DURHAM, NC – November 9, 2021 – Bioventus Inc. (Nasdaq: BVS) (“Bioventus” or “the Company”), a global leader in innovations for active healing, today reported financial results for three and nine months ended October 2, 2021.

Q3 Financial Summary & Recent Highlights:

  • Net Sales of $108.9 million, up $23.0 million, or 26.8%, year-over-year, comprising:
    • Net Sales from legacy Bioventus Inc. of $98.1 million, representing organic revenue growth* of 14.2% year-over-year, and
    • Net Sales from the acquisition of Bioness Inc. of $10.8 million.
  • Net Loss of ($2.3) million, compared to Net Income of $8.0 million in prior year.
  • Adjusted EBITDA* of $21.3 million, compared to $23.1 million in prior year.
  • Updates full-year 2021 Net Sales guidance to $425-$430 million, up from $405-$415 million, driven by strong Q3 results, Q4 expectations, and the inclusion of the Company’s recent acquisition of Misonix Inc.

“During the third quarter, we continued building momentum across our diversified portfolio as the Bioventus team demonstrated strong execution and resiliency, driving double-digit organic growth despite some pandemic related headwinds in our Bone Graft Substitutes business,” stated Ken Reali, Bioventus’ chief executive officer.  “The strong performance of our organization has enabled us to again raise our full-year revenue guidance.”

 Mr. Reali continued, “We are on-track to complete the integration of Bioness in the first quarter of 2022 and deliver on our cost synergy targets over the course of the next year.  Finally, we are excited to have closed our acquisition of Misonix and to welcome the Misonix employees to Bioventus.  This is a significant milestone that will enable multiple growth levers within the combined business.  Our new Bioventus organization will allow us to go deeper with our customers leveraging our infrastructure and driving significant shareholder value over the near and medium term.”

 Third Quarter 2021 Financial Results:

The following table represents net sales by geographic region, and by vertical, for the three months ended October 2, 2021 and September 26, 2020, respectively:

  Three Months Ended   Change
($ thousands, except for percentage) October 2, 2021   September 26, 2020   $   %
By Geographic Region:              
U.S. $ 99,162     $ 78,886     $ 20,276     25.7 %
International 9,728     7,022     2,706     38.5 %
Net Sales $ 108,890      $ 85,908      $ 22,982      26.8  %
By Vertical:              
Pain Treatments and Joint Preservation $ 60,635     $ 48,781     $ 11,854     24.3 %
Restorative Therapies 30,475     20,000     10,475     52.4 %
Bone Graft Substitutes 17,780     17,127     653     3.8 %
Net Sales $ 108,890      $ 85,908      $ 22,982      26.8  %

Net sales of $108.9 million compared to $85.9 million for the third quarter of 2020, an increase of $23.0 million, or 26.8%, year-over-year, primarily due to acquisitions, strong commercial execution and ongoing recovery from the COVID-19 pandemic. International net sales for the third quarter of 2021 increased 38.5% year-over-year, or 34.7% on a constant currency* basis.

Gross profit was $79.1 million, or 72.6% of net sales, compared to $62.5 million, or 72.7% of net sales, for the third quarter of 2020, an increase of $16.6 million, or 26.6%, year-over-year. Non-GAAP gross profit*  was $85.7 million, or 78.7% of net sales, compared to $67.9 million, or 79.1% of net sales, for the third quarter of 2020, an increase of $17.8 million, or 26.1%, year-over-year.

Operating loss was ($1.0) million, compared to operating income of $6.9 million for the third quarter of 2020, a decrease of ($8.0) million, or (115.1%), year-over-year. Operating margin was (1.0%) of net sales, compared to 8.1% of net sales for the third quarter of 2020.

Non-GAAP operating income* was $15.1 million, compared to $14.7 million for the third quarter of 2020, an increase of $0.3 million, or 2.3%, year-over-year. Non-GAAP operating margin* was 13.8% of net sales, compared to 17.1% of net sales for the third quarter of 2020.

Net Loss was ($2.3) million compared to net income of $8.0 million for the third quarter of 2020, a change of ($10.2) million or (128.5%), year-over-year.

Adjusted EBITDA* was $21.3 million, compared to $23.1 million for the third quarter of 2020, a decrease of ($1.8) million, or (7.7%), year-over-year.

