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Bioventus Inc. reported a strong performance in its Q1 2025 earnings call, surpassing EPS expectations with an actual EPS of $0.06 against a forecast of $0.02. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value metrics, with analysts maintaining a bullish consensus. Despite this positive result, the company’s stock experienced a 1.85% decline in premarket trading, settling at $6.90. The decline comes amid broader market concerns and specific company challenges, though technical indicators suggest the stock may be oversold.
Key Takeaways
- Bioventus exceeded EPS expectations by $0.04.
- The stock fell 1.85% in premarket trading despite earnings beat.
- Revenue reached $124 million, with 5% organic growth.
- Operating cash flow was negative but expected to improve.
- The company projects strong growth and profitability for 2025.
Company Performance
Bioventus reported a mixed performance for Q1 2025. While revenue declined by 4% to $124 million, the company achieved 5% organic growth, highlighting its ability to maintain core business strength. The adjusted earnings per share rose by 33%, reflecting effective cost management and operational efficiencies. However, the company faces challenges in its international segment, which could impact future growth.
Financial Highlights
- Revenue: $124 million (4% decline, 5% organic growth)
- Earnings per share: $0.08 (33% increase)
- Adjusted EBITDA: Over $19 million
- Cash on Hand: $23 million
- Outstanding Debt: $346 million
- Operating Cash Flow: -$19 million
Earnings vs. Forecast
Bioventus significantly outperformed its EPS forecast, delivering $0.06 per share compared to the expected $0.02. This positive surprise represents a substantial 300% increase over the forecast, marking a strong quarter for the company.
Market Reaction
Despite the positive earnings report, Bioventus’ stock saw a 1.85% decline in premarket trading, dropping to $6.90. While the stock has delivered an impressive 75.7% return over the past year according to InvestingPro data, recent performance has been challenging with a YTD decline of 33%. This reaction might be influenced by broader market trends or investor concerns about cash flow and debt levels, despite the earnings beat.
Outlook & Guidance
Looking ahead, Bioventus remains optimistic, projecting organic revenue growth of 6-8% for 2025 and adjusted EBITDA between $112-$116 million. The company aims to nearly double its cash from operations by the end of the year and reduce leverage to below 2.5x.
Executive Commentary
"We are well positioned to create shareholder value through strengthening our growth, profitability, and cash flow," stated CFO Mark Singleton. CEO Rob Claypool added, "Challenges are not new to Bioventus," underscoring the company’s resilience in facing market dynamics.
Risks and Challenges
- Negative operating cash flow, though expected to improve, remains a concern.
- High outstanding debt of $346 million could impact financial flexibility.
- International segment growth challenges may hinder overall performance.
- Potential pharmaceutical tariffs could affect pricing and margins.
- Macroeconomic pressures and market saturation pose additional risks.
Q&A
During the earnings call, analysts focused on the dynamics of the pain treatment market, pricing strategies, and the competitive landscape. They also inquired about the company’s strategy for international expansion and potential impacts of pharmaceutical tariffs.
Full transcript - Bioventus Inc (BVS) Q1 2025:
Chuck, Conference Operator: Day and welcome to the BioVentis First Quarter twenty twenty five Conference Call. All participants will be in a listen only mode. Please note this event is being recorded. I would now like to turn the conference over to Mr. Dave Crawford.
Please go ahead, sir.
Dave Crawford, Investor Relations, BioVentis: Thanks, Chuck, and good morning, everybody, and thanks for joining us. It’s my pleasure to welcome you to the BioVentis twenty twenty five first quarter earnings conference call. With me this morning are Rob Claypool, President and CEO, and Mark Singleton, Senior Vice President and CFO. Rob will begin his remarks with an update on our business and our 2025 priorities, and then provide a brief discussion on the current macro environment. Then Mark will review our first quarter results and discuss our outlook, including our 2025 financial guidance.
