Good afternoon, and thank you for standing by. Welcome to the MiMedx Fourth Quarter and Full Year 2024 Operating Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Mr. Matt Notarianni, Head of Investor Relations for MiMedx. Thank you. You may begin.

Thank you, operator, and good afternoon, everyone. Welcome to the MiMedx fourth quarter and full year 2024 operating and financial results conference call. With me on today’s call are Chief Executive Officer, Joe Capper and Chief Financial Officer, Doug Rice. As part of today’s webcast, we are simultaneously displaying slides that you can follow. You can access the slides from the Investor Relations website at MiMedx.com. Joe will kick us off with some opening remarks and a summary of our operating highlights, and Doug will provide a review of our financial results for the quarter, and then Joe will conclude with some additional updates, including a discussion of our financial goals. We will then be available for your questions. Before we begin, I would like to remind you that our comments today will include forward-looking statements, including statements regarding future sales, operating results and cash balance growth, future margins and expenses, our product portfolios and expected market sizes for our products. These expectations are subject to risks and uncertainties and actual results may differ materially from those anticipated due to many factors including competition, access to customers, the reimbursement environment, unforeseen circumstances and delays. Additional factors that could impact outcomes and our results include those described in the Risk Factors section of our annual report on Form 10-K and our quarterly reports on Form 10-Q. Also, our comments today include non-GAAP financial measures, and we provide a reconciliation to GAAP measures in our press release, which is available on our website at www.mimedx.com. With that, I’m now pleased to turn the call over to Joe Capper. Joe?

Thanks, Matt, and good afternoon, everyone. Thank you all for joining us on today’s call. I am very pleased to report that we had an excellent 2024, culminating with another strong performance in Q4. Full year revenue grew by 9% and as you will hear today, our momentum remains strong and we expect 2025 to be another highly successful year for MiMedx. During Q4, we once again achieved solid year-over-year top-line growth, maintained an excellent operating margin and continued to generate strong cash flow. We accomplished all of this in spite of challenges due to the much-discussed Medicare reimbursement issue and the associated above average sales force turnover we experienced in select markets. I firmly believe our strong results would have been noticeably higher, but for these two issues. So, let’s take a few minutes to review the highlights of the fourth quarter and then I will update you on the progress we are making on our key priorities. Q4 net sales grew year-over-year by approximately 7% to $93 million, another excellent growth quarter. Full year sales closed at $349 million up 9% over the prior year. Gross profit margin was 82% in the quarter. Adjusted EBITDA was $20 million or 21% of sales in the fourth quarter and $76 million or 22% of sales for the full year representing an increase of $18 million over the prior year. We ended the year with $104 million in cash, an increase of $16 million during the quarter. We continued with the market release of HELIOGEN, our first xenograft, which is targeted in the surgical market. We began enrollment for a randomized controlled trial for EpiFix and we continued our strong advocacy for regulatory and reimbursement reform. Turning now to our strategic priorities. On prior calls, we consistently discussed our market approach…

Thank you, Joe, and good afternoon to everyone on today's call. I'm pleased to review our results with you all today. As a reminder, many of the financial measures covered in today's call are on a non-GAAP basis. So please refer to our earnings release for further information regarding our non-GAAP reconciliations and disclosures, including the reconciliation tables in the back of our press release that provide more detail regarding the adjustments made to calculate our non-GAAP metrics. I encourage you to review these materials alongside my comments today. As a reminder, unless otherwise noted, my discussion is on a continuing operations basis. For a full discussion of the impact of our discontinued operations, please refer to our most recent 10-K filed today and 10-Q filings. Moving on to the results. Our fourth quarter 2024 net sales of $93 million represented 7% growth compared to the prior year period. By product category, fourth-quarter wound sales of $61 million grew 10% versus the prior year, while surgical sales of $32 million were up 2% as reported. Excluding the revenue impacts of AXIOFILL and of our dental product that was discontinued in late 2023, our surgical sales increased 6% in the fourth quarter. We saw significant contributions from many parts of the business in the fourth quarter, including solid double-digit growth year-over-year from our EFFECT product lines, EPIEFFECT and AMNIOEFFECT, robust growth from international and modest but ramping contributions from our xenograft HELIOGEN, which is our first 510(k) cleared product. Our fourth quarter 2024 gross profit was about $76 million compared to $73 million last year. Our GAAP gross margin was 82% in the fourth quarter of 2024 compared to 84% last year. Excluding the incremental acquisition-related amortization expense from intangible assets of roughly $2.2 million in the quarter, our gross margins…

