329150

(State or Other Jurisdiction

of Incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

85 Dan Road

Canton, MA

02021

(Address of principal executive offices)

(Zip Code)

(781) 575-0775

(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:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Class A Common Stock, $0.0001 par value

 

ORGO

 

Nasdaq Capital Market

 

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 9, 2023, the Company announced via press release its results for the fiscal third quarter ended September 30, 2023. 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.

Description

99.1

 

Press Release dated November 9, 2023

104

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.

By:

/s/ Lori Freedman

Name:

Lori Freedman

Title:

Chief Administrative and Legal Officer

 

Date: November 9, 2023

 


EX-99.1

Exhibit 99.1

https://cdn.kscope.io/dafb318e886aeebd35965260356477d6-img36819578_0.jpg

 

FOR IMMEDIATE RELEASE

 

Organogenesis Holdings Inc. Reports Third Quarter 2023 Financial Results

 

CANTON, Mass., (November 9, 2023) -- 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 30th, 2023.

 

Third Quarter 2023 Financial Results Summary:

 

Net revenue of $108.5 million for the third quarter of 2023, a decrease of $8.3 million compared to net revenue of $116.9 million for the third quarter of 2022. Net revenue for the third quarter of 2023 consists of:
o
Net revenue from Advanced Wound Care products of $101.4 million, a decrease of 7% from the third quarter of 2022.
o
Net revenue from Surgical & Sports Medicine products of $7.2 million, a decrease of 2% from the third quarter of 2022.
Net income of $3.2 million for the third quarter of 2023, compared to net income of $0.2 million for the third quarter of 2022, an increase of $3.0 million.
Adjusted net income1 of $5.3 million for the third quarter of 2023, compared to an adjusted net income of $5.1 million for the third quarter of 2022, an increase of $0.2 million.
Adjusted EBITDA of $16.0 million for the third quarter of 2023, compared to Adjusted EBITDA of $11.6 million for the third quarter of 2022, an increase of $4.4 million.

 

"Our third quarter revenue results were impacted by the LCD-related issues discussed on our second quarter call," said Gary S. Gillheeney, Sr., President and Chief Executive Officer of Organogenesis. “Notably, despite the revenue impact, we delivered significant improvements in our operating profitability and generated strong adjusted EBITDA and cash flow compared to the prior year period.”

 

Mr. Gillheeney, Sr. continued: “While we are pleased that the LCDs were withdrawn, we continue to navigate through the challenging environment created by their proposed adoption. We have reintroduced our 2023 financial guidance which reflects the impacts of business disruption in the third quarter, as well as our recovery activities throughout the end of the year. We expect to continue to build momentum as we close out 2023 and remain confident that we are well positioned for growth with our broad portfolio of products across all sites of care as we deliver on our mission to provide integrated healing solutions that substantially improve outcomes while lowering the overall cost of care.”

 

 

 

 

 

1Defined as GAAP net income (loss) adjusted to exclude the effect of amortization, restructuring charges, LCD legal fees and sales retention, write off of certain assets, facility construction project pause costs, GPO settlement fee and the resulting income taxes on these items.


 

 

Third Quarter 2023 Financial Results:



 

 

Three Months Ended
September 30,

 

 

Change

 

 

 

2023

 

 

2022

 

 

$

 

 

%

 

 

 

(in thousands, except for percentages)

 

Advanced Wound Care

 

$

101,357

 

 

$

109,514

 

 

$

(8,157

)

 

 

(7

%)

Surgical & Sports Medicine

 

 

7,174

 

 

 

7,345

 

 

 

(171

)

 

 

(2

%)

Net revenue

 

$

108,531

 

 

$

116,859

 

 

$

(8,328

)

 

 

(7

%)

 

Net revenue for the third quarter of 2023 was $108.5 million, compared to $116.9 million for the third quarter of 2022, a decrease of $8.3 million, or 7%. The decrease in net revenue was driven by a decrease of $8.2 million, or 7% in net revenue for Advanced Wound Care products and a decrease of $0.2 million, or 2%, in net revenue for Surgical & Sports Medicine products.

 

Gross profit for the third quarter of 2023 was $82.7 million, or 76% of net revenue, compared to $90.7 million, or 78% of net revenue for the third quarter of 2022, a decrease of $7.9 million, or 9%.

