Bioventus Inc. Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Driving Above-Market Revenue Growth: Surgical Solutions had strong double-digit growth in ultrasonics; Restorative Therapies' Exogen achieved double-digit growth; Pain Treatments growth expected to accelerate in H2 with normalized comps and focus on large accounts. 510(k) clearance of StimTrial and TalisMann for PNS presented a growth opportunity in the fast-growing PNS market.
• Expanding Profitability: Peer-leading gross margin combined with revenue growth in H2 expected to enable 100 basis points of adjusted EBITDA margin expansion despite foreign exchange impact.
• Accelerating Free Cash Flow Generation: Significant acceleration in cash flow this quarter, expected to continue in H2 with deleveraging, business efficiencies, and reduced extraordinary expenditures. Refinancing of credit facility lowered interest rate, improved liquidity, and reduced annual debt repayment.

Segment Performance

• Surgical Solutions: Revenue grew by 11%, driven by strong double-digit growth in ultrasonics. Bone graft substitutes showed acceleration, with expected continuation into the second half as new distributors ramp up. Revenue contribution not specified in absolute terms but growth highlighted.
• Restorative Therapies: Divestiture of Advanced Rehabilitation business led to 32% revenue decrease. Excluding divestiture, organic growth was 11% with Exogen achieving double-digit growth, demonstrating improved commercial effectiveness and sales force execution. Revenue contribution not specified in absolute terms but growth highlighted.
• Pain Treatments: Revenue increased 1% with growth temporarily slowed due to prior year comparisons. Excluding these, pain treatments grew an estimated 4%-5%. DUROLANE provided a solid platform for sustained above-market growth. 510(k) clearance of StimTrial and TalisMann for peripheral nerve stimulation presented a growth opportunity. Revenue contribution not specified in absolute terms but growth context provided.
• International: Revenue increased 12% compared to prior year, with organic growth climbing 24%, fueled by double-digit growth across Surgical Solutions and Pain Treatments. Revenue contribution not specified in absolute terms but growth highlighted

Guidance

• Reiterated full-year revenue guidance: organic revenue growth of 6%-8%, adjusted EBITDA of $112M-$116M, and EPS of $0.64-$0.68.
• Guidance incorporates $5M of tariff impact and year-to-date foreign exchange impacts, with expected tariff impact in 2025 at approximately $3M.
• Refinanced credit facility with benefits including lower interest rate, extended maturity, increased revolver size, and reduced annual debt repayment.

Risks

• Foreign Exchange Fluctuations: Impacted financial results with over $2M in year-to-date unplanned foreign currency exchange rate movements.
• Tariff Impacts: Approximately $3M expected tariff impact in 2025, affecting financial performance.
• Market Competition: Competitive landscape in pain treatments and other segments posing challenges to growth

Question and Answer

• Q: Chase Knickerbocker on pain growth, DUROLANE volume, and Surgical BGS growth A: Mark Singleton mentioned normalized pain growth was 4%-5% vs reported 1%. Rob Claypoole elaborated on pain growth drivers, including DUROLANE and PGS acceleration. Mark Singleton stated BGS had high single-digit growth in Q2 and expected acceleration in H2.
• Q: Matthew Park on Exogen growth and OpEx spend for PNS launch A: Rob Claypoole discussed Exogen's double-digit growth driven by focus, strategy, and commercial execution. Mark Singleton mentioned slight increase in OpEx spend in H2 for PNS launch and PRP platform.
• Q: Robbie Marcus on R&D spend and OpEx growth A: Rob Claypoole noted moderate R&D investment ramping up for ultrasonics and PNS. Mark Singleton stated revenue growing faster than OpEx overall, with OpEx adjusted for divestiture and focused on margin expansion.
• Q: Caitlin Cronin on TalisMann, StimTrial launch and tariff impacts A: Rob Claypoole discussed limited launch in H2 2025 and rapid ramp in 2026, with PNS portfolio potential to contribute to growth. Mark Singleton mentioned tariff impact expected at $3M in 2025, with FX impact already contained within guidance