Good day, ladies and gentlemen. Welcome to the Aziyo Biologics First Quarter 2023 Financial Results Conference Call. [Operator Instructions] Please be advised that today’s conference call is being recorded. I would now like to hand the conference call over to Matt Steinberg, Finn Partners.

Thank you, operator, and thank you all for participating in today’s call. Earlier today, Aziyo released financial results for the quarter ended March 31, 2023. A copy of the press release is available on the company’s website. Before we begin, I would like to remind you that management will make statements during this call that include forward-looking statements within the meaning of the federal securities laws, which are pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that do not relate to matters of historical facts or relate to expectations or predictions of future events, results or performance are forward-looking statements. All forward-looking statements, including, without limitation, those relating to our operating trends and future financial performance, are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please refer to the Risk Factors section of our public filings with the SEC, including Aziyo’s annual report on Form 10-Q for the quarter ended March 31, 2023, to be filed with the SEC, accessible on the SEC’s website at www.sec.gov. Such factors may be updated from time to time in Aziyo’s other filings with the SEC. The conference call contains time-sensitive information and is accurate only as of the live broadcast today, May 10, 2023. Aziyo Biologics disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise. Also, during this presentation, we refer to gross margin, excluding intangible asset amortization, which is a non-GAAP financial measure. A reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure is available in the company’s financial results release for the first quarter ended March 31, 2023, which is accessible on the SEC’s website and posted on the Investor page of the Aziyo website at www.aziyo.com. And with that, I will turn the call over to Aziyo’s CEO, Randy Mills.

Thank you, Matt. Welcome to our first quarter 2023 earnings call. Today, I’ll start with an overview of recent highlights. I will then describe how our efforts fit into the overall strategy for Aziyo. Matt Ferguson, our CFO, will provide details and context for our financial results. And lastly, I’ll wrap up with the priorities for the company moving forward. After that, we will open the line for your questions. We have a lot of ground to cover, so let’s jump in. First, it would be hard to miss the exceptional financial performance delivered by our businesses. Sales were up 14% to a record $13.1 million for the quarter, and this top line growth was seen across all of our four businesses. Furthermore, we saw a substantial improvement in gross margin, up 11 points year-over-year to 49%. The improvement in gross margin is largely attributed to process improvements made by our operations team, led by Erica Elchin. Recall, Erica was one of the leadership changes that we made in the second half of last year. And the efforts of her and her team are starting to produce some really impressive results. Next up, we made great progress on the business development front, which included creating a partnership with LeMaitre Vascular to distribute our cardiovascular portfolio. With this deal, we gained access to LeMaitre’s expert 58-person sales team dedicated to the needs of the cardiovascular surgeon, increasing coverage approximately fivefold. Similarly, we are now operationalizing our nonexclusive distribution partnership with Sientra, a leader in breast reconstruction surgery for our best-in-class product SimpliDerm. Like with LeMaitre, this partnership greatly expands sales coverage for SimpliDerm with the addition of Sientra’s 55 sales professionals, again, approximately a fivefold increase over our current coverage. These transactions enable us to improve patient access and outcome and…

Okay. Thanks, Randy. We are very pleased with our first quarter results, highlighted by record net sales and gross profit. As Randy mentioned, we achieved 14% growth for the first quarter of 2023, net sales of $13.1 million. The increase was driven by growth across all four business segments, led by our SimpliDerm and CanGaroo product lines. Gross profit for the first quarter of 2023 was $6.3 million, resulting in a gross margin of 49%, up 11 percentage points compared to the prior year period. On a non-GAAP basis, excluding amortization of intangibles, which may be viewed as more indicative of our operating performance, gross margin grew to 55%, up from 45% in the first quarter of 2022. We saw operational gains at both of our manufacturing sites, with the greatest impact coming from our orthobiologics and women’s health business units. Total operating expenses were $12.7 million for the first quarter of 2023 compared to $11.2 million in the corresponding prior year period. The increase was primarily due to increased non-cash accruals related to the 2021 recall of our FiberCel product. With the gains in gross profit and the somewhat higher operating expenses in the quarter, our Q1 net loss was only slightly changed from the prior year period, coming in at $8.0 million for Q1 of this year compared to $8.1 million in the year ago quarter. As of March 31, 2023, our cash position was $11.8 million. This reflects cash usage of $5.2 million for the quarter. Based on a variety of factors, the partnerships we’ve implemented, continued organic growth and a variety of other efficiency measures we’ve implemented, we expect this burn rate to come down significantly during the remainder of the year. We will see some effect in Q2, and by the second half of the year, we expect cash burn to be at roughly half of recent levels. In other words, in the range of $2 million to $3 million per quarter for Q3 and Q4 of this year. I’d also like to remind everyone that we’re fortunate to have a committed base of shareholders, chief among them, HighCape Partners, who is one of the founders of the company and continues to be our largest shareholder. We very much appreciate that HighCape remains actively involved in the company and committed to our long-term success and increasing shareholder value. And with that, I’ll hand it back to Randy before we take questions.

