Bioventus Inc. (BVS) 2026 Q2 法說會逐字稿

Hello and thank you for standing by, my name is Regina, and I will be your conference operator today.

At this time, I'd like to welcome everyone to the Bioventis Inc.

Second quarter 2026 earnings conference call.

All lines have been placed on mute to prevent any background noise.

After the speaker's remarks, there will be a question-and-answer session.

If you'd like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad to withdraw your question, pressar 1 again.

I'd now like to hand you today.

Conference over to Dave Crawford, please go ahead.

Thanks, Virginia, and good morning everyone, and thanks for joining us.

It is my pleasure to welcome you to the Bioventus 2026 second quarter earnings conference call.

With me this morning are Rob Claypool, President and CEO, and Mark Singleton, senior Vice President and CFO.

Bob will provide an update on our 2026 priorities and the second quarter of highlights, and then Mark will review second quarter results and discuss our 2026 financial guidance.

We will finish the call with Q&A.

A presentation for today's call is available on the investors section of our website bioventis.com.

Before we begin, I would like to remind everyone that our remarks today contain for statements that are based on the current expectations of management.

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 SEC.

Including adding 1A risk factors, and the company formed 10K when the year ended December 31st, 2025.

Such factors may be updated from time to time in the company's filings made with the SEC, you are cautioned not to place undue reliance upon any forward-looking statements, which may seek only as the date made.

Although the company may voluntarily do so from time to time, it 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 US generally accepted accounting principles or GAAP.

We generally refer to these as non-GAAP or adjusted financial measures.

Important disclosures about the definitions and reconciliations of those non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in the earnings press release on the investor section of our website at bioventist.com, and now I'll turn the call over on.

Thank you, Dave Good morning, everyone, and thanks for joining our call today.

Aventus continued this its positive momentum in the second quarter, delivering solid financial results across our business.

As we continue to strengthen our commercial, operational, and financial fundamentals, we are seeing encouraging leading indicators that reinforce our confidence in our future growth drivers.

As such, we are reiterating our fully guidance on all metrics and are confident that our long range growth prospects will drive enhanced value for our shareholders.

Before going through the details on the second quarter.

I'd like to take a moment to address the strategic review we disclosed this morning.

As you saw in our press release.

Following receipt of multiple expressions of interest.

And an unsolicited acquisition proposal.

Our board has formed a committee of independent directors that will evaluate a range of strategic options.

Importantly, these options include, but are not limited to a sale of the company or the continued execution of our standalone plan.

We have built a strong foundation for growth and success at Baoventus, and I'm confident that the committee with the assistance of Evercore as financial advisor will take the time it needs to carefully evaluate all options to maximize value for our shareholders.

Turning to the quarter, I'll update you on the 3 priorities we outlined at the start of the year.

1, accelerating long-term revenue growth with increased investment in our business.

To increasing earnings, even with the higher level of investment.

And 3, continuing to strengthen our robust cash flow and enhance capital allocation optionality.

Let me expand on each priority, starting with accelerating revenue growth and increasing investments into our business.

Second quarter revenue grew 4% as we continue to capitalize on the opportunities to grow our core business, led by strong double-digit growth in our pain treatments business.

Within pain treatments, our HA franchise led by Darling, our market leading single injection therapy.

Continues to be a durable strength for Vioventus, consistently growing well above the market.

Performance is driven by a strong commercial focus, the experience of our dedicated sales force, Neuralanne's clinical differentiation.

And broad private payer coverage.

In the second quarter, this compelling combination helped us expand volume in existing accounts.

And when new ones.

We believe our go to-market approach.

And disciplined pricing strategy positions us for sustainable above-market revenue growth in HA.

Here today, the HA business has outperformed our expectations, allowing us to deploy the significant operating profit generated by this franchise to invest in our key growth drivers, including PRP, PNS, ultrasonics, and international.

During the second quarter, we continued to increase investments in these businesses by expanding our commercial team.

Raising awareness of our differentiated solutions.

And enhancing physician training programs.

I'm pleased to report that these initiatives are generating valuable data-driven insights while producing positive traction across several leading performance indicators.

These insights help us determine the optimal mix of future investment and commercial actions to maximize growth and returns.

