# Organogenesis Holdings Inc.: Form 10-Q for the period ended Jun 30, 2025

- Company: [Organogenesis Holdings Inc.](/companies/orgo.md) (CIK 1661181)
- Form: 10-Q
- Filed: 2025-08-07
- Accepted by EDGAR: Aug 7, 2025, 16:16 ET
- Period: 2025-06-30
- Accession: 0000950170-25-105048
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1661181/000095017025105048/orgo-20250630.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1661181/000095017025105048/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-04-01 to 2025-06-30 | $101.0m | us-gaap:Revenues |
| Revenue | 6 months, 2025-01-01 to 2025-06-30 | $187.7m | us-gaap:Revenues |
| Research and development | 3 months, 2025-04-01 to 2025-06-30 | $10.4m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 6 months, 2025-01-01 to 2025-06-30 | $21.0m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2025-04-01 to 2025-06-30 | $73.8m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2025-01-01 to 2025-06-30 | $146.3m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2025-04-01 to 2025-06-30 | −$12.6m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2025-01-01 to 2025-06-30 | −$39.3m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2025-04-01 to 2025-06-30 | −$669.0k | us-gaap:InterestExpenseNonoperating |
| Interest expense | 6 months, 2025-01-01 to 2025-06-30 | −$1.6m | us-gaap:InterestExpenseNonoperating |
| Income tax | 3 months, 2025-04-01 to 2025-06-30 | −$2.4m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2025-01-01 to 2025-06-30 | −$9.4m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-04-01 to 2025-06-30 | −$9.4m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2025-01-01 to 2025-06-30 | −$28.2m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-04-01 to 2025-06-30 | −$0.10 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2025-01-01 to 2025-06-30 | −$0.27 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-04-01 to 2025-06-30 | −$0.10 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2025-01-01 to 2025-06-30 | −$0.27 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-04-01 to 2025-06-30 | 126,853,536 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2025-01-01 to 2025-06-30 | 126,576,130 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2025-01-01 to 2025-06-30 | −$52.8m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2025-01-01 to 2025-06-30 | $7.3m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2025-06-30 | $73.1m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-06-30 | $260.2m | us-gaap:AssetsCurrent |
| Total assets | at 2025-06-30 | $461.1m | us-gaap:Assets |
| Current liabilities | at 2025-06-30 | $65.8m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-06-30 | $99.9m | us-gaap:Liabilities |
| Shareholders' equity | at 2025-06-30 | $233.2m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 41,302 characters.

*The following discussion and analysis should be read in conjunction with our financial statements and accompanying notes included in this Form 10-Q and the financial statements and accompanying notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC, on February 27, 2025. Please refer to our cautionary note regarding forward-looking statements on page 3 of this Form 10-Q, which is incorporated herein by this reference.*

*Unless the context otherwise requires, for purposes of this section, the terms “we,” “us,” “our,” “the Company,” “Organogenesis” and “ORGO” will refer to Organogenesis Holdings Inc. and its subsidiaries as they currently exist.*

### Overview

Organogenesis is a leading regenerative medicine and tissue innovations company focused on empowering healing through the development, manufacturing, and sale of products for the advanced wound care and surgical and sports medicine markets. Our products have been shown through clinical and scientific studies to support and in some cases accelerate tissue healing and improve patient outcomes. We are advancing the standard of care in each phase of the healing process through multiple breakthroughs in tissue engineering and cell therapy. Our solutions address large and growing markets driven by aging demographics and increases in comorbidities such as diabetes, obesity, cardiovascular and peripheral vascular disease. We offer our differentiated products and in-house customer support to a wide range of health care customers including hospitals, wound care centers, government facilities, ASCs and physician offices. Our mission is to provide an integrated portfolio of healing and tissue solutions that improve lives while lowering the overall cost of health care.

We offer a comprehensive portfolio of products in the markets we serve that address patient needs across the continuum of care. We have and intend to continue to generate data from clinical trials, real-world outcomes and health economics research that validate the clinical efficacy and value proposition offered by our products. Several of our existing and pipeline products in our portfolio have PMA, or 510(k) clearance from the FDA. Given the extensive time and cost required to conduct clinical trials and receive FDA approvals, we believe that our data and regulatory approvals provide us with a strong competitive advantage. Our product development expertise and multiple technology platforms provide a robust product pipeline, which we believe will drive future growth.

In the Advanced Wound Care market, we focus on the development and commercialization of advanced wound care products for the treatment of chronic and acute wounds in various treatment settings. We have a comprehensive portfolio of regenerative medicine products capable of supporting patients from early in the wound healing process through wound closure regardless of wound type. Our Advanced Wound Care products include Apligraf for the treatment of venous leg ulcers (“VLUs”) and diabetic foot ulcers (“DFUs”); Dermagraft for the treatment of DFUs (manufacturing and distribution currently suspended pending transition to a new manufacturing facility or engagement of a third-party manufacturer); PuraPly AM and PuraPly XT as antimicrobial barriers and native, cross-linked extracellular matrix (“ECM”) scaffold for a broad variety of wound types; CYGNUS Dual as a dual-layered amniotic membrane that promotes an optimal environment for wound healing; CYGNUS Matrix as a dehydrated placental allograft that promotes an optimal environment for wound healing; and VIA Matrix, Affinity, Novachor, and NuShield placental allografts to address a variety of wound sizes and types as a protective barrier and ECM scaffold. We have a highly trained and specialized direct wound care sales force paired with comprehensive customer support services.

