Good day, ladies and gentlemen. And welcome to the MiMedx Group Q4 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions] As a reminder, today's conference call is being recorded. I'd now like to turn the call over to Mr. Thornton Kuntz, Senior Vice President of Administration. Please go ahead.

Thanks Candice and good morning, 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 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, 2014, and our most recent 10-Q. We do not undertake to update or revise any forward-looking statements, except as may be required by the company's disclosure obligations in filing it makes with the Securities and Exchange Commission under Federal Securities laws. With that, I will turn the call over to MiMedx's Chairman and CEO, Pete Petit.

Thank you, Thornton and good morning. I thank all of you for joining us for our 2015 year end conference call. I have with me Bill Taylor, our President and Chief Operating Officer; Mike Senken, our Chief Financial Officer; and Chris Cashman, one of our Executive Vice President and our Chief Commercialization Officer, there are also newish other executives with us. I'm going to make some comments about 2015, then some comments about our fourth quarter, and then our outlook for 2016. Considering the pricing headwinds in 2015 from expiration of same as pass-through status on EpiFix, we consider 2015 an excellent year. We have a major product line that offers over 20% decline in average selling price that's generally a very difficult to overcome. We overcame those issues with offering some other product innovations and improving the efficiency of our production processes. Thus we actually improved our gross profit margins each quarter during the year, the year we ended up with an 89% gross profit margin. We still had robust sales growth in 2015 and our wound care sales grew more than 30% and most importantly our surgical sports medicine orthopedics revenue grew by more than 85% in 2015. As you are well aware, we have very focused in this area now behind new sales personnel and with our acquisition of Stability Biologics. In the years ahead we expect our SSO revenue to grow faster than our wound care revenue as it catches up in overall revenue dollars. We continue to manage our profitability well, our 2015 net income of 29.4 million represents the 373% improvement over 2014, I would say that’s a very nice improvement. We had a full year adjusted EBITDA of over 44 million which represents 113% improvement. In 2015 our net income is approximately 16%…

Thanks Pete. 2015 was a transformative year for MiMedx. We continue to significantly grow our regenerative Biomaterial platforms organically as well as earlier this year by acquisition. Our Wound Care business grew by over 50% compared to 2014 even though our ASP for commercial Wound Care was reduced by about 24% for the year due to changes with exploration of past through status for EpiFix. Let me say that in a different way. After a 24% average price decrease in our biggest product line, we were still able to grow our market share in terms of revenue downs, take business from competitors, grow the market, and increase our year-over-year revenue in this business area by over 50%. We managed this transition as we told investors we would and the results were as we anticipated. On the SSO side, our Surgical, Sports Medicine/Orthopedic business, we continued our strong growth by growing about 87% of our previous year's total, and had about $46 million in revenue. This growth was driven by abdominal public surgery focus as well as our new product introduction of OrthoFlo, our amniotic fluid product among other things. Also, as looking at our revenue of commercial versus federal, our commercial business grew by over 75% and our federal business grew by over 20% year over year. We have strong growth in both of our areas. We continue to invest in our sales force and we have grown to be around 240 people today, and we have target and identified candidates for other 15 or so Accountant Executive positions. We should be well over 250 people shortly and we continue to hire sales reps in all of our sales channels, but an added focus is in the surgical areas, abdominal public surgical area. On sales front, I also want to…

Thank Bill. We are now just about five weeks out from the merger completion between MiMedx and Stability Biologics, a great deal has been accomplished. First and foremost, there is no doubt culturally that this is a terrific fit. The team at Stability Biologics is of high integrity, great passion, and very hard working. This is a nice fit relative to the speed with which we work in interface to get things accomplished here at MiMedx. Training has been a very big part of the activities over the last few weeks. We have trained the internal team of managers of both organizations on product portfolios. We also had the opportunity to include the SB team at International Team Meeting, which is our National Sales Meeting at the end of January into early February. We conducted a great deal of cross training and cross selling activities. We also capitalized on the time together to conduct in-depth reviews of our sales networks, very valuable initial planning, strategy, targeting and process and people integration occurred at that time. We continue to work the plan of cross selling coming out of that meeting through February. We now are engaged in training the many Stability Biologics agents and distributor groups nationally on the new product portfolios. It is clear that the specialization focus for our surgical initiative has been strengthened. Both the expansion of the sales network as well as the combination of product portfolios, puts MiMedx in enviable position to grow revenues and become a more meaningful provider in surgical specialties. Certainly Physio™, the new bone product by SB and the combination of our AmnioFix® product line are good combination in the spines specialty. We have also found that our strong position in Wound Care with our 200 plus sales reps, leveraging our wound…

