Good afternoon, and welcome to the First Quarter 2021 Earnings Conference Call for Bioventus Inc. Please note that this call is being recorded and that the recording will be available on the company's website for replay shortly. Before we begin, 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 of the company's Form 10-K for the year ended December 31, 2020, as well as our most recent 10-Q filing to be filed with the Securities and Exchange Commission. 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 securities 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 these as non-GAAP financial measures. Reconciliations of these 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 portions of our website. I would now like to turn the call over to Mr. Ken Reali, Bioventus' Chief Executive Officer. Sir, please go ahead.

Well, thank you, Jesse, and welcome, everyone, to Bioventus First Quarter 2021 Earnings Conference Call. I'm joined on the call today by Greg Anglum, our Chief Financial Officer. Let me provide you with a brief outline of what we intend to cover. I'll start by discussing our first quarter revenue performance and business trends, followed by a deep dive into the acquisition of Bioness, which we announced on March 30. We believe it represents a great example of how we plan to leverage our inorganic business development strategy to enhance our multiyear growth profile and leverage our significant customer presence across orthopedics, broaden our portfolio, and increase our global footprint. After my opening remarks, Greg will provide you with a more in-depth review of our financial results for the first quarter 2021 and our financial guidance for full year 2021, which we updated in our press release this afternoon. And then we will open the call for your questions. Turning to a brief review of our first quarter results. We are pleased to report first quarter net sales of $81.8 million, which represents growth of 4% year-over-year, exceeding our guidance expectations and was particularly impressive given the continued challenges in our external environment as the recovery from the global pandemic continues. Specifically, we experienced COVID-related business disruptions during the month of January, as the spike in cases in the second half of December carried over into the early part of 2021. We also saw modest business disruptions related to inclement winter weather in certain parts of the U.S. during the month of February. Importantly, we saw accelerating sales trends throughout the month of March, culminating with nearly 30% year-over-year growth in the final month of the quarter. Despite the ongoing challenges related to the pandemic, we were pleased to see improving growth trends in sales of our HA products during the first quarter, led by 22% growth in global sales of our flagship single-injection HA product, DUROLANE. We also delivered 33% growth in global sales of our bone graft substitutes products compared to the first quarter of 2020. We are encouraged by the continued evidence of recovery from the pandemic that we are seeing in our key markets, including a 9% increase in international sales in the first quarter and growth in all three product verticals over the prior year in the month of March. The overall environment continues to improve, and we remain confident in the strong growth expectations we have outlined in our updated guidance for full year 2021, which Greg will walk you through the details later in the call. We continue to expect measured improvements in the operating environment as we move through 2021, fueled primarily by the increasing availability of vaccines and an increasing percentage of vaccinated Americans, Canadians, and Europeans. We continue to expect a return to normalized year-over-year growth trends in the third quarter of 2021. The outlook for Bioventus has never been more compelling and exciting, and it is a direct result of our team's execution of our growth strategy. We are poised to deliver strong organic growth in 2021 in the range of 13% to 16% year-over-year. This organic growth is expected to be fueled primarily by strong global growth in sales of our leading portfolio of PMA-approved therapies for OA joint pain, our portfolio of clinically efficacious and cost-effective bone graft solutions, and continuing to build on our minimally invasive fracture treatment franchise. We are adding to the strong organic growth profile with the contributions from our recent acquisition of Bioness, and together, we expect to drive impressive overall revenue growth of 23% to 26% year-over-year in 2021. While we are pleased with the incremental growth we expect from this acquisition in 2021, we are also encouraged by the fact that we believe the acquisition of Bioness is a great example of how we plan to leverage our inorganic business development strategy to enhance our multiyear growth profile and leverage our significant customer presence across orthopedics, broaden our portfolio, and increase our global footprint, leading to consistent double-digit growth. Turning to a discussion on Bioness, which I believe will shed some light on why we believe the opportunity of combining these two companies is so compelling. First, a little background on the company. The company was founded in 2004 and has grown to more than 180 employees operating out of three locations in the U.S., Israel, and the Netherlands. Bioness solutions include implantable and external neuromodulation systems; functional electrical stimulation (FES) products; robotic-assisted gait safety systems; and software-based therapy programs, providing functional and therapeutic benefits for individuals affected by pain, central nervous system disorders, and orthopedic injuries. Bioness offers six medical devices within its commercial portfolio, which are distributed and sold on five continents in over 25 countries worldwide. Bioness generated revenue of approximately $40 million in full year 2020, roughly 75% of which was U.S.