Bioventus Inc. (BVS) Q4 2021 Earnings Call Transcript

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Bioventus Inc. ( BVS -0.43% )Q4 2021 Earnings CallMar 10, 2022,8:30 a.m. ET

Prepared Remarks:

Operator

Thank you for standing by, and welcome to the Bioventus Inc. fourth quarter 2021 earnings conference call. [Operator instructions] I would now like to hand the conference over to your speaker today, Mr. Dave Crawford, vice president of investor relations and treasurer.

Thank you. Please go ahead, sir.

Dave Crawford --Vice President of Investor Relations and Treasurer

Thank you. And good morning, everyone, and thanks for joining us. It's my pleasure to welcome you to the Bioventus 2021 fourth quarter earnings conference call. With me this morning is Ken Reali, CEO.

Ken will begin his remarks with a review of the quarter and his thoughts on the current market environment. Next, he will provide an overview of our 2022 priorities, and he will conclude with a brief comment on the hiring of Mark Singleton as our new CFO. I will then provide further detail on our fourth quarter results and lay out our 2022 net sales and adjusted EBITDA guidance. We will finish the call with Q&A.

A presentation for today's call is available on the Investors section of our website, bioventus.com. Before we begin, I would like to remind everyone that our remarks today may contain forward-looking statements that are based on the current expectations of management and involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated, including the risks and uncertainties described in the company's filings with the Securities and Exchange Commission, including Item 1A Risk Factors of the company's Form 10-K for the year ended December 31, 2020, as well as our most recent 10-Q filed with the Securities and Exchange Commission. You are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made. Although it may voluntarily do so from time to time, the company undertakes no commitment to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws.

This call will also include references to certain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP. We generally refer to these as non-GAAP financial measures. Definitions and reconciliations of those non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in the earnings press release on the investor relations portion of our website at bioventus.com. Now, I'll turn the call over to Ken.

Ken Reali --Chief Executive Officer

Thanks, Dave, and good morning, everyone, and thank you for your interest in Bioventus. Before discussing our most recent quarter, I would like to reflect on what was a transformational year at Bioventus. I am extremely proud of the way that our entire organization rallied to strengthen our long-term outlook through a variety of actions. Last month, we celebrated the one year anniversary of our IPO, which helped facilitate our acquisitions of Bioness and Misonix, allowing us to build out our three customer-focused verticals and enhance our scale.

These acquisitions have enabled our transformation from a company that historically reported high single-digit organic sales growth to one that we believe can consistently deliver double-digit organic growth. The acquisitions also bolstered our commercial organization by adding over 200 sales representatives to our team. Throughout 2021, we delivered strong commercial execution and were resilient in our response to the challenging dynamics brought on by the pandemic. We exceeded our initial sales plans, increased our targets throughout the year and generated 19% organic revenue growth.

We couldn't have achieved this without our team's exceptional execution of the company's strategy. Thanks to their continued hard work and dedication, the outlook for Bioventus has never been more exciting and we are looking forward to building on this momentum in 2022. I will now review our results for the quarter. Revenue increased 32% during the fourth quarter to $130 million despite some continued challenges from the pandemic.

We encountered headwinds at both the beginning and the end of the quarter from elective surgical procedure delays in specific regions of the country impacting our surgical solutions vertical. As the quarter progressed, we saw the impact of hospital and physician office staffing challenges across all our verticals as well as increased COVID rates among patients that force delays in scheduled treatment. Despite these challenges and the fact that we were impacted by three fewer selling days, we delivered a strong quarter of 5% organic growth. Adjusting for the impact of three fewer selling days, growth for the quarter would project to 10%.

With this, as a background, I will now discuss sales performance across our three verticals in more detail. Across pain treatments, we saw double-digit revenue growth, driven by continued market share gains for our single-injection Durolane therapy and our three injection Gelsyn therapy. We remain well positioned to take advantage of the shift toward single and three injection treatments for osteoarthritic knee pain. Durolane and Gelsyn each represent roughly 20% share of the single and three injection markets, respectively, with significant room for additional growth in the coming years for both therapies as they increase penetration.

Meanwhile, our five injection therapy, two parts, maintained its leading share of approximately 40%. As the only company with a portfolio of HA products across single, three and five injection therapies, we have held the No. 2 share position in the HA market and look to become the market leader in the coming years. Turning to our surgical solutions vertical, formally referred to as bone graft substitutes.