Thanks, Chris. My comments regarding revenue results will be brief, as they were previously reviewed on the January 11, 2016 shareholder call, and actually both Pete and Bill, in their prepared comments today spoke to some of the detail around revenue. The Company recorded revenues for the fourth quarter approximately $51.8 million, an increase of 31% or $12.3 million over prior year fourth quarter revenue of $39.6 million. We added approximately 400 new customers in the fourth quarter. For the 12 months ended December 31, 2015, reported revenues were $187.3 million, which represents an increase of 58% as compared to prior year. Gross margins for the quarter were 90.4% as compared to 90.9% in the fourth quarter of 2014. Slightly higher gross margin in the prior year was due to a higher mix of Wound Care versus SSO sales, driven by the pending expiration of pass through status as of the end of 2014 for EpiFix. Gross margins for the year were 89.2%, which were virtually the same as prior year. The improvements in gross margins since the beginning of the year reflected successful transition to the mesh configuration that was launched in mid February to address the expiration of pass through status for EpiFix. R&D expenses for the quarter were approximately $2.3 million or 4.5% of quarterly revenue as compared to $1.8 million in the fourth quarter of 2014. On a year-to-date basis, R&D expenses were $8.4 million as compared to $7 million in 2014. Increase is driven primarily by increased investments in clinical trial. Selling, general and administrative expense was approximately $36.5 million for the quarter or 70.5% of quarterly revenue as compared to $29.2 million or 73.9% of quarterly revenue in 2014. During the quarter, we added 16 direct sales reps and on a year-to-date basis have…

Thank you, Mike. Let’s open the call for questions and answers please.

[Operator Instructions] And our first question comes from Matt Hewitt of Craig-Hallum. Your line is now open.

Good morning gentlemen. Congratulations on the strong execution.

Thank you, Matt.

Couple of questions. First, you gave us a couple of pieces on the headwind that you were facing last year as far as – there was a 24% headwind on ASP. Could you quantify what that was. Looking back at the year, what that represented to the revenue line? I think early in the year, you’d have given us some details, I think it was going to be in the 6% to 8% range. But looking back now, what did that end up shaken out at?

Okay. On this one, the 6% to 8% that we were talking about before was - with our previous price structures and the number of grafts that were in the - there were larger grafts above the bundle rate that were in the Medicare population. So if you remember what we did though to address this to make sure we had deeper penetration was to add more SKUs, we changed the pricing on a number SKUs such that we had a number of grafts that were at or under the bundle. We added several mesh sizes that were at or under the bundle which on an average price per square centimeter basis significantly changed those numbers. So not exactly an apples to apples comparison because of all those changes we did. And now we have probably I think, we can cover in the neighborhood of 90% of the wounds in chronic wounds with products that are at/or under the bundle. So it was kind of change in the philosophy in the way we were looking at this to capture more of the wounds. In case some of the facilities did not, except the cost to closure argument of using more expensive graft early on and then less expensive ones later as those getting smaller. But overall, we had a substantial increase in the number of unit that were sold. Far more than that, what our revenue actually shows from an unit perspective.

Okay. I was unsure if there was going to – if there was the ability to do an apples-to-apples comparison. But obviously, with all the new products, and some of the changes you are able to make, you could pick that up with the volume. Shifting gears a little bit. You've continued to add sales headcount that are robust pace. Now you are staring on the SSO side which make a ton of sense. Where are you finding these candidates? Is it a similar strategy as you rolled out the wound care sales force as far as finding the topnotch deep role, that type people or are you looking for more specialized focus that can really go after a specific segment of the market?

