Earnings call transcript: Organogenesis Q2 2025 misses EPS forecast, stock steady

Organogenesis Holdings Inc. reported its second-quarter earnings for 2025, revealing a larger-than-expected loss per share, while revenue surpassed expectations. The company posted an earnings per share (EPS) of -$0.10, missing the forecast of -$0.05. However, revenue came in at $149.2 million, significantly exceeding the anticipated $103.4 million. Despite the earnings miss, Organogenesis shares remained stable in aftermarket trading, closing at $4.52, a 0.44% increase from the previous session. According to InvestingPro analysis, the company maintains a "GOOD" overall financial health score of 2.51 out of 5, and current analysis suggests the stock is undervalued at current levels.

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Key Takeaways

• EPS of -$0.10 fell short of the -$0.05 forecast.
• Revenue of $149.2 million exceeded expectations by 44.29%.
• Stock price increased by 0.44% in aftermarket trading.
• Operating loss improved slightly year-over-year.
• Strategic advancements in product innovation and market positioning.

Company Performance

Organogenesis experienced a mixed quarter, with revenue outperforming expectations but earnings falling short. The company saw a 23% year-over-year decline in net product revenue, driven by a 25% drop in Advanced Wound Care revenue. However, the Surgical and Sports Medicine segment grew by 16%, reflecting a strategic focus on diversifying its product offerings. The company’s gross profit margin remained strong at 73% of net product revenue, despite an operating loss of $12.6 million, which improved from a $13.9 million loss in the same quarter last year.

Financial Highlights

• Revenue: $149.2 million, up from a forecast of $103.4 million
• Earnings per share: -$0.10, compared to a forecast of -$0.05
• Gross profit: $73.1 million, representing 73% of net product revenue
• Operating loss: $12.6 million, an improvement from $13.9 million last year
• Cash position: $73.7 million as of June 30, 2025

Earnings vs. Forecast

Organogenesis reported an EPS of -$0.10, missing the forecast by 100%. The revenue surprise was notably positive, with actual revenue exceeding the forecast by 44.29%. This mixed performance reflects ongoing challenges in the company’s core Advanced Wound Care segment, offset by gains in Surgical and Sports Medicine.

Market Reaction

Following the earnings announcement, Organogenesis’ stock price increased slightly by 0.44% in aftermarket trading, closing at $4.52. This movement suggests that investors may have been more focused on the company’s strong revenue performance and strategic initiatives than the EPS miss. The stock remains within its 52-week range, with a high of $6.71 and a low of $2.28. InvestingPro data reveals impressive year-to-date returns of 41.25% and a remarkable one-year return of 72.52%, though investors should note the stock’s high beta of 1.77, indicating significant volatility.

Outlook & Guidance

Organogenesis provided guidance for 2025, projecting net revenue between $480 million and $510 million. The company expects Advanced Wound Care revenue to range from $450 million to $475 million, while Surgical and Sports Medicine revenue is anticipated to be between $30 million and $35 million. For the upcoming third quarter, revenue is expected to be in the range of $130 million to $145 million, with gross margins between 74% and 76%.

Executive Commentary

CEO Gary S. Gilhini Sr. described the current period as "a watershed moment for this industry and the most impactful development in more than a decade." He expressed confidence in the company’s positioning, stating, "We believe we are positioned to win going forward with our comprehensive portfolio." Gilhini also highlighted the potential of the RENEW program, noting its capacity to address the needs of over thirty million Americans with symptomatic knee osteoarthritis.

Risks and Challenges

• Ongoing declines in the Advanced Wound Care segment could pressure future earnings.
• Regulatory changes, such as CMS payment reform, may impact market dynamics.
• Competition in the hospital outpatient department wound care market remains intense.
• Economic uncertainties could affect healthcare spending and investment.
• Execution risks associated with product innovation and market expansion.

