Ladies and gentlemen, thank you for being here and welcome to the MiMedx Third Quarter 2020 Financial Results Conference Call. At this time, all participants are in listen-only mode. I would now like to turn the call over to your speaker today, Hilary Dixon, of MiMedx. Thank you. Please go ahead, Madam.

Thank you, operator, and welcome to today's conference call to discuss our third quarter 2020 financial results. With me today are Tim Wright, Chief Executive Officer; and Pete Carlson, Chief Financial Officer. Additional members of senior management will also be available to answer your questions. Before we begin, as a reminder, we began trading on the NASDAQ Stock Market at the start of trading yesterday, November 4, 2020, under the ticker symbol MDXG. Also on October 15, we filed our definitive proxy statement and announced that we will hold our 2020 Annual Meeting of Shareholders on November 20, 2020 at 10 AM Eastern Time in a virtual-only format. The press release reviewing third quarter 2020 financial results was issued yesterday, November 4, and is available on our website. I'd also like to remind you that remarks made during today's call include forward-looking statements that are subject to risk and uncertainty. Actual results may differ materially. We describe some of these factors in our risk factor section of our 2019 Annual Report on Form 10-K and in the second quarter 2020 quarterly report on Form 10-Q. This call will also include references to certain non-GAAP financial measures; we provide reconciliations of those measures to the most comparable GAAP measures in the earnings press release on the investor relations portion of our website at www.Mimedx.com. With that, I'm pleased to turn the call over to MiMedx Chief Executive Officer, Tim Wright.

