MiMedx Group, Inc

Good afternoon and thank you for standing by. Welcome to the MiMedx First Quarter 2026 Operating and Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Matt Notarianni, Head of Investor Relations for MiMedx. Thank you.

Thank you, Operator, and good afternoon, everyone. Welcome to the MiMedx First Quarter 2026 Operating and Financial Results Conference Call. With me on today's call are Chief Executive Officer Joe Capper and Chief Financial Officer Doug Rice. As part of today's webcast, we are simultaneously displaying slides that you can follow. You can access the slides from the Investor Relations website at MiMedx.com. Joe will kick us off with some opening remarks and a summary of our operating highlights, and Doug will provide a review of our financial results for the quarter. And then Joe will conclude with some additional updates. We will then be available for your questions. Before we begin, I would like to remind you that our comments today will include forward-looking statements, including statements regarding future sales, operating results and cash balance growth, future margins and expenses, our product portfolios, and expected market sizes for our products. These expectations are subject to risks and uncertainties, and actual results may differ materially from those anticipated due to many factors, including competition, access to customers, the reimbursement environment, unforeseen circumstances, and delays. Additional factors that could impact outcomes and our results include those described in the risk factors section of our annual report on Form 10-K and our quarterly report on Form 10-Q. Also, our comments today include non-GAAP financial measures, and we provide a reconciliation to the most comparable GAAP measures in our press release, which is available on our website at www.mymedics.com. With that, I'm now pleased to turn the call over to Joe Capper. Joe?

