Good day, ladies and gentlemen and welcome to the Q4, 2013 MiMedx Group Inc. Earnings Conference Call. My name is Whitney and I will be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct the question-and-answer session. (Operator Instructions) I’d now like to turn the call over to Mr. Thornton Kuntz, Chief Administrative Officer. Please proceed sir.

Thank you, operator. Good morning everyone. This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based upon current beliefs and expectations of our management and are subject to risks and uncertainties. Actual results may differ materially from those set forth in, contemplated by, or underlying the forward-looking statements based on factors described in this conference call and in our reports filed with Securities and Exchange Commission including our Form 10-K for the year-ended December 31, 2012 and our most recent 10-Q. We do not undertake to update or revise any forward-looking statements, except as may be required by the Company’s disclosure obligations in filings it makes with the Securities and Exchange Commission under Federal Securities laws. With that, I’ll turn the call over to MiMedx’s Chairman and CEO, Pete Petit.

Thank you, Thornton and welcome to our year end 2013 conference call. I have with me this morning Bill Taylor, our President and Chief Operating Officer; and Mike Senken, our Chief Financial Officer, Thornton Kuntz and some other corporate executives. Let me start by saying that fiscal year 2013 was an exceptional year for MiMedx. We face a number of hurdles that may have crippled and organization with less seasoned executive team. We came out of year with a substantial degree of organization maturity from the 2013 challenges and are far stronger and better prepared organization to lead the various opportunities on technologies going well. While overcoming our challenges, we continue to produce a prolific growth rate in revenue, reimbursement coverage, clinical studies, publications, protection of our intellectual property and building out of our comprehensive structure. I would characterize 2013 as a coming of age year for MiMedx while we have demonstrated that our organization has a talent, products and strategies to optimize on business opportunities. I would like to comment on the goals we have set out to achieve in 2013, the unexpected challenges we faced and results we have achieved. First revenue of 2013 of $59.2 million was approximately 2.2 times our 2012 revenue. We exceeded our full year internal budget revenue of $53 million by more than 10% and that’s for year information as the goal set by our Board of Directors for the management team. The fourth quarter of 2013 was a ninth consecutive quarter where we met or exceeded our revenue goal. The fourth quarter of 2013 marked a eighth consecutive quarter of positive adjusted EBITDA. The Company’s full year 2013 gross margin was 84% or 3 percentage points improved over the 2002 gross margins of 81%. In the third quarter, we achieved our goal…

Thanks Pete. This past year was very strong with an amazing number of first and overall outstanding performances for the MiMedx Organization. I would like to thank and congratulate our entire organization for and outstanding 2013 and I would also like to thank all of our shareholders for their confidence in our team. I will first discuss our revenue and the associated growth of our field sales organization. As Pete mentioned our revenue for the year was $59.2 million, just shy of the upper end of our full year range. And recall at the beginning of the year last year we projected $50 million to $60 million range and we’re just $800,000 away from exceeding the upper end of that range, and more than doubled our revenue from year-to-year and our fourth quarter revenue was more than 70% overall fourth quarter 2012. Even with the government shut down in the fourth quarter and typical fourth quarter VA seasonality. Our VA business was more mature today than our commercial business, so its seasonality is more visible as you would expect. The substantial growth of our sales organization from 33 people to 76 sales professionals during the year drove this phenomenal growth, because of the very favorable new CMS reimbursement situation, the availability of seasoned wound care sale talent, we significantly accelerated our hiring profits this year, we essentially hired the full years budgeted sales headcount in the first two months of this year. So we call that late last year after the final was announced and during our offering, we projected the massive sea change in reimbursement would take probably six or eight weeks into 2014 to be fully digested by clinics and physicians. We had a very strong education program that started in December and is just now winding down.…

Bill, thank you. Okay, it’s Mike Senken’s turn. Mike?