In the Surgical & Sports Medicine market, we are leveraging our broad regenerative medicine capabilities to address chronic and acute surgical wounds and tendon and ligament injuries. Our Sports Medicine products include NuShield for surgical applications in targeted soft tissue repairs; and Affinity, Novachor, PuraPly MZ, PuraPly AM, and PuraPly SX for management of open wounds in the surgical setting. We currently sell these products through independent agencies and our direct sales force.

### Dermagraft

As previously disclosed, manufacturing of Dermagraft was suspended in the fourth quarter of 2021 and sales of Dermagraft were suspended in the second quarter of 2022. We currently plan to transition our Dermagraft manufacturing to our newly-leased biomanufacturing facility in Smithfield, Rhode Island, which we expect will begin in 2027, and will result in substantial long-term cost savings. We expect to resume sales of Dermagraft by the end of 2027. If there are significant delays in the build out of the Smithfield Facility or in approval of the facility for manufacturing of Dermagraft, it could have an adverse effect on our future consolidated net product revenue and results of operations.

### Local Coverage Determinations and Centers for Medicare & Medicaid Services (CMS) Proposed Rule

On April 25, 2024, seven Medicare Part A/B Administrative Contractors (“MACs”) published new proposed local coverage determinations (“LCDs”) for skin substitute grafts/cellular and tissue-based products (“CTPs”) for the treatment of DFUs and VLUs in the Medicare population. These LCDs were finalized by the MACs on November 14, 2024, and were originally set to become effective on February 12, 2025. However, on January 24, 2025, the MACs announced a delay in the implementation of the LCDs until April 13, 2025, and on April 10, 2025, the MACs announced another delay in the implementation of the LCDs until January 1, 2026. Under the new LCDs finalized in November 2024, should they take effect in their current form, a total of eighteen products would remain covered, including our Apligraf and Dermagraft products for DFUs and VLUs, and our Affinity and NuShield products for DFUs; however, more than 200 products would be classified as “non-covered,” including our PuraPly, PuraPly AM, PuraPly XT, Novachor, TransCyte, Dual and Matrix products for DFUs and VLUs. The LCDs as finalized apply only to DFU and VLU indications for skin substitute products; coverage for other indications would remain subject to case-by-case review of medical necessity by the MACs if the LCDs take effect. It is uncertain if there will be further delays in implementing the new LCDs and/or if the new LCDs will be revised or rescinded going forward. If implemented, the LCDs could materially impact utilization of these products, our business, and our revenue. Any future changes or other developments related to these or other LCDs also could affect utilization of our products, our business, and our revenue.

In July 2025, CMS issued proposed rules that announce and solicit comments on proposed policy changes for Medicare payments under the Physician Fee Schedule (“PFS”) and Hospital Outpatient Prospective Payment System (“OPPS”), and other Medicare Part B issues, effective on or after January 1, 2026. For calendar year 2026, CMS has proposed to pay for skin substitute products as incident-to supplies when they are used as part of a covered application procedure paid under the PFS in the non-facility setting or under the Medicare OPPS in the hospital outpatient department setting. CMS also proposed to align skin substitute categorization consistent with their FDA regulatory status, such as 361 HCT/Ps, PMAs and 510(k)s. CMS indicated that it believes grouping and paying for skin substitute products based on relevant product characteristics, consistent with their FDA regulatory status, recognizes the clinical and resource differences in product types and would incentivize competition to create more innovative products, while also resulting in significant savings to the Medicare Trust Fund. CMS proposed, for calendar year 2026, to use a single payment rate reflecting the highest average for these three categories of skin substitute products to ensure it is not underestimating the resources involved with furnishing these services. For future years, CMS intends to propose payment rates that differentiate between the three FDA regulatory categories. CMS is proposing to implement these policy changes in both the non-facility setting paid under the PFS and the hospital outpatient department setting paid under OPPS to remain consistent across these different sites of care. While we believe CMS’ proposed payment structure will curb abuse under the current system, and the resulting rapid escalation in Medicare spending, and ensure a much-needed consistent payment approach across sites of care, the changes could also materially impact utilization of our products, our business, and our revenue.

### License And Manufacturing Agreement

We have a trademark license and manufacturing agreement with Vivex for Dual, Matrix, and VIA. We paid an upfront licensing fee to Vivex to sell Dual and Matrix, and we also agreed to pay a fixed milestone payment for Dual in the event that its ASP is published by certain government agencies for a specified period of time, which we remitted in January 2025. Additionally, we are required to pay a low double-digit royalty on the Net Sales of Dual and VIA, and a high single-digit royalty on the Net Sales of Matrix, respectively, during the royalty term, as defined in the Vivex Agreement. The royalty term is commensurate with the initial term of the contract and will continue for each subsequent renewal period. The initial term of the agreement expires on December 31, 2026 and can be renewed for up to five additional one-year terms.

