Organogenesis Holdings Inc. Reports Fourth Quarter 2023 and Fiscal Year 2023 Financial Results; Introduces Fiscal Year 2024 Guidance
- Positive: The company is focused on enhancing customer relationships and regaining lost accounts in a challenging environment.
- Positive: Plans for revenue growth in 2024 through new product launches and value demonstration.
- Negative: Decrease in net revenue for both Advanced Wound Care and Surgical & Sports Medicine products in Q4 2023 and FY 2023 compared to the previous year.
- Negative: Net loss reported for Q4 2023, compared to net income in Q4 2022.
- Negative: Operating loss in Q4 2023, compared to operating income in Q4 2022.
- Negative: Decrease in adjusted net income and Adjusted EBITDA for Q4 2023 and FY 2023 compared to the previous year.
- Negative: Decrease in gross profit margin for both Q4 2023 and FY 2023 compared to the previous year.
- Negative: Increase in R&D expenses for FY 2023 compared to FY 2022.
- None.
Insights
The reported decrease in net revenue and net income for Organogenesis Holdings Inc. during both the fourth quarter and the fiscal year 2023 indicates a contraction in the company's financial performance. A 14% decline in Q4 net revenue and a 4% decrease for the full year reflect challenges in the Advanced Wound Care and Surgical & Sports Medicine markets. The downturn in gross profit margins, from 77% to 72% in Q4 and a consistent 2% drop year-over-year, suggests a cost pressure or a shift in product mix towards lower-margin offerings.
From an operational standpoint, the reduction in operating expenses, particularly in the selling, general and administrative categories, demonstrates the company's effort to manage costs amidst declining revenues. However, the increase in R&D expenses by 12% year-over-year indicates a strategic focus on innovation and product development, which could be pivotal for future growth. Investors should consider the balance between cost control and necessary investments in R&D when evaluating the company's potential for a rebound.
Looking at the balance sheet, a slight increase in cash and cash equivalents paired with a reduction in term loan debt obligations suggests prudent liquidity management. However, the forecasted revenue growth for 2024, between 3% to 9%, needs to be assessed against the backdrop of the previous year's performance dip and the competitive landscape of the regenerative medicine market.
The regenerative medicine industry is highly competitive and innovation-driven. Organogenesis Holdings Inc.'s focus on the Advanced Wound Care and Surgical & Sports Medicine markets requires continuous product innovation and effective commercial strategies to maintain and grow market share. The mention of commercial support programs and efforts to regain lost accounts is a strategic move to bolster sales in a 'uniquely challenging operating environment'.
Furthermore, the company's confidence in the ReNu program—targeting knee osteoarthritis—highlights its potential as a significant value driver. The long-term success of such programs is contingent on clinical outcomes, market acceptance and reimbursement policies. Investors should monitor the progress of the ReNu program and other pipeline products as indicators of the company's ability to innovate and capture market opportunities.
The projected increase in revenue for the Advanced Wound Care products and a more substantial expected increase for the Surgical & Sports Medicine products in 2024 could signal strategic optimism. However, the actual performance will heavily depend on the execution of the company's commercial strategies and the broader market dynamics, including regulatory changes and payer reimbursement policies that can significantly impact the regenerative medicine sector.
Organogenesis Holdings Inc.'s emphasis on its regenerative medicine portfolio, especially in the context of the ReNu program, highlights the importance of addressing unmet medical needs. Knee osteoarthritis is a common and debilitating condition and innovative treatments like ReNu could offer substantial relief to patients while tapping into a significant market opportunity.
The company's financial commitment to R&D, despite a challenging fiscal environment, underscores the strategic importance of developing new and effective treatment options. The medical research community often sees increased R&D spending as a positive sign of a company's commitment to advancing care and potentially improving clinical outcomes. However, such investments must translate into successful product launches and market adoption to positively impact the company's financial health.
Investors might consider the potential of the company's pipeline in terms of scientific merit and market need. The success of clinical trials and subsequent regulatory approvals are critical milestones that could significantly influence the company's trajectory. The medical research community will also be looking at peer-reviewed publications and presentations at scientific conferences for validation of the clinical benefits of the company's products.
