Bioventus Inc.

Good day and welcome to the BioVentus fourth quarter 2025 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal conference specialists 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 touchtone phone. And 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 Mr. Dave Crawford. Please go ahead.

Thanks, Chuck, and good morning, everyone. Thanks for joining us. It's my pleasure to welcome you to the BioVentus 2025 Fourth 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, review our performance against our 2025 priorities, and lay out our 2026 objectives. Then Mark will review the fourth quarter results and discuss our 2026 financial guidance. We'll finish the call with Q&A. A presentation for today's call is available in the Investors 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 31st, 2025. 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 the company may voluntarily do so from time to time, and undertakes no commitment to update or revise the forward-looking statements, whether 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 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 will turn the call over to Rob.

Thank you, Dave. Good morning, everyone, and thanks for joining our call today. BioVentus delivered another solid quarter and concluded a successful year across our strategic priorities while helping patients recover so they can live life to the fullest. Over the past three years, we have established a strong track record of meeting or exceeding our financial guidance while enhancing our portfolio and significantly strengthening our commercial, operational, and financial fundamentals across our company. In short, we've transformed BioVentus. It's a different company today with a very strong foundation, and we are now entering an exciting new phase and are well-positioned to build a $1 billion leading medtech company. In this next phase, we are increasing our focus on accelerating our revenue growth while further strengthening our earnings power and expanding our capital allocation optionality through strong and consistent growth in free cash flow. We believe this combination will drive significant future value creation for shareholders. For my remarks this morning, I would like to discuss three areas. First, I will briefly highlight our fourth quarter performance. Second, I will summarize our 2025 full-year performance with respect to our three priorities that we outlined at the start of last year. And finally, I will lay out our objectives for 2026. Let's start with the review of the fourth quarter, which represented a significant year-over-year acceleration and reflects our progress with sharpening commercial execution, scaling operations, and strengthening our financial foundation. The results further demonstrate that BioVentus possesses a powerful combination of value drivers of revenue growth, increased profitability, and enhanced cash flow. We delivered 10% organic revenue growth with robust performance across our core businesses, and we achieved the second half revenue acceleration that we guided to throughout the past year. We drove an increase in adjusted EBITDA of $8 million and expanded our adjusted EBITDA margin by almost 500 basis points compared to the prior year. And we set a record for quarterly cash from operations at approximately $38 million, helped in part by our improved inventory management. In addition to our strong financial performance, we received positive market feedback and valuable insights from the pilot launches for two of our exciting growth drivers, Peripheral Nerve Stimulation, or PNS, and Platelet-Rich Plasma, or PRP, which I will discuss in more detail in a moment. Now let me shift to a review of our full-year performance against the three priorities I introduced at the start of 2025, driving above-market revenue growth, continuing to expand our profitability, and accelerating free cash flow generation. Across all three of our businesses, we delivered above-market organic revenue growth for 2025. In our pain treatments business, we drove solid growth from our market-leading HA business and added the two new high-potential growth drivers I already referred to, P&S and PRP. We also received a strong contribution to our 2025 growth from surgical solutions, and equally important, solidified our plan to accelerate growth in this business in 2026 and beyond. And in restorative therapies, we delivered our highest organic growth in the last seven years, thanks to the excellent execution of our great team and the powerful impact Exogen has on patients' lives. Turning to our second focus area, expanding profitability, we drove nearly 150 basis points of adjusted EBITDA margin expansion compared to 2024. surpassing our goal to expand our adjusted EBITDA margin by 100 basis points. This illustrates our capability to build our profitability by leveraging the combination of strong organic revenue growth, our peer-leading gross margin, and consistent operational efficiencies. Expanding our adjusted EBITDA margin to a level at or above many of our peers gives us the ability to invest in our significant growth opportunities in 2026. which we believe will accelerate future revenue growth. And with respect to our third focus area, we ended the year by generating nearly $75 million of cash from operations, accomplishing our goal to nearly double cash flow from operations compared to the prior year. In addition, we refinanced our term loan, which enhanced our liquidity and drove interest expense savings in the second half of the year that we expect to continue throughout 2026. Overall, 2025 was a pivotal year for our company and reflected our substantial advancements with our portfolio, execution, and financial performance. Next, I would like to highlight the three objectives we are prioritizing in 2026. First, with a strong financial foundation established, we are very focused on accelerating our growth drivers through targeted and disciplined investments. Second, as we significantly increase investments to accelerate future growth, we