We saw double-digit organic revenue growth despite the disruption in elective procedures I mentioned earlier. The launch of OSTEOAMP Flowable, our injectable allograft bone graft substitute solution continues to contribute to our momentum. Misonix contributed two months of revenue in the fourth quarter following the closing of the acquisition, and we saw strong double-digit sales growth of Misonix BoneScalpel compared to the same two-month period in 2020. At the end of the quarter, we received FDA clearance for the BoneScalpel access handpiece.

This handpiece provides surgeons with a new option to use in confined spaces during minimally invasive spine surgeries, enabling safe bone removal with maximum visualization. This device further strengthens our presence in minimally invasive spinal fusions, the fastest-growing segment of spine and complements our already strong portfolio of bone graft substitutes, including OSTEOAMP Flowable. We have commenced a limited market release for BoneScalpel access that has received positive feedback and plan to initiate a full commercial release in the second half of this year. Finally, we saw double-digit growth across our Restorative Therapies vertical, underpinned by our recently acquired advanced rehabilitation products and the Misonix wound therapy business.

Our advanced rehabilitation business has continued to perform well since we acquired it last March. In addition, our Misonix wound business grew double digits for the two months post acquisition compared to the same two-month period in 2020. Across our international segment, growth of 71% was enhanced by our Bioness and Misonix acquisitions, while organic growth of 9% was driven primarily by Durolane. Bolstering our international HA presence, I am pleased to announce that during the quarter, we acquired Curavisc a three and five injection HA treatment to sell alongside Durolane in our international markets.

While not as material as our other acquisitions, this was an important and strategic acquisition that allows us to leverage and expand our significant market presence and customer base in HA therapy. Additionally, later this year, we expect to begin leveraging the international distribution rights we received through our investment in Trice Medical. As we continue to introduce new products across multiple regions and execute our go-to-market strategy, we see international expansion as a catalyst for revenue growth. Dave will give you a look at the guidance shortly.

But as we look out to the rest of the year, market conditions are improving. And while delays in elective procedures have improved in recent weeks, we continue to see some impact from hospital staffing challenges. We expect some disruption over the next few months but we are optimistic that conditions will begin to more closely resemble a normal environment in the second half of the year. Now, I'd like to update you on our 2022 priorities.

As I highlighted earlier, we accomplished a great deal in 2021 with disciplined focus and execution across our key priorities, and we'll maintain the same rigor in executing our three priorities for 2022. Our first priority is to maintain double-digit organic growth through the continued strong execution of our commercial organization. We see three areas that are expected to deliver double-digit organic growth. Pain treatments, including hyaluronic acid and PNS peripheral nerve stimulation, driven by share gains across Durolane and Gelsyn and growth of Curavisc internationally and continued growth of our P&S business.

surgical solutions, including our bone graft substitutes as our hardware agnostic strategy drives penetration into new accounts. Keeping in mind, we only have 5% market share today and plenty of runway for growth. And while recognizing that it isn't contributing to organic growth for the majority of the year, Misonix will allow us to leverage our scale to achieve further market share gains and enhance its historic double-digit growth rate. Our second priority focuses on completing the integrations of our recent acquisitions, delivering on our cost synergy commitments and leveraging our enhanced scale to accelerate sales.

We recently incorporated Bioness into our IT system, the last significant milestone in the integration process. And now turn our attention to Misonix. Over the past few months, an internal team has developed our integration plan, leveraging the valuable experience from the Bioness process. We expect to be substantially completed with the integration of Misonix by year-end and remain on target for our projected $20 million of cost synergies by the end of 2023.

Besides the realization of cost synergies, our buying commercial teams continue to pilot opportunities to leverage our enhanced scale and customer relationships to accelerate sales growth. As I highlighted last quarter, we initiated two sales pilot programs to utilize our call point access and further increase Bioness growth. We saw positive results from our successful pilot centered around our L300 Go product for patients suffering gait disturbance following total knee replacement surgery. As a result, we are educating our broader sales team to further leverage their relationships with orthopedic surgeons.

The second pilot explored accelerating PNS revenue by using our existing sales force for lead generation. Based on the results of this pilot, we are moving forward and hiring additional sales representatives in our pain treatments vertical that will be solely focused on our PNS products. We anticipate that these products will contribute to our double-digit growth in both the near and midterm. In addition to these successful pilots, we recently received FDA 510(k) clearance for our next-generation StimRouter Plus Neuro-modulation system.

