Organogenesis Holdings Inc. Q4 FY2025 earnings call

Gary started with an overview of Q4 revenue results, mentioning record sales driven by advanced wound care growth. Dave reviewed Q4 financial results, balance sheet, and 2026 outlook. Gary discussed CMS policy changes, new manufacturing and R&D center progress, Renew program's BLA submission, and closing comments on team's commitment and strategic priorities.

Net product revenue for the fourth quarter was $225.1 million, up 78% year-over-year and up 50% sequentially. Advanced wound care net product revenue for the fourth quarter was $217.2 million, up 83%. Net revenue from surgical and sports medicines products for the fourth quarter was $7.9 million, down 2% year-over-year. Surgical and sports medicine product sales were up 12% for the full year 2025 period.

Expect total net revenue to decline 25%-38% year-over-year in 2026 full year. First quarter revenue down ~50% y-o-y due to clinician confusion. Second quarter expected to have strong sequential growth, first-half revenue decline ~30%-35%. Third and fourth quarters of 2026 expected to have strong sequential revenue growth, with positive adjusted EBITDA, especially fourth quarter expecting high-teens adjusted EBITDA margins.

Withdrawal of LCD coverage policies for skin substitutes announced on December 24th and comments on December 30th regarding discarded product resulted in clinical confusion and material disruption in the market, impacting utilization of PMA approved product in first two months of 2026.

Q: Just to start out, I wanted to focus on your fourth quarter results for advanced wound care. That 83% was definitely really strong and much stronger than we were anticipating. So I was curious how much of that growth you believe is due to customers maybe pulling forward some of the inventory ahead of the January 1st reimbursement changes.

A: Yeah, there's really not a tremendous amount of opportunity for that because obviously the products are going on to patients. So we don't think there was a tremendous amount of that. What we didn't see at the back end of that was an increase in aggressive pricing tactics, which we assumed was going to happen. But as you said, I mean, we beat our midpoint of our guidance by about $50 million. So it was an amazing quarter for us. We were quite pleased.

Q: And as we start to think about 2026, Can you help us kind of bridge the gap between what we saw in fourth quarter and the decline that you're forecasting for the rest of the year? I mean, how much is that purely mathematical with the reduced price of 127? Or is that more of lower unit volumes due to the confusion that you're seeing in the market?

A: No, we expect to gain share in 2026. So we're quite pleased with that. We think there's a couple of things that will happen is that We'll continue to see the competitive dynamics improve as we move through the year. And then in addition to that, obviously, we'd indicated that Q1 will be quite challenging based on the customer confusion, based on all of the elements that happened late in 2025. You know, obviously, the 127 is an element there. We planned for that. We expected that. So we felt that we could perform quite well with that. Also, with the LCD being pulled, late last year, we figured that that would be something that we could overcome without any question. And then the last piece was the comments that were made on December 30th, which really put some pressure on clinicians overall and really just has pulled back quite considerably. So it's really that major factor that's happening there from that standpoint.

Q: And then the last one from me, I know we are about two months into the quarter as of right now. So I was curious if you're starting to see anything that's giving you confidence in those share gains as we move throughout the year? Are you seeing any of the smaller competitors maybe exiting the market, supply issues? If you can provide us on any color there, that'd be really helpful.

A: Yeah, sure. As I mentioned, we are seeing some aggressive pricing pressure in the quarter, which I think means that exactly what we anticipated might happen in the fourth quarter. you know, people trying to clear out their inventory and that type of thing. So we are seeing some early signs of, you know, that potential change in the customer and competitive dynamics as we move forward. Yeah. And just to follow up, you know, with Dave's comment that, you know, these issues that we see are transitory. We do think that the flood of low-cost products will not sustain throughout the year, which is one of the reasons the back half, we believe, will be better. We think the clinician confusion as it relates to the comments on December 30th, you know, we're working our customers through that process and how to use our products, you know, with that issue. And, you know, we also think that, you know, there's just kind of a freeze in the market that folks are just generally confused by the health policy changes. And they were sweeping. You know, they basically have reduced the reimbursement for non-PMA products and shifted them to PMA products. And folks are trying to follow the reimbursement process and what does that mean for pricing and overall reimbursement. So there's just a lot of information. And those types of issues are transitory that we can work through. As Dave mentioned, 127 is something we contemplated and have no issues with. We can grow nicely at 127. It's more the confusion that we have to work ourselves through.