We will finish the call with Q and A. A presentation for today’s call is available on the Investors section of our website, bioventis.com. Before we begin, I would like to remind everyone that our remarks today contain forward looking statements that are based on the current expectations of management and involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated, including the 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 ks for the year ended 12/31/2024, as such factors may be updated from time to time in the company’s other filings made with the Securities and Exchange Commission. You are cautioned not to place undue reliance upon any forward looking statements, which speak only as of the date made. Although the company may voluntarily do so from time to time, it 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.
This call will also include reference to certain financial measures that are not calculated in accordance with U. S. Generally Accepted Accounting Principles or GAAP. We generally refer to these as non GAAP or adjusted financial measures. Important disclosures about them.
Definitions and reconciliations of those non GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in the earnings press release on the Investors section of our website at BioVentis.com. And now, I will turn the call over to Rob.
Rob Claypool, President and CEO, BioVentis: Thank you, Dave. Good morning, everyone, and thanks for joining our call today. I’m pleased to report that the first quarter of the BioVentis team continued to successfully execute our plan, maintained strong momentum and delivered yet another quarter of solid financial results as we help patients recover so they can live life to the fullest. First quarter revenue of $124,000,000 was in line with our internal expectations and reflected above market organic growth of 5%. As a reminder, our Q1 revenue growth reflects a comparison to strong prior year results with above normal orders by certain distributors at the end of last year.
Adjusted earnings of $08 per share increased 33%, reflecting the strength of our peer leading gross margin, prudent investment in key growth initiatives, and lower interest expense. Even with increased uncertainty in the macro environment, we do not see a material impact from tariffs at this time. And we remain well positioned for a second half acceleration in our growth with a strong focus on disciplined execution across the entire BioVentis organization. As a result, we are reiterating our full year revenue, adjusted EBITDA, and adjusted earnings per share guidance. Now let’s take a closer look at our first quarter results and provide an update on our business across the three priorities that I introduced at the start of the year.
Driving above market revenue growth, expanding our profitability and accelerating free cash flow generation. With respect to our first priority, driving above market revenue growth and starting with surgical solutions, revenue advanced 7% driven by double digit growth in ultrasonics, where we continue to see substantial growth from market expansion with new capital placements. Our value proposition of enhanced precision and control for surgeons, reduced patient blood loss, and increased operating room efficiency continues to resonate well with surgeons and hospital administrators. In restorative therapies, Exagen maintained its momentum highlighted by high single digit growth in The US. We’re excited about this performance as it validates our approach to drive the business with higher focus, increased investment and improved commercial fundamentals.
As we look to the rest of the year, we believe that Exagen has the ability to sustain this level of growth. And in pain treatments, growth continues to be driven by double digit growth in Duralane. As we previously discussed, we expect pain treatments growth to accelerate in the second half of the year as we move past challenging comparisons to the prior year and realize the benefit from recent account wins. Before transitioning to our second focus area, I’m excited to share that we are expanding our pain treatments portfolio with the recent addition of a platelet rich plasma or PRP system. As we have mentioned in the past, we will only add to our portfolio with world class technology that is synergistic with our patient based mission and our existing channels and call points.
With these criteria in mind, during the first quarter, we signed an agreement with Apex Biologics to be the exclusive distributor of their Excel PRP system in The US for orthopedics and sports medicine. PRP is a large and fast growing market, and our research indicates that the majority of surgeons using our treatments also use PRP in their practice. So clearly, we believe the opportunity in PRP is synergistic with our sales force. Further, the Excel system is designed for increased physician efficiency and precision. As it reduces the procedural time and provides a customizable treatment solution for different patient applications.
We believe these factors offer a significant competitive advantage. While the PRP revenue impact for 2025 is expected to be immaterial, we are excited about this portfolio expansion and adding another potential growth driver that leverages our existing commercial leadership and footprint. Turning to our second focus area, expanding profitability. We continue to strongly believe that our peer leading gross margin, combined with the expected acceleration of revenue growth in the second half of the year will enable us to achieve at least 100 basis points of adjusted EBITDA margin expansion for the year. Even when considering the macro environment, as we are prepared to swiftly adapt and prioritize spending if needed to help ensure we achieve this goal.