CANTON, Mass., Feb. 29, 2024 (GLOBE NEWSWIRE) -- Organogenesis Holdings Inc. (Nasdaq: ORGO), a leading regenerative medicine company focused on the development, manufacture, and commercialization of product solutions for the Advanced Wound Care and Surgical & Sports Medicine markets, today reported financial results for the fourth quarter and the year ended December 31, 2023.
Fourth Quarter 2023 Financial Results Summary:
- Net revenue of
$99.7 million for the fourth quarter of 2023, a decrease of14% compared to net revenue of$115.5 million for the fourth quarter of 2022. Net revenue for the fourth quarter of 2023 consists of:- Net revenue from Advanced Wound Care products of
$93.2 million , a decrease of14% from the fourth quarter of 2022. - Net revenue from Surgical & Sports Medicine products of
$6.5 million , a decrease of3% from the fourth quarter of 2022.
- Net revenue from Advanced Wound Care products of
- Net loss of
$0.6 million for the fourth quarter of 2023, compared to net income of$7.5 million for the fourth quarter of 2022, a decrease of$8.1 million . - Adjusted net income1 of
$1.9 million for the fourth quarter of 2023, compared to adjusted net income of$8.9 million for the fourth quarter of 2022, a decrease of$7.0 million . - Adjusted EBITDA of
$7.5 million for the fourth quarter of 2023, compared to Adjusted EBITDA of$14.1 million for the fourth quarter of 2022, a decrease of$6.6 million .
Fiscal Year 2023 Financial Results Summary:
- Net revenue of
$433.1 million for the year ended December 31, 2023, a decrease of4% compared to net revenue of$450.9 million for the year ended December 31, 2022. Net revenue for the year ended December 31, 2023 consists of:- Net revenue from Advanced Wound Care products of
$405.5 million , a decrease of4% year-over-year. - Net revenue from Surgical & Sports Medicine products of
$27.6 million , a decrease of4% year-over-year.
- Net revenue from Advanced Wound Care products of
- Net income of
$4.9 million for the year ended December 31, 2023, compared to net income of$15.5 million for the year ended December 31, 2022, a decrease of$10.5 million . - Adjusted net income1 of
$12.7 million for the year ended December 31, 2023, compared to an adjusted net income of$26.2 million for the year ended December 31, 2022, a decrease of$13.5 million . - Adjusted EBITDA of
$42.6 million for the year ended December 31, 2023, compared to an adjusted EBITDA of$49.3 million for the year ended December 31, 2022, a decrease of$6.7 million .
“We are building positive momentum with the many commercial support programs implemented to enhance existing customer relationships and regain lost accounts in a uniquely challenging operating environment”, said Gary S. Gillheeney, Sr., President and Chief Executive Officer of Organogenesis. "Despite the expected operating environment challenges, we delivered revenues within the lower end of our guidance. Looking ahead to 2024, we expect to return to revenue growth through continued demonstration of value to our customers and new product launches in both our Advanced Wound Care and Surgical & Sports Medicine markets broadening our portfolio of differentiated treatment options.”
Mr. Gillheeney, Sr. continued: “We continue to make progress with the ReNu program, which we believe, represents a significant value driver by addressing a critical unmet need in treating the symptoms of knee osteoarthritis. We remain confident in the long-term opportunity for Organogenesis and expect to continue to lead in our space with highly innovative products that deliver on our mission to provide integrated healing solutions that substantially improve outcomes while lowering the overall cost of care.”
1Defined as GAAP net income adjusted to exclude the effect of amortization, restructuring charges, LCD legal fees and sales retention, write-off of certain assets, facility construction project pause, GPO settlement fee and the resulting income taxes on these items.
