Participants

Matt Notarianni; Head - Investor Relations; MiMedx Group Inc

Joseph Capper; Chief Executive Officer, Director; MiMedx Group Inc

Douglas Rice; Chief Financial Officer, Chief Accounting Officer; MiMedx Group Inc

Chase Knickerbocker; Analyst; Craig-Hallum Capital Group

Ross Osborn; Analyst; Cantor Fitzgerald

Brad Bowers; Analyst; Mizuho Securities USA

Brooks O’Neil; Analyst; Lake Street Capital Markets

Carl Byrnes; Analyst; Northland Securities, Inc.

Presentation

Operator

Good afternoon and thank you for standing by. Welcome to the MiMedx fourth-quarter and full-year 2024 operating financial results conference call.
(Operator Instructions) As a reminder, this conference is being recorded.
I would now like to turn the call over to your host, Mr. Matt Notarianni, Head of Investor Relations for MiMedx. Thank you. You may begin.

Matt Notarianni

Thank you, operator, and good afternoon, everyone. Welcome to the MiMedx fourth-quarter and full-year 2024 operating and financial results conference call.
With me on today's call are Chief Executive Officer, Joe Capper and Chief Financial Officer, Doug Rice. As part of today's webcast, we are simultaneously displaying slides that you can follow. You can access the slides from the Investor Relations website at mimedx.com.
Joe will kick us off with some opening remarks and a summary of our operating highlights, and Doug will provide a review of our financial results for the quarter, and then Joe will conclude with some additional updates, including a discussion of our financial goals. We will then be available for your questions.
Before we begin, I would like to remind you that our comments today will include forward-looking statements, including statements regarding future sales, operating results, cash balance growth, future margins and expenses, our product portfolios, and expected market sizes for our products. These expectations are subject to risks and uncertainties and actual results may differ materially from those anticipated due to many factors including competition, access to customers, the reimbursement environment, unforeseen circumstances, and delays.
Additional factors that could impact outcomes and our results include those described in the risk factors section of our annual report on Form 10-K and our quarterly reports on Form 10-Q. Also, our comments today include non-GAAP financial measures, and we provide a reconciliation to the most comparable GAAP measures in our press release, which is available on our website at www.mimedx.com.
With that, I'm now pleased to turn the call over to Joe Capper. Joe?

