We just sort of never gotten to the point where again it’s matured enough before we had other opportunities to expand the business.
Ryan Zimmerman: Thank you. Appreciate the color.
Nick Colangelo: Thanks.
Operator: One moment for our next question. The next question comes from Sam Brodovsky with Truist Securities. Go ahead, Sam. Your line is open.
Sam Brodovsky: Hey, thank you for taking the questions and congrats on the solid start and great profit number. I did want to dig into that profit side of things a little bit. Joe, did I hear you right? You said 2Q margins, we should expect them to be similar to 1Q. And then just sort of taking that in mind, keeping the gross margin guide for the year at about 75% when presumably your lowest or excuse me, 70% when presumably the lowest quarter of the year is going to be about 69% and hopefully can step off from that. Just how are you thinking about that and what can give you confidence to potentially think about moving that that range up for gross margin or EBITDA?
Joe Mara: Yes. I certainly appreciate the question. Obviously, kind of a great start from a profitability perspective. As we’ve been talking about quite a bit, in particular over the last few quarters, our focus is driving the top line growth, but also kind of margin expansion and our profitability metrics. So I think to your point in Q1, obviously really strong, kind of both from an adjusted EBITDA margin perspective being in the mid-teens, gross margin in the high 60s, that was a bit ahead of kind of trends and expectations, if you will. I would say as we think about the balance of the year, I mean, that can certainly still ebb and flow a little bit. And I think the right baseline is obviously Q1 is off to a very strong start.
You can look at the prior year kind of in the — kind of mid to high 60s and we would expect on a full-year basis gross margin to expand from 68.5%, if you will last year to that 70% range. So again, it can ebb and flow a little bit throughout the year. But I think to the kind of key part of your question, which is I think based on that strong start, we certainly have the potential and I think are in a good position to potentially be higher than our initial guidance. But given we’re just kind of one quarter in and these are kind of approximate numbers, we haven’t updated them yet, but they continue to be a focus and these are kind of both numbers in the bottom line and the gross margin that we want to continue to improve. And the other piece on the gross margin side that we look at is kind of the pull through, which was very strong in the quarter, kind of the incremental revenue pull through well above 80%, I think over 85%.
So good start and expect strong quarters throughout the year and we’ll kind of monitor that. But I think we’re in a good position to be kind of on the higher side, if you will, particularly on the gross margin side.
Sam Brodovsky: Great. That’s super helpful. And then shifting to NexoBrid. I wanted to ask a bit of a higher level question there. Obviously, without providing guidance, but just as we think about where the company is going to be positioned heading into 2025, you already have almost half of centers in the funnel to an certain extent. Should we think about most, if not a good portion of the target centers being fully onboarded and ready to go in ’24? And then how do we think about the sales strategy changing in 2025? Can you fully shift to just driving surgeon utilization? Thanks.
Nick Colangelo: Yes. Hey, Sam, this is Nick. I’ll take that one. So for NexoBrid again, I think anyone who’s done market checks or for instance participated in or attended the American Burn Association Meeting, you get to see sort of this super high interest in the product from the Burn Care community. Obviously as you alluded to sort of performing well on sort of the Burn Center KPIs in terms of P&T submissions, approvals, initial orders and most importantly excellent surgeon feedback on patient outcomes for those who have started using the product. So we think as we’ve been kind of beating the drum on this is a build gear as you get through these sort of processes. I think it’s pretty well understood in the industry. We think we’ll be in a good place by the end of the year where, yes, we would expect the vast majority of P&T submissions to have been completed and hopefully approved or in the process of being approved.
And as we alluded to once you get through the P&T committee process, there are still other procedures and processes that hospitals need to get through to be able to order the product and then start utilizing it. So we’re hyper focused on that as you might imagine. And at the level of sort of KPIs and getting centers up and running, I’m pretty pleased with that performance. Lastly, I would just say as you know changing the standard of care from a surgical, excision procedure to a topically applied biologic. I mean surgeons have been doing the same thing for decades. And so I think the adoption again, moves at different paces in different hospitals, but we certainly have not changed our long-term view for NexoBrid. It’s just you go through the process.
Operator: Thank you. One moment for our next question. Your next question comes from George Sellers with Stephens, Inc. Go ahead, George. Your line is open.
George Sellers: Good morning. Thanks for taking the question and congrats on the quarter. Maybe on Epicel, I’m just curious if you could give some additional color on what drove the beat in the quarter, maybe how the underlying market performed, what sizes looks like, things like that, and also your perspective on the impact, some sort of halo effect potentially from NexoBrid if that was a significant driver as well?
Nick Colangelo: Yes, hey, George. It’s Nick. So just starting with the Burn Care market, as we’ve talked about, we do have access to market data around large 30% plus body surface area burns. And I would say the market was kind of normal maybe down a little bit. So that certainly wasn’t driving Epicel performance. It really was just as we talked about before. We do have a larger footprint now. We’re in more burn centers than we used to be. As I alluded to in my comments, we certainly saw a significant contribution to Epicel revenue from what were formerly dormant or new accounts that we’re calling on for NexoBrid. So that is a halo effect that we expect an additional pull through on Epicel. And I think we’re seeing that as we kind of move through the initial launch phase for NexoBrid.
