Good afternoon, ladies and gentlemen, and welcome to the Third Quarter 2021 Earnings Conference Call for Organogenesis Holdings, Incorporated. At this time all participants have been placed in a listen-only mode. 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 Item 1A, risk factors on the Company’s most recent annual and quarterly reports. You are cautioned not to 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 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, Sr., Organogenesis Holdings’ President and Chief Executive Officer. Please go ahead, sir.

Thank you, operator, and welcome everyone to Organogenesis Holdings third quarter 2021 earnings conference call. Today, I'm joined on the call by our Chief Financial Officer, Dave Francisco. Let me start with a brief agenda of what we'll cover during our prepared remarks today. I'll start with an overview of our financial performance in the third quarter including a discussion of the key drivers of the strong revenue growth and profitability our team delivered in Q3. That’s my opening remarks. Dave will provide you with a more in-depth review of our third quarter financial results and the updated guidance for 2021 that we updated in this afternoon's press release. And then we'll open up the call for questions. Beginning with the review of our third quarter revenue performance, I'm pleased to report that we delivered another quarter of strong performance despite a tougher than expected operating environment. During the quarter, we reported revenue growth of 13% year-over-year to 113.8 million driven by 19% growth of our Advanced Wound Care products, which also had a 41% decrease in the sale of our surgical in sports medicine products. As expected, our Surgical & Sports Medicine results reflected the headwinds for our renew and new cell product lines following the expiration of the FDA enforcement grace period for those products, which ended on May 31st of this year. Excluding net revenue from these products, our net revenue increased 20% year-over-year on an adjusted basis in the third quarter. A full reconciliation of our non-GAAP adjusted net revenue to GAAP net revenue is included in our earnings release. Our performance in Q3 continues to reflect that strong execution against our key pillars of our growth strategies, which includes leveraging our comprehensive and differentiated portfolio products, diversifying our revenue sources across multiple sites of care…

Thank you, Gary. I'll begin with a review of our third quarter financial results unless otherwise specified all growth rates referenced during my prepared remarks are on a year over year basis. As Gary mentioned, we were pleased with a strong revenue growth in the quarter given the challenging environment as well as the prior year comparable. Net revenue for the third quarter of 2021 was $113.8 million up 13% and normalizing for the loss of renewal and new sales, we grew adjusted net revenue by 20%. Our Advanced Wound Care revenue for the third quarter of 2021 was $107.3 million up 19%, driven by our expanded sales force and increased adoption of our PuraPly line extensions launching the second half of 2020. Revenue from Surgical & Sports Medicine products for the third quarter of 2021 was $6.4 million down 41% driven by the impact of sales of a renew and new sale products, which we stopped marketing after May 31, 2021 due the expiration of the FDA's enforcement grace period. Revenue for PuraPly products for the third quarter of 2021 was $56.9 million up 39%. As Gary indicated earlier, we were pleased with the continued strong performance from the PuraPly brand that sales have increased 33% year over year over the first nine months of 2021. Regarding our commercial footprint, we ended the quarter with 330 direct reps and expect to achieve our goal of ending the year with 340 direct representatives compared to 300 as of December 31, 2020. Gross profits of third quarter of 2021 were $87.6 million or approximately 77% of revenue compared to 77% last year. Operating expenses for the third quarter of 2021 were $171.3 million compared to $55 million last year, an increase of $16.3 million or 30%. The increase in operating expenses…

And our first question will come from Ryan Zimmerman from BTIG. Your line is now open.

I appreciate all the color you gave today on guidance and commentary on CMS. I guess, starting with guidance for both of you guys, as we think about the recovery into the fourth quarter, you have PuraPly kind of going up offsetting some of the amniotic sales, specifically due to Affinity's delay. And so, just help us understand kind of how the wound market is recovering in the fourth quarter? And why we should expect to see stronger PuraPly sales, maybe offsetting some of the other slower areas like a Surgical & Sports Medicine or amniotics? Thank you.