The new system provides the same clinically proven long-term pain relief while significantly improving the patient's control and user experience and also has enhanced battery life. With the Misonix integration underway, we have recently initiated programs to enable deeper penetration within our customers across surgical applications in spinal fusion, neurosurgery and wound treatments. The first will leverage the existing customer relationships that the respective Bioventus and Misonix sales forces maintain. These two sales forces have approximately 500 customer relationships each.

But there is relatively little overlap due to our relatively small market penetration today, roughly 10 accounts in total. Already, we have cross-trained the entire Misonix sales team on our bone graft substitutes portfolio to leverage their customer relationships. Also we have trained select members of our indirect sales force on our Misonix surgical products and plan to implement a more extensive rollout in the second half of the year. Through the early stages of implementation, we are already seeing this approach pay dividends as our sales teams have been able to utilize their relationships and cross-sell incremental products to an account.

The second Misonix program engages our Exogen representatives to sell Misonix' wound products into the office setting. Misonix has focused on the hospital wound center call point in the past. But due to the pandemic, more wound-related treatments have shifted to the office setting. We are leveraging our relationships with podiatrists by utilizing our existing Exogen call points in the office setting to offer Misonix' wound treatment therapies to patients suffering from debilitating wound conditions such as diabetic foot ulcers.

Our third and final priority for the year centers on the pending acquisition of CartiHeal, which we believe is a revolutionary and game-changing device for multitudes of patients suffering from knee osteoarthritis. As I mentioned last quarter, there are still steps remaining for CartiHeal to gain PMA approval. But in the meantime, we are preparing to finance the potential acquisition with additional debt. As a reminder, CartiHeal fills a significant unmet need for surgeons in the treatment of patients with cartilage defects and knee osteoarthritis and has a demonstrated superiority through a randomized controlled trial to the current surgical standard of care.

Demonstrating superiority, particularly in orthopedics is a high bar and one that speaks to the strong merits of the CartiHeal device. While we don't expect the acquisition to drive material growth during the first years post launch, we anticipate CartiHeal will be a significant driver of growth in the midterm as private payers increasingly approve reimbursement based on its clinical superiority and economic attractiveness. Before turning it over to Dave, I want to express how excited we are to bring Mark Singleton on board as our new chief financial officer. During our search, we were focused on finding a candidate who has demonstrated the ability in a global med tech organization to drive revenue growth as well as consistent operating leverage, both organically and through value-creating M&A.

Throughout his time at IBM, Lenovo and, most recently, over the last seven years at Teleflex, Mark has partnered with leadership to consistently deliver improved operating results and integrate acquired assets. Mark's ability to effectively manage operating spending and increased financial discipline and accountability will help us to drive expanded operating margin leverage as we continue to grow organically and enhance our portfolio through M&A. Mark brings robust experience in our industry and will be a strong cultural fit with our executive team and all of Bioventus. Lastly, I would like to thank Greg Anglum for his financial leadership during his time at Bioventus and wish him the best in the next step of his career.

In conclusion, we continue to build momentum across our business as we execute on our growth strategy and drive further market penetration across all three customer-focused verticals. I am confident we will deliver on our cost synergies from our acquisitions and enhance our growth profile by leveraging our scale and commercial infrastructure to deliver consistent double-digit growth. Now, I'll turn the call over to Dave.

Dave Crawford --Vice President of Investor Relations and Treasurer

Thanks, Ken. I will begin with a review of our fourth quarter results. Revenue of $130 million increased 32% compared to the prior year. We saw a 5 percentage point increase from organic revenue, along with a 27 percentage point benefit related to our acquisitions of Bioness and Misonix.

As Ken mentioned, sales growth was impacted by three fewer selling days compared to the prior year. Although hospital utilization was negatively impacted by the pandemic and hospital and physician office staffing shortages during the fourth quarter, we were able to deliver strong sales as we benefited from our diversified portfolio and strong execution by our commercial teams. Our adjusted sales performance drove -- our sales performance drove adjusted EBITDA of $28 million and adjusted diluted earnings per share of $0.26. Across pain treatment, we grew 20%, driven by 17 percentage points of organic growth across our HA portfolio and 3 percentage point contribution from our PNS products, which we acquired from Bioness.

As Ken mentioned, our Durolane and Gelsyn products continue to capture market share. Supartz sales were lower, given the ongoing shift away from five injection therapy toward single and three injection therapy. In surgical solutions, we grew 61%. We saw 13 percentage points of organic growth across our bone graft substitutes as the business returned to double-digit growth despite the challenging environment.