Thanks, Todd. As you've just heard, we had another solid quarter. Net sales were $93 million, up 7% in the quarter. The gross profit margin was 82%. Adjusted EBITDA was $20 million or 21% of net sales in the quarter. We added another $16 million to our cash balance, continued the market release of HELIOGEN, began the RCT for EpiFix, continued to invest in research designed to validate the use of our products in various applications, and we advocated for much-needed regulatory and reimbursement reform. Let me now turn to the latest on the proposed changes to the Medicare reimbursement system for the private office and adjacent care segments, a topic which we have discussed on numerous occasions. Shortly after our last call, the MACs announced their intent to implement the proposed LCDs on February 12, 2025. After the new administration took office, an executive order was signed, which called for a 60-day delay on the implementation of any new policies. The new skin substitute LCDs were included in this order and the implementation date is now April 13, 2025. Based on feedback from our outside advisors and activity within the new administration, we deem any further delay as highly unlikely. As key members of the new team are named, not surprisingly, the LCDs are a priority topic on which they are being briefed. We also know that this topic has come to the attention of the newly formed and high-profile Department of Government Efficiency, which was established in part to seek out and eradicate wasteful spending just like this. With the total Medicare spend in the private office and associated care settings running in excess of $1 billion per month, we can't imagine continued delays in the implementation of corrective solutions. We also believe it is highly likely CMS…

[Operator Instructions] Our first question comes from the line of Chase Knickerbocker with Craig-Hallum Capital Group.

Just first for me, specific drivers in Wound in Q4. That line item was quite a bit better than we were modeling. Was there kind of a recovery in EPIEFFECT growth? Was there kind of faster-than-anticipated recovery in those territories that had that sales turnover earlier in 2024? Maybe just a little bit of color there.

Yes. Chase, good to talk to you. This is Doug. And yes, it was our highest quarter since 2018, super proud of the way our sales team continues to execute, and certainly feels better than our third quarter. But like Joe said, international was a big catalyst for us. The EFFECTs products that I mentioned in my script, AMNIOEFFECT, and EPIEFFECT were certainly factors in our growth during the quarter.

And just specifically in Wound Doug, was there any drivers to call out in the quarter that kind of improved sequentially?

No, I don't think so. I think we've touched on the ones that we mentioned in the script.

And then just on 2025 as far as what guidance assumes, can you give us a little bit of a look into what your assumptions are for wound and surgical growth?

Yes. As both Doug and I talked about, right now, we're thinking at least high single digits across the board, not breaking out either one individually. Potential to do better, but we'll see, right? The first question is, why wouldn't you do better if there's all this market share up for grabs with the implementation of the LCDs in April? The short answer is because we don't have a model to point to. Likely there is going to be a fair amount of disruption and dislocation in the marketplace. No one is better positioned than us to benefit from that. So we do believe we will benefit from it. However, we have to kind of wait and see as we work through it. But it's -- should be interesting.

And maybe on that front, there's certainly a lot of noise out there kind of around the LCDs. You noted that your guidance assumes implementation. Any more specifics you can give us just around conversations you've had kind of enforcing your confidence? And then second, on that front for Doug, can you just help us quantify a little bit on what you kind of assume for impact from a benefit perspective from the LCD and kind of how you see that phasing into the year?

I like my answer on the upside. So Craig, first part of your question, Chase, we do not anticipate any further delay. A couple of things to point out. First of all, the delay that took place was not specific to SkinSub LCDs. It was kind of a good housekeeping move on the part of the new administration. And we're told that this is not uncommon when new administrations take office. They put a delay on any pending new policies until they have a chance to get folks in place to take a look at them. LCDs were included in that and not just the SkinSub LCD, but other LCDs. So, we don't see any indication for further delay. And based on input from our outside advisers, we are pretty confident that it will happen.