-based. Approximately 85% of their total revenue comes from the advanced rehabilitation business, the original legacy business at Bioness, with the balance coming from sales of their PNS device, called StimRouter, a new product area launched several years ago. The Bioness acquisition gives Bioventus access to two large and growing markets, the peripheral nerve stimulation (PNS) market and the advanced rehabilitation market. We estimate their medical devices address total global market opportunities approaching $8 billion per year, more than half of which is in the U.S. We believe both of these markets offer attractive growth opportunities driven by demographic trends and the need for safe, effective nonsurgical treatment options for the many patients suffering from post-surgical pain, stroke, multiple sclerosis, traumatic brain injury, spinal cord injury, and cerebral palsy. We expect to drive above-market growth given the highly synergistic nature of the Bioness business with Bioventus current call points, products, customers, and the overall business scale and structure that Bioventus can provide. With respect to their advanced rehabilitation business, Bioness is the recognized leader in advanced rehabilitation products with five FDA-approved, commercialized, and clinically supported devices focused on restoring extremity utilization for neuro and orthopedic patients through FES products, robotic assist gait safety systems, and software learning platforms. The advanced rehabilitation market represents an estimated $1.75 billion global market opportunity, with more than $1 billion of which is in the U.S. with a global CAGR projected in the low to mid-single digits. Bioness' franchise advanced rehab product is the L300 Go, a sophisticated device consisting of stimulation and gyroscopes that apply to a patient's leg to restore normal gait. This is a best-in-class product with a dominant market position in the FES market today, serving many patients suffering from gait disturbances caused by stroke, head injury, or other diseases. Bioness' advanced rehab product portfolio also includes an upper extremity solution called the H200 Wireless, a robotic safety gait system called the Vector, and a platform learning solution called the Bioness Integrated Therapy System for Balance (BITS), which uses proprietary hardware and software programs to track movements, allowing clinicians to challenge, assess, and track patient balance throughout the treatment continuum. Bioness does business with 17 of the top 20 rehab facilities in the U.S. today with a team of 35 direct sales representatives. We believe there are multiple synergistic opportunities for Bioventus to enhance the market penetration and long-term growth profile of Bioness' advanced rehab product portfolio. This includes: Number one, a broader footprint and access to many more rehab facilities, including those adjacent to orthopedic offices. Bioventus has an existing connection to the rehab market already, as 80% of orthopedic offices have a rehab facility associated with or adjacent to such offices. Patients seeing orthopedists in these offices are often referred to rehab facilities for advanced treatment pre and post-surgery. We think there is a significant opportunity with the adjacency and call point, given that many rehab facilities are located close to orthopedic offices, which is Bioventus' primary call point today. Number two, in addition to driving market penetration into advanced rehab facilities, we believe there is an even more compelling opportunity to enhance Bioness' long-term growth rate into the low double digits per year. For example, Bioventus has the number two market share in HA for patients suffering from osteoarthritis, and we expect to drive penetration of products such as the L300 Go into orthopedic offices to serve OA patients. We also see potential incremental growth opportunities in targeting pre and post-total knee patients suffering from gait disturbances due to weakening of the quadriceps muscle. Number three, there is business model synergy as products like the L300 Go are durable medical products, like EXOGEN, which allows us to leverage the significant infrastructure we have created from an order management and order-to-cash perspective. In the medium and longer term, we also see opportunities to leverage Bioventus' reimbursement expertise to expand commercial payer coverage. Bioness has been an advanced neuro-rehabilitation-focused company for many years. We expect to enhance their growth by transitioning them to an advanced neuro and orthopedic rehabilitation-focused company going forward. Turning to the peripheral nerve stimulation business. While the prospects for above-market growth in advanced rehab are compelling, we believe the potential growth opportunities that the PNS business offers are even more significant. We believe the total addressable market for PNS products is more than $3 billion in the U.S. alone, driven by an estimated 7 million to 8 million extremity surgeries each year and the related post-surgical pain. This acquisition affords us a unique opportunity to grow faster than the overall PNS market, which is projected to grow at attractive rates per annum, fueled by the opioid crisis and the quest for locally based solutions for treating post-surgical pain. Bioness' peripheral nerve stimulation product, StimRouter, is a recognized technology leader in PNS, and its next-generation, less invasive implantable