Thank you.
Okay, we're going to go ahead and get started with another presentation. My name is Eric Anderson from the TD Cowen Medical Devices team. We're happy to have the team from MiMedx here, and I'm going to introduce CFO Doug Rice for a presentation and some Q&A if follows. Thank you.
Thank you, Eric, and good morning, everybody. It's a pleasure to be here. I'd like to introduce our VP of Investor Relations, Matt Notarianni, who is here with me also. I'll zip through some slides and give a background on MiMedx and sort of the markets that we play in and our competitive advantages, and there should be room for some questions at the end. Thank you to TD Cowen and Josh and Eric for hosting us here today. We look forward to expanding our relationship with Cowen. I also think this conference is really good timing relative to where we were with earnings release last week, so all of our numbers are current. The next slide is simply our safe harbor around forward-looking statements. I won't read every word, but please refer to our filings and our 10-K that we filed last week. Who is MiMedx?
At a high level, we're an advanced wound care company focused on helping humans heal. That's our why statement, and it defines everything we do as a company. We have about 900 employees, mostly in the Metro Atlanta area. We have two manufacturing facilities, and we are international, but we're 90+% domestic, just to give you an idea of the company. Big picture. We were one of the early pioneers in this space, operationalizing placental tissue, processing at scale, and with a proprietary process. Our foundational innovations and strong IP portfolio have been recognized over the years as being among the strongest in the industry. As we move this business forward, we're excited to speak with you today about the macro and micro trends that we expect to drive growth and profitability into the future.
The skin substitute space has been in the news for a few reasons lately, and we're very proud to have worked with a very talented New York Times journalist to help bring to life the stories of two patients who received MiMedx products over the course of their care. If you haven't read this article, which came out in October, I would highly recommend checking it out. It speaks to the enormous potential for placental tissue in the care of a wide range of patients, from those with chronic and hard-to-heal wounds to burns and beyond. Where is our business today? As a company, and you'll see this over the next few slides, our business is broken into two product categories: wound and surgical. I would think of it as post-acute and acute. In wound or post-acute, we're talking about chronic and hard-to-heal wounds.
These are typically found below the knee and are characterized either as diabetic foot ulcers or venous leg ulcers. There are a lot of these wounds out there, and it disproportionately impacts the Medicare population, which continues to increase. Part of the portfolio of data that we have demonstrated is that innovative treatments like ours can help these patients avoid their worst-case outcome, an amputation, which is costly, has a staggering mortality, and in many cases can be avoided or prevented. On the surgical side of the business, that is really exciting for us and a potentially massive market opportunity. Today, our products are used in a range of surgical procedures, whether to assist in closure or to be used inside the body to prevent adhesion and other indications.
We are just at the starting point of building out a large body of evidence to support many indications and applications of these products. I'll talk a little more specifically about the initiatives we have in place in just a little bit. On the wound care front, our products are found in virtually every care setting where a patient presents with a chronic or hard-to-heal wound, and there are a lot of them, as you can see, all the way from the private office to ambulatory surgery centers to skilled nursing facilities and hospitals and wound care centers. At MiMedx, we are proud to combine an expansive donor network with about 50 birthing centers around the country in order to source donated placental tissue from consenting mothers following a cesarean section birth.
We take great care of this precious tissue with our team to ensure it arrives at our manufacturing facilities in Marietta, Georgia, with the ability to be screened, sterilized, and processed into our products. Once in Marietta, the tissues undergo a robust process to get them ready as shelf-stable packaged products. We have built this platform over the last decade and have protected it with a combination of know-how and a sizable and growing patent estate, which has successfully stood up to prosecution in the past. Today, we operate a single shift. We have ample headroom to continue to scale our manufacturing capabilities from end to end. One of the benefits of being among the true pioneers in this field is the library of scientific evidence that we have amassed with our portfolio. We believe today we have the most studied portfolio of placental products in the world.
Just last year, we had a paper in Nature, Scientific Reports, which was a first for this company and a major recognition of the potential for our products in one of the preeminent scientific journals in the world. That library of evidence has also afforded us very broad commercial payer coverage and, as we'll talk about a little bit later, has also set us up very favorably as Medicare reform takes shape. We are actively undertaking a number of efforts to expand our footprint and a wide range of surgical procedures as well. Finally, we are the first in our space to offer a comprehensive portal, which we call MiMedx Connect, to help drive customer stickiness, simplifying ordering, tracking insurance verification requests, and further getting to know our customers and making MiMedx a true partner for our customers.
