Good day, ladies and gentlemen and welcome to the MiMedx Group Inc, First Quarter 2015 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions]. As a reminder, this call is being recorded. I would now like to turn the call over to your host for today Miss. Alexandra Haden, General Counsel and Secretary. Madam, you may begin.

Thank you. 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 the 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 the Securities and Exchange Commission including our Form 10-K for the year-ended December 31, 2014. 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. Pete?

Good morning and welcome to our first quarter shareholder call. And I have with me Bill Taylor, our President and Chief Operating Officer and Mike Senken, our Chief Financial Officer. You’ve just Lexie Haden, our General Counsel. There are other corporate executives also on the call. Let me begin by making a statement that has become routine. The first quarter of 2015, was the 14th consecutive quarter of MiMedx meeting or exceeding our revenue guidance. This case we ended up in the upper range. We’ve calculated that unusually severe winter storms cost us at least a million in revenue for the quarter. We also take that into account when or whether when we give our first quarter forecast, but this one we had some exceptionally severe storms. Also the normal disturbances associated with pricing changes, whatever it is in the first quarter as it was in the first quarter a year ago when we had the same type of disruptions. It takes staff at most Wound Care centers a significant time to make these changes in their systems and always the latest patient treatment. On our [indiscernible] we had, but I would classify as a good quarter. As you look at on the rest of the year, we expect our quarterly performance to be very similar to the way it was last year, that is historically our first quarter has proven to be the weakest relative to quarter-over-quarter growth. The reimbursement confusion on the weather issues are behind us now and we expect robust growth each quarter during the reminder of the year. As in last year we currently expect the third quarter to be the fastest growth for us sequentially. From a strategic standpoint MiMedx has become the clear leader in advanced wound care therapy. We generally know approximately…

Thanks, Pete. Good morning everyone. First quarter played out differentially [ph] as we anticipated and we’re very well positioned to meet or exceed our increased full year projection. We anticipate our quarter reported growth will replicate the primary [ph] established last year. The seasonality of the first quarter is well established and the rest of the year will show accelerated growth. Our team did a great job in strategic and tactical planning last year in preparing for this year and the evolving market dynamics. The planning it takes to successfully manage these market variables is extremely complex. Frankly it’s so complex that many of our competitors refused to give any revenue guidance. Fortunately our team is very seasoned and understands those variables and what we can do to strategically to affect them in a positive way and for three and a half years we’ve shown that we can accurately project our performance quite well. As you can see from our press release, we increased our guidance $180 million to $ 190 million for the year, which is a sign that we feel very good about our opportunities this year. Of course it helps that our business is very diverse and although our platform technology comes from one source, the placenta, it certainly has a multitude of applications where it can be used and that diversifies our customer base and therefore gives us many opportunities to grow even when the market dynamics in certain sectors in a given quarter. People often ask me how we can be so accurate of our projections overtime, particularly with the companies growing at more than a 100% per year over three plus years. Really comes down to the multitude of opportunities that are provided by our Purion Process tissues. Remember we’re regenerative medicine company, not…

Thanks, Bill and good morning. The company recorded revenues for the first quarter of approximately $40.8 million, an increase of 108% or $21.2 million over prior year first quarter revenue of $19.6 million. On a market segment basis, wound care revenue was $29.8 million, which represents approximately 103% increase over prior year. The company believes that the recently introduced new sized in out new mesh configurations, which are working their way through the value analysis committee process will gain momentum beginning in Q2 and continue over the balance or the year. Surgical, sports medicine and OEM SSO for sure revenue was $11 million, which represents approximately125% increase over prior year. The growth in SSO revenue is a reflection of our strategic focus to grow both the SSO segment as well as the wound care segment. On a customer segment basis, commercial revenue was $27 million, which represents 158% increase over prior year, while federal revenue was $13.8 million, which is a 51% increase over prior year. As expected and reflected in our guidance commercial revenue was impacted by seasonality in the change in reimbursement somewhat offset by the addition of new customers in the afro mentioned introduction new sizes and the new mesh configurations. Government sales reflected penetration in new facilities as well as increased sales at existing facilities. Gross margins for the quarter were 87% as compared to 85% in the first quarter of 2014. The improvement was driven by product mix. R&D expenses for the quarter were approximately $1.8 million or 4% of quarterly revenue as compared to $1.4 million in Q1 of 2014. The year-over-year increase in R&D spending is driven primarily by increased investment in clinical trial. Selling, general and administrative expense was approximately $29.3 million for the quarter, with 72% of quarterly revenue as compared…

[Operator Instructions] Our first question comes from the line of Mike Matson of Needham and Company. Your line is open, please go ahead.