Let me highlight a few examples, starting with platelet-rich plasma.

Our momentum is building in PRP.

And as capital placements continue to accelerate, we are seeing both larger and more frequent disposable rewards.

These leading indicators demonstrate that our PRP system detraction and beginning to displace competitive offerings.

We are also beginning to realize the benefits of leveraging our HAs Salesforce to drive PRP adoption.

Which helps us win new PRP accounts and creates additional opportunities to expand our HA customer base.

With respect to PNS, our world-class differentiated technology.

Combined with strong commercial execution has created excellent momentum, including

Increased velocity and surgeon adoption and stem trial placements with high conversion rates to permanent talismanic implants.

Resulting in a growing base of new business.

In addition, surgeons consistently expressed strong appreciation and clear recognition of our differentiation.

Which is translating into competitive conversions and meaningful inroads with larger institutions.

The strength of these leading indicators confirms our continued focus on expanding Salesforce coverage.

Enhancing clinical support.

And investing in clinical evidence generation to further augment our differentiation.

In ultrasonics, our technology combined with our investments in marketing and surgeon training is driving encouraging traction with key leading indicators.

Particularly, increased surgeon adoption.

Accelerating disposables growth.

And new wins with larger accounts and market leading IDs.

We expect these early indicators to translate into revenue acceleration in the second half of this year and beyond.

Finally, in our international business, momentum continues to build following the addition of new talent and the team's greater focus on select markets with the best growth opportunities.

We are encouraged by the speed of execution, the depth of our opportunity pipeline and our customer win rates.

Together these indicators give us confidence in delivering strong double-digit growth in the second half, and for the full year.

Turning to our second priority, increasing earnings, even as we invest in our future growth drivers.

The second quarter was a powerful demonstration of how we have enhanced the earnings power of the business.

Despite accelerating investments, We delivered an adjusted EBITta margin of 23%.

And for the full year, we expect to maintain a margin of at least 20%.

Our operating profitability combined with significant interest expense savings.

Generated adjusted EPS of $0.22 in the quarter.

And your date, we have increased our adjusted EPS by 24% compared to the prior year.

Looking ahead to the second half of the year.

We expect to further accelerate our investments while continuing to grow earnings and deliver on our 4-year financial guidance.

We are able to achieve this by leveraging the earnings power generated from our durable, above market revenue growth and stable peer leading gross margin.

Turning to our third priority, accelerating cash flow.

We delivered another strong quarter with cash from operations of $20 million.

We used our strong cash generation to repay an additional $24 million of our term loan.

We also achieved an important financial milestone.

Reducing our net leverage to below 2 times.

And we expect our net leverage to be below 1.5 times by the end of the year.

Reflecting our disciplined capital allocation.

We plan to continue to prioritize strengthening our balance sheet by using our strong free cash flow to further reduce debt this year.

Thereby creating significant capital deployment optionality for the future.

Overall, we continue to execute with discipline and deliver strong results against our strategic priorities.

We are entering the back half of the year with significant momentum.

Increased conviction in our strategy.

And growing confidence in the strength of our portfolio and investment approach.

Before I turn the call over to Mark, I'd like to highlight another important milestone.

Aoventus was recently recognized by US News and World Report as a best company to work for.

This recognition is a testament to the talent, commitment, and culture of our world-class team.

And it further strengthens our resolve as we continue our journey to build Bioenis into a leading $1 billion medtech company that delivers exceptional value for our customers, employees, shareholders, and all other stakeholders.

Now's the call over to Mark.

Thank you, Rob and good morning everyone.

Let me start by highlighting that our performance quarter reflects the strength of our strategy and our disciplined execution against the investment pieces we outlined.

The combination of durable growth and momentum in our core business, and your leading gross margin is enabling us to fund the investment into our 4 growth drivers.

In the near term, each of these 4 areas of growth are generating encouraging evidence, increasing our confidence in future revenue acceleration.

At the same time, we continue to deliver on our commitment to improve profitability and generate strong cash flow.

This powerful combination sets us apart and positions us to create meaningful long-term value for our stakeholders.

Turning to our headline results from the second quarter, revenue of $153 million increased 4% compared to the prior year period.

