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Organogenesis Holdings Inc. (ORGO)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $86.7M and diluted EPS was $(0.17), with Advanced Wound Care down 23% YoY and Surgical & Sports Medicine up 11%; results were within prior guide but below Wall Street consensus for both revenue and EPS* .
  • Management reaffirmed FY2025 revenue guidance ($480M–$535M) but lowered GAAP net income and EBITDA ranges; gross margin guidance was raised to ~78–79% (from 76–78%) .
  • Q2 2025 modeling: revenue expected at ~$100M–$110M and gross margin back-end loaded as product mix normalizes and expiry pressures abate .
  • Catalyst path: CMS’ LCD delay to Jan 1, 2026 (April 11) reduces near-term disruption; back-half stabilization expected as products return to formularies; ReNu Phase III top-line in September and BLA submission targeted by year-end 2025 .

What Went Well and What Went Wrong

What Went Well

  • Reaffirmed FY2025 revenue guidance; optionality from full portfolio with PuraPly available for all indications during the LCD delay period .
  • Gross margin guidance increased to ~78–79% for FY2025 on expected mix shift and reduced expiry; team executed within Q4 guide range for Q1 revenue .
  • Quote: “We have reaffirmed our financial guidance for 2025 and are confident in the team’s ability to execute our commercial strategy this year.” .

What Went Wrong

  • Q1 revenue down 21% YoY to $86.7M; Advanced Wound Care down 23% YoY due to LCD-related uncertainty and audits; adjusted EBITDA swung to $(12.5)M .
  • Operating loss widened to $(26.7)M; write-down of assets held for sale ($6.6M) and excess inventory expirations pressured profitability .
  • Quote: “We had excess inventory in our living technology that expired in the first quarter… some of that will spill into the second quarter as well.” .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$115.2 $126.656 $86.693
Diluted EPS ($USD)$0.0966*$0.04 $(0.17)
Gross Margin (%)76.7% 75% 73%
Adjusted EBITDA ($USD Millions)$13.4 $18.177 $(12.524)

Values marked with * retrieved from S&P Global.

Segment revenue breakdown:

SegmentQ3 2024Q4 2024Q1 2025
Advanced Wound Care ($USD Millions)$108.0 $118.585 $79.927
Surgical & Sports Medicine ($USD Millions)$7.0 $8.071 $6.766

KPIs:

KPIQ3 2024Q4 2024Q1 2025
Operating Expenses ($USD Millions)$82.1 $85.4 $89.716
GAAP Net Income (Loss) ($USD Millions)$12.3 $7.673 $(18.843)
Gross Profit ($USD Millions)$88.0 $95.605 $62.970
Cash, Cash Equivalents & Restricted Cash ($USD Millions)$94.9 $136.151 $110.534

Consensus vs. Actuals (S&P Global):

MetricQ3 2024Q4 2024Q1 2025
Revenue Consensus Mean ($USD Millions)$109.467*$109.600*$90.767*
Revenue Actual ($USD Millions)$115.177 $126.656 $86.693
Primary EPS Consensus Mean ($USD)$(0.015)*$(0.015)*$(0.04)*
Diluted EPS Actual ($USD)$0.0966*$0.04 $(0.17)

Values marked with * retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Revenue ($USD Millions)FY2025$480–$535 $480–$535 Maintained
GAAP Net Income ($USD Millions)FY2025$9.5–$38.8 $4.7–$34.0 Lowered
EBITDA ($USD Millions)FY2025$27.0–$66.6 $20.0–$59.6 Lowered
Adjusted Net Income ($USD Millions)FY2025$15.3–$44.6 $15.3–$44.6 Maintained
Adjusted EBITDA ($USD Millions)FY2025$43.6–$83.2 $43.6–$83.2 Maintained
Gross Margin (%)FY2025~76–78 ~78–79 Raised
Q2 Revenue ($USD Millions)Q2 2025n/a~$100–$110 New modeling detail
Non-GAAP OpEx YoYFY2025+3%–6% excl. amortization & FDA fee +5%–7% excl. amortization, FDA fee, Q1 write-down Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
CMS LCD CoverageQ3: Advocated evidence-based coverage; NuShield/PuraPly data submitted . Q4: LCD finalized with Feb 12 effective date; expected near-term disruption .LCD delayed to Jan 1, 2026; company supports review to include real-world evidence .Less near-term disruption; extended timeline; more evidence submission window.
Payment ReformProposed value-based per cm payment; engagement with CMS .CMS reviewing coverage; payment changes possibly in July proposed rule; LCD acts as backstop if payment doesn’t materialize .Continued advocacy; potential mid-year visibility.
Portfolio Optionality/FormulariesQ4: Covered list dynamics, conversion expected .Pivot to full portfolio during delay; effort to re-add products to formularies; stabilization expected H2 .Mix shift upside; formulary reinstatement ongoing.
Gross Margin DriversQ3/Q4: 76.7%/75% gross margin .Expiry headwinds in H1; back-half lift from mix, reduced expiry; FY GM guide up to 78–79% .Improving in H2.
ReNu Program (Knee OA)Q3: Phase III interim positive; enrollment complete . Q4: BLA submission timeline; approval target late 2026/early 2027 .All patients to complete second Phase III by end Q2; top-line September; BLA submission by year-end .On track; 2025 BLA submission catalyst.
Manufacturing ExpansionAnnounced Smithfield facility; Dermagraft/TransCyte/ FortiShield roadmap .Progress continues; facility to support product reintroductions .Capacity expansion supports LT growth and margins.
Market Audits/BehaviorQ4: Limited disruption late Q4 .Audits and confusion pressured Q1; expect stabilization as clarity returns .Temporary headwind; easing expected.