Thanks Pete. The company reported revenues for the fourth quarter of approximately $18 million, an increase of 71% of $7.5 million over prior year fourth quarter revenue of $10.5 million. As a percentage of total quarterly revenue, wound care revenue represented 58%, surgical and sports medicine 38% and other 4% of reported revenue. In comparison to the fourth quarter 2012, wound care revenue grew 103% and surgical and sports medicine revenue grew 49%. Commercial revenue for the quarter was 51% of total revenue as compared to 42% in Q3 with the growth in commercial revenue being driven by the continued build out of our sales force in territories where we have MAC coverage. Sales to government accounts were down slightly as compared to the third quarter due in part to the government shutdown as well as normal seasonality and investor’s conference which traditionally occurs in November. In Q4 we added several new government facilities as we continue to expand our sales force. As compared to Q4 of 2012, commercial revenue grew 103% and government revenue grew 47%. As stated previously, we would expect the percentage of revenue from commercial accounts to continue to grow each quarter as we gain market share and what is the larger segment of the overall wound care market. Revenue for the 12 months ended December 31, 2013 increased $119% to approximately $59.2 million as compared to $27.1 million for the same period in 2012. Wound care revenue increased 190% while surgical and sports medicine revenue increased 79% when compared to prior year. Sales to government accounts increased 207% as compared to prior year recognizing that we only began selling direct into government accounts in the third quarter of 2012. Sales to non-government accounts have increased over 59% as compared to prior year. Gross margins for…

Thank you Mike. Let me make a couple of other comments before we open it up for questions and answers. First we’re sorry for the volatility in our shares; we discussed that at our Board meeting yesterday. But I want to point out that’s just part of being a high profile growth company. This should dissipate as we build our institutional shareholder base. Our individual shareholder seem to be more impressionable about some of these things that have come out on the blogs. Companies with similar market caps and trading volume like MiMedx are in the sweet spot for short sellers that’s just the way it is. Smaller companies because of lack of trading volume of lot of the sweet spot, larger companies because of almost all institutional investors are not in the sweet spot, we’re. As I previously said we’re allowing the company’s information rather than blogs, and we’re held very, very accountable for information we put out and information we disseminate, and we’ll continue to try to be extremely accurate as we have them with that information, the bloggers are not. Let’s go ahead and open the call up for questions and answers.

(Operator Instructions). Your first question comes from the line of Matthew Hewitt, Craig-Hallum Capital Group. Please proceed.

Congratulations on the strong 2013. First one I am looking at your guidance obviously you reiterated the full year. Q1 though appears a bit light, I guess what I was anticipating, maybe walk through some of the dynamics you have been experiencing post of bundle news from CMS, what the doctors, how they reacted to that news? And what that means as this year progresses?

Let me start with couple of comments and then Bill and Mike can jam in here. First of all, we’ve had a two-year track record now of excellent forecasting relative to our quarterly revenues and EBITDA. We’ve been more accurate I think the most management team and most management teams don’t even put out forecast. So number one, we’ve been wisely cautious on first quarter due to the new CMS payment changes. We’re in the marketplace. We know exactly I think what’s going on with the 1500 plus wound care centers around the country, the back office activity associated with the people try to come up to speed on this new very reimbursement procedure. It takes time and there is momentum that’s going to have to build here. We think in the first 60 days we started this in December terms of education process. We’ve made great progress but some of these variables, we do not control. But we’ve been very active with the management groups of some of these consolidated wound care centers. We have been very active with the field management in terms of education process. So we’re cautious and we’ll try to remain caution as we give you any forecast in the future. So if there is a bit of angst over the fact that these numbers look like our growth rate is slowing down that’s just not the case. We’re just doing the normal thing that a management team prudently should do with such a major change that has taken place in the industry. We’ve got all activities that we needed to do in order to export our advantages and believe me we will explore those.

And now I will add to that, Matt, as I am sure you know when there is a major change in reimbursement in the healthcare industry typically they take some time to educate and we have predicated this late last year after this final rule happened around Thanksgiving is that, it was going to be our job to educate people because they had been used to do this same payment structure for about 5 or 6 years, straight there is no major changes to it maybe even longer than that. So we had expected that it was going to take into the first quarter to really thoroughly educate everybody and we’ve done that. And the reaction generally speaking has been, wow that’s great. I need to switch over to EpiFix, but we need to verify that what you’re telling is true. And that’s exactly what they’ve done and now we’re seeing the momentum pick up where that confusion of the massive change is gone away. Our reimbursement team has done an excellent job getting out into the field explaining these large wound care centers that what the changes are like and what it means for them and what products. We’ve had a number of facilities when they understood it, they said okay EpiFix is going to be our grow to product and we’re not likely use anything else or we’ll use some other things very sparingly. They’ve taken a couple of our big competitors of which keeping out and that’s been a routine finding over the last several weeks. The last thing I’ll mention is of course the weather has been a little bit challenging a lot of vary to the country, little bit more so than usual that also has a little bit of effect in this quarter. So we have those two things together and then what Pete mentioned, we don’t like to give numbers that we can’t achieve, so we’re reasonably conservative.