Fourth Quarter 2023 Financial Results:
| Three Month Ended December 31, | Change | |||||||||||||||
| 2023 | 2022 | $ | % | |||||||||||||
| (in thousands, except for percentages) | ||||||||||||||||
| Advanced Wound Care | $ | 93,165 | $ | 108,836 | $ | (15,671 | ) | (14 | %) | |||||||
| Surgical & Sports Medicine | 6,486 | 6,680 | (194 | ) | (3 | %) | ||||||||||
| Net revenue | $ | 99,651 | $ | 115,516 | $ | (15,865 | ) | (14 | %) | |||||||
Net revenue for the fourth quarter of 2023 was
Gross profit for the fourth quarter of 2023 was
Operating expenses for the fourth quarter of 2023 were
Operating loss for the fourth quarter of 2023 was
Total other expense, net, for the fourth quarter of 2023 was
Net loss for the fourth quarter of 2023 was
Adjusted net income was
Adjusted EBITDA was
As of December 31, 2023, the Company had
Fiscal Year 2023 Results
The following table represents net revenue by product grouping for the year ended December 31, 2023 and December 31, 2022, respectively:
| Year Ended December 31, | Change | |||||||||||||||
| 2023 | 2022 | $ | % | |||||||||||||
| (in thousands, except for percentages) | ||||||||||||||||
| Advanced Wound Care | $ | 405,514 | $ | 422,231 | $ | (16,717 | ) | (4 | %) | |||||||
| Surgical & Sports Medicine | 27,626 | 28,662 | (1,036 | ) | (4 | %) | ||||||||||
| Net revenue | $ | 433,140 | $ | 450,893 | $ | (17,753 | ) | (4 | %) | |||||||
Net revenue for the year ended December 31, 2023 was
Gross profit for the year ended December 31, 2023 is
Operating expenses for the year ended December 31, 2023 were
Operating income for the year ended December 31, 2023 was
Total other expense, net, for the year ended December 31, 2023 was
Net income of
Adjusted net income for the year ended December 31, 2023 was
Adjusted EBITDA of
Fiscal Year 2024 Guidance:
For the year ending December 31, 2024, the Company expects:
- Net revenue between
$445.0 million and$470.0 million , an increase of approximately3% to9% year-over-year, as compared to net revenue of$433.1 million for the year ended December 31, 2023.- The 2024 net revenue guidance range assumes:
- Net revenue from Advanced Wound Care products between
$415.0 million and$435.0 million , an increase of approximately2% to7% year-over-year as compared to net revenue of$405.5 million for the year ended December 31, 2023. - Net revenue from Surgical & Sports Medicine products between
$30.0 million and$35.0 million , an increase of approximately9% to27% year-over-year as compared to net revenue of$27.6 million for the year ended December 31, 2023.
- Net revenue from Advanced Wound Care products between
- The 2024 net revenue guidance range assumes:
- Net income (loss) between (
$10.6) million and$4.6 million and adjusted net income (loss) between ($8.1) million and$7.1 million . - EBITDA between
$5.8 million and$25.0 million and Adjusted EBITDA between$15.8 million and$35.0 million .
Earnings Conference Call:
Financial results for the fourth fiscal quarter and year ended December 31, 2023 will be reported after the market closes on Thursday, February 29th. Management will host a conference call at 5:00 p.m. Eastern Time on February 29th to discuss the results of the quarter, and provide a corporate update with a question and answer session. Those who would like to participate may access the live webcast here, or access the teleconference here. A live webcast of the call will also be provided on the investor relations section of the Company's website at investors.organogenesis.com.
For those unable to participate, the webcast will be archived at investors.organogenesis.com for approximately one year.