PNS product candidate gives Bioventus another growth lever following FDA clearance in 2022. Bioness' patented PNS technology is ideally suited to treat post-surgical pain in the periphery. StimRouter has been implanted in over 3,000 patients since 2017 and is sold in more than 10 countries, including the United States. It is the only PNS device backed by a randomized controlled trial. Importantly, StimRouter has synergistic call points with our HA and EXOGEN businesses as sports medicine, total joint foot and ankle, and podiatric surgery are key call points for StimRouter, in addition to pain physicians. While Bioness' StimRouter and Talisman products offer compelling solutions for the overall post-surgical pain market, we believe the initial addressable market opportunity primarily targets orthopedic procedures, including total knee procedures, rotator cuff injuries, as well as some foot and ankle procedures. We estimate there are more than 1.5 million of these procedures in the U.S. each year, where there is a significant unmet need, representing an estimated addressable market opportunity approaching $1 billion annually in the U.S. alone. Today, post-surgical pain relief for orthopedics is dominated largely by opioid prescriptions and, to a lesser degree, cold therapy. Twenty to thirty percent of these surgical patients are those with prior opioid use, making them ideal candidates for PNS utilization. Peripheral nerve stimulation is an understood and well-recognized alternative to opioids, cold therapy, as well as spinal cord stimulation. PNS is less invasive than other alternative therapies. Bioventus will work closely with the existing Bioness PNS sales force to quickly expand the market penetration of StimRouter through our larger sales team and market access team, and also prepare the market for the less invasive, fully implantable Talisman PNS device that we expect to launch next year based on potential FDA clearance in 2022. Bioness' neuromodulation technology is highly differentiated, patent-protected, and ideally suited to treat pain in the periphery. With established reimbursement coding, StimRouter is well-positioned as a less invasive alternative to other modalities, such as cold therapy, while also avoiding the negative effects of opioid use. The similar customers, including total reconstruction, sports medicine, and general orthopedic surgeons that utilize our HA products for OA pain can take advantage of the pain relief offered by StimRouter for their patients, which allows Bioventus to be involved in more steps in the patient journey, especially for total knee arthroplasty patients who may receive HA injections before progressing to surgery. In summary, we believe the acquisition of Bioness checks many boxes as it relates to what we believe to be an ideal inorganic business development opportunity. It is a substantial commercial business serving large global and growing market opportunities. Bioness offers product solutions that align perfectly with Bioventus' existing product portfolio, which are most often used to delay or replace the need for elective surgical procedures, relieve pain, and are focused on reaching patients early in their treatment paradigm. We believe this acquisition will allow us to leverage our significant competitive advantage of our expansive direct sales and distribution channel, providing us with broad and differentiated customer reach and allowing us to serve physicians spanning the orthopedic continuum, including sports medicine, total joint reconstruction, hand and upper extremities, foot and ankle, podiatric surgery, trauma, spine, neurosurgery, podiatrists, and pain physicians. We also see opportunities to leverage our significant experience commercializing high-value durable medical products and expect our reimbursement team to drive improving reimbursement and order-to-cash performance for the Bioness business in the years to come. Clearly, we view the Bioness acquisition as a great fit and one that is accretive to our long-term growth profile, leveraging our significant customer presence across orthopedics, broadening our portfolio, and increasing our global footprint. Importantly, we look forward to potential acceleration in our multiyear growth profile, fueled by continued progress in our clinical, product development and new product pipeline, and continued pursuit of our inorganic business development strategy. One more item I would like to call out before turning the call to Greg. We spent time on our Q4 call discussing Bioventus' three verticals: OA joint pain treatment and joint preservation, minimally invasive fracture treatment, and bone graft substitutes. As a result of the Bioness acquisition, we have updated and renamed our three primary verticals as follows: pain treatments and joint preservation, which includes the legacy Bioventus OA joint pain treatment and joint preservation products, plus the peripheral nerve stimulation products sold previously by Bioness; restorative therapies, which includes the legacy Bioventus minimally invasive fracture treatments, plus all of the advanced rehabilitation products sold previously by Bioness; and our third vertical, bone graft substitutes, remains unchanged. We believe these three verticals offer total addressable market opportunities of more than $12 billion per year, and we believe we have the right strategy, differentiated product portfolio, and an exceptional team, which has us well positioned to drive strong growth as we penetrate this compelling market opportunity in the years to come. With that, let me turn the call over to Greg for a detailed review of our financial results in the first quarter 2021, as well as a review of our updated 2021 guidance.