The fourth quarter included a 48 percentage point contribution from two months of revenue from Misonix' surgical portfolio. And finally, across restorative therapies, we delivered 35% growth. Organic sales growth from Exogen was down against a tough comparison as prior-year revenue benefited from the release of roughly $2 million of settlement reserves resulting from the process improvements made following our OIG disclosure resolved in December of 2020. This represented a 2 percentage point unfavorable impact to the company's overall organic growth.

Meanwhile, inorganic growth from the sales of the Bioness advanced rehabilitation portfolio and the Misonix' wound business contributed a combined 58 percentage points. Moving down the income statement. Adjusted gross margin of 76% was down 340 basis points compared to the prior year. The decline in gross margin can be attributed to lower gross margins from our recent acquisitions, along with a slight increase in transportation costs due to the global supply chain challenges.

Overall, adjusted operating expenses increased $16 million, driven by the costs related to Bioness and Misonix, public company costs and a return to more normalized spending patterns when compared to the prior year. Now, turning to our bottom-line financial metrics. Adjusted EBITDA totaled $28 million, even compared to the prior year. Higher sales volume was offset by higher operating costs that I just mentioned.

Adjusted operating income increased to $22 million from $17 million in the prior year and adjusted net income totaled $18 million compared to $13 million a year ago. We earned $0.26 of adjusted diluted earnings per share. Now, for a brief recap of our full year results. Net sales increased to $431 million, a 34% increase compared to 2020.

Organic sales grew 19%, while the acquisitions of Bioness and Misonix contributed 15 percentage points of growth. For the year, adjusted EBITDA totaled $81 million. Adjusted gross margin for the year was 78% compared to 79% a year ago. Our 2021 adjusted gross margin reflects the impact of our recent acquisitions along with increased transportation costs due to global supply chain challenges, which I previously mentioned.

Adjusted operating income for the year totaled $85 million compared to $60 million in 2020. Now turning to the balance sheet and cash flow statements. Our balance sheet provides us with strategic flexibility as we ended the quarter with $44 million of cash on hand and $358 million of debt outstanding. Our revolving credit facility remained undrawn at the end of the fourth quarter.

Operating cash flow represented an inflow of $13 million for the quarter. We continue to generate strong and consistent cash flow, which provides us with the capability to delever even when taking on higher debt levels for short periods of time. Finally, let me review our 2022 guidance. Based on current trends in our business, we expect net sales to be in a range of $545 million to $565 million, including Bioness and Misonix.

For the year, we expect adjusted EBITDA to be between $94 million and $107 million. Similar to prior years, we expect our first quarter revenue and adjusted EBITDA to be the lowest for the year, and the fourth quarter to be the highest for the year, with the second and third quarters looking fairly similar to one another, contributing to the acceleration of EBITDA and earnings throughout the year will be a fairly consistent level of operating expenses each quarter, excluding the benefit of cost synergies. Synergies from our Misonix integration will be weighted more toward the second half of the year and further enhance EBITDA. Additionally, at this time, we are not providing guidance for adjusted diluted earnings per share due to the implications of the potential financing of our CartiHeal acquisition that Ken mentioned earlier.

Once we have completed the financing for CartiHeal, we expect to provide adjusted diluted EPS guidance for the year. The potential financing of CartiHeal will require approximately $265 million of additional debt. And given our higher leverage, we will restructure our existing debt. Based on current market conditions, upon the completion of the financing, we expect to have approximately $625 million of debt with an overall interest rate between 6% and 7%.

In closing, we continue to execute on our growth initiatives across our business and maintain our top-line momentum while completing the integration of Misonix later this year. Operator, please open the line for questions.

Questions & Answers:

Operator

[Operator instructions] Your first question comes from the line of Kyle Rose from Canaccord. Your line is open. Please ask your question.

Kyle Rose --Canaccord Genuity -- Analyst

Great. Thank you for taking the question. I wonder if you could just talk a little bit more about some of the market trends you're seeing at least to start the year into Q1 and how we should really think about the exit velocity into the Q2. And then just a little bit more on the sales team build-out with respect to the PNS business.

I mean, specifically, how many reps do you plan on hiring? And how should we think about the productivity metrics within that?