Hi, thanks for taking my question. I guess I wanted to start with the surgical business obviously it was much stronger than expected. Can you give us an insight into the various factors there that drove the growth and specifically I was wondering if you could tell us what benefit you saw from the robotic prostatectomy’s if any this quarter?

Well, we certainly grew in a number of areas and we did have growth in that area, the robotic prostatectomy’s, we haven’t broken those numbers out that much, at least at this stage. The one thing I will also point out is, in the first quarter we did not have any Zimmer revenue yet. That is expected to go this quarter. So we were pretty strong across the board in terms of our own product line as well as the [indiscernible], orthopedic as well as the urology and in surgical side of things. Also I want to highlight our EPIBURN. We had a very nice quarter with that. Again we did kind of a quite rollout of that. We had a sizable revenue in that area that last year would have been more in the EpiFix numbers and wound care, but since we have now our very specific product for burns, we include that in the surgical side of things because it’s more of a DRG focus.

Okay and you mentioned Zimmer, but what about Medtronic. Was there any kind of spots or stocking orders or is that more just selling product into them, if they’re selling it on their own?

It was kind of a continued phase of what we had in the fourth quarter. It was not a sizable jump up. We’re still working with them and moving our way up the management there to try and get much deeper focus on their end that they’re capable of.

Okay and then, just wondering if you could comment on what you’re seeing since April night in the Novitas regions, where they’ve started to cover some of the competitive products or you’ve been able to sort of maintain your share and pricing in those markets.

Well, first of all I can say, we haven’t seen any things that we classify as disruptive. Second of all, use my role to simply say it’s quite difficult to understand when American healthcare system is based on evidence based medicine, why Medicare and immediately would open up something of this nature, where they don’t require any evidence based medicine in order to participate, so it’s quite confusing. I think they’ve got something else in mind in terms of opening up like they haven’t and then again limited as I see what happens. Because at this stage they basically open that LCD up with any requirement for evidence based medicine, there’s no requirement for clinical studies or anything else and that’s a quite unusual. So we’ll see what plays out, but it may end up - they opened up initially and then as we paired back.

Yeah, this is Bill. One of the things I just want to highlight. There were already a few other areas that were like that because the Novitas states on the East Coast, I can’t remember which ones they are. It’s going to be Palmetto [ph] on the East Coast, we’re just like that that we’re open to anybody with a Q code and we’ve had –continued to lead the market in those areas. So our expectations, it will be the same in Novitas’s. There’s a lot of noise from the competitors, but what we’re seeing just like we saw Palmetto was that it was a lot noise, but a lot of folks didn’t realize two years ago that they could get into Plametto when they announced a year ago that they have coverage there, but they still don’t have very strong penetration. So we think we’re going to be just fine.

Okay and then my last question, just for Mike on the DSOs. I think you said they were 68 and that was up from 61, so it’s a fairly sizable increase if I heard you correctly. So can you explain that and does that have anything to do with the business mix that you had more of federal sales or something in the quarter?

I think Mike, some of it is the first quarter phenomenon. When we talk about weather and you talk about the first quarter getting off to a slow start, that’s also reflected in our shipments. And the shipments are weighted towards the backend of a quarter when you’re these calculations not on an average, but based upon a quarter end number. It can distrait the numbers a little bit. In addition to that with the surgical and sports area being up, there are higher shipments to distributors and their terms are a little bit different than to direct customers.

Okay, alright. That’s all I have, thanks a lot.

Thank you, Mike.

Thank you. Our next question comes from the line of William Plovanic of Canaccord Genuity. Your line is open, please go ahead.

Great, thanks. Good morning. Can you hear me okay.

Yeah, Hey, Bill.

Couple of questions here, just on the - I think there was an interesting comment with the EPIBURN product, you’re shifting basically revenues from the wound care bucket into the SSO bucket. And Mike, I don’t know if you’ve done the math on that, but if I work it, how much would have been classified? I think of anybody want to poke a hole in the quarter it would be that the SSO grew that faster, so this kind of takes that away, if some revenue is shifting between the buckets.

Bill, quite frankly I don’t think we want to fully disclose how much of the EPIBURN was included for competitive reasons. As Bill mentioned, it was a significant amount, but that - I mean let’s not also underestimate the fact that the exploration of the past year did have some impact. So overall we think we did well in EPIBURN.