| ORGANOGENESIS HOLDINGS INC. UNAUDITED CONSOLIDATED BALANCE SHEETS (amounts in thousands, except share and per share data) | ||||||||
| December 31, | ||||||||
| 2023 | 2022 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 103,840 | $ | 102,478 | ||||
| Restricted cash | 498 | 812 | ||||||
| Accounts receivable, net | 81,999 | 89,450 | ||||||
| Inventories | 28,253 | 24,783 | ||||||
| Prepaid expenses and other current assets | 10,454 | 5,086 | ||||||
| Total current assets | 225,044 | 222,609 | ||||||
| Property and equipment, net | 116,228 | 102,463 | ||||||
| Intangible assets, net | 15,871 | 20,789 | ||||||
| Goodwill | 28,772 | 28,772 | ||||||
| Operating lease right-of-use assets, net | 40,118 | 43,192 | ||||||
| Deferred tax asset, net | 28,002 | 30,014 | ||||||
| Other assets | 5,990 | 1,520 | ||||||
| Total assets | $ | 460,025 | $ | 449,359 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Current portion of term loan | $ | 5,486 | $ | 4,538 | ||||
| Current portion of finance lease obligations | 1,081 | — | ||||||
| Current portion of operating lease obligations - related party | 3,140 | 3,001 | ||||||
| Current portion of operating lease obligations | 10,004 | 8,707 | ||||||
| Accounts payable | 30,724 | 32,330 | ||||||
| Accrued expenses and other current liabilities | 30,074 | 26,447 | ||||||
| Total current liabilities | 80,509 | 75,023 | ||||||
| Term loan, net of current portion | 60,745 | 66,231 | ||||||
| Finance lease obligations, net of current portion | 1,888 | — | ||||||
| Operating lease obligations, net of current portion - related party | 17,227 | 20,367 | ||||||
| Operating lease obligations, net of current portion | 19,780 | 20,947 | ||||||
| Other liabilities | 1,213 | 1,122 | ||||||
| Total liabilities | 181,362 | 183,690 | ||||||
| Commitments and contingencies (Note 18) | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, | — | — | ||||||
| Common stock, | 13 | 13 | ||||||
| Additional paid-in capital | 319,621 | 310,957 | ||||||
| Accumulated deficit | (40,971 | ) | (45,301 | ) | ||||
| Total stockholders' equity | 278,663 | 265,669 | ||||||
| Total liabilities and stockholders' equity | $ | 460,025 | $ | 449,359 | ||||
| ORGANOGENESIS HOLDINGS INC. UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (amounts in thousands, except share and per share data) | ||||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Net revenue | $ | 99,651 | $ | 115,516 | $ | 433,140 | $ | 450,893 | ||||||||
| Cost of goods sold | 27,769 | 27,110 | 106,481 | 105,019 | ||||||||||||
| Gross profit | 71,882 | 88,406 | 326,659 | 345,874 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative | 61,381 | 68,293 | 269,754 | 283,808 | ||||||||||||
| Research and development | 11,770 | 11,395 | 44,380 | 39,762 | ||||||||||||
| Total operating expenses | 73,151 | 79,688 | 314,134 | 323,570 | ||||||||||||
| Loss (income) from operations | (1,269 | ) | 8,718 | 12,525 | 22,304 | |||||||||||
| Other expense, net: | ||||||||||||||||
| Interest expense, net | (502 | ) | 30 | (2,190 | ) | (2,009 | ) | |||||||||
| Other income (expense), net | (25 | ) | 6 | 57 | (13 | ) | ||||||||||
| Total other expense, net | (527 | ) | 36 | (2,133 | ) | (2,022 | ) | |||||||||
| Net income before income taxes | (1,796 | ) | 8,754 | 10,392 | 20,282 | |||||||||||
| Income tax (expense) benefit | 1,228 | (1,268 | ) | (5,447 | ) | (4,750 | ) | |||||||||
| Net (loss) income and comprehensive (loss) income | $ | (568 | ) | $ | 7,486 | $ | 4,945 | $ | 15,532 | |||||||
| Net income, per share: | ||||||||||||||||
| Basic | $ | (0.00 | ) | $ | 0.06 | $ | 0.04 | $ | 0.12 | |||||||
| Diluted | $ | (0.00 | ) | $ | 0.06 | $ | 0.04 | $ | 0.12 | |||||||
| Weighted-average common shares outstanding | ||||||||||||||||
| Basic | 130,916,950 | 128,661,435 | 131,231,317 | 130,070,231 | ||||||||||||
| Diluted | 131,857,509 | 133,348,995 | 132,746,727 | 132,383,152 | ||||||||||||
| ORGANOGENESIS HOLDINGS INC. UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS (amounts in thousands, except share and per share data) | ||||||||||||
| Year Ended December 31, | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net income | $ | 4,945 | $ | 15,532 | $ | 94,202 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
| Depreciation | 10,448 | 5,845 | 5,781 | |||||||||
| Amortization of intangible assets | 4,918 | 4,883 | 4,949 | |||||||||
| Amortization of operating lease right-of-use assets | 8,083 | 7,303 | 5,946 | |||||||||
| Non-cash interest expense | 427 | 434 | 346 | |||||||||
| Deferred interest expense | 490 | 501 | 1,493 | |||||||||