Q&A

During the earnings call, analysts inquired about the potential impact of CMS’s proposed payment reforms on the company’s market strategy. Executives also discussed the differentiation of the RENEW product in treating knee osteoarthritis and emphasized the growing momentum in the Surgical and Sports Medicine segment.

Full transcript - Organogenesis Holdings Inc (ORGO) Q2 2025:

Conference Operator: Welcome, ladies and gentlemen, to the Second Quarter twenty twenty five Earnings Conference Call for Organogenesis Holdings, Inc. At this time, all participants have been placed in listen only mode. Please note that this conference call is being recorded and that the recording will be available on the company’s website for replay shortly. Before we begin, I would like to remind everyone that our remarks today may 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 the Item 1A Risk Factors of the company’s most recent annual report and its subsequently filed quarterly reports. You are cautioned not to place undue reliance upon any forward looking statements, which speak only as of the date made.

Although it may voluntarily do so from time to time, the company 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 references to certain financial measures that are not calculated in accordance with the Generally Accepted Accounting Principles or GAAP. We generally refer to these as non GAAP financial measures. 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 Investor Relations portion of our website. I would now like to turn the call over to Mr.

Gary S. Gilhini, Sr, Organogenesis Holdings President, Chief Executive Officer and Chair of the Board. Please go ahead, sir.

Gary S. Gilhini Sr., President, CEO, Chair of the Board, Organogenesis Holdings: Thank you, operator, and welcome everyone to Organogenesis Holdings second quarter twenty twenty five earnings conference call. I am joined on the call today by Dave Francisco, our Chief Financial Officer. Let me start with a brief agenda of what we’ll cover during our prepared remarks. I’ll begin with an overview of our second quarter revenue results and provide an update on key operating and strategic developments in recent months. And then Dave will provide you with an in-depth review of our second quarter financial results, our balance sheet and financial condition at quarter end, as well as our financial guidance for 2025, which we updated in our press release this afternoon.

Then we will open up the calls for questions. Beginning with a review of our revenue results in Q2, we delivered sales results within the guidance range outlined on our first quarter call, driven by better than expected growth in our surgical and sports medicine products and sales of advanced wound care products that came in at the lower end of our expectations. Our second quarter advanced wound care results reflect the expected disruption in customer demand and ordering patterns related to the delay in the effective date of the final LCD for skin substitute grafts and cellular tissue based products for the treatment of DFUs and VLUs until 01/01/2026. Our team’s second quarter execution and focus on engagement, education, and support helped our customers navigate a confusing and challenging environment. While the delay in the effective date for the final LCD fueled even more aggressive pricing strategies from our competitors, our team remains committed to building upon our deep customer relations and promoting access to existing and recently launched products.

Last month, CMS announced the proposed Medicare physician fee schedule and outpatient prospective payment systems for calendar year 2026. This is a watershed moment for this industry and the most impactful development in more than a decade. We applaud the proposed new payment approach for skin substitutes as we have long advocated for an integrated coverage and payment policy to address rapid escalation of Medicare spending while ensuring patients have access to the products best suited to their care. Organogenesis has more than forty years of experience and pioneered the use of cellular and tissue based products for wound treatment, and we have spent the past several years leading key stakeholders who share our patient focused values to inform policymakers and advocate for reform that will increase access, improve outcomes, and curb the rampant waste and abuse in the space. We have long supported many of the points included in the proposed rules, notably a per square centimeter payment methodology based on FDA classification for skin substitutes covering all ASP sites of care, as well as the hospital outpatient setting, bringing a much needed consistent payment approach.

Exploitation of the current ASP based payment system has resulted in excessive and unsustainable spending these past few years. Closing this loophole and shifting away from the ASP model will bring stability to the market and push spending on dehydrated placentals in line with appropriate utilization. And we are pleased that the proposed FDA classification categories ensures patients will have access to appropriate therapies and encourage innovation in the space. As the population ages and more people face the prospect of chronic wounds associated with diabetes and other comorbid conditions, it’s imperative that the industry reignite its innovation engine to deliver advanced regenerative technologies that will speed healing and reduce the total cost of care. We believe the proposed rule, if finalized, will support these goals while bringing long term stabilization to the skin substitute markets.

