Good day, ladies and gentlemen. And welcome to the Fourth Quarter 2012 MiMedx Group Incorporated Earnings Conference Call. My name is Gwen and I will be your operator for today. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions) I would now like to turn the call over to your host for today, Mr. Thornton Kuntz, Vice President of Human Resources and Administration. Please proceed sir.

Thank you, Gwen, and good morning to everyone. This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based upon the 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, and our most recent 10-Q. 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 Pete Petit, MiMedx Chairman and CEO.

Thank you, Thornton. We appreciate all of you joining us for our shareholder call for the fourth quarter and the year end of 2012. I have with me today, Bill Taylor, our President and Chief Operating Officer, and Mike Senken, our Vice President and Chief Financial Officer. Of course, Thornton Kuntz and there are some other members of the management team in the room. First, I’d like to thank our management associates for a very prosperous 2012. There has been a great deal of progress made as a result of some dedicated and talented individuals. Also I would like to thank our Board of Directors for their diligence and oversight, which has kept our progress and procedures moving at the right pace. To summarize the highlights of 2012, I’ll state the following. Revenues more than tripled from 2011 to 2012. Adjusted EBITDA went from negative to positive. We completed a number of clinical studies, including our first randomized controlled trial. We have crossed numerous reimbursement barriers including receiving our Medicare C-code for EpiFix wound care allografts. On the 1st of January 2013, we received our Medicare Q-code for that issue. In addition, numerous health plans began to reimbursement for our allografts and we received the first approval by a Medicare intermediary for EpiFix wound care allograft. Also we added 28 direct sales people through our direct sales organization. Our employee base grew from 52 employees to 166 employees. We added some key members to our management team who primarily joined us from mine and Bill’s prior organizations. However, we brought to MiMedx an operational and manufacturing executive from Integra who has had numerous years of experience with tissue processing. Our first patent on our amniotic membrane tissue was issued. It was followed by four more patents in early 2013. We…

Thanks, Pete. Good morning everyone. I also want to thank everyone in MiMedx for all the hard work and great results in 2012. I am proud to be associated with the team here. For the folks on the call, I’d like to also highlight for your reference we just launched an updated website yesterday. So, when you have a minute, please take a look, it also includes a whole new investor page that is much more detailed and better than our previous page. So, please take a look at it when you have a moment. Before I get into the details of the quarter, I want to briefly review our business focus. MiMedx is a regenerative biomaterials company with applications in several areas of medicine. Our allografts are derived from a very special organ, the placenta and we continue to routinely find new uses and applications for this incredible tissue. Our current offerings can be grouped into three categories. Wound care surgical, which includes spine, orthopedic, and sports medicine. And then our third is other, which includes our ophthalmic, dental, and other smaller categories. The wound care category is generally made up of our EpiFix brand. And the surgical category consists of our AmnioFix brand draws various private labels that we process and tell to others. Mike Senken will further elaborate on the quarterly and yearly breakdown of these categories. Also I want to highlight that we have recently passed another milestone in terms of our distributed grafts. We now have distributed over 130,000 grafts and we are growing rapidly. On the operations front, I am going to highlight seven main topics. First is the new facility update, second placenta recovery network, third our intellectual property, fourth our scientific studies, fifth clinical studies, sixth reimbursement, and seventh our direct sales…

Thank you, Bill. Okay, Mike?

Thanks Pete. The company recorded revenues for the fourth quarter of approximately $10.5 million, an increase of approximately 300% or $7.9 million over prior year, a 32% increase over third quarter 2012, and a $2.4 million increase above our plan. Revenue for the year ended December 31, 2012 was approximately $27.1 million, which is approximately 250% increase over 2011 total year revenue of $7.8 million and exceeded our plan by 17% or $4 million. The increase in sales revenue for the quarter was driven by both sales of EpiFix and AmnioFix platforms including the injectable. In the fourth quarter, 49% of our sales volume was wound care, 44% surgical and sports medicine, and 7% other. On a year-to-date basis, wound care represents 42% of revenue, surgical and sports medicine represents 48%, and other represents 10% of total revenue. Gross margins for the quarter increased to 83.9% as compared to 67.3% in the fourth quarter of 2011 and 82.1% in the third quarter of 2012. The improvement was driven by volume and product mix. For the year, gross margins improved to 80.8% as compared to 57.4% in 2011 also driven by volume and product mix. The company reported positive EBITDA for the fourth consecutive quarter. Adjusted EBITDA is earnings before interest taxes, depreciation and amortization with the additional adjustment being share-based compensation any acquisition related earn-out provisions, as well as intangible asset impairment charges, which are all non-cash expenses. Included in today’s press release is the supplemental disclosure that reconciles our reported net income to adjusted EBITDA. The company reported positive adjusted EBITDA of approximately $434,000 for the quarter ended December 31, 2012, which is a $2.1 million improvement as compared to an adjusted EBITDA loss of $1,639,000 in the fourth quarter of 2011, but a decline of approximately $314,000 as…

Thank you, Mike. Thank you, Bill. While we have given you a great deal of information and commentary so let’s throw the call open to questions and answers.

