Bioventus Reports Second Quarter Results; Updates Full Year 2021 Financial Guidance

DURHAM, N.C., Aug. 10, 2021 (GLOBE NEWSWIRE) -- Bioventus Inc. (Nasdaq: BVS) (“Bioventus” or “the Company”), a global leader in innovations for active healing, today reported financial results for three and six months ended July 3, 2021.

Q2 Financial Summary & Recent Highlights:

• Net Sales of $109.8 million, up $51.8 million, or 89.3%, year-over-year, comprising:
  • Net Sales from legacy Bioventus Inc. of $97.9 million, representing organic revenue growth* of 68.8% year-over-year, and
  • Net Sales from the acquisition of Bioness Inc., of $11.9 million.
• Net Loss of ($10.8) million, an increase of ($4.8) million, or 80.3% year-over-year.
• Adjusted EBITDA* of $19.9 million, up $12.9 million, or 186.5% year-over-year.
• Updates full year 2021 financial guidance, and reaffirms recently raised¹ Net Sales growth guidance of 26% to 29% year-over-year and raises Non-GAAP guidance.
• Recently closed and announced acquisitions of Bioness and Misonix respectively raises Total Addressable Market to $15 billion.

*See below under “Use of Non-GAAP Financial Measures” for a definition and reconciliation of this measure.

¹ Prior guidance was provided on July 29, 2021

“Bioventus delivered strong second quarter results, driven by our team’s ability to build upon the momentum we saw exiting the first quarter. We achieved significant sequential quarterly growth and year over year growth while also obtaining double digit organic growth in comparison to Q2 2019 for legacy Bioventus,” stated Ken Reali, Chief Executive Officer of Bioventus. “We have raised our full year 2021 financial guidance and we believe we are well positioned to execute our strategy to accelerate our multi-year growth profile.”

Mr. Reali continued: “Our integration of Bioness, which we acquired at the end of the first quarter, is being executed per our plan and we expect will be largely complete by the end of Q4. We were also very pleased to announce that we entered into a definitive agreement to acquire Misonix, Inc., an important strategic transaction that we expect to close in Q4.

Our pending acquisition of Misonix, in addition to Bioness, will expand our total addressable market and deepens our portfolio of products. We view both acquisitions as important strategic additions that will be accretive to our long-term growth profile while leveraging our significant global commercial presence in orthopedics.”

Second Quarter 2021 Financial Results:

The following table represents net sales by geographic region, and by vertical, for the three months ended July 3, 2021 and June 27, 2020, respectively:

Net sales of $109.8 million compared to $58.0 million for the second quarter of 2020, an increase of $51.8 million, or 89.3%, year-over-year, primarily due to the recovery from the COVID-19 pandemic. International net sales for the second quarter of 2021 increased 129.5% year-over-year, or 112.2% on a constant currency* basis.

Gross profit was $76.3 million, or 69.5% of net sales, compared to $40.3 million, or 69.5% of net sales, for the second quarter of 2020, an increase of $36.0 million, or 89.1%, year-over-year. Non-GAAP gross profit* was $84.0 million, or 76.5% of net sales, compared to $45.6 million, or 78.7% of net sales, for the second quarter of 2020, an increase of $38.4 million, or 84.1%, year-over-year.

Operating loss was ($5.7) million, compared to ($4.6) million for the second quarter of 2020, an increase of ($1.1) million, or 25.0%, year-over-year. Operating margin was (5.2)% of net sales, compared to (7.9)% of net sales for the second quarter of 2020.

Non-GAAP operating income* was $13.3 million, compared to $6.2 million for the second quarter of 2020, an increase of $7.1 million, or 113.4%, year-over-year. Non-GAAP operating margin* was 12.1% of net sales, compared to 10.7% of net sales for the second quarter of 2020.

Net Loss was $(10.8) million compared to $(6.0) million for the second quarter of 2020, an increase of $(4.8) million or 80.3%, year-over-year

Adjusted EBITDA* was $19.9 million, compared to $6.9 million for the second quarter of 2020, an increase of $12.9 million, or 186.5%, year-over-year.

Non-GAAP net income* was $9.6 million, compared to $3.6 million, for the second quarter of 2020, an increase of $6.0 million, or 168.0%, year-over-year.

As of July 3, 2021, the Company had $136.1 million in cash and cash equivalents and $181.1 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.

