Good afternoon, ladies and gentlemen and welcome to the Fourth Quarter 2021 Earnings Conference Call for Organogenesis Holdings Inc. 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 of the company’s most recent annual report. 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 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 present in accordance with GAAP are available in the earnings press release on the Investor Relations portion of our website. And I would now like to turn the call over to Mr. Gary S. Gillheeney, Sr., Organogenesis Holdings’ President and Chief Executive Officer. Please go ahead, sir.

Thank you, operator and welcome everyone to Organogenesis Holdings fourth quarter 2021 earnings conference call. I am joined on the call today by Dave Francisco, our Chief Financial Officer. Now, let me start with a brief agenda of what we will cover today during our prepared remarks. I will start with a high level view of our fourth quarter and full year results, including our commercial, operating and financial highlights. I will then provide a review of the progress we have made against our strategic initiatives in 2021 as well as some color on our growth expectations for 2022. After my opening remarks, Dave will provide you with a more in-depth review of our fourth quarter financial results, our balance sheet and financial condition at year end, and the financial guidance for 2022 that we included in this afternoon’s press release and then we will open it up for questions. Let me begin with a review of our results for Q4, another quarter of strong performance, rounding out a transformative year for the company. We reported net revenue growth of 20% year-over-year to $128.6 million driven by 30% growth in our Advanced Wound Care products, which offset a 45% decrease in the sale of Surgical & Sports Medicine products. In the quarter, both segments exceeded our expectations driven primarily by the strength in our amniotic franchise. As expected, the decline in Surgical & Sports Medicine reflects the headwinds of our ReNu and NuCel products following the expiration of the FDA enforcement grace period on May 31. Excluding net revenues from these products, total net revenue increased 28% year-over-year on an adjusted basis in the fourth quarter. In addition to a better-than-expected net revenue result in Q4, we generated strong adjusted EBITDA of more than $26 million, representing a 20.5% of…

Gary, thank you. I will begin with a review of our fourth 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 the strong net revenue growth in the quarter given the challenging operating environment. Net revenue for the fourth quarter of 2021 was $128.6 million, up 20%. And excluding ReNu and NuCel, we grew adjusted net revenue by 28%. Our Advanced Wound Care net revenue for the fourth quarter of 2021 was $121.4 million, up 30%. And net revenue from Surgical & Sports Medicine products for the fourth quarter of 2021 was $7.2 million down 45%, driven by the impact on sales of our ReNu and NuCel products, which we stopped marketing after May 31, 2021, due to the expiration of the FDA’s enforcement grace period. Net revenue from PuraPly products for the fourth quarter of 2021 was $62.6 million, up 38%. As Gary indicated earlier, we’re pleased with the continued strong performance from the PuraPly brand, with sales increasing 35% year-over-year in 2021. Gross profit for the fourth quarter of 2021 was $96 million or approximately 75% of net revenue compared to 76% last year. Operating expenses for the fourth quarter of 2021 were $75.5 million compared to $59.7 million last year, an increase of $15.8 million or 26%. The increase in operating expenses in the fourth quarter of 2021 was driven by a $13.9 million increase in selling, general and administrative expenses and a $2 million increase in research and development costs compared to the prior year period. The year-over-year increase in selling, general and administrative expense was primarily due to higher commissions related to the strong year-over-year increase in sales. The year-over-year increase in R&D was driven by planned step-up…

And our first question is coming from the line of Ryan Zimmerman with BTIG. Your line is open.

Hey. Thanks for taking the question and it’s nice to scale the progress and you guys have made this year on. I guess to start, for Gary or Dave, I appreciate all the color on the guidance and when you back out ReNu and NuCel. But I guess with Dermagraft, one, that contribution kind of put you at that maybe a mid-teens adjusted growth rate for 2022. When does that Canton facility – and I might have missed this, when does the Canton facility come back online and Dermagraft can start contributing?

It’s going to be in 2024.

Okay. So, we shouldn’t expect anything then in 2022. Okay. And then the second question I had was just around some of the dynamics you saw in the quarter. If I heard you correctly, amniotics were up, yet some of your PMA and other products were down pretty significantly. And I believe that’s – some of that was related to COVID headwinds in the HOPD setting. But I am wondering if you could kind of speak, Gary, to kind of that dichotomy in utilization between the amniotics versus, say, the PMA and other in the quarter?

Sure. So, in the PMA and other you are correct, it was the COVID headwinds. The primary site of care for our Apligraf, Dermagraft, PMA products is the HOPD. And that’s where we saw the most impact of COVID as it is related to access. So, that’s pretty clear from the data that we have that – it’s a direct result of just not having access into that site of care for those products. On the amniotic side, they did do well. They performed – exceeded our expectations. We did see a slight decline as expected in the first month and then started to grow as expected and actually better than expected. So, we put a lot of time and focus on the amniotic portfolio in Q4, and it helped in exceeding our expectations.

Okay. If I could just squeeze one more in. The reimbursement rates for amniotics obviously, was a big focus at the end of last year. There might be some dynamics that with the MAX in the first quarter. How much of the guidance in the first quarter, Dave, reflects that headwind that you may see from MAX kind of readjusting their reimbursement. And if you can kind of give us – maybe help us understand that relative to say, the COVID dynamics as we think about the first quarter and the pacing through the year?

