Bioventus Inc. (NASDAQ:BVS) is a global medical device company focused on developing and commercializing clinically differentiated, cost-efficient, and minimally invasive treatments that engage and enhance the body's natural healing process. The company operates through two reportable segments, U.S. and International, and its portfolio of products is grouped into three businesses: Pain Treatments, Surgical Solutions, and Restorative Therapies.

Financials

In the fiscal year 2023, Bioventus reported annual net income of -$156,230,000, annual revenue of $512,345,000, annual operating cash flow of $15,344,000, and annual free cash flow of $7,982,000. The company's first quarter 2024 results demonstrate significant improvements across its business.

Revenue in the first quarter of 2024 was $129,457,000, representing an 8.7% increase compared to the prior year period. Adjusting for the divestiture of the Wound Business, organic revenue growth was 15% in the quarter. Gross profit increased 19.6% to $88,380,000, with gross margin expanding 620 basis points to 68.3%. Adjusted EBITDA grew 33.5% to $22,623,000, with the adjusted EBITDA margin expanding 310 basis points to 17.5%.

Business Overview

Pain Treatments

The company's Pain Treatments business, which includes non-surgical joint pain injection therapies and peripheral nerve stimulation products, delivered 22.3% revenue growth in the quarter, driven by strong volume growth in the Durolane single-injection therapy. Durolane now accounts for over two-thirds of the company's total HA revenue, and Bioventus expects high single-digit to double-digit growth in its HA business for the full year 2024.

Surgical Solutions

Bioventus' Surgical Solutions business, which includes bone graft substitutes and ultrasonic products, also accelerated to 16.2% revenue growth in the first quarter, with double-digit growth in both ultrasonics and bone graft substitutes. The company is optimistic about the long-term potential of its ultrasonic technology, which it believes can become the standard of care due to the improved control and versatility it provides surgeons.

Restorative Therapies

In the Restorative Therapies business, revenue declined 16.0% due to the divestiture of the Wound Business, which accounted for 19 percentage points of the decline. On an organic basis, Restorative Therapies increased 3%, driven by growth in the Exogen Bone Stimulation System.

International Segment

Bioventus' International segment grew 0.6% in the first quarter, with growth in Durolane offset by the timing of shipments for ultrasonics. The company remains optimistic about the long-term growth potential of its International business and expects strong and sustainable double-digit growth as it builds out its presence in targeted products and geographies.

Recent Developments

Bioventus' management team is focused on three key priorities: accelerating revenue growth, improving profitability, and enhancing the company's liquidity position. The company has made significant progress on these fronts, with revenue growth acceleration, margin expansion, and a reduction in net leverage.

Outlook

Looking ahead, Bioventus has updated its full-year 2024 guidance. The company now expects net sales to be in the range of $535 million to $550 million, up from the prior guidance of $520 million to $535 million. Adjusted EBITDA is now expected to be between $94 million and $99 million, up from the previous guidance of $89 million to $94 million. Adjusted earnings per share are now expected to be $0.25 to $0.33, up from the prior guidance of $0.12 to $0.20.

Conclusion

Bioventus' strong execution in the first quarter, coupled with its focus on accelerating revenue growth, improving profitability, and enhancing liquidity, positions the company well for continued success. The company's industry-leading gross margins, combined with its revenue growth initiatives, provide a solid foundation for sustained EBITDA and operating margin expansion. As Bioventus continues to reduce its debt and generate increased free cash flow, the company's valuation multiple is expected to align with its peers, translating into significant shareholder value creation.