Updated Full Year 2021 Financial Guidance:

For the twelve months ending December 31, 2021, the Company now expects:

• Net sales of $405 million to $415 million, up approximately 26% to 29% year-over-year. The full year 2021 net sales guidance range is comprised of:
  • Net sales from legacy Bioventus Inc. of $372.5 million to $380.5 million, representing organic revenue growth* in the range of approximately 16% to 18% year-over-year, and,
  • Net sales from the acquisition of Bioness Inc., following the closing date of March 30, 2021, of approximately $32.5 million to $34.5 million.
• Net income of $13.0 million to $17.6 million, compared to net income of $14.7 million for the twelve months ended December 31, 2020.
• Non-GAAP net income* of $67.1 million to $69.5 million, compared to $47.4 million for the twelve months ended December 31, 2020.
• Adjusted EBITDA* of $77.8 million to $82.0 million, compared to $72.4 million for the twelve months ended December 31, 2020.

The Company’s guidance reflects the Company’s current expectations regarding the impact of COVID-19 on its business. The severity and duration of the COVID-19 pandemic are outside of the Company’s control and, given the uncertain nature of the pandemic, could cause the Company’s future operating results to be different from our current expectations, particularly if the impact of the pandemic worsens.

Presentation: This press release presents historical results, for the periods presented, of Bioventus Inc., including Bioventus LLC, the predecessor of Bioventus Inc. for financial reporting purposes.

Second Quarter 2021 Earnings Conference Call:

Management will host a conference call to discuss the Company’s financial results and provide a business update, with a question and answer session, at 5:00 p.m. Eastern Time on August 10, 2021. Those who would like to participate may dial 844-945-2085 (442-268-1266 for international callers) and provide access code 1650599.

A live webcast of the call and any accompanying materials will also be provided on the investor relations section of the Company’s website at https://ir.bioventus.com/.

The webcast will be archived on the Company’s website at https://ir.bioventus.com/ and available for replay until August 10, 2022.

About Bioventus

Bioventus delivers clinically proven, cost-effective products that help people heal quickly and safely. Its mission is to make a difference by helping patients resume and enjoy active lives. The Innovations for Active Healing from Bioventus include offerings for pain treatment & joint preservation, restorative therapies and bone graft substitutes. Built on a commitment to high quality standards, evidence-based medicine and strong ethical behavior, Bioventus is a trusted partner for physicians worldwide. For more information, visit www.bioventus.com, and follow the Company on LinkedIn and Twitter. Bioventus and the Bioventus logo are registered trademarks of Bioventus LLC.

Legal Notice Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including, without limitation, statements concerning our business strategy, position and operations; expected sales trends, opportunities and growth; the ongoing COVID-19 pandemic; the expected benefits and impact of Bioventus’ products, including in certain regions, and biologic drug candidates; expected completion of integration efforts for Bioness; the closing of the pending Misonix acquisition; and the Company’s financial guidance and expected financial performance. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “potential,” “positioned,” “seek,” “should,” “target,” “will,” “would” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Factors that could cause actual results to differ materially from those contemplated in this press release include, but are not limited to, statements about the adverse impacts on our business as a result of the COVID-19 pandemic; our dependence on a limited number of products; our ability to develop, acquire and commercialize new products, line extensions or expanded indications; the continued and future acceptance of our existing portfolio of products and any new products, line extensions or expanded indications by physicians, patients, third-party payers and others in the medical community; our ability to differentiate the hyaluronic acid (“HA”) viscosupplementation therapies we own or distribute from alternative therapies for the treatment of osteoarthritic; the proposed down-classification of non-invasive bone growth stimulators, including our Exogen system, by the U.S. Food and Drug Administration (“FDA”); our ability to achieve and maintain adequate levels of coverage and/or reimbursement for our products, the procedures using our products, or any future products we may seek to commercialize, including any potential changes by Centers for Medicare and Medicaid Services in the manner in which our HA viscosupplementation products are reimbursed, our ability to complete acquisitions or successfully integrate new businesses, products or technologies in a cost-effective and non-disruptive manner; including the Misonix acquisition; competition against other companies; the negative impact on our ability to market our HA products due to the reclassification of HA products from medical devices to drugs in the United States by the FDA; our ability to attract, retain and motivate our senior management and qualified personnel; our ability to continue to research, develop and manufacture our products if our facilities are damaged or become inoperable; failure to comply with the extensive government regulations related to our products and operations; enforcement actions if we engage in improper claims submission practices or in improper marketing or promotion of our products; the FDA regulatory process and our ability to obtain and maintain required regulatory clearances and approvals; failure to comply with the government regulations that apply to our human cells, tissues and cellular or tissue-based products; the clinical studies of any of our future products that do not produce results necessary to support regulatory clearance or approval in the United States or elsewhere; and the other risks identified in the Risk Factors section of the Company’s public filings with the Securities and Exchange Commission (“SEC”), including Bioventus’ Annual Report on Form 10-K for the year ended December 31, 2020, as such factors may be updated from time to time in Bioventus’ other filings with the SEC, which are accessible on the SEC’s website at www.sec.gov and the Investor Relations page of Bioventus’ website at ir.bioventus.com. Except to the extent required by law, the Company undertakes no obligation to update or review any estimate, projection, or forward-looking statement. Actual results may differ materially from those set forth in the forward-looking statements.

