Organogenesis Holdings Inc. Q2 FY2026 earnings call

Market Context and Strategic Positioning

• The skin substitute market experienced significant contraction following CMS coverage and payment reform changes announced in late December 2025, leading to Q2 2026 revenue below prior Q1 guidance expectations.
• Management remains optimistic about the company's long-term position: Organogenesis holds the most diverse evidence-based portfolio across all FDA categories, including the only biologic PMA-approved product Applegraph, and is gaining market share as uncompetitive, low-evidence players exit the market.
• CMS' newly proposed hospital outpatient prospective payment system and physician fee schedule hold payment rates steady, reinforce PMA product differentiation, and prioritize clinical data for coverage, which management expects will stabilize the market.

Clinical Development Updates

• Positive 170-patient RCT results for PurePly AM in treating non-healing diabetic foot ulcers (DFUs), showing statistically significant wound closure at 12 weeks, have been submitted for publication. A separate real-world study of over 11,000 patients found PureApply AM treatment reduced overall amputation rates by 20% and above-knee amputations by 40% compared to standard of care, adding to a total evidence base of over 23,000 studied patients to support coverage determinations.
• Peer-reviewed results published in the Journal of Wound Care confirm Affinity delivers statistically significant improvements in 12 and 16-week wound closure for complex venous leg ulcers (VLUs), strengthening the evidence case for expanded coverage across two high-burden, high-cost chronic wound types.

MNUVIX (formerly Renew) Program Update

• The FDA accepted the Biologics License Application (BLA) for MNUVIX, a biologic therapy for symptomatic knee osteoarthritis, and set a Prescription Drug User Fee Act (PDUFA) target action date of April 24, 2027. If approved, MNUVIX will be the first approved non-surgical biologic option for this indication, addressing a large unmet need for over 30 million affected Americans.

Cost Restructuring

• A second 2026 restructuring completed in June cut 138 roles, expected to deliver $18 million in annualized cost savings. Combined with the March 2026 restructuring, total annual operating expense reductions are expected to exceed $32 million, repositioning the commercial team for market recovery while preserving cash.

Balance Sheet and Capital Initiatives

• As of Q2 end, the company held $46.8 million in cash, cash equivalents and restricted cash with no outstanding debt. Management expects current cash and product sales cash flows will fund operations for at least the next 12 months.
• The company entered into a new $75 million at-the-market (ATM) equity offering program to raise additional capital for working capital, R&D, and strategic initiatives.

1. Advanced Wound Care: Q2 2026 net product revenue was $36.1 million, representing a 61% year-over-year decline, and accounted for 84.3% of total Q2 net product revenue. Sequentially, revenue increased 23% quarter-over-quarter, and unit volume grew 30% quarter-over-quarter. Full-year 2026 revenue is guided to a range of $151 million to $183 million.
2. Surgical and Sports Medicine: Q2 2026 net product revenue was $6.7 million, representing an 18% year-over-year decline, and accounted for 15.7% of total Q2 net product revenue. Full-year 2026 revenue is guided to a range of $26 million to $30 million. Total Q2 2026 net product revenue was $42.8 million, a 58% year-over-year decline, with an additional $1 million in grant income.

• 2026 total net revenue guidance was significantly lowered to a range of $179 million to $215 million, representing a 62% to 68% year-over-year decline, from the prior guidance range that projected a 45% to 52% year-over-year decline. The downward revision reflects a slower-than-expected market recovery from CMS policy changes.
• Revenue growth is expected to continue on a sequential quarter-over-quarter basis in Q3 2026 and Q4 2026, but at a more modest pace than the Q1 to Q2 2026 sequential growth. Second half 2026 revenue is projected to decline 64% to 74% year-over-year.
• Management expects adjusted EBITDA loss will improve sequentially quarter over quarter, with a 60% to over 90% reduction in adjusted EBITDA loss in the second half of 2026 compared to the first half of 2026, and projects positive adjusted EBITDA in Q4 2026.
• Operating expenses (excluding cost of goods sold) are expected to decline approximately 32% year-over-year in 2026, with a more than 40% year-over-year decline in the second half. This includes $7 million in cost savings from the 2026 restructurings in Q3 and $9 million in Q4.
• The launch of Dermagraph is delayed by approximately one year (to mid-2028 from the prior target of mid-2027) to preserve cash, with no significant revenue from the product expected in 2026 or 2027 under the updated timeline.

• The skin substitute market recovery following CMS coverage and payment reform has been slower than initially expected, leading to materially lower 2026 revenue results and guidance compared to prior projections.
• Clinicians face uncertainty around potential post-audit payment clawbacks for products that lack robust randomized controlled trial (RCT) clinical evidence, which has suppressed overall market utilization even for products with strong evidence.
• Cash balances have declined from $94.3 million at the end of 2025 to $46.8 million at the end of Q2 2026, requiring cost-cutting initiatives and a new ATM equity offering to preserve liquidity and fund ongoing operations and R&D.
• All forward-looking statements are inherently uncertain, and actual results may differ materially from projections due to ongoing market and regulatory risks, as disclosed in the company's SEC filings.

Q: What indicators give management confidence that CMS will continue to stabilize the skin substitute market beyond the recent OPPS proposal? / A: Management sees month-over-month sequential growth in the market, with clinicians growing more comfortable with the current coverage and payment framework. CMS has reinstated the $127.14 reimbursement rate and maintained its tiered product classification system that differentiates PMA, 510(k), and 361 products, which signals continued support for evidence-based products. Organogenesis has already gained significant market share in both Q1 and Q2 2026 amid this stabilization.

Q: What explains the range in the 2026 revenue guidance, and what is the expected growth pacing for Q3 vs Q4? / A: The low end of the guidance assumes slower, more modest sequential growth and share gains than the 30% Q1-Q2 unit volume growth the company experienced, reflecting a conservative outlook. The high end reflects continued growth at the current rate, plus modest market expansion in late 2026. Most of the sequential growth is expected to come in Q4 rather than Q3, as the market continues its gradual evolution.

Q: What is the rationale for delaying the Dermagraph launch, and what is the updated timeline? / A: The Dermagraph manufacturing build-out is being slowed to preserve cash amid the prolonged market recovery. The product is still expected to launch, but the timeline is pushed back by one year, from mid-2027 to mid-2028. No significant Dermagraph revenue was projected for 2026 or 2027 even before the delay.

Q: How would MNUVIX position competitively if approved? / A: If approved, MNUVIX will be the first biologic therapy approved for symptomatic knee osteoarthritis, with no competing products expected to launch before it. It has a strong clinical and safety profile, and management plans to launch immediately after approval using a temporary temporary code while awaiting a permanent payment code.