Bioventus Inc.

third quarter 2024 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Dave Crawford. Please go ahead.

Thanks, Danielle, and good morning, everyone, and thanks for joining us. It is my pleasure to welcome you to the BioVentus 2024 Third 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 2024 priorities and our continued progress, and Mark will provide detail of our third quarter results and discuss our updated 2024 financial guidance. We will finish the call with Q&A. The presentation for today's call is available on the investor section of our website, bioventus.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 SEC. including item 1A, risk factors of the company's Form 10-K for the year ended December 31, 2023. As such, factors may be updated from time to time in the company's other filings made with the SEC. 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 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 U.S. generally accepted accounting principles, or GAAP. We generally refer to these as non-GAAP or adjusted financial measures, Important disclosures about and 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 investor section of our website at bioventus.com. Now, I'll turn the call over to Rob.

Thank you, Dave. Good morning, everyone, and thanks for joining our call today. As a result of strong execution by our BioVentus team across all functions and geographies, We delivered another strong quarter and we look forward to completing a successful and transformational 2024. We believe our diverse portfolio, growth strategy, and improved execution position us to sustain our momentum and deliver above market revenue growth, margin expansion, and cash flow acceleration in the years ahead. Let's take a look at our performance across the three priorities I introduced at the start of the year. Accelerating revenue growth, improving profitability, and enhancing our liquidity position. With respect to our first priority, accelerating revenue growth, we delivered growth of 15% in the third quarter. This marks the fourth straight quarter of double digit organic revenue growth. Given the strong execution across all of our businesses, we are pleased to raise our revenue guidance for the full year to the high end of our previous expectations. I'll share just a few highlights regarding our revenue. Starting with Surgical Solutions, We accelerated our double-digit growth in the third quarter across both ultrasonics and bone graft substitutes. With respect to ultrasonics, our selling strategy continues to gain momentum as the number of generators sold exceeded our expectations and we saw the highest year-over-year growth for our disposable blades for the year. As we have mentioned in the past, We are in the early stages of penetrating the roughly $1 billion market opportunity across spine, neuro, and general surgery. Today, our focus, our strategic focus, remains on spine surgery as we seek to scale the business and drive significant growth by establishing nexus and bone scalpel as the standard of care. To this end, we are making strategic investments to build awareness about the benefits of ultrasonic surgery versus current practices, increase medical education and commercial effectiveness, and enhance our portfolio with line extensions. Longer term, we plan to augment our growth by penetrating neurosurgery and general surgery while also expanding internationally. We're excited about our potential to drive sustained double-digit or ultrasonic growth in the years ahead. With respect to our HA business for knee osteoarthritis, the team once again delivered double-digit growth in the third quarter, led by significant demand for Duralane, our single injection HA therapy. Throughout this year, we have concentrated on enhancing the collaboration between our corporate accounts team and our field sales team to augment our commercial execution with large IDN and regional customers. Our intense focus is helping us expand our footprint and secure new accounts as we continue to gain market share. Looking forward, we are confident in our ability to drive sustained above-market growth with our clinical differentiation, dedicated commercial team, robust private payer coverage, and opportunities for geographic expansion. Moving to Exogen. We have fully transitioned from stabilizing the business to establishing it as a growth business in our portfolio with our very dedicated and patient-focused team. Given our renewed focus and investments in additional commercial resources, medical education, and product enhancements, we expect Exogen to grow annually by low to mid-single digits in the years ahead. Next, I'd like to provide a brief update on the status of our advanced rehabilitation business divestiture that we discussed last quarter. At the beginning of October, we announced an agreement to sell the business for $25 million with potential earnouts totaling up to $20 million. We believe this divestiture will allow us to further strengthen our focus and execution within our portfolio while also enhancing our liquidity. At this time, we expect the transaction to close near the end of this year or early next year. Now I'll shift to our second focus area, boosting profitability. With our peer-leading gross margin and our accelerated revenue growth, adjusted EBITDA of $24 million increased by $2 million versus the prior year. For the year, we have delivered nearly 150 basis points of adjusted EBITDA margin improvements. Going forward, we remain committed to growing the bottom line faster than our top line, and as previously mentioned, we are committed to expanding our adjusted EBITDA margin by at least 100 basis points annually. We believe this level of annual margin improvement is sustainable as we capitalize on our revenue acceleration, preserve our high gross margin profile with supply chain improvements, and reallocate or reduce operational expenditures. to either invest in higher ROI initiatives or drop the savings to the bottom line. And now I'll turn to our third major focus area, improving our liquidity position. I'm pleased to say that we generated positive cash flow from the operations in the third quarter, increased our cash position, and further reduced our net leverage ratio to approximately 3.5 turns. Next year, we expect a material acceleration in our cash flow as we plan to reduce one-time cash costs, decrease inventory, and lower our interest expense, providing further improvements in our overall financial position. That concludes my update on our three priorities. I'm confident that the work taking place across our organization to improve our fundamentals, drive above-market growth, enhance profitability, and strengthen our liquidity position will continue to advance our business and create significant shareholder value. Now I'll turn the call over to Mark.