Good afternoon, everybody. My name is Jenny Rabinowitz. I cover U.S. MedTech and healthcare IT at Goldman, and today I'm thrilled to be joined by BioVentus. To my left, we have Mark Singleton, CFO, and Dave Crawford, VP, Treasurer, and IR. Starting off, I think it would be great to start with a company introduction. The market's used to review three key segments, one of the key products in all of them.
Great. Thank you for having us. I appreciate it. BioVentus is a $568 million revenue company as of 2025. Our guidance for 2026 is $605 million. We participate in markets of $6 billion plus, so a lot of opportunity. We've had a lot of success over the last few years accelerating our revenue, expanding our margins, and generating a significant amount of cash flow. We've actually taken our margins from early 2022 to 13% EBITDA to greater than 20% in 2025. And so we've increased them by 700 basis points at the same time, taking our revenue growth from low single digits to mid, you know, mid to high single digits consistently from a performance perspective. Overall, we've also taken our cash flow from that, you know, the last few years to from a negative cash flow to positive free cash flow. And over the last 12 months, we produced a hundred million dollars of free cash flow. And we actually doubled our cash flow from 2025 to 2024. So we think this is a really compelling investment from a portfolio perspective. Today, we really look at our portfolio in what our core products are, what our expansion products are, and what our emerging products are. Our core products are our hyaluronic acid, HA product today. It's also our PRP product, which is a new growth driver. We're establishing four new growth drivers. But from the core product is also BGS and Exogen. So BGS and Exogen actually produce a lot of the cash and profit of our company. Those are the core products, and they feed the emerging product, which is ultrasonics, international markets from an expansion, and then the emerging products are PNS and PRP. So overall, those are how we think about our products, but our segments that we have is our pain segment, which is PRP, PNS, and HA, and then we have our surgical segment, which is our ultrasonics business and also our bone graft substitutes business, and then our restorative therapies, which is our Exogen business.
Thinking back to the IPO in 2021, BioBentist did a few acquisitions shortly thereafter to divestitures. So how are you thinking about the portfolio you have today? Are you thinking with it?
Yeah, we're really excited about the portfolio that we have today. Again, we have the core products with HA, BGS, and Exogen, which really fund the actual future product, which is our expansion and our emerging products. And when we think about P&S as a product that we're really excited about in our portfolio, this is one that's got a lot of attention recently. There were some acquisitions made by Boston Scientific and Medtronic, who bought two of our competitors, and they paid significant multiples for that business. And if you look at where we think we can take that business, those multiples would result in a more market share than what we actually have for our overall, you know, company today. So we have that, you know, P&S is a great product. You know, when we compare ourselves to the competitors, we're actually, our product is actually designed for the peripheral nerve, whereas our other competitor product, we're designed for spinal cord. So significantly more specificity in how we go about developing that product and how we're taking it to market. It also generates a lot more power from that device that can actually reach deeper and larger nerves, so it's much more effective. And then it's also a more smaller wearable device, so it's easier for the patient. But this market is for patients that have debilitating pain. The market itself is $250 million opportunity, growing at 25%, almost 25% a year. So, you know, really a high-growth market, which we feel that we can be really successful in over time.
You asked how the core products fund the growth. From a broader perspective, though, maybe including external as well, but how do you think about capital allocation beyond that?
Yeah, capital allocation, really, one, it's great to get that question today. versus a few years ago, first, second, and third question were about leverage and what we're going to do to reduce our leverage. And we've brought our leverage down from almost close to six turns, and at the end of the first quarter it was a little bit more than two turns. So significant reduction, and that comes as a reflection of the financial discipline that we put into the company and the actual cash flow that the business is generating today. So significant turnaround. But when we think about capital allocation right now, we're really focused on paying down debt, which, you know, we've reduced our debt, you know, at the end of the first quarter. It's close to $250 million, so significant reduction with that, as we've talked about with the leverage ratio. We look at M&A, and we just talked about our portfolio and how we really do like our portfolio today. We think there's a lot of potential to make a shift into these high-growth markets and really bring those products to life and ignite the growth drivers over the next few years. We're not going to put our head in the sand and ignore M&A, but it's not going to be our first priority. We really want to focus on the portfolio that we have today and bring it to life. One thing that we'll start to look at is stock buybacks potentially as we get below our two turns as we expect to do that in the second half of the year, but really right now focused on paying down debt and we'll continue to do that in the short term.
