Good day, ladies and gentlemen, and welcome to the Q1, 2012 MiMedx Group Inc. Results Conference Call. My name is Renee and I will be your coordinator for today. [Operator Instructions] I would now like to turn the presentation over to your host for today, Mr. Thornton Kuntz, VP of Human Resources and Communication.

This presentation contains forward-looking statements within the meaning of Section 27-A of the Securities Act of 1933 and Section 21-E of the Securities Exchange Act of 1934. These statements are based upon current beliefs and expectations of our management and are subject to risks and uncertainties. Actual results may differ materially from those set forth in, contemplated by, or underlying the forward-looking statements based on factors described in this conference call. And in our reports filed with the Securities and Exchange Commission, including our Form 10-K for the year ended December 31, 2011. We do not undertake to update or revise any forward-looking statement except as maybe required by the company's disclosure obligations in filings it makes with the Securities and Exchange Commission under federal securities laws. With that, I will turn the call over to our host, Pete Petit, MiMedx Chairman and CEO.

Good morning. I appreciate you joining us for our first quarter shareholder conference call. I have with me today, Bill Taylor, our President and Chief Operating Officer; Mike Senken, our Chief Financial Officer; and John Daniel, the President and Founder of Surgical Biologics our wholly owned subsidiary and Thornton Kuntz, our Vice President, Administration. As I recall I described our fourth quarter performance as good. I will classify our first quarter performance as excellent. Where we exceed our revenue goals, but most importantly, we achieved our goal of having positive EBITDA for the quarter, which is a close approximation to cash flow. Plus we’ve had negative EBITDA since I stepped in and managed the development of growth of MiMedx Group this is a great achievement for the company. Frankly, for any company to pass from negative EBITDA to positive EBITDA is an event. Certainly being able to create 255% growth in revenues over the first quarter a year ago and 41% growth over last quarter is quite an achievement and we’re being able to produce some process our products to meet that rapidly increased need is also quite an achievements. Most importantly being able to control expenses during this type of rapid growth is another achievement that many companies cannot duplicate. So I think our management team deserves accolades for the quarter’s performance and what we hope will be continued rapid growth of revenues and positive EBITDA and then positive operating profits and then after that positive after-tax profits. Incidentally since the company has accumulated over the years a significant tax loss carry forward, we will pay minimum in tax over the next several years and that’s going to be an extra positive cash flow for us. As shareholders, we’re all very fortunate that about 6 years ago John Daniel…

Thanks Pete, good morning everybody. Well as Pete mentioned we had an incredible start to this year. The second consecutive quarter that we met are exceeded our revenue goals plus we had a number of orders late in the quarter that were shipped in early the second quarter, which really as Pete said helped us to get off to a great start. On our $3.7 million revenue in the first quarter, we increased our gross margins to 74%, which is well on our way to our 80% target gross margins. I’ll cover very briefly, 3 key areas sales, clinical and operations. On the sales side, as we continue to make some very strong progress as the revenue number can attest. We’ve had 2 major trade shows in the first 4 months of this year. In February we attended the AAOS, the American Association of Orthopedic Surgeons, where we had a tremendous interest in AmnioFix membrane and AmnioFix Injectable was very successful in terms of lead generation. We continue to receive reports on the effectiveness of our injectable AmnioFix Injectable and are very pleased with our progress and are also optimistic regarding its very strong growth. Our other major trade show was in April actually here at Atlanta, it was called the SAWC, the Symposium on Advanced Wound Care was a huge success for us. You may remember that in the fall, we had response to the CME course and we did the same thing in this symposium, it’s a continuing medical education program where 2 very prominent physicians gave a lecture on amniotic tissue used in wound care. And just like the fall program; this one was packed with standing room-only. The feedback was very tremendous and we certainly garnered a lot of attention. Our K series [ph] representing typical…

Thank you, Bill. Okay, it’s Mike Senken our Chief Financial Officer. Mike?