Yes. So, they are somewhat comingled as we talked about in the third quarter, right. So, it’s really that – you are talking about the launch of Affinity, right. And as that moves forward, I think there is access challenges from that standpoint. But this team has got a tremendous amount of experience launching new products into these markets. And so obviously, it’s been incorporated into the guidance and plays into the first quarter and full year cadence that we just discussed.

Okay. Thank you. I will hop back in queue. Thanks for taking the questions.

And our next question is coming from the line of Danielle Antalffy with SVB Leerink. Your line is open.

Hi. Good afternoon guys. Thanks so much for taking the question and congrats on a strong enter to the year. Just a question on one of the growth drivers, I am relatively new to the Organogenesis story, but we spoke a few weeks ago at our conference about expansion into new channels like dermatology. And just wondering if you could talk a little bit more about how meaningful is the growth driver that expansion or into other new channels might be in 2022? And then I have one follow-up.

Sure. Let me jump in, and then Dave, you can jump in as well. So, we certainly aren’t going to get into all of our channel strategies, but we do expect growth in the surgical channel this year with some of our products. We also are seeing, in certain specialties like dermatology, nice growth. And that’s one in particular that’s growing quite nicely. So, we do expect some growth support from those adjacent channels. But we certainly aren’t guiding to exactly what those channel opportunities would be.

Yes. I would agree. I think we have seen some good progress in ‘21 and that momentum continues into ‘22. And as Gary mentioned, it’s incorporated into the guidance, but we don’t typically split that out.

Yes. Understood. And I guess just a quick follow-up on that. I mean when you are calling on new physician offices, is that one of the components that you are seeing in COVID surges, like, for example, Omicron is a little bit more difficult to get into new offices? And have you seen that start to ease up?

We certainly did see it at the end of Q4 and into January. And what it really impacted was bringing new products into the office. That was the challenge. It really wasn’t a brand – our traditional brand products did well and really helped with the growth in Q4 and will also help in Q1 and Q2 as well. But it was getting the new products introduced and getting them integrated into those facilities, which was more of the challenge because of staffing issues.

Got it. And just one last question for me, and that’s on the strength from a competitive positioning perspective and the full product portfolio and also the significant number of feet on the street. I guess how much of a competitive moat have you built there? There are other players in this market, but clearly, you guys are outpacing market growth and will continue to do so. So, just wondering if you feel like the sales force is at a place where you feel like the competitive moat is big enough, or do you expect to continue adding there? And maybe just talk a little bit about what more needs to be done or if you feel like you have got a big enough competitive moat around you guys today? Thanks so much.

Sure. Thank you, Danielle. We certainly have what we believe is a competitive advantage with not only the size, but the expertise of our sales force. And we expect to continue to add to that sales force both in the additional sites of care today that we participate in. But as we grow our office strategy, we expect to add additional sales force there. We are looking at specialties within wound care where additional sales representatives would be added and – on the surgical side, we also expect that we will be adding additional sales force. And as we get further down our pipeline with TransCyte, which is in the burn space, that would be an additional sales force small, it’s a pretty efficient market. And ultimately, if successful, with ReNu there would be a specialty sales force there. So, we expect to continue to add in our traditional markets and continue to add in the adjacencies that we are seeing additional growth from.

Thanks so much. Sorry for the questions, I appreciate it.

Great questions. Thank you, Danielle.

Our next question is coming from the line of Steven Lichtman with Oppenheimer. Your line is open.

Hi. Thank you, guys. Gary, you mentioned new product flow in 2022. Can you walk through some of the key products in your focus right now and also maybe specifically on Novachor?

Sure. So, Novachor is one of the products that we will be launching in the second half. It will be more of a soft launch and physician experience kind of a launch. But we do expect it to provide some growth in the second half of the year and be a growth driver for us in years to come. PuraPly MZ is the other product that we have. We expect to launch it in the second half of the year. It would not be material and we don’t reflect it in our guidance at all, even though it will be launched. So, those are the two products, Novachor being more of a contributor this year and PuraPly MZ, a more of a contributor next year and years to come.

Got it. Great. And then just secondly, as you look at your Advanced Wound Care guide for the year, what gets you sort of toward the lower end versus the higher end? Is it mostly around COVID? Is it about Novachor ramp? Any sort of color you could provide on sort of the upper versus lower.

Yes, I will start and then Dave, you can jump in. Clearly, the Nova – excuse me, the Omicron and COVID-related issues. We – as I have mentioned in our prepared remarks, we are seeing an improved trend in February, and we are seeing improved access. So, that speaks well. But until we get through the quarter, we won’t know exactly what that is. And also, we are re-launching Affinity, and you – re-launching it in the first quarter when you have other seasonal issues as well. So, there is a little bit of noise that we want to see a little bit more data before we are comfortable. But that’s what the range is for those two items. Dave?

Yes. I would agree it’s really that dynamic of the extension of what we saw in January further into the full quarter. And obviously, we have guided for the full quarter and how that – how the pace of recovery and improvement in the dynamics paces through the year.

Got it. Great. Thanks guys. Thank you.

Thanks.

And 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. You may now disconnect.