Thank you, Matt. I’d like to finish up with a summary of our priorities moving ahead. First, we are continuing to drive top line growth, particularly in our CanGaroo and SimpliDerm lines. To this end, we are strengthening our partnership with Boston Scientific by building awareness around the unique synergies CanGaroo offers Boston CRM products, specifically their subcutaneous defibrillator. With SimpliDerm, we are continuing to drive sales through our own distribution network and are working aggressively with Sientra to get their sales team up and running. We are also doing the same with LeMaitre, looking to set a strong trajectory out of the gate for our cardiovascular products. Our second point of focus is improving cash flow. We want the cost of goods improvements we have made to stick and to serve as a base for even better margins going forward. As Matt pointed out, we are doing a nice job reducing operating expense and are targeting to have our cash burn rate cut in half in the second part of the year. And we’re still not done with business development activities. We’ve had some solid wins already this year, but we look forward to capitalizing on additional opportunities, specifically around our orthobiologics and CanGaroo businesses, which could further improve our cash position. And our third point of focus is the resubmission of CanGaroo RM. Our regulatory and R&D teams, led by Dr. Michelle Williams, are hard at work generating the data the agency needs for resubmission. And we look forward to providing you with updates as our progress unfolds. So we kicked off 2023 in a really positive note by generating record revenue and gross margin performance, and our four business segments are hitting on all four cylinders. I’d like to point out that none of this would be possible without the tireless work of our dedicated team. And I want to end by thanking all of the employees as well as the patients and the stakeholders for their continued support. So with that, I’d like to end the comments and open the lineup for questions.

[Operator Instructions] And it looks like we have a question from Ross Osborn from Cantor. Your line is open.

Hi, guys. Congrats on the strong first quarter. Thanks for taking the questions. Maybe starting off. Just would be curious to hear the rationale for not providing revenue guidance at this point?

Well, Ross, we’re very pleased with the growth that we saw in Q1, and we feel like we’re on a good trajectory in really all parts of our business. But the fact that we’ve recently implemented a couple of partnerships that we talked about, the deal with Sientra and the deal with LeMaitre, make it a little bit harder to just predict within a reasonable range, a reasonably tight range, exactly what the future revenues will be. We feel like they are headed in the right direction. And importantly, in both cases, we feel like both those deals will really contribute more beneficially to the bottom line than if we were trying to do all of the sales ourselves. But we will continue to evaluate that over the next quarter or two. And as we get a little bit of a trajectory going with both those partners as well as our own organization and its new form, we will reconsider whether it makes sense to do that in future quarters.

Okay. Fair enough. And then I guess I realized it’s like 20 days or so since your partnership announcement with LeMaitre. But have you seen an increase in productivity of your sales force with respect to CanGaroo given it’s their focus now and do you plan to add to your direct team there?

Yes, Ross. So right now, our direct team there and our sales and commercial leadership is really focused on training and training their sales team on account conversion where it makes sense for LeMaitre to have complete access to the account. So we’re looking right now to make sure that all of the customer and all of the revenue base we have transfers over completely and then have them build on that moving forward. So 20 days in, yes, you got – way too early for us to see anything directly out of the gate. I will say this though, this is a really solid partner, and this is a partner that we communicate with on a daily basis, both at the team member level and at the leadership level. And I think both – and I think the same thing with Sientra, by the way. Both organizations, these partnerships are really important to both of us. And their success is really important to both of us. So we really couldn’t be more pleased with how either one of these has started out so far.

Okay. Great. And then lastly, maybe on burn, so following your cost reduction measures announced with 4Q results and kind of the sales force changes with the partnerships, how should we expect burn to decrease from here? How much of the cost reduction initiatives were reflected in 1Q results?

Yes. So actually – it’s a good question, Ross. In the first quarter, the changes that we made really were enacted very close to the end of the quarter. And we talked about them then on our call for Q4, which is not until late in the quarter during Q1. So some of the cost of those changes will actually add to some of the expense in Q2. Other changes that we made, we will see a more immediate effect. So I would say the overall effect in Q2 will be a little bit more muted, but we do expect cash burn to come down in Q2. So rather than the $5 million that we saw in the last quarter and pretty consistently in a few quarters before that, it’s probably more like in the $3 million to $4 million range in the second quarter. And then as we get into Q3 and Q4, we should see the full benefit of the changes. And we will also start to see some of the, I think, increased productivity that you referred to before associated with some of these partnerships. Those will really hit, I’d say, in Q3 and Q4. And at that point, I would expect our cash burn to be down significantly from where it’s been in the past. And as I mentioned in the prepared remarks, we would expect it to be about half of the $5 million level. So in other words, in the $2 million to $3 million per quarter range.

Okay. Great. Thanks for taking my questions and congrats again on the strong quarter.

Thanks, Ross.

Hey, thanks, Ross.

And that was our last question. Ladies and gentlemen, this does conclude today’s teleconference. We thank you for your participation. You may now disconnect your lines at this time, and have a great day.