We go to market with a team of more than 200 direct sales professionals, as well as a national network of sales agents, to make sure we have broad coverage geographically and across all sites of care. I mentioned before our broad commercial payer coverage, particularly for our flagship EPIFIX product, which has allowed us to be used routinely on patients outside of the Medicare Fee-for-Service. Our manufacturing has now turned out over 3 million allografts. As Joe mentioned during last week's earnings call, our efforts to grow in Japan are beginning to pay off measurably, with sales growing over 200% in 2024. Our portfolio is comprised of a number of products, but I'd like to focus on a few highlights from our portfolio for the moment.
First up, EPIFIX is our flagship product for the wound care market and, as I mentioned, boasts widely recognized efficacy data, which is why it is among the products outlined on the shortlist for coverage under the proposed LCDs we expect to go into effect next month. AMNIOEFFECT is a lyophilized surgical product that has seen a really nice uptake in a range of applications since its launch two and a half years ago. Finally, HELIOGEN is our first xenograft or animal-derived product. It's a bovine collagen. We acquired the rights to sell this product along with a relationship from a contract manufacturer, Regenity Biosciences, last year. This bovine particulate is our first 510(k) cleared product in our bag and represents the first in what is likely to be a full complement of xenografts as we look forward to bringing them and others to the market in the future.
Here's a quick breakdown of how our wound and surgical products stack up. You can see that wound is about 2/3 of our total revenue, and surgical is the remaining one-third. Both segments have seen good growth, particularly when you consider our surgical business had a few transitory items impacting the reported growth in 2024. When you exclude those transitory items, wound grew 12% and surgical grew 8% on the year. I've mentioned a few times our focused push into surgical. As one of our primary strategic initiatives for the business, we are dedicating considerable focus on building out the evidence base for a wide range of surgical disciplines. We already see several very compelling use cases for our products in the OR and outline a few highlights here on this slide.
On the lower right, I'd like to highlight the data around colorectal anastomosis procedures with our products resulting in a statistically significant reduction in leaks, which is a catastrophic complication for the patients as well as the hospitals. As we continue to find compelling use cases, we will look to be peer-reviewed on our collection of evidence. This slide shows some of the studies we have in flight focused on very significant opportunities. We expect later this year to have a health economics paper for the use of EPIFIX in Mohs procedures and are well underway looking at other GI transplant anastomotic procedures. This is all in addition to the randomized controlled clinical trial, or RCT, that we have in flight for EPIEFFECT on the wound side of the business.
As our CEO, Joe Capper, has mentioned repeatedly, our aspirations are to have a MiMedx product ready for use in every single one of the tens of millions of surgical procedures performed every year, whether for the closure of the site or for deeper tunneling wounds. On each of our calls, we talk about our strategic priorities, and we refresh these and track our progress as we move throughout each year. This year, the added priority on the other side of upcoming reimbursement reform will be to capitalize on the opportunity for our business and the covered products we offer after the LCDs go into effect. Alongside that unique opportunity for the company, we remain focused on leading the industry with innovation and broadening our offerings.
We also see significant opportunity to continue to build a footprint in the surgical suite, which will be underpinned by compelling data that we have started to ramp up in a variety of disciplines. Finally, our customer intimacy initiative is all about doing what we can to be more than just a vendor to our doctor and hospital customers, and we want to be a trusted partner with them, offering services that make it easy to work with and be a preferred vendor to them. From a financial perspective, we just had our 2024 conference call last week and capped off a year in which we saw solid growth, even despite some of these market challenges, strong profitability, and robust cash flow generation.
Over the last few years, we have dramatically improved our balance sheet and continue to build optionality to invest and expand our business both organically and inorganically. We reported 9% growth for the year and 20+ % EBITDA margins and over $100 million of gross cash balance. For our management team, our leadership team has now been together for over two years and has largely transformed our company over the last two years into a nimble, focused leader in the industry. We now boast a number of individuals with deep med tech experience as well as expertise in regenerative tissues in general. Lastly, I'd like to just summarize. You can see that we have large and expanding addressable markets.
