Are certain products (synthetics, amniotics) being held up in the market, or are they being paid for?

No particular product is being held up. The concern for clinicians is potential clawbacks post-application upon audit, especially for products without RCTs, which are often considered investigational. This leads to a 'flight to quality' towards products with significant evidence, like Organogenesis's offerings. “The concern is postapplication upon audit, would there be a potential clawback on those products? And what we're seeing in the market is products without RCTs are at significant risk. Sometimes -- many times, they're considered investigational.”

What gives comfort for the low vs. high end of guidance, and how does this relate to Q3/Q4 pacing and market return in 2027?

The low end of guidance reflects conservative growth and share gains, less than what was experienced in Q2. The high end reflects current growth rates with small market expansion. Pacing is biased towards Q4. The company is guiding to less than current growth on the low end, and current growth with small market expansion on the high end. “So we're kind of guiding to where we are, but slightly less than the experience -- the growth experience we had in Q2. That's why we have more confidence in the low end of the range. Now the high end of the range, and I'll let Dave jump in, is basically reflecting the growth that we are seeing right now in our business with some small, what I call, market expansion at the end of the third quarter and fourth quarter.”

ORGO

Organogenesis Holdings (ORGO) Q2 FY26 earnings call: guidance and Q&A

Q: Can you elaborate on the pacing baked into Q3 and Q4 guidance?

Following strong sequential growth from Q1 to Q2, the expectation is for continued, but more modest, share gains and sequential growth. Q3 is expected to see modest growth, with a little more strength anticipated in Q4. “So our expectation is that the movement from here would be continued share gains, but more modest and obviously the growth on a sequential basis would be much more modest than what we'd anticipate or what we experienced in the first to the second quarter. So we see some modest growth into the third quarter with a little bit more strength in the fourth.”

Earnings call· Jun 2026 (Q2 FY26)· Health Care· Aug 6, 2026

Source: earnings call transcript

Executive summary

Organogenesis Holdings Inc. Q2 FY26 — Strategic Restructuring Amidst Market Contraction

Organogenesis navigated a challenging Q2 FY26 marked by significant year-over-year revenue contraction due to CMS policy changes in the skin substitute market. Despite this, the company demonstrated sequential revenue improvement and substantial market share gains in wound care unit volume. Management has implemented strategic cost reductions and is prioritizing its evidence-based portfolio and pipeline assets like Amnuvx, aiming for stabilization and future growth in a recalibrated market.

Highlights

Total revenue increased 18% quarter-over-quarter in Q2 FY26, showing sequential improvement from Q1.
Advanced Wound Care products sales increased 23% sequentially in Q2 FY26.
Wound care unit volume increased 30% quarter-over-quarter, indicating market share gains.
Restructuring efforts are expected to reduce annual operating expenses by more than $32 million.
FDA accepted the Biologic License Application for Amnuvx, setting a PDUFA target action date of April 24, 2027.

Concerns

Total revenue declined 58% year-over-year in Q2 FY26, reaching $42.8 million.
Advanced Wound Care net product revenue declined 61% year-over-year to $36.1 million.
GAAP net loss was $96.3 million in Q2 FY26, compared to $9.4 million last year, including a $30 million noncash tax expense.
Adjusted EBITDA loss was $34.4 million in Q2 FY26, compared to $3.6 million last year.
Full-year 2026 revenue guidance was lowered to $179 million to $215 million, reflecting a 62% to 68% year-over-year decline.

Guidance & targets

Category	Target	Timeline	Confidence
Total Net Revenue	$179 million to $215 million high materiality	FY26	Medium
Advanced Wound Care Net Product Revenue	$151 million to $183 million medium materiality	FY26	Medium
Surgical & Sports Medicine Net Product Revenue	$26 million to $30 million medium materiality	FY26	Medium
Grant Income	$1.9 million low materiality	FY26	High
Second Half Revenue Decline	64% to 74% year-over-year high materiality	H2 FY26	Medium
Adjusted EBITDA Loss Reduction (H2 vs H1)	nearly 60% reduction (low end) to more than 90% reduction (high end) high materiality	H2 FY26	Medium
Operating Expenses (excluding COGS) Reduction	approximately 32% year-over-year medium materiality	FY26	High
Operating Expenses (excluding COGS) Reduction (H2)	more than 40% year-over-year medium materiality	H2 FY26	High
Dermagraft Launch	mid-2028 medium materiality	CY28	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Advanced Wound Care Primary driver of the overall revenue decline year-over-year, but showed strong sequential recovery and unit volume growth, indicating market share gains. Unit volume growth QoQ: +30%PuraPly AM RCT: 170 patients, statistically significant DFU wound closure at 12 weeksPuraPly AM Amputation Rate: 20% lower overall, 40% lower above/at knee for 11,000 patientsAffinity VLU Data: Statistically significant improvements in wound closure at 12 and 16 weeks	$36.1M	-61%	+23%	—
Surgical & Sports Medicine Experienced a year-over-year decline, contributing to the overall revenue decrease.	$6.7M	-18%	—	—

Risks & headwinds

Skin substitute market contraction due to CMS policy changes Q2 FY26 and ongoing into H2 FY26

Total revenue declined 58% YoY in Q2 FY26; Advanced Wound Care sales declined 61% YoY.

