Organogenesis' Q3 2025 Earnings Call: Contradictions Emerge on ReNu Timelines, Market Dynamics, LCD Impact, and Gross Margins

Date of Call: November 06, 2025

Financials Results

• Revenue: $150.5M net product revenue for Q3, up 31% YOY and up 49% sequentially
• Gross Margin: 76% of net product revenue, compared to 77% in the prior year

Guidance:

• 2025 net revenue expected $500M–$525M (up 4%–9% YOY)
• Advanced Wound Care revenue $470M–$490M (up 4%–8% YOY)
• Surgical & Sports Medicine revenue $30M–$35M (up 6%–23% YOY)
• GAAP net income $8.6M–$25.4M; EBITDA $19.1M–$41.9M
• Non‑GAAP adjusted net income $21.5M–$38.4M; adjusted EBITDA $45.5M–$68.3M
• Assumed gross margins ~74%–76%; GAAP op ex (ex COGS) up 1%–2% YOY

Business Commentary:

* Record Revenue and Product Growth: - Organogenesis Holdings reported net product revenue of $150.5 million for Q3, up 31% year-over-year and 49% sequentially. - Growth was driven by strong execution and improved sales of Advanced Wound Care and Surgical & Sports Medicine products, despite aggressive pricing strategies from competitors.

• Skin Substitute Market Reforms:
• CMS finalized a new payment policy for skin substitutes, recognizing clinical differentiation and resource costs, which is expected to address Medicare spending and promote market stability.

• Organogenesis, with its diverse product portfolio and 40 years in regenerative medicine, anticipates a strong position in the reformed market.

• ReNu Program Advancements:

• The second Phase III trial of ReNu demonstrated numerical improvement in baseline pain reduction, exceeding the first trial's results.
• Organogenesis plans to submit a BLA for ReNu, with a potential 2-month delay due to recent data readouts, aiming for approval for pain symptoms associated with knee osteoarthritis.

• Balance Sheet and Financial Guidance:
• As of September 30, 2025, Organogenesis had $64.4 million in cash, with no outstanding debt obligations, reflecting a strong balance sheet.
• The company updated its 2025 revenue guidance to between $500 million and $525 million, indicating a year-over-year increase of 4% to 9%.

Sentiment Analysis:

Overall Tone: Positive

• Management reported record Q3 revenue above guidance (Q3 net product revenue $150.5M, +31% YOY), highlighted CMS 2026 PFS changes as a market opportunity, and raised 2025 guidance ranges across revenue and profitability, citing improved positioning and expected margin/cash‑flow benefits.

Q&A:

• Question from Ross Osborn (Cantor Fitzgerald & Co.): When are you expecting physician behavior to change following the PFS—December or earlier?
  Response: Administrative changes are already occurring (contracts being processed) though sales shifts not yet seen; utilization change is expected going forward.

• Question from Ross Osborn (Cantor Fitzgerald & Co.): What will you do to generate awareness and capture incremental volume as competitors with higher ASPs exit the market?
  Response: Leverage strong brand equity and clinical evidence, emphasize reimbursement likelihood and efficacy, and sustained messaging to drive adoption as market shifts.

• Question from Iseult McMahon (BTIG, LLC): How might the new PFS rates impact margins for 2026?
  Response: While 2026 modeling is early, company expects ASPs to decline industry‑wide but sees growth drivers (Apligraf higher HOPD reimbursement, hospital outpatient opportunity) and anticipates improved margins and cash flow as lower‑value products are removed.

• Question from Iseult McMahon (BTIG, LLC): Were you surprised the final rate landed around $127?
  Response: No; management expected a rate near the proposed rule and notes CMS recognized PMA differentiation, which may lead to higher PMA reimbursement over time.

• Question from Iseult McMahon (BTIG, LLC): Given recent ReNu data, are prior approval timelines (late 2026/early 2027) still feasible?
  Response: A December meeting is planned and a modular filing is possible; management now guides to a roughly two‑month delay as prudent, though the original timeline could still be met.

Contradiction Point 1

ReNu's Approval Timeline

It involves the expected timeline for the approval of ReNu, which is crucial for the company's product roadmap and investor expectations.