And with respect to our third focus area, consistent with what we have shared in the past, we expect to nearly double cash from operations this year compared to last year. It is customary to see a significant acceleration in cash flow starting in the second quarter and we are already seeing the drivers supporting this improvement with our reduction in interest expense and one time cash costs. Let me conclude by reiterating that although the macroeconomic environment has become more dynamic since our last earnings call just two months ago, at this time we do not see a material impact based on the current schedule of expected tariffs. Nevertheless, we are being vigilant and continuously monitoring and planning for any potential changes. It’s important to note that BioVentis has established a solid foundation, which we believe provides flexibility in navigating an uncertain macro environment and allows us to sustain the momentum that we’ve generated over the past two years.
We have significantly enhanced our financial liquidity and cash flow generation. We’ve assembled a diverse portfolio of short, mid and long term growth drivers and each business is well positioned as the market or growth leader in large growing markets with favorable demographic trends. Almost all of our revenue is comprised of consumable products or therapies, many of which help to delay more expensive procedures. And finally, our dedicated team has displayed agility and resiliency in responding to change while driving strategic improvements. Challenges are not new to BioVentis and given our substantial and ongoing progress in elevating our team, our processes and our performance, we view the current climate as another opportunity to distinguish ourselves from our competition and how we serve our customers and patients globally.
As we continue marching towards becoming a $1,000,000,000 high growth, high margin, high cash flow company that generates significant value for all of our stakeholders. Now I’ll turn the call over to Mark.
Mark Singleton, Senior Vice President and CFO, BioVentis: Thanks Rob and good morning everyone. Let me begin by saying that I am pleased with the start of the year and the progress we are making to improve and strengthen our company and our performance. Turning to our headline results for the first quarter, revenue of $124,000,000 declined 4% reflecting the impact of our Advanced Rehabilitation divestiture at the end of last year. Adjusting for the divestiture, organic growth was 5%, with solid growth across all three businesses. Organic growth for the quarter was below our annual expectation given two fewer selling days and above normal orders by certain distributors at the end of last year.
Adjusted EBITDA of over $19,000,000 was $3,000,000 lower than the prior year, primarily due to the divestiture and an unexpected $1,100,000 foreign currency loss from the revaluation of payables on our balance sheet. The currency loss related to payables designated in Swedish krona, which appreciated 11% in the quarter. Now let me provide some additional commentary on our quarterly revenue. Surgical solutions revenue grew by 7%, driven by strong double digit growth in ultrasonics, with capital sales in The US up by more than 50% compared to the prior year. As expected, bone graft substitutes growth slowed, but is expected to accelerate in the second half of the year due to our recently added distributors.
In pain treatments, revenue increased 4% compared to the prior year, as certain distributors bought less this quarter following higher purchases at the end of last year. This impacted growth by approximately three to four percentage points. Shifting to restorative therapies, the divestiture of our advanced rehabilitation business resulted in a 35% decline in revenue. Excluding the impact of the divestiture, organic growth was 4% as we maintained above market growth and exogen demand with demonstrated improvement in commercial effectiveness and sales force execution. Finally, revenue from our international segment declined 12% compared to the prior year, while organic growth was 1%.
Double digit growth across surgical solutions was offset by lower sales of Exagen due to the timing of certain distributor orders shifting to the second quarter. Moving down the income statement, adjusted gross margin of 75% was 70 basis points lower than last year due to channel mix and higher freight costs. Adjusted total operating expenses declined $3,000,000 as increased investment in our growth initiatives was more than offset by direct expense savings related to the Advanced Rehabilitation divestiture. Now for further detail on our bottom line financial metrics. Adjusted operating income decreased to $18,000,000 from $20,000,000 in the prior year.
Adjusted net income of $6,000,000 increased 32% compared to $5,000,000 in the prior year. This growth is a result of the reduction in interest expense, which is $3,000,000 lower than last year. And finally, adjusted earnings were $08 per share for the quarter, an increase of $02 compared to the prior year. Now shifting to the balance sheet and cash flow statement. We ended the quarter with 23,000,000 in cash on hand and $346,000,000 in outstanding debt, which included $10,000,000 drawn on a revolving credit facility.
