Hello. Great. Welcome, everyone. Welcome back. Richard Newitter here, MedTech analyst at Truist Securities, and our next fireside chat, we have senior management from Vericel. We have Vericel's CEO and President, Nick Colangelo, and CFO, Joe Mara. Welcome. Thanks, Rich. Good to be here. Yep. Thanks for having us. Yeah. I thought maybe we would start off and get the macro question out of the way. We're trying to ask all of our companies just about underlying utilization and volumes, and you guys have a lot of things going on, new product launches. I appreciate your growth rate, and what's going on at your company might not be what's happening on the underlying utilization environment. Would love to just hear, are you seeing any notable change in trends, positive or negative, against the backdrop of some hospitals, companies that are talking about slowing utilization and things like that? What can you tell us there? Yep. I guess I'll just start by reminding our listeners that we'll be making some forward-looking statements today, so they should take a look at our documents on file with the SEC for further information. I would just say, Rich, to your point, we certainly recognize that there's a lot of macro events going on, rotations out of healthcare or MedTech specifically into tech and AI and things like that. There's a lot of sector-specific issues that people have mentioned, and this really started back at the beginning of the year at a major conference, and we were very specific in our comments that we did not, while others were mentioning sort of December slowdowns and things like that we did not see anything impacting our business, nor do we expect to. In fact, I made a point of saying that we had our largest month ever since we launched the product in December by far. We had really strong sort of underlying metrics, biopsy procedures, implant procedures, every sort of metric we always talk about, really in the second half of the year, particularly in the fourth quarter, certainly in December, and that carried over into the first quarter, where again, we had another 20%+ growth, highest first-quarter metrics ever, second-highest biopsy month ever. You have two straight quarters of the highest quarterly biopsies we've ever delivered. We've had some pretty strong growth, and we haven't seen any sort of procedural slowdown for MACI and really in our part of the market. We do track other procedures in cartilage repair, and there hasn't been any sort of noticeable decline in patient flow overall. We obviously are outgrowing the market by multiples, right? We don't rely on sort of market growth to drive our growth anyway. We certainly haven't seen that to date, and we mentioned on our last earnings call that those trends have continued to start the second quarter, which you would expect if we have two of our highest biopsy quarters ever. You're probably set up well for not only the second quarter but the rest of the year. Yeah. Maybe we can just go to the quarter and guidance and the update that was there. You had a great start to the year, especially for MACI. You said volume growth accelerated throughout the quarter as well as into April, like you said, the beginning of 2Q, and that you grew units, I believe, double digits. Right. Your guidance, though, implies more of a high teens growth rate instead of 20%+ for the remaining nine months of the year. You also had a 9.5% price increase in May. Thinking about double digits throughout 1Q, and it was accelerating and into April, just help me reconcile the step-down in the back half or the 2Q to 4Q period. Is that just conservatism or what can you reconcile for us there? I can take that one, Rich. I would say, just to build off where Nick started, I think we feel like from a commercial perspective, we just feel like the team's been operating and really executing at a very high level over the last few quarters, and I would say particularly in the back half of last year into the start of the year, as we talked about and as Nick referenced, we had a really strong first quarter, 22% revenue growth, our best first quarter in a few years. Feel really good about the start of the year. Obviously Q1 puts us in a good position as we move forward. I would say from kind of a guidance sort of framework and philosophy perspective, we were pretty pointed to start the year to try to be a bit prudent. If you kind of look back at last year, I think a good analog is kind of how we're thinking about burn care now. We've moved back to kind of a run rate concept on burn care, and I think that's worked out very well over the last few quarters. We've over-delivered there. I think on the MACI side, I would say we probably just want to be a bit prudent as we think about the guidance. To your point, whether you look at Q2 or you look at the remainder of the year, it's really high teens growth is kind of where the guide is at. I think to your question, from a pricing perspective, we did take that high single-digit price increase last month. When you kind of factor that in and kind of think about similar year-over-year pricing growth, it's not going to take much for us to kind of meet our guidance and certainly our internal expectations are higher than where our guidance is and certainly our internal goals are as well. I would say if we can continue to be around that double-digit