Thanks Pete and good morning everyone. For the period ended March 31, 2012 the company reported revenues of approximately $3.7 million, an increase of 255% or $2,662,000 as compared to our $1,043,000 in revenue recorded in the same period of 2011. The increase in sales revenue was driven by sales of our amniotic tissue platform in the spine, wound care and orthopedics market as well as shipments of our AmnioFix Injectable product. The increase in product revenue was driven by the expansion of our distribution channel, the market demand for our leading edge technology with superior efficacy, safety and savings to the healthcare system and the progress that has been made in clearing reimbursement hurdles. As discussed previously, management has been keenly focused on achieving positive non-GAAP adjusted which is a reflection of the company’s operating cash burn before taking into consideration working capital and other investing activities. Adjusted EBITDA is earnings before interest, taxes, depreciation and amortization with the additional adjustment being share-based compensation, which is non-cash expense. Included in today’s press release is a supplemental disclosure that reconciles our reported net income to adjusted EBITDA. To that end, the company reported for the first time in its history as Pete mentioned earlier. Positive adjusted EBITDA for the quarter end March 31, 2012. The reported adjusted EBITDA of approximately $314,000 for the quarter is a $2.6 million improvement as compared to an EBITDA loss of approximately $2.3 million in the first quarter of 2011. The improvement was driven by increased sales volume with average gross margins as Bill mentioned earlier of 74% and reduced spending in research and development somewhat offset by investments and sales and marketing as per our plan. Key investments areas include randomize clinical trials our reimbursement hotline as well as resources associated with the management…

Thank you, Mike. Let’s turn the call over now to question and answers.

[Operator instructions] Your first question comes from the line of Nathan Cali with Noble Financial.

Just a couple of questions. When do you expect additional clinical data and what will that be?

I'll let Bill Taylor give you some insights there.

Yes. One of our EpiFix RCT we do expect to have that completed later this quarter. On diabetic foot ulcers and our Venus ulcer when we expect to be completed early third quarter. So I don’t have exact date for you on when that will be completed and we’ll have to obviously be a little cautious on how we release the data if we want to get it published. So but we will get that information to you as soon as we reasonably can but that’s the timing we have at present.

Okay. I would add this try to be conservative about it. We have a lot of insights into the way the progress of the trials are going and they are going very well, which beg good results at this point.

Okay. How many patients is the diabetic foot ulcer study?

I don't have the number in front me, but it will be basically a number that achieves statistical significance.

Okay.

And where the statisticians have a P value of less than 0.05 if I remember correctly. So…

I thank you. I remember 80.

Well, the target was 80, but if it performs better than we anticipated in the design of clinical study, we would have to terminate it earlier because we will achieve statistical significance earlier.

Great.

So we will see how that pans out.

Okay. As far as the revenue in the quarter, was any that as a result of a stocking order or….

Well, Nathan, we do have stocking dealers and they routinely stock. I wouldn’t say that this quarter is any different than fourth quarter so if you concerned about a situation where our dealers are overstocked I don’t think that’s really a concern. We ran into a backlog -- back order situation at the end of the quarter. First time we've ever done that so I don’t think we have distribution that’s got an over amount of products sitting on the shelves. We actually ran out of product and we don’t like to do that.

Well, and a substantial amount of orders were reorders from customers that have been customers for quite a well, so establish some pretty strong reorder patterns either monthly or quarterly.

And as I mentioned earlier our first quarter, first month of this quarter as been very strong. So I think this demonstrates the product being used by clinicians.

And then just a couple more follow-up questions on the EBITDA side, would you guys expect based upon what you are seeing on the revenue side. Do you expect the EBITDA to continue down the same path that you saw here in the first quarter?

Yes, Nathan I was -- we look at the margins as continuing to be strong. Spending will go up in the second quarter because we have to add staff to address demand and support production. But yes, we fully expect and our plan holds for improved EBITDA in the second quarter. And so we should definitely go up from where we were in the first quarter.

And I will add this with the rapidly growing business entity like this and you have to stay ahead of a hiring process with employees as well as management and both John Daniel, Bill Taylor and myself have been through this kind of growth phase previously. So we will be adding people judiciously but we must add, since you can’t keep up with all the things that are going on with rapid with the business that’s growing this fast, if you don’t stay ahead of the hiring curve.

Would you say that hiring will go into the COGS, or that will go more to the G&A?

It’s both places, I mean we will be adding staff to support clinical trials but also reimbursement and then you've got your -- certainly your processors for production.

Okay, and then just one last question how many new accounts would you say you opened in the first quarter?

Well, again it’s a tough question, because we have a balance of sales agents where we sell directly into the hospitals and they get paid a commission and then we also have our distributors or dealers that take titles of product and we’ve added new clients in both realms. So if you're looking for hospitals, I can’t give you an exact number.

Okay.