Importantly, we are pleased that CMS has recognized the clinical differentiation of premarket approval, or PMA products, that outline steps to expand access to these healing technologies. PMA products such as Applegraf and Dermograph have been proven to reduce life threatening amputations and costly complications associated with DFUs and VLUs. The proposed rules will encourage the continued development of PMA products that will greatly benefit both clinicians and patients. As the public comment period opens, we remain committed to engage with CMS and other stakeholders to refine and enhance the proposed rules that will expand access to appropriate therapies for patients while reducing the overall cost to Medicare. With the payment and coverage changes expected to be implemented in 2026, we believe we are better positioned to continue to lead the space with highly innovative, highly efficacious products that deliver on our mission of advancing healing and recovery beyond our customers’ expectations.

Before turning the call over to David, I want to provide updates on key strategic focuses for our company. We believe gathering robust and comprehensive clinical and real world evidence is an essential component of developing a competitive product portfolio and driving further penetration in the markets where we compete. We expect to submit published clinical data supporting PuraPly AM for DFU and Affinity for VLU to the max by the established deadline of 11/01/2025. We have been preparing our organization to succeed in a new world that is coming to fruition by investing to optimize our industry leading portfolio of healing technologies. In May, we marked the expansion of our biomanufacturing capabilities at our new facility in Smithfield, Rhode Island, welcoming the governor and other state and civic leaders to share our plans for the site.

When completed, the Smithfield facility will support the reintroduction of Dermograph, a PMA approved product for the treatment of DFUs, and Transite, a PMA approved bioengineered cellular tissue scaffold for the treatment of deep second and third degree burns, as well as the introduction of FortiShield, a biosynthetic transitional wound matrix for the treatment of second degree burns and surgical wounds. We believe the added manufacturing capacity and portfolio expansion will further enhance our long term growth and margin profile, create additional stakeholder value, and positively impacting more people’s lives. With respect to our RENEW program, we remain on plan for submission for RENEW by the end of this year, which, if approved, will further enrich our already robust regenerative portfolio. All patients completed the second Phase III study, and we remain on track to share publicly the top line data results from the study in September 2025. Our timeline continues to target completion of the final clinical study report required for the BLA submission in the fourth quarter, which has us on track for a modular BLA submission by the 2025.

We continue to believe in the potential of RENEW to address the need for more than thirty million Americans suffering from symptomatic knee osteoarthritis. This is a defining moment for the industry and an exciting opportunity for Organogenesis to serve more patients. We see our vision for skin substitutes in wound care becoming a reality following years of advocating for health policy reform to ensure patient access to the most appropriate products while achieving significant cost savings to Medicare. We believe we are positioned to win going forward with our comprehensive portfolio, including products from all FDA classifications. We have a development engine fueling new innovation and the capacity to launch and reintroduce products and a transformational opportunity with Renew.

With that, let me turn the call over to Dave.

Dave Francisco, Chief Financial Officer, Organogenesis Holdings: Thanks, Gary. I’ll begin with a review of our second quarter financial results. Unless otherwise specified, all growth rates referenced during my prepared remarks are

Gary S. Gilhini Sr., President, CEO, Chair of the Board, Organogenesis Holdings: on a year over year basis.

Dave Francisco, Chief Financial Officer, Organogenesis Holdings: Net product revenue for the second quarter was $100,800,000 down 23%. As Gary mentioned, these results came in within the range of the expectations we provided on our Q1 call, which called for total revenue in the range of $100,000,000 to $110,000,000 Our Advanced Wound Care net product revenue for the second quarter was $92,700,000 down 25%. As Gary mentioned, the commercial team executed well in the period, driving increased momentum towards the end of Q2 despite the delay of the effective date of the LCD, which increased the aggressive competitive pricing tactics in the period. Net product revenue from Surgical and Sports Medicine products for the second quarter was up was $8,100,000 up 16%. Our total revenue results for the second quarter included $200,000 of grant income related to the grant issued from the Rhode Island Life Sciences hub, offsetting our employee related costs in our Smithfield facility.