(Operator Instructions) Our first question comes from the line of Mr. Matt Hewitt with Craig-Hallum Capital Group. Please proceed.

Congratulations on a great finish to the year.

Thanks Matt.

A couple of questions from me, first the gross margin expansion that you’ve seen here in the past couple of quarters and to me also it was quite surprising by the fourth quarter. How should we think about that line going through ’13, obviously there is some mix will determine that, but how should we will be thinking about that, is there additional expansion possible once you get the new facility online or have we kind of hit a peak?

Matt let me toss it back to you, what did you model?

I think I was a little bit closer to 82.5% given the strong performance in Q3. But is this 83% to 84% is that kind of a peak maybe or is there still some opportunities especially it sounds like you’re doing some studies on additional uses of the placenta as you find those could we see further expansion?

I think we could, I think we all need to be conservative. But I think maybe in the range that we have just reported is probably reasonable. But there are ways for us to raise that and over the 2013 year we will talk to you about doing that but that’s maybe a good place to do…

Okay, okay. Secondly I guess a more of a strategic or business opportunity standpoint. What – have there been some new applications that you found for EpiFix in particular I guess over the past few months or quarters I know Mohs surgery was a new area that you found some opportunity. But what other areas are you seeing traction or seeing interest from doctors or practitioners?

Well, we want to be careful here, we’ve given shareholders a great deal of information. Bill’s commentary was full of a lot of detailed information. But we also want to be careful until we get some of our clinical studies done. Doctors – I can’t emphasize enough how well received the allografts or when doctors began to realize the healing qualities of the tissue. So, we get all kind of phone calls coming at us and what we need to do and are doing is picking the best opportunities and try to hit clinical, trials started quickly. But and that will pace when we enter some of these markets. So, we just need a little bit of time to and maybe at the end of the first quarter we can talk in a little more detail. But I think we have probably given you what we probably feel comfortable with this morning.

Okay. The pricing I know that you made some changes at the start of the year if I am not mistaken as far as how you are pricing EpiFix, correct or help me understand when we will start to see that impact, is that in Q2 I am trying to remember how that was going to work?

Yeah I’ll take that one Matt. Last year we had a pricing structure that was focused on a particular graft price and was not focused as cleanly on the square centimeter price the way that Medicare reimburses. So, we changed all that effective January 1st, where all of our sizes are based on a square centimeter price instead of a targeted price per graft. So, what that will do is over the – well let me just take you step back in 2012 our month – our quarterly ASP varied a lot and because we had differences in our different SKUs so the reported ASP was different, so that our reimbursed, reimbursable amount would have a lot of variability. So, that was one of the issues we have. So, we made everything consistent which should remove that variability and that first we should be able to see a very standard and slightly elevated price per square centimeter should be July 1st based on all the changes because we will report our first quarter average sale price and then CMS will add 6% to that and then that will be the new reimburse price effective July 1st.

Okay, thanks for refreshing my memory there. Lastly just a clarification on the listing if I heard you correctly you’ve answered or you’ve worked on a number of the questions major market listing is that going to be by the end of April or you will have sent in the application by the end of April, just so I understand the timing there?

Matt the reason why we are a bit vague on that is as you’re working with these exchanges you go through a number of submissions of information in Q&A and you wait to get feedback. So, we have to be a little bit vague on the exact timing of that, but recognize we are moving as quickly as we can.

Alright, great. Thank you. And again congratulations on a great 2012 and looking forward to the growth here in ’13.

Thank you, Matt.

Thank you, Matt.

Our next question comes from the line of Mr. Bruce Jackson with Northland Capital Market. Please proceed.

Hi, good morning.

Hi, Bruce.

Hi, Bruce.

As you know the FDA has been making the rounds of all the tissue banks recently, I was wondering if you could just refresh us on your most recent dealings with the FDA and if there are any outstanding issues.

Sure, I’ll take that one too. We’ve had two audits from the FDA in the past probably 22 months or so. The one in 2011 was a standard audit. The audit that we had last year which I think was around May if I remember correctly, May or June something like that. And that one was a targeted inspection. The FDA had a question because they had audited one of our distributors who is a tissue bank and had – they had a question that couldn’t answer by the distributor, so they came in and that got sorted out. The second thing is they were asked by CBER which is the biologics division of the FDA, they had a question relative to our injectable and it mainly focused on living cells. Their biggest question was do we have living cells in our tissue and of course the answer is no, our cell – the cells are not alive. Obviously there is a lot of scrutiny there relative to the living cells. And you can look at the – from announcements from the working group of the FDA on tissue that the tissue reference group has pronounced with every year going back to like 2007, you can reference there what they – how they view living cells and amniotic tissue and other types of allograft. So, we had a clean inspection report on both of those audits, no 43 was issued on either one of them and we have copies of the inspection report to show that everything was clean. So, the inspector replied with all of our scientific data to CBER and CBER had no further questions. So, I think we are in good shape there.

Okay, that’s great. Then one other question on the hospital procurement network I want to make sure I have got the numbers correct. So, you are at 19 right now and I think you said earlier you are talking to some new hospital systems and were those hospital systems an additional 40 or is that the total number you will be at after you get the new procurement contracts?