### Components of Our Condensed Consolidated Results of Operations

In assessing the performance of our business, we consider a variety of performance and financial measures. We believe the items discussed below provide insight into the factors that affect these key measures.

### Net product revenue

We derive our net product revenue from our portfolio of Advanced Wound Care and Surgical & Sports Medicine products. We primarily sell our Advanced Wound Care products through direct sales representatives who manage and maintain the sales relationships with hospitals, wound care centers, government facilities, ASCs and physician offices. We primarily sell our Surgical & Sports Medicine products through third party agencies. As of June 30, 2025, we had approximately 233 direct sales representatives and approximately 175 independent agencies.

We recognize revenue from sales of our Advanced Wound Care and Surgical & Sports Medicine products when the customer obtains control of our product, which occurs at a point in time and may be upon procedure date, shipment, or delivery, based on the contractual terms. We record revenue net of a reserve for returns, discounts and GPO rebates, which represent a direct reduction to the revenue we recognize.

Several factors affect our reported revenue in any period, including product, payer and geographic sales mix, operational effectiveness, pricing realization, marketing and promotional efforts, the timing of orders and shipments, regulatory actions including healthcare reimbursement scenarios, competition and business acquisitions.

### Grant income

Grant income relates to a grant the Company received from a governmental agency during the second quarter of 2025 related to its Smithfield Facility. We expect to recognize grant income through 2027 as the Company recognizes the related expenses that the grant is intended to compensate.

### Cost of goods sold and gross profit

Cost of goods sold includes personnel costs, product testing costs, quality assurance costs, raw materials and product costs, manufacturing costs, and the costs associated with our manufacturing and warehouse facilities. The changes in our cost of goods sold correspond with the changes in sales units and are also affected by product mix.

Gross profit is calculated as net product revenue less cost of goods sold and generally increases as revenue increases. Our gross profit is affected by product and geographic sales mix, realized pricing of our products, the efficiency of our manufacturing operations, and the costs of materials used and fees charged by third-party manufacturers to produce our products. Regulatory actions, including healthcare reimbursement scenarios, which may require costly expenditures or result in pricing pressures, may decrease our gross profit.

### Selling, general and administrative expenses

Selling, general and administrative expenses generally include personnel costs for sales, marketing, sales support, customer support, and general and administrative personnel, sales commissions, incentive compensation, insurance, professional fees, depreciation, amortization, bad debt expense, royalties, information systems costs, gain or loss on disposal of long-lived assets, and costs associated with our administrative facilities. We generally expect our selling, general and administrative expenses to continue to increase due to increased investments in market development and the geographic expansion of our sales forces as we drive for continued revenue growth.

### Research and development expenses

Research and development expenses include expenses for clinical trials, personnel costs for our research and development personnel, expenses related to improvements in our manufacturing processes, enhancements to our currently available products, and additional investments in our product and platform development pipeline. We expense research and development costs as incurred.

### Impairment and write-down expenses

Impairment and write-down of property relates to the pending sale of one of our buildings located on our Canton, Massachusetts campus that was adjusted to fair market value based on current market conditions. We recorded impairment and write-down of the property during the second quarter of 2024 and first and second quarter of 2025. Write-down of capitalized internal-use software costs consists of the development costs for certain modules of our ERP system that were determined to have no future value. We recorded this charge during the second quarter of 2024.

### Other income (expense), net

Other income (expense), net comprises primarily of interest income generated from our interest-bearing sweep accounts offset by amortization of debt discount and debt issuance costs.

### Income taxes

We account for income taxes using an asset and liability approach. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Valuation allowances are provided when necessary to reduce net deferred tax assets to an amount that is more likely than not to be realized.

In determining whether a valuation allowance for deferred tax assets is necessary, we analyze both positive and negative evidence related to the realization of deferred tax assets including projected future taxable income, recent financial results and estimates of future reversals of deferred tax assets and liabilities. In addition, we consider whether it is more likely than not that a tax position will be sustained on examination by taxing authorities based on the technical merits of the position. We believe that our net U.S. deferred tax assets did not require a valuation allowance as of June 30, 2025 and December 31, 2024.

Our U.S. provision for income taxes relates to current tax expense associated with taxable income that could not be offset by net operating losses or research and development credits. The utilization of our remaining federal net operating losses is subject to an 80% taxable income limitation and for certain states we have no net operating losses remaining to offset state taxable income or the utilization of the remaining state net operating losses are subject to a limitation. We have also recorded a foreign provision for income taxes related to our wholly-owned subsidiary in Switzerland.

We account for uncertainty in income taxes recognized in the condensed consolidated financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities. If the tax position is deemed more-likely-than-not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the condensed consolidated financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate as well as the related net interest and penalties.