 

Operating expenses for the third quarter of 2023 were $74.7 million compared to $88.9 million for the third quarter of 2022, a decrease of $14.2 million, or 16%. R&D expense was $10.5 million for the third quarter of 2023, compared to $9.6 million for the third quarter of 2022, an increase of $0.9 million, or 9%. Selling, general and administrative expenses were $64.2 million for the third quarter of 2023, compared to $79.3 million for the third quarter of 2022, a decrease of $15.1 million, or 19%.

 

Operating income for the third quarter of 2023 was $8.1 million, compared to operating income of $1.8 million for the third quarter of 2022, an increase of $6.3 million, or 352%.

 

Total other expense, net, for the third quarter of 2023 was $0.4 million, compared to $0.6 million for the third quarter of 2022, a decrease of $0.2 million, or 27%.

 

Net income for the third quarter of 2023 was $3.2 million, or $0.02 per share, compared to net income of $0.2 million, or $0.00 per share, for the third quarter of 2022, an increase of $3.0 million, or $0.02 per share.

 

Adjusted net income of $5.3 million for the third quarter of 2023, compared to adjusted net income of $5.1 million for the third quarter of 2022, an increase of $0.2 million, or 4%.

 

Adjusted EBITDA was $16.0 million for the third quarter of 2023, compared to $11.6 million for the third quarter of 2022, an increase of $4.4 million, or 38%.

 

As of September 30th, 2023, the Company had $98.8 million in cash, cash equivalents and restricted cash and $67.6 million in debt obligations, compared to $103.3 million in cash, cash equivalents and restricted cash and $70.8 million in debt obligations as of December 31, 2022.

 

 

 


 

Nine Months ended September 30, 2023, Results

The following table represents net revenue by product grouping for the nine months ended September 30, 2023 and September 30, 2022, respectively:

 

 

 

Nine Months Ended
September 30,

 

 

Change

 

 

 

2023

 

 

2022

 

 

$

 

 

%

 

 

 

(in thousands, except for percentages)

 

Advanced Wound Care

 

$

312,349

 

 

$

313,395

 

 

$

(1,046

)

 

 

0

%

Surgical & Sports Medicine

 

 

21,140

 

 

 

21,982

 

 

 

(842

)

 

 

(4

%)

Net revenue

 

$

333,489

 

 

$

335,377

 

 

$

(1,888

)

 

 

(1

%)

 

Net revenue for the nine months ended September 30, 2023 was $333.5 million, compared to $335.4 million for the nine months ended September 30, 2022, a decrease of $1.9 million, or 1%. The decrease in net revenue was driven by a decrease of $1.0 million, or less than 1%, in net revenue for Advanced Wound Care products and 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, 2023 was $254.8 million, or 76% of net revenue, compared to $257.5 million, or 77% of net revenue, for the nine months ended September 30, 2022, a decrease of $2.7 million, or 1%.

Operating expenses for the nine months ended September 30, 2023 were $241.0 million, compared to $243.9 million for the nine months September 30, 2022, a decrease of $2.9 million, or 1%. R&D expense was $32.6 million for the nine months ended September 30, 2023, compared to $28.4 million in the nine months ended September 30, 2022, an increase of $4.2 million, or 15%. Selling, general and administrative expenses were $208.4 million for the nine months ended September 30, 2023, compared to $215.5 million in the nine months ended September 30, 2022, a decrease of $7.1 million, or 3%.

Operating income for the nine months ended September 30, 2023 was $13.8 million, compared to operating income of $13.6 million for the nine months ended September 30, 2022, an increase of $0.2 million, or 2%.

Total other expenses, net, for the nine months ended September 30, 2023 were $1.6 million, compared to $2.1 million for the nine months ended September 30, 2022, a decrease of $0.5 million, or 22%.

Net income of $5.5 million for the nine months ended September 30, 2023 or $0.04 per share, compared to net income of $8.0 million, or $0.06 per share for the nine months ended September 30, 2022, a decrease of $2.5 million, or $0.02, per share.

Adjusted net income for the nine months ended September 30, 2023 was $10.7 million compared to $17.3 million, for the nine months ended September 30, 2022, a decrease of $6.5 million, or 38%.

Adjusted EBITDA of $35.1 million for the nine months ended September 30, 2023, compared to an Adjusted EBITDA of $35.2 million, for the nine months ended September 30, 2022, a decrease of $0.1 million, or less than 1%.

