Good afternoon. I'm Josh Jennings. We're moving down from the TD Cowen Medical Devices team. We're moving down the medical devices track this afternoon, day one of our 44th annual healthcare conference, and we're excited to have the MiMedx team joining us, and we're gonna hand it over to the head of IR, Matt Notarianni, and gonna take us through the MiMedx presentation and then have some Q&A after. Matt, thanks so much for being here up in Boston, and great to see you.
Josh, likewise. Thank you so much. Let me get over here, grab the clicker, and good afternoon, everyone. First, obviously, wanna share our thanks to the Cowen team for the invite and for the opportunity to present today. Really glad to be here in Boston with y'all. I'm gonna get into some slides about the business, but before I do, we'll just turn you to these disclaimer slides. Make sure you understand the forward-looking statements, as well as the discussion of our risks, which are hot off the press on our 10-K, which we filed last week. Additionally, we make some non-GAAP references, and those reconciliations can be found in our press release for Q4 in the full year, which we issued also last week. So MiMedx is a business that's focused on healing solutions, and we tried to really simplify this message and focus it last year.
We came up with a why statement or a mission statement really focused on helping humans heal. We do that, and I'll get into, excuse me, the unmet need that we try to serve. But we do that with over a decade and a half of experience with our products in the market, really as the pioneer in the field of placental-based allografts in particular. We have, as you'll see, a very broad portfolio of products, and a pretty robust body of clinical, scientific, and also real-world evidence, that our clinicians, you know, rely on as they evaluate treatment alternatives for the patients that they're working with to restore healing for. We also, by virtue of having that data and that real-world experience, have very broad coverage, over 300 million payor lives covered.
While this business is primarily a domestic, U.S.-based business, we are at the very beginning of some targeted international expansion, specifically in Japan, where 2023 was really our first year in the market. So moving on to the unmet need for healing solutions. To characterize it, it's a very large issue here. There are estimates that over 7 million people suffer from chronic, non-healing wounds. These are wounds that have stalled out at some point in the healing cascade. They typically exist in the lower extremities. And the patients that are presenting with these, it's an oversimplification to say, "Oh, it's just diabetics," or "It's just the elderly population." They usually share a host of different comorbidities, of which those are two of them. Ultimately, it's poor circulation, vascular issues, etc., that reveal themselves in wounds in these areas that fail to close adequately.
When those are treated ineffectively, the cascade can get quite serious, ultimately leading, in worst-case scenarios, to amputation, which, in addition to just being a catastrophic lifestyle consequence, carries a very significant mortality rate with it as well. So really, as we've developed a product portfolio squarely, you know, over our history focused on helping docs manage these issues and keep patients from, you know, getting to these bad outcomes, we really want to meet patients. They come in a variety of different settings. I'll talk about our wound portfolio as well as our surgical portfolio. First, on the wound side, these wounds start or present in different care settings with varying degrees of severity. The private office we refer to is really more your community podiatry office.
And that's where oftentimes you'll see these patients show up first with a nagging wound that has failed to close. And as that ineffective treatment or the patient has let it go on long enough, it ends up in different and more expensive care settings, including the wound care centers and hospital outpatient and inpatient settings. On the surgical side, over time, what we have found is that the use of our products are also very effective for helping close acute wounds, the deliberate wounds that you make as part of a surgical incision to help support a clean closure, as well as inside the body, whether to act as a barrier, a wrap, a covering, or to help reinforce tissue. And so our products participate kind of across this wheel.
And you'll hear more about how we think about, you know, getting deeper into the surgical end market in the coming quarters and years ahead. Looking at the portfolio, so we divide the product portfolio kind of by the E products. Those are found in the wound settings. So EPIFIX, our lead product, and EPIEFFECT, our latest launch product, are included there. And then our surgical products, I'll begin with an A, the AMNIOFIX and associated lines. And together, that's what generates the $321 million or so of net sales that we reported last week. And service is an addressable market that today, rough numbers, we're sizing at about $2.5 million or $2.5 billion, growing to $3.5 billion, relatively balanced between U.S. wound and U.S. surgical, and then layering in a quite sizable opportunity in Japan that we would be excited to take part in over time.