I think if I could just put an exclamation point of what Pete and Bill added which is, we’ve added over 30 people in the first 45 days of the New Year. If we had any concerns about the reimbursement environment and what the impact was going to be to this business and also guidance, we certainly wouldn’t pull the trigger on that number that’s a huge increase in a very short period of time.

Just do the math it’s 50% increase on where we were in December, that’s a lot to swallow in six weeks.

The other issue here is the wastage factor which we here talking about throughout this industry since last summer. In interview in some of our competitors sales people which most of whom we hired, they all said to us we’re really tired if walking into our accounts meaning old accounts and hearing about wastage factor. It was a bad symptom and they were able to make exclusive for us and it devastated them. So there is no issue about momentum. Here is an issue about centers coming up and been able to do their billing and be comfortable with that. And to some extent as these centers flip over, if they got hospital associated whether they’ll be some value committee process to go through, but believe me the momentum is with us and you will see it appropriately.

Thank you for the detailed responses. Maybe one more for you Pete and then I’ll jump back into queue. You are champion of the reimbursement side of this obviously working with the MACs and the commercial providers. You’ve made steady progress on both fronts. How soon can we anticipate that you’re going to get this last MAC I mean is that something you think can happen here even before this quarter ends or at least in the first half end? Secondly on the commercial side, do you have a number obviously the addition of the Blue Cross Blue Shield contract is nice but what has been total number of commercial lives covers today?

Okay, Matt. First of all on First Coast that’s the one remaining MAC in Florida there always seemed to be not just in this area but in other areas, the last to respond. We are in discussions with them and that’s all I really want to say. I’ll just say we are in intimate discussion with them. So we’ll go from there. Now on the reimbursement front, fortunately or unfortunately because of my tenure in the industry, 47 years; I have been involved with health plans for the majority of that period of time. I know a lot of people. I’m experienced more than anybody can even imagine and worked with few reimbursement, progress new technologies that have come to the market through our company. Dr. Don Fedoroff was saying, Don was with Highmark Blue Cross Blue Shield for 12 years. He was the Chief Medical Officer when I hired him well eight years ago, just coming to make your health care. Don’s reputation in the industry is stellar. We know a lot of people. We perform properly for these health plans in the past. There has been an attitude from the medical directors of these health plans about getting substitutes. We didn’t develop that attitude. A lot of competitors, previous competitors being; we’re in the process of changing that. So I feel like as we make progress here and in the months ahead, I will pretty much put the MAC issue behind us. Now it’s on the other health plans. The large Blue Cross Blue Shield plan that just gave us coverage, it is a good indication of what should begin to play out through the Blue Cross Blue Shield organization. Then we got the signals, the atmos, the well points et cetera those were deployed and we were…

All right, thanks for the feedback there. I will jump back in the queue.

Our next question comes from the line of Will Plovanic with Canaccord; please proceed.

I apologize for the background noise, I’m travelling. Couple of questions here, just I’m going to get a little specific, one, your sports medicine was very strong in the quarter, just curious what specifically is driving that business?

That surgical and Sports Medicine, just to be clear which is, both our [indiscernible] membrane and the EpiFix business as well as our micronized business, or at least a portion of our micronized business we do have some EpiFix micronized as well, but would Mike go in there? He need the numbers there.

Well, we have distributors that are primarily focused on the spine business and we recorded a large order in the fourth quarter related to that.

Yes, you can imagine all those surgical procedures that would require the membrane. Typically from a seasonality perspective, the fourth quarter is a big quarter for them. Because people have used up their insurance co pays and deductibles and so forth so, usually are quite busy so that’s been a trend for us on the surgical side where we tend to have some pretty big numbers in the fourth quarter.