Matt, it’s Chris. We are very focused on the specialization. The opportunity in our position forces to go opportunistically after the top people that are in the field, to be in line with the way that we’ve always worked, clinical and scientific experience and ability to speak that language is very important. So our profile hasn’t changed as we move into the SSO area. It’s very important that we get people with few experience but also match our culture, our work ethic, and our commitment to science clinical. So those individuals can come from a lot of different backgrounds, a lot of different type of companies. But they are certainly going to have very specific knowledge to the markets they are calling on.

Okay. One last one and then and then I’ll hop back in the queue. Could we get an update on the international opportunity? Where that sits today? And what are your expectations for this upcoming year?

Sure, we've actually been growing that business quietly. And we do expect this year that we’re going to have sizably more revenue than what we had in previous years. Don't want to go into a lot of detail until we are a little farther along on that. But we are in several countries in Europe and a few other geographies as well. Right now growing and building those sales. There's a number of other companies like Japan and a few other countries that we are focused on and I think we can get into it fairly quickly. .:

Fair enough, all right. Thank you.

Thank you. And our next question comes from the line of Mark Landy of Northland Capital. Your line is now open.

Thank you. Good morning, folks. Pete, I guess the questions are just for you. On 18, Thursday last week, the federal registered - the FDA updated the federal registered 2 - upregulate metal on metal hips and the articulating surfaces from essentially [indiscernible]. That process took from the open meeting about 3.5 years. Assuming the rules for upregulation of a product across the divisional borders, so from SEDAR to SEDAR is this the expectation that we should have for any changes to the current [HTCT] [ph] guidelines? And you talked about the FDA having just followed the rules and regulations. Is this the kind of time frame that one should think about mistakes to any changes that could be made versus the immediate expect of these untitled errors.

Mark, I think that’s a good example, and there is numerous more that you could sight. When the industry decides that they want to upregulate an area, change regulations, it takes a process to last in that vicinity. And I think, again a bit about the meeting that's coming up on April 13, it’s going to be a significant input from industry. Physicians, patients et cetera and I expect the process of that nature will probably begin.

I bring it up because it is the latest updates of the federal register for an upregulation of a product. Moving on. I guess for Chris. Chris, I know you are very excited and you highlighted the opportunity of combination of Stability, specifically in variance and then also your growing business in foot and ankle. I know that you don’t break out the burns revenue but adding the Stability product to your burn portfolio, could you give us a size, just a qualitative outline of the size of the additional impact that you could get from Stability. Could it double the revenues, triple the revenues, increase the revenues by half?

Specifically to the burn product?

Correct.

I think, it’s top off my head, I think from a burn aspect and in patient, there is probably somewhere around, for initial primary diagnosis, 50,000 give or take, some patients that are in the hospital for trauma or burn. As you may remember, EPIBURN, obviously the premium product, premium priced product has incredible healing aspect but it is not because of the price point, it can be used on full torso and very, very large burns on the body. It has been used very effectively in areas that it’s either for function like on the hands and extremities, and in areas like the face, neck, prosthetic reasons, and also for better healing and integration. What is interesting about the ALLIBURN product from Stability is it’s a split thickness skin graft that allows us now at appropriate price point, to be more effective in creating greater coverage and obtaining those patients early on. And then, of course, as those patients progress and the healing process progresses, there is going to be opportunities where EPIBURN is absolutely perfect for the final stages of that healing, and skin epithelialization. So Again, we are in the early throws of it but we are excited about that combination and having a more stronger, broader portfolio.

So there is really two benefits. The opportunity to get the patient earlier, and then the opportunity to grow the revenues in patient's that you weren't able to treat, is that correct?

Yes, that's correct. And it gives us a greater footprint. Just from breadth of product, we're only in the earliest stages of introducing EPIBURN within the last year or so 15 months. So this just gives us a greater reach and greater portfolio.

So does this double the opportunity for your burns portfolio, could you give us some sense of the size increase at the combination for there?

