Organogenesis (ORGO) Q3 2026 Earnings Call: Revenue Guidance and Amnuvx Delay

Key Takeaways

• Q3 2026 net product revenue fell 70% year over year to $45.5 million, but increased 6% sequentially as conditions in the skin substitute market began to improve.
• Advanced Wound Care revenue declined 73% to $38.2 million, while Surgical & Sports Medicine revenue decreased 19% to $7.3 million.
• Gross margin contracted to 52% from 76%. Organogenesis recorded a $29.6 million net loss and a $22.4 million adjusted EBITDA loss.
• Management updated full-year 2026 net revenue guidance to $179 million-$200 million, representing a 65%-68% year-over-year decline.
• The company expects positive adjusted EBITDA in Q4 2026 at the high end of its guidance range. Results would remain negative at the low end.
• The FDA identified 18 remediation items at the Norwood facility during its review of Amnuvx. Organogenesis expects remediation to be completed by September 30, 2027, extending the PDUFA timeline beyond April 24, 2027.

Core Financial Results

Business and Operating Performance

The 70% revenue decline reflected disruption in the skin substitute market following the withdrawal of LCD coverage policies and CMS comments concerning discarded product in December 2025. Despite the year-over-year contraction, total revenue rose 6% from Q2, including sequential growth of 6% in Advanced Wound Care and 10% in Surgical & Sports Medicine.

Management said Organogenesis gained market share as competitors reduced their exposure to wound care or exited the category. Claims analysis indicated that the company’s share increased by more than 30% compared with Q1 and grew at more than twice the rate of major established competing portfolios. Apligraf, PuraPly AM, Affinity and NuShield all showed sequential improvement.

Organogenesis also highlighted the publication of PREPARE trial results for PuraPly AM in non-healing diabetic foot ulcers. The trial met its primary endpoints and showed statistically significant improvement in wound closure at 12 weeks when PuraPly AM was combined with standard care. The company said its PuraPly AM evidence base covers more than 23,000 patients.

For Amnuvx, formerly ReNu, the FDA accepted the biologics license application in June 2026. A pre-license inspection subsequently identified 18 remediation items, while the FDA also requested additional information related to the submitted clinical data. The company continues to pursue approval for the proposed single-injection biologic treatment for knee osteoarthritis.

Management Guidance

Organogenesis now expects full-year 2026 net revenue of $179 million-$200 million, down 65%-68% year over year. The outlook includes:

• Advanced Wound Care revenue of $151 million-$171 million.
• Surgical & Sports Medicine revenue of $26 million-$27 million.
• Grant income of $1.9 million.

Management expects sequential revenue improvement in Q4, but said the overall recovery is progressing more slowly than previously contemplated.

The company expects its second-half adjusted EBITDA loss to decline by more than 60% from the first half at the low end of guidance and by more than 80% at the high end. Positive adjusted EBITDA in Q4 is expected only if results reach the high end of the range.

Restructuring and additional cost actions are expected to reduce annualized operating expenses by approximately $45 million, including about $32 million related to restructuring.

Management expects existing cash, working capital and net cash flows from product sales to fund operating expenses and capital expenditures for at least the next 12 months. The company is also evaluating financing alternatives for Amnuvx commercialization and Smithfield facility investments.

Risks and Points to Watch

• Skin substitute demand remains affected by reimbursement changes, uncertainty over discarded-product rules and clinician confusion, particularly around Apligraf.
• Management estimated that nearly 20% of Q3 skin substitute sales came from inventory held by companies no longer operating in the market. It expects this inventory to clear over the next one or two quarters.
• The Amnuvx PDUFA target date will move beyond April 24, 2027. No revised target date was provided.
• Norwood remediation is expected to cost approximately $8 million, including about $4 million of incremental spending and $4 million of planned facility work brought forward. Approximately 25% is expected in 2026, with the remainder through Q3 2027.
• Cash, cash equivalents and restricted cash declined to $26.9 million from $94.3 million at the end of 2025.

Analyst Q&A Highlights

Management said the skin substitute market has bottomed and is beginning to expand again, although complete Q3 market data was not yet available. It expects pricing and volume trends to become clearer by Q1 as excess inventory clears and clinicians adjust to reimbursement changes.

The company believes the market could return to double-digit expansion, with four or five major competitors supported by established products and clinical evidence. Management also said reinstatement of LCD policies remains a possibility, but did not provide a timeline or certainty.

On Q4 profitability, management clarified that positive adjusted EBITDA depends on revenue reaching the high end of guidance. At the low end, adjusted EBITDA would remain negative despite restructuring savings and continued expense controls.