This compares to no impact in the prior year period, and we expect grant income to be immaterial in 2025. Gross profit for the second quarter was $73,100,000 or 73% of net product revenue compared to 78% last year. Gross profit was unfavorably impacted in the period due primarily to lower revenue over our fixed costs as well as the expiration of excess product resulting from the delayed implementation of the LCD and related uncertainty. Operating expenses for the second quarter were $113,600,000 compared to $144,100,000 last year, a decrease of 30,500,000 or 21%. Excluding cost of goods sold of $27,600,000 for the second quarter and $29,200,000 last year, our non GAAP operating expenses for the second quarter were $86,000,000 compared to $114,900,000 last year, a decrease of $29,000,000 or 25%.

The year over year change in operating expenses, excluding cost of goods sold, was driven by a $22,800,000 write down of certain nonrecurring costs in the 2024 compared to $1,700,000 in the 2025, as well as lower research and development and SG and A expenses, which declined 334% year over year, respectively. Operating loss for the second quarter was $12,600,000 compared to an operating loss of $13,900,000 last year, a decrease of 1,300,000.0 Excluding non cash amortization and the write down of certain nonrecurring costs in both periods, our non GAAP operating loss was $10,000,000 compared to $9,700,000 of income last year. GAAP net loss for the second quarter was $9,400,000 compared to a net loss of $17,000,000 last year, a decrease of $76,000,000 $7,600,000 Net loss to common for the second quarter was $12,200,000 compared to a net loss of $17,000,000 last year. Net loss to common includes the impact of both the cumulative dividend and the noncash accretion to redemption value on our convertible preferred stock. Adjusted EBITDA loss for the second quarter was $3,600,000 compared to adjusted EBITDA income of $15,600,000 last year.

Turning to the balance sheet. As of 06/30/2025, the company had $73,700,000 in cash, cash equivalents and restricted cash with no outstanding debt obligations. That compared to $136,200,000 in cash, cash equivalents and restricted cash with no outstanding debt obligations as of 12/31/2024. Now turning to a review of our 2025 revenue guidance, which we updated in this afternoon’s press release. For the twelve months ending 12/31/2025, the company now expects net revenue of between $480,000,000 and $510,000,000 representing a year over year change in the range of flat to an increase of 6%.

The 2025 net revenue guidance now assumes net revenue from Advanced Wound Care products between $450,000,000 and $475,000,000 representing a year over year change in the range of a decline of 1% to an increase of five percent. Net revenue from Surgical and Sports Medicine products between $30,000,000 and $35,000,000 representing a year over year increase in the range of 6% to 23%. The expected increase in our revenue over the 2025 will be driven by our recently launched in licensed products that are all well positioned in today’s market. We have tightened our total revenue guidance range, reflecting the performance in the 2025 and our more refined expectations for the remaining two quarters. With respect to our profitability and EBITDA guidance, the company now expects GAAP net loss in the range of $6,400,000 to net income of $16,400,000 compared to net income of 4,700,000.0 to $34,000,000 previously EBITDA in the range of $6,200,000 to $37,000,000 compared to $20,000,000 to $59,600,000 previously non GAAP adjusted net income in a range of $5,500,000 to $28,300,000 compared to $15,300,000 and $44,600,000 previously.