What we are talking about is an incremental 40.

Okay, incremental 40. And then when you get to that incremental 40 what level of revenue does that support?

Although we have in the past is that conservatively 30 hospitals should easily be able to supply a $100 million in revenue, so 300 hospitals, $1 billion in revenue. So, pretty straight forward math on that. Now obviously early on we want to have excess capacity in those hospitals because our growth is somewhat unpredictable its – we know its fast, but we don’t necessarily know how fast, so we want to have excess capacity there.

Okay, got it. Thank you very much.

Thank you, Bruce.

Thank you, Bruce.

(Operator Instructions) Our next question comes from line of William Plovanic with Canaccord. Please go ahead.

Great, this is actually Kyle in for Bill. Can you hear me, alright?

Hi Kyle.

Great, just a couple of big picture question obviously you’ve got five out of nine MACs signed up so far, just wondered if you could break that down into covered lives perspective, I mean, how many covered Medicare lives are there right now and then once we get up to that those nine MACs by maybe first half of the year or into the back half, how many patients will be covered at that point?

I don’t have exact number on the lives in front of me, but I can tell you it’s approximately 30 of the 50 states, so about 60% of the states we have coverage in.

Great, okay and then I mean going back to the study that was end earlier this year, any expectation for that to be published or when we can see the full trial results?

Yeah the post RCT for diabetic foot ulcers has been submitted for publication. We do not have a publication date yet, but hopefully over the course of the next weeks or maybe before next conference call we may have some further information on that. And then we are also as I mentioned on the cross over study that was submitted for the SAWC was accepted for that. So, there won’t be necessarily a publication we will have be symposium poster published.

Okay, great. And then just I think you kind of mentioned EpiFix, micronized version I wondered if you could just kind talk a little bit more about the pros and cons of that product and how that differs from EpiFix as it currently stands and what that does as far as product allowing you to target more wounds, what more effectively?

Sure, it’s pretty interesting on the EpiFix side. We’ve had a lot of physicians who want to have a micronized version because of tunneling wounds and other kinds of wounds that are hard to put a membrane into it. So, we’ve had number of them essentially kind of shredding it themselves and in packing the tunneling wound. So, we have decided to have an EpiFix micronized version that either could be injected into the dermal layer around the wound bed to help to kind of jump start the healing there or could be factored either in a powder form or in a paste form and put into the kind of underneath the (indiscernible) or in the tunneling wounds. And we have gotten some pretty interesting and good results there, so we thought it was best go ahead and introduce the micronized version of EpiFix.

Now does that have the same reimbursement codes and the same Q-code or does that – is that going to be another process that the team will have to go through?

We expect that to be different and we actually applied for the Q-code in December. So, by May we should understand the pathway that the FDA is looking for and find out if they have accepted the application. But it’s our belief is that its more like a drug because it’s a milligram reference as opposed to a per square centimeter reference. So, we should find out in May then what the situation is relative to that application. And then that would we will find out that’s when they will give a preliminary decision is in May, final decision is in November with then if it is accepted then it will be January of 2014 when it will be available.

Great, okay.

From a coding perspective.

And then just one final question, obviously significant growth in the back half of the year in the VA market, I just wondered obviously taking share there, just wondered if you can kind of provide a little more color on what that market looks like just from a market size perspective. And covered life patients does anything, any more granularity we can kind of dig into on that side as we go into ’13 having the full year with the VA initiative up and running and then that’s it?

We’ll I guess – go ahead.

We’ll there are first of all one set of metrics it might be useful for you, because what you are asking specifically we don’t have in front us, but one set of metrics might be the rate at which Advanced BioHealing Group and a lot of that good portion of that was in the VA side of the business. They had about 155 commercial sales people as I recall reading prospectus and about 35 or 40 of their sales persons were in the VA side. So, you might be able kind go back and analyze their growth rate by that back some of things you are looking for. But we don’t really have the metrics you’re asking for in front of us.

I’ve got a couple with that are close – there is a little over 150 VA hospitals across the country were roughly 700 clinics and we reported the end of Q3 call that we were in about 80 of those VA facilities. We are in about 120 now all those 700 clinics do not do wound care. So, there is a sub-segment of that most of the VA hospital do but there are a few that do not have very much wound care there. So, I think there is still room for us to grow significantly in the VA area, but that will give you a little bit of a frame of reference on the ability to grow. And of the 120 that we are in we are not fully penetrated in all 120 facilities yet either.

Thank you very much. Congrats on a great year.

Great. Thanks a lot.

Thanks a lot, Bill.

There are no other questions at this time. I’ll now turn the call over to Mr. Pete Petit, Chair and CEO. Please proceed.

Thank you, Gwen. I will appreciate your time and join us on the call. I hope we have been informative. We will continue to try to give you as much information as we can. It doesn’t perhaps compromise us in terms of competitive issues and so on. Thanks so much, looking forward to reporting here at the end of April on our first quarter results.

Ladies and gentlemen, thank you for your time today. This concludes the presentation. You may now disconnect. Have a wonderful day.