Full Earnings Call Transcript

Complete Earnings Call Transcript

Management Remarks

Operator

I would like to remind everyone that our remarks today may 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 Securities and Exchange Commission, including Item 1A, Risk Factors, of the company's most recent annual report and its subsequently filed quarterly report. 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 the forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable laws.

This call will also include references to certain financial measures that are not calculated in accordance with generally accepted accounting principles, or GAAP. We generally refer to those as non-GAAP financial measures. 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 Relations portion of our website.

I would now like to turn the call over to Mr. Gary S. Gillheeney, Sr., Organogenesis Holdings President, Chief Executive Officer, and Chair of the Board. Please go ahead, sir.

Gary Gillheeney

Thank you, operator, and welcome everyone to Organogenesis Holdings' third quarter 2026 earnings conference call. I'm joined on the call today by Dave Francisco, our Chief Financial Officer.

Let me start with a brief agenda of what we'll cover during our prepared remarks. I'll begin with a brief review of our results and key developments in the third quarter and in recent months. Dave will then provide you with an in-depth review of our third 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'll then provide you some closing comments before we open up the call for your questions.

Beginning with a review of our results and key developments in Q3, our revenue results reflect a significant contraction and slow pace of recovery in the skin substitute market following the withdrawal of the LCD coverage policies for skin substitutes and CMS's published comments regarding discarded product in December of 2025. On balance, we were encouraged to see the operating environment improve from what we experienced during the second quarter, particularly as it relates to improving clinician confusion. Although net product revenue declined 70% year over year in the third quarter, our net product revenue increased 6% quarter over quarter in Q3.

As a leader in the industry, we leveraged our most comprehensive portfolio across multiple FDA classifications, specifically the only biologic PMA-approved product, Apligraf, to enhance our market share position with an increase in volume on a quarter-over-quarter basis, outperforming the declines that have been reported across the industry. As discussed on our second quarter conference call, the competitive landscape has changed dramatically in the months following CMS's sweeping changes to payment policy. Distributor-driven competitors, high-priced amniotic players, and companies engaged in fraudulent practices have been substantially reduced. Many of the remaining players are diversifying away from wound care or exiting the category altogether.

In this new market, customers are deciding which products and which partners they can trust, and they are deciding based on efficacy, outcomes, and evidence. And that is the foundation Organogenesis was built on and the primary driver of the continued growth and market share we're achieving this year. And these gains are broad-based, with Apligraf, PuraPly AM, Affinity, and NuShield all demonstrating meaningful improvements. That breadth tells us that customers are placing their confidence in our portfolio, not just a single product. We are also treating more patients and utilization of our skin substitutes is increasing. Our team's commitment to our customers and their patients is paying dividends.

Claims data analysis further supports the fact that Organogenesis is gaining market share, with our share increasing more than 30% versus Q1 and increasing at a rate more than double the major established competitive portfolios. While this growth is more measured than we contemplated in our guidance at the beginning of 2026, we're strengthening our position as this market reshapes.

I want to make it clear that I remain very optimistic about our future. 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 in the market. It's 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 always been core to our foundation. As coverage policies evolve, evidence will be the currency of credibility, and we intend to remain in the lead. We continue to advance our strategic initiative to expand the company's mission into entirely new markets with the Amnuvx program. Let me share a few updates on our progress in each of these important strategic initiatives in recent months.

On October 12th, we announced the publication of previously released results from PREPARE, a prospective multicenter randomized controlled trial evaluating the safety and efficacy of PuraPly AM in the management of non-healing diabetic foot ulcers, or DFUs. The trial achieved its primary endpoints, and the results published in the Journal of Wound Care demonstrate statistically significant improvements in wound closure at 12 weeks among patients treated with PuraPly AM plus standard of care, providing clinical evidence supporting the use of PuraPly AM in one of the most costly and difficult-to-treat chronic wound populations. We believe publications 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.

We have built a significant body of evidence on the clinical benefit of PuraPly AM, including 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 determinations. Peer-reviewed data continues to differentiate Organogenesis in a recalibrated market where we are gaining share while competitors without comparable evidence are pivoting away from wound care or exiting the market altogether.

Turning to an update on our ReNu program. Amnuvx, formerly ReNu, is our initiative to bring a new regenerative therapy intended to meaningfully change the treatment paradigm for knee osteoarthritis. Knee OA is a leading cause of chronic pain, functional impairment, disability, and reduced quality of life. And unfortunately, this patient population progresses through temporary measures until the only option is a total knee replacement. No biologic therapy for knee OA pain has been approved by the FDA, leaving no disease-directed option between conventional injections and joint replacement.

