Good morning, everyone, and thank you for joining us at this year's Canaccord Genuity Growth Conference. My name is Caitlin Cronin, and I'm one of the medical device analysts here at Canaccord Genuity. Bioventus is here with us today, and they're a leader in minimally invasive treatments to enhance the body's natural healing process. We're very pleased to be joined by Mark Singleton, CFO, as well as Dave Crawford, VP of Investor Relations. Before we begin, I want to remind everyone of any relevant disclosures, which can be found on our conference and our firm website. We'll begin with a brief presentation by the Bioventus team, followed by a fireside chat, and I'll try to leave a couple minutes at the end for any questions from the audience. With that, hand it over to management.
Good morning, everyone. I appreciate you taking the time, and thank you for your interest in Bioventus. Just a little bit of what Caitlin said about Reg FD. We'll be making some forward-looking statements and would refer you to our latest 10-Q this morning. Bioventus was a spin-out of Smith & Nephew in 2012. In 2021, the company went public. In the back half of 2022, we were in a very chaotic situation from a Bioventus, and into early 2023. Coming out of that, you know, I really believe that those challenging times have masked the full potential of our company, and it really hasn't been understood the value that we really have to create shareholder value.
Since then, we've restructured the company, reduced expense, we've hired a new CEO, brought in a new management team, and we have three straight quarters of very strong results. Those results are also, you know, a reflection of our portfolio that have both short-term growth drivers, long-term growth drivers, and peer-leading gross margins of 75%. Bioventus is really just starting to take off, and we have a lot of runway in front of us. When you look at our portfolio on the, on the left-hand side of the chart, we have really three different areas that we participate in. First is pain treatments, the second is our surgical solutions portfolio, the third is our restorative therapies portfolio.
In our hyaluronic, in our pain treatment portfolio, we have our hyaluronic acid product, where we're a leading portfolio with differentiated technology and really strong go-to-market success, and we've been, you know, growing that year to date double digits. We also have our peripheral nerve stimulation product, which is really a small, very minor, minor, immaterial part of our portfolio today, but it's a long-term growth driver that will contribute, you know, a significant amount of growth over the long term. We go to our surgical solutions portfolio. We have our bone graft substitutes part of the portfolio, and we have a ultrasonics part of the portfolio. Both of those in Q2 grew double digits. Overall, surgical solutions in 2Q grew close to 20%, and that is both a short-term growth driver and a long-term growth driver.
When we look at Restorative Therapies, we have two, two products in there, an Advanced Rehabilitation and EXOGEN product. EXOGEN is a great product that has actually declined over the last five years and is now starting to turn around. It has very high gross margin and is a really strong cash contributor for our company. When you look at the revenue profile of our company, today, we have roughly $560 million. That's our midpoint of our guidance for 2024. That is $560 million, but when you look at the market opportunity, back to my statement of short-term and long-term growth, we have a significant $15 billion of from a TAM perspective, so a lot of opportunity in front of us to really gain share.
We really believe there's a lot of shareholder value in to be had and created in this company. In our short-term goals, we're focusing on, you know, driving revenue growth, significantly increasing EBITDA, and driving cash flow from the liquidity perspective to help us pay down debt coming out of the challenging times that I referred to in 2022. So set up for a lot of opportunity. We advance to the next slide. On the left-hand side is our 2022 challenges, and on the right-hand side is where we are today. 2022, we had really flat growth. We were facing an industry pricing change in our HA business, going from WAC pricing to ASP that drove double digits price declines, some of those as significant as 20%-30%.
Even with those price challenges that we had, we were able to squeak out a little bit of growth in that portfolio. But all of those challenges also forced us to have to re-amend our debt agreements. We had negative cash flow and, you know, just significant challenges from a control perspective. So really, really, as I said, a crisis timeframe of that in Bioventus. All of these things are behind us, including the pricing. We have re-amended our debt agreement, and we're starting to produce cash flow, as we saw in our 2Q results, at a significant material level. So we move to the right-hand side, that's where we look at this today and really look at the momentum that we have. Price is our friend now versus our enemy before, really a tailwind to our growth.
