MiMedx down 7% after earnings, discussion of LCD delays

Shares of MiMedx (MDXG) are down 49c, or 7%, to $6.39 in Thursday afternoon trading after the company reported earnings last night and discussed Medicare local coverage determination delays on its associated call. On the call, CEO Joseph Capper stated, according to a transcript: “As you may know, on the eve of their scheduled implementation of the proposed LCDs, the federal government once again announced a delay this time until January 1, 2026. It goes without saying another delay was a head scratcher as the private office setting is in tremendous need of Medicare reform. This action without any other immediate step to slow down the out of control spend represents another blow to Medicare beneficiaries, the trust fund, and US taxpayers. I am proud of MIMEDX rich history of developing products based on clinical needs and backed by robust peer reviewed evidence which are tenants of any high quality medical technology company. We firmly believe this is the right approach to all aspects of medicine and certainly welcome the reform which would have made basic evidence a requirement to commercialize products in the wound care market. That said, we must adapt to the current environment. Naturally, we had contingency plans in place in the event of another such delay. And we have modified our approach to ensure we remain competitive in these affected care settings as we bridge to a period of reform for which we will continue to actively advocate.” The CEO went on to add: “As part of our contingency planning in the event of further LCD delays, we added a third party manufactured allograft branded Salera to our offering, which contributed to our recent results. We are in discussions to potentially distribute other third party manufactured allografts as well. I expect these products to be helpful in retaining business. However, I would caution against expecting this pivot in our approach to create a windfall for MiMedx for a few reasons. First, only approximately 25% of our overall business has ASP exposure. Second, while priced higher than our current EPI brands, they remain well below the eye-popping prices of some of the newer products or recently re-priced products on the market. Third, MiMedx will not engage in the aggressive selling practices that have become more common and which we believe crossed the line of appropriate marketing behavior. I credit our strong management team for being well prepared to pivot and take steps to protect our business. However, make no mistake, we will continue to advocate for much needed reform in this market. It is certainly very frustrating to see our tax dollars wasted.”