Joseph Capper

Thanks, Matt. Good afternoon, everyone.
Thank you all for joining us on today's call. I am very pleased to report that we had an excellent 2024, culminating with another strong performance in Q4. Full-year revenue grew by 9% and as you will hear today, our momentum remains strong and we expect 2025 to be another highly successful year for MiMedx.
During Q4, we once again achieved solid year-over-year top-line growth, maintained an excellent operating margin, and continued to generate strong cash flow. We accomplished all of this in spite of challenges due to the much-discussed Medicare reimbursement issue and the associated above-average sales force turnover we experienced in select markets. I firmly believe our strong results would have been noticeably higher, but for these two issues.
So let's take a few minutes to review the highlights of the fourth quarter, and then I'll update you on the progress we are making on our key priorities. Q4 net sales grew year over year by approximately 7% to $93 million, another excellent growth quarter. Full-year sales closed at $349 million, up 9% over the prior year. Gross profit margin was 82% in the quarter. Adjusted EBITDA was $20 million or 21% of sales in the fourth quarter and $76 million or 22% of sales for the full year, representing an increase of $18 million over the prior year. We ended the year with $104 million in cash, an increase of $16 million during the quarter.
We continued with the market release of HELIOGEN, our first xenograft, which is targeted in the surgical market. We began enrollment for a randomized controlled trial for EPIEFFECT and we continued our strong advocacy for regulatory and reimbursement reform.
Turning now to our strategic priorities. On prior calls, we consistently discussed our market approach in terms of three primary areas of focus. Since this strategy has delivered excellent results, we will continue to allocate our time and resources around these three primary objectives. I would add an additional strategic priority to the list for this year, which is to capitalize on the opportunity presented through implementation of the pending LCDs. Make no mistake, we are poised to do just that and believe, no other company in our space is as well positioned to grow share as MiMedx is based on the proposed guidelines.
As a reminder, our top strategic priority is to continue to innovate and diversify our product portfolio. As discussed, the company has built a strong competitive advantage around our ability to develop and commercialize unique product configurations designed to meet explicit customer needs. We have introduced multiple new products in the last two years alone. First three received widespread market acceptance, and HELIOGEN, which is an early market release, is starting to gain traction.
AMNIOEFFECT continues to do well, growing at close to 20% year over year in the surgical market. And EPIEFFECT, which we launched in late 2023, continued to show significant strength in the private office. Both products have received excellent position feedback as they have become integral parts of their quick care protocols.
Additionally, we continue to make progress building our EPIFIX business in Japan with sales nearly tripling in 2024. We now have most of the key opinion leaders and top decile customers routinely ordering and using our product.
Building on the success of these product introductions, we expect a similar performance as we move toward full market release of HELIOGEN, our first xenograft. We're making good progress working through the mechanics of the early launch phase and expect the HELIOGEN to be a meaningful contributor in 2025.
The second priority is to develop and deploy programs intended to expand our footprint in the surgical market. As we've discussed, this objective calls for a significant commitment to the production of real-world clinical evidence scientific research. We now have multiple studies in flight which are designed to support the use of our placental-derived allografts in a variety of surgical procedures.
On previous calls, we highlighted publications which demonstrated the incredible healing properties of our proprietary technology. This clinical research and general awareness pieces have appeared in publications such as Nature and The New York Times. The potential for reduced scarring or adhesion formation through the use of MiMedx proprietary technology as demonstrated in this research, could enable accelerated and improved quality of healing, leading to enhanced surgical and economic outcomes.
Again, coupling these potential benefits with the tens of millions of surgeries performed in the US each year, we believe the market opportunity could be massive over time. We firmly believe we are still in the very early market development phase for placental-derived products. In addition to research and awareness, it is critical that we continue to expand our product and service offering in order to build a stronger presence in the surgical environment.
The third initiative is to introduce programs designed to enhance customer intimacy. As a reminder, the primary focus of this initiative is to develop programs which improve relationships and ultimately lower our customer turnover. To strengthen the connection with our customers, we have undertaken a variety of initiatives aimed at institutionalizing customer-centric behavior. We continue to experience excellent adoption of MiMedx Connect, our new customer portal. Now over 1,000 customers using the platform to perform functions such as insurance, verification, and product ordering.
We are actively developing additional features designed to improve workflow and strengthen the bond between MiMedx and their customers. We believe our commitment to this approach will lead to enhanced customer relationships, improved net promoter scores, higher margins, and ultimately an increase in the average lifetime value of a customer.
Now let me turn the call over to Doug for a more detailed review of our financial results. Doug?