 

 

 

 

 


 

Fiscal Year 2023 Guidance:

 

For the year ending December 31, 2023, the Company expects:

Net revenue between $433 million and $446 million, representing a decrease of approximately 1% to 4% year-over-year, as compared to net revenue of $450.9 million for the year ended December 31, 2022.
o
The 2023 net revenue guidance range assumes:
Net revenue from Advanced Wound Care products between $406 million and $418 million, a decrease of 1% to 4% year-over-year as compared to net revenue of $422.2 million for the year ended December 31, 2022.
Net revenue from Surgical & Sports Medicine products between $27 million and $29 million, an approximately 6% decrease to 0% increase year-over-year as compared to net revenue of $28.7 million for the year ended December 31, 2022.
Net income between $4 million and $9 million and adjusted net income between $11 million and $17 million.
EBITDA between $26 million and $37 million and Adjusted EBITDA between $40 million and $51 million.

 

Third Quarter Earnings Conference Call:

 

Financial results for the third fiscal quarter of 2023 will be reported after the market closes on November, 9th. Management will host a conference call at 5:00 p.m. Eastern Time on November 9th to discuss the results of the quarter, and provide a corporate update with a question and answer session. Those who would like to participate may access the live webcast here, or access the teleconference here. The live webcast can also be accessed via the company's website at investors.organogenesis.com. The webcast will be archived on the company website for one year.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

ORGANOGENESIS HOLDINGS INC.

UNAUDITED CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except share and per share data)

 

 

 

September 30,

 

 

December 31,

 

 

 

2023

 

 

2022

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

98,226

 

 

$

102,478

 

Restricted cash

 

 

599

 

 

 

812

 

Accounts receivable, net

 

 

89,276

 

 

 

89,450

 

Inventory, net

 

 

27,905

 

 

 

24,783

 

Prepaid expenses and other current assets

 

 

9,567

 

 

 

5,086

 

Total current assets

 

 

225,573

 

 

 

222,609

 

Property and equipment, net

 

 

117,503

 

 

 

102,463

 

Intangible assets, net

 

 

17,101

 

 

 

20,789

 

Goodwill

 

 

28,772

 

 

 

28,772

 

Operating lease right-of-use assets, net

 

 

42,363

 

 

 

43,192

 

Deferred tax asset, net

 

 

30,014

 

 

 

30,014

 

Other assets

 

 

1,321

 

 

 

1,520

 

Total assets

 

$

462,647

 

 

$

449,359

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Current portion of term loan, net of debt issuance costs

 

$

5,483

 

 

$

4,538

 

Current portion of finance lease obligations

 

 

1,174

 

 

 

-

 

Current portion of operating lease obligations

 

 

13,048

 

 

 

11,708

 

Accounts payable

 

 

26,784

 

 

 

32,330

 

Accrued expenses and other current liabilities

 

 

34,993

 

 

 

26,447

 

Total current liabilities

 

 

81,482

 

 

 

75,023

 

Term loan, net of current portion and debt issuance costs

 

 

62,117

 

 

 

66,231

 

Finance lease obligations, net of current portion

 

 

2,166

 

 

 

-

 

Operating lease obligations, net of current portion

 

 

38,826

 

 

 

41,314

 

Other liabilities

 

 

1,191

 

 

 

1,122

 

Total liabilities

 

 

185,782

 

 

 

183,690

 

Commitments and contingencies (Note 18)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued

 

 

-

 

 

 

-

 

Common stock, $0.0001 par value; 400,000,000 shares authorized; 132,041,164 and 131,647,677 shares issued; 131,312,616 and 130,919,129 shares outstanding at September 30, 2023 and December 31, 2022, respectively.

