Full Press Release Details
Organogenesis Holdings Inc. Reports Second Quarter 2022 Financial Results
CANTON, Mass., (August 9, 2022) 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 second quarter ended June 30, 2022.
Second Quarter 2022 Financial Results Summary:
We delivered second quarter revenue results
at the high-end of the growth expectations we provided on our Q1 call, said Gary S. Gillheeney, Sr., President and Chief Executive Officer of Organogenesis.
Mr. Gillheeney, Sr. continued: Our diversified business performed well in the period despite the challenging operating environment, reflecting the
strength and resilience of Organogenesis. We delivered record gross margins and generated more than $18 million of adjusted EBITDA in the quarter, reflecting the compelling profitability potential in our model in the years to come. We believe
that we are strategically well positioned to capitalize on long term growth trends in the markets we serve as we deliver on our mission to provide integrated healing solutions that substantially improve outcomes while lowering the overall cost of
| Three Months Ended June 30, | Change | |||||||||||||||
| 2022 | 2021 | $ | % | |||||||||||||
| (in thousands, except for percentages) | ||||||||||||||||
| Advanced Wound Care | $ | 113,791 | $ | 111,436 | $ | 2,355 | 2 | % | ||||||||
| Surgical & Sports Medicine | 7,610 | 11,760 | (4,150 | ) | (35 | %) | ||||||||||
| Net revenue | $ | 121,401 | $ | 123,196 | $ | (1,795 | ) | (1 | %) |
Net revenue for the second quarter of 2022 was $121.4 million, compared to $123.2 million for the second quarter of
2021, a decrease of $1.8 million, or 1%. The decrease in net revenue was driven by a decrease of $4.2 million, or 35% in net revenue of Surgical & Sports Medicine products. This is partially offset by an increase of
$2.4 million, or 2% in Advanced Wound Care products.
Gross profit for the second quarter of 2022 was $94.7 million, or 78% of net revenue,
compared to $93.3 million or 76% of net revenue for the second quarter of 2021, an increase of $1.5 million, or 2%.
Operating expenses for the
second quarter of 2022 were $82.8 million compared to $69.7 million for the second quarter of 2021, an increase of $13.1 million, or 19%. R&D expense was $10.2 million for the second quarter of 2022, compared to
$7.3 million in the second quarter of 2021, an increase of $2.9 million, or 39%. Selling, general and administrative expenses were $72.6 million, compared to $62.3 million in the second quarter of 2021, an increase of
$10.3 million, or 16%.
Operating income for the second quarter of 2022 was $11.9 million, compared to an operating income of $23.6 million
for the second quarter of 2021, a decrease of $11.7 million, or 49% .
Total other expenses, net, for the second quarter of 2022 were
$0.8 million, compared to $2.4 million for the second quarter of 2021, a decrease of $1.7 million, or 69%.
Net income for the second
quarter of 2022 was $8.7 million, or $0.07 per share, compared to a net income of $20.7 million, or $0.15 per share, for the second quarter of 2021, a decrease of $11.9 million of, or $(0.09) per share.
Adjusted net income of $11.3 million for the second quarter of 2022, compared to adjusted net income of $20.3 million for the second quarter of
2021, a decrease of $9.0 million, or 44%.
Adjusted EBITDA was $18.6 million for the second quarter of 2022, compared to an adjusted EBITDA of
$25.1 million for the second quarter of 2021, a decrease of $6.5 million, or 26%.
As of June 30, 2022, the Company had $112.9 million
in cash, cash equivalents and restricted cash and $72.6 million in debt obligations, compared to $114.5 million in cash, cash equivalents and restricted cash and $73.6 million in debt obligations, of which $0.2 million were
finance lease obligations as of December 31, 2021.
First Half 2022 Results
The following table represents net revenue by product grouping for the six months ended June 30, 2022 and June 30, 2021, respectively:
| Six Months Ended June 30, | Change | |||||||||||||||
| 2022 | 2021 | $ | % | |||||||||||||
| (in thousands, except for percentages) | ||||||||||||||||
| Advanced Wound Care | $ | 203,881 | $ | 202,144 | $ | 1,737 | 1 | % | ||||||||
| Surgical & Sports Medicine | 14,637 | 23,604 | (8,967 | ) | (38 | %) | ||||||||||
| Net revenue | $ | 218,518 | $ | 225,748 | $ | (7,230 | ) | (3 | %) |
Net revenue for the six months ended June 30, 2022 was $218.5 million, compared to $225.7 million for the six
months ended June 30, 2021, a decrease of $7.2 million, or 3%. The decrease in net revenue was driven by a decrease of $9.0 million, or 38% in net revenue of Surgical & Sports Medicine products. This is partially offset by an
increase $1.7 million, or 1% in Advanced Wound Care products.