Growth was driven by significant strength in our pain treatments business, which was partially offset by a few factors.

Including a challenging comparison to the prior year in surgical solutions and restorative therapies.

And a shift in timing of some orders which we will discuss in a moment.

Adjusted EBITA of $35 million increased to over $1 billion compared to the prior year and grew faster than revenue growth.

Adjusted EBITDA margin of 23% expanded 20 basis points compared to the second quarter last year, even with our increased investment.

And adjusted earnings were $0.22 per diluted share for the quarter compared to $0.21 in the prior year period.

Now, let me provide some additional commentary on our quarterly revenue.

In global pain treatments, we delivered double-digit growth with revenue of $82 million representing a 12% increase compared to the prior year.

As highlighted the ongoing durability of our performance continues to be driven by strong growth in HA from volume gains with their differentiated

Single injection, Durallane therapy, and favorable customer mix.

This success reflects the intense focus and strategic collaboration across our sales force.

Corporate accounts and pricing teams.

Additionally, we saw positive contributions from PRP and PNS.

And we continue to expect both to rant in the second half of the year, as we have previously discussed.

Moving to surgical solutions, revenue in Q2 totaled $50 million which was a decline of 5% compared to the prior year.

Although it reflects 5% growth sequentially, in addition to the challenging prior year comparison, performance was impacted by the timing of certain ultrasonics capital placements and international orders, shifting approximately $2 million of revenue or more than 100 basis points for the company into the second half.

Revenue in BGS.

We're also impacted by a challenging prior year comparisons and deliberate portfolio actions for.

It is important to note that ultrasonics disposables performance is accelerating, and we are gaining significant traction within BGS with new large accounts and IDNs which will propel second half and longer-term profitable growth.

In restorative therapies, revenue of $21 million declined 2%, resulting from a chat change in mix, specifically with Medicare patients, in addition to a difficult comparison to the prior year.

We expect growth to resume based on current business opportunities and the execution that the exigent team has demonstrated over the past 2 years.

Finally, international revenue of $19 million was lower than the prior year by 1% or 2% on a constant currency basis, primarily due to the timing of distributor orders.

Which is consistent with the business.

The fundamental growth in international continues to be strong, and given our increased strategic focus.

Talent additions and improved commercial execution.

We expect to generate strong double-digit growth in the second half of the year, and for the full year.

Moving down the income statement, adjusted gross margin of 75% was 90 basis points lower than the prior year period as expected.

Primarily due to higher freight cost and product mix.

Additional adjusted total operating expenses and R&D expenses increased by $4 million as we continue to strategically invest in our key growth drivers to accelerate future revenue growth and expand the long-term earning potential.

At the same time, we have demonstrated disciplined cost management by controlling expenses and finding efficiencies across the business.

Adjusted net income of $20 million increased $1 million compared to prior year period.

This improvement reflects the benefit of continued revenue growth, stable gross margins and lower interest expense, demonstrating the leverage in our business model and impact of our ongoing focus on operational execution.

Adjusted net income was also impacted by an increase in our effective tax rate compared to the prior year due to the removal of the valuation allowance, and we expect to have a higher effective tax rate for the year.

Turning to the balance sheet and cash flow statement, we continue to generate strong cash flow, driven by a robust profitability.

Disciplined working capital management.

In capital life business model.

Cash flow from operations total $20 million.

During the quarter and we ended the period with $29 million of cash on hand and $248 million of outstanding debt.

During the quarter, we reduced debt by an additional $24 million.

Bringing total debt repayment for the year to $46 million as we continue to prioritize deleveraging and repayment of our term loan.

This strengthens our financial position and is expected to drive further interest expense savings while enhancing our ability to strategically deploy capital towards our highest value opportunities.

Through the 1st 6 months of the year we have achieved 5% revenue growth.

12% adjusted EID growth, 24% adjusted EPS growth and $22 million of growth in cash from operations.

Importantly, we expecteo year revenue growth to increase in the second half compared to the first half by over 300 basis points.

Half of which comes from acceleration in our surgical solutions business with a portion related to the shift in timing from the second quarter into the second half, and the other half from revenue acceleration in both PNS and PRP.

