MiMedx Group, Inc. Q2 FY2025 earnings call

Key Highlights

• The company achieved record quarterly revenue and adjusted EBITDA, with double-digit growth in both Wound and Surgical franchises.
• Adjusted gross profit margin was 84%, and adjusted EBITDA was $24 million, representing 25% of net sales. Cash balance ended the quarter at $119 million, with an expectation to end the year with over $150 million.
• Surgical business grew 15%, with HELIOGEN sales increasing as adoption gains traction. Enrollment continued in the EPIEFFECT randomized controlled trial, and collaborations began for complementary wound care solutions.

Strategic Priorities

• Innovate/Diversify Product Portfolio: Progress on EPIEFFECT trial, with expectation of an interim report soon; EPIXPRESS launch cleared by FDA; pilot programs for non-skin substitute wound care solutions, including collaboration with Vaporox Inc.
• Expand Surgical Market Footprint: Funded clinical and scientific research, including a study on cost-effectiveness in the Journal of Drugs in Dermatology, and highlighted evidence supporting product use at high-profile conferences.
• Enhance Customer Intimacy: Focused on developing programs to improve customer relationships, with strong adoption of MiMedx Connect portal and plans to enhance features.

Medicare Reimbursement Reform

• CMS announced the WISeR model and proposed physician fee schedule/Outpatient Prospective Payment System for 2026, moving to a fixed payment of $125.38 per square centimeter for skin substitutes in all outpatient sites. MiMedx plans to submit comments supporting the new methodology with recommendations.

In the second quarter of 2025, MiMedx's net sales grew 13% to a record $99 million. By product category, wound sales were $64 million, up 12%, contributing approximately 64.6% to total revenue. Surgical sales were $34 million, up 15%, contributing roughly 34.3% to total revenue. The adjusted gross profit margin was 84% for the quarter, and adjusted EBITDA was $24 million, which was 25% of net sales. The company ended the quarter with $119 million in cash and cash equivalents, an increase of $12 million from the prior period.

• Increased full year revenue growth outlook from high single digits to low double digits.
• Expect full year adjusted EBITDA margin to be above 20%.
• Confident in long-term prospects due to pending Medicare reimbursement changes.

• Competition in the market.
• Uncertainty regarding access to customers.
• Fluctuations in the reimbursement environment.
• Unforeseen circumstances and delays that could impact actual results, as detailed in the Risk Factors section of the annual report on Form 10-K and quarterly report on Form 10-Q.

Q: Chase Knickerbocker asked about the market post reimbursement change and market size.

A: Joe Capper stated they welcome the reform, are well-positioned long term, but market size was too early to tell.

Q: Carl Byrnes inquired about CMS flexibility and stocking anomalies.

A: Joe Capper said he couldn't handicap CMS flexibility, but they've managed inventory before; Doug Rice added they've prepared for prior LCD delays.

Q: Ross Osborne asked about market share next year and mobile wound care.

A: Joe Capper talked about advocating for provider compensation, low-hanging fruit not specified, and LCD feedback.

Q: Anthony Petrone asked about physician fee schedule and wound classifications.

A: Joe Capper said it was too early to tell, but working on regulatory advocacy.

Q: Carl Byrnes followed up on partnership contribution.

A: Joe Capper said the partnership's material contribution wouldn't be near term, with collaboration details to be worked out.