As expected, operating cash flow was an outflow totaling $19,000,000 given the timing of employee annual bonus payments and other annual costs like our insurance premiums. Absent these outflows of approximately $27,000,000 operating cash flow for the first quarter would have been positive. Consequently, we are confident that cash from operations will accelerate in the second quarter and throughout the remainder of the year, and we continue to expect 2025 cash from operations to nearly double compared to 2024. In addition, given the projected strong cash flow and increase in adjusted EBITDA, we expect our net leverage to decrease below two and a half times by the end of twenty twenty five. Finally, we are pleased to be reaffirming our 2025 financial guidance, which was provided on March 11.
This includes organic revenue growth of 6% to 8%, adjusted EBITDA of $112,000,000 to $116,000,000 and EPS of $0.64 to $0.68 This full year financial guidance reflects expected strong acceleration in the second half of the year. While we continue to closely monitor the macro environment for any signs of deviations of medical procedural volume and changing tariff landscape, at this time we believe the anticipated impact is minimal and manageable. Our current full year 2025 guidance incorporates the impact of recent tariffs, which is slightly less than $1,000,000 as many of our products, including raw materials and subcomponents are made in The US and our therapies currently fall under an exemption from pharmaceutical products. In closing, we continue to execute our business plan and believe we are well positioned to create shareholder value through strengthening our growth, profitability and cash flow over the coming quarters in the long term. Operator, please open the line for questions.
Chuck, Conference Operator: Thank you. We will now begin the question and answer session. And the first question will come from Chase Knickenbacker with Craig Hallum. Please go ahead.
Chase Knickenbacker, Analyst, Craig Hallum: Good morning. Thanks for taking the questions. I just wanted to start in pain, maybe kind of a bigger picture kind of competitive question. Can you just kind of give us an update on the market and how you see it? I mean, you seeing kind of any increased competition in the single injection space?
Kind of give us an update on the multi shot. I know it’s a little bit more of a competitive environment out there, there. And then can you just kind of level set us, was there any price benefit for Duralane in the quarter on a year over year basis? And then kind of how you expect the year to kind of play out from that perspective?
Rob Claypool, President and CEO, BioVentis: Hey, Chase, it’s Rob. Yes, on the first one, we continue to see a shift from multi injection to single injection in this space. And from our perspective, that’s fine for a few different reasons. We have a really strong clinical value proposition with Duralane and strong contract backbone and those two combined with our dedicated commercial organization, we’re driving good growth in that space, again double digit growth in the first quarter. Also carries higher profitability for us in the single injection space.
So we expect that to continue to take place. From a competitive standpoint, the competitors that we’ve had in the past still exist today. We feel good about competing against them given that combination that I just mentioned with our clinical value proposition and contracts and really dedicated sales force. So regarding the pricing, I’ll turn
Mark Singleton, Senior Vice President and CFO, BioVentis: that over to Mark. Yeah, thanks, Chase. Yeah, when you look at our CMS price, as you’re pointing to, it increased year over year. But as we’ve discussed before, there’s a lot of differences between CMS and our financial ASP over the long term. Directionally, these are will come together and trend in the same way.
But in the short term, there’s lots of different things that can affect it, like the payments from a rebate perspective with CMS is based on cash. And the ASP from a financial perspective is based on accruals. And then you have lots of dynamics with distributor inventory that influence this from a quarter on quarter basis. But overall, from specifically Duralane, the CMS ASP was up 10%, but from a financial ASP, it was just slightly positive.
Chase Knickenbacker, Analyst, Craig Hallum: Got it, thanks. And then just can you remind us kind of the tougher Q2 comp for pain and what was driving that? Sorry, if I missed it. And then, you’d mentioned some account wins, Can you just kind of discuss those in increased detail just to what’s kind of supporting that second half ramp that you expect in growth?