range on biopsies and see similar pull-through on implants and our conversion rate has typically been pretty stable, I think we certainly feel like we're in a good position as we move into Q2 and beyond. Again, not only to meet the guidance, but ideally overperform there. Got it. That's really helpful color. This has come up as well, just on the pricing. You had multiple price increases last year. You have, I believe, a single price increase this year. There is some confusion out there, I think, for investors of how you guys manage your price increases. Obviously, not all of them are the same order of magnitude each time. They happen at different times. Can you tell us a little bit about how you stagger them, what the strategy is, and what your ongoing price assumption is in your growth algorithm? Yeah. I'll start, and Joe can add in color if he'd like as well. I think, first of all, you have to recognize that MACI is a kind of a unique product compared to other MedTech products, in that it's a combination device, biologic product as regulated as such by the FDA. Every major plan has a medical policy that covers MACI. It's reimbursed under a J code, like other biologic products, we set the price. We're not subject to CMS pricing or anything like that because we don't really have Medicaid and Medicare business. That's kind of the first thing. We do a lot of pricing research every year or two, and we do multi-year product or pricing analysis with payers and hospital administrators. I think it's important for investors to understand that from a payer perspective, they look at it on two dimensions. Similar technologies, this is an advanced cell therapy. If you think about other cell therapy products like CAR T therapies or other gene therapies which fall within the same class, those products are half a million dollars to multiple millions of dollars per unit. Our pricing for MACI is not even on the radar screen in terms of similar technologies. The other dimension they look at is sort of what's the overall impact to the system or their plan. Again, MACI, we're very proud of the fact that we've grown the product to about a quarter billion dollars, and we're well on our way to kind of getting to half a billion dollars over the next several years. If you look at either sort of those types of therapies I talked about, cell and gene therapies, where they're not only high price but high volume, and there's multiple billions of dollars spent on these products. Or even in our space, if you think about total knees, which call it $20 billion-ish a year, total hips, $10 billion-ish, total shoulders, $3 billion-$5 billion. Again, it's not even on the radar screen. We have this really enviable position, and again, we price sort of based on that market research, and it's really not atypical for similar kinds of products to take the price increases we take. Overall, you couple that with the kind of double-digit volume growth, we expect it to be sort of a strong pricing and volume growth story for years to come with no competition on the horizon. I don't want to put words in your mouth about a long-term MACI growth trajectory, if we just assume that your pricing can durably sustain, as you just suggested, let's just say in that high single digit, low double digit range, then giving you a 9%-11%, 8%-12%, whatever you want to say, call it 10% at the midpoint. Then units sustaining in that close to double digits, even if it's just barely 10% or 9.5%, you should be a 20+% MACI grower for the intermediate to longer term, no? Are the components wrong? I know you won't necessarily guide there- Right Is that a reasonable way to think about what all else equal should be doable? Yeah. Obviously, we can't predict out multiple years and any other sort of macro changes in the environment. We don't expect any. I don't think directionally you're off, right? We still think we'll have strong pricing power as we move forward, the penetration rate in our TAM is still relatively low. We would expect to continue to have strong growth, again, especially as there's sort of no MACI-like competition on the horizon. Nick, if we had to hypothesize about what could potentially change that pricing conversation with commercial payers other than you're not on the radar compared to what they're paying for, what could it be? Again, we meet with payers, we've done it, just say it was every other year since we launched the product a decade ago. It's not like we're under the radar. It's just when you think about, I always use an example, like even MACI at $300 million, if you look at a UnitedHealthcare that has 15% of covered lives, what would that mean if it's a representative example, which it is? It's $45 million a year for UnitedHealthcare. Again, that's just not something that they're going to spend time actively managing. I would say it's also a function of the fact that MACI has to have a prior approval. It's a medical policy. You have to meet certain parameters to even be eligible to be treated with MACI and covered under those plans. The plans know the price, they know the outcomes data, which is great long-term outcome data, and they know that only the appropriate patients are going to be treated with MACI. It's a very transparent process. It's not like we're under the radar, but once they find out there's going to be an issue, they already