BIOVENTUS INC.

Consolidated condensed balance sheets
As of July 3, 2021 and December 31, 2020
(Amounts in thousands, except share and per share data) (unaudited)

BIOVENTUS INC.

Consolidated condensed statements of operations and comprehensive (loss) income
(Amounts in thousands, except share and per share data, unaudited)

BIOVENTUS INC.

Consolidated condensed statements of cash flows
(Amounts in thousands, unaudited)

Use of Non-GAAP Financial Measures

Net Sales and International Net Sales Growth on a Constant Currency Basis

Net Sales and International Net Sales Growth on a Constant Currency Basis is a non-GAAP measure, which is calculated by translating current and prior year results at the same foreign currency exchange rate. Constant currency can be presented for numerous GAAP measures, but is most commonly used by management to facilitate the comparison sales in foreign currencies to prior periods and analyze net sales performance without the impact of changes in foreign currency exchange rates.

Organic Revenue Growth

The Company defines the term “organic revenue” as revenue in the stated period excluding the impact from business acquisitions and divestitures. The Company uses the related term “organic revenue growth” to refer to the financial performance metric of comparing the stated period organic revenue with the reported revenue of the corresponding period in the prior year. The Company believes that these non-GAAP financial measures, when taken together with our GAAP financial measures, allows the Company and its investors to better measure the Company’s performance and evaluate long-term performance trends. Organic revenue growth also facilitates easier comparisons of the Company’s performance with prior and future periods and relative comparisons to its peers. The Company excludes the effect of acquisitions and divestitures because these activities can have a significant impact on the Company’s reported results, which the Company believes makes comparisons of long-term performance trends difficult for management and investors.

Adjusted EBITDA, Non-GAAP Gross Profit, Non-GAAP Gross Margin, Non-GAAP Operating Income, Non-GAAP Operating Expense, Non-GAAP Operating Margin, Non-GAAP Net Income, and Non-GAAP Earnings per share of Class A Common Stock.

We present Adjusted EBITDA, Non-GAAP Gross Profit, Non-GAAP Gross Margin, Non-GAAP Operating Income, Non-GAAP Operating Expense, Non-GAAP Operating Margin, Non-GAAP Net Income, and Non-GAAP Earnings per share of Class A Common Stock, all non-GAAP financial measures, to supplement our financial reporting, because we believe these measures are useful indicators of our operating performance.

We define Adjusted EBITDA as net income (loss) from continuing operations before depreciation and amortization, provision of income taxes and interest expense (income), adjusted for the impact of certain cash, non-cash and other items that we do not consider in our evaluation of ongoing operating performance. These items include equity compensation, COVID-19 benefits, net, succession and transition charges, foreign currency impact, acquisitions and integration costs, inventory step-up costs, equity loss in unconsolidated investments, change in fair value of contingent consideration, impairments related to variable interest entity and other non-recurring costs. See the table below for a reconciliation of net income to Adjusted EBITDA. Our management uses Adjusted EBITDA principally as a measure of our operating performance and believes that Adjusted EBITDA is useful to our investors because it is frequently used by securities analysts, investors and other interested parties often use it in their evaluation of the operating performance of companies in industries similar to ours. Our management also uses Adjusted EBITDA for planning purposes, including the preparation of our annual operating budget and financial projections.