In addition, cash from operations is expected to approximately double in the second half, compared to the first half of this year.

As a result of strong progress to date in our outlook for the business, we are reaffirming our full year financial guidance.

We continue to expect 2026 revenue to be in the range of $600 million to $610 million.

Adjusted earnings per share to be between $0.75 to $0.79 per diluted share and cap from operations to range between $84 million and $89 million dollars.

In closing, we are off to a strong start to the year and remain focused on executing our strategy to invest in our foreign growth drivers.

We believe we possess a powerful combination of growth, operational discipline, and financial strength to position as well as we build a leading med tech company and create meaningful long-term value for our shareholders.

Operator, please open the line for questions.

We will now begin the question-and-answer session.

To ask a question, simply press star, followed by the number 1 on your telephone keypad.

Our first question will come from the line of Chase Knickerbocker with Craig Hallam, please go ahead.

Good morning, thanks for taking the questions.

So, just first on pain, it's clear that both you and kind of your leading competitor.

In the single injection market, are growing volumes here, in the first half of the year, maybe just a couple parter there, can you give us an idea of kinda volume versus price performance in the quarter again focusing particularly on Derling and then kind of just help us with kind of a little bit of characterization around the competitive dynamics that are currently out there in the single injection market, how, kind of both, and again, your leading competitor could be kind of grabbing volumes and taking a share at the same time.

Thanks.

Hey Chase, this is Rob, yeah, thanks for the question, and, we'll TRY to provide you some insights on that, first just reiterate that, we've had a great first half, even better than our expectations, and, to your question there, it was led by double-digit volume growth for Darling, again, this is our single injection therapy.

And, like I believe our first half performance shows again that HA is a very strong, durable, profitable growth driver for us,

So that's, we've talked about it before, but it's favorable movement market, but that's really due to our clinical differentiation, our broad private payer base and our overall commercial strength, so, like we're looking forward to the back half of the year, not just for HA, but for pain overall, and, again, whether,

Whether you're talking about the first half of this year, the second half going forward, our progress and growth in this space is really driven by volume growth.

Help her out, thanks, maybe just on, kind of go surgical.

If you can just discuss your visibility into that capital, kind of getting pushed into the second half and kind of staying there, and then just to follow-up on that, even if you kind of place that $2 million in the second quarter, surgical would have still maybe just peel back the layers a bit around kind of breaking down growth by Ultrasonics and BGS, and then if you wouldn't kind of talk, wouldn't, mind talking about kind of capital in Allonics versus kind of Piece growth, I think that would be really helpful for us to just kinda think about that business.

Yeah, this is Rob again, this, there's a lot to unpack there from the question, so maybe I'll broaden it to, surgical and just kinda give you overall perspective on it and also touch on, both, the capital and disposable pieces that you mentioned, so, first we feel great about the long-term outlook for both ultrasonics and BGS and for surgical overall, I think it's important to note that, despite 2 and the transitory impact of the timing that you mentioned, with respect.

The capital placements, and that alone was nearly a 400 basis point impact for surgical.

The surgical business grew 5% sequentially in the second quarter, and more importantly, we saw great traction in ultrasonics with our leading indicators from our investments, including new accounts, new users, capital placements, and accelerated sequential growth with disposable, so, we're really looking forward to the second half of the year, and in BGFfo, we're constantly.

Managing our business with operating discipline to drive profitable growth, and to that end we took some proactive actions in the channel in the second quarter.

That had a temporary impact on our performance, but there we also saw in Q2 very positive traction with new large account acquisitions and early penetration with the colleges that we've recently won, which gives us clear line of sight, to acceleration in the back half of the year, so again, a lot, a lighter reporter, lessen our expectations for known reasons, and part of that was that shift in timing that you alluded to, and we fully expect to see, a strong acceleration for our surgical business in the back half of the year.

And then just last for me Rob, if I can sneak one more in, appreciate all the context there, I know you won't, kind of specifically, comment on the strategic alternatives process, but maybe could you just help us contextualize it just a little bit as far as kind of, where we are, is this kind of, is this fresh, is this kind of brand new, or is this something we've been kinda of working on in the background before announcing it publicly here over the course of the quarter.

Yeah, thanks for that question, Chase.