Are the initial approval timelines for ReNu still on track following recent data? - Iseult McMahon (BTIG, LLC, Research Division)

2025Q3: We plan to file in modular form in December if the meeting with the FDA is successful. It's likely there will be a 2-month delay, but it's possible we may still meet the original timeline. - Gary Gillheeney(CEO)

When will Dermagraft be reintroduced? - Ryan Zimmerman (BTIG)

2025Q2: Assuming success in our upcoming meeting with the FDA, we are planning a modular PMA submission for ReNu in December of this year. - Gary Gillheeney(CEO)

Contradiction Point 2

Market Dynamics and Customer Behavior

It highlights differing perspectives on market dynamics and customer behavior, which directly impacts expectations of sales and revenue.

How is your engagement with the clinical community progressing, and when do you anticipate physician behavior will change post-PFS? - Ross Osborn(Cantor Fitzgerald)

2025Q3: We're starting to see changes in administrative behavior now, with clinicians moving to products on the approved LCD list and contracts being processed to remove other products. While we're not seeing sales behavior changes yet, the pieces are being put in place for utilization changes based on the physician fee schedule. - Gary Gillheeney(CEO)

Why didn't Q1 buying patterns follow the Q4 trend of high-ASP product demand? - Ryan Zimmerman(BTG)

2025Q1: The market dynamics were different in Q1 due to confusion and audits affecting customer behavior. The market contracted with temporary caution, unlike the strong fourth quarter finish. However, we continue to have portfolio optionality to pivot and perform well regardless of the LCD's impact. - Gary Gillheeney(CEO)

Contradiction Point 3

Impact of LCD

It involves differing views on the impact of the LCD on customer behavior and formulary inclusion, which are crucial for sales and revenue.

How might the 2026 physician fee schedule rates impact margins? - Iseult McMahon(BTIG)

2025Q3: We have four covered commercialized products, including Dermagraft, which will be reintroduced. The field will be leveled with reduced financial incentives, and we have brand equity and efficacy to compete. Our broad portfolio and commercial team's adaptability will drive growth. - David Francisco(CFO)

Why did you reiterate guidance despite the LCD not proceeding? - Ross Osborn(Cantor Fitzgerald)

2025Q1: Our full portfolio is available for all indications, which is a significant benefit. Our portfolio includes higher-margin products, and we expect stabilization in customer buying behavior in the second half. There are still challenges with formulary inclusion and competition dynamics. - David Francisco(CFO)

Contradiction Point 4

Gross Margin Expectations

It involves changes in financial forecasts, specifically regarding gross margin expectations, which are critical indicators for investors.

Are ReNu's initial approval timelines still on track following recent data? - Iseult McMahon(BTIG)

2025Q3: We expect our gross margins to improve to just over 70% for the year. - David Francisco(CFO)

Can you clarify the gross margin guidance for the year? - Aaron Wukmir(Lake Street Capital Markets)

2025Q1: Gross margins are expected to be back-end loaded, with a significant mix shift in the product portfolio. Excess inventory has impacted margins, but this issue is expected to be temporary. The mix shift, along with the lack of product expiry going forward, should lead to a significant jump in gross margins. - David Francisco(CFO)

Contradiction Point 5

ReNu Development Timeline

It involves differing expectations regarding the timeline for ReNu's development, which is a key product for the company's growth and market positioning.

Are the initial approval timelines for ReNu still on track following the recent data readout? - Iseult McMahon(BTIG, LLC, Research Division)

2025Q3: We plan to file in modular form in December if the meeting with the FDA is successful. It's likely there will be a 2-month delay, but it's possible we may still meet the original timeline. - Gary Gillheeney(CEO)

Can you provide an update on ReNu's timeline for submission, approval, and launch? - Brooks O'Neil(Lake Street Capital Markets)

2024Q4: We expect to file the BLA submission at the end of 2025. We would anticipate hearing from the FDA in Q4 of 2026, potentially leading to approval by the end of 2026 or early 2027. - Gary Gillheeney, Sr.(CEO)