AxoGen, Inc. Q2 FY2025 earnings call

Financial and Corporate Overview - Michael D. Dale: Discussed Q2 financial results and corporate highlights, progress in implementing strategic plan, update on Avance Nerve Graft BLA. - Key Points: Q2 sales growth, broad-based adoption of nerve care portfolio, progress in high potential accounts, commercial infrastructure expansion, surgeon training, clinical research, coverage/payment progress, prostate market development. ### Financial Details - Lindsey Hartley: Reported Q2 revenue of $56.7 million, 18.3% y-o-y growth and 16.7% sequential increase. Gross profit $42 million, gross margin 74.2%. Operating expenses increased, but operating leverage improved. Net income $0.6 million, adjusted net income $5.7 million, adjusted EBITDA $9.3 million. Cash, cash equivalents, and investments increased to $35.9 million as of June 30.

Q2 sales increased to $56.7 million, growing 18.3% compared to the same period last year. Revenue growth was across all nerve repair target markets: extremities, oral maxillofacial and head and neck, and breast. Avance Nerve Graft is the primary growth driver. In the first half of 2025, high potential accounts contributed approximately 70% of revenue growth, with average high potential account productivity up 21% year-over-year. There were 641 active high potential accounts out of approximately 780 that meet high potential criteria, an increase of 19 accounts or 3% from H1 2024.

Revenue Guidance - Raised revenue growth guidance to at least 17% or revenue of at least $219 million. ### Gross Margin Guidance - Reiterated gross margin guidance in the range of 73% to 75%, inclusive of one-time costs related to Avance Nerve Graft BLA approval, expected to impact gross margin by approximately 1%. ### Cash Flow - Continue to expect to be net cash flow positive for the year and self-fund strategic plan with growing cash from operations.

BLA Process Uncertainty - Potential disruptions in logistics and mechanics related to product supply, particularly around trunk stock, until fully codified and finalized with the FDA post-BLA approval.

Q: Congrats on nice results. Wanted to dig in on progress in the business through H1 and acceleration in trends.

A: Growth due to sales management strategies, application of product value proposition, focus on high potential accounts. Extremities business growing faster than internal plan.

Q: Updated guidance calls for 17% growth, any back half dynamics vs first half?

A: Part of BLA process, maintaining conservatism until BLA is final to understand logistics mechanics.

Q: Follow-up on sales rep productivity, seasonality?

A: Seasonality varies by clinical application area (e.g., extremities affected by weather, breast by summer slowdown).

Q: Commercial coverage wins, progress and post BLA?

A: Coverage expansion due to updated value dossiers, expect acceleration post BLA as snowball effect builds.

Q: Interaction during late cycle BLA meeting, processes near approval?

A: Professional, cooperative, interactive process, ongoing discussions on labeling and quality systems.

Q: BLA remaining milestones, manufacturing improvements post approval?

A: Ongoing conversations with FDA on labeling and quality systems, manufacturing improvements include continuous process improvements and electronic systems to reduce inefficiencies.

Q: Gross margin Q2 vs Q1, write-downs?

A: Biggest change was product cost savings and lack of write-off reduction. Going through process improvements, may take write-offs as deemed necessary, impacted by BLA in Q3, expect return to normal in Q4 with process changes.