MiMedx Group, Inc. Q1 FY2026 earnings call

Joe Capper mentioned the start of the year was eventful with new Medicare reimbursement dynamics. Wound care franchise was negatively impacted by Medicare pricing reset, while surgical business excelled in Q1. Surgical business had 13% growth in Q1, with contributions from the entire product portfolio. Launched AmnioFix Thyroid Shields and began limited market release of some licensed surgical products. Also, prioritized generating scientific and clinical evidence. Announced restructuring and cost reduction initiative to reduce cost structure by approximately $40 million. Doug Rice reviewed financial results, noting consolidated net sales $59 million, down 33% year-over-year. Gross profit $42 million, gap gross margin 71% in Q1. Operating expenses discussed, including sales and marketing, G&A, R&D. Expected full-year adjusted EBITDA to be roughly break even with sequential improvements

For the first quarter, year-over-year net sales were $59 million. Surgical business was up 13% to $36 million, contributing 61% of total net sales. Wound care business was down 60% to $23 million, contributing 39% of total net sales. Adjusted gross profit margin was 72% in the quarter.

Modify top line expectations to $260 to $290 million. Surgical to continue double-digit growth. Wound expected to have sequential volume recovery each quarter, but full-year decline in line with Q1 relative basis. Expect adjusted EBITDA loss in first half, move to profitability in Q3 as sales improve and cost reduction benefits kick in. Expect stronger exit to 2026, and double-digit above-market growth in both franchises in 2027

Challenges in wound care market due to Medicare reimbursement reform, including claims processing slowdown, WISER model failure, lack of LCDs leading to ineffective products entering market. Competitor inventory in channel as a headwind. Disruption in wound care market causing patients not to receive needed care

Q: Chase Knickerbocker asked about wound volume trend month by month and customer feedback.

A: Joe and Matt responded that March was flat to Jan/Feb, April same, with modest sequential recovery expected but guidance conservative due to slow implementation.

Q: Dave Tercalli asked about WISER comment and process to change.

A: Joe said WISER model will get better as contractors fix systems, dealing with MACs and CMS.

Q: Anthony Patron asked about market settlement and long-term mix outlook.

A: Joe said wound care market will find new normal, surgical business will continue to grow, wound care market will be smaller but attractive.

Q: Frank Takinen asked about 40 million cost reduction and competitor inventory.

A: Doug said 40 million reduction is 15-20% of operating expenses, competitor inventory is a meaningful headwind for first half