Turning to recent results, can we walk through the drivers that supported 7% growth in Q1, and can you characterize this performance kind of extra rebate adjustments or any unusual factors? Yeah.
So, yeah, our first quarter without the rebate was in line with our expectations, So 7% growth on the top line, and again, as we expected overall in the first quarter without the rebate from an overall company's perspective, we'd be in the 3% to 4% range. So a good quarter overall from our expectations, and we think about our surgical business was in the 7% growth range. Our expectation for that is higher than that for the rest of the year, but that's more of a, as we sequence through the year, we expect that business to accelerate. But overall, a good performance, when you look at it from a profitability, we actually grew our EBITDA by close to 25% year-over-year in first quarter, and we grew our EPS 100%. And so those would be a little bit less without the rebate, but still an overall excellent performance from a profit perspective gets into the expense management and also some of our growth investments that we're making into our growth drivers, the $13 million investments that we've talked about making are going to be, you know, accelerating as we go through the year as well.
Dave, the other thing I'd hit on is cash flow. So significant $28 million increase in cash flow in Q1. As Mark talked about, that's been a big turnaround part of the story. We continue to see that momentum build as we've gone throughout the year.
On that subject, can you walk through the dynamics that led you to hold the Organic Growth Guide, but you did raise the EPS and free cash flow guide, so maybe a bit more on the profit of the EPS.
Right. When we think about the first quarter performance, as we just talked about, both EPS and cash flow are ahead of our expectations much more significantly than the revenue. Again, EPS, 100% increase year over year. That's a reflection of overall good P&L management, but it's also a reflection of the lower debt that we've been paying down with the excellent cash flow that Dave just referenced who were able to pay down the debt that had less interest expense flowing into the P&L. So year over year, a lot of improvement driven just purely on interest expense, but also good management to really further ahead on those two from a cash perspective and from an EPS perspective than we were on revenue. And, you know, from a revenue perspective, still have three quarters left, you know, over the year. So, you know, our decision was to maintain that.
Since you reported earnings, there's been some news below as it relates to CMS reimbursement for bone growth stimulators, but you guys held a guide. Can you walk through the kind of math or how you framed it that helps you get comfortable maintaining your guide in light of this change?
Yeah, I think we really just focused on the impact that that has on our business, and it really affects 50% of our business, this new news on the reimbursement. So when you look at the amount of that was impacted from a full-year perspective, it was really immaterial. When you also look at our competitors who were also impacted, they had some significant reductions in their revenue and profit that they adjusted with the news of this, and they're much more significantly impacted than what we are. And so, again, we have this business. There's only a small part of the actual half of the business of our Exogen business is impacted by this. The other half is not.
I'd also add, when you think about last year, we had some headwinds related to currency and tariffs that we were able to We see this as something similar. We'll have to make some tough decisions, but that's why we felt comfortable maintaining the guidance.
As it relates to your competitor, are you less exposed just because as a percentage of sales, or is your product portfolio for BGS different?
We're definitely less exposed. We compete head-to-head with them, but this is a bigger part of their portfolio, and they also treat other conditions with their products that we don't.
I guess where else in your portfolio do you see reimbursement risk or maybe benefit? Is there anything else you know CMS is evaluating maybe?
Yeah, we always stay on top of that from a day-to-day perspective and focusing, but there are some significant changes to HA reimbursement in 2022 that impacted the company, but that has been stable since then, and we don't have any information that would lead us to believe that there would be any future changes or negative impacts to reimbursement at this point in time.
Turning to the segments and starting with the core. In HA, how has Durlane been impacted by the market-wide shift towards single injections and away from multi-injection?