We've done a really good job of managing our expense, driving that to the bottom line with our peer-leading gross margins and starting to create EBITDA, starting to pay down debt and get into leverage ranges that are much more amenable, and we're highly focused on continuing to improve the debt overall. So taking the crisis situation, put that behind us, and really starting to accelerate revenue growth, accelerate our bottom-line growth even faster than our revenue growth, and you know, proceeding into good terms, again, with a really a lot of opportunity to create shareholder value. When we look at the next chart, we are gonna talk about revenue growth.
You can see kind of the trends here: 2022, you know, minimal growth, 2023, increased, and then 2024, our latest guidance is 12% growth. Even in 2023, when you look at the 3.6%, our HA portfolio grew significant, volume growth there. But despite the headlines, and that's why the headwinds on price, that's why our growth was less. But this year, and through the H1, our Surgical Solutions portfolio, again, as I referred to earlier, made up of our Bone Graft Substitutes and Ultrasonics, is providing significant, has significant growth opportunity in front of us, and it's also providing significant growth, today, you know, through the H1 of the year, and expect that to continue into the H2 of the year.
So a really strong short-term and long-term portfolio with Surgical Solutions. In the Pain Treatments, we have the short-term growth that we've been delivering over the last couple of years that was masked by the, by the crisis and challenges that we had in our hyaluronic acid portfolio. Very differentiated portfolio. We have three offerings there, the broadest portfolio of any company in this space. We have a, a really strong sales force who sells around our, our really strong contracts position, so we have really good contracts that help drive this. So we're coming at this space from a lot of different angles and, and highly invested and continue to be successful.
Through the H1 of the year or in Q2, specifically, this part of our portfolio grew 18%, and we continue to see opportunity in the H2 of the year for that to drive double-digit growth. So Surgical Solutions, high growth potential in front of us, we're executing on that. HA growth in the short term and the long term, we expect that to grow above market, so a lot of levers here. Also look at our international markets, which are, you know, 10% of our portfolio, roughly, and we expect that there's a lot of opportunity for that to be in front of us as well. I talked about the peripheral nerve stimulator earlier.
Again, over the long term, that's a new, new product that is gonna reach 510(k) approval in the next, you know, 6-12 months. We would expect that to happen and has a lot of growth potential in front of us. So overall, a lot of potential to really grow this portfolio in the short term and the long term, and really think that there's a lot of special ingredients that we have here. We go to the EBITDA perspective, so a lot of growth potential. We're demonstrating that in the short run. We believe it's there in the long run, and we look at what we've done from an EBITDA perspective through the challenging times. We had, you know, roughly $67 million of EBITDA in 2022.
We increased that to $89 million in 2023, and our guidance is projecting that to be $106 million. So this came through, you know, restructuring in 2022 and early 2023, where we reduced a significant amount of cost, and then also were able to grow a small amount. So even despite the small amount of revenue growth we had in 2023, we still grew the top line significantly. And this year, you know, through the H1, we're growing our revenue roughly about 14%, but we're growing our bottom line almost twice that. So really responsible management of the P&L and great execution by the team across the portfolio from a revenue growth perspective that's driving the EBITDA performance that we have. From the...
One of the things with the crisis that we had in 2022 was the leverage ratio that went up because of the profits going down, and right now, we almost reached 6 turns of leverage at that point in time. Right now, we're in the actual 3.7 turns from an EBITDA to debt perspective, and we expect that to continue to reduce throughout this year, and our goal and expectation is for that to go below 3 turns by the end of 2025. Look at cash from operations. Again, the negative cash that we had in the crisis in 2022, a little bit of improvement in 2023, and then continue to expect a lot higher cash flow in 2024.
There's still a few headwinds on that, but 2Q, you, as you can see from our results, was a very strong cash quarter. And, you know, this is coming from, you know, higher performance in the EBITDA, which we talked about as being one of our priorities. You know, paying down debt through different sources, a lot better work, internal management of our working capital. So we're coming at this from a, from a lot of different directions, and as you can see from our continued improved results, it's working. So with that, just to reinforce that, again, Bioventus, we think, is a, a lot of opportunity to create shareholder value. We have a diversified portfolio with short-term levers, long-term growth levers, peer-leading gross margin.