And again that’s one of the reasons why margins were a little bit down in the fourth quarter because as we said in the prepared remarks we had higher shipment to some of these distributors.

Okay than a clarification, any ways to quantify that? And then my next question is, given the Q4 results were there any hospitals or wound centers that were trying to burn through any existing inventories in the fourth quarter or may be potentially in the first quarter added to these reimbursement changes, or for the wound care they’re just not seeing on inventories?

Yes, on the wound care side, on that last question, we did hear that some of the facilities that had inventory, that they wanted to clear too before those newer reimbursement issues with them in the following year. Now, how much of that was out there, it’s hard to say, but we had heard of some circumstances like that.

Just in terms of numbers, to be clear surgical sports medicine revenue in the third quarter was 6.1 million, and it was 6.9 million in the fourth quarter, so an $ 800,000 increase. Wound care revenue was 9.2 million in the third quarter and 10.3 million in the fourth quarter.

Okay and that the last question I will as is just if you could, actually I have two more, I apologize. One, how long do you expect these new sales reps to ramp given that there tenure, when can we start to see their contribution in the numbers? And then the last question I have is just, I know you had something in your prepared remarks with negotiations with the FDA over the trials for the micronized products. But just any timing, where we can look forward to and we get more clarity there, that’s all I have, thank you very much.

All right, on FDA there’s nothing really changed from probably information we previously disseminated, we’ve got a meeting scheduled in early March, I forget whether we’ve exactly announced the date, that’s our first IND, pre IND meeting with them, we expect another meeting within the next 30-45 days after that and then we’ll get into the BLA process after those two meetings but those two meetings are pre meetings for the BLA process and when those two meeting are completed we’ll be in a position hopefully to discuss with the FDA our proposal to continue to market to a transition agreement. So I guess again the timing that we previously discussed is to impact probably something in the May. May timeframe we’ll have more information for shareholders on that subject.

And Bill, can you repeat that first question too real quick.

Just with the new sales reps you’re adding tenured reps, I mean long do you expect it to take them to ramp, when can we see this in the numbers do you think?

Yes, as you recall, typically we’ve used about a six month ramp rate to get up to $85,000 a month which is a million dollars a year run rate. I think we’re going to have a, that should be a very solid number and as a matter of fact I think some of the folks should be able to beat that. The only issue we’re going to have, it’s not really an issue it’s just the timing is when you have to get into a value analysis committees and so forth. Fortunately with the change in CMS I think that’s shepherding a little quicker response to these committees, so I do think that we’ve got a shot at on average a little better than that six months. So we seem to be getting some pretty good uptake just in the first few weeks of the new folks jumping in. So we’ve got a shot at maybe speeding that down by a month or month and a half.

The value analysis committees will be, very up to speed on what wastage means and the use of these previous products versus our products so we hope to see those come back, committees to move quickly.

Our next question comes from the line of Bruce Jackson - Lake Street Capital Markets, please proceed.

So, if we could just take a closer look at the guidance for 2014. How should we think about the quarter to quarter progression as the year unfolds, would you expect sort of a like a step up in Q2 and then a gradual rise or it’d be just gradual throughout the year. Just help us out with how you see the year unfolding from a revenue standpoint.

This is Pete, I think you’ll see a major step up from first quarter, second quarter and then escalating step ups from that point forward. There is tremendous momentum out there, I can assure you. If not this management team would not have made the decisions we made to bring as many people on as we have. So it’s a case of getting through these VAT committees and our people that we’ve hired generally all experienced, they know the product areas well, they know all the physicians and room centers well, so things will develop very quickly once they start.

Yes, already, I think you’re going to see that a sizeable step in the second quarter and then if you think about it, with all these new folks that we have online they’ll still have some moving to step up into the third quarter as well and then if we add another 20-30 people as we expect that we’re going to, 20-40 people we’ll get the continued build of that, the new element of the sales force. I think we’ve got pretty good coverage on the country right now, the only exception to that is, is Florida, since we don’t have first place yet, but even with that as we continue to add sales reps we wanted more, more condensed and more dense, we’ll have less wind chill time and they driving from account to account and have better and deeper penetration in the states we’re in, so I think you’re going to see some sizeable increases from quarter to quarter, each quarter through the year.