Management Commentary

  • “Organogenesis’ strong brand equity, diverse portfolio and deep customer relationships have us well positioned to navigate a challenging market.” .
  • “We quickly pivoted to maximize our substantial competitive advantages during the period of extended LCD delay.” .
  • “We expect the second quarter revenue in the range of approximately $100 million to $110 million… a big jump up in gross margin overall based on that mix shift and the lack of expiry going forward.” .
  • “We expect to submit a compelling case to secure coverage for PuraPly AM when the LCDs are implemented in 2026.” .
  • “We remain on plan… top line data results from the second Phase III [ReNu] study to share publicly in September… on track for a BLA submission by the end of this year.” .

Q&A Highlights

  • Guidance cadence and confidence: Reaffirmed top/bottom lines despite LCD delay; optionality from PuraPly availability across indications and higher-margin licensed products; back-half stabilization expected .
  • Gross margin trajectory: H1 impacted by expiry of living technologies; back-end loaded improvement from mix shift and reduced expiries .
  • Market dynamics: Q1 contraction driven by confusion and audits; process underway to reinstate products on formularies with better trend than in 2023 .
  • CMS outlook: Delay to reevaluate coverage policies and allow additional data; LCD serves as backstop if payment reform isn’t advanced; positive for PuraPly AM prospects .

Estimates Context

  • Q1 2025 revenue ($86.693M) below consensus ($90.767M)* and diluted EPS ($(0.17)) below consensus ($(0.04)); prior two quarters were above consensus on revenue and EPS .
  • With gross margin guidance raised and Q2 modeled at $100–$110M revenue, consensus may need to revise H2 expectations to reflect mix-driven margin recovery and formulary reinstatement tailwinds .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term headwinds from LCD uncertainty and audits drove Q1 softness and margin pressure; management guides to Q2 revenue of ~$100–$110M and expects H2 stabilization as formularies normalize .
  • FY2025 revenue guidance maintained; GAAP net income and EBITDA ranges lowered, but gross margin guidance raised to ~78–79% on expected mix shift and reduced expiry—watch H2 margin inflection .
  • Portfolio optionality with PuraPly available across indications during LCD delay supports top-line resilience and margin mix benefits despite competitive entrants .
  • Balance sheet remains solid with $110.5M cash and no debt; $125M revolver availability provides flexibility to execute growth initiatives .
  • Regulatory catalysts: CMS coverage review (LCD delayed to Jan 1, 2026) and potential payment reform commentary mid-year; company actively advocating value-based payment .
  • Clinical catalyst: ReNu Phase III top-line in September and BLA submission by year-end 2025—potential medium-term transformational asset if approved .
  • Trading lens: Expect choppy H1 with expiry/transition effects; positioning for back-half recovery and monitoring CMS rulemaking and ReNu data could be key to sentiment re-rating .

Appendix: Additional Q1 2025 Details from 8-K

  • Operating loss $(26.7)M; write-down to fair value for asset held for sale $6.6M; adjusted net loss $(13.4)M; adjusted EBITDA $(12.5)M .
  • GAAP net loss $(18.8)M; diluted EPS $(0.17); cash, cash equivalents and restricted cash $110.5M; no outstanding debt .

Relevant Q1 2025 Press Releases

  • Company supports CMS’ LCD delay to review coverage policies, emphasizing inclusion of real-world evidence and advocating for integrated coverage and payment policy .
  • Earnings date announcement (April 7) and conference call logistics .