Organogenesis Holdings Inc (NASDAQ:ORGO) Q3 2019 Earnings Conference Call - Final Transcript

Nov 12, 2019 • 05:00 pm ET

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Organogenesis Holdings Inc (NASDAQ:ORGO) Q3 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
Gary S. Gillheeney

full year guidance which we updated today in the press release.

Turning to a quick review of our third quarter revenue performance. We reported total revenue growth of 27% year-over-year in the third quarter, driven by sales of our Advanced Wound Care products of 25% and sales growth of our surgical and sports medicine products of 39% year-over-year. This strong growth was driven by investments we've made in expanding our sales force over the last 12 to 18 months where we've increased our direct sales team from approximately 190 at the end of 2017 to approximately 240 as of September 30 2019, an increase of over 26% for the period. We've also expanded the number of independent agencies that we are working with in the surgical and sports medicine market to approximately 145 at quarter end, up 61% from the end of 2017.

Our third quarter results also benefited from the favorable reimbursement decision for our largest product line PuraPly. Revenue from PuraPly products for the third quarter of 2019 was $31.8 million compared to $17.9 million in the third quarter of 2018, an increase of $13.9 million or 78% year-over-year. The impressive growth in sales of our PuraPly products represented the largest driver of growth in our Advanced Wound Care business which increased 25% year-over-year and this growth performance is notable given the headwind from Affinity being off the market, which represents more than 10 percentage points of growth in the period. Importantly, we continue to expect to have commercial scale of Affinity by the end of Q1 2020.

We continue to leverage our strong demand for PuraPly by growing the number of PuraPly customers and driving customers and clinician adoption deeper into existing PuraPly accounts. We also continue to expand the number of Organogenesis products that our customers are purchasing.

We also reported stronger than expected revenue growth in our surgical and sports medicine business sealed by our strong portfolio of differentiated orthobiologic products including NuCel for bony fusion in the spine and extremities, our surgical and sports medicine, growth in the third quarter was particularly impressive given the supply related challenges we had for NuCel, but the investments in expanding our sales team as well as strong execution helped drive growth of 39% year-over-year.

We've more than doubled the number of agencies selling our surgical and sports medicine portfolio over the last two years and this investment continues to pay dividends in driving significant revenue growth and increasing our overall market share .Third quarter revenue growth also benefit of the sale of our commercially available amniotic products which increased in the high teens, year-over-year against a difficult growth comparison in the prior year. This increase reflects the strong execution of our sales force against our strategy and leveraging the strong adoption of PuraPy into broader adoption utilization of our non PuraPly problems.

Third quarter amniotic product growth did benefit from the improvements we've made in our product capacity towards the end of the second quarter, and we