bvs-20210403

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________

FORM 10-Q

________________

Mark One


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 3, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number: 001-37844

BIOVENTUS INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware						81-0980861
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)

4721 Emperor Boulevard, Suite 100
Durham, North Carolina						27703
(Address of Principal Executive Offices)						(Zip Code)

(919) 474-6700

Registrant’s Telephone Number, Including Area Code

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.001 par value per share	BVS	Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☐

Emerging Growth Company

☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 10, 2021, there were 41,038,589 shares of Class A common stock outstanding and 15,786,737 shares of Class B common stock outstanding.

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	BIOVENTUS INC.

	TABLE OF CONTENTS

P ART I. F INANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Condensed Statements of Operations and Comprehensive Income for the three months ended April 3, 2021 and March 28, 2020	1

	Consolidated Condensed Balance Sheets as of April 3, 2021 and December 31, 2020	2

	Consolidated Condensed Statements of changes in Stoc kholders ’ and Members’ Equity for the three months ended April 3, 2021 and March 28, 2020	3

	Consolidated Condensed Statements of Cash Flows for the three months ended April 3, 2021 and March 28, 2020	4

	Notes to the Condensed Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26

Item 4.	Controls and Procedures	26

PART II. O THER INFORMATION

Item 1.	Legal Proceedings	28

Item 1A.	Risk Factors	28

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28

Item 3.	Defaults Upon Senior Securities	29

Item 4.	Mine Safety Disclosures	29

Item 5.	Other Information	29

Item 6.	Exhibits	30

Signatures		33

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

As used in this Quarterly Report on Form 10-Q, unless expressly indicated or the context otherwise requires, references to "Bioventus," "we," "us," "our," "the Company," and similar references refer to Bioventus, Inc. and its consolidated subsidiaries, including Bioventus LLC (BV LLC).

This Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act), and Section 27A of the Securities Act of 1933, as amended (Securities Act), concerning our business, operations and financial performance and condition, as well as our plans, objectives and expectations for our business operations and financial performance and condition. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements including, without limitation, statements regarding our business strategy, including, without limitation, potential acquisitions and expected expansion of our pipeline and research and development investment, new therapy launches, our operations and expected financial performance and condition, and impacts of the COVID-19 pandemic. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “potential,” “positioned,” “seek,” “should,” “target,” “will,” “would” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words.

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Forward-looking statements are based on management’s current expectations, estimates, forecasts and projections about our business and the industry in which we operate, and management’s beliefs and assumptions are not guarantees of future performance or development and involve known and unknown risks, uncertainties and other factors that are in some cases beyond our control. As a result, any or all of our forward-looking statements in this Quarterly Report may turn out to be inaccurate. Furthermore, if the forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. Important factors that may cause actual results to differ materially from current expectations include, among other things, our business may continue to experience adverse impacts as a result of the COVID-19 pandemic; we are highly dependent on a limited number of products; our long-term growth depends on our ability to develop, acquire and commercialize new products, line extensions or expanded indications; we may be unable to successfully commercialize newly developed or acquired products or therapies in the United States; demand for our existing portfolio of products and any new products, line extensions or expanded indications depends on the continued and future acceptance of our products by physicians, patients, third-party payers and others in the medical community; our commercial success depends on our ability to differentiate the hyaluronic acid (HA) viscosupplementation therapies that we own or distribute from alternative therapies for the treatment of osteoarthritis; the proposed down classification of non-invasive bone growth stimulators, including our Exogen system, by the U.S. Food and Drug Association (FDA) could increase future competition for bone growth stimulators and otherwise adversely affect the Company’s sales of Exogen; if we are unable to achieve and maintain adequate levels of coverage and/or reimbursement for our products, the procedures using our products, or any future products we may seek to commercialize, including any potential changes by Centers for Medicare and Medicaid Services in the manner in which our HA viscosupplementation products are reimbursed, the commercial success of these products may be severely hindered; if we choose to acquire or invest in new businesses, products or technologies, we may be unable to complete these acquisitions or to successfully integrate them in a cost-effective and non-disruptive manner; we compete and may compete in the future against other companies, some of which have longer operating histories, more established products or greater resources than we do, which may prevent us from achieving increased market penetration or improved operating results; the reclassification of our HA products from medical devices to drugs in the United States by the FDA could negatively impact our ability to market these products and may require that we conduct costly additional clinical studies to support current or future indications for use of those products; our ability to maintain our competitive position depends on our ability to attract, retain and motivate our senior management team and highly qualified personnel, and our failure to do so could adversely affect our business, results of operations and financial condition; if our facilities are damaged or become inoperable, we will be unable to continue to research, develop and manufacture our products and, as a result, our business, results of operations and financial condition may be adversely affected until we are able to secure a new facility; our products and operations are subject to extensive governmental regulation, and our failure to comply with applicable requirements could cause our business to suffer; we may be subject to enforcement action if we engage in improper claims submission practices and resulting audits or denials of our claims by government agencies could reduce our net sales or profits; the FDA regulatory process is expensive, time-consuming and uncertain, and the failure to obtain and maintain required regulatory clearances and approvals could prevent us from commercializing our products; our HCT/P products are subject to extensive government regulation and our failure to comply with these requirements could cause our business to suffer; if clinical studies of our future products do not produce results necessary to support regulatory clearance or approval in the United States or elsewhere, we will be unable to expand the indications for or commercialize these products; we may be subject to enforcement action if we engage in improper marketing or promotion of our products, that could lead to costly investigations, fines or sanctions by regulatory bodies, any of which could be costly to our business; and other important factors described in Part I, Item 1A. Risk Factors in our 2020 Annual Report on Form 10-K. You are urged to consider these factors carefully in evaluating these forward-looking statements. These forward-looking statements speak only as of the date hereof. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