Thank you, Hilary. Good morning, everyone. Thank you for joining us this morning. The third quarter was a period of significant progress for MiMedx as we continue to execute on our strategy. I'm pleased with many accomplishments in all areas of our business including R&D, supply chain and operations, and commercial operations. Moreover, we continue to make a meaningful difference in the lives of patients and families suffering from chronic unhealed wounds. We remain at the forefront of patient care and treatment. Now with an established seasoned executive team in place, we are well-positioned to make deeper advancements in the large and expanding new care market. On today's call, I plan to recap key recent milestones, share highlights of our third quarter results, and reiterate areas where we are investing in the business to drive near-term and long-term results. I do want to express my deep appreciation to our 700 plus employees and their families for their incredible ongoing commitment and dedication to MiMedx. I'm exceptionally proud of our team's performance in Q3 and for their perseverance over the last eight months as we weathered the unprecedented COVID pandemic together and with our customers. It must be noted, we're still in the pandemic, so we must remain vigilant. Some of our turnaround efforts have been complicated by COVID, but that has not deterred our focus on the fundamental business objectives to restore our financial integrity and our reputation, build out a cohesive and capable management team, maximize the core business, and continue to advance our musculoskeletal pipeline while strategically addressing any headwinds we may encounter. Our performance this quarter resulted in a strong rebound in sequential sales growth, with a 22% increase over the prior quarter. Since the onset of COVID in March, we mobilized to ensure continued access to our products for patients and their families, protect the health and safety of our own people, our most precious resource, and maintain a product safety profile that we must continue to remain vigilant on. This is an area that I'm very proud of. Since inception, the company has distributed more than 2 million allografts. We've recovered more than 75,000 placentas. We've done all this and maintained a reported events average of 0.1%. These are impressive statistics, and again, I'd like to thank the team for their commitment to quality and product integrity. Senior access to accounts has improved, which has been a major hallmark of the business. And yet, we are looking at this as a potential rebound to begin to normalize our field personnel in their accounts. Overall, the business is operating efficiently. Over the past year, we have built a capable and cohesive leadership team with industry domain expertise. We made two critical hires in the third quarter: Dr. Rohit Kashyap, who is our Chief Commercial Officer, and Dr. Bob Stein, who leads our Research and Development efforts. Approximately 90% of our senior leadership team is new. Other high-performance individuals have been put in new leadership positions with increasing responsibility. We have a talented and dedicated employee base, and I can say with confidence that we're working to systematically transform the business. I'd like to take a few minutes to recap some of the recent announcements that we've made. First, I'm exceptionally excited to reiterate that our common stock commenced trading yesterday, November 4. This is a momentous occasion for us and represents a significant transformation for the business, not only for the business but also for our employees and shareholders. Obviously, this improves our trading liquidity, allows us to have more interaction with the financial community, and strengthens our ability to execute on our strategic objectives. I again want to congratulate the entire MiMedx organization and also thank our shareholders for their ongoing support. Second, earlier this week, we announced the addition of coverage for EpiFix. Now, as many of you know, EpiFix is our flagship Amnion/Chorion brand. This product was placed on the formulary of the largest U.S. Commercial payer as a proven and medically necessary option in the treatment of diabetic foot ulcers. Coverage will begin December 1. Recently, we outlined key growth drivers for our core business, and this additional coverage supports the tactics that we have outlined, including highlighting the clinical and economic value of our core portfolio and expanding patient and healthcare providers' access to our products. We believe that EpiFix is the only amniotic membrane product to receive coverage under this payer's updated commercial medical policy. We expect the payer's decision will be an important competitive advantage over time for MiMedx as it facilitates access to EpiFix in a growing market for diabetic foot ulcers. Important validation and demonstration of the strength of our clinical data in the skin substitute market, and it also recognizes the significant differentiated value of our portfolio. We'll continue to inform decision-makers, payers, and providers and help elevate the standard of care for millions of patients. Let me take a moment to just highlight the Agency for Healthcare Research and Quality data. As you know, this was published in February of 2020. This independent report intended to inform healthcare decision-makers, whether it be patients or clinicians, healthcare system leaders, policymakers, and among others, to make well-informed decisions and thereby improve the quality of health care services. I believe the report accomplished this objective and serves as a critical validation of our clinical evidence. It was one of the key factors leading to the attainment of the additional coverage by the U.S.'s largest payer. The findings of the AHRQ report noted that in the MiMedx product review, we had statistically significant results in the way we conducted a randomized controlled trial across many applications. Additionally, there was a head-to-head study that resulted in a superiority claim for us. These studies also demonstrated a low risk of bias. This report serves to