 

 

13

 

 

 

13

 

Additional paid-in capital

 

 

317,254

 

 

 

310,957

 

Accumulated deficit

 

 

(40,402

)

 

 

(45,301

)

Total stockholders’ equity

 

 

276,865

 

 

 

265,669

 

Total liabilities and stockholders’ equity

 

$

462,647

 

 

$

449,359

 

 

 


 

ORGANOGENESIS HOLDINGS INC. UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands, except share and per share data)

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net revenue

 

$

108,531

 

 

$

116,859

 

 

$

333,489

 

 

$

335,377

 

Cost of goods sold

 

 

25,789

 

 

 

26,177

 

 

 

78,712

 

 

 

77,909

 

Gross profit

 

 

82,742

 

 

 

90,682

 

 

 

254,777

 

 

 

257,468

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

64,222

 

 

 

79,328

 

 

 

208,373

 

 

 

215,515

 

Research and development

 

 

10,470

 

 

 

9,575

 

 

 

32,610

 

 

 

28,367

 

Total operating expenses

 

 

74,692

 

 

 

88,903

 

 

 

240,983

 

 

 

243,882

 

Income from operations

 

 

8,050

 

 

 

1,779

 

 

 

13,794

 

 

 

13,586

 

Other expense, net:

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(444

)

 

 

(572

)

 

 

(1,688

)

 

 

(2,039

)

Other income (expense), net

 

 

31

 

 

 

5

 

 

 

82

 

 

 

(19

)

Total other expense, net

 

 

(413

)

 

 

(567

)

 

 

(1,606

)

 

 

(2,058

)

Net income before income taxes

 

 

7,637

 

 

 

1,212

 

 

 

12,188

 

 

 

11,528

 

Income tax expense

 

 

(4,470

)

 

 

(997

)

 

 

(6,675

)

 

 

(3,482

)

Net income

 

$

3,167

 

 

$

215

 

 

$

5,513

 

 

$

8,046

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income, per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.02

 

 

$

0.00

 

 

$

0.04

 

 

$

0.06

 

Diluted

 

$

0.02

 

 

$

0.00

 

 

$

0.04

 

 

$

0.06

 

Weighted-average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

131,312,483

 

 

 

130,903,160

 

 

 

131,230,882

 

 

 

129,784,890

 

Diluted

 

 

133,417,721

 

 

 

132,232,954

 

 

 

132,790,296

 

 

 

132,555,265

 

 

 

 


 

ORGANOGENESIS HOLDINGS INC. UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

(amounts in thousands, except share and per share data)

 

 

 

Nine Months Ended
September 30,

 

 

 

2023

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

 

Net Income

 

$

5,513

 

 

$

8,046

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation

 

 

7,466

 

 

 

4,331

 

Amortization of intangible assets

 

 

3,689

 

 

 

3,662

 

Reduction in the carrying value of right-of-use assets

 

 

5,964

 

 

 

5,483

 

Non-cash interest expense

 

 

321

 

 

 

326

 

Deferred interest expense

 

 

367

 

 

 

428

 

Provision recorded for credit losses

 

 

1,320

 

 

 

855

 

Loss on disposal of property and equipment

 

 

104

 

 

 

4,412

 

Adjustment for excess and obsolete inventories

 

 

4,351

 

 

 

7,621

 

Stock-based compensation

 

 

6,630

 

 

 

4,697

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(1,761

)

 

 

(11,510

)

Inventory

 

 

(7,473

)

 

 

(7,282

)

Prepaid expenses and other current assets

 

 

(4,491

)

 

 

1

 

Operating leases

 

 

(6,282

)

 

 

(5,250

)

Accounts payable

 

 

(3,661

)

 

 

5,261

 

Accrued expenses and other current liabilities

 

 

8,179

 

 

 

(4,061

)

Other liabilities

 

 

68

 

 

 

39

 

Net cash provided by operating activities

 

 

20,304

 

 

 

17,059

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(21,040

)

 

 

(23,242

)

Net cash used in investing activities

 

 

(21,040

)

 

 

(23,242

)

Cash flows from financing activities:

 

 

 

 

 

 

Payments of term loan under the 2021 Credit Agreement

 

 

(3,281

)

 

 

(938

)

Payments of withholding taxes in connection with RSUs vesting

 

 

(333

)

 

 

(648

)

Proceeds from the exercise of stock options

 

 

-

 

 

 

2,070

 

Principal repayments of finance lease obligations

 

 

(114

)

 

 

(200

)

Payment of deferred acquisition consideration

 

 

-

 

 

 

(608

)

Net cash used in financing activities

 

 

(3,728

)

 

 

(324

)

Change in cash, cash equivalents and restricted cash

 

 

(4,465

)

 

 

(6,507

)

Cash, cash equivalents, and restricted cash, beginning of period

 

 