Let me just add Bill, it wouldn’t fill the whole gap that you saw, but would fill a nice chunk of it. We’ll put it that way.

Good that’s helpful.

The next is you’ve talked about the mesh product as something that kind of - I think it was launched in February, when did that start gaining traction and then I was wondering if you would be willing to give us samplings of kind of monthly cadence to revenues, just so we can get comfortable with Q2?

Well, I’d say that it literally started picking up some momentum until March and we’re seeing that momentum continue. In terms of a cadence, I don’t know that we can get that detailed, but we’re seeing it grow the way we’d like. Obviously we’d like to grow even faster, but I think we’re pretty satisfied with where we’re at right now.

Bill, let me address the cadence issue. With 14 straight quarters of saying what we’re going to do and doing it, I don’t know it’s why as not say, we’re going to continue that. And we’ve always said and I’ll say it for a number of times again that if we’ve got issues, we will let the street understand them and I can’t surprise you, we’ll get them out early and get them an amount there. So we feel cut about the quarter and we’ve got our wholly second quarter numbers.

Perfect and then housekeeping questions, your tax rate was very low. I think you’re guiding 30% for the year, how should we think about the rest of the year and then your bought back a bunch of stock, what is the actual number of shares that we should be using for forward share count? Thanks.

So in terms of tax rate Bill, fundamentally the taxes that we recorded in the first quarter were state income taxes and that can be in the 3% to 5% range over the course of this year. As far as federal taxes are concerned, we’ve mentioned before that we have that differed tax asset that still holds the full valuation allowance. We do anticipate over the course of this year that that valuation allowance will be released. And so, in effect your federal tax rate will be zero.

Bill, was that not a good number?

It’s a great number and then just the share a question. Thank you.

In terms of share counts, so at the end of the quarter we were at, on a weighted average basis fully diluted 113.6 million shares. Total outstanding shares were 108.5 million. We don’t include in our forecast an assumption that we’re buying back shares, we kind of look at it as an opportunistic activity. So all I could tell you is, we ended the quarter at 108.5 million shares.

And then Mike, just on the tax thing, should I assume that 3% to 5% tax rate for the balance of the year and then Q4 is probably one we’d see the catch up for the valuation allowance?

I think at this stage that’s a good assumption Bill.

Great, thank you.

Thank you. Our next question comes from the line of Bruce Jackson of Lake Street Capital. Your line is open, please go ahead.

Good morning, thanks for taking the questions. So looking again at the surgical business, how many of the direct reps are dedicated to that business right now?

So on that one we have a group of folks that manage our spine and orthopedic folks as well as in our direct people on the surgical, so we add all those people we’ve got. I think we’re right around 20, with both the groups, when you include the direct surgical as well as the folks that manage the distributors and field agents.

Okay and then the incremental revenue growth was just quite strong. Was most that burn and could you suggest like current quarter, where the growth rate is coming from?

I wouldn’t say Bruce, that most of it was burn. There was a nice piece of growth that came from burn, but in the surgical market, we experienced kind of lumpy orders from our distributors. If I look back to 2014, we had strong distributor sales in the first quarter and the third quarter and weaker distributor sales in the second and the fourth. And this year is playing out, we believe the same way that last year did, so again burn was important to us, but it wasn’t the only reason for the growth on the surgical sports and OEM.

And we had some growth on the direct surgical side. If we add in there, so it’s really a combination of both those, a little bit of the distributor orders, but then the growth on our direct, on whether it be the burn or the prostatectomy and other type of surgical grafts.

Okay, great. Then with CollaFix, the first product, the Bovine Collagen product, that was a tendon or peer product, so is that going to be the first application again this time around. Have you done any animal studies and if so, how does that compare with the first version of the product? And then to the extent that you can tell us about what the regulatory strategy might be for that, whether it’s going to be a 510ks or PMA that would be very helpful?