Non-GAAP net income* was $13.8 million, compared to $12.6 million, for the third quarter of 2020, an increase of $1.3 million, or 10.1%, year-over-year.

As of October 2, 2021, the Company had $80.9 million in cash and cash equivalents and $177.4 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 $425 million to $430 million, up approximately 32% to 34% year-over-year. The full year 2021 net sales guidance range is comprised of:
    • Net sales from legacy Bioventus Inc. of $378.1 million to $382.1 million, representing organic revenue growth* in the range of approximately 18% to 19% year-over-year, and,
    • Net sales from the recent acquisitions of Bioness Inc and Misonix Inc of approximately $46.9 million to $47.9 million.
  • Net income of $1.8 million to $3.7 million, compared to net income of $14.7 million for the twelve months ended December 31, 2020.
  • Non-GAAP net income* of $72.1 million to $75.6 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 its 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.

Third 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 8:30 a.m. Eastern Time on November 9, 2021. Those who would like to participate may dial 844-945-2085 (442-268-1266 for international callers) and provide access code 9652759.

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 November 8, 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 treatments, restorative therapies and surgical solutions. 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; the benefits of and expected completion of integration efforts for the Bioness and Misonix acquisitions; 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 updated in our Quarterly Report on Form 10-Q for the three months ended October 2, 2021 and as such factors may be further 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 October 2, 2021 and December 31, 2020
(Amounts in thousands, except share amounts) (unaudited)

  October 2, 2021   December 31, 2020
Assets      
Current assets:      
Cash and cash equivalents $ 80,917     $ 86,839  
Accounts receivable, net 105,442     88,283  
Inventory 36,565     29,120  
Prepaid and other current assets 23,154     7,552  
Total current assets 246,078     211,794  
Restricted cash 50,000      
Property and equipment, net 10,297     6,879  
Goodwill 52,885     49,800  
Intangible assets, net 248,794     191,650  
Operating lease assets 16,938     14,961  
Deferred tax assets 481      
Investment and other assets 29,317     19,382  
Total assets $ 654,790     494,466  
Liabilities and Members’ Equity      
Current liabilities:      
Accounts payable $ 10,897     $ 4,422  
Accrued liabilities 107,554     88,187  
Accrued equity-based compensation 10,875     11,054  
Current portion of long-term debt 15,000     15,000  
Current portion of contingent consideration 13,386      
Other current liabilities 2,993     3,926  
Total current liabilities 160,705     122,589  
Long-term debt, less current portion 162,437     173,378  
Accrued equity-based compensation, less current portion     29,249  
Deferred income taxes 47,687     3,362  
Contingent consideration, less current portion 30,906      
Other long-term liabilities 22,558     21,728  
Total liabilities 424,293     350,306  
Stockholders’ and Members’ Equity:      
Members’ equity     144,160  
Preferred stock, $0.001 par value, 10,000,000 shares authorized, 0 shares issued      
Class A common stock, $0.001 par value, 250,000,000 shares authorized,

41,097,292 shares issued and outstanding

41      
Class B common stock, $0.001 par value, 50,000,000 shares authorized,

15,786,737 shares issued and outstanding

16      
Additional paid-in capital 158,480      
Accumulated deficit (6,238)      
Accumulated other comprehensive income 204      
Total stockholders’ equity attributable to Bioventus Inc. and members’ equity 152,503     144,160  
Noncontrolling interest 77,994      
Total stockholders’ and members’ equity 230,497     144,160  
Total liabilities and stockholders’ and members’ equity $ 654,790     $ 494,466  

 

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

  Three Months Ended   Nine Months Ended
  October 2, 2021   September 26, 2020   October 2, 2021   September 26, 2020
Net sales $ 108,890     $ 85,908     $ 300,484     $ 222,570  
Cost of sales (including depreciation and amortization of $6,637 and $5,477, $17,491 and $16,076 respectively) 29,821     23,444     85,546     62,521  
Gross profit 79,069     62,464     214,938     160,049  
Selling, general and administrative expense 69,636     50,295     173,372     131,104  
Research and development expense 6,153     3,569     11,936     8,311  
Restructuring costs 1,798         1,798      
Change in fair value of contingent consideration 651         1,292      
Depreciation and amortization 1,878     1,667     5,655     5,305  
Impairment of variable interest entity assets         5,674      
Operating (loss) income (1,047)     6,933     15,211     15,329  
Interest expense 1,347     1,880     152     7,095  
Other expense (income) 757     (3,285)     2,821     (4,539)  
Other expense (income) 2,104     (1,405)     2,973     2,556  
(Loss) income before income taxes (3,151)     8,338     12,238     12,773  
Income tax (benefit) expense (882)     373     759     302  
Net (loss) income (2,269)     7,965     11,479     12,471  
Loss attributable to noncontrolling interest 1,198     492     8,260     1,164  
Net (loss) income attributable to Bioventus Inc. $ (1,071)     $ 8,457     $ 19,739     $ 13,635  
               
