Organogenesis Holdings Inc. Class A Common Stock 2026 Q2 Earnings Call

Please go ahead, sir. Thank you, operator, and welcome everyone to Organogenesis Holdings second quarter 2026 earnings conference call.

I'm joined on the call today by David Francisco, our Chief Financial Officer. Let me start with a brief agenda of what we'll cover during our prepared remarks. Dave will then provide you with an in-depth review of our second quarter financial results, our balance sheet, and financial condition at quarter end, as well as our financial outlook for 2026, which we updated in our press release this afternoon. I will then provide you some closing comments before we open the call for your questions. Let me begin with a review of our results and key developments in Q2.

Our revenue results reflect the significant contraction and slower pace of recovery in the skin substitute market as a result of the actions and comments from CMS in late December of 2025. Total revenue declined 58% year-over-year in the second quarter, driven primarily by a 61% decline in sales of our Advanced Wound Care products. We were pleased to see measured improvement in our business trends in the second quarter. On balance, we were encouraged to see the operating environment improve from what we experienced during the first quarter. Net product revenue increased 18% quarter-over-quarter in Q2, driven primarily by a 23% sequential increase in sales of our Advanced Wound Care products.

As a leader in the industry, we leveraged our most comprehensive portfolio across multiple FDA classifications, including the only biologic PMA approved product, Apligraf, to enhance our market share position with a 30% increase in wound care unit volume on a quarter-over-quarter basis, outperforming the declines that have been reported across the industry. That said, revenue results for Q2 were below the expectations we outlined in our first quarter call. We attribute the majority of this performance to a slower pace of recovery from the significant contraction in the skin substitute market as a result of the sweeping changes from CMS to reform coverage and payment. The prolonged recovery has also prompted us to make important strategic decisions that are intended not only to reduce our cost structure, but also better position Organogenesis for success going forward.

While our operating and financial results in 2026 have been significantly impacted by the contraction in the skin substitute market this year, I want to make it clear that I remain very optimistic about our future. CMS efforts to overhaul coverage and payment for the skin substitute market have addressed the waste, fraud, and abuse from bad actors exploiting the system. With the proposed hospital outpatient prospective payment system and the physician fee schedule announced last month, we believe CMS is now seeking to promote stabilization in the market. They've held payment rates steady. They've reinforced the differentiation of PMA products and the importance of clinical data in determining coverage. We applaud these actions and look forward to expanding access to patients who need these products.

With more than 40 years in regenerative medicine and the most diverse evidence-based portfolio with technologies in each FDA category, we believe we are best positioned in the skin substitute market and will continue to be a leader in the space with the best evidence-based portfolio on the market. It is from this strong long-term market position that we are making important strategic decisions and prioritizing our investments that will support our company's future growth and continued leadership in this market. We are increasing our focus on clinical evidence with new published studies because science and evidence have been and always will be the core of our foundation. As coverage policies evolve, evidence will be the currency of credibility, and we intend to remain in the lead. Importantly, we continue to advance our strategic initiative to expand the company's mission into entirely new markets with the ReNu program.

Recently, the FDA formally accepted Amnuvx as the proprietary trade name for the biologic product previously known as ReNu. If approved, Amnuvx will establish a new market category for a biologic product representing a transformational opportunity for Organogenesis and the more than 30 million Americans living with symptomatic knee osteoarthritis. Let me share a few updates on our progress in each of these important strategic initiatives in recent months. The compelling clinical results from our RCT evaluating the safety and efficacy of PuraPly AM in the management of non-healing diabetic foot ulcers, or DFUs, was submitted for publication. The results of this 170-patient study showed statistically significant DFU wound closure at 12 weeks. We believe publication of these impactful results will strongly support PuraPly AM's inclusion in any future coverage policies, underscoring its critical role in the wound healing algorithm.

The RCT is complemented by an additional exciting publication in the "Journal of Wound Care," showing reduced rates of non-traumatic lower leg amputation among Medicare beneficiaries with DFU treated with PuraPly AM versus standard of care. The use of PuraPly AM in nearly 11,000 patients was associated with a statistically significant 20% lower overall amputation rate and an even lower 40% rate for amputations above or at the level of the knee. These new studies built on a significant body of evidence of clinical benefit of PuraPly AM, adding to the previous publications on comparative effectiveness research and a prospective analysis of a large patient registry. Together, this compelling evidence spans more than 23,000 patients studied, reflecting both the primary and supporting data CMS considers when making coverage determination.

On July 27th, we announced peer-reviewed results published in the "Journal of Wound Care," demonstrating Affinity's benefit in the most challenging and complex venous leg ulcers, or VLU. The data showed statistically significant improvements in wound closure at 12 and 16 weeks for Affinity plus standard of care across both wound duration group study, offering compelling new evidence in one of the hardest to treat populations in chronic wound care. These results reinforce Affinity's benefit in the hard to heal wounds, the population that drives the greatest clinical burden and cost in VLU treatment. As those costs continue to rise, particularly within Medicare, this is a meaningful step forward for patients, clinicians, and payers. Complementing our existing diabetic foot ulcer data, these results add to a growing body of RCT and real-world evidence that strengthens the case for expanded coverage across two of the most common, costly wound types.

With respect to our recent progress in our Amnuvx program, on July 6th, we announced that the FDA accepted our biologic license application for Amnuvx and has set a PDUFA target action date of April 24th, 2027. We believe this highly differentiated regenerative therapy has the potential to meaningfully change the treatment paradigm by offering a non-surgical, biologic option designed to address pain and improve function, particularly in patients with severe disease who lack approved non-surgical options. We look forward to continued engagement with the FDA as they complete their review. Before turning the call over to Dave, I want to comment on our updated outlook and important strategic decisions we've made subsequent to quarter end. We have updated our expectations for total revenue in 2026 in this afternoon's press release.

While we continue to expect improvement in our revenue results on a sequential basis in the third and fourth quarters, our 2026 revenue guidance now reflects the expectation that we see a more measured pace of recovery as compared to what was contemplated in our prior expectation for total revenue in 2026. Given the impact of a prolonged recovery on our revenue expectations, we completed a restructuring in June. The restructuring included a workforce reduction of 138 employees and is expected to result in cost reductions of approximately $18 million on an annualized basis. This is our second restructuring announced in 2026, which together are expected to reduce annual operating expenses by more than $32 million on an annual basis. Importantly, the benefits of these activities are not limited to expense reductions.

Rather, we believe our commercial team is now positioned to maximize the opportunity ahead as the skin substitute market expands from the recalibration over the first half of 2026. With that, let me turn the call over to Dave.