Yeah, Durlane has been, you know, positively impacted by that. We feel that this is, you know, within the HA space, as you said, it's the single injection. It's clinically differentiated versus our competitors. You know, we have a really strong sales force with HA that is, you know, in the field selling this all day, every day. We also come at this business with our contract position that we have with, you know, different payers as well. And so we have a payers. And, you know, if you have UnitedHealthcare, for example, and, you know, they have Duralane. And if you're a UnitedHealthcare, you're going to get Duralane through your insurance. So we really feel good about that. And even despite, you know, you just mentioned some of the CMS reimbursement items from 22 all the way through 2025, there have been strong volume growth. That's really what we focus on with this space. We're going to be responsible with price, but we've seen a lot of volume growth given our great sales force, you know, out there that drives us every day and a combination of them working also with the contracts and payers that we have in place. So we really feel we have a powerful combination, you know, from an HA perspective. And as the market moves towards single injection, we're there to really benefit from that and take advantage of it.
What do you think is driving the market towards single injection? Is it mostly patient preference, physician preference, pyrodynamics that you kind of touched on?
I think it's a little bit of both, and, you know, and it's less trips to the doctor, you know, with the single injection. But I think that there's more clinical differentiation with that product as well. And so overall, I think it's a natural shift. And just, you know, I think it's the physicians, you know, it's a little bit of both in all of them. But there's still, we also have a broader portfolio than just Duralane. We sell our three-injection product, Gelsin, sell our five-injection soup parts. So there's still, you know, steady demand for both of those as well. but there is a shift into the single injection. But overall, I think it's more preferences and then convenience for the doctors and the patients.
Sticking with HI, you talked about, I mean, here and in other public appearances, targeting profitable growth, definitely a recurring theme. Can you describe to us what does this actually look like out in the field? Are you willing to turn down lower-emergent contracts? How is this playing out?
That's a good question. Again, been really successful in driving a lot of volume growth over the last few years, adding new payers, adding new physicians, so really done a good job. We'll continue to do that in 2026. Our expectations for this business are not as high in 2026 as what they were and what we achieved in 2025, and it's really about being responsible from a pricing perspective. to pretty much what you're asking us, you know, and that we're not going to chase, you know, volume that's not profitable from an overall. It just doesn't make sense, you know, from a P&L and financial management perspective. And so we're going to be rational and, you know, really pursue business that we feel is going to add profitable growth. And that's what we've been focusing on with our sales team in 2026. And as we talked about before, our first quarter results were in line with what we expected.
Turning to, there's obviously been some M&A activity from larger suppliers. How are you so attractive about this market, and how are you uniquely positioned to compete?
Yeah, I think it's, again, it's a $250 million market growing at 25%. These are patients who are really suffering from debilitating pain. I've been, you know, out in the field with our CEO, Rob, and seen this live in person, seeing some procedures, seeing the patients really go from, you know, when they've got the device implanted in them, come back to the doctor, and really kind of highly questioning us, the BioVentus team, when we were there that that product was actually going to work for them. And we saw it live in person to where we actually, you know, after the implant actually saw that have an impact. We've had our general manager out in the field where a woman really had not been able to really be mobile for a long, long while, and she had the P&S device installed and was able to walk after that and had much higher mobility, and she came to tears after seeing and experiencing that and just really moving experiences that we've seen. So it's a great market, and it's really treating people with really not just a little bit of pain in their knee, but significant pain that's really impacting their daily lives. So that's why it's such a really attractive market with the $250 million growing almost 25%. We feel that we have the advantage versus our competitors, again, because our device was specifically designed for the peripheral nerves versus the other ones being designed for spinal cord stimulation. And our device, the power that our device generates is more efficient and it's more powerful to where it goes from the lead, you know, into the deeper and thicker nerves. And so it's going to have a more effective impact on the nerves and bring the patients, you know, to see the results that I just referred to. And then there's always a wearable device that you have, and ours is much smaller than our competitors. And so we think really the combination of all those things is what gives us the advantage. But we really are excited about this product. We have a specific general manager we brought in to run this business and excited about what we see so far, excited about what we can do into the future. and I think it's going to be one of our great growth drivers and help change the growth profile of the company over time.