### Results of Operations

The following table sets forth, for the periods indicated, our results of operations:

*(Unaudited, in thousands)*

| \` Revenue: | Three Months Ended June 30, 2025 | 2024 | Six Months Ended June 30, 2025 | 2024 |
| --- | ---: | ---: | ---: | ---: |
| Net product revenue | $100,779 | $130,234 | $187,472 | $240,210 |
| Grant income | 226 | — | 226 | — |
| Total revenue | 101,005 | 130,234 | 187,698 | 240,210 |
| Operating expenses: |  |  |  |  |
| Cost of goods sold | 27,630 | 29,198 | 51,353 | 57,894 |
| Selling, general and administrative | 73,810 | 76,540 | 146,319 | 148,862 |
| Research and development | 10,395 | 15,587 | 21,035 | 28,397 |
| Write-down to fair value for asset held for sale | 1,746 | — | 8,313 | — |
| Impairment of property and construction | — | 18,842 | — | 18,842 |
| Write-down of capitalized internal-use software costs | — | 3,959 | — | 3,959 |
| Total operating expenses | 113,581 | 144,126 | 227,020 | 257,954 |
| Loss from operations | (12,576) | (13,892) | (39,322) | (17,744) |
| Other income (expense), net: |  |  |  |  |
| Interest income (expense), net | 669 | (620) | 1,630 | (1,134) |
| Other income (expense), net | 73 | (28) | 75 | (5) |
| Total other income (expense), net | 742 | (648) | 1,705 | (1,139) |
| Net loss before income taxes | (11,834) | (14,540) | (37,617) | (18,883) |
| Income tax benefit (expense) | 2,442 | (2,503) | 9,382 | (260) |
| Net loss and comprehensive loss | $(9,392) | $(17,043) | $(28,235) | $(19,143) |

### EBITDA and Adjusted EBITDA

Our management uses financial measures that are not in accordance with GAAP (Non-GAAP), in addition to financial measures in accordance with GAAP, to evaluate our operating results. These Non-GAAP financial measures should be considered supplemental to, and not a substitute for, our reported financial results prepared in accordance with GAAP. Our management uses Adjusted EBITDA to evaluate our operating performance and trends and make planning decisions. Our management believes Adjusted EBITDA helps identify underlying trends in our business that could otherwise be masked by the effect of the items that we exclude. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects, and allowing for greater transparency with respect to key financial metrics used by our management in its financial and operational decision-making.

The following table presents a reconciliation of GAAP net loss to Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA for each of the periods presented:

*(Unaudited, in thousands)*

| \` | Three Months Ended June 30, 2025 | 2024 | Six Months Ended June 30, 2025 | 2024 |
| --- | ---: | ---: | ---: | ---: |
| Net loss | $(9,392) | $(17,043) | $(28,235) | $(19,143) |
| Interest (income) expense, net | (669) | 620 | (1,630) | 1,134 |
| Income tax (benefit) expense | (2,442) | 2,503 | (9,382) | 260 |
| Depreciation and amortization | 3,734 | 3,366 | 7,178 | 6,438 |
| Amortization of intangible assets | 841 | 834 | 1,683 | 1,735 |
| EBITDA | (7,928) | (9,720) | (30,386) | (9,576) |
| Stock-based compensation expense | 2,542 | 2,568 | 5,909 | 4,975 |
| Write-down to fair value for asset held for sale (1) | 1,746 | — | 8,313 | — |
| Impairment of property and construction (2) | — | 18,842 | — | 18,842 |
| Write-down of capitalized internal-use software costs (3) | — | 3,959 | — | 3,959 |
| Adjusted EBITDA | $(3,640) | $15,649 | $(16,164) | $18,200 |

(1) Amount reflects the fair value adjustment of a purchased building classified as held for sale. See Note 6, *Property and Equipment, Net.*

(2) Amount reflects the impairment of a purchased building and associated unfinished construction work. See Note 6, *Property and Equipment, Net.*

(3) Amount reflects the write-down of costs previously capitalized as construction in progress in the development of internal-use software, that the Company determined have no future value. See Note 6, *Property and Equipment, Net.*

### Comparison of Three and Six Months Ended June 30, 2025 and 2024

### Revenue

*(in thousands, except for percentages)*

|  | Three Months Ended June 30, 2025 | 2024 | Change $% |  |
| --- | ---: | ---: | ---: | ---: |
| Advanced Wound Care | $92,696 | $123,237 | $(30,541) | (25%) |
| Surgical & Sports Medicine | 8,083 | 6,997 | 1,086 | 16% |
| Net product revenue | $100,779 | $130,234 | $(29,455) | (23%) |

*(in thousands, except for percentages)*

|  | Six Months Ended June 30, 2025 | 2024 | Change $% |  |
| --- | ---: | ---: | ---: | ---: |
| Advanced Wound Care | $172,623 | $227,101 | $(54,478) | (24%) |
| Surgical & Sports Medicine | 14,849 | 13,109 | 1,740 | 13% |
| Net product revenue | $187,472 | $240,210 | $(52,738) | (22%) |

Net product revenue from our Advanced Wound Care products decreased by $30.5 million, or 25%, to $92.7 million in the three months ended June 30, 2025, from $123.2 million in the three months ended June 30, 2024. Net product revenue from our Advanced Wound Care products decreased by $54.5 million, or 24%, to $172.6 million in the six months ended June 30, 2025, from $227.1 million in the six months ended June 30, 2024. The decrease in Advanced Wound Care net product revenue was primarily attributable to increased ambiguity and disruption in customer behavior following the delayed implementation of the LCDs announced in January 2025.