inform payers and key decision-makers. There is no other amniotic product that has received coverage by this payer. It's important to note that more clinical evidence will be needed in the future, and we're very committed to this. This is clearly in line with our strategy to generate a body of evidence that could be payer-reviewed. In mid-September, we launched the new EpiCord Expandable product line as the largest advancement in our portfolio of products. At the core of this technology is EpiCord, which has demonstrated clinical efficacy in the treatment of diabetic foot ulcers. This product has the ability to expand during the procedure and offers a cost-effective way to treat larger wounds and differentiated wound surfaces including uneven wound surfaces and deeper wounds. The results of our internal product development efforts have been impressive. We're going to continue to develop meaningful products to provide our salesforce the ability to sell these products in areas of unmet needs. Also, with this product, we're seeing utilization across a number of sizes and types of wounds. Once the wound has closed and started to heal, the physician or podiatrist can transition to our basic EpiCord or EpiFix products. This is a nice continuity of care that we've been able to capitalize on. This innovation is important as it opens access to other customers and gives our salesforce the opportunity to target new accounts and new care settings. Feedback from the launch has been very positive. We plan to highlight this at the Symposium on Advanced Wound Care this week through November 6. As a pioneer in the development of placental tissue technology, MiMedx is constantly improving our knowledge of placental science, and we're committed to continuous innovation. Earlier in this quarter, we outlined four key growth drivers for our core business. We expect to enhance the portfolio value by continuing to highlight the clinical and economic value of our portfolio. By this, we can also expand our market into new applications. From an expansion standpoint, we're targeting new business opportunities and, in a controlled fashion, pursuing international expansion. The accomplishments as noted above contribute to these growth factors, and I'd like to highlight some specifics across three domains of value creation for our company: number one, commercial; number two, R&D; number three, supply chain and operations. In a commercial organization led by Dr. Kashyap, we have started to stabilize key accounts. We're very conscientious that the pandemic isn't over, so we remain vigilant around this. I believe our recent accomplishments and tactics to grow our business are working. We plan to leverage our commercial sales to operationalize the pull-through of the recent contract wins we've had and payer wins we've had. While we expect the impact of additional payer coverage will be modest as we first ramp up, our field reimbursement managers, medical affairs organization, and market access teams are well-positioned to support our field sales efforts in this effort. Growth will come from key initiatives including exceptional execution by our sales organization, investments in medical education, for example, key opinion speaker programs, as well as science-based approaches to the buyer health policy team. Our salesforce size and productivity are key elements in this strategy as well, and strong engagement in important meetings will be crucial. Putting the right people in the right places will ensure that we have access to market demand. We will scale our efforts appropriately to address the clinical need across a variety of care settings and a wide range of applications. Let me transition to R&D, led by Dr. Stein. We're investing in medical education to support our current salesforce growth objectives. We will highlight our clinical and economic evidence of our portfolio products, which is substantial. We will drive disease state awareness across the care continuum, and we'll continue to support our publication strategy, whether that be in the safety and efficacy of our product or their economic value. We will use these tactics to expand and leverage the market. Our research efforts are focused across our portfolio of currently marketed products today, as well as to support our BLA submissions in the future. As you know, we've recently announced we completed enrollment of our Phase 3 trial and our osteoarthritis Phase 2b trial. We'll continue to update you on the progress of these important pipeline assets that we have. In our manufacturing area, one competitive advantage we have is the vertical integration of our supply chain and our operations. We must use this to maintain our business operations and our quality standards. Our vertical integration was particularly helpful at the beginning of our pandemic with COVID. Our ability to scale our donation network and recovery network was absolutely essential during this process as some hospitals began to shut down. We have the largest civil network and recovery network in this industry. During the pandemic, and ongoing, we still continue to have a very high order fill rate. I'm pleased to share also, it's very important relative to our BLAs that we're on track for our GMP facility. This positions us to benefit not only in support of our BLA products but also benefits us long term with a favorable cost profile, control over our manufacturing process, and allows us to ensure high-quality controls. In summary, we're gaining momentum, we're seeing our access to accounts beginning to stabilize with more normal-looking financial and operational metrics, and feel we're in a position to run the business for growth. We continue to realize operating efficiencies as we streamline processes, align product strategies, and focus on key priorities. We're investing in the business, and we believe these initiatives that we've outlined position us well to leverage our recent wins, specifically with payer coverage and with our new product innovation, namely EpiCord Expandable. At this point, I'd like to turn the call over to Pete to review the specifics of our financial performance.