So it sounds like there might be an advantage on the clinical side just in terms of how the device was designed. I guess, how are you guys thinking about generating clinical data so that the clinical community knows this?
Yeah, that's a good question, and we're in the early stages of that and exploring the opportunities of how we go about doing that, And obviously that's an investment that we'll need to make to do that, but we have not generated that. But we have plans in place. We're assessing that all the time, looking at the benefits of that and how we, in our research and in our R&D team, participating in that with the clinical team.
I think something else unique about the PNS portfolio is that there's multiple offerings through the trial. So do all of your competitors have this? Is this something unique? And does this help you address maybe a wider range of patients or indications?
I'd say it's a little bit a part of that market. Not all of our competitors have a complete portfolio like we do, like the company that Medtronic just bought SPR. They just had a temporary device. But it's important for, and so we have a trial device, and then we have the permanent device. And we just came out and launched those, got FDA clearance in 2025. But it's important for the patient to go through a 30-day, a 60-day trial to really experience the impact of that. And then once they get comfortable with it and how to use it and then we move them to a permanent device. And so it's really more in line with how the industry does that. But there are some patients, you know, like I said, the SPR market is more temporary devices. But overall, we think that gives us an advantage.
On our news call, you mentioned that half of the planned investments for the year are being dedicated to P&S. So can you walk through what some of the key areas of investment are for this year?
Yeah, we're investing. We grew our EBITDA above 20% last year, so really have a unique from a P&L perspective of either expanding our margins or investing. This is an investment year in 2026. to really invest in the four key growth drivers that we've talked about. And so from a P&S perspective, you know, the $13 million that we're investing in that, a big, big portion of that is for the P&S market or product. And we're focused on first expanding our sales force, you know, there and investing in the sales resources to bring the product to market. Second, this sale also, as we talked about, the clinical trial and the clinical data, really investing in clinical resources who will work alongside the sales team to help in the procedure and answer the questions and make that procedure as efficient and effective as possible. And so we're investing in those. We're also increasing the amount of medical education that we're doing overall, increasing our marketing that we're doing for that product. So really, you know, this is really like a startup in a lot of ways for us, and so there's lots of investments that we're making in the things that we just talked about. When we look at those and think about the return that we're going to have and expect from those, we're, again, really excited about the product and confident in the investments that we're making.
Is this level of investment in response to competition coming on, or is this kind of the right time for you guys to?
We believe it's the right time. These investments were planned in 2025 before any of these acquisitions were made, and we looked at our P&L through our planning processes in the fall of 2025, looked at our growth potentials in 2026 and really focused on, you know, putting those investments in place then and, you know, giving us a head start going into 2026, so really not in response to them. And we actually feel these two players, Boston Scientific and Medtronic, coming into this space, really, we welcome it. You know, our CEO, Rob, would say he's ready to compete with them, which I agree with, but I think it will bring more attention to the space. It will expand the market. So we really look at this as all upside from a BioVentus perspective and the opportunities that it will actually bring to us.
Shifting to PRP, you've highlighted it's the only system that only requires one centrifuge spin cycle. How pivotal is this point of differentiation in terms of clinicians looking to adopt PRP?
Yeah, PRP, we think, you know, to answer that question directly, We think that it's an important part of the decision. It's not just because we walk in there and say that they're going to switch on that alone, but we think it is one of the differentiators anytime, whether it be PRP or another device, that you can actually make it easier for physicians. That's going to be an advantage, no matter whether it's PRP or another product. Our thesis and thinking about getting into PRP is really taking advantage of the synergies we get with our HA sales force. So we're entering this space with a product that is going to be highly accretive to our bottom line straight away because there's not a significant amount of investments. There are all kinds of synergies. Our HA reps are going to the office today already, and now they're selling an HA. They're going to bring in PRP. So with the infrastructure that we have and the success that we've had with our HA sales force, really in medical device they talk about having multiple things in the bag. This adds another thing to the bag for HA Salesforce, and we've seen early on that this has been very beneficial both ways. One, getting conversations with our current customers about PRP and getting those customers to sign up and switch to our device, but at the same time reaching out to some new customers who maybe weren't buying HA from us before, and now they're buying. So we're seeing benefits both ways on this and really are excited about the opportunities. But we think the biggest advantage we have is the sales force that we've been so successful with in selling Duralane, Jelson, and Sue Parts and really adding this to their bag to get synergies. And also from a look at it from an investment, again, we'll have the gross profit through the revenue growth that we drive, and that will be going to the bottom line because there's not a lot of investment to really drive this. So we're excited about that, one, for HA reps to be able to have something else to sell in their bags and also the benefits and the P&L that that will actually bring from a financial EBITDA and also cash flow.