We have a maturing reimbursement and regulatory landscape from which we think we can take advantage and a competitive advantage with defensible intellectual property and proprietary technology, strong and improving financial profile and balance sheet that gives us a ton of optionality, and experienced and skillful leaders with more capable and we're more than capable of executing our proposed strategy. With that, Eric, that's my prepared remarks. I'd be happy to take questions.
Sure. Maybe just one from me. It's our understanding that you plan for multiple scenarios in terms of how the LCD shakes out. Can you just walk through what those steps look like and then move forward there?
Yep. We're excited about the proposed Medicare Local Coverage Determinations that are scheduled to take effect April 13th. We're certainly nimble. Some of what the LCDs call for is not always clear. We've got many scenarios that we're prepared to execute around that as we learn more in the weeks following April 13th. We're super excited to root out a lot of the fraud, waste, and abuse in our space. We feel like the LCDs really level the playing field and give companies like MiMedx a better chance at playing in the space.
Yeah. Excuse me. Maybe I'll just tack on to that a little bit. I think there is a bit of a fixation among investors on the LCDs, right, as an important first step. What we've tried to convey, and certainly the work that we've been doing on the Hill and with lawmakers, is it is a bit of a short-term fix for the space, right? It's going to prioritize efficacy should it actually go through. I would say broader reform is absolutely needed. That would come through a variety of mechanisms that CMS could enforce, whether it's through the Physician Fee Schedule change, which gets proposed in the summers. There is a range of scenarios as it relates to what could or could not happen this year. Certainly, the guidance that we issued last week assumed that April 13th is the go date.
Should that not be the case, what we've said and when asked, and I think it was on the call as well, does that necessarily mean that if they don't, whether because of something the Trump administration does or whatever, how does that change the way we think about the year? It changes the tactics. It's probably premature to say that it fundamentally changes the way that we can grow and further invest in the business. While we'll be adaptive to all of that, we continue to be really trying to push the conversation in Washington around getting some of these exorbitantly priced products with no clinical efficacy out of the marketplace.
Good question. Other questions? Yep. One more in the back?
Can you give a little bit more background on the industry environment and the progress in the recent one happened with this?
The question, if I understand it, just more background on how we got to this particular situation with Medicare. I think all of us are proponents of free markets and willing buyers and willing sellers. The problem is when the buyers get taken advantage of with certain loopholes. I think part of the problem stems from regulatory issues, but from a reimbursement perspective, because our products are priced on an ASP-plus methodology, it's allowed certain competitors to come in at very high prices. While they're not approved with all the payers, they're able to get reimbursement codes for Medicare and bill Medicare at very, very high rates, multiples of the cost of our product to our customers.
I would say it's important. What's somewhat unique in this case, in this industry, right, is there are a couple of different reimbursement mechanisms that exist. There's obviously the DRG for the hospital inpatient. There is a bundled rate that exists today for hospital outpatient and wound care centers. Finally, in the private office and adjacent care settings, so think home health, nursing homes, skilled nursing facilities, et cetera, the same products are reimbursed using the Medicare Part B ASP list. That's really where the issue is. If we're isolating the issue, it's made headlines. A lot of folks are focused on it. It's one payer in that subsegment of the marketplace that really has allowed this proliferation to happen. How does it work?
You get a Q-code product, you establish pricing, and whether you're rotating Q-codes or doing some other loopholes that may exist, you're able to exponentially bill Medicare for the care of these patients. What does that mean in terms of dollars and cents, right? 2020 is kind of our starting point. That's kind of the anchor that we look at where Medicare outflows in that care setting was about $500,000,000 annually. Fast forward to just a few months ago, that spend was happening every two weeks. Medicare was spending over $1,000,000,000 a month on products in that care setting. For us, right, it's about a little less than a quarter of our business is Medicare fee-for-service. It dominates the headlines and has certainly become a focal point.
Under an administration that has prioritized rooting out fraud, waste, and abuse, it seems ripe for reform. It's something CMS has been talking about for years and hasn't yet really acted on or figured out what the right solution is. That's where we've seen the opportunity to kind of weigh in and hopefully influence some positive change there.
Good question. Anything else? All right. Super appreciate everybody's attendance today and happy to address more about MiMedx. We like talking about the business anytime during the conference. Thank you very much. With that, I'll sign off.
Thanks, everyone.