Thank you, Ken. Before we begin, I would like to highlight a few items for analysts and investors to bear in mind during my prepared remarks this afternoon to avoid confusion when evaluating our reported results or when reviewing our historical financial results and SEC filings. First, as indicated in our press release this afternoon and further detailed in our 10-Q to be filed with the SEC, the historical results for the first quarter of 2020 periods presented are those of Bioventus LLC, the predecessor of Bioventus Inc. for financial reporting purposes. On February 16, 2021, the company successfully closed our IPO of common stock. Accordingly, these historical results do not reflect what the results of operations of Bioventus Inc. would have been had the IPO and related transactions occurred prior to such periods. Subsequent to the IPO and related transactions that occurred in connection with the IPO, the company is the sole managing member of Bioventus LLC and owns 72.2% of Bioventus LLC. The company has a majority economic interest, the sole voting interest in and controls the management of Bioventus LLC. Accordingly, for the period post-IPO, February 16, 2021, to quarter-end on April 3, 2021, our reported results reflect the attribution of net income to noncontrolling interest related to the 27.8% interest held by Smith & Nephew. Second, to avoid confusion, and unless otherwise noted, my commentary will focus on the company's GAAP results for the first quarters of fiscal year 2021 and 2020. For all non-GAAP references, we have included full reconciliations from our GAAP reported results to the related non-GAAP item in our press release this afternoon. Third, my commentary regarding our financial results for the first quarter of 2021 were driven by the legacy Bioventus business only as the acquisition of Bioness did not materially impact our first quarter 2021 financial results. My commentary regarding updated financial guidance for full year 2021 includes the contributions from our acquisition of Bioness post closing. Turning to a review of our first quarter financial results. Net sales increased $3.1 million, or 4% year-over-year, on a reported basis and increased 3.5% on a constant currency basis. The year-over-year change in net sales by geography was driven by a $2.6 million increase, or 4% year-over-year, in U.S. net sales, and a $0.6 million increase in international net sales. First quarter net sales to international customers increased 8.5% year-over-year on a reported basis and 2.5% on a constant currency basis. The year-over-year change in net sales by vertical for the first quarter of 2021 was driven by a 33% increase in global net sales of BGS products and a 0.6% increase in global net sales of pain treatment and joint preservation products, offset partially by a 7% decrease in global net sales of restorative therapies products. Gross profit increased $2.3 million, or 4.1% year-over-year, to $59.6 million, representing approximately 73% of sales, unchanged from the prior year period. Our cost of goods line item includes noncash amortization expense of $5.2 million for the first quarter of 2021 compared to $5.3 million last year. Excluding noncash amortization, our non-GAAP gross margin was 79.2% compared to 79.5% last year, down 30 basis points year-over-year, driven primarily by the mix of revenue, by geography, and by vertical as compared to the prior year period. Total operating expense decreased $6.7 million, or 15% year-over-year, to $37.6 million. The change in total operating expense by line item was driven by a $5.6 million decrease, or 14% year-over-year, in SG&A expense, and to a lesser extent, a $1.2 million decrease, or 56% year-over-year, in R&D expense. The largest contributor to the year-over-year decrease in first quarter operating expense was a net decrease of $17.4 million in stock compensation expense relating to fair market adjustments of the related pre-IPO stock compensation liability. Keep in mind that our GAAP operating results include noncash amortization expenses of which approximately $1.3 million is noncash intangible amortization expense for the first quarter of 2021 compared to $1.6 million last year. We exclude noncash amortization from our non-GAAP operating expense in the non-GAAP reconciliation tables detailed in our press release this afternoon. In addition to the aforementioned noncash amortization expense, first quarter GAAP operating expense included approximately $4.3 million of expenses that have been added back for non-GAAP purposes, $3.2 million of which was driven by acquisition costs related to the Bioness transaction announced on March 30, 2021. Excluding these items, our non-GAAP operating expense was $31.9 million compared to $41.9 million, down $10 million, or 24% year-over-year. Operating income was $22.0 million compared to operating income of $13.0 million for the first quarter of 2020, an increase of $9.0 million, or 69% year-over-year. Non-GAAP operating income was $32.9 million compared to $20.6 million, up $12.2 million, or 59% year-over-year. Non-GAAP operating margin was 40.2% of net sales compared to 26.2% of net sales for the first quarter of 2020. Total other income was $2.5 million compared to total other expense of $2.5 million for the first quarter of 2020, a year-over-year change of $4.9 million, primarily due to the settlement of our equity participation right liability in connection with our IPO, which resulted in interest income of $2.9 million. In addition, the change in the fair value of our interest rate swap resulted in interest income of $1.6 million compared to interest expense of $1.1 million for the first quarter of 2020, a year-over-year change of $2.7 million. These year-over-year increases in interest income were offset partially by $0.5 million in net losses related to our equity investment in CartiHeal. GAAP net income was $24.5 million compared to GAAP net income of $10.5 million last year. Non-GAAP net income was $35.4 million compared to $18.1 million last year. Adjusted EBITDA was $11.1 million, down 22% year-over-year, driven primarily by public company costs and higher selling expenses related to the better-than-expected sales in the first quarter. As detailed in the non-GAAP reconciliation table in our