We’ve done enough work to see that the placenta collagen is expected to perform equally as good as the Bovine. I don’t really want to go into lot more detail on that, but it looks very good obviously without the potential issues of Bovine source, which is when you get from a closed hurt and there’s a lot of concerns about BSC, which are not the same with human tissues. So we feel very good about that and we have ample supply based on, frankly parts of the placenta that we just throw away right now. In terms of our focus, again for competitive reasons I’m not going to go into a lot of details just yet, but you can expect probably first, at least one or two applications are likely to be 510ks. What we talked before about CollaFix in terms of a tendon repair, if it’s used to augment a tendon, then we expect that to be a 510k path. But if it’s used to bridge a gap in a tendon, that’s likely to be a PMA and our thought process has not changed on that. We do believe that that is still as we expected it a few years ago. So again if you had to bridge a centimeter of gap in the tendon then that will be a longer regulatory path, but we do expect several products earlier than something like that.

Okay, great. Thank you very much.

Thanks, Bruce.

Thank you. Our next question comes from the line of Matt Hewitt of Craig-Hallum. Your line is open, please go ahead.

Good morning, gentlemen. Thanks for the update. A couple of questions from me, first the shift on the government business going direct versus your long-term partner. How will that impact margins and when do you anticipate we’ll start see that, I would assume benefit?

This is Pete. Well, there will obviously be some gross margin implications there, but I would expect you’ll gain to see a little bit second quarter and it will feel as we begin to take more of that business of your own FSS.

And one of the things is, we don’t want to make this change abruptly because we want to make sure that the facilities have smooth transitions and don’t have any issues. And also we’ve been told that some of the facilities definitely like ordering from a Service Disabled Veteran-Owned Small Business because they have certain requirements for a portion of their spend to be from a better known business. So we don’t want to force those changes too soon, but yeah, we’ll have slightly improved margins.

Okay, great. And sticking on the margins front, thank you for the clarification on the mesh product regarding the punching holes, is it safe to assume that you can use those punches essentially in the injectable and will that enable some gross margin expansion?

We don’t like to waste anything here.

Very perceptive Matt.

Okay and then I guess last question for me. It sounds like Zimmer is taking a little bit longer to ramp and I’m curious if you think that’s being held up by the Biomet acquisition and maybe has that comes to a close and is consummated that you could see Zimmer coming back at a faster pace or ramping that opportunity for you guys?

Yeah, with Zimmer actually relative to Medtronic are ranking faster, I can say that. With us of course any larger company like that is not going to move as quickly as what we could move or would like to move. But we actually expect to start shipping first product to them this quarter. It will be a little different because we’re working a project with them or we’re actually shipping directly to their hospitals as opposed to a really large stocking order that goes straight to their facility. And in part that is because of their integration activities they expect to happen with Biomet, so they prefer to get started quickly even though the numbers may not be huge. They’d rather get started quickly, so that means once the Biomet acquisition goes through, they can leverage both sales forces, once all that’s finalized. So we’re very optimistic there because they have a focus from senior level management there that this is a very important product line for them, which is a little different than the mid level support that we have at Medtronic.

Great, thank you very much for the update.

Thanks, Matt.

Thank you. [Operator Instructions] Our next question comes from the line of Martin Bell, private investor. Your line is open, please go ahead.

Hi, Pete, how are you doing?

Good morning Marty, how are you?

Good. Just as an individual investor, when I see stock starting to go down and I wonder what happened, I look online to see if there was a press announcement or news, I don’t see anything. And I’m often tempted and I kick myself for doing it, but working a message for it, thinking those as we know are people who are shorts [ph] trying to put out information. You’ve spoken about Organogenesis, but I did see stuff on the board and wondered if it’s - we’re talking about some product from selecting [ph] with, headlines that it’s going to be MiMedx’s downfall. Is there anything about that product you can tell us?

Well, first of all Pete, don’t look at those blogs much at all. I’ve learned over years that all it does is raise your blood pressure a little bit. But anyway, Bill said, he’s seen that, I haven’t.

Marty, I know what you’re talking about. Biovance is from Alliqua. Alliqua is a company that’s in part been invested by Celgene. A good management team, I think they’ve got a lot of good things going for them, but they’re ruining their focus on wound care and that product Biovance, before Alliqua had it, was actually Celgene’s product. They had actually done a small clinical with that product on diabetic ulcers. It was published in 2009, frankly before we even became involved with surgical biologics. They had a 29% healing rate in 12 weeks, which is not that much better than a standard of care. The single layer amnion, it’s [Indiscernible]. And Celgene, the big company they are was not effective with moving that. I would assume because it did not have very good clinical efficacy and that’s also the company that recently bought Celleration, which has missed therapy, which we took a look at as well and declined because our technology frankly doesn’t need that. I would just say that, a company that buys that technology may not be as enthusiastic about their amniotic tissue is with what we are because if they were, they wouldn’t have bought that company. So that’s my true sense.