Adjusted EBITDA in the range of $31,100,000 to $61,900,000 compared to $43,600,000 to $83,200,000 previously. In addition to our formal financial guidance for 2025, we are providing some considerations for modeling purposes. For modeling purposes, we expect the third quarter revenue in the range of approximately $130,000,000 to 145,000,000 Our profitability guidance for 2025 now assumes gross margins in the range of approximately 74% to 76% compared to 78% to 79% previously. The updated gross margin range reflects the expected impact related to product mix shift in our in licensed brands in the 2025. GAAP operating expenses, excluding cost of goods sold, in the range of flat to up 1% year over year and excluding noncash intangible amortization of approximately $3,400,000 the nonrecurring FDA payment related to our renewed BLA filing of $4,600,000 and the $8,300,000 of write down of assets in the first half, our total non GAAP operating expenses will increase 3% to 4% year over year compared to a range of 5% to 7% previously.

With that, I’ll turn the call over to the operator to open the call for your questions.

Gary S. Gilhini Sr., President, CEO, Chair of the Board, Organogenesis Holdings: You.

Conference Operator: Okay. And our first question will come from the line of Ryan Zimmerman with BTIG. Your line is open.

Ryan Zimmerman, Analyst, BTIG: Thanks for taking our questions. Good afternoon, Gary and Dave.

Gary S. Gilhini Sr., President, CEO, Chair of the Board, Organogenesis Holdings: Maybe Good afternoon.

Ryan Zimmerman, Analyst, BTIG: We could start with the CMS proposal for 2026. It is a radical change from what we’ve seen, And I believe the proposal was set at about 125 and change per square centimeter, if I’m not mistaken. Maybe, Gary, you could talk about kind of how you see Orgo fitting within that structure as it starts the year in 2026? And what are your expectations for the market from, let’s say, today through the back half of 2025? And then what changes in 2026 with that proposal and how the market may change?

Gary S. Gilhini Sr., President, CEO, Chair of the Board, Organogenesis Holdings: Sure. I’d be happy to. So as you know, we’ve been advocating for this type of payment reform for years, literally years. So it is a transformational event for the industry and a real opportunity for our products and Organogenesis organization. We agree with the CMS approach of setting tiers, And those tiers based on clinical differentiation, relative resource cost, they’ve kind of broken them out based on FDA classifications where data and evidence really matters.

So, you know, we feel great about this change. The fact that it’s also in HOPD, it’s not just in the ASP sites of care, it’s now opened up the HOPD market to larger, more complex wounds, where we are the leader in that space. That just gives more opportunity for folks to utilize our technologies, like Apolograph and soon to be released, you know, Dermagraph. So, you know, Apolograph is reimbursed today at $30 per square centimeter, and the current proposal at $125 would be a significant change. It would eliminate any of the disincentives financially to use the product and put it on a level playing field.

But what we really appreciate is CMS establishing these tiers, and we expect that we’ll be lobbying for different payment rates based on those tiers. So, Apolograph and Dermagraft and other PMA products will have the appropriate reimbursement based on the evidence and relative resource cost to produce those products. So, this is very exciting for us, very exciting for the industry. As it relates to the market, today, Aplograft represents about 3% of the units sold, believe it or not. A PMA product with arguably the best evidence in the space has about 3% of the market, that we see that significantly changing in 2026.

Five ten products as well, our PuraPly product is priced below the $125 per square centimeter today, so we would see an enhancement in that product and more utilization going forward. And then a level playing field for all the amnions, so there wouldn’t be a significant price advantage going forward, levels of playing field. So, we see a lot of reasons why 26% is going be extremely positive for us. The rest of 25%, I think, we’ve seen in Q2, we’ve seen some aggressive pricing. We think that’s going to continue and get worse at the end of the year.

I assume there’ll be a lot of discounting and inventory sales, anybody who’s got a lot of inventory at higher prices are going to need to move those products and we expect to see aggressive pricing. But for us, we’ve seen strong momentum coming out of the second quarter. Dave will talk a little bit about that. That momentum is continuing both in accounts and in revenue. And we have a couple of new products that we’ve launched that will compete extremely well in this market as we bridge the 2026.

Ryan Zimmerman, Analyst, BTIG: Yes. Well, just to follow-up on that. Thank you for that answer, Gary. It’s appreciated. Your guidance reduction, I think, is around $12,500,000 if I’m not mistaken, if I did my math right, for the year at the midpoint.

