Good morning, ladies and gentlemen, and welcome to the Second Quarter 2019 Earnings Conference Call for Organogenesis Holdings Inc. [Operator Instructions] Please note that this conference call is being recorded and that the recording will be available on the company’s website for replay shortly. Before we begin, I would like to remind everyone that our remarks today may contain forward-looking statements that are based on the current expectations of management and involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated, including the risks and uncertainties described in the company’s filings with the Securities and Exchange Commission, including the item 1A Risk Factors of the company’s Form 10-K for the year ended December 31, 2018. You are cautioned to not place undue reliance upon any forward-looking statements, which speak only as of the date made. Although it may voluntarily do so from time to time, the company undertakes no commitment to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by the applicable securities laws. This call will also include references to certain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP. We generally refer to these as non-GAAP financial measures. Reconciliations of those non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are made available in the earnings press release on the Investor Relations portion of our website. I would now like to turn the call over to Mr. Gary Gillheeney, Organogenesis Holdings Chief Executive Officer. Please go ahead, sir.

Thank you, Victor, and welcome everyone to Organogenesis Holdings second quarter 2019 earnings conference call. I’m joined on the call today by Tim Cunningham, our Chief Financial Officer. Let me start with a brief agenda of what we will cover during our prepared remarks. I’ll start with a high-level overview of our revenue performance during the second quarter of 2019. After my opening remarks, Tim will provide you with a more in-depth review of our quarterly financial results as well as an overview of our financial guidance for 2019, which we updated today in our earnings release. Following Tim’s discussion of our financial results and outlook, I will then share some thoughts on why we believe we are well positioned for strong performance in 2019 and solid long-term growth going forward. And then we’ll open it up – the calls – for questions. So let me begin. After a strong start to the year in the first quarter, the momentum continued in the second quarter as our continued execution drove impressive results. Our total revenue increased 54% over the first half of 2019, our gross profit increased 81% and we reported strong improvements in profitability with our operating loss and our adjusted EBITDA loss decreasing 47% and 51%, respectively, year-over-year. We are focused on continuing to execute over the balance of 2019, a year in which we expect to increase our net revenue by 29% to 35% year-over-year as reflected in our full year guidance, which we updated as I mentioned this morning in our press release. For the second quarter, we reported total revenue growth of 49% year-over-year, driven by sales growth in our Advanced Wound Care products of 50% and sales growth in our Surgical & Sports Medicine products of 46% year-over-year. This strong growth was driven by…

Thank you, Gary. I will begin with a review of our second quarter financial results. Revenue for the second quarter of 2019 was $64.9 million compared to $43.6 million for the second quarter of 2018, an increase of $21.4 million or 49% year-over-year. Unless otherwise specified, all growth is based on a year-over-year basis. Revenue from Advanced Wound Care Products for the second quarter of 2019 was $55.2 million compared to revenue of $36.9 million for the second quarter of 2018 an increase of $18.3 million or 50%. Revenue from Advanced Wound Care Products represented 85% of total revenue in the second quarter of 2019, consistent with the prior year period. The increase in Advanced Wound Care revenue was primarily attributable to additional sales personnel, PuraPly regaining pass-through reimbursement status for the two year period effective October 1, 2018 and the continued growth in adoption of our amniotic products, Revenue from Surgical & Sports Medicine products for the second quarter of 2019 was $9.7 million, compared to $6.7 million for the second quarter of 2018, an increase of $3.1 million or 46%. Revenue from Surgical & Sports Medicine products represented 15% of total revenue in the second quarter of 2019, consistent with the prior year period. The increase in Surgical & Sports Medicine revenue was primarily due to the expansion of our sales force and the penetration of new and existing customer accounts. As of June 30 2019, we had approximately 245 direct sales representatives, up from 215 at year-end and approximately 145 independent agencies, up from 130 at year-end. Revenue from PuraPly products for the second quarter of 2019 was $29.7 million compared to $12.8 million in the second quarter of 2018, an increase of $16.9 million or 133%. Revenue from PuraPly products represented approximately 46% of total revenue…

Thanks, Tim. Overall, we are pleased with our operating and financial performance over the first six months of 2019 and we are focused on continuing to execute over the balance of 2019, a year in which we expect to increase our net revenue by 29% to 35% year-over-year as we continue to drive strong adoption and utilization of our comprehensive product portfolio in both Advanced Wound Care and Surgical & Sports Medicine. e have a strong commercial strategy and our continued success in executing this strategy will result in strong adoption and utilization of our differentiated product solutions for both markets we serve in addition to strong commercial execution. Our strategic growth plan include priorities in the areas of operational progress, including capacity and margin improvement and continued development of our new product pipeline and improving our overall profitability profile. Importantly, we are committed to delivering on our mission to provide integrated healing solutions to substantially improve medical outcomes, while lowering the overall cost of care to the healthcare systems. And we believe we have several unique strengths that position us well for future growth. We are a leader in the regenerative medicine space with strong brand recognition. We are well positioned in large, attractive and growing markets, specifically Advanced Wound Care and Surgical & Sports Medicine. We have a comprehensive suite of products to address the clinical and the economic needs of our patients and our providers. We have a large and growing body of clinical data and a portfolio of products with FDA and PMA approvals and FDA clearances, and we’ve established a robust and extensive customer relationships with hospitals, wound care centers, government facilities, ambulatory surgery centers and physician offices to sell our broad portfolio of products. We’ve built and established a scalable regulatory manufacturing and commercial infrastructure in both markets we serve and our executive management team has extensive experience in regenerative medicine industry, posting over 100 years of collective experience and accomplishments in the space. This experience allows us to operate from a deep understanding of the underlying trends in regenerative medicine and the scientific, clinical, regulatory, commercial and manufacturing requirements necessary to succeed in our industry. We look forward to speaking with the investment community in the future and we appreciate your interest. And with that, operator, I will turn it over to you.