Douglas Rice

Thank you, Joe, and good afternoon to everyone on today's call. I'm pleased to review our results with you all today.
As a reminder, many of the financial measures covered in today's call are on a non-GAAP basis, so please refer to our earnings release for further information regarding our non-GAAP reconciliations and disclosures, including the reconciliation tables in the back of our press release that provide more detail regarding the adjustments made to calculate our non-GAAP metrics. I encourage you to review these materials alongside my comments today.
As a reminder, unless otherwise noted, my discussion is on a continuing operations basis. For a full discussion of the impact of our discontinued operations, please refer to our most recent 10K file today and 10Q filings.
Moving on to the results, our fourth-quarter 2024 net sales of $93 million represented 7% growth compared to the prior-year period. By product category, fourth-quarter wound sales of $61 million grew 10% versus the prior year, while surgical sales of $32 million were up 2% as reported. Excluding the revenue impacts of AXIOFILL and of our [dental] product that was discontinued in late 2023, our surgical sales increased 6% in the fourth quarter.
We saw significant contributions from many parts of the business in the fourth quarter, including solid double-digit growth year over year from our effect product lines EPIEFFECT and AMNIOEFFECT, robust growth from international and modest but rampant contributions from our xenograft HELIOGEN, which is our [first five 10K-cleared] product.
Our fourth-quarter 2024 gross profit was about $76 million, compared to $73 million last year. Our GAAP gross margin was 82% in the fourth quarter of 2024 compared to 84% last year. Excluding the incremental acquisition-related amortization expense from intangible assets of roughly $2.2 million in the quarter, our gross margins were 84%, flat compared to the fourth quarter of 2023. Moving into 2025 with anticipated higher surgical sales and other sales mix changes, we expect our GAAP gross margin to be 81% to 82% and our non-GAAP gross margin to be 82% to 83%.
Turning to our operating expenses, selling general and administrative expenses or SG&A were $61 million in the fourth quarter, compared to $54 million in the prior year period. This increase was primarily related to higher commissions from increased sales and also reflects incremental spend associated with an adjustment we made to commission rates during the year, partially offset by certain spending efficiencies in G&A.
Also, please note that beginning this quarter and moving forward, we will be breaking up our sales and marketing or S&M expenses from our general and administrative or G&A expenses. Today's press release has a quarterly look back at these expenses for 2023 and 2024 to assist with modeling. We expect 2025 sales and marketing and G&A expenses to be relatively flat compared to 2024.
Our fourth-quarter R&D expenses were $3 million or about 4% of net sales, up 38% compared to the prior-year period, driven primarily by increased costs associated with our ongoing EPIEFFECT RCT as well as additional spend related to future products in our pipeline. Based on increased investments in clinical and economic evidence together with increased trial enrollment, we expect 2025 R&D to be approximately 5%.
Income tax for Q4 2024 was about $4 million, reflecting a GAAP effective tax rate of 34%. Although slightly higher for the quarter due to timing, our full-year GAAP effective tax rate came in at about 27% and we continue to expect our long-term non-GAAP effective tax rate to be about 25%.
Our fourth-quarter GAAP net income, inclusive of the results of our discontinued operations, was $7 million or $0.05 per share compared to GAAP net income of $53 million or $0.32 per share in the prior-year period. Recall in the fourth quarter of 2023, we recognized a one-time income tax provision benefit of over $37 million which was the primary driver of GAAP net income in the prior-year period.
Adjusted net income for the quarter was $11 million or $0.07 per share compared to $11 million or $0.04 per share in the prior year period. Fourth-quarter 2024 adjusted EBITDA was $20 million or 21% of net sales compared to $21 million or 24% of net sales in the prior-year period.
Turning to our liquidity, our ability to continue to grow profitably and maintain a high EBITDA to cash flow conversion rate has dramatically improved the complexion of our balance sheet over the last two years. During the fourth quarter, we generated free cash flow of $19 million, a $9 million increase over the same period in 2023. In turn, our net cash balance is now at about $86 million, up from $70 million just last quarter, and more than 150% increase in our net cash position compared to the end of 2023.
Looking back on the full year, we are pleased with our 2024 results, which featured 9% top-line growth and adjusted EBITDA margin of 22%, the refinancing of our balance sheet with incremental borrowing capacity and free cash flow generation of $65 million.
Turning to our guidance for 2025, today we are introducing an outlook that assumes the LCDs are implemented as written and is currently scheduled on April 13. Under that scenario, we expect to be able to deliver net sales growth at least in the high-single digits and an adjusted EBITDA margin above 20%. The fluidity of the situation around Medicare reimbursement over the last several months has required us to plan for numerous scenarios and could require us to be nimble in our approach and planning throughout the year. Obviously, we will continue to revisit expectations as the year unfolds.
Longer term, we believe we can deliver top-line growth in the low double-digits, particularly as we continue to drive our business deeper into the surgical suite while still generating robust profitability as measured by an adjusted EBITDA margin above 20%.
We are not, nor do we plan on providing quarterly guidance for the foreseeable future. However, for modeling purposes, I want to provide a few reminders about the nature of our business. Revenue is typically lowest in the first quarter of the year, highest in the fourth quarter with quarters 2 and 3 roughly similar. The same pacing holds true for our adjusted EBITDA as the first quarter exhibits a combination of lower revenue and elevated expenses, typically resulting in a lower adjusted EBITDA margin which builds over the course of the year.
I will now turn the call back to Joe. Joe?