Mitigation:Strategic cost reductions, focus on evidence-based portfolio, market share gains, and expansion into new markets (Amnuvx).

Slower pace of market recovery H2 FY26

Q2 FY26 revenue below expectations; full-year 2026 revenue guidance lowered to $179M-$215M (62%-68% YoY decline).

Mitigation:Implemented two restructurings to reduce operating expenses by over $32M annually; commercial team positioned for market expansion as it recalibrates.

Potential clawbacks for products without RCTs Ongoing

Clinicians are concerned about post-application audits and potential paybacks for products lacking evidence.

Mitigation:Doubling down on wound care with evidence-based products (PuraPly AM, Affinity) and increasing focus on clinical evidence with new published studies.

Dermagraft launch delay Mid-2027 to mid-2028

Launch delayed by approximately one year, from mid-2027 to mid-2028.

Mitigation:Strategic decision to preserve cash by slowing down manufacturing build-out; product still expected to launch.

What to watch in Q3 FY26

Sequential Total Revenue Growth

Q3 FY26

Current +18% QoQ in Q2 FY26

Target Continued modest sequential growth

Why it matters

Indicates the pace of market recovery and the effectiveness of the company's strategic adjustments.

So our expectation is that the movement from here would be continued share gains, but more modest and obviously the growth on a sequential basis would be much more modest than what we'd anticipate or what we experienced in the first to the second quarter. So we see some modest growth into the third quarter with a little bit more strength in the fourth.

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Q&A highlights

What gives confidence that Medicare is stabilizing the skin substitute market beyond the OPPS proposal?

Management sees month-over-month growth and clinicians becoming more comfortable with current coverage. CMS reinstating the $127.14 reimbursement rate and maintaining the tier structure (PMA, 510(k), 361) signals stability and the importance of evidence, leading to market share gains for Organogenesis.

“CMS reinstated the $127.14 reimbursement rate. I think they did that with the intention of stabilizing the market and bringing consistency to the market. They also continue to identify the tiers where they recognize PMA products and 510(k) products and the 361.”

asked by Iseult McMahon · answered by Gary Gillheeney

2 min read 5 chapters

Detailed narrative

Impact of CMS Policy Changes and Market Recovery

Organogenesis experienced a significant 58% year-over-year decline in total revenue in Q2 FY26, primarily driven by a 61% decline in Advanced Wound Care sales. This contraction is attributed to sweeping changes by CMS in late 2025 to reform coverage and payment in the skin substitute market.

While Q2 showed an 18% sequential improvement in total revenue and a 23% sequential increase in Advanced Wound Care sales, the pace of recovery has been slower than initially expected, leading to updated full-year guidance.

Strategic Response and Cost Reduction Initiatives

In response to the prolonged market recovery, Organogenesis implemented strategic decisions to reduce its cost structure and better position for future success. This included two restructurings in 2026, resulting in a workforce reduction of 138 employees in June. These actions are expected to reduce annual operating expenses by over $32 million, with the March restructuring contributing $13.4 million and the June restructuring contributing $18 million on an annualized basis.

The company aims to reduce operating expenses (excluding COGS) by approximately 32% year-over-year in FY26.

Focus on Clinical Evidence and Market Leadership

The company is doubling down on wound care, emphasizing clinical evidence and its diverse, evidence-based portfolio. Management believes CMS's actions, such as holding payment rates steady and reinforcing differentiation of PMA products, promote market stabilization. Organogenesis is increasing its focus on new published studies, including compelling clinical results for PuraPly AM in diabetic foot ulcers (DFUs) and Affinity in venous leg ulcers (VLUs), to support expanded coverage and strengthen its market position.

Amnuvx Program Advancement

Organogenesis is advancing its strategic initiative to expand into new markets with the Amnuvx program, previously known as ReNu. The FDA formally accepted the Biologic License Application (BLA) for Amnuvx, setting a PDUFA target action date of April 24, 2027.

If approved, Amnuvx is expected to establish a new market category for a biologic product addressing symptomatic knee osteoarthritis, a market affecting over 30 million Americans. The company anticipates a significant ramp-up post-approval, with a temporary code initially and a permanent code expected by late 2027 or early 2028.

PuraPly AM and Affinity Clinical Data

Compelling clinical results from an RCT evaluating PuraPly AM in 170 DFU patients showed statistically significant wound closure at 12 weeks. An additional publication demonstrated a 20% lower overall amputation rate and a 40% lower rate for above-knee amputations among Medicare beneficiaries treated with PuraPly AM versus standard of care, across nearly 11,000 patients.

For Affinity, peer-reviewed results showed statistically significant improvements in wound closure at 12 and 16 weeks for complex VLUs, reinforcing its benefit in hard-to-heal wounds.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.