And with the priorities that we're focused on, we really believe that a lot of opportunity here coming out of the crisis, again, with that really masking the potential that this true company has, and we believe that we're gonna have short-term success and long-term, long-term success as well. Thank you.
All right, thanks so much. We'll turn to the fireside chat. So I wanna start in Restorative Therapies, just given there were a couple of material updates in the Q2. You know, let's start with you announced the intended divestiture of your advanced rehab business, which is, you know, one of the businesses you acquired in Bioness, although you intend to keep the PNS business, which you mentioned earlier, could be a future growth driver for you. You know, so what really drove you to decide to, you know, tend to divest of the advanced rehab portfolio?
... Thank you, Caitlin. Yeah, from a divestiture perspective, so we announced this in our 2Q earnings. We really, if you go back to 2023, 2023, we divested our wound business. And really that was kind of the first of, I'd say, our non-strategic assets. So when we look at the advanced rehabilitation portfolio, it's really about narrowing down our focus on the portfolio, narrowing down, you know, the ability to really invest in our ultrasonics business, to continue to invest in the PNS, continue to invest in international markets where we really think those long-term and short-term growth drivers are.
And so this also by selling this asset also allows our internal management team to focus on the high growth assets that we have, and just really feel overall that the strategic fit in our portfolio isn't as much as the other assets that we have. These are great products. There's a lot of really good patient stories, and passion behind this and, you know, a little sad to see this go, but overall, we feel from a strategic just really narrowing the focus of our management team and our internal focus, that this is the right move. From how, you know, financial effects of this, from a growth perspective, this should actually help our revenue growth percent increase.
We look at it from a margin perspective, this is a lower margin business than our peer-leading margin of 75%, so that'll help improve our gross margins. Overall, from an EPS perspective, it's, you know, accretive dilutive is really immaterial to that so... But we feel strongly that this is the right decision and, and again, helps us narrow our focus on those growth levers that we talked about in the presentation.
Just a couple of housekeeping follow-ups. You know, when do you guys expect the divestiture, and is it still included within your guidance for the year?
Yeah, it's, it is included in our guidance. We have not removed that since it's not an official. We haven't signed anything at this point in time, and, the timing of this, we're, hoping to have this, signed by the end of Q3, and then we'd hope to have it, closed by the end of the year, would be the timeline.
Okay. And then just turning to EXOGEN, also in restorative therapy, as you saw impressive growth this quarter, and, you know, the business has been challenged for the last couple of years, but over the last couple of quarters, has seen some material improvement, you know, culminating in a strong mid-single-digit growth in the Q2. You know, just to start, what were the root of the issues with EXOGEN's lagging performance, and then what has driven the recent recovery?
Great. Thank you. So EXOGEN is one of the original products of Bioventus, and really bone stimulation is what the device is. And in the 2018-2019, you know, range, it kind of the revenue peaked and was a large percent of the total company's revenue at that point in time. And it's been declining, you know, in the early years off of 2018-2019, pretty significantly, but steady declines, I'd say, up until 2023. And really would say, you know, through kind of this 2022, early 2023 timeframe of when the company was really challenged, we took our eye off the ball on this product.
This product is one of our highest margin products in the portfolio, and really is a, I would say kind of a blue-collar sale. And from the front end all the way to the back end, there's a lot of opportunity for improvement, which is where the improvements come. And the person over, you know, responsible for this is really an operational minded person, who's done a great job with this portfolio. So, really what we've been focused on is making our back-end processes a lot more efficient to free up more sales time for our actual salespeople. There's a lot of paperwork because of the reimbursement and the government involvement for the salespeople when you look at that versus a normal medical device sale.
So we've been trying to do all we can to make their time more focused on sales versus the back office paperwork, et cetera. We've also invested in associate sales reps to help, you know, the full-time, more advanced salespeople or veteran salespeople, so investing more salespeople in this, and then a small amount of investment just from an R&D perspective to continue to improve the product. But this product has been around for a long time, and there's really some great patient stories with this as well.