| Deferred tax expense (benefit) | 2,012 | 1,980 | (31,976 | ) | ||||||||
| Loss on disposal of property and equipment | 235 | 4,482 | 1,407 | |||||||||
| Loss on lease termination | 559 | — | — | |||||||||
| Provision recorded for credit losses | 1,297 | 1,781 | 2,999 | |||||||||
| Adjustment for excess and obsolete inventories | 6,580 | 9,648 | 12,079 | |||||||||
| Stock-based compensation | 8,996 | 6,552 | 3,864 | |||||||||
| Loss on extinguishment of debt | — | — | 1,883 | |||||||||
| Change in fair value of earnout liability | — | — | (3,985 | ) | ||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Accounts receivable | 5,539 | (8,770 | ) | (28,654 | ) | |||||||
| Inventories | (8,179 | ) | (9,410 | ) | (9,302 | ) | ||||||
| Prepaid expenses and other current and other assets | (10,115 | ) | (378 | ) | (34 | ) | ||||||
| Operating leases | (8,439 | ) | (7,006 | ) | (6,156 | ) | ||||||
| Accounts payable | (108 | ) | 3,260 | 3,847 | ||||||||
| Accrued expenses and other current liabilities | 3,138 | (11,850 | ) | 9,354 | ||||||||
| Other liabilities | 91 | 72 | (6,065 | ) | ||||||||
| Net cash provided by operating activities | 30,917 | 24,859 | 61,978 | |||||||||
| Cash flows from investing activities: | ||||||||||||
| Purchases of property and equipment | (24,364 | ) | (33,898 | ) | (31,220 | ) | ||||||
| Net cash used in investing activities | (24,364 | ) | (33,898 | ) | (31,220 | ) | ||||||
| Cash flows from financing activities: | ||||||||||||
| Line of credit repayments under the 2019 Credit Agreement | — | — | (10,000 | ) | ||||||||
| Term loan repayments under the 2019 Credit Agreement | — | — | (60,000 | ) | ||||||||
| Proceeds from term loan under the 2021 Credit Agreement, net of debt discount and issuance cost | — | — | 73,174 | |||||||||
| Term loan repayments under the 2021 Credit Agreement | (4,688 | ) | (2,813 | ) | (938 | ) | ||||||
| Principal repayments of finance lease obligations | (485 | ) | (200 | ) | (2,630 | ) | ||||||
| Proceeds from the exercise of stock options | — | 2,070 | 2,198 | |||||||||
| Payments of withholding taxes in connection with RSUs vesting | (332 | ) | (648 | ) | (737 | ) | ||||||
| Payments of deferred acquisition consideration | — | (608 | ) | (483 | ) | |||||||
| Payment to extinguish debt | — | — | (1,620 | ) | ||||||||
| Net cash used in financing activities | (5,505 | ) | (2,199 | ) | (1,036 | ) | ||||||
| Change in cash, cash equivalents and restricted cash | 1,048 | (11,238 | ) | 29,722 | ||||||||
| Cash, cash equivalents, and restricted cash, beginning of year | 103,290 | 114,528 | 84,806 | |||||||||
| Cash, cash equivalents, and restricted cash, end of year | $ | 104,338 | $ | 103,290 | $ | 114,528 | ||||||
| Supplemental disclosure of cash flow information: | ||||||||||||
| Cash paid for interest | $ | 5,436 | $ | 2,649 | $ | 5,787 | ||||||
| Cash paid for income taxes | $ | 3,052 | $ | 1,201 | $ | 607 | ||||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||||||
| Cumulative effect adjustment for adoption of ASU No. 2016-13 (Note 2) | $ | 615 | $ | — | $ | — | ||||||
| Deferred acquisition consideration and earnout liability recorded for business acquisition | $ | — | $ | 828 | $ | — | ||||||
| Purchases of property and equipment in accounts payable and accrued expenses | $ | 841 | $ | 1,928 | $ | 3,750 | ||||||
| Right-of-use assets obtained through operating lease obligations | $ | 5,869 | $ | 1,350 | $ | 53,793 | ||||||
| Right-of-use assets obtained through finance lease obligations | $ | 3,454 | $ | — | $ | — | ||||||
Non-GAAP Financial Measures
Our management uses financial measures that are not in accordance with generally accepted accounting principles in the United States, or GAAP, in addition to financial measures in accordance with GAAP to evaluate our operating results. These non-GAAP financial measures should be considered supplemental to, and not a substitute for, our reported financial results prepared in accordance with GAAP. Our management uses Adjusted EBITDA and adjusted net income to evaluate our operating performance and trends and make planning decisions. Our management believes Adjusted EBITDA and adjusted net income help identify underlying trends in our business that could otherwise be masked by the effect of the items that we exclude. Accordingly, we believe that Adjusted EBITDA and adjusted net income provide useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and prospects, and allowing for greater transparency with respect to key financial metrics used by our management in its financial and operational decision-making.