If approved, Amnuvx will establish a new market category for a biologic product that addresses this massive treatment gap for more than 30 million Americans living with symptomatic knee osteoarthritis. 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 for patients with severe disease who lack approved non-surgical options. We completed the BLA submission for Amnuvx with the FDA in April of this year. In June of this year, the FDA accepted the BLA for review.

During the third quarter, the FDA completed a pre-license inspection of our Norwood facility and identified 18 items requiring remediation. In addition, we received information requests from the FDA related to the clinical data we submitted in the BLA following a mid-cycle communication telecon. We are preparing responses to the information request and currently expect to complete the identified remediation work in the Norwood facility by September 30th, 2027. Accordingly, the PDUFA target date will be extended from April 24th, 2027. While the timeline has been extended, our commitment to pursuing a BLA for this unique, non-surgical single-injection biologic is unchanged. We have well-established leading capabilities in manufacturing and living technology, and therefore are confident that we will resolve the identified observations, and we look forward to continuing engagement with the FDA as we complete their review. With that, let me turn the call over to Dave.

David Francisco

Thanks, Gary. I'll begin with a review of our third quarter financial results. Unless otherwise specified, all growth rates referenced during my prepared remarks are for the 3-month period ending September 30th, 2026, and are on a year-over-year basis. Net product revenue was $45.5 million, down 70%. Our Advanced Wound Care net product revenue was $38.2 million, down 73%. Net product revenue from Surgical & Sports Medicine products was $7.3 million, down 19%.

Importantly, our third quarter results reflect an encouraging improvement in growth trends on a sequential basis. Specifically, our total revenue increased 6% quarter over quarter, driven by a 6% increase in sales of Advanced Wound Care products and a 10% increase in sales of our Surgical & Sports Medicine products. Gross profit was $23.6 million, or 52% of net product revenue, compared to 76% last year.

Operating expenses were $75 million compared to $130.1 million last year, a decrease of $55.2 million, or 42%. Excluding cost of goods sold of $21.9 million in Q3 and $36.3 million last year, our non-GAAP operating expenses were $53 million compared to $93.9 million last year, a decrease of $41 million, or 44%. The year-over-year change in operating expenses, excluding cost of goods sold, was driven by a $34.7 million, or 43% decrease in SG&A expenses, and a $5.3 million, or 40% decrease in research and development expenses.

Operating loss was $29.5 million compared to operating income of $20.7 million last year, a decrease of $50.2 million. Net loss was $29.6 million compared to net income of $21.6 million last year. Net loss to common stockholders was $32.7 million compared to net income of $14.5 million last year. Net loss to common stockholders includes the impact of the cumulative dividend and the non-cash accretion to redemption value of our convertible preferred stock.

Adjusted net loss was $29.3 million compared to adjusted net income of $23.2 million last year. Adjusted EBITDA loss was $22.4 million compared to adjusted EBITDA of $30.1 million last year. We have included a detailed reconciliation of GAAP to non-GAAP adjusted net loss and adjusted EBITDA loss in our press release this afternoon.

Turning to the balance sheet, as of September 30th, 2026, the company had $26.9 million in cash, cash equivalents, and restricted cash, and no outstanding debt obligations, compared to $94.3 million in cash, cash equivalents, and restricted cash and no outstanding debt obligations as of December 31st, 2025. We expect that our cash on hand and other components of working capital as of September 30th, 2026, plus net cash flows from product sales will be sufficient to fund our operating expenses and capital expenditure requirements for at least the next 12 months. We continue to evaluate alternative financing strategies to accelerate key investments, including Amnuvx commercialization and enhancing capacity and efficiencies from our Smithfield facility.

Turning to our 2026 outlook, which we've updated in this afternoon's press release, while our 2026 outlook continues to reflect the expectation that we see sequential improvement in our revenue trends in the third and fourth quarters, our updated total revenue range now reflects the expectation that we see a more measured recovery in the overall operating environment in the second half of 2026. We now expect total net revenue for the full year of 2026 of $179 million to $200 million, representing a decline in the range of 65% to 68% year over year, and compared to our prior guidance, which assumed a decline in the range of 62% to 68% year over year.

Note that our total net revenue range assumes sales of Advanced Wound Care products in the range of $151 million to $171 million, sales of our Surgical & Sports Medicine products in the range of $26 million to $27 million, and grant income of $1.9 million.