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Part I. Financial Information

Item 1. Financial Statements

Bioventus Inc.

Consolidated condensed statements of operations and comprehensive income

Three months ended April 3, 2021 and March 28, 2020

(Amounts in thousands, except share and per share data)

(Unaudited)


	Three Months Ended
	April 3, 2021		March 28, 2020
Net sales	$	81,778	$	78,645
Cost of sales (including depreciation and amortization of $5,236 and $5,307, respectively)	22,222		21,409
Gross profit	59,556		57,236
Selling, general and administrative expense	34,686		40,276
Research and development expense	947		2,146
Depreciation and amortization	1,925		1,825
Operating income	21,998		12,989
Interest (income) expense	(2,876)		2,381
Other expense	419		83
Other (income) expense	(2,457)		2,464
Income before income taxes	24,455		10,525
Income tax (benefit) expense	(73)		39
Net income	24,528		10,486
Loss attributable to noncontrolling interest	408		458
Net income attributable to Bioventus Inc.	24,936		10,944
Other comprehensive income (loss), net of tax
Change in foreign currency translation adjustments	(1,156)		(469)
Comprehensive income	$	23,780	$	10,475

Loss per share of Class A common stock, basic and diluted(1):	$	(0.02)

Weighted-average shares of Class A common stock outstanding, basic and diluted(1):	41,797,882

(1) Represents loss per share of Class A common stock and weighted-average shares of Class A common stock outstanding for the period from February 16, 2021 through April 3, 2021, the period following Bioventus Inc.'s initial public offering and related transactions described in Note 1. Organization and Note 7. Earnings per share within the Notes to the Unaudited Condensed Consolidated Financial Statements.

The accompanying notes are an integral part of these consolidated financial statements.

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Bioventus Inc.

Consolidated condensed balance sheets as of April 3, 2021 (Unaudited) and December 31, 2020

(Amounts in thousands, except share and per share data)


	April 3, 2021		December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	124,247	$	86,839
Restricted cash	5,207		—
Accounts receivable, net	89,472		88,283
Inventory	39,808		29,120
Prepaid and other current assets	11,987		7,552
Total current assets	270,721		211,794

Property and equipment, net	8,084		6,879
Goodwill	53,529		49,800
Intangible assets, net	271,042		191,650
Operating lease assets	18,060		14,961
Deferred tax assets	481		—
Investment and other assets	21,158		19,382
Total assets	$	643,075	$	494,466

Liabilities and Stockholders’ and Members’ Equity
Current liabilities:
Accounts payable	$	10,283	$	4,422
Accrued liabilities	89,651		88,187
Accrued equity-based compensation	10,875		11,054
Current portion of long-term debt	15,000		15,000
Current portion of contingent consideration	13,057		—
Other current liabilities	10,161		3,926
Total current liabilities	149,027		122,589

Long-term debt, less current portion	169,731		173,378
Accrued equity-based compensation, less current portion	—		29,249
Deferred income taxes	48,963		3,362
Long-term contingent consideration, less current portion	29,943		—
Other long-term liabilities	25,129		21,728
Total liabilities	422,793		350,306

Commitments and contingencies (Note 9)

Stockholders’ and Members’ Equity:
Members' equity	—		144,160
Preferred stock, $0.001 par value, 10,000,000 shares authorized, 0 shares issued
Class A common stock, $0.001 par value 250,000,000 shares authorized, 41,038,589 shares issued and outstanding	41		—
Class B common stock, $0.001 par value, 50,000,000 shares authorized, 15,786,737 shares issued and outstanding	16		—
Additional paid-in capital	142,923		—
Accumulated deficit	(1,041)		—
Accumulated other comprehensive income	451		—
Total stockholders’ equity attributable to Bioventus Inc. and members’ equity	142,390		144,160
Noncontrolling interest	77,892		—
Total stockholders’ and members’ equity

SEC Form 10-Q filed by Bioventus Inc.