AxoGen, Inc. (NASDAQ:AXGN) Q3 2023 Earnings Call Transcript

Unidentified Analyst: Super helpful. Thanks very much.

Operator: Thank you. Our next question is from the line of Caitlin Cronin with Canaccord Genuity. Please proceed with your questions.

Caitlin Cronin: Hi, everyone. Good morning and congrats on a great quarter. Just maybe to start touching on core accounts, it became a larger portion of your business this quarter. Historically, it’s only been 60%, now 65%. Do you really expect this to keep growing and has this really been the result of middle adopter growth or more penetration of different types of surgeons within an account? Thank you.

Karen Zaderej: Yes. Thank you. We’re very excited that we’re seeing faster growth in both emergent and scheduled procedures in our core accounts. And that’s been our strategy is we think there’s a significant opportunity to grow that business in those core accounts. That’s where we’ve got a lot of upside potential, and it is all of those. Now, the majority of our – the vast majority of our core accounts have both some business in trauma and some business in scheduled cases. But we see opportunity to continue to expand both of those and continue to drive that deeper adoption. And that deeper adoption really by definition means we’re moving into those middle adopters and becoming the standard of care in those accounts. That’s what our goal is. And then continue to grow the number of core accounts where we become the standard of care. So we think that strategy has been effective and we’re happy to see that percentage increase.

Caitlin Cronin: Awesome. And then just a quick one on breast. You noted a higher number of surgeons you expect to train this year. Are you starting to see revenue contribution from this new opening of procedures in that segment?

Karen Zaderej: Yes, it’s been exciting to see the expansion into the implant-based procedures. This is the opportunity for sensationists, we’re ending breast cancer awareness month has been a meaningful topic of conversation among women who have breast cancer. And I think the realization that this is an important outcome for women has continued to disperse significant interest in the procedure. We’ve had standing room only interest in our training programs for the implant-based procedures, and we think this will continue to be an impactful part of our overall growth in the scheduled procedures.

Caitlin Cronin: Thank you.

Operator: [Operator Instructions] Our next question comes from the line of Dave Turkaly with JMP Securities. Please proceed with your questions.

Dave Turkaly: Hi. Good morning. Karen, maybe on the Avive Plus, the resorbable – does anybody else have a resorbable product I’m just curious, were surgeons asking for this, I – kind of wondering exactly where it will be used specifically.

Karen Zaderej: Yes, actually, if you remember, we had an absorbable product prior that was very well received by the market, and we voluntarily withdrew that as some FDA changes in classification of products. I didn’t tell you that I regularly receive phone calls from surgeons who were saying that they would like a replacement back for that product, that it was an important part of the overall treatment algorithm. It’s not going to be used, it’s a very niche product. It’s not going to be used in all procedures, but in those procedures where there is a trauma that can cause damage to the surrounding tissue of it can be important to have a temporary or a resorbable soft tissue matrix that provides protection during the critical healing phase. And surgeons are very interested in having this as a part of their algorithm, in addition to the offerings we have with AxoGen. And so we are looking forward to getting this launched in the first quarter.

Dave Turkaly: Great. And maybe one follow-up for Pete. Can you give us from a modeling standpoint, what you think interest expense is going to look like, maybe just on a quarterly basis moving ahead, given that capitalization is now rolling off?

Pete Mariani: Yes. I think with the structure of our debt, you’ll see anywhere from a 1.7 million to maybe a 1.9 million a quarter. Actually, yes, but that’s interest expense. And then we’ll see interest income as well off the cash that we have of a few hundred thousand.