I'd say there's one other differentiation besides just the centrifuge spin is the benchtop processor. It allows more customization for the surgeon or physician to choose leucocyte-rich, leucocyte-poor, depending upon what the patient is requiring to be treated. That allows them to have just one system. A lot of these orthopedic doctors will have multiple systems because of what they want to do. They're able to customize it just using our own system. So that's just a quicker process, but one that's more efficient and customizable.
Great. I think for PNS and PRP together, you said it should contribute 200 basis points to growth for the year. How are you tracking against that so far? What KPIs are you monitoring?
Yeah, so our expectations for the first half of the year were not to be at 200 basis points. The 200 basis points was a full-year commitment, so we're tracking in line with our first-half expectations, and so we'd expect the back half to be more than 200, you know, while the first half is less than that. But, you know, in addition to just the pure revenue, we're looking at, you know, we've developed, you know, a sales pipeline, So obviously you want to look at the opportunities that you have. What we talked about before with the temporary devices or the trial devices to see how many folks are going to get a PERM. So we were tracking the number of P&S perspective, looking at the number of physicians that we've actually trained or surgeons that we've actually trained, and then how many of them are adopting it. And so all of those are internal things that we're assessing and looking at. We haven't started to quote any of those externally at this point in time. That's something that we eventually want to do, but really looking at those internally from a PRP perspective, looking at the capital placements that we have, obviously looking at the sales funnel, developing all of those things early on with these new businesses and really looking at those metrics and monitoring them over time, and that's where will help us get more and more confident about the future.
shifting to ultrasonics you have a first of kind product offering so how are you thinking about the investment required given that you're kind of being the market creator this year
yeah so the ultrasonics product came through us a few years ago through an acquisition and for those that don't know about this this is really a game changing technology again another field visit that I did with Rob early on in his tenure we met with a surgeon and probably, you know, a gentleman about my age, he'd been, you know, working and doing surgery for a significant amount of time and unprovoked or unsolicited, he, you know, told Rob and I that he thought this technology was revolutionary. So that was a, you know, direct quote from him. Literally the devices that we're competing with today are hammer and chisel. It's, you know, night and day different. We strongly believe that we have the ability to change standard in care in this space over time. It's really that the surgeon has much more precision and control with this device. There's a lot less blood loss for the patient, and it also extends the life of the surgeon because they're not in there with their hands, moving things around and hammering and chiseling safe, and that we're excited about when in this space with this technology.
On international markets, any markets you guys are interested in entering, what are you eyeing, and any criteria that you're evaluating, whether it makes sense to enter a country?
Yeah, we're always looking at all of our investments from an ROIC lens. When we think, you know, this is another growth driver for us, we think it has a significant amount of potential. I think, you know, Rob's come into the company and the business that he used to run before BioVentus was 25% of the revenue was in the U.S. and 75% was in international. BioVentus is pretty much the direct inverse of that is that we have 10% of our business internationally and 90% in the U.S. So he understands how to go to market internationally and has had a proven track record on how to be successful. So first start with that and his experience there. He's brought new leadership into this business that has, you know, similar track record in business and international markets and how to go about that. So we've added talent, you know, one through adding Rob and his commercial experience. He's added talent that we've put in place there that's really looking at these markets a lot different and has had early success early on. But the areas that we're actually looking at and, you know, where we think we have the most opportunity are going to be in Asia, APAC, but specifically within APAC, China and Japan, We're not really penetrating those markets, you know, much at all today. So an immaterial amount of business in both of those. So we're working through regulatory processes, looking at, you know, all of the things we have to do to enter those markets and, you know, working through that. The other area is going direct in Germany. So this is not a market that we've really, even though it's a mature market, it's not something that we've penetrated, you know, very much there. but we're making investments from a Salesforce perspective and really taking ultrasonics itself into Germany and some of the other products. The last market, I'd say, is the Middle East and specifically Saudi Arabia, where we really think that we have opportunity, again, some specific examples of success from Rob's past and the leader that we have in our international business have been very successful in those markets. Obviously, there's some turbulent times over there right now, but we believe in those areas that we have a lot of opportunity to really accelerate growth and hasn't really been, I'd say, explored before as a company.