Net (loss) income $ (2,269)     $ 7,965     $ 11,479     $ 12,471  
Other comprehensive (loss) income, net of tax              
Change in foreign currency translation adjustments (366)     943     (1,225)     687  
Comprehensive (loss) income (2,635)     8,908     10,254     13,158  
Comprehensive loss attributable to noncontrolling interest 1,300     492     8,182     1,164  
Comprehensive (loss) income attributable to Bioventus Inc. $ (1,335)     $ 9,400     $ 18,436     $ 14,322  
               
Loss per share of Class A common stock(1):              
Basic and diluted $ (0.03)         $ (0.15)      
Weighted-average shares of Class A common stock outstanding(1):              
Basic and diluted 41,837,581         41,816,706    
               
(1) Per share information for the nine months ended October 2, 2021 represents loss per share of Class A common stock and weighted-average shares of Class A common stock outstanding from February 16, 2021 through October 2, 2021, the period following Bioventus Inc.’s initial public offering and related transactions described in Note 1. Organization and Note 7. Earnings per share within the Notes to the Unaudited Condensed Consolidated Financial Statements in the Company’s Quarterly Report on Form 10-Q for the quarter ended October 2, 2021.

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

  Three Months Ended   Nine Months Ended
  October 2, 2021   September 26, 2020   October 2, 2021   September 26, 2020
Operating activities:              
Net (loss) income $ (2,269)     $ 7,965     $ 11,479     $ 12,471  
Adjustments to reconcile net income to net cash provided by operating activities from continuing operations:              
Depreciation and amortization 8,522     7,276     23,185     21,789  
Equity-based compensation 5,938     7,390     (10,621)     619  
Change in fair value of contingent consideration 651         1,292      
Change in fair value of Equity Participation Rights         (2,774)     (788)  
Change in fair value of interest rate swap (81)     (21)     (1,391)     1,980  
Impairments related to variable interest entity         7,043      
Other, net 404     (205)     (210)     823  
Changes in working capital (2,578)     (1,164)     (18,129)     9,858  
Net cash from operating activities – continuing operations 10,587     21,241     9,874     46,752  
Net cash from operating activities – discontinued operations     (400)         (400)  
Net cash from operating activities 10,587     20,841     9,874     46,352  
Investing activities:              
Purchase of Bioness, Inc., net of cash acquired (1,000)         (46,790)      
Investments (11,124)     (16,630)     (11,124)     (16,630)  
Purchase of property and equipment (1,926)     (1,281)     (4,568)     (2,331)  
Other 864     152          
Net cash from investing activities – continuing operations (13,186)     (17,759)     (62,482)     (18,961)  
Net cash from investing activities – discontinued operations             172  
Net cash from investing activities (13,186)     (17,759)     (62,482)     (18,789)  
Financing activities:              
Proceeds from issuance of Class A common stock sold in initial public offering, net of underwriting discounts and offering costs         107,777      
Proceeds from issuance of Class A and B common stock 417         747      
Borrowing on revolver             49,000  
Payments on revolver     (49,000)         (49,000)  
Payments on long-term debt (3,750)     (2,500)     (11,250)     (5,000)  
Refunds (distributions) – members (996)     (5,616)     (183)     (14,691)  
Other, net (17)         (28)      
Net cash from financing activities (4,346)     (57,116)     97,063     (19,691)  
Effect of exchange rate changes on cash (206)     272     (377)     86  
Net change in cash, cash equivalents and restricted cash (7,151)     (53,762)     44,078     7,958  
Cash, cash equivalents and restricted cash at the beginning of the period 138,068     126,240     86,839     64,520  
Cash, cash equivalents and restricted cash at the end of the period $ 130,917     $ 72,478     $ 130,917     $ 72,478  