And we’ll try to be more specific in subsequent calls and I know that your questions and those of other analysts will get more detail and we’ll be prepared for it, but that you will highlight to us the kind of things you are interested in knowing for your models of prior to these kind of calls we’ll try to have the information for you.

Sure, no problem. Just trying to get a sense on…

Sure, I would think that generally, that we have a good mix of repeat orders from existing customers and new customers. As you saw in the first quarter, we announced an agreement with histogenetics [ph] that’s obviously a new customer for us there are other new customers as well, but how you build off of how you build your growth is off of a base and the base is [indiscernible] as well.

Could I ask one more tough question? And what do you think the retention rate is? Do you have that number available? If not I can get it off line, no problem?

It’s very high. To your previous question, the one thing I can answer is that the number of new clients for the first quarter was higher than the number of new clients in the fourth quarter.

Okay.

The percentage.

Okay.

Let me make a comment on retention. From a clinical standpoint, I just can’t recall any physicians saying to us and we stay very tuned to the feedback. We don’t like your products. We’re not going to use your products. I just don’t remember any of that feedback. What does happen, as I reiterated about the reimbursement phase, the hospital or a clinic or physician’s office will get disappointing results when they bill for the product. We’ve got health plans, the barriers on the health plans in private side are really coming on pretty fast. We’re still fighting some battles with the Medicare reimbursement side and well a couple of those have come down we still have a number that haven’t. So what will happen is if they start using a product and they can’t get pay for it then they’ll stop until reimbursement gets adjusted. So if we don’t have follow-up it’s generally reimbursement related. It’s certainly not clinically related.

Your next question comes from the line of Henry Mellon with Mellon Group.

The facility you guys are in now, what kind of expansion growth would you say you’d able to attain? I assume you’re going to start and add people maybe to work on weekends and all that lovely stuff but just where you're currently sitting there. What kind of growth can you handle?

You’re talking about the physical plant. Okay. That’s Bill’s question.

Sure, Henry. You may recall that we did consolidation background August of last year and the billing that Surgical Biologics was originally located when we merged had about 16,000 square feet, we added another 4,000 there. So we got about 20,000 square feet in this building we also leased a building across the street that originally was going to be slated for device technologies, which also has about 20,000 square feet. We’re actually moving our clean room and expanding into that clean room we’d built for devices because of our as you know our challenges we had on that portion of our business. And so we have a substantial amount of excess space at the moment. I personally feel pretty comfortable that it will last us through about this time next year and then there is some space next to it that is open that we’re eye balling right now to expand into. So I think we’re in pretty good shape.

And you are also in great shape, as far as getting the initial product from the hospitals, correct. That’s not even an issue we’re not even scratching the surface, as far as that’s concerned.

We are doing pretty well on that front. As I mentioned in my portion where our collections on the donor side are outpacing our ability to produce at the moment, and that’s where we want to be and John’s in the middle of the process for expanding that donor process. And in my estimation, the number of facilities we are in today should be sufficient for us through the end of the year and we are building now capacity for next year's is kind of where we are focused at the moment.

Your next question comes from the line of William Plovanic with Canaccord.

Just on the -- so you are shifting to a Q-Code and my understanding in the codes you are looking at the Q and J. The Q is still a temporary note, does that have a dollar amount assigned to it. Just walk us through the process of getting the code, getting the dollars, getting the payers to pay. I mean what is that process going to look like over the next 3, 6, 9 months?

Sure, Bill Taylor is going to do that, he is grand.

All right, all right. I will do the best I can and fairly convoluted situation is reimbursement tends to be. Q-Code has turned out to be a permanent temporary code, if you know what I mean the intent on the Q-Code in skin substitutes, as I understand it was to be a short-term situation until CMS decided how to convert the skin substitutes into J-Codes. They had originally wanted to do that by I don’t remember if it was last year or this year, but they still have not done that. So when you get to Q-Code the intent there is that they will be converted in to J-Codes. Now in terms of the process, whether it be a C-Code, which is what we have right now which you may remember is being -- is designed for ambulatory surgery centers and hospital outpatient situations. The first step is to get the code and then the second step is I can’t remember the exact number, but there is something like 22 regional max. So the groups that govern Medicare in certain geographical regions. The second step then is for those max then to go ahead and cover the skin substitute. Again as I understand it about 4 or so years ago it was pretty common that once you’ve got a C-Code or a Q-Code, that the max would immediately start to reimburse. But because there has been so many products file into the Q-Code, the skin substitute arena some of which have marginal effect then these regional max groups have pushed back and are asking for randomized controlled trials in order to justify the performance or justify their reimbursement. So basically, with our positive recommendation on Q-Code, we do expect to have that issued in November and then be effective in January of 2013. Our Chief Medical Officer Don Fetterolf is actually contacted all of the max groups. Some of them are paying now on the C-Code some of them have said they want one RCT before they will pay, they’ve got all the rest of the information according to what they’ve told us. Some of them said they want 2 RCTs. So once we RCTs completed, for instance when the first one is completed and in a format that we can share with the max groups we will share that with the groups that said they wanted one and we expect that will clear the decks for those max groups. And then when our second RCT is completed we will share that with all the max groups as well. So we do believe by the third quarter we will substantially address many of the max groups issues and certainly by the first of year being pretty well positioned.