press release, adjusted EBITDA excludes the impact of stock compensation expense and other noncash or nonrecurring items. We believe this provides supplemental information about the underlying operating performance of our business. Turning to the balance sheet. As of April 3, 2021, the company had $124.2 million in cash and cash equivalents and $184.7 million in debt obligations compared to $86.8 million in cash and cash equivalents and $188.4 million in debt obligations as of December 31, 2020. As of April 3, 2021, we had approximately $50 million of available borrowing capacity on our revolving credit facility. Turning to a review of our fiscal year 2021 revenue guidance, which we updated in our press release this afternoon. For the 12 months ending December 31, 2021, the company now expects net sales of $394 million to $406 million, up approximately 23% to 26% year-over-year. This compares to our prior guidance range, introduced in our Bioness acquisition press release on March 30, 2021, which called for net sales of $390 million to $402 million. The increase in our net sales guidance range is driven by the stronger-than-expected sales results in the first quarter of 2021 and net sales from the acquisition of Bioness following the closing date of March 30, 2021, of approximately $30 million to $32 million. With respect to our profitability guidance, we now expect net income of $12 million to $19.2 million compared to net income of $14.7 million for the 12 months ended December 31, 2020. This compares to our prior guidance range, which called for net income of approximately $13.5 million to $17.5 million, excluding the impact of noncontrolling interest of approximately $1.5 million. The decrease in our net income guidance range is driven by the net loss from the acquisition of Bioness following the closing date of March 30, 2021, of approximately $22 million to $19 million, partially offset by the stronger-than-expected financial results for legacy Bioventus in the first quarter of 2021. We now expect non-GAAP net income of $59.7 million to $65.2 million compared to $47.4 million for the 12 months ended December 31, 2020. The decrease in our non-GAAP net income guidance range is driven by the acquisition of Bioness following the closing date of March 30, 2021, which is expected to be a loss of approximately $9.3 million to $6.5 million, partially offset by the stronger-than-expected financial results for legacy Bioventus in the first quarter of 2021. We now expect adjusted EBITDA of $73.9 million to $80.9 million compared to $72.4 million for the 12 months ended December 31, 2020. This compares to our prior guidance range, which called for adjusted EBITDA of approximately $79 million to $83 million, as provided in our Q4 2020 earnings release. The decrease in our adjusted EBITDA guidance range is driven primarily by the acquisition of Bioness following the closing date of March 30, 2021, of approximately $7.3 million to $4.5 million. In addition to the formal financial guidance provided in this afternoon's release, we would like to provide some key assumptions to bear in mind when evaluating our growth expectations for 2021. First, our full year 2021 net sales guidance range assumes the following for net sales growth by geography: U.S. net sales growth in the range of 21% to 24% year-over-year, and international net sales growth is expected to be in the range of 40% to 53% year-over-year on both a reported basis and a constant currency basis. These ranges assume U.S. sales growth on an organic basis in the range of 13% to 16% year-over-year and contributions from our acquisition of Bioness, and international sales growth on an organic basis in the range of 13% to 24% year-over-year, as well as contributions from our acquisition of Bioness. For net sales by vertical, our full year 2021 guidance now assumes high teens to low 20% growth in global sales of pain treatments and joint preservation products, driven by organic growth in the mid-teens as well as contributions from Bioness. Low to mid-30% growth in global restorative therapies business, driven by organic growth in the low to mid-single digits and contributions from Bioness, and low to mid-20% growth in global sales of BGS products. Second, we expect to see measured improvements in the operating environment as we move through 2021, fueled by the increasing availability of vaccines and the increasing percentage of vaccinated Americans, Canadians, and Europeans. That said, our full year 2021 guidance assumes no material improvement in COVID-related headwinds, including sales rep access and elective procedure trends over the first half of 2021 and a return to normalized year-over-year growth trends in the third quarter of 2021. To that end, while it is not our standard guidance practice, and we do not expect to provide quarterly guidance in the future, given the significant impact of the COVID pandemic in the second quarter of 2020 and the related benefit to our Q2 '21 year-over-year growth rate, we expect our total net sales in the second quarter of 2021 to increase approximately 67% to 74% year-over-year on a GAAP basis and a constant currency basis. Finally, with respect to our expectations for financial performance in 2021, we would like to provide some of our assumptions to help evaluate our full year 2021 guidance for GAAP and non-GAAP net income. For the full year 2020 period, we expect non-GAAP gross margins of approximately 77.8% to 78.1%, which exclude noncash amortization and depreciation of approximately $29.0 million to $29.5 million. GAAP operating expense growth in 18% to 20%, driven primarily by the incremental operating expenses related to our acquisition of Bioness, and approximately low single-digit growth in legacy Bioventus operating expenses compared to 2020. Total interest and other expenses of approximately $3.5 million to $4 million, including $2 million of interest expense related to the continued consideration related to the Bioness acquisition. Noncash depreciation and amortization of approximately $39 million to $40 million. Noncash stock compensation income of approximately $3 million and weighted average diluted Class A shares of approximately 41 million to 43 million shares. With that, I'll turn the call back to you, Ken.