This is Pete. Well, I think what this does is just give us a much broader product line and a much stronger presence in all this centers. There is - Integra has a strong presence there. Now, we think we are going to have the same width and breadth product line that they have and probably we think products are going to perform better. So if you can, you might take a look at -- if it's possible to get hold on some of the Integra Burn performances and see what we might be aspiring to. But I suspect it's certain our goal to see we increase, use double and triple numbers and we would think that's probably certainly reasonable - of the hedging has gone up and down.

Most patients now are now having opportunity to benefit from the AlloBurn product, so that's an incremental growth opportunity.

Fair enough. And then just moving on to the other highlighted area was foot and angle. That is one of the high-growth areas in orthopedics. There are lot of large orthopedic players or counting these growth opportunities for the future. Could you just give us just a broader sense of your current footprints in the foot and ankle markets as you focus on podiatrist and perhaps how the benefit -- you could benefit from the increased focus on foot and ankle -- moving into the surgical podiatrist and then perhaps into the higher-end podiatrist respects to the use of your product versus them moving forward with respect to treating more complicated surgeries?

Sure. Well, for sure our Wound Care group, which is in an excess as we said of 200 Account Executives now are very focused and were day-to-day with podiatrist. And so that's an area that we are very well engaged and of course significant portion of foot and surgery is done and performed by podiatrist. Not to mention, the combination now, the Stability network as well as our own current agent and distributor network that we already had in place. We have really got a great very specialized focus in the foot and ankle area. And then we think that we can leverage those relationships and that whole body of network in order to drive deeper. Now what the other plus is through this acquisition or with this merger with Stability, our whole portfolio has rounded out. When you look at our foot and ankle product portfolio today, we have our core confidence in AmnioFix® in the marginalized product lines. But we have also ordered OrthoFlo. We guided that, because of the preciousness and anti-inflammatory products in that. We also have added just recently and introduced at the – at past meeting we can have a go power amnio cord product, which is an umbilical thicker graft and that will be used as we throw a stitch through it, and it can be used in foot and ankle surgical procedures. And then of course the PhysioTM and DBM products are going to be very applicable to the foot and ankle surgical procedures. So all of a sudden, we have got a pretty formidable product portfolio and a network that is very focused in this area.

The cross selling opportunities to clean the podiatrist and the surgeons become that much greater created by adding the PhysioTM and the DBMs?

There is no doubt, there is no doubt. And either these are not me two products, these are enhanced healing. They are cutting edge technologies. So again, that even creates greater interest from the users if you will or providers.

And then the last question for Mike, I think gross margin, Mike, just quarter is just due to volume and mix or was this something in their pickup, the sequential pickup?

It has to do with product mix.

Okay. Thank you very much. That answers my questions.

Thank you. Our next question comes from Mike Madsen of Newman Company. Your line is now open.

Hi, thanks for taking my questions. I guess I just want to start with the breakdown between the governments commercial sales. I'm sorry. I think you said the numbers, but I just want to make sure I got it correctly. Did I hear the government sales were up 75% commercial or up 20%?

Other way around.

Yes, the other way around.

Okay. But those numbers are correct. They just have it reversed?

That's correct.

Okay. And then just -- looking at the sales force overall, I guess, I just want to make sure I understand kind of how things are organized now that you bought the Stability company. So you obviously have a big part of your sales force that covers the Wound Care opportunity. And I know you have started to develop some dedicated surgical reps and now you have added Stability, which is really more, I guess, seems to be an orthopedic focus, maybe they have some burn business as well. But is that the three kind of legs of the stool that you have there in the sales force: first you have dedicated Wound, dedicated Surgery as in non-orthopedics, and then dedicated orthopedics reps or are they just more overlap between the surgery and orthopedics now?

Let me just hit that and Chris can fill in if needed. So we for the last several years had the split. The Wound care was direct reps; and then in the SSO business, we had basically a team that managed our sale agents and distributors. Then as we started building our abdominal, pelvic surgical group, we started adding more direct reps there as well. So in SSO, basically we have the direct sales organization for the abdominal and pelvic and then we have the management team that manages our sales agents and distributors. And we added when we added Stability Biologics, that added some sales management that manage their 100 distributors and sales agents that they brought the table. So the three groups are the right way to look at it, but direct -- there is only one portion of our SSO that we have direct reps. Obviously, our wound care as well. And then the indirect is under the SSO bucket relative to sports medicine, orthopedic and spine.