That’s good to hear. Thank you very much.

Marty, let me add something to this because I know the volatility of our shares. It’s something that none of our shareholders like and certainly we don’t like. And we’ve done the things know how to do to reduce that as much as possible. But I can tell you that having run public companies now for 33 or 34 years, we have some very unusual activity in this company and it’s not many things I haven’t seen are dealt with. But I also take that right back to the fact that, there’s two elements one again competitor; number two, there have been some hedge funds that have bet heavily against us recently. Last year we’ve taken some strong short positions and are doing their utmost to get the story out and get it sold. I just cannot understand it, I’m not fairly sophisticated investor and to take a company like ours that has a base technology we have, the management experience that we have, a track record of 14 straight quarters and the real thing is going to ruin short stays and have done that before, is when the press release comes out and says, company X has been acquired by company Y. I understand, except the fact that they who have taken a position and they’re probably way under water and they need to try to figure out ways to exit gracefully. But I just don’t understand, we’re just not a good short candidate and of course I’m the CEO, so take that for what it is, but I just don’t understand that. But it’s there until we continue to be quarter after quarter relentless, doing what we’ve been doing for 14 straight quarters and some day maybe they’ll realize. But I apologize for the volatility. All we can do as a management team to work it through and we’re continuing to fair it out, the issues that seem to be causing some of it. So try to stay away from the blogs and you’ll see this management team keeps our shareholders very informed and as I’ve always said, if we’ve got a problem that we’ve misstated something or we’ve miscalculated some, we’ll get out to shareholders quickly with it. So thanks for your patience.

Thank you for all you’re doing. I don’t think at least as a shareholder we could ask for much more. Thank you.

Well, thank you.

Thank you. Our next question is a follow up from the line of William Plovanic of Canaccord Genuity. Your line is open, please go ahead.

Hi, great. Thank you for letting me have a follow up question here. Just in clarity, so with the reclassification of some of the AmnioFix is you start to sell the EPIBURN and I’m sorry, the EpiFIx to EPIBURN. Do you think there could be some further shift of buckets as we go through 2015, where some of the EpiFix is still be sold into burn, so we could see some degradation of that wound growth because of that and enhanced SSO growth or has that all taken place in Q1, ’15?

I don’t think you’re going to see much of a difference going forward and just to remember last year, we were used in some burns, but not a lot on EpiFix. It’s hard to delineate exact numbers because we don’t always get our TUR cards back, the Tissue Utilization Records. So it’s been more of a focused effort for us on burn here recently. So I guess that would be normally be in last year’s numbers, but we haven’t added focus on it. So I guess that’s the way to look at it.

Yeah, Bill. Maybe a follow up to the question you asked earlier and my struggles with it. Just keep in mind what’s happening is similar to what we had with the micronized from ’13 to ’14, where we had one brand of micronized and then we came out with an EpiMiecronized and an AmnioMicronized and then started reporting them in the two different segments. We’ve done on the same thing on the burn side, so we’ve created a brand called EPIBURN and what it’s doing is - whereas last year it would have been a larger sized EpiFix that happened to be recorded as part of wound, it’s now being recorded in surgical and sports. The difficulty we have in looking it at all of our large sized revenue last year is to those points. The only way you can drill down into it is, hopefully you can find the tissue utilization records which give you those larger sizes that were actually used in burn cases. And quite frankly we haven’t done that detail analysis, we decided to come up with the brand EPIBURN because we felt it was a significant market and we wanted to get clarity there, but that’s what’s happening here. So it’s more difficult to analyze that when you think.

Okay, but the take away though is that you’ve probably - whatever the magnitude was Q1, ’15 versus Q1, ’14. That should be similar as we go through the year, so the ramp as we think about sequentially Q2 versus Q1 in each of those buckets should be more normalized as we think of a business. Of course you also don’t have the transition into the bundle.

I would agree with that statement. I think that’s right.

Okay, that’s helpful. That’s all I had. Thank you very much.

Thank you, Bill.

Thank you and with no further questions in queue, I’d like to turn the conference back over to Mr. Pete Petit for any closing remarks.

Well, thank you for joining us this morning and hopefully the conversations and our answers to your questions have been helpful. We look forward to continue to give you all good news and we’ll go from there. Thank you.

Ladies and gentlemen, thank you for your participation in today’s conference. This does conclude the program and you may all disconnect. Have a great rest of your day.