The following table presents a reconciliation of GAAP net income to non-GAAP EBITDA and non-GAAP Adjusted EBITDA, for each of the periods presented:
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| ($, in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Net (loss) income | $ | (568 | ) | $ | 7,486 | $ | 4,945 | $ | 15,532 | |||||||
| Interest expense, net | 502 | (30 | ) | 2,190 | 2,009 | |||||||||||
| Income tax expense (benefit) | (1,228 | ) | 1,268 | 5,447 | 4,750 | |||||||||||
| Depreciation | 2,982 | 1,514 | 10,448 | 5,845 | ||||||||||||
| Amortization | 1,229 | 1,221 | 4,918 | 4,883 | ||||||||||||
| EBITDA | 2,917 | 11,459 | 27,948 | 33,019 | ||||||||||||
| Stock-based compensation expense | 2,366 | 1,855 | 8,996 | 6,552 | ||||||||||||
| Restructuring charge (1) | 1,918 | 750 | 3,796 | 2,268 | ||||||||||||
| Write-off of certain assets (2) | — | — | — | 4,200 | ||||||||||||
| Settlement fee (3) | — | — | — | 2,600 | ||||||||||||
| Facility construction project pause (4) | — | — | — | 632 | ||||||||||||
| Legal fees (5) | — | — | 1,182 | — | ||||||||||||
| Sales retention (6) | 272 | — | 694 | — | ||||||||||||
| Adjusted EBITDA | $ | 7,473 | $ | 14,064 | $ | 42,616 | $ | 49,271 | ||||||||
(1) Amounts reflect employee retention and benefits as well as other exit costs associated with the Company’s restructuring activities.
(2) Amount reflects the disposal of certain equipment related to the same facility.
(3) Amounts reflect the fee the Company paid to a GPO to settle previously disputed GPO fees.
(4) Amount reflects the cancellation fees incurred in connection with the Company’s decision to pause one of its manufacturing facility construction projects.
(5) Amount represents the legal fees incurred related to the recently published and withdrawn local coverage determinations, or LCDs.
(6) Amount represents the compensation expenses related to retention for those sales employees impacted by the LCDs.
The following table presents a reconciliation of GAAP net income to non-GAAP adjusted net income, for each of the periods presented:
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| ($, in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Net (loss) income | $ | (568 | ) | $ | 7,486 | $ | 4,945 | $ | 15,532 | |||||||
| Amortization | 1,229 | 1,221 | 4,918 | 4,883 | ||||||||||||
| Restructuring charge (1) | 1,918 | 750 | 3,796 | 2,268 | ||||||||||||
| Write-off of certain assets (2) | — | — | — | 4,200 | ||||||||||||
| Settlement fee (3) | — | — | — | 2,600 | ||||||||||||
| Facility construction project pause (4) | — | — | — | 632 | ||||||||||||
| Legal fees (5) | — | — | 1,182 | — | ||||||||||||
| Sales retention (6) | 272 | — | 694 | — | ||||||||||||
| Tax on above | (923 | ) | (527 | ) | (2,859 | ) | (3,898 | ) | ||||||||
| Adjusted net income | $ | 1,928 | $ | 8,930 | $ | 12,676 | $ | 26,217 | ||||||||
(1) Amounts reflect employee retention and benefits as well as other exit costs associated with the Company’s restructuring activities.
(2) Amount reflects the disposal of certain equipment related to the same facility.
(3) Amounts reflect the fee the Company paid to a GPO to settle previously disputed GPO fees.
(4) Amount reflects the cancellation fees incurred in connection with the Company’s decision to pause one of its manufacturing facility construction projects.