Joseph Capper

Thanks, Doug.
As you've just heard, we have another solid quarter. Net sales were $93 million, up 7% in a quarter, gross profit margin was 82%, adjusted EBITDA was $20 million or 21% of net sales in a quarter. We added another $16 million to our cash balance, continued the market release of HELIOGEN, began the RCT for EPIEFFECT, continued to invest in research designed to validate the use of our products in various applications, and we advocated for much needed regulatory and reimbursement reform.
Let me now turn to the latest on the proposed changes to the Medicare reimbursement system for the private office and adjacent care settings, a topic which we have discussed on numerous occasions. Shortly after our last call, MiMedx announced their intent to implement the proposed LCDs on February 12, 2025. After the new administration took office, an executive order was signed which called for a 60-day delay on the implementation of any new policies. The new skin substitute, LCDs, were included in this order and the implementation date is now April 13, 2025.
Based on feedback from our outside advisers and activity within the new administration, we deem any further delay as highly unlikely. As key members of the new team are named, not surprisingly, the LCDs are a priority topic on which they are being briefed. We also know that this topic has come to the attention of the newly formed and high-profile Department of Government Efficiency, which was established in part to seek out and eradicate wasteful spending just like this.
With the total Medicare spend in the private office and associated care settings running in excess of $1 billion per month, we can't imagine continued delays in the implementation of corrective solutions. We also believe it is highly likely CMS will take steps to modify the pricing methodology for skin substitutes within the physician fee schedule later this year. And of course, the government has ramped up enforcement which we expect will continue to increase. We are prepared for the eventual implementation of the proposed LCDs and believe MiMedx is poised to gain share as a result.
During this period of transition, we can expect potential confusion in the market as physicians change ordering patterns and practices and patients migrate to alternative sites of care. Given this potential for short-term disruption, we are hesitant to project expectations with much specificity. However, we do not see a scenario in which the implementation of the LCDs does anything but bolster MiMedx business.
For now, as Doug just outlined, we are comfortable with full-year revenue growth rate guidance in the high-single digits with higher growth rates in the back half of the year and with the obvious caveat that April 13 is the go-live date for the LCDs. We also expect our full-year adjusted EBITDA margin to be above 20%. We will continue to revisit expectations as we learn more. Importantly, our expectations about the long-term prospects of the business are incredibly high. Post the implementation and enforcement of the new LCD guidelines, we anticipate resetting top-line growth to the low double-digits.
Finally, I want to share a few closing thoughts. It's now been two years since I joined the company. As a practice, at the end of each year, I'd like to take a look back on what we set out to accomplish, an inventory on what we did accomplish, and of course I just shared what we intend to accomplish moving forward.
The company was on quite a different trajectory two years ago. Since then, much has changed at MiMedx. I stated then that our mission was to transform the company into a highly-focused, growth-oriented, profitable med tech business. Since that time, we restructured parts of the business, rationalized expenses, and implemented productivity improvements, which have dramatically enhanced our financial profile and significantly altered the course of the company in many positive ways.
We have also spent a fair amount of time working with numerous stakeholders to reshape and modernize both the regulatory and reimbursement aspects of our industry. We believe these efforts are getting results. As our industry evolves to incorporate improved regulatory structure and fiscal accountability, products will need to demonstrate effectiveness in order to compete the market. I believe no other company is better positioned than MiMedx to excel in such an environment, given our market leading technology which is supported by well-powered clinical evidence. In short, our best days are right in front of us.
In closing, I would like to sincerely thank our talented team of dedicated individuals for a great finish to 2024 and for all that you do for the thousands of people who rely on our products each and every day.
With that, I would like to open the call to questions. Operator, we are now ready for our first question. Please proceed.

Question and Answer Session

Operator

(Operator Instructions)
Chase Knickerbocker, Craig-Hallum Capital Group.