With respect to our profitability expectations, our updated guidance continues to assume improving quarterly adjusted EBITDA performance on a sequential basis, which is expected to result in more than a 60% reduction in adjusted EBITDA loss in the second half of 2026 as compared to the first half of 2026 at the low end of the range, and more than an 80% reduction in adjusted EBITDA loss in the second half of 2026 as compared to the first half of 2026, including the expectation of positive adjusted EBITDA generation in the fourth quarter.

Note that we have materially reduced our expense profile this year. Cost savings related to our March 2026 and June 2026 restructurings and incremental cost reduction activities in the second half of 2026 are expected to result in a total reduction in operating expense of approximately $45 million, of which approximately $32 million is related to restructuring. With that, I'll turn the call back over to Gary for closing remarks.

Gary Gillheeney

Thanks, Dave. The market disruption has reshaped the skin substitute category, and while we support many of the revisions to reimbursement, the uncertainty around comments on discarded product has created real confusion for our customers, particularly around Apligraf. During the past year, we've been engaging constructively with federal policymakers on the distinct value of living cell-based biologic therapies, including why discarded product rules should reflect how these products are manufactured and administered. As that work continues, we're encouraged by the progress as customers increasingly are returning to products proven to deliver positive outcomes for patients.

Biologic cell therapy is made from biologic sources and as a living cell-based biologic, Apligraf is supplied as a single fixed-size unit with a limited shelf life. For more than 25 years, the science behind our technologies has been clear. Our biologic PMA products, Apligraf, Dermagraft, and Transcyte have been rigorously studied and FDA approved based on clinical data. We believe our biologic PMAs and clinical evidence that underpin them will be the cornerstone of the market going forward. Organogenesis introduced living cell technology with Apligraf, and today we are building on that foundation to define a sustainable future for advanced wound care. We are emerging from this reset as a biologic company supported by multiple regenerative technology platforms.

Amnuvx, now under BLA review, would, if approved, add to our arsenal of biologic therapies that harness the body's natural healing mechanisms. Going forward, we will continue to leverage our advanced science and unmatched breadth of clinical data as part of our vision to be a force for meaningful change and set a higher expectation in healing and recovery. With that, I'll turn the call over to the operator to open the call up for questions. Thank you.

Operator

[Operator Instructions]

Our first question comes from the line of Ryan Zimmerman of BTIG.

Question-and-Answer Session

Ryan Zimmerman

Good afternoon, Gary and Dave. Can you hear me okay?

Gary Gillheeney

We can, Ryan.

Ryan Zimmerman

Great. So, you know, a lot of things are up in the air in this market. It's been, you know, I think more challenging for everyone than anticipated. What is your current thinking, Gary, around kind of how the recovery curve will take shape? And what I'm trying to understand is just, as we've cycled through this, it's taken longer than I think everyone's anticipated. And so, do you have a sense for when you think you kind of come out the other side of this dynamic? And given we saw the PFS rates, we saw the OPPS last night, not a whole lot changed from what was proposed, and so it seems like Medicare is kind of sticking with kind of what they intended from the proposal.

Gary Gillheeney

So, you know, for us, you know, we think we certainly are coming up on the other side. The market has clearly bottomed out. We're seeing an improvement in overall market expansion. We've seen it from Q1 to Q2. Q3 data is still not available yet, but based on our market share gains and our growth, our expectation is the market is expanding again. So as the market absorbs all of the changes that are going on, right, and there's still a lot of inventory in the market. You know, we estimate almost 20% of the sale of skin substitutes in Q3 are from companies who are no longer in the space that have actually -- just dumped a lot of inventory.

So as that processes through, which we think it will in the next quarter or two, as confusion, particularly around our products and the utilization of Apligraf is getting clearer, we're starting to see a path forward. So I think we've certainly hit the bottom and we're coming up on the other side. It's just a matter of who's left in the market and how customers respond to who's left in the market. We think the focus on efficacy and evidence is really important. There's audits going on still out there and the ones that win are the ones that have evidence, RCTs in those audits. So, you know, it's a moving back to evidence, which is what we've always wanted it to be.

Ryan Zimmerman

Right. And just to be clear, Gary, if there's a price versus volume dynamic that's occurring here where there is lower price for these products, but the volumes are starting to pick up. That began in Q1, so arguably by the end of the fourth quarter, we should be through that kind of, you know, dynamic.

Gary Gillheeney

I would think by the end of the year, certainly through Q1, we're going to understand and start to see a lot more clarity, because price can only go so far. So I think the volume and price will settle out at least by Q1, and we'll get a better sense of how the market's really moving and what the potential of the market is.