Our product portfolio today is all, as I mentioned, placental-based allografts. The very beginning of those products starts with a placental donation from a healthy cesarean section delivery. We have a network of birthing centers and hospitals, as well as docs that we work with, to really work with these patients as they're getting ready to deliver, educate them on the value of the placental donation, and then work to recover those and bring them to our facility in Marietta, Georgia. They undergo testing, terminal sterilization, and then our proprietary processing, which we refer to as PURION, to ultimately get to the suite of products in different sizes, configurations, thicknesses that we offer today. We've got a couple of stats in terms of what we've distributed to date and continue to work with a large and growing number of these facilities across the country.
When we talk about sales and I talked about the various sites of care, we really chunk it up into 3 main buckets. There's the hospital setting that includes inpatient as well as outpatient care, as well as the wound care clinics. These are going to be reimbursed, usually using the DRG on the inpatient side or through a capitated payment system in the outpatient and wound care clinics setting. And those tend to be pretty stable reimbursement environments for this category of products. I'll skip over private office for a second and go to other. Other is kind of a hodgepodge of additional sites of care, including the federal facilities. That's also where our Japanese business shows up. And then kind of between a quarter and a third of our business is derived from the private office. This, in 2023, was a very strong grower for us.
We'll talk a little bit about the more nuanced reimbursement dynamics at play here in one of my next slides. But again, these are the podiatry clinics that, you know, are oftentimes a first line for seeing patients with chronic and hard-to-heal wounds. And so the physician office reimbursement landscape has been under a fair bit of scrutiny over the last couple of years. CMS, back in 2022, started to flirt with an idea of changing the paradigm somehow, maybe going to a bundle or some other mechanism to reimburse. And this is, remember, a very heavily Medicare-aged patient population. What we went and looked at here is there are essentially two mechanisms at play. There is wholesale acquisition cost reimbursement, and then there is pricing that is published on a quarterly basis on the Medicare ASP list.
MiMedx's products have been on the ASP list for years, and they were one of several quarters ago, there were very few that were on the list, roughly 12 in the category. So most of the space was being reimbursed using wholesale acquisition cost. You can see in the evolution of the gray bars from 2019 to 2022 that the spend that Medicare was outlaying to products that were not on the ASP list was really ramping out far beyond any sort of patient demographics or any other corresponding increases. What we saw happen was CMS started to add skin subs to the ASP list over time, really beginning in December of 2022, and continues to add to them each quarter. So now we're talking about a universe where there's roughly 80 skin substitute products listed. We know that's roughly a little less than half.
There are about 200 skin subs available in the marketplace today. What this has done, though, is driven transparency, at least for these products, in terms of pricing and a much more streamlined reimbursement environment, which we think has benefited us, as evidenced by the growth that we were able to demonstrate for the site of care as a whole. We have a new management team, including Joe Capper, our CEO, who's in his 14th month now with the company. When he joined, he kind of laid out three strategic priorities that we, on quarterly conference calls, hearken back to to kind of check our progress. Essentially, they're in these three big buckets. First, we want to build our leadership position in wound and surgical. That's growth in all sites of service, really regain share in the physician office.
That was a priority, certainly for last year, as the environment was changing. And then go deeper and wider, specifically within surgical. When we talk about developing opportunities in adjacent markets, this opens the door for organic innovation, like you saw with EPIEFFECT and AMNIOEFFECT product launches, but also inorganic complementary product lines. There are numerous potential areas where we could not only augment our portfolio, putting more in the bag in support of selling to the same channel, to a clinician who's treating the very same patient, but also doubling our addressable markets by having a broader product portfolio. And then finally, demonstrating some discipline around how we spend money. We've made commitments, obviously, internally to focus the business. We announced a strategic realignment of the company that unlocked a significant amount of savings and cash flow last summer.
But even beyond kind of that distinct exercise, we have been pretty judicious about where each dollar gets spent in support of driving free cash flow of this business and being an overall more efficient business at scale. Slide's a quick snapshot of what we reported last week. It was really kind of a capstone event off of a really strong year. Net sales for the fourth quarter of $87 million. We're up 17% year-over-year. And we grew the full year net sales by 20%. Our gross margins are very healthy. They were 84% in the fourth quarter and followed a trend that was pretty positive over the course of the year on a quarterly basis.