103,290

 

 

 

114,528

 

Cash, cash equivalents, and restricted cash, end of period

 

$

98,825

 

 

$

108,021

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Cash paid for interest

 

$

3,896

 

 

$

1,787

 

Cash paid for income taxes

 

$

3,021

 

 

$

974

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

Purchases of property and equipment included in accounts payable and accrued expenses

 

$

4,146

 

 

$

5,547

 

Right-of-use assets obtained through lease obligations

 

$

5,138

 

 

$

1,708

 

Shares issued for deferred acquisition consideration

 

$

-

 

 

$

828

 

 

 

 

 


 

Non-GAAP Financial Measures

Our management uses financial measures that are not in accordance with generally accepted accounting principles in the United States, or GAAP, in addition to financial measures in accordance with GAAP to evaluate our operating results. These non-GAAP financial measures should be considered supplemental to, and not a substitute for, our reported financial results prepared in accordance with GAAP. Our management uses Adjusted EBITDA and adjusted net income to evaluate our operating performance and trends and make planning decisions. Our management believes Adjusted EBITDA and adjusted net income help identify underlying trends in our business that could otherwise be masked by the effect of the items that we exclude. Accordingly, we believe that Adjusted EBITDA and adjusted net income provide useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and prospects, and allowing for greater transparency with respect to key financial metrics used by our management in its financial and operational decision-making.

The following table presents a reconciliation of GAAP net income to non-GAAP EBITDA and non-GAAP Adjusted EBITDA, for the periods presented:

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

(Unaudited) (in thousands)

 

Net Income

 

$

3,167

 

 

$

215

 

 

$

5,513

 

 

$

8,046

 

Interest expense, net

 

 

444

 

 

 

572

 

 

 

1,688

 

 

 

2,039

 

Income tax expense

 

 

4,470

 

 

 

997

 

 

 

6,675

 

 

 

3,482

 

Depreciation

 

 

2,544

 

 

 

1,456

 

 

 

7,466

 

 

 

4,331

 

Amortization

 

 

1,229

 

 

 

1,220

 

 

 

3,689

 

 

 

3,662

 

EBITDA

 

 

11,854

 

 

 

4,460

 

 

 

25,031

 

 

 

21,560

 

Stock-based compensation expense

 

 

2,417

 

 

 

1,702

 

 

 

6,630

 

 

 

4,697

 

Restructuring charge (1)

 

 

95

 

 

 

611

 

 

 

1,878

 

 

 

1,518

 

Legal fees (2)

 

 

1,182

 

 

 

-

 

 

 

1,182

 

 

 

-

 

Sales retention (3)

 

 

422

 

 

 

-

 

 

 

422

 

 

 

-

 

Write-off of certain assets (4)

 

 

-

 

 

 

4,200

 

 

 

-

 

 

 

4,200

 

Facility construction project pause (5)

 

 

-

 

 

 

632

 

 

 

-

 

 

 

632

 

Settlement fee (6)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,600

 

Adjusted EBITDA

 

$

15,970

 

 

$

11,605

 

 

$

35,143

 

 

$

35,207

 

(1)
Amounts reflect employee severance, retention and benefits as well as other exit costs associated with the Company’s restructuring activities.
(2)
Amount represents the legal fees incurred related to the recently published and withdrawn local coverage determinations, or LCDs.
(3)
Amount represents the compensation expenses related to retention for those sales employees impacted by the LCDs.
(4)
Amount reflects the disposal of certain equipment related to the Company's Canton, Massachusetts facilities.
(5)
Amount reflects the cancellation fees incurred in connection with the Company's decision to pause one of its manufacturing facility construction projects.
(6)
Amounts reflect the fee the Company paid to a group purchasing organization, or GPO, to settle previously disputed GPO fees.