Ken Reali --Chief Executive Officer

Thanks, Kyle. First of all, as far as the business goes, the start of the year was a tough start as a lot of us have talked about -- different than other parts and times of the pandemic, we saw more of a broad implication, not just across elective surgical procedures, but patients that were deferring treatment because they were sick or offices shutting down because they had sick office staff for nurses and certainly, this hospital staffing issue as well. And that was the start of the year. As we've gone through the year now, we've certainly seen a real steady progression of improvement.

And I would say the exit velocity here projected in Q2 -- going into Q2 should be strong. Not quite, I would say, in a normalized environment as we talked about, but we expect that to occur by the second half of the year. Regarding peripheral nerve stimulation, we see a real opportunity here. As you know, this is a $6 billion total addressable market.

We focus now on postsurgical pain using peripheral nerve stimulation and particularly the StimRouter and now the StimRouter Plus to address this area of the orthopedic market, particularly avoiding the prescription of opioids. So we're very excited about the opportunity. There's established reimbursement for peripheral nerve stimulation, and we'll be adding to our sales force to solely focus on this area. We're not going to give direct sales numbers of how many reps for strategic reasons, but it will be enough to enhance our ability to really go after this market.

And of course, our PNS reps will work hand in hand with our pain, other pain treatment reps in hyaluronic acid as well as selling our long bone stimulation to really get into accounts and offices and leverage those relationships.

Kyle Rose --Canaccord Genuity -- Analyst

Great. And then just if you could update us on capital allocation plans for, I guess, over the near to midterm. I mean, obviously, you're going to bring on some debt and finish this CartiHeal deal. You've been pretty acquisitive over the course of the last 12 months relative to your size.

So just -- should we expect deals to slow down from a BD perspective or is it just going to continue to be status quo?

Ken Reali --Chief Executive Officer

Yup. Kyle, as we go forward this year, our focus is really on digesting what we have in front of us. And that includes -- now that Bioness is fully integrated, completing the Misonix integration by the end of this year and completing the CartiHeal acquisition. At this point in time, there are no other acquisitions that we are planning.

We really anticipate our year looking that way and, of course, executing on the amazing opportunity we have of driving double-digit growth and continuing to gain market penetration.

Kyle Rose --Canaccord Genuity -- Analyst

Thank you for taking the questions.

Ken Reali --Chief Executive Officer

Thanks, Kyle.

Operator

Your next question comes from the line of Drew Ranieri from Morgan Stanley. Your line is open. Please ask your question.

Drew Ranieri --Morgan Stanley -- Analyst

Hi, Ken, Dave. Thanks for taking the question. Just to maybe start on guidance for a moment. Can you just give us a better sense of maybe what gets you to the lower and upper end of the range maybe from a specific product launch or a segment perspective.

Just wondering if you're seeing better traction in one particular area that gets you to the top end or just more of the same. And then is there any selling day impact that you're contemplating for 2022? And just to throw this in here, too. Can you give us a sense of what you're expecting for organic growth for the year? Thank you.

Ken Reali --Chief Executive Officer

Bioventus Inc. (BVS) Q4 2021 Earnings Call Transcript

Yeah. Thanks, Drew. If you look back at what's driving our growth in our business, it comes down to several key areas. Number one, in surgical solutions, it's the double-digit growth of bone graft substitutes.

And certainly, we feel that despite the start to the year, if things continue to go with the pandemic, the way they're progressing today, we'll be back to a normalized environment and strong double-digit growth in bone graft substitutes as we go through the year. BoneScalpel, combined with that in surgical solutions, we have a tremendous opportunity, and that has also historically had strong double-digit growth. And we expect that to continue as well. Once again, provided elective procedures continue to go the way they have progressed here through the first quarter, which is a great improvement.

The other area of growth for the company is our HA business where we continue to gain market share with Durolane, our single injection and Gelsyn, Drew, our three injection, and we see that continuing. The HA market is very strong. And certainly, the reimbursement is robust, and our sales force is highly focused in this area where we have a unique combination with our three products, Durolane, Gelsyn and Supartz. So we see that growth continuing as well.

And then peripheral nerve stimulation, as you mentioned, that's a critical growth area, both in the near and midterm for us off a small base, I would say, but we do see that as a growth driver for us, not only this year but in the years to come as we continue to penetrate that market. As far as sales days impact, we don't see that in 2022 as we saw in 2021. Keep in mind, the way we do our sales days is not necessarily on a calendar month and a calendar quarter. We do a set amount where the first month of every quarter is five weeks followed by two successive weeks -- two successive months of four weeks.