Ryan Zimmerman

Okay. And then Dave, for you, you know, you made a comment. You guys have done a lot of cost cutting, you know, through this year to manage through things. I'm just wondering if you could spend a minute on the adjusted EBITDA comments in fourth quarter being positive, given the guidance. Maybe help us bridge from the revenue composition to the positive adjusted EBITDA, because given what we saw this quarter, it does require some tighter expense control again in fourth quarter.

David Francisco

Yes, so you're right, Ryan. We have done quite a bit. As we mentioned, we've done two RIFs. And then as you kind of look at the differential between the operating expenses between the second quarter and the third, we're down about $10 million on an adjusted basis. So from our standpoint, that's, call it $40 million annualized. And then there was $8 million, almost $8.5 million of incremental savings on headcount that was in COGS. So that's where we came up with the -- some of these are project deferrals and things of that nature. So that's where we're at about $45 million on an annualized basis.

So we have made a lot of progress there. I think when you look at the differential between the potential for break-even position that we've got in the fourth quarter, it's really at the high end of the range. So we've continued to see progress in, you know, a reduction in adjustment -- some of that was revenue, some of it was cost cuts, but down, you know, call it, you know, $12 million to $13 million each quarter in improvement. And so, again, if we're on the low end, it's still negative, but on the higher end, if we hit those numbers, then we expect to be net positive.

Ryan Zimmerman

Okay, understood. I'll leave it there and hop back in queue, guys. Thank you.

Gary Gillheeney

Thanks, Ryan.

David Francisco

Thanks, Ryan.

Operator

One moment for our next question. Our next question comes from the line of Ravi Misra of Truist Securities.

Ravi Misra

So just one, I guess, on the market size, you know, you wonder if a little bit of a last-man-standing type of environment here. And it looks like, you know, at least the sequential commentary that you've made. Just curious if you're willing to, based on that and the competitors exiting the space, are you looking to call a bottom here, or is there visibility in sight on the other end yet in terms of where this market is shaping out, you know, kind of the -- it was a miss on the top line, at least versus consensus, but it was better, right, than we had expected, I think, versus the prior quarters? So just help me understand, you know, what's the trajectory, I guess, of any recovery that may or may not be emerging, if you could give detail on that.

Gary Gillheeney

Good question. Sure. So obviously, I don't think anyone can predict with great accuracy this market, but I think what we've seen, the change between Q1 and Q2, as it relates to market expansion, the market coming back, we're seeing something similar in Q3, though again, the data isn't complete yet. So we clearly have seen the bottom without question. We've seen the bottom. I think the challenge is there is a lot of low-cost inventory that's going to flush through that's, you know, impacting the market when that code goes through the system, which we believe it'll be gone by the end of the year. I think that the trajectory forward is going to be strong. We think it'll be double digit from a market expansion perspective, and we think there'll be 4 or 5 major competitors in the space with quality products.

We think if the LCDs are put back in place, which we think that is a strong possibility that could happen, that would also redefine the market probably to those same 4 or 5 competitors with solid products and solid evidence. And then I think the market will steadily grow because the wounds aren't going away. The fact that a lot of patients are not being treated, things are a lot worse in those hospitals right now and they need to be treated. So they will get treated. It's just a matter of over time, clinicians getting comfortable enough to step back in with skin substitutes.

Ravi Misra

Thanks. And then just on the PDUFA commentary, I'm sorry if you discussed this already, we've been jumping through calls. With the push out now on the date and the expense management that you were talking about with Ryan just now, how do we think about the incremental costs, I guess, around that delay and how should that be, you know, built into your model in the sense of, is the identification of the remediation efforts going to take 1 year, 2 years? Any framework around timing or expenses you could put around that would be great.

Gary Gillheeney

Sure. So based on our current estimate, we expect the remediation to be done by September 30th, 2027. So that's our expected timeframe right now. We believe the incremental cost, I should say the total cost for the remediation is about $8 million, which is about $4 million of incremental cost. The other $4 million are kind of pulled-forward things that we were going to do anyway to enhance the facility and improve margins. You know, the FDA wants us to put them in place now, which is fine. So it's an $8 million total spend, a $4 million pull forward. Dave?

David Francisco

That's right, that's right. With about 25% of that done in 2026, the remainder in '27 through, as Gary said, the third quarter.

Operator

I am showing no further questions remaining at this time. That does conclude our conference for today. Thank you for your participation.

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