Chase Knickerbocker

Just first for me, specific drivers in wound in Q4, that line item was quite a bit better than we were modeling. Was there a recovery in EPIEFFECT growth? Was there faster-than-anticipated recovery in those territories that had that sales turnover earlier in 2024? Maybe just a little bit of color there.

Douglas Rice

Yeah, Chase, good to talk to you. This is Doug, and yeah, it was our highest quarter since 2018. Super proud of the way our sales team continues to execute and certainly feels better than -- that our third quarter. But like Joe said, international was a big catalyst for us. The effects products that I mentioned in my script, AMNIOEFFECT and EPIEFFECT were certainly factors in our growth during the quarter.

Chase Knickerbocker

And just specifically in wound, Doug, was there any drivers to call out in the corridor that improved sequentially?

Douglas Rice

No, I don't think so. I think we've touched on the ones that we mentioned in the script.

Chase Knickerbocker

Got it.
And then just on 2025 as far as what guidance assumes, can you give us a little bit of a look into what your assumptions are for wound and surgical growth?

Joseph Capper

Yeah, as both Doug and I talked about right now we're thinking at least high-single digits across the board, not [breaking] out either one individually. With the potential to do better, but we'll see, right? The first question is, why wouldn't you do better if there's this all this market share up for grabs. With the implementation of the LCDs in April, the short answer is because we don't have a model to point to. Likely, there is going to be a fair amount of disruption and dislocation in the marketplace. No one's better positioned than us. To benefit from that, so we do believe we will benefit from it. However, we have to wait and see as we work through it. But it should be interesting.

Chase Knickerbocker

Yeah, agreed, and maybe on that front, there's certainly a lot of noise out there (technical difficulty) around the LCDs. You know that your guidance assumes implementation. Any more specifics you can give us just around conversations you've had enforcing your confidence.
And then second on that front, for Doug, can you just help us quantify a little bit on what you assume for impact from a benefit perspective from the LCD and how you see that phasing into the year?

Joseph Capper

He didn't like my answer on the (laughter) upside.
So first part of your question, Chase, we do not anticipate any further delay. A couple things to point out. First of all, the delay that took place was not specific to skin subs LCDs. It was a good housekeeping move on the part of the new administration, and we're told that this is not uncommon when new administrations take office. They put a delay on any pending new policies until they have a chance to get folks in place to take a look at them. LCDs were included in that and not just the skin sub-LCD but other LCDs. So we don't see any indication of further delay and based on input from our outside advisors, we are pretty confident that it will happen.

Douglas Rice

Yeah, and just from a flow-through perspective, with the covered list of it being typically lower ASP products, we expect higher volumes this year to support the products that we have that are on the covered list and so as a result, I think the biggest financial impact will be on our gross margin line as we look at sales mix that largely has lower ASPs. We will benefit, however, from higher throughput and higher volumes to cover some of our fixed manufacturing costs, but generally that's the biggest [line], but we continue to invest in our sales force and invest in evidence and the LCDs won't change that.

Operator

Ross Osborne, Cantor Fitzgerald.

Ross Osborn

Hey guys, congrats on the quarter and thanks for taking our questions.
So starting off with HELIOGEN, would you refresh us on how you're thinking about that revenue opportunity and what level of contribution to growth you're baking into the guide for this year?

Joseph Capper

We have not broken out any numbers on HELIOGEN yet simply because it's in its very early stage of launch and market prep. It takes quite some time to run through value analysis committees and get the product contracted and in place, and that's ongoing. So to date, the contribution has been nominal and we think it's going to be a much bigger contributor in '25, but not something that's material enough to break out at this point. And so, we'll see (inaudible) market acceptance, we might start talking a little bit more about it numerically.

Ross Osborn

Okay, got it.
And then, turning to your salesforce, you caught up attrition, how of hiring plans gone since then, what are your thoughts on '25?

