Organogenesis drops as Medicare to pull skin substitute LCDs (update)

[CMS]
gustavofrazao

Organogenesis (ORGO [https://seekingalpha.com/symbol/ORGO]) and MiMedx (MDXG [https://seekingalpha.com/symbol/MDXG]) traded lower on Friday after the Centers for Medicare & Medicaid Services (CMS) announced the withdrawal of final Local Coverage Determinations (LCDs) related to certain skin substitute products that were set to take effect next year.

The LCDs in question covered skin substitute grafts/cellular and tissue-based products for the treatment of diabetic foot ulcers and venous [https://www.cms.gov/newsroom/fact-sheets/upcoming-update-final-local-coverage-determinations-lcds-certain-skin-substitutes] leg ulcers, according to a statement from the CMS on Wednesday.

In April, the CMS announced that it would delay the [https://www.cms.gov/newsroom/fact-sheets/upcoming-update-final-local-coverage-determinations-lcds-certain-skin-substitutes] implementation of the above LCDs until January 1 amid an ongoing review of coverage policies related to skin substitute products, for which it sought supportive study results.

Commenting on the move, Craig-Hallum analyst Chase Knickerbocker argued that “without the LCDs, there will certainly be some additional level of competition for MDXG as the status quo list would have impacted the usage of those products on the list to some degree.”

“This will likely drive some level of disappointment from investors, as the LCDs were considered a positive for MDXG,” the analyst added with a Buy rating and a $13 target on the stock.

Meanwhile, BTIG’s Ryan Zimmerman argued that the LCDs' withdrawal removes the restrictions on hundreds of products, paving the way for “312 other products participation in the market.” “CMS is bowing to pressure from industry participants and appears meek and ineffective at curtailing abuse in the market,” he added, according to Bloomberg.

“While we still believe low-cost providers such as ORGO will be best positioned in the market, this update does reduce our confidence in our 2026 Top Pick outlook for ORGO at this point,” Zimmerman wrote with a Buy rating and a $9 target on the stock.

Other related stocks: Integra LifeSciences (IART [https://seekingalpha.com/symbol/IART]), Celularity (CELU [https://seekingalpha.com/symbol/CELU])

_Update 11:09 AM ET: Adds comments from BTIG_

MORE ON ORGANOGENESIS HOLDINGS, MIMEDX GROUP

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* Organogenesis Holdings Inc. (ORGO) Q3 2025 Earnings Call Transcript [https://seekingalpha.com/article/4840611-organogenesis-holdings-inc-orgo-q3-2025-earnings-call-transcript]
* MiMedx: Breakout Setup Into A Policy Overhaul [https://seekingalpha.com/article/4837375-mimedx-breakout-setup-into-a-policy-overhaul]
* Organogenesis starts rolling submission for ReNu allograft for knee arthritis [https://seekingalpha.com/news/4534925-organogenesis-starts-rolling-submission-renu-allograft-knee-arthritis]
* Organogenesis outlines 2025 revenue guidance of $500M–$525M as CMS policy shift drives growth outlook [https://seekingalpha.com/news/4518984-organogenesis-outlines-2025-revenue-guidance-of-500m-525m-as-cms-policy-shift-drives-growth]