And what happened in the fourth quarter is we had the five weeks, we had the four week in November. And then our December was truncated by three less selling days just based on when the end of the year happened because we always end the year on the end of the year, December 31. So that's what happened here in 2021 ending.

Dave Crawford --Vice President of Investor Relations and Treasurer

Drew, I guess, when you think about organic growth for the business, what I would tell you on that is pro forma revenue for the company is just north of $500 million. So if you look at kind of the midpoint of the earnings guidance, it's kind of projecting organic revenue growth of around 10%, again, consistent with what we're trying to achieve on that double-digit growth target.

Drew Ranieri --Morgan Stanley -- Analyst

Got it. And then Ken, you just mentioned the HA market remains very strong. Reimbursement is robust. It's -- heard some concerns from investors that Medicare might be potentially cutting prices in the not-too-distant future.

But can you maybe spend a moment there, talk about how Bioventus might be better situated versus competitors? And any idea of precise timing for or implementation of the pricing cuts? Thank you.

Ken Reali --Chief Executive Officer

Yeah. Thanks for the question, Drew, on that. We've looked at this very carefully and this is not a Medicare cut per se, but it's focused on ASP reporting and ASP reimbursement, average selling price reimbursement. One of the things that we've historically done at Bioventus in our HA business is focused on market access.

And what that means is having specific contracts with insurance carriers such as United Healthcare, the largest private carrier in the country today. And with those contracts, gives us unfettered access to accounts and the ability to cross sell to what we call non-contracted, non-United patients. But we also spend a lot of money relative to getting those contracts through rebates back to insurance companies where we have that unfettered access in that exclusive contract. So when we look at this analysis for us, and this is specific to Bioventus, I can't speak for other countries or other companies, rather, it's a net-neutral for Bioventus.

While we may lose a little on the ASP reimbursement, we gain by paying less rebates because of that reimbursement change. So for Bioventus, it provides us with basically a balanced footing on the HA reimbursement side. we may see some choppiness as we go through this, and we're projecting this would occur in the third quarter this year. But we feel that choppiness will be very short-lived as we work through the ASP reimbursement and, of course, the rebate change associated with that, that we pay back to insurance companies.

Drew Ranieri --Morgan Stanley -- Analyst

Thanks for taking the questions.

Ken Reali --Chief Executive Officer

Thanks, Drew.

Operator

Your next question comes from the line of Robbie Marcus from J.P. Morgan. Your line is open. Please ask your question.

Robbie Marcus --J.P. Morgan -- Analyst

Thanks for taking the questions. Maybe to start with all the deal integration and the upcoming finance, how should we think about free cash flow in 2022?

Ken Reali --Chief Executive Officer

I think, Robbie, free cash flow will continue to be robust for the company. It's -- our business model has not changed whatsoever. We got about 90% free cash flow flowing through, and we expect that to not change here in 2022. Our business model, even with our acquisitions that we've done has not changed whatsoever.

We have robust reimbursement for all of our products in the markets that we serve. And it's pretty diverse as well, which offers a good protection for the company.

Dave Crawford --Vice President of Investor Relations and Treasurer

Hey, Robbie. The one thing I would add -- it's Dave here. You're going to probably see free cash flow accelerate our cash from operations to accelerate during the course of the year. Q1 will be by far away, the lowest amount.

We have some payments that will go out management incentives. We also have a payment for former employees relating to the going public and the transitioning of their stock and paying out that as well as some other just onetime or costs associated that hit in the first quarter that don't hit later on in the year. So insurance premiums, for example. And then we also have some things going on relative to the acquisitions.

But as Ken alluded to, we would expect free cash flow to build during the course of the year. Obviously, the additional debt that we are likely to take on with CartiHeal will impact some of that in the back half of the year when the financing is in place from that perspective.

Robbie Marcus --J.P. Morgan -- Analyst

Got it. OK. So we shouldn't expect the deal or the refinancing to happen until second half of the year?

Ken Reali --Chief Executive Officer

It is dependent, I think, upon the timing of the approval from the FDA. From our planning purposes, we've kind of put something in kind of like the midpoint of the year that could accelerate. It could be delayed. Again, that's in the hands of the FDA, and then we have a period of time that we'll use to close that transaction and finance the transaction as well.