Sure. So I mean, the environment really is not improving dramatically. We continue to see the impact of COVID. I think for our PuraPly products, one of the areas that's really helped the product is, we have more accounts, more physician specialties, it's a more established brand and we're able to focus our large sales force on selling that product, because of its brand equity and because of the customers we have. So, we've been able to drive a little extra growth within those existing accounts and some additional accounts. So, it's really the utility of the product and the focus of our sales force. We've done that in the past and it really had an impact. Dave, if you have a different

No, I think that’s right. I mean it’s just as you said, it's a well-established brand continues to be something that the customers find a lot of clinical utility in. And we continue to see good growth in that product line.

And Garry, just digging a little further in that and I have one follow-up. But are you seeing offsetting usage of some of the other products -- are you seeing offsetting usage, I guess, of PuraPly just given your focus on it relative to potentially other products that are in your portfolio or others? And then I just want to ask a follow on Affinity.

Sure. So, PuraPly is very different product. I mean, ultimately, all the products get to a point of healing. So, our focus when you're selling Affinity -- excuse me, PuraPly is, it's a different focus. It's a different patient. It's a patient earlier on in the process where Affinity is more of a recalcitrant wound, layering the process and it's a different site of care. So, our sales reps will then focus on a dermatologist or a plastic surgeon office, where that product PuraPly can be utilized where you wouldn't with Affinity. So, it really does expand the use of the product. They can be some because ultimately, the objective is to heal the wound, but the type of patient and the sites of care are a little bit different. So, we don't expect a significant amount of cannibalization across tissues.

And then, just lastly, for me, as we think about Affinity, I mean, it's been obviously a subject of investor discussion this quarter. And so, how much of Affinity -- the impact and guidance that you've laid out? How much do you think that that's due to the delay in rollout versus maybe other factors? And what impact have you seen in the fourth quarter from CMS' error with the MAC in terms of utilization? And any color you can provide maybe on what kind of their expectation or what they've said or indicated about the plan going forward would be appreciated?

So, CMS has not provided any color. We wouldn't discuss any discussions we have with them, but we do expect to get the rate reestablished as I mentioned. So when we filed for a published ASP, when you move to a published ASP, you will have a pause and that's considered in our guidance when you moved to that published ASP. And that pause is related to benefit verifications and other changes that happen with the product. So, you'll have those types of impacts. You also have the rest of the country, which is the strategy here where not selling the product, where you have the opportunity to sell to the entire country and build the brand more broadly and build a base for long-term growth. So, there are changing dynamics clearly when you move to a public ASP, which is, again, something that we filed for and we believe is in the best interest for the long-term growth of the product. So, clearly not being able to get out those new customers in those regions where we haven't sold a product at all has really had an enormous impact. So, you get the benefit of those additional regions, and you may have some loss in existing regions, but overall, you end up at a better place. But we weren't able to get at those new regions and get out those customers. That's a major impact on Affinity for the quarter. Dave, would you comment on that.

I agree it's all about access and kind of adopting a new technology. So, it was really challenging in the period.

Your next question comes from Matt Miksic with Credit Suisse. Your line is open.

Hi, thanks guys for taking the question, and congrats on a really strong quarter and a tough environment. Maybe I apologize Gary, if I missed it, but just because of the questions and focus around reimbursement around Affinity and PuraPly. Just wondering, if you provided -- if you could provide any color on like the trajectory of growth, the cadence of growth, the second and third quarter? And maybe what your expectations are in the fourth quarter, understanding guide by products like that, but just whether you're expecting things to improve or remained stable? Just anything you'd be willing to share would be helpful. And I have one follow up.

Sure. So we certainly expect sales of Affinity to approve in Q4 even with the loss of published ASP. There will be a pause again in October. So, we expect to see that and we did see that. And we're now starting to see the product pick back up once benefit verifications are done and folks understand that the product facility and reimbursed. So, we feel like that there will be a slight improvement in the product will grow in Q4. We expect to have a published ASP in January, and then we will re-launch the product again in January. And we would expect a pause again when you have a change in your ASP and you now have a published ASP, which is different. There'll be benefit fabrication process, which normally happens in Q1, anyway as deductibles reset for our customers. So, we do expect that there'll be some pause going into Q1, but ultimately we expect Affinity to continue to be a growth driver for the Company going forward.