And just from a flow-through perspective with sort of the covered list being typically lower ASP products, we expect higher volumes this year to support the products that we have that are on the covered list. And so as a result, I think the biggest financial impact will be on our gross margin line as we look at sales mix that largely has lower ASPs. We will benefit, however, from higher throughput and higher volumes to cover some of our fixed manufacturing costs. But generally, that's the biggest line. But we continue to invest in our sales force and invest in evidence and the LCDs won't change that.

Congrats on the quarter. Starting off with HELIOGEN, would you refresh us on how you're thinking about that revenue opportunity and the level of contribution to growth you're baking into the guide for this year?

We have not broken out any numbers on HELIOGEN yet simply because it's in its very early stage of launch and market prep. It takes quite some time to run through value analysis committees and get the product contracted and in place, and that's ongoing. So to date, the contribution has been nominal. And we think it's going to be a much bigger contributor in '25, but not something that's material enough to break out at this point. And so we'll see. If I think gains market acceptance, we might start talking a little bit more about it numerically.

And then turning to your sales force, you caught up attrition. How have hiring plans gone since then? What are your thoughts on '25?

Yes. Look, I think the commercial team did a nice job, especially recovering from the above-average turnover we experienced midyear 2024. And that had a lasting impact throughout the rest of the year. So I think they've done a really nice job getting the team back up to speed. And obviously, turnover has come back to a more normalized rate. It's always disruptive when it happens because as you know, this is a noncontracted business and it tends to follow some of the sales -- a portion of it will tend to follow the sales personnel they go to another company. But we're in really good shape. We're at near full strength of where we need to be as we enter the New Year. So we feel pretty comfortable about that.

Our next question comes from the line of Anthony Petrone with Mizuho Securities.

Bradley Bowers on for Anthony. Just wanted to double-click on the LCD. Obviously, the two-month delay kind of at your hands. I just wanted to kind of hear what you expect to happen kind of on the day that there is this changeover that this is finalized, maybe assuming it is as proposed. It seems like you were probably ready to go for 212, so you kind of have an idea of what the plan is. So I just wanted to kind of hear about what you expect for business dynamics. Obviously, some of the other competitors that are off the market. Has there been stockpiling? Or are you guys now given preferential treatment?

Yes. Obviously, we've been preparing from an inventory standpoint. So we're comfortable that we'll have product -- plenty of product to meet demand. The commercial team has a variety of capital contingency plans in place depending on how these things are rolled out. There are still a few unanswered questions about specifically things like how our non-DFU or VLU wound is going to be reimbursed. Are we just going to stick to products on the list or other products going to be allowed to be reimbursed? So there's a little bit of unknown still, but it doesn't matter how it's rolled out. We're prepared to excel in any scenario.

And then maybe just to push on those topics. As I understand it, this ITC would do a good job of cutting back on some of the waste, but maybe some of the actual billing practices would still be ongoing, but this seems to fit right within the wheelhouse. So I wanting to kind of hear what your conversations are and maybe what the path is to pare down some of that excess spending and really let the good actors such as MiMedx kind of shine in this market.

Yes. I think we've been pretty vocal about our advocacy for reform. It's just not healthy, from a taxpayer standpoint, from a patient perspective, and just the healthcare industry in general. This is an issue that's passed its time to be cleaned up. And I know that folks at Medicare and the MACs have spent an awful lot of time trying to figure out the best way to address this. So if I were them, I would not let this ultimately get into the hands of those, I'd be out in front of it. And I think they have a plan to be out in front of it. But look, I think bringing up those is important because any further delays, frankly, run right in the face of what at least this administration has publicly said it's trying to do, and that is identify and root out fraud waste, and abuse. And we can debate which one of those three words best describes what's been happening in the skin substitute market. But it's certainly one of those three areas, and it's a wild overspend as we've outlined in the past. It's grown more than 20-fold in at least a 5-year period. So again, it's past its time to be addressed. And I think there's a lot of good people inside that have been trying to figure this out.