Rob Claypool, President and CEO, BioVentis: Yes. So just regarding Q2 for this category, again, last year at this time, a competitor had supply challenges that led to some additional volume and we also had some of the favorable rebate accrual. So that’s the again, some of these one time comparables that will be out of the way as we move to the second half of the year. And then what was the second part of the question, Chase?
Chase Knickenbacker, Analyst, Craig Hallum: You had mentioned some recent account wins and kind of that supporting the acceleration in the second half of the year for pain. You just kind of give us more detail there on what supports it?
Rob Claypool, President and CEO, BioVentis: Yeah, thank you. So I’m not going to go into detail on those because they’re fresh wins. So what we’re moving right now towards is converting those accounts and penetrating them to increase volume, but wins. And then in terms of what’s driving them, it really keeps going back to the same combination that we’ve mentioned. And we see it reinforced quarter by quarter, which is where there’s clear clinical differentiation with Duralane and the more doctors and patients that experience it, the more well known that clinical differentiation becomes.
And in addition to that, we’re leveraging the strong contract presence that we have, which still gives us an opportunity to drive significant penetration volume in the market. And then we have a really hungry team that’s out there focused on this each day. So that combination is leading to those account wins. The other thing that I’ve mentioned, that we’ve mentioned in the past is we’re getting smarter in terms of our targeting, which accounts that we want to go after in order to drive the volume in the quarters and the years ahead. So, it’s a combination of those that are leading to these account wins.
Chase Knickenbacker, Analyst, Craig Hallum: Just last for me. It sounds like pharmaceutical tariffs are incoming. Can you kind of give us your assumptions around your exposure there and kind of how you see that playing out and any sort of avenues for you to kind of adjust to any incoming tariffs there?
Rob Claypool, President and CEO, BioVentis: Yeah, as Mark mentioned, pharma is currently excluded. And I think this is one of those states where speculating on a hypothetical probably not productive just given how much things are changing day to day, week to week. I will emphasize that we’re vigilant in monitoring the changing environment and we’ve already planned for a number of different scenarios. And right now we’re focused more on what we can control, which is a lot like growing above market and expanding our profitability and increasing our cash flow. If something changes in that area, we’ll be sure to
Mark Singleton, Senior Vice President and CFO, BioVentis: talk to you about it.
Dave Crawford, Investor Relations, BioVentis: Thanks, Rob.
Rob Claypool, President and CEO, BioVentis: Thank you.
Chuck, Conference Operator: The next question will come from Robbie Marcus with JPMorgan. Please go ahead.
Robbie Marcus, Analyst, JPMorgan: Oh, great. Good morning and thanks for taking the questions. Just wanted to follow-up there. You guided to first quarter below the low end of the six to eight organic. It came in at 5%.
You touched on some of it in the last few questions, but just maybe on organic growth and EBITDA, just speak to the level of confidence and visibility you have to the acceleration in 2Q through 4Q. Thanks.
Mark Singleton, Senior Vice President and CFO, BioVentis: Thanks, Robbie. This is Mark. And really, when we look at the second half of the year or I guess the remaining three quarters in front of us, we talked a little bit about from a first quarter perspective that BGS was going to be slow in the first half of the year. We expect that to start accelerating in the back half of the year. From a seasonality perspective, Q2 last year was our biggest quarter.
So Q2 and Q4 really in front of us, talked about the recent account wins that we have. From an EBITDA perspective, you can really look at the big jump in EBITDA we had from Q1 to Q2 in 2024. We expect the same in 2025 and then to accelerate from there. And so as the sales increase throughout the year, we don’t expect big spikes in expense other than kind of the correlation of commissions that would go with that. And so as the sales drives throughout the year, EBITDA will drop to the bottom line.
And again, focused on increasing our margin by 100 basis points for that as well. And then also the cash flow acceleration nearly doubled from last time. So really just gets into the continue to executing like we have over the last couple of years.