Net product revenue from our Surgical & Sports Medicine products increased by $1.1 million, or 16%, to $8.1 million in the three months ended June 30, 2025, from $7.0 million in the three months ended June 30, 2024. Net product revenue from our Surgical & Sports Medicine products increased by $1.7 million, or 13%, to $14.8 million in the six months ended June 30, 2025 from $13.1 million in the six months ended June 30, 2024. The increase in Surgical & Sports Medicine net product revenue was primarily due to an increase in certain customer buying patterns.

### Cost of Goods Sold and Gross Profit

*(in thousands, except for percentages)*

|  | Three Months Ended June 30, 2025 | 2024 | Change $% |  |
| --- | ---: | ---: | ---: | ---: |
| Cost of goods sold | $27,630 | $29,198 | $(1,568) | (5%) |
| Gross profit | $73,149 | $101,036 | $(27,887) | (28%) |

*(in thousands, except for percentages)*

|  | Six Months Ended June 30, 2025 | 2024 | Change $% |  |
| --- | ---: | ---: | ---: | ---: |
| Cost of goods sold | $51,353 | $57,894 | $(6,541) | (11%) |
| Gross profit | $136,119 | $182,316 | $(46,197) | (25%) |

Cost of goods sold decreased by $1.6 million, or 5%, to $27.6 million in the three months ended June 30, 2025, from $29.2 million in the three months ended June 30, 2024. Cost of goods sold decreased by $6.5 million, or 11%, to $51.4 million in the six months ended June 30, 2025, from $57.9 million in the six months ended June 30, 2024. The decrease in cost of goods sold was primarily due to a decrease in sales volume as well as a shift in product mix.

Gross profit decreased by $27.9 million, or 28%, to $73.1 million in the three months ended June 30, 2025, from $101.0 million in the three months ended June 30, 2024. Gross profit decreased by $46.2 million, or 25%, to $136.1 million in the six months ended June 30, 2025, from $182.3 million in the six months ended June 30, 2024. Gross profit decreased as a percentage of revenue due to a shift in product mix.

### Research and Development Expenses

*(in thousands, except for percentages)*

|  | Three Months Ended June 30, 2025 | 2024 | Change $% |  |
| --- | ---: | ---: | ---: | ---: |
| Research and development | $10,395 | $15,587 | $(5,192) | (33%) |

*(in thousands, except for percentages)*

|  | Six Months Ended June 30, 2025 | 2024 | Change $% |  |
| --- | ---: | ---: | ---: | ---: |
| Research and development | $21,035 | $28,397 | $(7,362) | (26%) |

Research and development expenses decreased by $5.2 million, or 33%, to $10.4 million in the three months ended June 30, 2025, from $15.6 million in the three months ended June 30, 2024. Research and development expenses decreased by $7.4 million, or 26%, to $21.0 million in the six months ended June 30, 2025, from $28.4 million in the six months ended June 30, 2024. The decrease in research and development expenses was primarily due to a decrease in expenses associated with clinical research and trials.

### Selling, General and Administrative Expenses

*(in thousands, except for percentages)*

|  | Three Months Ended June 30, 2025 | 2024 | Change $% |  |
| --- | ---: | ---: | ---: | ---: |
| Selling, general and administrative | $73,810 | $76,540 | $(2,730) | (4%) |

*(in thousands, except for percentages)*

|  | Six Months Ended June 30, 2025 | 2024 | Change $% |  |
| --- | ---: | ---: | ---: | ---: |
| Selling, general and administrative | $146,319 | $148,862 | $(2,543) | (2%) |

Selling, general and administrative expenses decreased by $2.7 million, or 4%, to $73.8 million in the three months ended June 30, 2025, from $76.5 million in the three months ended June 30, 2024. The decrease in selling, general and administrative expenses was primarily due to a $5.9 million decrease in commissions and royalty expense due to decreased sales. These decreases in expenses were partially offset by a $0.8 million increase in facilities expense, a $1.5 million increase in marketing expenses, and a $1.2 million increase in the allowance for expected credit losses.

Selling, general and administrative expenses decreased by $2.5 million, or 2%, to $146.3 million in the six months ended June 30, 2025, from $148.9 million in the six months ended June 30, 2024. The decrease in selling, general and administrative expenses was primarily due to a $9.4 million decrease in commissions and royalty expense due to decreased sales. These decreases in expenses were partially offset by a $4.0 million increase in headcount-related expenses and facilities expense, a $1.3 million increase in marketing expenses, and a $1.1 million increase in the allowance for expected credit losses.

