Organogenesis Holdings Inc. Reports Fourth Quarter 2023 and Fiscal Year 2023 Financial Results; Introduces Fiscal Year 2024 Guidance
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 of 14% 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 of 14% from the fourth quarter of 2022.
- Net revenue from Surgical & Sports Medicine products of $6.5 million, a decrease of 3% from the fourth quarter of 2022.
- 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 of 4% 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 of 4% year-over-year.
- Net revenue from Surgical & Sports Medicine products of $27.6 million, a decrease of 4% year-over-year.
- 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 $99.7 million, compared to $115.5 million for the fourth quarter of 2022, a decrease of $15.9 million, or 14%. The decrease in net revenue was driven by a decrease of $15.7 million, or 14% in net revenue of Advanced Wound Care products and a decrease of $0.2 million, or 3% in net revenue of Surgical & Sports Medicine products.
Gross profit for the fourth quarter of 2023 was $71.9 million, or 72% of net revenue, compared to $88.4 million or 77% of net revenue, for the fourth quarter of 2022, a decrease of $16.5 million, or 19%.
Operating expenses for the fourth quarter of 2023 were $73.2 million, compared to $79.7 million for the fourth quarter of 2022, a decrease of $6.5 million, or 8%. R&D expenses were $11.8 million for the fourth quarter of 2023, compared to $11.4 million in the fourth quarter of 2022, an increase of $0.4 million, or 3%. Selling, general and administrative expenses were $61.4 million, compared to $68.3 million in the fourth quarter of 2022, a decrease of $6.9 million, or 10%.
Operating loss for the fourth quarter of 2023 was $1.3 million, compared to operating income of $8.7 million for the fourth quarter of 2022, a decrease of $10.0 million.
Total other expense, net, for the fourth quarter of 2023 was $0.5 million, compared to other income, net of less than $0.1 million for the fourth quarter of 2022, a decrease of approximately $0.6 million.
Net loss for the fourth quarter of 2023 was $0.6 million, or $(0.00) per share, compared to net income of $7.5 million, or $0.06 per share, for the fourth quarter of 2022, a decrease of $8.1 million, or $0.06 per share.
Adjusted net income was $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, or 78%.
Adjusted EBITDA was $7.5 million for the fourth quarter of 2023, compared to $14.1 million for the fourth quarter of 2022, a decrease of $6.6 million, or 47%.
As of December 31, 2023, the Company had $104.3 million in cash, cash equivalents and restricted cash and $66.2 million in term loan debt obligations, compared to $103.3 million in cash, cash equivalents and restricted cash and $70.8 million in term loan debt obligations, as of December 31, 2022.
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 $433.1 million, compared to $450.9 million for the year ended December 31, 2022, a decrease of $17.8 million, or 4%. The decrease in net revenue was driven by a decrease of $16.7 million, or 4% in net revenue of Advanced Wound Care products and a decrease of $1.0 million, or 4% in net revenue of Surgical & Sports Medicine products.
Gross profit for the year ended December 31, 2023 is $326.7 million, or 75% of net revenue, compared to $345.9 million, or 77% of net revenue, for the year ended December 31, 2022, a decrease of $19.2 million, or 6%.
Operating expenses for the year ended December 31, 2023 were $314.1 million, compared to $323.6 million for the year ended December 31, 2022, a decrease of $9.4 million, or 3%. R&D expenses were $44.4 million for the year ended December 31, 2023, compared to $39.8 million for year ended December 31, 2022, an increase of $4.6 million, or 12%. Selling, general and administrative expenses were $269.8 million for year ended December 31, 2023, compared to $283.8 million year ended December 31, 2022, a decrease of $14.1 million, or 5%.
Operating income for the year ended December 31, 2023 was $12.5 million, compared to an operating income of $22.3 million for the year ended December 31, 2022, a decrease of $9.8 million.
Total other expense, net, for the year ended December 31, 2023 was $2.1 million, compared to $2.0 million for the year ended December 31, 2022, a decrease of $0.1 million.
Net income of $4.9 million for the year ended December 31, 2023 or $0.04 per share, compared to net income of $15.5 million, or $0.12 per share for the year ended December 31, 2022, a decrease of $10.5 million, or $0.08 per share.
Adjusted net income for the year ended December 31, 2023 was $12.7 million., compared to $26.2 million for the year ended December 31, 2022, a decrease of $13.5 million, or 52%.
Adjusted EBITDA of $42.6 million for the year ended December 31, 2023, compared to Adjusted EBITDA of $49.3 million for the year ended December 31, 2022, a decrease of $6.7 million, or 14%.
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 approximately 3% to 9% 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 approximately 2% to 7% 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 approximately 9% to 27% year-over-year as compared to net revenue of $27.6 million for the year ended December 31, 2023.
- 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.