Given the results today, Dave, how do you do you think you’ve sufficiently accounted for this kind of aggressive behavior in the back half of the year with the reduction of the AWC segment for the balance of the year?

Dave Francisco, Chief Financial Officer, Organogenesis Holdings: Yes, we do, Ryan. Thanks for the question. Mean, as Gary mentioned, we did exit Q2. We came in at the low end, but exited with a fair amount of momentum. And we’ve recently launched some new products and in this environment you have to have the right products in the portfolio to succeed.

And so we believe those recently launched products are going to contribute quite a bit in the back half. As Gary mentioned, there could be some challenging periods, call it in the late period of Q4, but we think we’ve accounted for that. We’ve always anticipated that this would be remember, it was a relatively wide range when we first issued guidance simply because the market is in such an unusual spot here. So from our perspective, at least, we just took down the top end knowing that we’ve got two quarters behind us, two quarters ahead. So we just thought we’d narrow that range.

But we think the low end we’re confident in given the performance that we saw at the end of the second quarter.

Ryan Zimmerman, Analyst, BTIG: Okay. Last one for me and I’ll hop back in queue. Gary, I don’t think I heard, you may not want to say, the timing of the dermograph reintroduction. Can you be more specific or for competitive purposes, are you not?

Gary S. Gilhini Sr., President, CEO, Chair of the Board, Organogenesis Holdings: Well, we can give you a sense. We think that by the 2027 that we’ll have the opportunity to launch DermaGraft.

Ryan Zimmerman, Analyst, BTIG: Okay. Thank you, guys.

Dave Francisco, Chief Financial Officer, Organogenesis Holdings: Sure. Thanks,

Conference Operator: We are currently showing no remaining questions in the queue. Just one moment. A question has raised from Ross Osborne with Cantor Fitzgerald. Please go ahead.

Matt Park, Analyst, Cantor Fitzgerald: Hey, guys. This is Matt Park on for Ross today. Thanks for taking the questions. Guess jumping right in RENEW. As you guys move closer to BLA submission, I guess I trying to get your thoughts on how you think about ReNeu’s positioning within the broader knee OA treatment landscape and I guess what you guys view as the key differentiators versus existing injectable options?

Gary S. Gilhini Sr., President, CEO, Chair of the Board, Organogenesis Holdings: I think what’s really exciting is the actual data. So, in both studies, we had a significant number of KL-4s in the study. So, the second study hasn’t been completed yet, but in the first study, those KL-4s performed similar to KL3s and KL2s. So, you know, that is unique and it speaks to the strength of the product and potential labeling potential labeling improvements in the product over anything else. We’re pretty excited that the data is showing that it’s a robust product and will compete extremely well against the other competitors, which is primarily hyaluronic acid and steroids.

Matt Park, Analyst, Cantor Fitzgerald: Got it. That’s helpful. And then maybe just one more from me on the Surgical and Sports side of the business. Just hoping to get some more color on what’s driving or on what drove strength in the quarter and how you expect this momentum to continue in the back half of year?

Dave Francisco, Chief Financial Officer, Organogenesis Holdings: Yes, sure. We didn’t adjust the guidance there. I think we did see some very strong performance. I think you’re seeing some transition into some of the key products that we’ve got in the portfolio. And so we continue to see some nice numbers coming up from there.

In addition to that, we’ve kind of implemented some hybrid rep situations where you’re really seeing reps coming expanding across both wound care and surgical and that added some value in quarter as well. So we held that guidance, but it’s between 623%. So nice performance in the first half, up 12 excuse me, 16% in the quarter and 13% for the half. So we’re excited to see that.

Matt Park, Analyst, Cantor Fitzgerald: Got it. Thanks for taking the questions.

Gary S. Gilhini Sr., President, CEO, Chair of the Board, Organogenesis Holdings: Thank you. Thank you.

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