(5) Amount represents the legal fees incurred related to the recently published and withdrawn local coverage determinations, or LCDs.
(6) Amount represents the compensation expenses related to retention for those sales employees impacted by the LCDs.
The following table presents a reconciliation of projected GAAP net income (loss) to projected non-GAAP EBITDA and projected non-GAAP Adjusted EBITDA included in our guidance for the year ending December 31, 2024:
| Year Ended December 31, | ||||||||
| ($, in thousands) | 2024L | 2024H | ||||||
| Net (loss) income | $ | (10,565 | ) | $ | 4,616 | |||
| Interest expense, net | 3,000 | 2,200 | ||||||
| Income tax expense (benefit) | 308 | 5,061 | ||||||
| Depreciation | 9,680 | 9,680 | ||||||
| Amortization | 3,400 | 3,400 | ||||||
| EBITDA | 5,823 | 24,957 | ||||||
| Stock-based compensation expense | 10,000 | 10,000 | ||||||
| Restructuring charge | - | - | ||||||
| Adjusted EBITDA | 15,823 | 34,957 | ||||||
The following table presents a reconciliation of projected GAAP net income (loss) to projected non-GAAP adjusted net income included in our guidance for the year ending December 31, 2024:
| Year Ended December 31, | ||||||||
| ($, in thousands) | 2024L | 2024H | ||||||
| Net (loss) income | $ | (10,565 | ) | $ | 4,616 | |||
| Amortization | 3,400 | 3,400 | ||||||
| Restructuring charge | — | — | ||||||
| Tax on above | (918 | ) | (918 | ) | ||||
| Adjusted net (loss) income | $ | (8,083 | ) | $ | 7,098 | |||
Forward-Looking Statements
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to expectations or forecasts of future events. Forward-looking statements may be identified by the use of words such as “forecast,” “intend,” “seek,” “target,” “anticipate,” “believe,” “expect,” “estimate,” “plan,” “outlook,” and “project” and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. Such forward-looking statements include statements relating to the Company’s expected revenue, net income, adjusted net income, EBITDA, and Adjusted EBITDA for fiscal 2024 and the breakdown of expected revenue in both its Advanced Wound Care and Surgical & Sports Medicine categories. Forward-looking statements with respect to the operations of the Company, strategies, prospects, and other aspects of the business of the Company are based on current expectations that are subject to known and unknown risks and uncertainties, which could cause actual results or outcomes to differ materially from expectations expressed or implied by such forward-looking statements. These factors include, but are not limited to: (1) the impact of any changes to the reimbursement levels for the Company’s products; (2) the Company faces significant and continuing competition, which could adversely affect its business, results of operations and financial condition; (3) rapid technological change could cause the Company’s products to become obsolete and if the Company does not enhance its product offerings through its research and development efforts, it may be unable to effectively compete; (4) to be commercially successful, the Company must convince physicians that its products are safe and effective alternatives to existing treatments and that its products should be used in their procedures; (5) the Company’s ability to raise funds to expand its business; (6) the Company has incurred losses in prior years and may incur losses in the future; (7) changes in applicable laws or regulations; (8) the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors; (9) the Company’s ability to maintain production or obtain supply of its products in sufficient quantities to meet demand; (10) any resurgence of the COVID-19 pandemic and its impact, if any, on the Company’s fiscal condition and results of operations; (11) the impact of the suspension of commercialization of: (a) ReNu and NuCel in connection with the expiration of the FDA’s enforcement grace period for HCT/Ps on May 31, 2021 and (b) Dermagraft in the second quarter of 2022 pending transition of manufacturing to a new manufacturing facility or a third-party manufacturer; and (12) other risks and uncertainties described in the Company’s filings with the Securities and Exchange Commission, including Item 1A (Risk Factors) of the Company’s Form 10-K for the year ended December 31, 2023 and its subsequently filed periodic 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 applicable securities laws.
About Organogenesis Holdings Inc.
Organogenesis Holdings Inc. is a leading regenerative medicine company offering a portfolio of bioactive and acellular biomaterials products in advanced wound care and surgical biologics, including orthopedics and spine. Organogenesis’s comprehensive portfolio is designed to treat a variety of patients with repair and regenerative needs. For more information, visit www.organogenesis.com.
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