All,

This is a very exciting step for Bioventus and gives us another critical growth driver for the company in the medium term.

Here are some details about the CartiHeal acquisition, strategy and the next steps taking us through the course of 2022.

  • We expect to close on the acquisition later in Q2 and we will be financing this through debt.  The financing is important to understand strategically as it allows us to finance the transaction without utilizing our valuable equity.  Over the course of the coming 18 months you will hear me discuss the need to grow revenue and EBITDA allowing us to “de-lever” our debt position in the coming quarters.  Our double digit growth in revenue and EBITDA will be essential to this strategy!
  • CartiHeal is a game changing technology, has been named a “breakthrough device” by FDA and is one of the only orthopedic devices in recent memory to be shown to be clinically superior to current surgical standard of care in the treatment of osteochondral defects of the knee.  CartiHeal is made from aragonite which is a unique form of sea coral and is highly patented.
  • Importantly, we expect most CartiHeal cases to be performed in the ambulatory surgical center (ASC) and we will be leveraging our strong relationships and sales team that sell our current portfolio of HA products which is generally sold to the same customer base that will use CartiHeal, total joint surgeons and sports medicine surgeons.  This will be an off the shelf device and packaged sterile in various sizes depending on the size of the defect in the knee.
  • Strategically, CartiHeal fits in our continuum of care that only Bioventus uniquely offers in the treatment of knee osteoarthritis.  We believe that CartiHeal, like our HA products, will delay the need for more costly and invasive total knee procedures.
  • We will be starting a limited market release (LMR) with CartiHeal in the third quarter and will target the US market to start with.  We will use the initial cases to gain surgical experience with key opinion leaders (KOLs) and develop a robust understanding of surgical technique “pearls” that will ensure consistent and excellent results for the patients that will be having CartiHeal implanted in their knee.
  • Since CartiHeal is a brand new technology with no peers in terms of other devices it will not have reimbursement and we will need to work on a case by case basis to start with to establish reimbursement and coding.  We know this process will take the next several years to fully establish the coding necessary for universal reimbursement.
  • We will be integrating the CartiHeal technology into our organization over the next year or so and expect to be able to leverage our current infrastructure to manage and drive CartiHeal market development, growth and reimbursement.  We will be moving CartiHeal manufacturing, that is currently based in Israel, to Memphis over the coming 18 months.

We will update you as things progress on this exciting new acquisition and significant future opportunity for Bioventus!

I hope you have a great week!