Turning to the P&L a little bit, how would you frame the margin profile of some of the expansion emerging products that we talked about as these scales should be accreted to corporate average?
Yeah, our gross margin is peer leading overall. you know we're you know compares to anybody else we're you know either the best or close to the best and and it's a really a strengthen of our of our P&L where we have the ability to grow we have a high margin generates lots of gross profit dollars so we can either expand our margins drop it to the bottom line like we did last year we can take that money and invest it in the P&L like we're doing this year but from a margin profile of our growth drivers we look at you know start with P&S it's a little bit less than our average from a gross margin perspective but that's today, you know, early on. And as we get more volume through that over time, we'll have the ability to lower our cost structure and bring that margin more in line with the corporate average of 75%. From a PRP perspective, that margin is a little bit lower than our corporate average. But again, the thesis for that investment was fully knowing that that margin is lower. But when you look at that from the actual variable profit to the bottom line, it will be significant because the amount of investments that we're putting into that are not, you know, we've really already invested in the sales force, which is the biggest thing we need to do to drive that growth. And so from an ultrasonic perspective, it's actually north of our corporate average. And so overall that, you know, is accretive to our gross margin. Again, high growth potential, really strong growth margin combination. and then our international markets today, that margin is less than our corporate average. But we don't feel that these growth drivers are going to, over time, as we get success in each of these areas, we're going to have better negotiating power. We're always going to be looking at our cost structure and how to bring it down. So we don't think that the growth drivers and where our future growth is going to come from is going to be a meaningful difference in our actual growth margin that we have today and still fully expect that we'll be in that range over time.
So we talked about how 2026 is an investment-heavy year, and you've also said that you're expecting to hold EBITDA margins of 20%. How should we think about the balance between reinvestment and margin expansion beyond 2026?
Yeah, I think that that's a wait-and-see, a little bit of that, to see the success that we have this year and the new things that we discover by taking these new products to market. The great thing is we have the flexibility, right, and we've proven that we can do that. Last year, I think, you know, this year our margin will be a little bit less from an EBITDA perspective. We'll grow EPS. That's how our guidance is set up. But when we get into 2027, we'll evaluate, you know, the milestones of how we're doing. You know, are we making the progress that we expected, yes or no, you know, and really look at that. But we do believe that these growth drivers have so much potential that we're going to, you know, invest in them to, you know, to realize their full potential. And, you know, that may mean another investment year, but we haven't gotten to the point to where we've really, you know, fully decided on that.
At the last minute, let me turn it back to you guys. Anything we didn't discuss that you want to highlight, something underappreciated, or anything you want to share?
Yeah, I think, one, I thank you for having us, but we really feel our story in total is underappreciated. But you said BioVentus is a very different company today than it was a few years ago. We've made significant progress overall on our revenue growth, on expanding our margins, on changing our cash flow from negative to positive. We think this is a really compelling investment. It's a rare and really unique opportunity to get into the company. When we look into the future with these four growth drivers that we have that we're investing in, we really be able to take our growth profile that we have today and really accelerate it over time. At the same time, you know, expanding our margins and driving more cash flow. But overall, we feel like we've had a good track record of what we've accomplished to get the company where it is today. We have a really strong foundation, and now it's really bringing these growth drivers, igniting them, and driving that into the future, and we think it's a great opportunity to get into an exciting company that has a bright future. Thank you guys for coming.