Thanks, Greg. Before opening the call for Q&A, I want to reiterate some of the finer points of the Bioventus growth strategy. Number one, we are confident in our multiyear organic growth, which is compelling and fueled by our market penetration strategy with our HA and bone graft substitutes, and expanding our indications in the minimally invasive fracture treatment area. Number two, our product pipeline is robust and is expected to fuel accretive growth in the medium-term with products like Agili-C by CartiHeal, MOTYS, and PROcuff, as well as the injectable version of OSTEOAMP and Talisman, the implantable, less invasive PNS device from Bioness. Number three, our M&A strategy is designed to bring in acquisitions that are expected to deliver accretive growth to our business, such as Bioness, leveraging our strong commercial infrastructure to yield consistent double-digit growth. Number four, operationally, we are focused on continuous improvement to positively impact our margins, including cost savings initiatives from a manufacturing and supply chain perspective while also enhancing our quality programs to meet ongoing changes in our regulatory environment. And number five, most importantly, our strategy is backed by a highly engaged, results-driven culture that is fueled by an employee-driven mission to improve the lives of thousands of patients treated each day by our medical devices, returning them to active lives. With that, we will open the call up to take questions. Jesse?

Speakers, the first question is from Drew Ranieri of Morgan Stanley.

Ken and Greg, there's lots to unpack here in the quarter, and I appreciate all the commentary on Bioness. But just to start on guidance for a moment. You raised the bottom end of your organic guidance on the heels of the first quarter outperformance. And Ken, you really sounded positive on recent trends, and Greg, you sounded positive on recent trends and underlying growth. Is there anything that's giving you particular pause in your channels as you kind of look through the rest of the year? And maybe could you just help us kind of better appreciate what gets you to the upper end of the range of the organic growth range?

Well, thanks, Drew, for joining the call. The trends we saw in March were very encouraging. As we mentioned, the 30% growth year-over-year in March across all three verticals was extremely encouraging for us. The way we've looked at our guidance certainly is continued headwinds here in the first half of 2021, and things getting back to normal in the second half of 2021, predicated on the current trends externally relative to vaccinations and cases across the United States, Canada, and Europe. So from our perspective, just continued execution and continued good things coming from the vaccination efforts and the pandemic slowly waning are key things for us to drive our business back to normalized growth, which is what we're anticipating in the second half of 2021.

Got it. And then just shifting gears for a moment to M&A. I mean with your first transaction as a public company, just how are you thinking about M&A for the rest of 2021? Do you need to digest this deal first? Are you kind of actively on the hunt to add another complementary business? And then just kind of with Bioness, I mean it clearly opens up the business to expanded market opportunities. But where could you go next to further leverage your customer base?

Yes, sure, Drew. First of all, on the M&A side, look, we are constantly looking at our pipeline, adding new opportunities and subtracting things after we've looked at them more closely. The name of the game for us is opportunities that drive accretive revenue growth, getting us to consistent double-digit growth, that leverage our commercial infrastructure and our overall infrastructure. If we find things that fit that, that's not going to stop us relative to where we are with the Bioness integration. So we'll continue to look at things appropriately, and if they're the right fit, certainly pursue them more aggressively. As far as Bioness goes, we see terrific synergy here across the business. As I talked about with the advanced rehab business, the adjacency of rehab facilities to orthopedic offices, the ability of us to sell the L300 Go particularly for quadriceps strengthening post-total knee procedure are very compelling opportunities to expand that business beyond where they are today. Today, they are the market leader in this space in a very sophisticated device world that they sell into to help these patients.

Got it. And I heard you mention just as a housekeeping question. Just DUROLANE growth in the quarter on a worldwide basis was 22%. Did I miss a U.S. growth rate?

No, we just cited the global growth rate there, Drew. We continue to see great things in the U.S. as well. As that market continues to evolve in the U.S. to a single injection, we saw that accelerated somewhat with the pandemic, but DUROLANE is a flagship product. We're extremely excited by DUROLANE and its potential for continued growth in the market. Keeping in mind, it was just launched in 2018, it still has a mildly established market share for a product of its caliber, and we're extremely bullish on its continued growth in the U.S. market here in the years to come. I would also add that the majority of revenue with DUROLANE, remember that our HA revenue, international is only about 10% of our total revenue. So that puts the growth perspective for the U.S. market in context.