Okay, so I think just through the tone of the call, in terms of the goals you are setting for the company, you feel comfortable with those and the only kind of limiting or mitigating factor would be the speed at which you can get the codes effective to get the reimbursement in place in all the different geographies.

That’s correct and we have of course numerous ways to be reimbursed and we are working all of those. We are not just waiting on the Medicare codes, but there is a focus there. And we’ve just announced a very innovative program for the Veteran's Administration. Bill talked about that a little bit earlier. Those are not reimbursed problems for us, those are good problems. So…

Well, I would like to also address that in the chronic wound care market somewhere in the neighborhood of 25% to 30% of the patients are private paid and our experience to date in private pay has been very positive. We have been getting reimbursement in the majority of the private plans out there. There is only a few that have been pushing back the vast majority of them have been paying. So we still in the U.S. alone the chronic wound care market is in excess of $3.5 billion and about a quarter of that’s private pay. So it’s a substantial market that’s available to us right now today without worrying about the Medicare markets. So we’ve got plenty of opportunities right in front of us.

And then just the last question Bill, is I think it was in the last couple of weeks if I’m not mistaken that [indiscernible] Advanced BioHealing as the DOJ investigation going on to some of their selling practices. Have you seen any type of impact from that on your business?

This is Pete. Not really, we’ve tried to just quietly go about our business in the wound care sector, Dermagraft and Apligraf, they’ve been the major competitors there. Dermagraft has outrun Apligraf over the last several years at a fairly rapid cliff. So maybe that means that some of their marketing practices were little too aggressive, but we just don’t have a real focus there, I might add though this that if one is familiar with the way Advanced BioHealing progressed with their revenues, they had about an $8 million year and when they got the reimbursement barriers broken down about 4 or 5 years ago. They would jump from $8 million to $40 million and $80 million and $132 million. Things are little different today in the healthcare markets than they were in 4 and 5 years ago, believe me. A little bit tighter restrictions on a lot of things, but that’s the kind of growth they achieved. So we’re looking forward to our barriers coming down because I really don’t think it’s an issue with physicians and their desire to use the allografts once they see what happens.

[Operator Instructions] Your next question comes from the line of John Carley, private investor.

My question is in the plastic surgery market what are your opportunities with your product line as you go forward and how is the reimbursement issue playing to all that.

John, this is Pete, I’ll make a comment and let Bill fill in. We are receiving constant inquires from the plastic surgery and then some cases dermatology area and with physicians who’ve used our product and are quite excited about it. In many cases in the plastic surgery are that’s a cash reimbursement it’s not tied to health plans or some kind of a government reimbursement so as we talk to the plastic surgeons they are all very positive about the fact that this product is doing some very exciting things for them and is cash reimbursement. So we have a focus in the plastic surgery area and we’ll continue to talk to you in the quarter’s ahead about that but it looks like a real opportunity for us. Bill?

The only thing I’d add to that is the other side of that is the re-constructive plastics, the re-constructive market there are some reimbursements available in that market and we’re -- without going to a lot of detail we are in -- taking a look at that and seeing where we can play. But there is a substantial and sizable market on the cash pay plastics market that’s pretty intriguing right now. But beyond that and probably ought to wait a quarter or 2 before we give you more details on it.

At this time, there are no additional questions. I would now like to turn the call over to Mr. Pete Petit for closing remarks.

Thank you. Well, again thank you for your interest. Thanks for being on the call. Hopefully we conveyed some information to you that’s beneficial. Remind your fellow shareholders that this will be available on our website and please listen if they have the chance to do so. I think this has been a very informative session for us. Thanks so much. Appreciate your confidence in management.

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect. Have a good day.