Thank you. [Operator Instructions] And our first question will come from the line of Ryan Zimmerman from BTIG. You may begin.

Great. Thank you. Can you hear me okay?

Yes, Ryan.

Gary, Tim, congrats on the continued execution. Just to begin, let’s start with guidance. You have a few moving pieces. It looks like PuraPly is doing exceedingly well. I think your guidance raise implies about a 15.5% increase at the midpoint for PuraPly. So I’d just love if you could walk us through how you’re thinking about that PuraPly guidance and the run rate you’re thinking about going forward? Or just the formulation that you’re coming up with for that PuraPly guidance? And then I have some follow-ups.

Sure. This is Tim, Ryan. I’ll start and then I’ll let Gary take over. We tightened the range as we get further into the year. In the first half, we tightened the range. With that, we raised the Surgical & Sports Medicine range. We brought up the lower end of the range and by bringing up Surgical and brought up to midpoint. With PuraPly, we – as you recall in January in the first quarter, we took Affinity off the market. So what we have done is we’ve sold more PuraPly as well as NuShield to make up for that taking that product off the market.

That’s very helpful.

Ryan, just to add to that. Tim is correct. Affinity off the market has certainly put some pressure on the company, but our portfolios has responded and PuraPly and NuShield is clearly picking up that slack. Back in the first half of the year, we actually exceeded our expectations for Affinity with the excess in additional sales of PuraPly and NuShield. So we’re pretty excited about that. We’re also seeing deeper penetration in additional new physician specialties. And we’re seeing more and more use of the product in smaller wounds. Actually today, over 70% of the units that we sell are on the smaller size and today would fit under the bundle, if in fact, the product was still under the bundle. So we’re seeing good adoption. We’re seeing an expansion of the product profile in smaller wounds and different physician specialties, which is our strategy.

That’s very helpful. And then looking at Surgical & Sports Medicine, it continues to trend really well. The implied guidance on the back half of the year does imply a bit of a step down. So is that conservatism on your part because you seem to be doing better than I think even you initially expected on the Surgical & Sports Medicine side?

Yes. Ryan, this is Gary. So last year, we had a strong third and fourth quarter. But more importantly, in Q4 we typically see what we call a seasonal bump. But last year, that seasonal bump was extremely strong and we weren’t sure whether that’s an anomaly and not comfortable guiding to that additional bump in Q4. But we are seeing strong trends. We are continuing to add agencies. So if we do experience a similar seasonal bump in Q4 this year, we would be trending towards the higher end of the range. But we’re not correct it given in our guidance because we have seen it basically one-time.

Fair enough. I’ll let others to ask some questions. I hop back in queue. Thank you.

[Operator Instructions] Our next question comes from the line of Steven Lichtman from Oppenheimer. You may begin.

Thank you. Hi, guys. Just building on Ryan’s question on PuraPly. You’re coming in higher than expected. Can you update us on efforts to capitalize on the pass-through period here? I know you talked about expanding payer coverage, adding sizes, increasing education. Can you provide an update on those potential efforts?

Sure. As it relates to PuraPly, we are seeing a much more usage of our smaller sizes of our PuraPly products. That’s very encouraging to us because those smaller sizes do today fall under the bundle from a pricing perspective. So that revenue is somewhat protected. We’re also seeing additional physician specialties. We’re seeing more product in the office. We’re seeing more product in plastic and some of the trauma cases. So the expansion is working and those sales are fairly sticky the way we see them. And we’re pretty excited about it.

Okay, great. Thanks, Gary. And then sales force hires and independent agency adds continues to be strong. Any changes in your thoughts on how many adds you’ll have on both fronts in 2019?

I think we’re still comfortable that we’re going to be adding 50 to 60 direct sales reps in our Advanced Wound Care business and 25 to 30 new agencies in our Surgical & Sports Medicine business. So we’re comfortable with that. And we are building that sales force consistent with our capacity increases, particularly on the amnion side. So as we ramp-up our capacity and we’ve seen a nice boost in capacity of our amniotic production in Q2 for NuShield, which again is taking a part of the burden of the Affinity product being off the market along with PuraPly, we don’t expect to see another improvement – significant material improvement in productivity until Q4. So the addition of our reps and the expected improvement in revenue will follow that capacity.

Got it. Thanks, Gary. I’ll jump back in queue.

Thank you.

Thank you. And I’m currently showing no further questions at this time. That does conclude our conference for today. Thank you for your participation.

Thank you very much.

Thank you.