Yahoo Finance Bioventus Inc (BVS) Q1 2024 Earnings Call Transcript Highlights: Strong Start with Significant ...
Revenue: $129 million, 9% growth year-over-year, 15% organic growth adjusting for divestiture.
Adjusted EBITDA: $23 million, up $6 million, 33% increase year-over-year.
Adjusted Gross Margin: 76%, increased by 190 basis points from previous year.
Adjusted Operating Income: $20 million, 49% increase from $14 million in the prior year.
Adjusted Operating Margin: 15.5%, advanced 410 basis points from 11.4% in the prior year.
Adjusted Net Income: $5 million, compared to a loss of $16 million in the prior year.
Adjusted EPS: $0.07, improved from a loss of $0.26 per share in the prior year.
Net Leverage Ratio: Below four times, significantly ahead of end-of-2024 target.
2024 Financial Guidance: Net sales expected between $535 million to $550 million; Adjusted EBITDA between $94 million to $99 million; Adjusted EPS between $0.25 to $0.33.
Release Date: May 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Bioventus Inc (NASDAQ:BVS) reported a strong start to the year with 15% organic revenue growth in Q1, driven by strategic focus and disciplined execution.
The company experienced double-digit growth in its HA business, propelled by significant volume growth in DUROLANE, which now accounts for over two-thirds of total HA revenue.
Bioventus Inc (NASDAQ:BVS) saw accelerated double-digit growth across both ultrasonics and bone graft substitutes in the surgical solutions segment during the first quarter.
The company successfully reduced its net leverage ratio to below four times at the end of Q1, significantly ahead of the prior expectation of achieving this target by the end of 2024.
Bioventus Inc (NASDAQ:BVS) increased its adjusted EBITDA margin by over 300 basis points, driven by Q1 revenue acceleration and a healthy gross margin in the mid 70s.
Negative Points
International segment growth was below expectations in Q1 due to the timing of some shipments, although the company remains optimistic about its long-term potential.
Despite overall growth, the restorative therapies segment saw a sales decline of 16%, primarily due to the impact of the Wound business divestiture.
There were some recent shortages in the supply chain for Surgical Solutions, potentially impacting projected growth, although no meaningful impact is currently anticipated.
Operating cash flow represented an outflow of $6 million in Q1 due to expected outflows related to employee annual bonus payments, annual insurance costs, and timing of contractual inventory purchases.
The company is still working on improving employee retention and expense control, indicating ongoing challenges in managing operational costs effectively.
Q & A Highlights
Q: Can you provide details on the year-over-year growth number for DUROLANE, specifically what was price versus volume? A: (Mark Singleton - CFO, SVP) The volume growth for DUROLANE was in the high double-digits, driven by our dedicated salesforce and the market shift towards single-injection therapies. Price increases are planned to continue sequentially throughout the year, with a slight increase already seen in Q1.
Q: How are the financial ASPs expected to change sequentially, and what are the expectations for GELSYN in the latter half of the year? A: (Mark Singleton - CFO, SVP) For Q2, DUROLANE saw a price increase of about 6%, and GELSYN about 1%. Looking into Q3, another smaller increase is expected for DUROLANE, and a significant double-digit increase for GELSYN. The price adjustments are managed within and outside contracts to support growth.
Q: What drove the impressive acceleration in growth for the Surgical Solutions segment, specifically around Bone Graft Substitutes (BGS)? A: (Robert Claypoole - CEO) The growth was driven by true demand and enhanced focus on the segment. The dedicated distribution changes implemented last year are contributing positively, and we expect this momentum to continue, supporting our guidance for double-digit growth across Surgical Solutions for the year.
Q: How should we model adjusted gross margins going forward given the current performance? A: (Mark Singleton - CFO, SVP) The adjusted gross margin for Q1 was exceptionally high at 76% due to optimal product mix. Expectations for the year remain around 74%, consistent with 2023, reflecting strong performance against peers and industry standards.
Q: Can you discuss the underlying growth and competitive share in the HA business now that reimbursement headwinds have lapped? A: (Mark Singleton - CFO, SVP) The HA business is showing strong unit growth with revenue share around 25%. With reimbursement issues resolved, we expect high single to double-digit growth moving forward, supported by strong sales execution and market dynamics favoring our products.
Q: Could you provide insights into the improvements in commercial execution across the business, particularly in Surgical Solutions? A: (Robert Claypoole - CEO) Our commercial execution is strengthening due to more strategic focus and disciplined execution. In Surgical Solutions, changes to distribution have enhanced performance significantly, contributing to the positive outlook for the segment.
Q: Any updated expectations for EXOGEN and the international business following the MDR certification? A: (Robert Claypoole - CEO) EXOGEN continues to perform well with strong brand equity. The MDR certification will help expand our business in Europe. We are optimistic about the growth potential for EXOGEN and our international operations moving forward.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