So, as mentioned, we made the announcement today, given the unsolicited acquisition proposal that we received along with multiple expressions of interest, and, beyond that, we can't provide a lot of detail, beyond what we've already shared, but, I will say we continue to be really excited about our significant progress and about the enormous potential ahead, and we have a lot of confidence that the committee, that I mentioned is committed to evaluating.

The full range of options to maximize shareholder value, so, we'll leave it at that for now and,

We'll keep you updated on anything that we can as time goes on.

Thank you, Rob.

Thank you.

And again, to ask a question, press star 1 on your telephone keypad.

Our next question will come from the line of Larry Solo with CJS Securities, please go ahead.

Great, thanks, and, good morning, everybody, I guess, give us a little more color, Rob, on PRP and PNS, and it doesn't sound like you're ready to give us any numbers, but I, it sounds like that, 2% of 12 million number, it sounds like you're headed in the right direction there, maybe just a little color just on customer reception, just early on anecdotally, how things are going, and I guess, particularly on PRP, I guess it sounds like you, you're building some app.

Replacements, which will drive more sales too in the back half of the year.

Yeah, thanks Larry, great question, so I'll I'll start off with PRP, and, like we're really encouraged by what we saw in Q2, including velocity of new customers, accelerated capital placements, you mentioned there, both an acceleration and an increase in the size of our reorders, all of which further validated the market opportunity in front of us, with our differentiated technology, and I'll also point out that we're really starting to leverage our established HA.

Commercial team from PRP in a very synergistic way, and that not only makes this a good profitability driver for Viventis, but, I think it's also important to highlight that AA is helping us win PRP and PRP is now helping us win new HA business, so it's very exciting, and we're looking forward to turning this business into a strong growth driver for Baoventus and the back half of this year, and beyond.

I'll touch on PNS briefly too, since you mentioned it.

It's, we're really excited about what we saw in PNS and Q2 as well, it included an expansion of our PNS team, an acceleration of new customers and new trials and a great conversion rate to new implants, and we're receiving really positive feedback from the market.

And, when it comes to PNS stuff, it's roughly a $200 million dollar market today, could reach $5 million over the next handful of years, and we're confident that our, highly differentiated technology and our go to market strategy positions us very well to scale this business to over $100 million as to the other part of your question, yeah, we, as expected, still tracking towards the 200 basis points, for this year, so again, really looking forward to the back half for both PRP and PNS and.

The years beyond.

Great, if I could just follow-up question from Mark, sales growth, 5%, you mentioned 5% in the first half, and even actually grew 12%, which shows some margin expansion, curious, I know when we started the year, with the investments, enhance investments into the business, we thought EBITDA would be roughly flat-ish on the margin basis, is that still your, assumption because, I think sales growth you mentioned was a little bit less than expected, but you still had some nice.

Margin expansion there, any thoughts on that as we look into the back half?

Thanks.

Yeah, thanks for the question, feel really good about our the control we have with our P&L and the pure leading gross margins that we have overall our expectations, as we mentioned in our prepared remarks are, pretty consistent with what we communicated, for the full year around the 20%,

QQD down margin was 23%, so it's just a reflection of the powerful, P&L that we have and the ability to control it, but, with those really strong performance numbers, we are continuing to invest in our growth drivers, as we mentioned in the beginning of the year, we had highlighted that $13 million of investment, it's actually going to be a little bit more than that, as we go into the back half of the year, PS will get the majority of those drivers because of, how Rob just articulated the confidence of

We have in that product and our ability to be successful there, so we'll continue to invest in the second half, will be more investments into the second half than there was in the first half, and I'm very confident about, the team's ability to provide a return on investment for those.

Right, thanks, appreciate it.

Our next question will come from the line of Caitlin Roberts with Canocord Genuity, please go ahead.

Hi, thanks so much for taking the question.

I think just starting with estrogen, maybe a little bit more color on the change in customer mix and, any more color that you guys have on the CMS pricing reversal and how that fits into your expectations.

Thank you.