Gross profit for the six months ended June 30, 2022 was $166.8 million, or
76% of net revenue, compared to $170.3 million, or 75% of net revenue, for the six months ended June 30, 2021, a decrease of $3.5 million, or 2%.
Operating expenses for the six months ended June 30, 2022 were $155.0 million, compared to $134.1 million for the six months June 30,
2021, an increase of $20.9 million, or 16%. R&D expense was $18.8 million for the six months ended June 30, 2022, compared to $13.5 million in the six months ended June 30, 2021, an increase of $5.3 million, or 39%.
Selling, general and administrative expenses were $136.2 million for the six months
ended June 30, 2022, compared to $120.6 million in the
six months ended June 30, 2021, an increase of $15.6 million, or 13%.
Operating income for the six months ended June 30, 2022 was
$11.8 million, compared to an operating income of $36.2 million for the six months ended June 30, 2021, a decrease of $24.4 million, or 67%.
Total other expenses, net, for the six months ended June 30, 2022 were $1.5 million, compared to $4.9 million for the six months ended
June 30, 2021, a decrease of $3.4 million, or 69%.
Net income of $7.8 million for the six months ended June 30, 2022 or $0.06 per
share, compared to net income of $30.6 million, or $0.23 per share for the six months ended June 30, 2021, a decrease of $22.8 million, or $(0.17) per share.
Adjusted net income for the six months ended June 30, 2022 was $12.2 million compared to adjusted net income of $31.5 million, for the six
months ended June 30, 2021, a decrease of $19.3 million, or 61%.
Adjusted EBITDA of $23.6 million for the six months ended June 30,
2022, compared to an Adjusted EBITDA of $41.1 million, for the six months ended June 30, 2021, a decrease of $17.5 million, or 43%.
Fiscal Year 2022 Guidance:
For the year ending December 31, 2022, the Company expects:
Second Quarter Earnings Conference Call:
Financial results for the second fiscal quarter of 2022 will be reported after the market closes on Tuesday, August 9. Management will host a conference call
at 5:00 p.m. Eastern Time on August 9th 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 dial 844-543-0451 (864-991-4103 for international callers) and provide access code 356553. 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)
| June 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 112,279 | $ | 113,929 | ||||
| Restricted cash | 665 | 599 | ||||||
| Accounts receivable, net | 88,824 | 82,460 | ||||||
| Inventory, net | 23,235 | 25,022 | ||||||
| Prepaid expenses and other current assets | 6,540 | 4,969 | ||||||
| Total current assets | 231,543 | 226,979 | ||||||
| Property and equipment, net | 93,292 | 79,160 | ||||||
| Intangible assets, net | 23,231 | 25,673 | ||||||
| Goodwill | 28,772 | 28,772 | ||||||
| Operating lease right-of-use assets, net | 45,860 | 49,144 | ||||||
| Deferred tax asset, net | 31,994 | 31,994 | ||||||
| Other assets | 1,665 | 1,537 | ||||||
| Total assets | $ | 456,357 | $ | 443,259 | ||||
| Liabilities and Stockholders Equity | ||||||||
| Current liabilities: | ||||||||
| Deferred acquisition consideration | $ | $ | 1,436 | |||||
| Current portion of term loan | 3,596 | 2,656 | ||||||
| Finance lease obligations | 200 | |||||||
| Current portion of operating lease obligations | 11,871 | 11,785 | ||||||
| Accounts payable | 36,373 | 29,339 | ||||||
| Accrued expenses and other current liabilities | 36,390 | 37,289 | ||||||
| Total current liabilities | 88,230 | 82,705 | ||||||
| Term loan, net of current portion | 68,969 | 70,769 | ||||||
| Operating lease obligations, net of current portion | 43,700 | 46,893 | ||||||
| Other liabilities | 1,073 | 1,557 | ||||||
| Total liabilities | 201,972 | 201,924 | ||||||
| Commitments and contingencies (Note 18) | ||||||||
| Stockholders equity: | ||||||||
| Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued | ||||||||
| Common stock, $0.0001 par value; 400,000,000 shares authorized; 131,613,917 and 129,408,740 shares issued; 130,885,369 and 128,680,192 shares outstanding at June 30, 2022 and December 31, 2021, respectively. | 13 | 13 | ||||||
| Additional paid-in capital | 307,374 | 302,155 | ||||||
| Accumulated deficit | (53,002 | ) | (60,833 | ) | ||||
| Total stockholders equity | 254,385 | 241,335 | ||||||
| Total liabilities and stockholders equity | $ | 456,357 | $ | 443,259 |
ORGANOGENESIS HOLDINGS INC.