Our management uses Non-GAAP Gross Profit, Non-GAAP Gross Margin, Non-GAAP Operating Income, Non-GAAP Operating Expense, Non-GAAP Operating Margin and Non-GAAP Net Income principally as measures of our operating performance and believe that these non-GAAP financial measures are useful to better understand the long term recurring performance of our core business and to facilitate comparison of our results to those of peer companies. Our management also uses these non-GAAP financial measures for planning purposes, including the preparation of our annual operating budget and financial projections.

We define Non-GAAP Gross Profit as gross profit, adjusted for the impact of certain cash, non-cash and other items that we do not consider in our evaluation of ongoing operating performance. These items include depreciation and amortization included in the cost of goods sold and acquisition costs in cost of goods sold. We define Non-GAAP Gross Margin as the calculated ratio of Non-GAAP Gross Profit to net sales. See the table below for a reconciliation of gross profit and gross margin to Non-GAAP Gross Profit and Gross Margin.

We define Non-GAAP Operating Income as operating income, adjusted for the impact of certain cash, non-cash and other items that we do not consider in our evaluation of ongoing operating performance. These items include depreciation and amortization included in the cost of goods sold, amortization included in operating expenses, change in fair value of contingent consideration, COVID-19 expense, COVID-19 income, succession and transition charges, acquisition and integration costs, inventory step-up costs, impairments related to variable interest entity and other non-recurring costs. Non-GAAP Operating Margin is defined as defined as Non-GAAP Operating Income divided by net sales. See the table below for a reconciliation of Operating Income and operating margin to Non-GAAP Operating Income and Non-GAAP Operating Margin.

We define Non-GAAP Operating Expense as operating expenses, adjusted to exclude certain cash, non-cash and other items that we do not consider in our evaluation of ongoing operating performance. These items include amortization included in operating expenses, change in fair value of contingent consideration, COVID-19 expense, COVID-19 income, succession and transition charges, acquisition and integration costs, impairments related to variable interest entity and other non-recurring costs. See the table below for a reconciliation of Operating Expenses to Non-GAAP Operating Expenses.

We define Non-GAAP Net Income as Net Income, adjusted for the impact of certain cash, non-cash and other items that we do not consider in our evaluation of ongoing operating performance. These items include depreciation and amortization included in the cost of goods sold, amortization included in operating expenses, change in fair value of contingent consideration, COVID-19 expense, COVID-19 income, succession and transition charges, acquisition and integration costs, inventory step-up costs, impairments related to variable interest entity and other non-recurring costs. See the table below for a reconciliation of Net Income to Non-GAAP Net Income.

We define Non-GAAP Earnings per Class A share as Earnings per Class A share, adjusted for the impact of certain cash, non-cash and other items that we do not consider in our evaluation of ongoing operating performance. These items include depreciation and amortization included in the cost of goods sold, amortization included in operating expenses, change in fair value of contingent consideration, succession and transition charges, acquisition and integration costs, inventory step-up costs, impairments related to variable interest entity and other non-recurring costs, divided by weighted average number of shares of Class A common stock outstanding during the period. See the table below for a reconciliation of loss per Class A share to Non-GAAP Earnings per Class A share.

Reconciliation of Net (Loss) Income to Adjusted EBITDA (unaudited)

Reconciliation of Net (Loss) Income to Non-GAAP Net income (unaudited)

Reconciliation of Loss per share of Class A Common Stock to Non-GAAP Earnings per share of Class A Common Stock (unaudited)

Reconciliation of Gross Profit to Non-GAAP Gross Profit and Gross Margin to Non-GAAP Gross Margin (unaudited)

Reconciliation of Operating (Loss) Income to Non-GAAP Operating Income and Operating Margin to Non-GAAP Operating Margin (unaudited)

Reconciliation of Operating Expenses to Non-GAAP Operating Expenses (unaudited)

Reconciliation of Guidance Range for Gross Profit to Non-GAAP Gross Profit and Gross Margin to Non-GAAP Gross Margin for the twelve months ending December 31, 2021

Reconciliation of Guidance Range for Net Income to Non-GAAP Net Income for the twelve months ending December 31, 2021

Reconciliation of Guidance Range for Net Income to Adjusted EBITDA
for the twelve months ending December 31, 2021

Investor Inquiries: Mike Piccinino, CFA, IRC Westwicke/ICR investor.relations@bioventus.com Press and Media Inquiries: Thomas Hill Bioventus thomas.hill@bioventus.com