aim to drive profitability at a pace exceeding revenue growth. Third, we look to continue to strengthen our already robust cash flow, which in turn will enhance our capital allocation optionality. Let me expand on each objective, starting with revenue growth. We remain focused on driving above-market growth across our core business, led by our durable and very profitable HA franchise, which generates profit to invest in and accelerate our future growth drivers of P&S, PRP, ultrasonics, and our international business. In 2026, we plan to allocate approximately $13 million of incremental investment toward these exciting growth drivers. Investment across these businesses includes expansion of commercial resources, evidence generation to highlight the clinical and economic benefits of our technology, stronger marketing to raise awareness of our clinically differentiated portfolio, and continued R&D innovation. Let me provide additional context on these investments across our three businesses. First, within our pain treatments business, we will be investing in both P&S and PRP. Our P&S platform will receive the largest share of the incremental investment, given the rapidly expanding market, our highly differentiated technology, and the enormous potential of this business. This resource allocation strategy is supported by our successful pilot launch and positive feedback from physicians and patients as they see the benefits of our innovative technology. During the pilot launch, we gained positive traction with both our trial and permanent solutions and collected valuable insights. The learnings from the pilot launch enable us to invest aggressively in 2026 in a very targeted and measured way to maximize the growth of this business in 2026 and over the coming years. Mark and I have spent time in the field and witnessed firsthand the positive impact that our P&S technology has on patients' lives. Our interactions with a wide variety of customers and patients have made us even more confident that our P&S business will become a major growth driver for BioVentus, given the power, size, and ease of use of our differentiated technology. We are also excited about PRP following its successful pilot launch. As a reminder, we are leveraging our existing HA commercial team for PRP, so there is less incremental investment required for this growth driver. Again, the market feedback from our pilot launch has been positive about our differentiated technology and the benefits for both physicians and patients. We believe the combination of P&S and PRP will provide a minimum of 200 basis points of growth this year with further acceleration in 2027. Shifting to our surgical solutions business, where ultrasonics will receive a disproportionate amount of our incremental investments considering the size of the market, unique benefits of our technology, and our increasing ability to make our solution the standard of care. In 2026, we plan to invest aggressively in marketing to raise awareness, in medical education to train surgeons earlier in their careers, and in sales expansion in targeted areas. We will also continue to support the growth of our excellent bone graft substitutes technology by raising awareness of our distinct clinical and economic value proposition. And with respect to our restorative therapies business, we will continue to support the business with targeted investments in 2026 and maintain our renewed focus and disciplined execution following a very successful 2025. Finally, within our international segment, we plan to make significant investments across pain treatment, surgical solutions, and restorative therapies, given the untapped growth potential in front of us. I recently attended our international sales meeting and came away even more confident that our international business is well positioned to become a key growth driver for BioVentus. We now have a targeted growth plan, new structure and capabilities, and a highly energetic team that is very focused on driving excellent execution in 2026. Before I turn the call over to Mark, let me briefly touch on our other two key objectives for 2026, earnings and cash flow. Mark will share more details on both during his section, so I'll just provide the headlines. We remain committed to increasing our earnings. and strengthening cash flow, even as we accelerate investment in our growth drivers. We expect earnings growth to outpace revenue growth, driven by our peer leading gross margin, disciplined resource allocation, and our interest expense savings. Given our substantial progress over the past few years in raising our EBITDA margin, we believe the best way to maximize shareholder value is to prioritize greater investment in our future growth, while maintaining an EBITDA margin of approximately 20% for 2026. We believe our strong business model gives us the flexibility to invest more aggressively in 2026 to accelerate our future growth and the ability to expand our margins as soon as 2027. And we believe this combination of accelerating growth and margin expansion will create significant shareholder value. And with respect to our third objective, As our increased earnings outpaces revenue growth, we expect it to contribute to an increase in cash flow, which will create increased capital allocation optionality. In the near term, we will continue to prioritize strengthening our balance sheet by using our strong free cash flow to further reduce debt. In conclusion, thanks to the strong execution of our team, We have transformed BioVentus and created a strong foundation. It's unusual for a company our size to consistently grow above the market while simultaneously increasing its investment in growth and expanding profitability and cash flow. We believe this combination is one of the many aspects that sets BioVentus apart. We are now entering a new stage. confident in our portfolio, growth strategy, and investment power to become a $1 billion leading MedTech company. Our team is focused, excited, and ready for the year ahead. Now I'll turn the call over to Mark.