But I think this is really about, you know, coming out of the challenging times, putting a lot of focus on this product, and we're starting to see a lot better results and, you know, look, obviously, with really high gross margins, if we start growing this again, which we are, versus a decline, that's a really good contributor from a bottom-line perspective and a really good contribution to our cash flow as well.
Mm-hmm. That's great, and then maybe just, you know, turning to pain treatments, you mentioned earlier the abating pricing headwinds, which have, you know, been a problem over the last couple of years. Can you describe why Bioventus is a formidable player in this space? You know, like, what is it about your products, your commercial team, you know, and also the payer standpoint, that makes it so strong for you guys?
Yes.... I think it really, you know, starts with the clinical differentiation that we have in our DUROLANE product, which is, you know, roughly 75% of that portfolio and really driving the majority or, you know, a lot of our growth in that portfolio overall through the H1 of the year. You know, or in, I guess, say specifically in the Q2, that portfolio grew 18%-19%, so really, really strong growth. And again, the pricing challenges are well behind us, and we're moving into hopefully making pricing a tailwind. But I think, you know, why we're so successful here is, one, 'cause we're committed to it. Not all of our competitors are. Two, we have the clinical differentiation on DUROLANE that we talked about.
But then there's the go-to-market approach, and we really have a strong position with contracts and our payers. So people like UnitedHealthcare, Cigna, Aetna, we have contracts with those. So when a patient goes into the office, if they're covered by UnitedHealthcare, then they're gonna be getting DUROLANE or GELSYN-3 or one of the other products that we have. So really strong position on the contracts, and we have a big investment in our sales team, and the sales team, it sells around those contracts. So if an office has those contracts, they get in there and go after the business that aren't really, you know, the Medicare business or the non-insurance business, and they've done a great job of executing around that.
So we're we have the payer contracts, where our market access team had really opened those avenues up into the contracts, and then we have the sales team that sell it all around that. We have some competitors in that space who've actually just de-emphasized and taken the sales force out and just purely letting the contracts work for them. We're doing both, and you know, the business that we sell around those contracts is even more profitable than the contracts itself. So between the clinical differentiation, the sales coverage that we have, the payer coverage, I mean, we feel that we're you know, the strongest player in this market and our products are also very differentiated and the best treatment for patients.
That's great. And then maybe just turning to Surgical Solutions, which you noted was your other main growth driver for the business. Can you talk about, you know, Ultrasonics versus Bone Graft Substitutes and the commercial strategy which you implemented later last year and how that's going?
Yeah. So our ultrasonics portfolio came to us through the Misonix acquisition, a double-digit grower consistently, so our overall surgical solutions portfolio grew close to 20% in 2Q, the most recent quarter. That portfolio, essentially, the commercial model is we have a generator that goes into the hospital, and the generator has, you know, power, very efficient power that goes into hand pieces that the surgeon would use in the surgery, and then we have disposables that go on those hand pieces. So kinda three different parts of the sale.
Right now, we're really participating in the spine space, and when you compare our product to our competitors, I've been out in the field with our new CEO, Rob, and, you know, talking to surgeons, et cetera, one of the surgeons commented about how revolutionary it is. So from a spine-specific, our bone cutting device, which essentially is used in spine surgery, is a very clean cut. You know, one, it's really good for the surgeon because of the handle. It, it's really a lot easier for them to use, so clean cuts, a lot less blood, a lot safer for the patient, a lot safer for the doctor. We really believe that we can kinda change the standard of care with this.
When you compare that, you know, the precise cutting that we have, cutting ability that we have, to our competition, who's kind of living in the dark ages in some ways with a hammer and chisel, so when they're going in to do a spine surgery, they're actually literally, you know, hammering and chiseling to get through the spine. It's night and day, and that's why we really believe we have the ability to change care. I'd say that change the way of care for surgeons. One of the things that we're really focused on from a commercial strategy to your question, Caitlin, is really the medical education and training that we need to do.