Our next question comes from the line of Brooks O'Neil with Lake Street.

I'm curious just there's a variety of what I might call "legal matters" that are sort of outstanding. I'd put in that category, the AXIOFIL matter with the FDA, the Surgenex suit related to employee turnover, and IP-related matters sort of, I guess, we'd call it the plethora of knockoffs that are available in the marketplace as we speak. If you could just give us a sense for where you think you are in those three areas, that would be a great help.

Yes, Brooks, I appreciate you bringing it up. So let's just talk about legal matters in general for this company. Several years ago, this company was spending a lot of money on legal matters. We joked that it was a law firm that happened to be in the med tech business. But there were a lot of legacy legal issues that the company was spending an awful lot of its capital on in the defense perspective. The three things you just talked about, AXIOFIL, Surgenex, and IP-related issues, we're playing offense on all of those. There are cases that we decided to proceed in all cases to protect our business. With AXIOFIL, again, as a reminder, we felt like the company was not being treated in a consistent fashion. There are three nearly identical products in the marketplace, AXIOFIL being one of them. One of those products has a designation as a 361, one is a 510(k), but we were told AXIOFIL has to be treated as a biologic drug and go through those drug-like trials. It didn't make any sense to us. It wasn't the biggest revenue generator for us. But it's precedent-setting and really, frankly, it's an opportunity to have the conversation with the agency about what is the best regulatory pathway for these products. And by the way, we're in favor of a more stringent regulatory burden like a 510(k) type of process versus 361. I think it's better for the industry. I think the fact that these are categorized as 361 products is at least half the problem we're having with the skyrocketing prices in the private office. These products are just too easy to drop into the marketplace. The only thing new there is that that case has been reassigned to a new judge, and…

I'll just say I'm looking forward to getting past this regulatory nonsense and moving to a more orderly situation in the marketplace. I think that will be later this year.

This is the first time -- this is the first sector of health care that I've been in where there's no clinical evidence required to bring a product to market. There's no premarket clearance and you get to set your own price. What the hell could have gone wrong?

Right. Well, it will get better. I'm pretty sure.

Yes, it will. And it will be a really nice industry once we kind of migrate through these maturation phases.

Our next question comes from the line of Carl Byrnes with Northland Capital Markets.

Congratulations on your progress. I'm wondering if you can comment a bit more on EpiFix in Japan, which was up 3x year-over-year. What's driving that? Is it number of docs trained? Can you talk that out a little bit and provide a little more detail on what's happening in Japan? All good.

Yes. As a reminder, we were the first human tissue in the marketplace in Japan, which meant it took a long time to prep that market to select the right distributor, get reimbursement for the product, train the doctors, have the doctors start to utilize product, see benefit from it, and then begin the reorder process. So clearly, when you're in a new market like that, you're going to target the largest wound care docs, key opinion leaders and the team did a very effective job of doing that. So you're seeing high growth off of a very low base. But it's a contributor. And originally, we had talked about this as being a fairly big TAM. Frankly, we don't know what the TAM is yet. It depends on how well the market develops and whether or not there's pushback. And also as a reminder that -- pushback around reimbursement, also as a reminder, the product is priced in the market at a point that is much higher than their current standard of care. So they have to get sold on the therapy and they have to really see the results. But we're definitely happy with the progress. I would have loved to see it be a bigger contributor, but that's not a knock on the team. That's just a knock-on effect that it takes a while to prep a market like this when you're creating everything from ground zero.

Carl, this is Doug. I would also add just from a grouping or categorization perspective that our other category that you're looking at includes -- it does include international, but it also includes a few other care settings. So it wasn't just international that drove that growth.

There are no further questions at this time. I'd like to pass the call back over to Joe for any closing remarks.

Thanks, operator. Appreciate you guys being on the call today and your continued interest in the company. We will talk to you in a few months. That concludes today's call. Thank you.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.