Next question is from the line of Robbie Marcus of JPMorgan.

This is actually Alan on for Robbie. I had a few quick ones. But just starting with the quarter itself, really good kind of top line performance. But then when you kind of adjust for all the onetimers, you were a little bit better than we had expected on EBITDA, but still didn't seem like we saw the full drop-through. So what drove the top line, but then was offset on EBITDA, specifically looking at gross margins or OpEx?

Sorry, Alan. So part of your question was what drove the top line. I think I'll come back to that in a second, but part of it was on the fall-through. We certainly had some of the top line growth fall-through to OpEx. The two things that offset a little bit in the quarter, as I said in our prepared remarks, were we had some public company costs during the quarter as well as some higher-than-expected selling costs, really driven by the higher-than-expected sales. And so, we didn't quite get the fall-through that you might have expected, but it's really those two things.

Got it. And then kind of looking at the M&A question. When we look at Bioness, there's obviously going to be a bit of dilution this year. How accretive should we really be thinking about it in 2022 and beyond, some of that's probably upfront investment this year that should fall off next year? So how should we think about the accretion next year, given you did, I think, at year 1, it would be accretive to your net income?

Correct, Alan. At this point, we're not giving full 2022 guidance yet. We do absolutely feel strongly that the business will be accretive to non-GAAP income beginning one year after close. We're continuing to work through integration and synergies and continuing to build that case. We feel very good that it will move to being accretive. We have long-term goals in terms of continuing to improve our EBITDA margins, and we feel good about that as well, but beyond that, it's hard to say with specificity right now. As we get closer to 2022, certainly, we will give you more information on that.

When we consider your M&A strategy for the future, how should we view your focus on acquiring attractive top-line assets while managing dilution? Should Bioness be seen as an example of an acceptable level of dilution, or do you believe there's more room to be flexible? In the future, would you prefer to minimize dilution? I'd like to hear your thoughts on this.

Yes. Alan, I think it's all of the above. We're going to continue to look at every opportunity in isolation. The profile we're looking for is strong adjacencies to where our business is today that leverage our commercial channel, our commercial call points, our broad expansion in orthopedics, and certainly leverage our infrastructure and ultimately accretive growth over many years to come, getting to consistent double-digit growth. From our perspective, that is the recipe. Now the type of deals that that comes in can be of a full gamut, and certainly being public allows us to look at many types of deals from private to public companies. I do want to shift gears to go back to your original question, Alan, on the growth drivers for the company in Q1, because it is very compelling, and it does start with our bone graft substitute business, which grew 33% over the prior 2020 quarter. We're very proud of that. We're very proud of the DUROLANE growth at 22%, the continued growth in our overall HA portfolio, where we are now the number two player in the HA business and the return to growth of EXOGEN and our minimally invasive fracture treatment area in the month of March. All of those were huge drivers in addition to the international business, which also saw growth for the first time since the start of the pandemic. So really clicking on many levers for growth and certainly a terrific quarter, and I want to make sure we highlighted that for you.

Next question is from Amit Hazan of Goldman Sachs.

Could you clarify your sales guidance for Bioness this year? Last year's run rate was about $40 million, and you’re projecting around $30 million for the next three quarters. Can you explain if the difference is due to materiality in Q1 or provide some context for us?

Sure, Amit. Happy to do that. As you said, we put out the debt at $40 million last year. Our guidance is $30 million to $32 million for the period post close. At Bioness, they did $9.6 million in the first quarter. And so, that's the rate they're on. So that sort of lets you back into what we see for the rest of the year going forward. Again, like any business, they were certainly impacted by COVID as well. We're waiting to see the impacts of how it comes out of COVID. They had a very similar story that we did with respect to their first quarter in terms of March being much better than January and February. We certainly need to see that business perform at a higher level a little more before we get more bullish on what it could do.

Yes, I would just highlight that historically, the business has been a double-digit performer prior to the pandemic, so certainly, we look at it both ways.

That's helpful. I'd like to discuss guidance over the next few months and your comments on the third quarter. Specifically, could you provide some insights on how things have progressed in April and May and whether that growth has continued? Also, as we get to know your perspective on normalization in your Q3 commentary, could you explain what that means for you and what level of growth to expect in a normal environment?

Sure, Amit, I will address both of your points. Regarding the second quarter, we hope to maintain the trends we observed in April. While we won't provide specific monthly trends, we're confident in the growth projection of 67% to 74% for the second quarter based on what we've seen so far. Now, concerning the normalization comment, historically in our legacy business, we have experienced mid- to high-single-digit growth, which will factor into our normalization. Additionally, we'll account for the growth from Bioventus to reach our full-year guidance range of $394 million to $406 million.