Then the measure that we spend a lot of time talking to the street about is Adjusted EBITDA, with goals as we were gearing up for the end of 2023 to be north of 20%. You can see we clearly achieved that on a quarterly basis. We also wanted to build cash. We ended the year with a cash balance of $82 million. We also were fortunate to strengthen the balance sheet, converting some preferred stock at the end of last year and announcing a refinancing early in January that provided us revolver access and a much lower overall cost of capital. Some snapshots or headshots of the team here, all of which, you know, are relatively under, at least under five years in the seat, and come from a variety of roles in MedTech.
It's very much an aligned group as we've focused this organization to really not have the sort of identity crisis around who we want to be. We're very clear about being a MedTech player in the healing industry. Just to wrap up, so we're a pioneer in the field of placental-based allografts. We have an expanding pipeline. Some of that has come to market quite quickly in the last, call it, 18 months. These serve very large and growing market opportunities. You know, we think that the combination of our large and robust sales organization, our deep product pipeline, and wide product offering all lend itself to being able to grow above market.
What we mentioned on the call last week was that we expect this business to be able to grow in the low double digits over the long term and generate some very healthy cash flow, which you've seen for the last couple of quarters. Let me pause there. I think I have some additional time for any questions.
Questions from the audience? I guess just one question. As you describe the competitive environment in the United States evolving with this scrutiny of kind of outpatient reimbursement, how should, how are you, what's MiMed's view on how that evolves? And will that continue to be a competitive advantage as it moves throughout this year and in maybe the 2025 flagship? Yeah, it's a great question. And since you're not mic'd up, I'll repeat it. That's Larry.
But yeah, so it was really on the evolution of the reimbursement landscape in the private office and how we see ourselves positioned. You know, what I would say is we feel fortunate to have been on the ASP list for a very long time. And our lead product, EPIFIX, has been in the market probably longer than most of the other SKUs out there. What does that mean? That means that we've got the most peer-reviewed published data and the most real-world use data, probably, of any skin sub out there. We also have stayed on that sort of transparent path with a pricing paradigm that has not run afoul of sort of the CMS spend that they're really trying to solve for. We obviously have been engaged with them and others to make sure that they get it right.
Because the last thing that we want with respect to any sort of changes in the private office is that it has the unintended consequence of forcing patients into more expensive sites of care. So in other words, if they were to cap the number of applications, which was something that some LCDs had contemplated last year, well, that doesn't change the fact that those patients probably need those additional applications. And so what happens to that patient? That patient ends up being referred to the inpatient, and the dollars get spent, but they get spent in the DRG. That's a more expensive site of care anyways. So we want to make sure that it doesn't run afoul of kind of chaos for the patient. Obviously, understand what they're trying to do. And, you know, CMS initially thought about or postulated that they might want to go to a bundle.
We see a bundle in the wound care center and hospital outpatient side. Even there, it's an imperfect calculation with the bundle amount that they use because there's a size at which it stops making sense for them to treat patients in that care setting as well. So again, it's kind of finding the right path. And right now, what seems to be working for CMS is to continue to add these products to the ASP list on a pretty steady basis. And, you know, at some point, should they include requirements around data or whatever, we feel like we stand head and shoulders above a lot of the other players in the space.
Maybe one follow-up, last question for me. Follow-up question on pricing. Just skin substitutes and as this scrutiny has been ongoing in the office channel, has there been any ASP pressure, or is that, how do you see ASPs evolving over the next few years as well?
Yeah. So the question was, with all the scrutiny, how has ASP pricing behaved? For us, for EPIFIX in particular, it's been very stable. And you can kind of see that quarter after quarter. Now, with 80 SKUs on the list, there's a pretty wide range in ASPs on a per square centimeter basis to deal with. And what you see kind of over those corresponding quarters is some degradation. If a vendor decides to discount or rebate, that gets captured on kind of a lagging basis in that ASP.
And what the intent is, obviously, to focus on selling on the product's efficacy and not on, you know, some sort of financial benefit to the doc. You know, over time, I think what you'll see is like-kind products that have similar attributes that are on the ASP list end up finding themselves in similar spots. I mean, because you're going to have a more rational marketplace. As long as that wholesale acquisition cost loophole continues to exist, though, you have a dynamic where there's another alternative out there that, you know, can allow for perversion in the system and excess spend.
Other questions? Matt, thanks so much.
Thanks, everyone.