Release Date: July 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- MiMedx Group Inc (MDXG, Financial) reported a 7% year-over-year increase in net sales for the second quarter, reaching $87 million.
- The company achieved a gross profit margin of 83% and an adjusted EBITDA of $20 million, representing 23% of net sales.
- MiMedx Group Inc (MDXG) successfully launched HELIOGEN, a new bovine-derived particulate product, which is expected to expand their market reach.
- The company reported a significant increase in cash, ending the quarter with $69 million, a $21 million increase.
- MiMedx Group Inc (MDXG) continues to see strong growth in international markets, particularly with their EPIFIX product in Japan.
Negative Points
- The company faced challenges due to competitive behavior in the private office setting, impacting growth rates and causing higher-than-normal employee and customer churn.
- MiMedx Group Inc (MDXG) had to adjust its full-year revenue growth guidance from low double digits to mid to high single digits due to reimbursement uncertainties.
- The ongoing FDA matter concerning the AXIOFILL product has negatively impacted sales with certain customers.
- The company is experiencing disruption in the market due to artificially high-priced products, which has affected their Medicare-related revenue.
- MiMedx Group Inc (MDXG) anticipates increased R&D expenses due to the EPIEFFECT randomized controlled trial, which may impact their financials in the short term.
Q & A Highlights
Q: Have you seen the worst of the attrition of customers and sales force due to high-priced products, and how should we think about revenue cadence for the rest of the year?
A: Joseph Capper, CEO: We believe we've seen the worst of it, with significant activity in the second half of Q2. We've worked to limit damage and rebuild affected areas. The worst is likely behind us, but high-priced product sales continue. We hope for government action soon. We've adjusted guidance to mid- to high single digits, assuming a similar sales run rate as now.
Q: Can you provide more details on the RCT for EPIEFFECT, including size, timeline, and cost assumptions?
A: Joseph Capper, CEO: We haven't disclosed the number of patients but it's a highly-powered, well-designed RCT. The study is underway, with patient enrollment starting. We expect a timeline of about a year, with interim results in six months. The cost is within our budget and won't significantly impact R&D spend as a percentage of revenue.
Q: What was different in Q2 compared to Q1 and last year regarding high ASP products and customer churn?
A: Joseph Capper, CEO: The issue has accelerated with more products and participants in the market. Companies are pricing products at high levels and using schemes to maintain those prices. This has led to increased churn as people pursue financial gains. The situation needs to be addressed, and we're lobbying for change.
Q: Do you expect the LCD implementation to positively impact revenue, despite EPIEFFECT potentially rolling out?
A: Joseph Capper, CEO: We expect an uptick in business soon after LCDs are implemented, as inventory is not likely to be high due to high prices. The market should shift quickly once changes are made.
Q: Can you provide a sense of the timing for the full rollout of the xenograft product and its market potential?
A: Joseph Capper, CEO: We're excited about the collagen-based particulate product for surgical procedures. We plan to launch more products in the xenograft category, doubling our total addressable market. We'll see some upside this year, with more significant growth expected next year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