UNAUDITED CONSOLIDATED
STATEMENTS OF OPERATIONS
(amounts in thousands, except share and per share data)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Net revenue | $ | 121,401 | $ | 123,196 | $ | 218,518 | $ | 225,748 | ||||||||
| Cost of goods sold | 26,652 | 29,940 | 51,732 | 55,435 | ||||||||||||
| Gross profit | 94,749 | 93,256 | 166,786 | 170,313 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative | 72,609 | 62,349 | 136,187 | 120,581 | ||||||||||||
| Research and development | 10,205 | 7,320 | 18,792 | 13,529 | ||||||||||||
| Total operating expenses | 82,814 | 69,669 | 154,979 | 134,110 | ||||||||||||
| Income from operations | 11,935 | 23,587 | 11,807 | 36,203 | ||||||||||||
| Other expense, net: | ||||||||||||||||
| Interest expense | (730 | ) | (2,431 | ) | (1,467 | ) | (4,901 | ) | ||||||||
| Other expense, net | (21 | ) | 18 | (24 | ) | 15 | ||||||||||
| Total other expense, net | (751 | ) | (2,413 | ) | (1,491 | ) | (4,886 | ) | ||||||||
| Net income before income taxes | 11,184 | 21,174 | 10,316 | 31,317 | ||||||||||||
| Income tax expense | (2,440 | ) | (487 | ) | (2,485 | ) | (687 | ) | ||||||||
| Net income | $ | 8,744 | $ | 20,687 | $ | 7,831 | $ | 30,630 | ||||||||
| Net income, per share: | ||||||||||||||||
| Basic | $ | 0.07 | $ | 0.16 | $ | 0.06 | $ | 0.24 | ||||||||
| Diluted | $ | 0.07 | $ | 0.15 | $ | 0.06 | $ | 0.23 | ||||||||
| Weighted-average common shares outstanding | ||||||||||||||||
| Basic | 129,635,682 | 128,235,224 | 129,214,541 | 128,053,654 | ||||||||||||
| Diluted | 132,600,579 | 133,988,413 | 132,705,206 | 133,721,191 |
ORGANOGENESIS HOLDINGS INC.
UNAUDITED CONSOLIDATED
STATEMENT OF CASH FLOWS
(amounts in thousands, except share and per share data)
| Six Months Ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 7,831 | $ | 30,630 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation | 2,875 | 2,073 | ||||||
| Amortization of intangible assets | 2,442 | 2,486 | ||||||
| Amortization of operating lease right-of-use assets | 3,649 | 2,562 | ||||||
| Non-cash interest expense | 217 | 143 | ||||||
| Deferred interest expense | 291 | 1,036 | ||||||
| Provision recorded for doubtful accounts | 122 | 1,496 | ||||||
| Loss on disposal of property and equipment | 196 | 239 | ||||||
| Adjustment for excess and obsolete inventories | 5,228 | 4,678 | ||||||
| Stock-based compensation | 2,995 | 1,740 | ||||||
| Change in fair value of Earnout liability | (3,058 | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (6,485 | ) | (21,460 | ) | ||||
| Inventory | (3,441 | ) | (4,984 | ) | ||||
| Prepaid expenses and other current assets | (1,839 | ) | (1,649 | ) | ||||
| Operating leases | (3,472 | ) | (2,774 | ) | ||||
| Accounts payable | 2,671 | 716 | ||||||
| Accrued expenses and other current liabilities | (1,697 | ) | 2,646 | |||||
| Other liabilities | 23 | (340 | ) | |||||
| Net cash provided by operating activities | 11,606 | 16,180 | ||||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | (12,840 | ) | (9,290 | ) | ||||
| Net cash used in investing activities | (12,840 | ) | (9,290 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Payments of term loan | (938 | ) | ||||||
| Payments of withholding taxes in connection with RSUs vesting | (646 | ) | (737 | ) | ||||
| Proceeds from the exercise of stock options | 2,042 | 1,205 | ||||||
| Principal repayments of finance lease obligations | (200 | ) | (1,374 | ) | ||||
| Payment of deferred acquisition consideration | (608 | ) | (483 | ) | ||||
| Net cash used in financing activities | (350 | ) | (1,389 | ) | ||||
| Change in cash, cash equivalents and restricted cash | (1,584 | ) | 5,501 | |||||
| Cash, cash equivalents, and restricted cash, beginning of period | 114,528 | 84,806 | ||||||
| Cash, cash equivalents, and restricted cash, end of period | $ | 112,944 | $ | 90,307 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | 1,041 | $ | 3,836 | ||||