Rob Claypool, President and CEO, BioVentis: And Ravi, I’ll just add on, growth acceleration in the back half will, as Mark alluded to, will occur naturally as we move past some of these unfavorable comparables. And we see that in the first quarter with double digit growth in Duralane, double digit growth in Ultrasonics, nearly double digit growth in Exagen in The US, and these have been some of the key focus areas for us. They’re validating our approach and once those unfavorable comparables in the first half of the year are out of the way, I think we’ll see that those growth drivers shine a little brighter.
Robbie Marcus, Analyst, JPMorgan: Great. And you’ve made really good improvements in lowering leverage over the past few years. Maybe just speak to where you are in that journey and the plans for the rest of the year. Thanks a lot.
Mark Singleton, Senior Vice President and CFO, BioVentis: Yeah, I think we’re right now right around 3.25 leverage ratio and expect that to get to around 2.5 by the end of the year. So really feel good about it again from driving revenue and expanding our margin by 100 basis points and delivering the cash flow, we expect to be able to achieve that as we accelerate through the last three quarters of the year.
Robbie Marcus, Analyst, JPMorgan: Appreciate it. Thanks a lot.
Mark Singleton, Senior Vice President and CFO, BioVentis: The
Chuck, Conference Operator: next question will come from Caitlin Cronin with Canaccord. Please go ahead.
Mikaela, Analyst, Canaccord: Hey, guys. It’s Mikaela on for Caitlin. Thanks for taking the questions. Of piggybacking off of the last question, can you maybe talk about what level of leverage you become more constructive on M and A opportunities?
Rob Claypool, President and CEO, BioVentis: Yeah, this is Rob. I’ll start by saying that premise there is portfolio. And we feel really good about the portfolio that we have right now and our ability to drive short, mid and long term growth. And then on top of the existing portfolio we have, we’re layering additional growth drivers, which we’re really excited about as well. We have in the back half of this year, going through FDA clearance right now, we have game changing technology for our peripheral nerve stimulation business.
We have significant untapped opportunity in our international business. And as mentioned today, we’re now going to be in the PRP space, which opens up a large and growing market for us. So, feel really good about the portfolio that we have. And so the focus from a capital deployment standpoint is really to keep reducing leverage to get it below two eventually, and that’s the focus for us. Nonetheless, as opportunities come along that are really synergistic with our mission and synergistic with our current business footprint and the channels and call points that we have, we’re going to go after those if they help us achieve our goals, which is driving growth, profitability and cash flow.
That’s what you saw with the PRP announcement today. So that’s our focus at this point.
Mikaela, Analyst, Canaccord: Got it, thanks. That’s great. And maybe just one more from us. Has the new OUS business manager started, and if so, maybe what are some of the initiatives they’re driving in early days?
Rob Claypool, President and CEO, BioVentis: Your line broke up a little bit. I believe it was a question about the OUS business.
Mikaela, Analyst, Canaccord: Oh, yeah. Sorry. Has the OUS business manager started? And if so, what are some of the initiatives that they’re driving in the early days?
Rob Claypool, President and CEO, BioVentis: Yeah, thank you. So, you just started this month actually, and really excited about that. I mentioned a couple times in the past that our international business is still quite small, even though many of the products that we have are eligible to drive significant growth. With this type of business, you have a ton of opportunity, but you’re early in the evolution, You really need a leader who can fly high and low at the same time and driving a powerful overarching growth strategy, but also with really disciplined prioritization and very hands on leadership and improving commercial execution country by country. So that’s why we brought on the new leader and that’s what he’s going to do.
So we’re going to again, not just take a broad random approach, but very prioritize in terms of which countries, which products, refining the go to market approach, putting the investments in the right place to unlock more significant growth going forward for our international business. Great, thank you.
Chuck, Conference Operator: This concludes our question and answer session. I would like to turn the conference back over to Mr. Rob Claypool for any closing remarks. Please go ahead, sir.
Rob Claypool, President and CEO, BioVentis: Okay. Thanks, everyone, for your interest in BioVentis. And once again, we delivered a solid performance throughout our business in the first quarter. We are confident in our ability to build on our momentum to deliver above market revenue growth, improve profitability, and accelerate our cash flow to create significant shareholder value. Thanks for joining the call.
Chuck, Conference Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
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