Okay. And just need to understand that the value of the product. I know we spent a fair amount of time making calls out to clinicians about the product early on in our diligence and covering the Company over the past several years. And the feedback is certainly been positive, but I thought it might be helpful just propose to understand, given the array of amniotic products that are out there. Just remind us about any where is it used that you maybe would not use a dehydrated tissue amnion or just a little more color on where clinicians really seek it and use it and particularly I guess in this physician channel only at this points?

Correct. So it is unique. It is the only fresh amnion in the space. So, it has living cells in the product, similar to many of our other products. That's part of who we are as living active technology. So, when a wound is recalcitrant, meaning it hasn't really closed more than 50% in four weeks. And the clinician is challenged and they feel an active product like Affinity is really what's needed to jumpstart the wound. That's really the value of the product. It's when you have that wound, that's really difficult. Again, the question feels an active living type technology would help that wound to healing through the proliferative phase ultimately to healing.

Next question comes from Steve Lichtman with Oppenheimer. Your line is open.

Thank you. Hi guys. Gary, just on the ASP update for the fourth quarter, for January -- excuse me. What gives you the confidence that, it will be on the next list? I know you mentioned not wanting to talk about any conversations with CMS, but anything you guys have looked at relative to prior situations or any outside consultants or anything to give you that confidence?

Well, sure. We certainly have a lot of outside consultants, given us a lot of confidence that, that would happen. I think it's important to note that, we received an ASP, a published ASP for the quarter. It was just incorrect and I'm in the process of trying to get it corrected. We didn't meet the timelines and weren't able to get the ASP re-established. So, it was a filing error, and this happens often. What we've been told by our consultants is the match will typically reimburse it. And we are seeing that, so that's ended up being accurate, and then you re-file correctly and it'll get re-established again. So, we have no reason to believe or any reason to believe that, it wouldn't be reestablished at this point.

Okay, got it. And then relative to COVID, I just wanted to put a finer point of what you're seeing out there. It sounds like you're seeing pretty steady environment versus what you saw in the third quarter. And what part of your business specifically would see more of an impact versus others? As you mentioned, you've diversified a lot, so certainly not all. But, if you could talk a little bit more color on what's impacted and what you're seeing out there today?

So, I mean, our entire business has really impacted. What's troubling is when you don't have access and you're launching a new technology like Affinity, it's challenging because you need multiple meetings, you need training, replenishing typically goes through benefits verification obviously, and then a trial period with the product. So, there is a lot of access that's required. So, anything that's new or new customers are more challenged. Our existing accounts where we have great brand equity, we have great relationships, we're able to continue to sell and go a little deeper which helped PuraPly this past quarter. That's really the challenge is branching out with new technologies, and new accounts or new physician specialties when you don't have access.

Next question From Danielle Antalffy with SVB Leerink. Your line is open.

Hi. This is Erin on for Danielle. Thanks so much for taking our questions. So congrats on the quarter. I just wanted to kind of dive a little bit deeper into the COVID headwind. I know you mentioned that, that staffing shortages is creating a challenge. I just was hoping to see, if there is any way to quantify what that impact looks like in 3Q? It just seems like this is kind of a larger headwind that that could potentially linger. So just wanted to kind of get a sense of how this may impact growth going forward?

So, third quarter impact, we estimated to be about $4 million. I think, as you move into Q4, it's a little bit more difficult to tease it out, just because of the components that Gary had said about the access. This is a change in dynamics in the launch and how much is this associated with specific COVID related. It's a little bit more challenging to tease out.

Yes, it is. But we think there's about $4 million third quarter. But we view that -- we clearly think that the headwind is going to exist Q4, and we're battling it and navigating it with our portfolio in our customers. And we also think you could leap into the first half of next year as well based on what we're saying. So, I think seeing that as well.

Thanks all for the color. And then just on the office channel, obviously, the diversification of care setting has helped you power through some of the COVID-headwinds. I just wanted to get a sense of how penetrated you are into the potential accounts? And how much runway is potentially left in this channel?

So, we don't really provide how many accounts, but what I've said before is the channel is large, it's about 12,000 offices, and we -- there's about 6,000 high potential offices. We're not anywhere near penetrating that channel significantly underpenetrated.

We are currently showing no remaining questions in the queue at this time. That does conclude our conference for today. Thank you for your participation.

Thank you.