We need to get this into, you know, early, you know, the teaching hospitals, into the fellows when they're actually going through this early on in their careers, to get that into where they recognize how good that technology is compared to the co-competition of having that. And we're starting to do that and make those investments to really do that. But the challenge we have, which is really a human nature thing, is some of the older surgeons are just... you know, don't wanna change how they've been doing this for X number of years, for a long time. But there are examples out there of where we've met surgeons who are, you know, further on in their career and starting to change.
But it's really a differentiated product and, you know, continue to do that. But we need— That's, so that's today, we're participating in the spine space. We also have the ability to take this into the neural area, so that's not a market that we're really focused on today, and then also kind of in the general surgery area, too. Both of those are untapped markets, and even within the spine market, we're really untapped. And so a lot of runway, a lot of potential there, but we are growing at, you know, double digits today and having a lot of success. But we believe, again, short term and long term, this portfolio really has a lot of ability to grow.
I'd just add from a commercial execution standpoint, you look at our BGS sales force and then our distributors there and our direct reps for ultrasonics. We had tried a kinda hybrid approach where they would be selling each other's products. What Caitlin was referring to is about midpoint of last year, we kind of went back and separated that. So distributors and BGS focused solely on that market, then our direct reps and ultrasonics solely focused on ultrasonics, and that's where we've seen a better execution from a commercial standpoint and seen growth, especially in the BGS side, lift off to that double digits that Mark was referring to.
It seems like on the BGS side, you've also been able to manage your supply chain through, you know, the increased demand. Where does that stand now? Is it a limiter to growth?
... I mean, yeah, that's the thing inside it is sometimes in the H1 of the year, it felt like we couldn't, you know, get enough supply, and there was a lot of noise from the sales team. But despite that, we still delivered, you know, in that portfolio, you know, overall 20% growth. So but we, we definitely have a lot better position, and see a lot line of sight to, to, more further, you know, plentiful supply in the H2, or, you know, there's a little bit of challenges, but starting to get a lot better as we turn, turn into the H2 of the year.
That's great. And then maybe just finishing on, you know, the financial side. With your credit agreement, renegotiation expected, extended till early 2025 and also debt pay down ahead of expectations, you know, what's your strategy to really continue driving improvement on the balance sheet?
Yeah, I think, you know, right now, again, you know, as I said in my presentation, we expect our leverage to get below 3 turns by the end of 2025, and that really puts us in a good position with those agreements, where we didn't necessarily think that, you know, a year and a half ago. So we feel good about where we are. Again, with our divestiture of the advanced rehabilitation, focusing on continuing to pay down the debt through things like that, with the proceeds continuing to drive the EBITDA. We also expect to have, you know, less below-the-line costs, you know, and less. You know, starting to do a lot better job on working capital.
So we really feel like we're in a good position, you know, fully capable of continuing to pay the amortization on our term loan in the short run, and we're, you know, working closely with our banking partners on what the right move. But there isn't something that, like, we have to do tomorrow to continue to keep us doing what we have to do in that portfolio.
That's great. And then maybe just to finish up in the last 30 seconds, what do you wanna leave investors with? You know, understanding how far you've come and how you plan to execute going forward.
Yeah, I think I could sum that up with we're really just getting started. I think that we've been through some tough time. We have a lot of scars from that. I'd say that Rob Claypoole has started as a new CEO in January. He's bringing a commercial execution and understanding of taking our commercial execution to the next level, and really gonna add a lot of value to our company, that we really haven't had that level of understanding from a commercial execution in this company before, to be honest, and really excited about how he's looking at this. He also has a lot of experience in international. His prior company, Mölnlycke, the portfolio he managed there was 70% international and 30% the US.
Our company is exactly the opposite of that, so he's very familiar with how to be successful in the international markets. And so, again, really kind of I said in my presentation, we're really just starting to get, really getting started here. A lot of runway in front of us and, and, you know, really believe there's a lot of shareholder value here. One, just from a discount to... from a multiple perspective today, to the long-term levers that we have with the 75% gross margins, to where if we manage the P&L from a, a expenses perspective and grow like we know we can with the 75% margins, we're gonna be really, really successful, and we think this is a great opportunity to, to invest.
That's great. Well, thank you both, and I think we'll end it there.
Thanks, Kate.
Thank you.