If I could, the only thing I would add to that is on the spine and orthopedic, sport medicine side we also have regional directors as well as specialists, market development managers that work with these agents and distributors whether it's training or being involved and managing those groups.

Okay. And then the 100 new reps from the wound products, are they mainly focused on orthopedics or are they going to be selling into other types of surgery as well like the general surgery and gynecology and things like that?

Predominantly, they have always been spine-oriented and orthopedic. There are groups that also do sports medicine, and certainly some of that is -- some of the focus is also abdominal pelvic, but I think the right way to think about it is they are more orthopedic -- main orthopedic and spine.

Okay, got it. And then just on OrthoFlo. How do we think about that product? The potential sales, given that you don't really have reimbursement coverage and it's competing in the category where you -- where the HA products, there is insurance coverage. So I don't know what the pricing differential is, but how big of an opportunity can that really be without some sort of coverage?

Well, I think there is a significant opportunity. I think you do hit on key point about obviously long-term coverage and reimbursement when you're talking about the offices and pain, sports medicine uses. Nevertheless, OrthoFlo is different. OrthoFlo with it continuous uses, it has inflammatory modulators, it has growth factors, it has HA, which of course is a significant constituent to the [indiscernible] fluid. And so OrthoFlo is different. The pure amniotic fluid is definitely different than high-value gases is doing for that HA market which, quite frankly also is about $1 billion almost in the U.S. So when you think about that there is an elective opportunity in price right and with the constituents and the characteristics of OrthoFlo, we think that we can still be successful there. I think, secondly, it's important to understand that there is other areas within the body where protection and lugubriousness and inflammatory modulation is important. And one area you can think about is best at joints where the [indiscernible] fluid running through. So we will get better lubricity within the spine area. So there are other opportunities as well that maybe more hospital based.

I'd like to add too. Remember the strength of our reimbursement group and how we went through reimbursement in other areas of our business. Obviously, that's an area that we are looking hard relative OrthoFlo and are working on a plan to put that into place. I'm not sure I can tell you how long it will take to get that. But we are obviously, I think, based on our history, we have shown that we can make reimbursement happen as fast or faster than the other folks in the industry. So we will be looking at that as well.

Okay. That's all I have. Thank you.

Thank you. Our next question comes from Joe Munda of First Analysis. Your line is now open.

Good morning, guys. Thanks for taking the question. Pete, I want to go back to comment you made a while back here following the Stability acquisition. The company is moving aggressively into the orthopedic space with -- by adding their products. What are your thoughts still against adding hardware or implant product or feature based on the fact that a lot of the competitors you're going to be coming up against are full suite of both hardware and biologics?

Joe, I don't think you will see us step in the hardware. We are biologics, focused organization on generic medicine. The point you're making though is valid and that's why the sales - independent sales rep organizations are so important to us. Generally speaking, many of them have metal and their presence in the operating room is because of the metal they are carrying in there. At the same time they are looking for a biologic to piggy back on the metal and we are an ideal, very ideal solution for that. So that's our approach and I just don't think you will see us stepping into the metal area.

Okay. That was helpful. In addition, I guess piggy backing a little bit off of that is somewhat, any updates on the relationships with both Zimmer and Medtronic?

Well, probably all three of us should comment on that, even Mike. You know as the organization is growing extremely rapidly, that's always taxing on the management team. And frankly, we have said this before we just haven't had the time from our end to spend probably the committed time within that would have improved things somewhat. On the other hand they have had their hands full with the integration of acquisitions, etcetera. We've got and I've discussed and focus this year that we put one of our sales executives strictly given them responsibility, strictly to work those two relationships, something we haven't had just until recently. So we think they are powerful organizations, they like our products. We just haven't had time to get focused to do some of the things that we'll be doing in '16. So we hope again to find those two relationships into a more productive fashion here with us.