But from a planning standpoint, I think it's probably good as a midpoint to look at it kind of on a July 1 timing. And then we will definitely update everyone as that timing either accelerates or moves back.

Robbie Marcus --J.P. Morgan -- Analyst

Great. And then last one for me. Ken, you mentioned earlier about you're not looking to -- or you're not -- you don't have any other deals planned right now. The commentary I feel like you used to say was Bioventus will continue to look for good acquisitions.

And if you see something, you'll go acquire it. I just want to make sure it's not a change in positioning here as in you're done acquiring for a while. So maybe just a clarification.

Ken Reali --Chief Executive Officer

Yeah, let me be clear, Robbie. We'll continue to build a pipeline of M&A opportunities. but we need to digest what we have in front of us in 2022 with a pending acquisition of CartiHeal, which we're very excited about and the integration of Misonix, it's just a timing thing for us that we need to get beyond but it doesn't change our medium-term strategy of continuing to build our customer verticals of both product development and R&D and enhanced M&A, which is what we've done in the past year. That doesn't change in the medium term.

It's just a timing thing of digesting what we have in front of us today.

Robbie Marcus --J.P. Morgan -- Analyst

Great. Thanks a lot.

Ken Reali --Chief Executive Officer

Thank you, Robbie.

Operator

Your next question comes from the line of Amit Hazan from Goldman Sachs. Your line is open. Please ask your question.

Unknown speaker

Hi. It's Phil on for Amit. Thanks for taking the question. I think for the first one, I wanted to ask Drew's organic growth question maybe from the other direction instead of -- I heard the $500-ish million pro forma.

But we were trying to put together an estimate for what the inorganic contribution was to 2022. I don't think we have an idea on Curavisc yet, but taking the Bioness and the Misonix together was somewhere around $75 million for us, which gets you to kind of that 9% to 13%, the same organic growth rate. Is that kind of thinking about the math right? What's the contribution from Curavisc that's expected here in '22?

Ken Reali --Chief Executive Officer

Yeah. Curavisc is going to be pretty small. We're not going to break out Curavisc separately. That was a strategic opportunity and acquisition for us that complements Durolane internationally, considering Durolane is a single-injection product, and there's still demand for three and five injection with the accounts that we sell today.

But regarding your question on inorganic versus organic, I think your numbers are correct. We -- our guidance -- midpoint of our guidance, as Dave said, gets us into double-digit growth. That's what we're guiding at looking at the full year sitting here today based on what we know, and we feel very comfortable with our double-digit growth strategy and being able to execute on that. And certainly, we'll update more fully as we go through the year.

Unknown speaker

OK. That's great, Ken. Thanks. Thanks for that.

Just a quick one on quarterly phasing. I saw the roughly regular seasonalities. If we go back pre pandemic, I think that that's sort of a 22% of sales coming in the first quarter. That looks like it's roughly in line or maybe a little bit lower street.

Is that the right kind of range to be thinking about for 1Q setup?

Ken Reali --Chief Executive Officer

I think so. With the pandemic and the slow start to the year, it might be a little bit lower than that this year for sure. We -- but historically, this business, Q1 has always been the low point and Q4 has always been the high point and that's driven by elective surgical procedures peaking in the fourth quarter, insurance deductibles being reset January 1. All of those dynamics seem to have a heavy weight on our type of business, and that really hasn't changed with the acquisitions that we've done, either that cadence.

But this year, with the weakness starting out in the beginning of the year because of the pandemic, Q1 could even be a little lighter than that.

Dave Crawford --Vice President of Investor Relations and Treasurer

Yes. And as Ken talked about in his prepared remarks, also seeing some of the acceleration of the business as we anticipate things getting more closely to the normal in the second half, that will wait a little bit more toward the back half of the year as well.

Unknown speaker

OK. Thanks, both. Appreciate it. I'll jump back.

Thank you.

Dave Crawford --Vice President of Investor Relations and Treasurer

Thank you.

Operator

There are no further questions at this time. Mr. Ken Reali, You may continue.

Ken Reali --Chief Executive Officer

OK. Thank you, Justin, and thank you all for your continued interest in Bioventus. 2021 was a transformational year for the company, and we look to build on our momentum and continue our strong execution. I am confident in our growth strategy and in the ability of our diversified market-leading portfolio to sustain double-digit organic growth while creating stakeholder value through our enhanced portfolio and synergies from our recent acquisitions.

Thank you very much.

Operator

[Operator signoff]

Duration: 45 minutes