Thank you, Tim, and good morning, everyone. Today, I will discuss our third quarter results, which demonstrate improvement in our business and recovery from the soft second quarter, our cash position, and some upcoming activities. We are pleased to have completed a strong day of trading on the NASDAQ stock market and are excited for the increased liquidity this brings to our shareholders. Our third quarter results reflect positive momentum for revenues on a sequential basis. However, as I've discussed before, I need to clarify the impact of the company's transition in revenue recognition methodology on our reported results. Net sales for the third quarter of 2020 were $64.3 million, primarily recognized on an as-shipped basis. Included in this amount is $1 million of cash collected related to sales made prior to the revenue recognition transition. We refer to these as the remaining contracts. Net sales for the third quarter of 2019 were $88.9 million, primarily recognized on a cash receipt basis. Included in this amount is a benefit of $21.4 million resulting from the transition in revenue recognition that occurred in that period. Adjusted net sales, which exclude impacts of the company's transition in revenue recognition and cash collected on those remaining contracts, were $63.3 million in the third quarter of 2020, a decrease of 6.2% from the third quarter of 2019. Cash collections in the third quarter of 2019 were higher than shipments in that period. On an as-shipped basis, revenue between the two periods was relatively consistent. Furthermore, adjusted net sales in the third quarter of 2020 represented an increase of 22% over the second quarter of 2020, which was significantly impacted by restricted access and other limitations caused by the pandemic. While we are very optimistic, I would caution you that we are still in the midst of the pandemic, and we are cautious in attributing these recent sales trends. We do know that products for non-healing wounds are not getting better without treatment. Sales in the latter part of the year are usually stronger simply due to how individuals manage their personal insurance reimbursement. Also, COVID makes it difficult to predict future revenues because its impact varies at different times and in different places. If our customers suffer from another COVID outbreak or access restrictions, future sales and profitability could be impacted. We're focused on growing our business, and Tim mentioned some of the strategies and tactics to do that. That being said, the sequential recovery seen in the third quarter reflects the hard work across the company, particularly throughout our commercial organization. I appreciate the support and dedication across the entire MiMedx team to support our physician customers to help us make a difference for patients and their families. Gross margin in the third quarter of 2020 was 84.0% compared to 85.1% in the third quarter of 2019. Excluding the impact of the transition in revenue recognition, gross margin in the current period was 84.0% compared to 84.8% for the year-ago period. This decrease is primarily a result of the higher quality standards of current good manufacturing practices and lower production yields. Selling, general, and administrative expenses for the third quarter of 2020 were $48.0 million, or a decrease of 6.3% compared to the third quarter of 2019. This decrease was driven in part by lower expenses related to travel restrictions implemented by the company, reduced severance expenses, and a result of fewer legal consulting and accounting expenses, exclusive of those reported in investigations, restatements, and related expenses. Investigation, restatement, and related expenses for the third quarter of 2020 were $12.0 million, consisting of costs incurred under indemnification agreements with the company's former management and directors and the resolution of certain legal matters involving the company. In the year-ago period, these totaled $7.2 million and consisted of legal and restatement expenses. Going forward, these costs will be unpredictable as they will consist of expenses for legal matters involving the company, including resolution of matters and costs incurred under indemnification agreements. Management continues to make good progress in resolving open matters, and the notes to financial statements in this quarter's 10-Q provide the latest updates. Research and Development expenses were $3.4 million for the third quarter of 2020 compared to $2.7 million for the third quarter of 2019. Consulting fees related to the company's clinical research efforts drove this increase. As Tim noted, we completed enrollment in our two key active trials during the quarter. The company expects these costs to increase over time as we invest in additional clinical and scientific research, including clinical efficacy and economic data, internal product development, and preclinical research supportive of future growth objectives. Turning to the bottom line, the net loss in the third quarter of 2020 was $19.4 million and reflected the investigation, restatement, and related expenses of $12 million, along with the $8.2 million loss on extinguishment of debt early in the quarter. This compares to net income of $12.4 million in the third quarter of 2019, that included a net benefit of $18.6 million related to the transition in the company's revenue recognition methodology, and $7.2 million of investigations, restatements, and related expenses. Adjusted EBITDA was $6.9 million in the third quarter of 2020, or 10.8% of net sales, compared to $7.6 million in the third quarter of 2019, or 8.5% of net sales. The current period amount is 11.0% of adjusted net sales, compared to 11.2% of adjusted net sales in the prior year period, as the benefit from cost management efforts offset the higher level of R&D spending. By adapting to the current environment, we continue to manage our costs well, and we'll remain prudent in our spending. The business is operating efficiently, and we continue to review and refine our efforts to ensure effective product support and service for our customers and access to our solutions for patients and families. Now, let me review our cash position. As of September 30, 2020, the company had approximately $109.6 million of cash and cash equivalents compared to $69.1 million as of December 31, 2019. Cash and cash equivalents net of debt were $62.0 million at September 30, 2020, compared to $3.4 million at December 31, 2019. Our healthy cash position gives us the financial flexibility to invest in initiatives that strengthen our core business and to pursue new growth opportunities, including our late-stage pipeline targeted to address unmet patient needs while also addressing remaining legal contingencies. Finally, as you expect, we are continuing our other outreach efforts in dialogue with investors and analysts. Another benefit of our NASDAQ listing is the increased opportunity to participate in industry conferences, and we will give you the customary advanced notification of specific events. We are looking forward to the upcoming 2020 annual meeting of shareholders on November 20. At this time, we will now take your questions. Operator, you may open the line for questions.