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, restructuring costs, loss on debt retirement and modification, 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, restructuring costs, change in fair value of contingent consideration, COVID-19 expense, 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, restructuring costs, change in fair value of contingent consideration, COVID-19 expense, 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, restructuring costs, change in fair value of contingent consideration, loss on debt retirement and modification, 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, restructuring costs, change in fair value of contingent consideration, acquisition and integration costs  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)

  Three Months Ended   Nine Months Ended
($, thousands) October 2, 2021   September 26, 2020   October 2, 2021   September 26, 2020
Net (loss) income $ (2,269)     $ 7,965      $ 11,479      $ 12,471   
Depreciation and amortization(a) 8,522     7,276     23,185     21,789  
Income tax (benefit) expense (882)     373     759     302  
Interest expense 1,347     1,880     152     7,095  
Equity compensation(b) 5,938     7,390     (10,621)     619  
Restructuring costs(c) 1,798         1,798      
COVID-19 benefits, net(d)     (3,057)         (4,158)  
Succession and transition charges(e)     771     344     5,345  
Foreign currency impact(f) 17     (98)     (47)     (58)  
Acquisition and integration costs(g) 1,575         6,604      
Inventory step-up costs(h)         2,106      
Equity loss in unconsolidated investments(i) 419         1,320      
Change in fair value of contingent

consideration(j)

651         1,292      
Impairments related to variable interest entity(k)         7,043      
Other non-recurring costs(l) 4,199     601     6,858     884  
Adjusted EBITDA $ 21,315      $ 23,101      $ 52,272      $ 44,289   
  • Includes for the three months ended October 2, 2021 and September 26, 2020 and the nine months ended October 2, 2021 and September 26, 2020, respectively, depreciation and amortization of $6,637, $5,477, $17,491 and $16,076 in cost of sales and $1,878, $1,667, $5,655 and $5,305 presented in the consolidated statements of operations and comprehensive (loss) income with the balance in research and development.
  • The three and nine months ended October 2, 2021 primarily includes equity-based compensation expense (income) resulting from awards granted under the Company’s current equity based compensation plan (2021 Plan) and compensation costs. The nine months ended October 2, 2021 also includes the change in fair market value of accrued equity-based compensation related to the BV LLC Phantom Profits Interest Plan (Phantom Plan) due to expected pricing with our IPO. Equity compensation expenses for the three and nine months ended September 26, 2020 represents compensation from the Company’s management incentive plan and Phantom Plan as well as the change in fair market value of accrued equity-based compensation related to the plans due to the impact of the COVID-19 pandemic on our business.
  • Costs incurred as a result of adopting a restructuring plan for businesses recently acquired to reduce headcount, reorganize management structure and consolidate certain facilities.
  • Represents income resulting from the Coronavirus Aid, Relief and Economic Security (“CARES”) Act offset by additional cleaning and disinfecting expenses and contract termination fees for canceled events.
  • Primarily represents costs related to the CEO transition.
  • Foreign currency impact represents realized and unrealized gains and losses from fluctuations in foreign currency and is included within other (income) loss in the consolidated statements of operations and comprehensive (loss) income.
  • Represents costs incurred to acquire and integrate Bioness.
  • Amortization of the inventory step-up associated with the Bioness acquisition.
  • Represents CartiHeal equity investment losses.
  • Represents changes in fair value of contingent consideration associated with the Bioness acquisition.
  • Represents loss on impairment on Harbor’s long-lived assets, and the Company’s investment in Harbor.
  • Other non-recurring costs primarily includes charges associated with strategic transactions, such as potential acquisitions and public company preparation costs, primarily accounting and legal fees.
 