Thanks, Matt, and good afternoon, everyone. Thank you for joining us on today's call. The start of the year has been an eventful one for MyMedics as we navigated the new reimbursement dynamics. and continue to leverage growth opportunities for the company. I am extremely proud of our team as they are once again rising to the challenges of the day. In this case, the reset of Medicare pricing for skin substitutes. While our wound care franchise was negatively impacted, our surgical business continued to excel in Q1. For background, the January 1st implementation of the new Medicare reimbursement framework marked a significant change for the wound care market. Reform was necessary and inevitable, given the massive amount of fraud, waste, and abuse that permeated the category. However, the final rules were not well-defined and then created a whole new set of challenges for industry participants attempting to adapt to the changes. While we did expect to experience some disruption, especially for the first half of the year, none of us could have foreseen the obstacles we are experiencing nor the magnitude of the market contraction. And unfortunately, the dislocation is resulting in patients not receiving the care they need, calling for additional modifications to the Medicare reimbursement program. Rest assured, myMedics can navigate these choppy waters better than most thanks to our strong balance sheet and diversified top line. Unlike many other industry participants, Our business is buoyed by nearly $200 million of 2026 surgical and international revenue that has no exposure to the structural changes taking place in the wound care market, both of which grew by double digits in Q1. It remains to be seen how many other companies will be able to financially withstand these disruptions. I will touch on some of the headlines of the quarter, then circle back for a deeper dive on the two businesses. For the first quarter, year-over-year net sales were $59 million. Our surgical business was up 13%, and our wound care business was down 60% from the prior year. Our adjusted gross profit margin was 72% in the quarter. We had an adjusted EBITDA loss of $12 million. We ended the quarter with $142 million in cash. We completed enrollment in our EpiEffect randomized control trial, drew full market release, of our PRP product and began selling a few of our newly licensed surgical products. As a reminder, for the past few years, the company has been following a strategy that prioritizes the continued innovation and diversification of our product portfolio in support of both our wound care and surgical businesses. We also continue to seek opportunities to expand our surgical footprint in newer specialties. Our intent has been to drive comparatively higher growth with surgical-related products to achieve a more balanced business mix and take advantage of what we believe is an incredibly large and growing opportunity for our surgical portfolio. The plan has been working, and as a result, we have realized 50% top-line growth in our surgical business over the past three years. We will continue to make investments in support of this strategy. Let's take a few minutes to unpack what's happening in the wound care market, where it is clear the Medicare reimbursement reform is creating collateral damage. On January 1st, CMS changed from an ASP reimbursement methodology in favor of the new fixed price system for skin substitutes. Also, at the very last minute, CMS, without explanation, decided not to implement the new LCDs, which would have required manufacturers to prove product efficacy to qualify for Medicare reimbursement, a customary requirement for other medical products. Finally, at the same time, they initiated the WISER model in six states, which now requires prior authorization to qualify for reimbursement. As providers attempted to adjust, it quickly became clear the MACs were ill-prepared for the change. As a result, claims processing slowed dramatically, with at least one of the MACs not processing any Medicare claims for most of the first quarter. In that MAC alone, our year-over-year first quarter wound revenue dropped by 72%. Making matters worse, the WISER implementation has been an unmitigated failure. It is apparent the tools they are using were not properly tested. In one of the WISER states, our wound revenue was down 84% in Q1. The practical implications of our long prior authorization due to these kludgy systems can be devastating for patients. To state the obvious, this model should not have been implemented at the same time as the reimbursement methodology changed. And of course, without LCDs, no guardrails exist to prevent ineffective products from entering the market. The challenges have caused several providers to stop using skin substitutes altogether, at least temporarily. This cannot persist for long, or patients will suffer, amputations will increase, and people will die. To sum up the government's efforts in a nutshell, good intent with poor execution. That said, this reform was bound to happen. It's just unfortunate so much attention was given to the pricing fix and very little to the payment process. The outsized economics which have induced massive fraud, waste, and abuse in the skin substitute market has been eliminated. Putting aside the near-term overreaction, this reform is a good thing for the healthcare system and taxpayers. We must now continue to encourage CMS and the MACs to course correct, work out the kinks, and quickly stabilize the wound care market. While we are experiencing our own challenges with the sluggish transition, we have been told of other companies which have experienced 90% plus revenue drops in Q1, suggesting that on the other side of the reset, there will be fewer manufacturers in place to serve the market. As we entered the year, we made the decision to keep the business resource at least through the first quarter in the event of a more orderly transition. We started to see some but not many signs towards the end of the quarter of an uptick in volume in the care settings we expected to benefit from the reform. However, due to the magnitude and slow pace of the adjustment, we needed to act. A few weeks ago, we announced that we had taken steps to reduce our cost structure by approximately $40 million. which should put us on a pathway back to profitability. In summary, we believe the wound care market will normalize. Patients need care and suppliers need a more orderly process sooner rather than later if they're going to stay in the business. When it does, product performance will no longer be set aside in favor of outsized profit potential. Our market-leading technology, with its unmatched collection of clinical evidence, will continue to set the standard. We also expect that at some point, CMS will set basic requirements for proof of product safety and efficacy. There will be fewer participants, and my medics will again flourish in the wound care space. Let's now turn to the surgical business, which continues to be an outstanding performer, delivering 13% growth in Q1 with contributions from the entire product portfolio. As stated on numerous occasions, One of the tenets of our strategic plan has been to expand our surgical footprint by investing in dedicated commercial resources, innovative products, and meaningful scientific research to validate the clinical and economic benefits derived from the use of our best-in-class technology. As a reminder, we made the purposeful pivot to greater emphasis on the surgical market starting three years ago, given the size of the market opportunity and the clear improvement in surgical outcomes when incorporating our products in a variety of procedures. We saw it as one of the best areas to concentrate our focus and investments. At the outset of this year, we realigned our commercial team to dedicate more sales professionals to the surgical business, and we continue to look for opportunities to augment this team even further. I mentioned on our last call that we had added a few products to the surgical portfolio. In the quarter, we launched AmnioFix Thyroid Shields, a new variant of our AmnioFix product. to be used as a protective barrier during thyroidectomy surgery, which is a procedure involving partial or complete removal of the thyroid gland. As a reminder, this surgery carries inherent risk due to the proximity of the recurrent glandular nerve and the parathyroid glands, which can be vulnerable to injury. AmnioFix Thyroid Shield is off to a terrific start and is another great example of how the application of our technology can significantly reduce or eliminate post-operative complications. During the quarter, we also began the limited market release of two of the five 10K products we licensed. G4 Derm Plus, which is a flowable peptide matrix engineered for rapid, protected wound closure. The product forms a 3D scaffold that mimics the human extracellular matrix and serves as an antibacterial barrier that protects the wound and controls bile burp. And Hydrolyx Collagen Matrix, which is a sterile type 1 collagen powder comprised of soluble modified bovine collagen. In addition to deploying more direct selling resources and expanding our product portfolio, we have consistently prioritized the generation of rigorous scientific and clinical evidence as a crucial part of our growth plan. On our last call, I highlighted a recently published article in the Journal of Information, which found that our DHACM and LHACM allografts exhibited immunomodularity properties that correspond with the beneficial outcomes we observe in the clinical setting. This piece, along with other important publications, like our 2025 article in Nature Scientific Reports, are important reminders of the extraordinary healthcare benefits inherent in our technology. They indicate that D-HACM and L-HACM both appear to restore a balanced physiological inflammatory response and serve to interrupt pathological fibrosis, which could lead to reduced scarring and a more expeditious return to functionality. I cannot overstress the importance of this type of work, especially during this early phase of surgical market development. We've amassed a library of data that allows us to confidently state that we have the number one most studied amniotic tissue. We've also been advocating for placental allografts to be upgraded from a 361 destination to 510 clearance, like xenografts, and synthetic skin substitutes. We see this as part of the natural maturation of the sector. To that end, we expect to submit our first two 510K applications for placental-derived products in the next few months. As you have just heard, we are continuing to work through the unforeseeable disruptions in the wound care market and have taken steps to right-size our cost structure to better enable a rapid return to profitability as the industry normalizes. and our surgical business remains strong and poised for continued growth. One final topic before I turn the call over to Doug for a more detailed review of our financial results. As announced on our last earnings call, the board has authorized a share repurchase program of up to $100 million for companies common stock over a two-year period. We intend to use the repurchase program periodically on a discretionary basis subject to general business and market conditions and balanced against other investment opportunities. Since that call in late February, we have been focused on various strategic and operational matters, including the restructuring activity that was announced earlier this month, which precluded us from repurchasing shares. With some of those activities behind us, we are now able to move forward with the share repurchase program. Accretive investments that meet our criteria will remain our highest priority but we do intend to allocate some capital to invest in our own stock. With that, I'll turn the call over to Doug. Doug?