### Impairment and Write-Down Expenses

During the three and six months ended June 30, 2025, we recorded a $1.7 million and $8.3 million, respectively, write-down of costs to adjust certain assets held for sale to their fair market value. During the three and six months ended June 30, 2024, we recorded a $4.0 million write-down of costs related to internal-use software and an $18.8 million impairment of a purchased building and associated unfinished construction work. See Note 6, Property and Equipment, Net, to our condensed consolidated financial statements included in this Form 10-Q.

### Other Income (Expense), net

Other income (expense) net, decreased by $1.4 million to $0.7 million in income in the three months ended June 30, 2025, from $0.6 million in expense in the three months ended June 30, 2024. Other income (expense), net, decreased by $2.8 million to $1.7 million in income in the six months ended June 30, 2025, from $1.1 million in expense in the six months ended June 30, 2024. The decrease resulted primarily from interest income generated from our interest-bearing sweep accounts offset by amortization of debt discount and debt issuance costs.

### Income Tax Benefit (Expense)

*(in thousands, except for percentages)*

|  | Three Months Ended June 30, 2025 | 2024 | Change $% |  |
| --- | ---: | ---: | ---: | ---: |
| Income tax benefit (expense) | $2,442 | $(2,503) | $4,945 | (198%) |

*(in thousands, except for percentages)*

|  | Six Months Ended June 30, 2025 | 2024 | Change $% |  |
| --- | ---: | ---: | ---: | ---: |
| Income tax benefit (expense) | $9,382 | $(260) | $9,642 | (3708%) |

26

Income tax expense decreased by $4.9 million, or 198%, to a benefit of $2.4 million in the three months ended June 30, 2025, from expense of $2.5 million in the three months ended June 30, 2024. Income tax expense decreased by $9.6 million, or 3708%, to a benefit of $9.4 million in the six months ended June 30, 2025, from expense of $0.3 million in the six months ended June 30, 2024. The change in the income tax benefit (expense) is primarily attributable to a higher estimated effective tax rate for the twelve months ending December 31, 2025 resulting from an increase in expected pre-tax income in 2025 compared to 2024, partially offset by our research and development tax credits.

### Liquidity and Capital Resources

As of June 30, 2025, we had working capital of $189.1 million, which included $73.1 million in cash and cash equivalents. We expect that our cash on hand and other components of working capital as of June 30, 2025, plus net cash flows from product sales will be sufficient to fund our operating expenses, capital expenditure requirements and debt service payments for at least 12 months beyond the filing date of this Form 10-Q.

Our primary uses of cash are working capital requirements, capital expenditures and debt service payments. Additionally, from time to time, we may use capital for acquisitions and other investing and financing activities. Working capital is used principally for our personnel as well as manufacturing costs related to the production of our products. Our working capital requirements vary from period to period depending on manufacturing volumes, the timing of shipments and the payment cycles of our customers and payers. Our capital expenditures consist primarily of building improvements (including costs related to the build-out of our Smithfield, Rhode Island facility), manufacturing equipment, and computer hardware and software.

To the extent additional funds are necessary to meet our long-term liquidity needs as we continue to execute on our business strategy, we anticipate that they will be obtained through additional equity or debt financings, other strategic transactions or a combination of these potential sources of funds. There can be no assurance that we will be able to obtain additional funds on terms acceptable to us, on a timely basis, or at all.

### Cash Flows

The following table summarizes our cash flows for each of the periods presented:

*(in thousands)*

|  | Six Months Ended June 30, 2025 | 2024 |
| --- | ---: | ---: |
| Net cash used in operating activities | $(52,808) | $(5,424) |
| Net cash used in investing activities | (7,264) | (4,102) |
| Net cash used in financing activities | (2,344) | (4,335) |
| Net change in cash, cash equivalents and restricted cash | $(62,416) | $(13,861) |

#### Operating Activities

During the six months ended June 30, 2025, net cash used in operating activities was $52.8 million, resulting from our net loss of $28.2 million and net cash used in connection with changes in our operating assets and liabilities of $58.8 million, partially offset by non-cash charges of $34.3 million. Net cash used in changes in our operating assets and liabilities included an increase in inventory of $15.9 million, an increase in accounts receivable of $13.6 million, an increase in prepaid expenses and other current assets and other assets of $12.9 million, a decrease in accrued expenses and other current liabilities of $13.9 million, and a decrease in operating lease liabilities of $4.1 million, partially offset by an increase in accounts payable of $1.6 million.

During the six months ended June 30, 2024, net cash used in operating activities was $5.4 million, resulting from our net loss of $19.1 million and net cash used in connection with changes in our operating assets and liabilities of $28.3 million, partially offset by net non-cash charges of $42.0 million. Changes in our operating assets and liabilities included an increase in inventory of $2.0 million, an increase in prepaid expenses and other current assets of $0.4 million, an increase in accounts receivable of $26.0 million, a decrease in operating lease liabilities of $5.9 million, and a decrease in accounts payable of $2.1 million, partially offset by an increase in accrued expenses and other current liabilities of $8.2 million, and an increase in other liabilities of $0.1 million.