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

  Three Months Ended   Nine Months Ended
($, thousands) October 2, 2021   September 26, 2020   October 2, 2021   September 26, 2020
Net (loss) income $ (2,269)     $ 7,965      $ 11,479      $ 12,471   
Depreciation & amortization included in cost of goods sold 6,637     5,477     17,491     16,076  
Amortization included in operating expenses 1,241     1,408     3,813     4,537  
Restructuring costs(a) 1,798         1,798      
Change in fair value of contingent consideration 651         1,292      
COVID-19 expense(b)     130         277  
COVID-19 income(c)     (3,187)         (4,435)  
Succession and transition charges (d)     771     344     5,345  
Acquisition and Integration costs(e) 1,575         6,604      
Inventory step-up costs(f)         2,106      
Impairments related to variable interest entity(g)         7,043      
Other non-recurring items(h) 4,199         6,858      
Non-GAAP Net income $ 13,832      $ 12,564      $ 58,828      $ 34,271   
  • Costs incurred as a result of adopting a restructuring plan for businesses recently acquired to reduce headcount, reorganize management structure and consolidate certain facilities.
  • Additional cleaning and disinfection expenses and contract termination fees for canceled events included in operating expenses.
  • Represents income resulting from the Coronavirus Aid, Relief and Economic Security (“CARES”) Act.
  • Primarily represents costs related to the CEO transition.
  • Represents costs incurred to acquire and integrate Bioness.
  • Amortization of the inventory step-up associated with the Bioness acquisition.
  • Represents loss on impairment on Harbor’s long-lived assets, and the Company’s investment in Harbor.
  • Other non-recurring costs primarily includes charges associated with strategic transactions, such as potential acquisitions and public company preparation costs, primarily accounting and legal fees.

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

  Three Months Ended October 2, 2021
Weighted average Class A Common Stock outstanding, basic & diluted 41,837,581
Loss per share of Class A Common Stock (basic & diluted) $ (0.03)  
Depreciation and amortization included in cost of goods sold 0.12
Amortization included in operating expenses 0.02
Restructuring costs(a) 0.03
Change in fair value of contingent consideration 0.01
Acquisition and Integration costs(b) 0.03
Other non-recurring items(c) 0.07
Non-GAAP Earnings per share of Class A Common Stock (basic & diluted) $ 0.25   
  • Costs incurred as a result of adopting a restructuring plan for businesses recently acquired to reduce headcount, reorganize management structure and consolidate certain facilities.
  • Costs related to the Bioness acquisition.
  • Other non-recurring primarily consists of charges associated with potential strategic transactions, such as potential acquisitions.

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

  Three Months Ended   Nine Months Ended
($, thousands) October 2, 2021   September 26, 2020   October 2, 2021   September 26, 2020
Gross Profit $ 79,069   $ 62,464   $ 214,938   $ 160,049
Gross Margin 72.6  %   72.7  %   71.5  %   71.9  %
Depreciation and Amortization included in cost of goods sold 6,637   5,477   17,491   16,076
Acquisition costs in cost of goods sold     2,106  
Non-GAAP Gross Profit $ 85,706   $ 67,941   $ 234,535   $ 176,125
Non-GAAP Gross Margin 78.7  %   79.1  %   78.1  %   79.1  %

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

  Three Months Ended   Nine Months Ended
($, thousands) October 2, 2021   September 26, 2020   October 2, 2021   September 26, 2020
Operating (loss) income $ (1,047)     $ 6,933      $ 15,211      $ 15,329   
Operating Margin (1.0  %)   8.1  %   5.1  %   6.9  %
Depreciation and Amortization included in cost of goods sold 6,637   5,477   17,491     16,076
Amortization included in operating expenses 1,241   1,408   3,813     4,537
Restructuring costs(a) 1,798     1,798    
Change in fair value of contingent consideration 651     1,292    
COVID-19 expense(b)   130     277
Succession and transition charges(c)   771   344     5,345
Acquisition and Integration costs(d) 1,575     6,604    
Inventory step-up costs(e)     2,106    
Impairments related to variable interest entity(f)     5,674    
Other non-recurring items(g) 4,199     6,858    
Non-GAAP Operating Income $ 15,054      $ 14,719   $ 61,191      $ 41,564
Non-GAAP Operating Margin 13.8  %   17.1  %   20.4  %   18.7  %
  • Costs incurred as a result of adopting a restructuring plan for businesses recently acquired to reduce headcount, reorganize management structure and consolidate certain facilities.
  • Additional cleaning and disinfection expenses and contract termination fees for canceled events included in operating expenses.
  • Primarily represents costs related to the CEO transition.
  • Costs related to the Bioness acquisition.
  • Amortization of the inventory step-up associated with the Bioness acquisition.
  • Represents loss on impairment on Harbor’s long-lived assets.
  • Other non-recurring primarily consists of charges associated with potential strategic transactions, such as potential acquisitions.