 

 


 

The following table presents a reconciliation of GAAP net income to non-GAAP adjusted net income, for the periods presented:

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

(Unaudited) (in thousands)

 

 

(in thousands)

 

Net Income

 

$

3,167

 

 

$

215

 

 

$

5,513

 

 

$

8,046

 

Amortization

 

 

1,229

 

 

 

1,220

 

 

 

3,689

 

 

 

3,662

 

Restructuring charge (1)

 

 

95

 

 

 

611

 

 

 

1,878

 

 

 

1,518

 

Legal fees (2)

 

 

1,182

 

 

 

-

 

 

 

1,182

 

 

 

-

 

Sales retention (3)

 

 

422

 

 

 

-

 

 

 

422

 

 

 

-

 

Write-off of certain assets (4)

 

 

-

 

 

 

4,200

 

 

 

-

 

 

 

4,200

 

Facility construction project pause (5)

 

 

-

 

 

 

632

 

 

 

-

 

 

 

632

 

Settlement fee (6)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,600

 

Tax on above

 

 

(791

)

 

 

(1,781

)

 

 

(1,936

)

 

 

(3,371

)

Adjusted net income

 

$

5,304

 

 

$

5,097

 

 

$

10,748

 

 

$

17,287

 

(1)
Amounts reflect employee severance, retention and benefits as well as other exit costs associated with the Company’s restructuring activities.
(2)
Amount represents the legal fees incurred related to the recently published and withdrawn LCDs.
(3)
Amount represents the compensation expenses related to retention for those sales employees impacted by the LCDs.
(4)
Amount reflects the disposal of certain equipment related to the Company's Canton, Massachusetts facilities.
(5)
Amount reflects the cancellation fees incurred in connection with the Company's decision to pause one of its manufacturing facility construction projects.
(6)
Amounts reflect the fee the Company paid to a GPO to settle previously disputed GPO fees.

 

 

The following table presents a reconciliation of projected GAAP net income to projected non-GAAP EBITDA and projected non-GAAP Adjusted EBITDA included in our guidance for the year ending December 31, 2023:

 

 

 

 

Year Ending December 31,

 

 

 

2023L

 

 

2023H

 

Net income

 

$

4,200

 

 

$

9,300

 

Interest expense

 

 

2,700

 

 

 

2,700

 

Income tax expense

 

 

4,700

 

 

 

9,700

 

Depreciation

 

 

9,900

 

 

 

9,900

 

Amortization

 

 

4,900

 

 

 

4,900

 

EBITDA

 

$

26,400

 

 

$

36,500

 

Stock-based compensation expense

 

 

9,000

 

 

 

9,000

 

Restructuring charge

 

 

3,400

 

 

 

3,400

 

LCD legal fees and sales retention

 

 

1,600

 

 

 

1,600

 

Adjusted EBITDA

 

$

40,400

 

 

$

50,500

 

 

 

 

 

 

 


 

The following table presents a reconciliation of projected GAAP net income to projected non-GAAP adjusted net income included in our guidance for the year ending December 31, 2023:

 

 

 

 

Year Ending December 31,

 

 

 

2023L

 

 

2023H

 

Net income

 

$

4,200

 

 

$

9,300

 

Amortization

 

 

4,900

 

 

 

4,900

 

Restructuring charge

 

 

3,400

 

 

 

3,400

 

LCD legal fees and sales retention

 

 

1,600

 

 

 

1,600

 

Tax on above

 

 

(2,700

)

 

 

(2,700

)

Adjusted net income

 

$

11,400

 

 

$

16,500

 

 

 


 

Forward-Looking Statements

 

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to expectations or forecasts of future events. Forward-looking statements may be identified by the use of words such as “forecast,” “intend,” “seek,” “target,” “anticipate,” “believe,” “expect,” “estimate,” “plan,” “outlook,” and “project” and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. Such forward-looking statements include statements relating to the Company’s expected revenue, net income, adjusted net income, EBITDA, and Adjusted EBITDA for fiscal 2023 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; (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 may owe rebates to the federal government prospectively on certain of its products if more than a certain percentage of the product is not administered to a patient and is discarded (wasted) by providers; (6) the Company’s ability to raise funds to expand its business; (7) the Company has incurred losses in prior years and may incur losses in the future; (8) changes in applicable laws or regulations; (9) the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors; (10) the Company’s ability to maintain production of Affinity in sufficient quantities to meet demand; (11) any resurgence of the COVID-19 pandemic and its impact, if any, on the Company’s fiscal condition and results of operations; (12) the impact of the suspension of commercialization of: (a) ReNu and NuCel in connection with the expiration of the FDA’s enforcement grace period for HCT/Ps on May 31, 2021 and (b) Dermagraft in the second quarter of 2022 pending transition of manufacturing to a new manufacturing facility or a third-party manufacturer; and (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, 2022 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