know, and they know all, everything, when we do that research, and again, it's very much in line with sort of what they might expect. I think, if we got greedy, that's when you would get hurt, right? We just try to be very thoughtful about how we price going forward, and we don't really expect that to change. Nick, you also said you're basically the only player in town, right? Competition, no competition on the horizon, I think is what you said. Yep. I want to maybe just ask because this comes up a lot from investors. You have Agility, which has been on the market for some time, but they are potentially going to be stepping into a better CMS reimbursement situation starting January 1st, 2027. Smith+Nephew is a formidable company that is going to likely commercialize more aggressively and put more behind it as they step into that more favorable reimbursement situation. I guess how do you expect the competitive landscape to change at all once that happens? It sounds like not much. Why? Well, yeah, I would just step back and say for those who aren't as familiar with us, MACI is by far the market leader in cartilage repair. We've been on the market. This is our 10th year. We've had a compounded annual growth rate of 24%, 20% or more in the last three years. It is the market leader, especially obviously in our addressable market segment. I think you have to always start by saying a cartilage injury is not the same. It's a very sort of complex treatment algorithm and nuanced in that the decisions surgeons make are really based on the patient profile, so the age of the patient, their ability to do rehab with any kind of cartilage repair procedure, and the characteristics of the defect itself. The size, the location, whether there's bone involvement or not, the overall health of the knee, those are the primary decision points that lead surgeons to make a certain decision on how they want to treat. The competitive landscape has been very stable since we bought this business in 2014 and launched MACI in 2017. Potential market entrants really haven't changed, and in fact, it's moved very strongly in our favor. The way we always talk about competition is MACI-like products, and that's what I said earlier. At one point in time, there were two MACI-like products in development for the U.S. market. One didn't meet its primary endpoint and is gone. The other sort of had a European study that didn't show a difference versus microfracture. Yes, I would say that there's not going to be a MACI-like product on the market in the foreseeable future, if ever. That's number one. That's what investors should worry about. Was there going to be a product that would come to market and sort of have a direct impact on MACI? Because a new product that's kind of in that class could have taken market share, could have impacted pricing strat, whatever. That's just not going to happen. That's number one. The other thing we talked about is there's always sort of these other products that have been out there for different parts of the cartilage repair market, different segments. When you talk about procedures that are alternatives to MACI, like osteochondral allografts, OATS, which is taking a plug of a patient's own cartilage and transplanting it, microfracture with these microfracture augmentation products that are out there, and there have been other synthetic sort of products that have been on the market sort of come and gone. Those have always been out there throughout the history that we've had MACI. On Agility in particular, we've known that product for 10 years. It's been in development. It's been on the market for four years. I think if you go to the website, there are reimbursement codes if physicians want to use it now, with a permanent CPT code coming. Again, it'll depend on the reimbursement under that code based on RVUs. It'll depend on the price that's charged. Is it good economics for surgeons? We'll see, but the issue is it's not really our patient population. MACI's typical patient is a younger patient, sort of in their early 30s with a pure chondral or just a cartilage surface injury. That's what the core MACI patient is. I think if you look at our publication on the first 5,000 patients, low single-digit percentage of patients had any bone involvement. It really is sort of those surface cartilage defects. In the tenets of joint preservation is do no harm. If you have a pure cartilage injury, you're not going to drill into the bone, core out the bone to use an OCA or even an Agility. We've always said it's likely to be used in smaller defects, older patients, with osteoarthritis sort of as a bridge to a partial or full knee replacement, and that hasn't changed over the last seven years we've been talking about it. I think there was another analyst that had did a KOL call last week with a sort of early MACI adopter, high-volume surgeon, Hurricanes doc, if you're a hockey fan. His point was when he thinks about this, when you've got a defect that's 1 square centimeter or less, there's lots of different options out there that you can do, OCAs and potentially Agility, OATS, whatever. When it gets to be a centimeter and a half or larger, that's when you start skewing towards MACI. To use his words. If there's bone involvement, that's going to change the algorithm. That's where you might use an OCA or again, potentially an