Joseph Capper

Yeah, look, I think with the commercial team did a nice job, especially recovering from the above average turnover we experienced mid-year 2024, and that had a lasting impact throughout the rest of the year. So I think they've done a really nice job getting the team back up to speed, and obviously, turnover has come back to a more normalized rate. It's always disruptive when it happens. Because as you know this is non-contract business and it tends to follow some of the sales -- a portion of it will tend to follow the sales personnel if they go to another company. But we're in real good shape. We're at near full strength of where we need to be as we enter the new year, so we feel pretty comfortable about it.

Operator

Anthony Petrone, Mizuho Securities.

Brad Bowers

Brad Bowers on for Anthony. Thanks for taking our questions.
Just wanted to double click on the LCD, obviously the two-month delay (technical difficulty) add your hands. I just wanted to hear, what you expect to happen on the day (technical difficulty) that there is this change over that this is finalized, maybe assuming it is as proposed. It seems like you were probably ready to go for [212] so you have an idea of what the plan is. So just wanted to hear about what you expect for business dynamics, obviously, some of the other competitors that are off the market, has there been stockpiling or are you guys now preference -- or given preferential treatment?

Joseph Capper

Yeah, obviously we've been preparing from an inventory standpoint, so we're comfortable that we'll have plenty of product to meet demand. The commercial team has a variety of capital contingency plans in place depending on how these things are rolled out. There's still a few unanswered questions about specifically things like how non-DFU or VLU wounds going to be reimbursed? Or you're just going to stick to the products on the list or other products going to be (technical difficulty) allowed to be [reimbursed]. So there's a little bit of unknown still, but it doesn't matter how it's rolled out, we're prepared to excel in any scenario.

Brad Bowers

That's helpful.
And then maybe just to push on the DOGE topic, as I understand it, this [LCD] would do a good job of cutting back on some of the ways, but maybe some of the actual billing practices would still be ongoing, but this seems to fit right within the wheelhouse. So one to (technical difficulty) what your conversations are and maybe what the path is to pare down some of that excess spending and really let the good actors such as MiMedx shine in this market. And again, thanks for the question.

Joseph Capper

Yeah, I think we've been pretty vocal about our advocacy for reform. It's just not healthy A, from a taxpayer standpoint, from a patient perspective, and just the healthcare industry in general. This is an issue that's -- it's past its time to be cleaned up, and I know that folks at Medicare and the Max have spent an awful lot of time trying to figure out the best way to address this. So if I were them, I would not let this ultimately get into the hands of DOGE, I'd be out in front of it, and I think they have a plan to be out in front of it.
But if they -- look, I think bringing up DOGE is important because any further delays, frankly, run right in the face of what at least this administration has probably said it's trying to do, and that is identify root out fraud, waste, and abuse. Now we can debate which one of those three words best describes what's been happening in the skin substitute market, but it's certainly one of those three areas and it's a wild overspend, as we've outlined in the past. It's grown more than twentyfold, at least a five-year period. So again, it's past its time to be addressed, and I think there's a lot of good people inside that have been trying to figure this out.

Operator

Brooks O’Neil, Lake Street.

Brooks O’Neil

I'm curious just there's a variety of what I might call legal matters that are outstanding. I put in that category, the AXIOFILL matter with the FDA, the Surgenex suit related to employee turnover and IP-related matters I guess we call it the plethora of knockoffs that are available in the marketplace, as we speak. You could just give us a sense for where you think you are within those three areas that would be a great help.