Okay. And then just last one for me. You mentioned a couple of times now, but the BGS growth that was a lot better than last quarter. I don't know if that's just the comp thing, but I'm just curious about the acceleration there, if you can add a little bit more color as to what you think might be going on in that market or for your products in particular.

Yes, Amit, let me be clear on that: 33% growth. There is absolutely zero stocking in that growth. These are cases. All of our inventory is either held by us or held in consignment at the hospital before a case, so that is just driven by pure market share gains. It's a terrific job and execution by our team. We have a compelling product line and strategy, where we continue to gain new customers as well as whole hospital conversions. Our strategy is to offer a superior product line and the cost savings opportunity, they can save on bone graft substitutes. Being agnostic to spinal hardware is a true advantage we have. Because we can go in and really just look at that line item, which is significant for spinal surgery, and offer a win-win solution that works great for all the surgeons because they love our product. That's what's driving that. It's pure growth, and certainly, the return of elective procedures as the quarter moved forward was a big advantage for us as well. That is something we look forward to as we continue to unfold in 2021 as that continues to strengthen.

Next question is from Kyle Rose of Canaccord.

So a lot to unpack from the quarter here. I wonder if we could just start from a high level. I mean, obviously, you saw great progression through Q1, and particularly in March, you're talking positively about Q2. Just wondered, are you seeing any sort of pent-up demand in the channel from a procedural standpoint? Obviously, seeing something like the 33% execution on the BGS side. I mean, that's exceptional. Trying to understand how much of that is maybe some catch-up and then will normalize a little bit versus how we should think about just some of the pent-up demand.

Yes, Kyle, I think we should break it down by vertical to really understand that. First of all, in our joint preservation area, the HA area, clearly, there was some reticence to return to doctors' offices, particularly in the early part of the quarter based on the strength of the pandemic and the number of cases. What's happened is because the priority in the vaccinations was older people who are our primary HA customers. As they got vaccinated, they returned to some normalcy, getting their HA injections and visiting their doctors, so that progressed through the quarter. So that was the HA story, strong progression all the way through. With EXOGEN, the minimally invasive fracture treatment vertical, it was a little bit different because EXOGEN was impacted less in the beginning of the pandemic but more as we went through it. That is driven by the time from the incident to when EXOGEN is required, which can be anywhere from 3 months to 12 months post-injury. We have seen steady improvement in EXOGEN through the pandemic, culminating in March, where we saw some really solid growth. I think that's somewhat returned to normalcy. It wasn't a shutdown like we experienced in March and April and May of last year. The bone graft substitutes business was definitely impacted, but we saw a great return there, and strength increasing through the quarter.

And again, on the bone graft substitute business, we expect, as we said, low to mid-20% growth overall for the year, so that should give you an indication as well.

Okay. Yes, that's very helpful. And then I've just got two more, I'll ask them upfront. You've got some new products launching but then also some products before the FDA for review. Just wondered if you could give us an update on the pipeline when we think about the rollout of MOTYS as well as the submission for the fifth metatarsal on the EXOGEN system. And then the second one is, you talked a lot about Bioness and spent some time helping us understand that acquisition and the opportunities. How long do you see some of those commercial synergies playing out before you really start leveraging both sides of the business and driving incremental growth?

Yes, it’s an excellent question. Why don’t we start with MOTYS? The Phase II trial with MOTYS, the IND trial continues to enroll patients, so great progress toward eventual BLA. As far as EXOGEN goes, we did just receive a deficiency letter from FDA just a couple of weeks ago here in April, and we are going to be addressing that with FDA. There is a potential delay on the timing of the bone study PMA supplement approval, but we really can't weigh in on that until we have further information and discussions with the FDA. These deficiency letters on a PMA are somewhat complex and take some discussion time with the FDA to work through the actual action plan. So more to come on that. As for the Talisman, we expect 510(k) clearance on that particular product in 2022 and the launch of that product in 2022 as well. From a synergy or integration perspective, we are training and starting a pilot on StimRouter with our Bioventus sales force. In fact, that is going on as we speak, where we're getting our sales reps who are extremely excited to work with the Bioness StimRouter team, and we're going to start that process here this quarter. Very excited about that. We continue to work through the integration of the advanced rehabilitation area, but excited once again to get the L300 Go and look at the orthopedic opportunities.

Since we are currently showing no additional participants in the queue, that will conclude our conference call for today. Thank you all for participating. You may now disconnect.

Thank you, Jesse. Thank you, everybody.