#### Investing Activities

During the six months ended June 30, 2025, we used $7.3 million of cash in investing activities consisting exclusively of capital expenditures.

During the six months ended June 30, 2024, we used $4.1 million of cash in investing activities consisting exclusively of capital expenditures.

#### Financing Activities

During the six months ended June 30, 2025, net cash used in financing activities was $2.3 million. This consisted of principal payments on finance lease obligations of $0.6 million and net cash payments associated with our stock awards activities of $1.8 million.

During the six months ended June 30, 2024, net cash used in financing activities was $4.3 million. This consisted of the principal payment on our term loan of $2.8 million, principal payments on finance lease obligations of $0.5 million, and net cash payments associated with our stock awards activities of $1.0 million.

### Indebtedness

#### 2021 Credit Agreement

In August 2021, we and our subsidiaries entered into a credit agreement with SVB and several other lenders (the “Lenders”), which we refer to as the 2021 Credit Agreement. The 2021 Credit Agreement, as amended, provides for a term loan facility not to exceed $75.0 million (the “Term Loan Facility”) and a revolving credit facility not to exceed $125.0 million (the “Revolving Facility”). In November 2024, we and the Lenders amended the 2021 Credit Agreement to allow for the issuance of the Convertible Preferred Stock, and to require the repayment of the Term Loan Facility within one business day of such issuance, among other terms (the “2024 Amendment”). In August 2025, we and the Lenders amended the 2021 Credit Agreement (the “2025 Amendment”) to provide that so long as there are no outstanding borrowings under the Revolving Facility, the Consolidated Fixed Charge Coverage Ratio (described below) covenant shall not be tested for the fiscal quarter ended June 30, 2025. Notwithstanding this testing accommodation for the quarter ended June 30, 2025, the covenant is deemed to be in effect for purposes of any transaction contemplated by the 2021 Credit Agreement that requires pro forma compliance with the Consolidated Fixed Charge Coverage Ratio or the financial covenants generally and would preclude us from any additional borrowing under the Revolving Facility unless waived or further amended. The 2025 Amendment further requires us, our subsidiary guarantors, the administrative agent and certain of the Lenders prior to September 30, 2025 to enter into an agreement to reset certain financial covenants or implement new financial covenants and implement other modifications to the 2021 Credit Agreement and related documents, on terms and conditions reasonably acceptable to the administrative agent and such Lenders. The Lenders shall have no further obligation to make revolving extensions of credit under the 2021 Credit Agreement until such an agreement has been executed, and our failure to enter into such an agreement shall constitute an event of default under the 2021 Credit Agreement. Notwithstanding this obligation, we have the right to terminate the 2021 Credit Agreement for our convenience prior to such date, and we expect that the cash on hand and other components of working capital as of June 30, 2025, plus net cash flows from product sales will be sufficient to fund our operating expenses, capital expenditure requirements and debt service payments for at least 12 months beyond the filing date of this Form 10-Q.

Advances made under the 2021 Credit Agreement were either SOFR Loans or ABR Loans, at our option. For SOFR Loans, the interest rate was a per annum interest rate equal to the Adjusted Term SOFR plus an Applicable Margin between 2.00% to 3.25% based on the Total Net Leverage Ratio. For ABR Loans, the interest rate was equal to (1) the highest of (a) the Wall Street Journal Prime Rate, (b) the Federal Funds Rate plus 0.50% and (c) the Adjusted Term SOFR rate plus 1.0%, *plus* (2) an Applicable Margin between 1.00% to 2.25% based on the Total Net Leverage Ratio.

The 2021 Credit Agreement required us to make consecutive quarterly installment payments equal to the following: (a) from September 30, 2021 through and including June 30, 2022, $0.5 million; (b) from September 30, 2022 through and including June 30, 2023, $0.9 million; (c) from September 30, 2023 through and including June 30, 2025, $1.4 million and (d) from September 30, 2025 and the last day of each quarter thereafter until August 6, 2026 (the “Term Loan Maturity Date”), $1.9 million. We prepaid the Term Loan Facility in November 2024, and amounts borrowed under the Term Loan Facility may not be re-borrowed.

We must pay in arrears, on the first day of each quarter prior to August 6, 2026 (the “Revolving Termination Date”) and on the Revolving Termination Date, a fee for our non-use of available funds (the “Commitment Fee”). The Commitment Fee rate is between 0.25% to 0.45% based on the Total Net Leverage Ratio. We may elect to reduce or terminate the Revolving Facility in its entirety at any time by repaying all outstanding principal and unpaid accrued interest.

Under the 2021 Credit Agreement as amended by the 2024 Amendment, we are required to comply with certain financial covenants including the Consolidated Fixed Charge Coverage Ratio and Consolidated Total Net Leverage Ratio, tested quarterly. In addition, we are also required to make representations and warranties and comply with certain non-financial covenants that are customary in loan agreements of this type, including restrictions on the payment of dividends, repurchase of stock, incurrence of indebtedness, dispositions and acquisitions.