Okay, great and then turning to the new product pipeline, can you just tell us what the priorities are in terms of the BLA products, which ones you’re going to go after first.

I don’t think we’ve really disclosed that information. So let us make this commitment to you Bruce, we’ll give some insight here next couple of weeks because we’ll be with the FDA, it’s probably prudent for us to put our press release describing what that\ visits entails and in that press release we’ll give some descriptions on exactly which of the, there’s going to be more than one BLA which is first initiative involves and then we’ll give some insight into what our second initiative involves, I think it’s best to let us do that in a professional way with a press release and we’ll do it wrapped out around our FDA visit, how about that.

(Operator Instructions) Your next question comes from the line of Suraj Kalia, Northland Securities, please proceed.

Good morning gentlemen. So Pete, I guess or for Bill, all the sales reps that have been hired, are they more relationships on the commercial side or the VA side.

The vast majority of them are from the commercial side. A few of them may still have some good strong VA relationships, but I would say 95%, 90% of them, or something like that are focused on the commercial interest side.

Fair enough, and Bill just to follow up on the same question and I’ll keep this my last question. For these, you know you’re press release states that commercial sales in fiscal ’14 are going to be at least if I remember correctly going to be higher, at least you’re alluding the proportion of commercial sales is going to increase, am I correct in assessing that you all are just trying to shield yourself from the collateral damage of Shire and what’s going on in that front, hence you all are beefing up on the commercial side. Is that a safe way to look at that.

Not really, we’ve always since well before Shire imploded, we’ve always had this focus on wound care and commercial wound care so that’s been our plan two-four years so what’s happened with the issues in the market place, we’ve been able to accelerate that but it’s always been in the plan to move forward as we’ve stated.

Let me add this, we went after obviously VAs initially because there weren’t any reimbursement questions there, and the reason our products swept through the Vas very rapidly is because there’s clinical effect seen and its cost effectiveness. So that’s a microcosm of what’s going to happen on the commercial side, commercial side we have these reimbursement issues to settle and we’ve settled those now, as I say I think that the MACs are pretty much behind us. We’d be working four-six months this year very diligently on bringing the other commercial health plans, private health plans on, and that will again just add continued momentum to the commercial piece.

And as we said before when AVH Shire was up at the $200 million a year run rate, roughly a quarter of their business was government or VA business and three quarters of it was commercial, and we fully expected, have expected that our business would evolve into that kind of a ratio, maybe even more over time where it’s more in the commercial side because we have so many opportunities on the surgical side, and your fixed product line.

Fair enough, gentlemen thank you for taking my questions.

Next we have a follow up question from the line of Matt Hewitt, Craig Hallum Capital Group, please proceed.

Just two follow ups from me, first and I’m sorry if you disclosed this, I missed it, the HydroFix contribution either in Q4 or for 2013.

The total revenue for HydroFix in 2013 was roughly $450,000 and in the fourth quarter it was roughly a $150,000.

Okay, thank you, and then, lastly here, I think you previously discussed that the BLA process the trials associated with those application would likely start to impact the back half of the year, you’d kind of ball parked it around 3-5 million, is that still how we should be thinking about for our models.

I would certainly wait till four quarters start ramping any of that up, based on the timing we understand now and I think that’s a reasonable figure and again, I think what we’ll do when we put out a press release describing our forthcoming meeting, or after the meeting with FDA we’ll give more insights into that.

Okay, great, thank you very much.

Any other questions. Okay, well I thank you very-very -- Go ahead operator.

There are no further questions in the queue.

Okay, well I thank you very-very much for being on the calk, we’ll be with you in about another 60 days reporting first quarter and as I’ve always said, if there’s anything that changes with the way we have produced our outlooks and forecast we will let you know. That’s been the way we’ve run our disclosures over the decades and if there’s any issues that are going to develop that are different from the summary presented to you then we will certainly let you know. So thank you very much and I appreciate your support and your interest in the company.

Ladies and gentlemen that concludes today’s conference, thank you for your participation you may now disconnect, have a great day.