Agility. Really, in his words, "The share shift's going to come from OCA and OATS." Did not expect any meaningful impact on MACI business as we wouldn't. His point was, "I believe my MACI business will continue to grow in the double digits to teens in the years ahead." I don't think we could be more consistent in our perspective on this. Hopefully that answers your question. It does. I guess the question that I have as a follow-up would just be, if your competitor positions the product in a way that is more overlapping on the Venn diagram, if you will, even if it's not where it's suited, you could get some trialing or some physicians who are influenced or trying it maybe in areas they shouldn't be or pushing the envelope. I guess, will you need to contemplate that or is the market expanding at a rapid enough clip that type of impact will be negligible in your view? We don't expect any sort of impact of note. Again, companies can position products however they want. You're basically saying, you're going to override a surgeon's treatment algorithm to try a product that, again, why would you? There's a failure rate like there is with any product, right? If you core out the bone and it doesn't work, then what are you going to do in a 29-year-old patient, right? I would expect that most surgeons would not do something just regardless of how any company positions any product, if it's sort of contrary to their normal treatment algorithms. Got it. What do you think investors are most underappreciating about your competitive moat, your IP, your true protection on a true MACI-like product? Yeah. Well, like I said, MACI's regulated by the FDA as a combination device biologic product. There is no established pathway to bring those kinds of product to market, so there's no sort of biosimilar pathway for these combination products. There's no 510(k) pathway, so if anybody wants to enter the market with a MACI-like product, they have to run the clinical studies. As I mentioned earlier, it hasn't gone well for those that have tried to do it other than MACI. You can ask yourself why that is. Were they not run well? Is there something different about our approach from a manufacturing and product profile perspective? Which there's probably something to that. That's the moat. You can't just sort of enter the market under a 510(k) or a biosimilar kind of pathway. You have to run the studies. The last company in the U.S. that ran a study, whether it's a MACI-like product, it was a 10-year enrollment for 200 patients. Why would you use a trial of product when MACI's available for an appropriate patient? It gets very difficult for anybody to run these kinds of studies, it's a pretty big moat. Yep. I want to switch gears a little bit to just MACI Arthro and what this has been doing for the business, where you've been seeing use. I think you said MACI Arthro now drives over half your implants, and the trained base has reached 1,000 surgeons, right? Is that? Correct. Where are you seeing the uptake most prominently? Is this expanding the market? Yeah. Just to clarify, what we've said is that over half of MACI's overall business is coming from surgeons who are trained on MACI Arthro. It's that group of trained surgeons. Yeah, last year was MACI Arthro's first year on the market. We had said there's roughly call it 2,500-ish prior to that, surgeons that were using MACI, taking biopsies, et cetera, in any given year. Cumulatively, a little higher than that. Yeah, to have 1,000 surgeons trained in the first year on the market was pretty good, and we were pretty happy with that. At this point, we have a critical mass of trained surgeons. Over time, I would expect that any surgeon that is using MACI is going to be trained on MACI Arthro. It's not really training metrics anymore that we're concerned about. It's getting that pull-through of MACI Arthro cases from those that have been trained. That's what our commercial team is focused on this year. That's important because not only have we seen sort of what you'd want to see out of trained surgeons, where biopsy growth, implant growth increases. Total. Total. Yeah. When you sort of the surgeons that have done MACI Arthro cases, they actually have even higher biopsy growth and implant growth rates, and we've seen their conversion rates go higher. It's kind of this halo effect on the overall business. We want to make sure that continues. Obviously, we'll continue to train surgeons. The trends of how they behave tended to continue. I'd say last year, MACI actually, the growth rate increased by a couple of hundred basis points, and I'd say the increase we saw in those small femoral condyle defects that MACI Arthro is designed to treat actually became one of our faster-growing segments. Now, it's off a lower volume, so patella's always been our highest volume, sort of highest growth, or consistently is. We said the small femoral condyle defect growth actually sort of matched that or was on par with that last year. That's important, right? That was incremental to those specific physicians' overall use, right? Is it tough to break out? It's tough to break out. We just look at it in aggregate. You never know if they would've done the case anyway, even if they did it MACI Arthro and so on. I would say just there was much more use of MACI Arthro than that. I'm saying you can look at the increase