| Cash paid for income taxes | $ | 974 | $ | 582 | ||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Purchases of property and equipment included in accounts payable and accrued expenses | $ | 6,546 | $ | 4,349 | ||||
| Right-of-use assets obtained through operating lease obligations | $ | 364 | $ | 29,092 | ||||
| Shares issued for deferred acquisition consideration | $ | 828 | $ |
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
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 June 30, | Six Months Ended June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| (in thousands) | (in thousands) | |||||||||||||||
| Net income | $ | 8,744 | $ | 20,687 | $ | 7,831 | $ | 30,630 | ||||||||
| Interest expense, net | 730 | 2,431 | 1,467 | 4,901 | ||||||||||||
| Income tax expense | 2,440 | 487 | 2,485 | 687 | ||||||||||||
| Depreciation | 1,528 | 1,063 | 2,875 | 2,073 | ||||||||||||
| Amortization | 1,221 | 1,243 | 2,442 | 2,486 | ||||||||||||
| EBITDA | 14,663 | 25,911 | 17,100 | 40,777 | ||||||||||||
| Stock-based compensation expense | 1,692 | 1,042 | 2,995 | 1,740 | ||||||||||||
| Recovery of certain notes receivable from related parties (1) | (179 | ) | ||||||||||||||
| Change in fair value of Earnout (2) | (2,762 | ) | (3,058 | ) | ||||||||||||
| Restructuring charge (3) | 643 | 939 | 907 | 1,866 | ||||||||||||
| Settlement fee (4) | 1,600 | 2,600 | ||||||||||||||
| Adjusted EBITDA | $ | 18,598 | $ | 25,130 | $ | 23,602 | $ | 41,146 |
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 June 30, | Six Months Ended June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| (in thousands) | (in thousands) | |||||||||||||||
| Net income | $ | 8,744 | $ | 20,687 | $ | 7,831 | $ | 30,630 | ||||||||
| Amortization | 1,221 | 1,243 | 2,442 | 2,486 | ||||||||||||
| Recovery of certain notes receivable from related parties (1) | (179 | ) | ||||||||||||||
| Change in fair value of Earnout (2) | (2,762 | ) | (3,058 | ) | ||||||||||||
| Restructuring charge (3) | 643 | 939 | 907 | 1,866 | ||||||||||||
| Settlement fee (4) | 1,600 | 2,600 | ||||||||||||||
| Tax on above | (935 | ) | 145 | (1,606 | ) | (278 | ) | |||||||||
| Adjusted net income | $ | 11,273 | $ | 20,252 | $ | 12,174 | $ | 31,467 |
The following table presents a reconciliation of projected GAAP net income to projected non-GAAP EBITDA and projected non-GAAP Adjusted EBITDA included in our guidance for the year ending December 31, 2022:
| Year Ending December 31, | ||||||||
| 2022L 4 | 2022H 4 | |||||||
| Net income | $ | 25,600 | $ | 35,800 | ||||
| Interest expense | 3,500 | 3,500 | ||||||
| Income tax expense | 9,300 | 13,000 | ||||||
| Depreciation | 5,900 | 5,900 | ||||||
| Amortization | 4,900 | 4,900 | ||||||
| EBITDA | $ | 49,200 | $ | 63,100 | ||||
| Stock-based compensation expense | 6,400 | 6,400 | ||||||
| Restructuring charge | 1,900 | 1,900 | ||||||
| Settlement fee | 2,600 | 2,600 | ||||||
| Adjusted EBITDA | $ | 60,100 | $ | 74,000 |
The following table presents a reconciliation of projected GAAP net income to projected
non-GAAP adjusted net income included in our guidance for the year ending December 31, 2022:
| Year Ending December 31, | ||||||||
| 2022L 4 | 2022H 4 | |||||||
| Net income | $ | 25,600 | $ | 35,800 | ||||
| Amortization | 4,900 | 4,900 | ||||||
| Restructuring charge | 1,900 | 1,900 | ||||||
| Settlement fee | 2,600 | 2,600 | ||||||
| Tax on above | (2,500 | ) | (2,500 | ) | ||||
| Adjusted net income | $ | 32,500 | $ | 42,700 |
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, adjusted net revenue, net income, adjusted net income, EBITDA, and Adjusted EBITDA for fiscal 2022 and the breakdown of expected revenue in
both its Advanced Wound Care and Surgical & Sports Medicine categories as well as the estimated revenue contribution of its PuraPly products. 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