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

  Three Months Ended   Nine Months Ended
($, thousands) October 2, 2021   September 26, 2020   October 2, 2021   September 26, 2020
Operating Expenses $ 80,116      $ 55,531      $ 199,727      $ 144,720   
Amortization included in operating expenses 1,241     1,408     3,813     4,537  
Restructuring costs(a) 1,798         1,798      
Change in fair value of contingent consideration 651         1,292      
COVID-19 expense(b)     130         277  
Succession and transition charges(c)     771     344     5,345  
Acquisition and Integration costs(d) 1,575         6,604      
Impairments related to variable interest entity(e)         5,674    
Other non-recurring items(f) 4,199         6,858      
Non-GAAP Operating Expenses $ 70,652      $ 53,222      $ 173,344      $ 134,561   
  • Costs incurred as a result of adopting a restructuring plan for businesses recently acquired to reduce headcount, reorganize management structure and consolidate certain facilities.
  • Additional cleaning and disinfection expenses and contract termination fees for canceled events included in operating expenses.
  • Primarily represents costs related to the CEO transition.
  • Costs related to the Bioness acquisition.
  • Represents loss on impairment on Harbor’s long-lived assets.
  • Other non-recurring primarily consists of charges associated with potential strategic transactions, such as potential acquisitions.

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

($, thousands) 2021 Guidance

Low

  2021 Guidance

High

  Twelve

Months Ended

December 31,

2020

Net Sales $ 425,000   $ 430,000   $ 321,161
Cost of Sales 123,700   125,600   87,642
Gross Profit 301,300   304,400   233,519
Gross Margin 70.9  %   70.8  %   72.7  %
Depreciation and Amortization included in

cost of goods sold

25,200   26,000   21,169
Acquisition costs in cost of goods sold 4,100   4,100  
Non-GAAP Gross Profit $ 330,600   $ 334,500   $ 254,688
Non-GAAP Gross Margin 77.8  %   77.8  %   79.3  %

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

($, thousands) 2021 Guidance

Low

  2021 Guidance

High

  Twelve

Months Ended

December 31,

2020

Net income $ 1,800      $ 3,700      $ 14,722   
Depreciation and Amortization included in

cost of goods sold

25,600     26,400     21,168  
Amortization included in operating expenses 5,500     5,500     5,868  
Loss on debt retirement and modification 2,000     2,000      
COVID-19 expense         576  
COVID-19 income         (4,699)  
Succession & Transition 300     300     5,609  
Restructuring costs 2,800     3,000     563  
Acquisition and Integration costs 13,100     13,100      
Inventory step-up costs 4,100     4,100      
Change in fair value of contingent consideration 1,900     2,000      
Impairments related to variable interest entity 7,000     7,000      
Other non-recurring costs (a) 8,000     8,500     3,590  
Non-GAAP Net income $ 72,100      $ 75,600      $ 47,397   
  • Represents anticipated charges in connection with potential strategic investments.

Reconciliation of Guidance Range for Net Income to Adjusted EBITDA

for the twelve months ending December 31, 2021

($, thousands) 2021 Guidance

Low

  2021 Guidance

High

  Twelve

Months Ended

December 31,

2020

Net Income $ 1,800      $ 3,700      $ 14,722   
Depreciation and amortization 33,700     34,500     28,643  
Loss on debt retirement and modification 2,000     2,000      
Income tax expense 2,400     2,900     1,192  
Interest expense 2,800     3,000     9,751  
Equity compensation (3,900)     (3,900)     10,103  
COVID-19 benefits, net     (4,123)  
Succession and transition charges 300     300     5,609  
Restructuring costs 2,800     3,000     563
Foreign currency impact         (117)  
Equity loss in unconsolidated investments 1,800     1,800     467  
Acquisition and Integration costs 13,100     13,100      
Inventory step-up costs 4,100     4,100      
Change in fair value of contingent consideration 1,900     2,000      
Impairments related to variable interest entity 7,000     7,000      
Other non-recurring costs (a) 8,000     8,500     5,633  
Adjusted EBITDA $ 77,800      $ 82,000      $ 72,443   
  • Represents anticipated charges in connection with potential strategic investments.

 

Investor Inquiries:
Dave Crawford
Bioventus
919-474-6787
[email protected]

Media Contact:
Thomas Hill
919-474-6715
[email protected]