Sure, Caitlin, this is Rob, I'll provide you, with some insights on that,

First, yeah, we saw volume grow in the quarter, we saw a shift for the quarter in the customer pair mix, with fewer medical Medicare orders, and, so a little bit lighter, quarter, but teams on top of it doing a nice job of growing volume and still see oxygen growing low to mid single-digits in the back half of the year, well, as driving great profit cash flow for the company, on the CMS part of your question, while it was one of

Was initially announced, we communicated that it was not a material change, so we're pleased to see the reversal, and we don't see that as a material change either.

And then the PNF portfolio and potential data generation, are you thinking about, data generation going forward and have, surgeons in the early days been focusing on that as a point for you guys to work on.

Yeah, thanks, and just to clarify, I think what you're referring to is the evidence, generation, and, yeah, that's been a part of our plan, and we continue to pursue that, just to further augment our differentiation in the space, what we're seeing initially, in the market is a very strong reception to our technology, given its differentiation, but it's natural for us to continue to develop evi evidence, just to further augment that differentiation.

The Wonderful.

Thanks so much.

Thank you, Caitlin.

And once again for any questions, press star 1 on your telephone keypad, and our next question will come from the line of Mike Pewski with Barrington Research.

Please go ahead.

Hey, good morning, and I apologize in advance because I've missed part of this call, hop in 3 calls,

EGS, did you guys walk away from some business in the quarter, and if so, did you quantify it?

Thanks.

Yeah, they they touch on it, like, we mentioned it a little bit earlier, but, look for BGS, constantly managing our business with operating discipline to drive that profitable growth, and, to your question, that's why we highlighted that we took some proactive actions in the channel, during the second quarter, that had a temporary impact on our business, so, and I also pointed out earlier that, Well, that was the case, we also saw a very positive tra traction with BGS with new account acquisitions and early penetration with accounts that we recently won, and so that would give us clear insight, clearer line of sight to acceleration in the back half.

So, sorry for the others, a little bit of repeat there, but, that's what took place in BGS in the second quarter, Michael.

Right can I just TRY to press on that a little bit, you did quantify the impact of the shift in, ultrasonics.

I mean, would you be willing to quantify how much business maybe you decided to, jettison there in BGS.

Yeah, I don't think we'll get into the details on it, Mike, but it was significant enough for us to call it out and, again, a positive traction with our leading indicators, but, that's why we made a point of mentioning that we took those actions in the quarter consciously and proactively, but want to really emphasize that the focus there was just the driving of profitable growth, same operating discipline that you've seen.

Us, take in other businesses like HA, where we mentioned that end of last year and this year as well, transparent about, our efforts to, constantly, play the long game and make sure that we have that operating discipline to drive really healthy profitable growth, so, that's why we highlighted it for the quarter.

Okay, and, again, apologize in advance if you covered this in the 1st 5-7 minutes of the call, but, I, I'm just curious on the strategic review, to the extent you can,

I'm just curious, has the PA, the PNS asset, and what you guys have sort of, been able to do there in terms of the regulatory approvals in the very early days.

Has that been a significant factor, do you believe, in the, current stra strategic review.

Thanks.

Yeah, thanks for the question, so we touched on it briefly, before you were able to join, and, so I won't go over those details again, I think to your specific question, but we have a really, strong business overall, we've made a ton of progress and we have enormous potential ahead, I say we, overall we have strength, we have momentum, and we have potential, and it's natural that that gets, attention from others.

PS is a really

Exciting part of the portfolio and of course there's a high valuation of the PNS space overall in the market, but we're also getting, a lot of positive feedback from the market about our overall business when you look at year-to-date, what Mark mentioned earlier, 5% growth overall just for this year, 12% Ita, 24% in EPS growth, debt pay down of 46 million, now lower than 2x large with line sight to, 1.5, and so again, just tremendous strength.

Momentum, and potential, and of course, what we're building in PNS is a really exciting part of the overall company.

All right, very good, thank, thanks guys, appreciate it.

Thank you.

And that concludes the question-and-answer session, I'll hand the call back over to Rob Claypool for any closing comments.

All right, thanks everyone for your interest in Bioventis, once again, we delivered solid results in the second quarter, and are confident in our ability to deliver above market revenue growth, increase earnings, and accelerate cash flow to create significant shareholder value.

This concludes today's call.

Thank you all for joining.

You may now disconnect.