Joseph Capper

Yes, Brooks, I appreciate you bringing it up.
So let's just talk about legal matters in general for this company. Several years ago, this company was (technical difficulty) a lot of money on legal matters. We joked that (laughter) it was a law firm that happened to be in the med tech business, but there was a lot of legacy legal issues that the company was spending an awful lot of its capital within the defense perspective.
The three things you just talked about AXIOFILL, Surgenex, IP-related issues. We're playing offense on all of those. There are cases that we have decided to proceed in all cases to protect our business. With AXIOFILL, again, as a reminder, we felt like the company was not being treated in a consistent fashion. There were three nearly identical products in the marketplace, AXIOFILL being one of them. One of those products has a designation as a 361, one is a 510(k), but we were told AXIOFILL has to be treated as a biologic drug and go through those drug-like trials. It didn't make any sense to us, right?
It wasn't the biggest revenue generator for us, but it's precedent setting and really frankly, it's an opportunity to have the conversation with the agency about what is the best regulatory pathway for these products. And by the way, we're in favor of a more stringent regulatory burden like a 510(k) type of process versus 361. I think it's better for the industry. I think the fact that these are categorized as 361 products is at least half the problem we're having with these skyrocketing prices in the private office, these products are just too easy to drop into the marketplace.
The only thing new there is that that case has been reassigned to a new judge and that judge has already set a hearing date, which I believe is for the latter part of March. I'm not 100% sure which -- what it is, but I think it's a second part of March. That's a good sign. It's a good sign that the process is moving, so we'll get clarity on that at some point. And then hopefully, that will spur a conversation with the agency on what is the best way to handle these types of products. But certainly, there has to be some level of consistency.
With the Surgenex case, that has to just play itself out. We're going through the process of depositions, et cetera, collecting evidence, but there's nothing really new to report on that case. But again, that was all about protecting our business. The company was raided in a very brazen fashion and we think it is constitutes anti-competitive behavior, so we're taking steps to protect the business.
Not surprisingly, with the proliferation of so many skin substitutes in the marketplace, we've discovered cases -- many cases where people are trapping all our intellectual property rights. So again, we need to protect our portfolio. We've already asserted one case in court and there's been several communications with other companies that are clearly violating our intellectual property. So we'll pick them up one by one and either it will serve as a royalty stream or these products will be removed from the market at some point in the future. That is our firm belief.

Brooks O’Neil

Great, that's very helpful. I'll just say I'm looking forward to getting past this regulatory nonsense and moving to a more orderly situation in the marketplace, I think that'll be later this year. I'm hopeful (multiple speakers)--

Joseph Capper

This is the first sector of healthcare that I've been in where there's no clinical evidence required to bring a product to market. There's no pre-market clearance, and you get to set your own price. What the hell could have gone wrong?

Brooks O’Neil

Right. Well, it'll get better, I'm pretty sure.

Joseph Capper

Yeah, well, and it'll be a really nice industry once we migrate through these maturation phases.

Operator

Carl Byrnes, Northland Capital Market.

Carl Byrnes

Thanks for the question and congratulations on your progress. I'm wondering if you can comment a bit more on [EPIFIX] in Japan, which was up 3x year every year. What's driving that? Is it number of docs training? Can you point (technical difficulty) out a little bit or provide a little more detail on what's happening in Japan?
All good, thanks.

Joseph Capper

Yeah, as a reminder, we were the first human tissue in the marketplace in Japan, which meant it took a long time to prep that market to select the right distributor, get reimbursement for the product, train the doctors, have the doctors start the US products, see benefit from it, and then begin to reorder process. So clearly, when you go into a new market like that, you're going to target the largest wound care docs, key opinion leaders, and the team did a very effective job of doing that. So you're seeing high growth off of a very low base, but it's a contributor and originally we had talked about this as being a fairly big TAM. Frankly, we don't know what the TAM is yet. It depends on how well the market develops and whether or not there's pushback.
It also as a reminder that -- pushback around reimbursement, also as a reminder, the product is priced in the market at a point that is much higher than their current standard of care. So they have to get (technical difficulty) therapy and they have to really see the results. But we're definitely happy with the progress. Would have loved to see it be a bigger contributor, but that's not a knock on the team, that's just a knock on the fact that it takes a while to prep a market like this when you're creating everything from ground zero.

Douglas Rice

Carl, this is Doug. I would also add just from a grouping or categorization perspective that our other category that you're looking at includes -- does include international, but it also includes a few other care settings. So it wasn't just international that drove that growth.

Operator

Thank you. There are no further questions at this time. I'd like to pass the call back over to Joe for any closing remarks.

Joseph Capper

Thanks, operator. I appreciate you guys being on the call today and your continued interest in the company. We will talk to you in a few months. That concludes today's call. Thank you.

Operator

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.