Okay. I guess my final question, Bill it's for you. As far as the sales force is concerned, I think you had mentioned in the past that you were at 240 right around time of JPMorgan. And you had mentioned I think adding 80 reps possibly in 2016. Is that still the, I guess, the goal or has that changed? A – Bill Taylor: I think we have set somewhere in the neighborhood of 70 or 80 for the year. And that still looks good. Obviously as we go through the year that might get updated a little bit, but that's where I'd say we are right now.

Okay. And any sense of how that was chased out as far as wound versus surgical? Any help there would be great. A – Bill Taylor: We'd definitely be adding across all of our business areas, but I would say that a higher percentage of gross is going to be in that SSO or mainly are directs in the surgical area. That's one area that we really want to build up this year. But that said, we still have some room to grow in the Wound Care area. We used to have a lot of pockets where we don't have good coverage. We have a lot of larger cities where we just want to get deeper penetration. There are still several secondary cities that we need to get into that we are not into just yet. But from a percentage growth of the sales forces, I think the SSO group is going to grow faster than the Wound Care group.

Thank you.

[Operator Instructions] Our next question comes from the line of Bruce Jackson of Lake Street Capital. Your line is now open.

Hi guys, nice quarter. So getting back to OrthoFlo, can you give us a rough indication of what the contribution was during the quarter and then also has been out there long enough to gauge the reorder rate?

Well, number one, we don't disclose revenues for OrthoFlo or some of these product launches, we don't break it up that way. But I can give you a little bit of directional insights. I don't know that it's been around long enough to draw any major conclusions other than that we continue to make good progress. We're seeing adoption and reorders to your point. We're excited about the product. I think we have also said that there is other potential opportunities to expand that product line. And so, Bruce, we are very excited about and we're seeing adoption.

Patients to that product line are months ahead so. Q – Bruce Jackson: And then speaking of additions to the product line, any update on the tendon repair products?

On the CollaFix side? Q – Bruce Jackson: On the CollaFix side?

Yes, that project is moving forward. We have actually -- as the brief update we have successfully converted from the [bovine corium] [ph] whether the cow skin to the human placental collagen. We've now got our production lines up and running and we produced collagen fiber that are equivalent in strength with human fiber compared to the bovine. So now with our fiber modules up and running, now it's time for us to get down to the individual projects and how we're going to convert that fiber into specific configurations and then move forward for the filing of more than one 510K and then down the road PMA. But the initial submissions will be 510K, so we are working on our animal studies and other types of studies to prepare for that first 510K. So we are on schedule. We have made the progress. We have expected to make and converting the source of the collagen. And we still hope to submit for our first 510K later this year. Q – Bruce Jackson: Okay. Then you have mentioned that you've got $255 million covered lives right now. Are there -- were there any major additions to the insurance coverage during the quarter and do you anticipate any additional insurance coverage going forward?

Well, we still have two of the biggest United and Aetna. And we are working on those in every way we can, professionally. Some of the others [Kaiser] [ph] is still in our sights and few others, but that basically it in terms of the coverage for EpiFix and the Wound area. Of course we're looking down the road, it's coverage for some of these other new products. And again, I think we will make progress there faster than anybody else can, just because of experience in what we have already accomplished yet. Q – Bruce Jackson: Okay. Then last question, getting back to the diabetic foot ulcer procedures and the ability to on cross sell with the Stability Biologics acquisition. Certainly it would be advantage to be able to combine with some metal on the extremity orthopedic side. Another product they used a lot is the injectable. Do you have the ability to -- do doctors have the ability to buy that if it's -- as long as it's not being promoted?

Yes, the physician officers can buy the injectable. That's right. Q – Bruce Jackson: Okay, that's it for me, thank you.

Thanks Bruce. Thanks Bruce, appreciate it.

Thank you. And I'm showing no further questions at this time. I'd like to turn the conference back over to Mr. Petit for closing remarks.

Thank you. Well, I think we've had a very informative and productive call, a lots of good questions and hope that we've conveyed information and parameters you were seeking. Look forward to the next call which will be in about 60 days when we finish our first quarter. Again thanks so much for your interest. And those for those shareholders, thanks for your confidence in the management. Thanks