Hey, guys. Thanks for taking the questions. As you know, current treatments for Knee OA, such as cortisone injections and HA injections, have questionable efficacy. In the case of cortisone, it may cause accelerated degeneration of knee cartilage. Our research indicates that AmnioFix is a superior and safer treatment for Knee OA than both cortisone and HA injections. And as such, we think that AmnioFix will likely gain FDA approval and eventually become a widely used potentially frontline treatment for Knee OA? If we're correct, then this could mean that AmnioFix's potential revenue for the Knee OA indication alone could amount to well north of $1 billion. Do you believe that our assessment of the market potential for AmnioFix is realistic? And why or why not?

Yes. This is Tim. Thank you for your comments and your question. Certainly, the AmnioFix injectable for Knee OA could be an important addition to other treatment modalities. Certainly non-steroidals, hyaluronic acid, steroids, even the current modalities that are being studied in the clinic, like anti-NGF, have their own limitations. One of our main goals in our Phase 3 clinical trials is to demonstrate not only the clinical efficacy but also the safety of amniotic tissue. So we do feel there is a promising value creator here for the business. I would like to have Bob Stein provide his comments on this as well, and then we'll address your comment regarding the potential size of the market and so on.

Thank you, Tim. Thank you, Eiad. I do believe that our AmnioFix injectable product is having a very powerful impact on pain and function in osteoarthritis. Earlier studies by Dr. Alden have supported that, and our ongoing study looks very promising at this stage. We were able to enroll the entire intended patient population into that study a little bit early. The reason for that, even in the face of COVID, and slowed down enrollment for a while, is that our dropout rate is much lower than we had anticipated. Our study was designed for an anticipated 10% dropout rate and our actual dropout rate has only been 3%. That allowed us to accrue the number of patients we believe we need to see a statistically and clinically significant difference in a slightly smaller sample size. It's a pretty good size study though; it has over 460 patients that have been enrolled. And the blinded endpoints will be available in the second quarter of next year. The 12-month blinded observation period will be completed before the end of the year, which will allow us to start to have dialogue with the FDA under the regenerative medicine advanced therapy designation and begin planning our Phase 3 studies. So we're quite enthusiastic about it as an intervention. There will be additional data that we'll be able to describe at the appropriate time, although not in the first part of the six-month observation, but after we've had an appropriate opportunity to vet it internally and have discussions with the FDA.

Yes. Thank you, Bob. Just going back to the size of the knee osteoarthritis market that you're referring to, I believe we've stated before that the market is significant. There are over 242 million patients worldwide suffering from symptomatic OA of the knee and the hip. Even if you cut that in half, it's still a significant opportunity for us as we drill down on the epidemiology. We're not quite ready to fully characterize the total addressable market, but as we work through over the next month, we've placed considerable effort into characterizing this market. I appreciate Eiad's diligence in this area and look forward to speaking to you more about this.

Thank you very much, Tim. And one more question. You mentioned during your introductory comments some contract wins. Are you open to providing any details about those contract wins?

I would love to but I don't think it's appropriate at this time. We have been very successful in contract wins, which is really part of our growth strategy. I also would like to note that once again, the largest U.S. commercial payer will be providing coverage for a product on December 1st for EpiFix. This is an important accomplishment for the organization. There's no other amniotic tissue on the market today that has the benefit of this coverage. I believe it benefits payers, it benefits patients, and it benefits the company. So, Eiad, we're executing against the need to grow our core business. We're also executing under the leadership of Bob Stein in our Phase 2b and Phase 3 trials in the musculoskeletal area, where, in the future, I would like to be able to provide a robust update.

Thank you very much.

Thank you. And our next question comes from Arne Amberg. Your line is now open.

Thank you so much for taking my question. In reference to the win with the large commercial carrier, you indicated that you intend to start to expand the salesforce. While you've given us an idea of total employees, can you help us understand where you are in terms of Porter carrying salesmen, Medical sales reps? And what do the expansion plans mean?

Ernie, thank you for your question. Having a large and growing salesforce is an important part of our tasks. So you have a focus on a good topic there. We have not been updating the count of our sales representatives externally. During the year, the last number we talked about just because it is out there was there were 285 sales professionals as of the end of last year, December of 2019. We do recognize the need to increase our field forces. As Tim said, we are focused on having the right people in the right places as we put the resources out to distribute our product. While we don’t have quantification and are not sharing that at this time, rest assured that we are always focused on the resources we have in the field distributing the product. I would also go back to another thing Tim said about the resources around those sales representatives which are our medical liaison, market access, and reimbursement resources that all help get the word out and facilitate transactions with our customers.

Thank you. The investigation expenses, the character of the expenses in the last quarter looks like they changed significantly. Pete said that he couldn't specifically talk about the future, because they’ll be variable. Do you have any limits on the contractual reimbursement you have for former management?

Yes, Ernie, you are correct in the characterization. We have hit a transition in those overall activities. As you noted, at the end of the second quarter with the filing of the 2019 10-K we completed our restatement activities. The investigation referenced in that line item was completed in 2019. The indemnification payments are one of the largest components of the current spending, and those agreements are not limited. Therefore, we are not able to put a cap on that. I would just note that the agreements do provide the opportunity to seek reimbursement for expenses that have been advanced in fees paid for in case the individual covered has a final ruling of guilt against them.