in the small femoral condyle defects and that really accounted for the incremental overall growth. We're coming into the year with a lot more trained surgeons. We'll continue to train those surgeons, but we think that's a great indicator for us. Where it's being used is, these instruments were designed for two to four square centimeters, so they're matching cannulas and cutters and everything for either a two, three, or four square centimeter defect on the femoral condyle. That's where we've seen the most uptake. We've been pleasantly surprised that we're also seeing trochlea cases, so behind the kneecap, just because they can access that area easily with our Arthro procedures. Also patella usage, which is kind of interesting, right? The back of the kneecap. I think from a surgeon perspective, they'll look at it and say, "Hey, that could be a great benefit for the patient." Overall, it is with MACI Arthro generally because it's a less invasive surgery, so you'd expect sort of less postoperative pain, greater range of motion, faster back to full weight bearing, et cetera. If they can treat the defect without having to open up the knee and kind of flip the kneecap over to address a patella defect, that could have some pretty meaningful benefits for the patient as well. We're actually seeing surgeons sort of, even though that's not what the instruments were designed for, doing patella cases as well. I wanted to ask also, you got MACI Arthro still in the relatively early to mid-innings of launch, and then you also took some measures to realign your sales force entering 2026. Talk a little bit about how that's trending relative to your expectations and should we be nervous at all that there's potential. Right You're splitting territories. Is there a delayed impact coming, or what gives you confidence to say that it's not? Yeah. We decided to expand our sales force in the second half of last year. We actually moved it up a little bit because we knew we had a super high volume fourth quarter coming and in the large territories, we wanted to get people on board to be able to support those cases. Given the momentum of the business, we wanted to make sure that we had the full expanded sales force in place for all of 2026. Yeah, a lot of them came on board in the fourth quarter. Obviously, it's really interesting. I think the commercial leadership team, they executed flawlessly to bring new reps on, sort of partnering with the existing reps in those territories. There's a lot that could've gone wrong, and obviously, we sort of blew it out in Q4 and had our highest quarter ever, right? They worked really well together. They each knew what part of the territory they were going to have come the first part of the year. We get into this first quarter, and everybody's territory is realigned, and again, we said on our earnings call that it was the first quarter with the new reps and all the reps in their new territories. We had record first-quarter metrics across the board. We saw strong double-digit biopsy growth, double-digit implant growth, and particularly strong biopsy growth in the new territories. Again, I think there was flawless execution. We've done this a lot. We know how to do it well, in terms of communication, incentive comp plans, and so on, and I think the proof is in the results. At this point, with sort of potential disruption behind us, they're almost six months into the tenure here. There'll be no disruption that's delayed. Sounds like you're feeling good. Maybe to close it off here, we have two minutes left. You're sitting on a little over $200 million of cash on the balance sheet. If you continue with this type of free cash flow generation, which is accelerating, you could be approaching a half a billion dollars in a couple of years here. Yeah. Right? How should we think about what you're going to do with that cash, I'm just curious with where the stock is trading now, I would imagine you think it's undervalued. Tell me if you think different. Could there be a buyback potentially on the horizon? I'd say our capital allocation strategy has been pretty consistent. Our big capital investment was the $100 million into our new facility, which we self-funded and actually increased our cash balance while we were doing that. That was the big Cap. In order to meet our projected growth over the next five to 10 years, that was sort of the big capital investment we needed to make, that's why with that behind us, $2 million-$3 million a quarter in CapEx. We're going to have really strong free cash flow. It's down to the other two areas that we would always talk about, which is business development. We're certainly looking for other opportunities, particularly in sports medicine. At some point, if we didn't do anything else, you can do the math and say the pull-through, given our margins, both gross margin and adjusted earnings margin, is pretty strong. You'd have to think about those capital returns to shareholders, and a buyback certainly is something that we think about and we're in a position to do when we think it's right. We obviously think the stock is undervalued now. I'd just say it's an option that's on the table that we certainly talk about. Great. I think we'll close it off there. Nick, Joe, thank you so much. Great. Really appreciate it. Thanks, Rich. Appreciate it. Thanks for having us, Rich.