Yahoo Finance MiMedx Group Inc (MDXG) Q1 2024 Earnings Call Transcript Highlights: Strong Financial ...
Revenue: $85 million, an 18% increase year-over-year.
Gross Profit Margin: Improved to 85%.
Adjusted EBITDA: $19 million, representing 22% of sales.
Net Sales Growth: Sixth consecutive quarter of double-digit growth.
Cash Balance: Ended the quarter with $48 million.
Debt Repayment: $30 million paid down on revolving credit line.
Product Portfolio Expansion: Introduction of first XenoGraft product planned.
Strategic Initiatives: Focus on product innovation, surgical market expansion, and enhancing customer intimacy.
Release Date: April 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: We saw a little bit of disruption in the wound care market last fall when the LCD was first released. What are you hearing from customers? And kind of how are you guys thinking about how the market is going to react to this? And then particularly around (inaudible), do you expect any (inaudible) change in physician behavior as far as adoption goes with that product considering it's on the noncovered list that sits today? A: Joseph Capper - MiMedx Group Inc - Chief Executive Officer, President, Director: It's kind of early on to have heard too much. But let me just start by saying, this is a change that we welcome even if there is some potential short-term disruption. We've been advocating for change in this market segment for some time. And frankly, we see this as a step in the right direction. No reimbursement changes are typical in health care. I've lived through them several times in the past and we will navigate through this. I strongly believe that when the dust settles, there will be more upside than any potential downside for MiMedx. If you look at the the market today, approximately 60% to 80% of the private office volume is going to the nearly 180 products that are no longer going to be permitted to be reimbursed. So that's a lot of share. It's frankly up for grabs. As far as (inaudible) is concerned, I said during my comments that it's really a matter of timing. We had been working for me for some time to put in place a randomized controlled trial on that product. As is our habit, right? When we get a marquee product that comes to market, we like to invest into evidence to improve efficacy. That trial will start to enroll patients in June. So even before the comment period is over, we're going to have a trial well underway. Clearly, that will be communicated to the MAX and to CMS. So we can't predict if and when, but we're pretty confident that we're taking all the right steps to ensure that the effect remains in the market. So again, on the other side of this change, this is a good thing. The industry will have cleared a major uncertainty, which I believe is overhang on value today.
Q: Yes. And as you kind of think about that long-term kind of benefit that we -- you just kind of talked about a couple of times in your prepared remarks and just in the answer there as well. How do you guys kind of quantify that benefit? I know you just said kind of 60% to 80% of that private office volume is in those noncovered products. Can we dive in a little bit deeper there and kind of help us quantify what that volume is from a numbers perspective? And then obviously, you would certainly expect that to come to the 15 products that are on the covered list. And maybe speak to your kind of competitive positioning there as as far as how you're positioned to potentially grab the majority of that share that becomes available? A: Joseph Capper - MiMedx Group Inc - Chief Executive Officer, President, Director: Difficult to quantify available market at this point. As you can imagine, a lot of that market dollars are due to inflated pricing. And then my guess is there's a certain level of overutilization. So when new regs are put in place. I think you're going to see a much smaller dollar TAM, but probably a slightly smaller volume TAM as well. As far -- so hard to quantify at this point. I think importantly, even before we launched (inaudible), we were picking up share in private office as some of the competitors were moving the product onto the ASP price list and some of the (inaudible) discounting some of that behavior was are starting to slow down a little bit. So that was likely to drive some of our performance as well as just better execution within the sales organization. Look, there's -- I think you'd be hard-pressed to find a product on that on that list that has as much evidence and is much market acceptance as our products, in particularly, empty. So look, we feel real good about where we are today and the opportunity moving forward. But again, I would say, back up, look at it from a macro level, very good thing for the industry to get this behind us.
Q: And then just a quick -- just one more on kind of the impact here and then a question on kind of the (inaudible) trial. If we kind of look back to the fall, there was some kind of impact on those that were on the not covered list. Do you think there's a chance that you guys could kind of pick up the volume as people kind of adjust their behavior ahead of time of this going effective. And then just to you, on the (inaudible) timing for that trial, how long would you expect it to basically get results? And then do you know exactly kind of how that conversation would go with CMS on when you could get on that covered list, assuming this goes effective? A: Joseph Capper - MiMedx Group Inc - Chief Executive Officer, President, Director: Yes. We will start those conversations almost immediately. And it will be in our comments. And when we have an opportunity to meet with them, we'll talk about it. we're committed to funding the entire trial. I think it's going to last somewhere around a year, but there will be points along the way, we will get interim readouts. So we'll have good data along the way. the trial will likely produce 4 or 5 published papers. So it will put a lot of good evidence into the literature. So we feel pretty good about it. And again, this is a commitment that is not new for us. We've been doing this is a practice of the company. Long before my time here, (inaudible), this is -- the company has been committed to evidence-based medicine.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