Thank you. Just one other question. In terms of the contract wins you’ve talked about for DFUs, how does that add to the additional wins that you have talked about here on the call? How does that get you in terms of covered lives in the area? Are there still significant wins to be had?

It's a great question. Rohit, I'd like you to take that question. MiMedx has always enjoyed commercial payer coverage along with Medicare coverage. This coverage with one of the largest carriers is very significant for us.

Yes. Good morning! And it's an excellent question, because I'm very excited about the opportunity with the larger payer expanding our reach further. One of the areas we focus on is — you have covered lives, and then you have covered indications. As we develop clinical data, as we have discussions, and as we prove our value to the payers, one of the things we continue to do is expand into more covered lives and also into more indications. So if you have DFU, can you add VLU? If you have DFU and VLU, can you expand to wounds from head to toe? So that continues to be a priority. But I would emphasize again, it validates — the coverage validates the strength of our clinical data. As Tim and Pete have highlighted, we believe we are the only amniotic-based tissue with this payer, which is why we have this coverage. We are excited to get started organizing this in order to capture that opportunity. We expect there will be some learning experiences for both us and them as we go through this in the initial phase, but we are excited about a substantial opportunity for our business as we go forward and continue to leverage our clinical data to expand indications as well.

Ernie, it's Pete Carlson. Thank you for your questions. What I would mention, relative to covered lives is that with this we're well over 300 million in covered lives.

Thank you.

Thank you. Our next question comes from Brian Finn from FIN Capital. Your line is now open.

Hey, guys. Congrats on some of the recent wins here with some of these insurers. I have two questions. The first question was on quarter-to-date, if you guys can give any commentary on Q4 sales. And then on the commercial side, you guys are very dominant in some geographies, while in other geographies you must have a presence. I want to understand how Rohit is addressing that going forward and what the plans are to get more reps in certain areas.

Brian, thank you for the comment on the quarter. I'll start with the first question, and Rohit can add his thoughts on Q4 sales, then address how we're positioning ourselves geographically and getting reps in the right places. We haven't talked about Q4 sales externally and don't plan to at this point. As Tim noted, we are beginning to see things stabilize, but we also know we're in uncertain times. We've seen shutdowns occurring outside the U.S., and we just don't know where things are going to go here in the U.S. But I would emphasize that we're beginning to see stabilization in accounts and access, and I'll let Rohit give his added thoughts on that.

Thanks, Pete. It is an excellent question because we ask ourselves this question every day regarding business stabilization and progress. We continue to see some substantial recovery, but that can shift around during the course of the quarter and we continue to expect to see some of that progress forward. Regarding the volume of patients and patient access to therapy, because we are down as well and there may be some essential challenges. I’m proud that we have been nimble, especially over the last quarter, to adjust our tactics and strategies in order to provide necessary support for our customers and educate them with the virtual platforms we can leverage. As for the geographic distribution of salespeople, as Tim mentioned, we want to ensure we have the right people in the right places, as you suggested. We consider current sales, future potential or untapped potential, and also accessibility. If there is a state or location with a significant amount of potential, we assess our access based on existing facilities, payer contracts due to significant local players. We take all those factors into account as we are currently executing that process.

Cool. Thank you, guys.

Thank you for joining us on the call today. We've accomplished a tremendous amount over the past year culminating in yesterday's listing on NASDAQ. It's clearly an important milestone for our employees and our shareholders. Additionally, we continue to increase our engagement with the financial community and will be participating in a number of healthcare investor conferences over the coming months. With a leading market platform and a growing body of evidence and clinical research, we are definitely focused on operationalizing our strategy, and we feel we're well positioned for the future. In addition to the comments Rohit made on our sales organization, I wanted to add that our strong market access team has delivered on contracts and payer coverage, very important. Our Medical Education team is working to build out our medical education support for our sales reps in all geographic territories. On behalf of the entire MiMedx team, thank you for your continued support and commitment to MiMedx. As always, I welcome your questions and feedback and look forward to engaging you more in the future. Operator, you may close the call.

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.