As of June 30, 2025 and December 31, 2024, we did not have outstanding borrowings under our Term Loan Facility or our Revolving Facility.

### Critical Accounting Policies and Significant Judgments and Estimates

Our unaudited condensed consolidated financial statements have been prepared in accordance with GAAP. The preparation of unaudited condensed consolidated financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, and the disclosure at the date of the unaudited condensed consolidated financial statements, as well as revenue and expenses recorded during the reporting periods. Management bases its estimates, assumptions and judgments on historical experience and on various other factors that it believes to be reasonable under the circumstances. Different assumptions and judgments would change the estimates used in the preparation of our unaudited condensed consolidated financial statements, which, in turn, could materially change our results from those reported. Management evaluates its estimates, assumptions and judgments on an ongoing basis. Historically, our critical accounting estimates have not differed materially from actual results. However, if our assumptions change, we may need to revise our estimates, or take other corrective actions, either of which may also have a material adverse effect on our condensed consolidated statements of operations and comprehensive loss, liquidity and financial condition. See also our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, for information about these accounting policies as well as a description of our other significant accounting policies.

### Off-Balance Sheet Arrangements

We did not have, during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

### Recently Issued Accounting Pronouncements

We have reviewed all recently issued standards as disclosed in Note 2, *Summary of Significant Accounting Policies* to our condensed consolidated financial statements included in this Form 10-Q.

## Market risk

As filed, 278 characters.

During the six months ended June 30, 2025, there were no material changes to our market risk disclosures as set forth in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

## Controls and procedures

As filed, 1,079 characters.

### Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act). Based upon that evaluation, our management, including our principal executive officer and our principal financial officer, concluded that, as of June 30, 2025, our disclosure controls and procedures are effective and designed to ensure that the information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the requisite time periods.

### Changes in Internal Control Over Financial Reporting

There were no changes in our internal controls over financial reporting that occurred during the quarter ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 5,237 characters.

Investing in our Class A common stock involves a high degree of risk. Our Annual Report on Form 10-K for the year ended December 31, 2024, includes a detailed discussion of our risk factors under the heading “Part I, Item 1A—Risk Factors.” Except as set forth below, there have been no material changes from such risk factors during the quarter ended June 30, 2025. You should consider carefully the risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2024, and all other information contained in or incorporated by reference in this Form 10-Q before making an investment decision. If any of the risks discussed in the Annual Report on Form 10-K for the year ended December 31, 2024, or herein actually occur, they may materially harm our business, financial condition, operating results, cash flows or growth prospects. As a result, the market price of our Class A common stock could decline, and you could lose all or part of your investment. Additional risks and uncertainties that are not yet identified or that we think are immaterial may also materially harm our business, financial condition, operating results, cash flows or growth prospects and could result in a complete loss of your investment.

***Seven MACs recently published new proposed LCDs, for skin substitute grafts/CTPs for the treatment of DFUs and VLUs in the Medicare population that list certain of our products as non-covered. If the final LCDs include this non-coverage determination, it could, at least in the near term, have a material adverse effect on utilization of these products, our business and our revenue.***

On April 25, 2024, seven MACs (CGS, WPS, NGS, Palmetto, Novitas, First Coast Services, and Noridian) published new proposed LCDs for skin substitute grafts/CTPs for the treatment of DFUs and VLUs in the Medicare population. These LCDs were finalized by the MACs on November 14, 2024, and were originally set to become effective on February 12, 2025. However, on January 24, 2025, the MACs announced a delay in the implementation of the LCDs until April 13, 2025, and on April 10, 2025, the MACs announced another delay in the implementation of the LCDs until January 1, 2026. Under the new LCDs finalized in November 2024, should they take effect in their current form, a total of eighteen products would remain covered, including our Apligraf and Dermagraft products for DFUs and VLUs, and our Affinity and NuShield products for DFUs; however, more than 200 products would be classified as “non-covered,” including our PuraPly, PuraPly AM, PuraPly XT, Novachor, TransCyte, Dual and Matrix products for DFUs and VLUs. It is uncertain if there will be further delays in implementing the new LCDs and/or if the new LCDs will be revised or rescinded going forward. If implemented, the LCDs could materially impact utilization of these products, our business, and our revenue. Any future changes or other developments related to these or other LCDs also could affect utilization of our products, our business, and our revenue.

***CMS proposed rule including proposed policy changes for Medicare payments under the PFS for skin substitute products in calendar year 2026 could have a material adverse effect on utilization of our products, our business and our revenue.***

In July 2025, CMS issued proposed rules that announce and solicit comments on proposed policy changes for Medicare payments under the PFS and OPPS, and other Medicare Part B issues, effective on or after January 1, 2026. For calendar year 2026, CMS has proposed to pay for skin substitute products as incident-to supplies when they are used as part of a covered application procedure paid under the PFS in the non-facility setting or under the Medicare OPPS in the hospital outpatient department setting. CMS also proposed to align skin substitute categorization consistent with their FDA regulatory status, such as 361 HCT/Ps, PMAs and 510(k)s. CMS indicated that it believes grouping and paying for skin substitute products based on relevant product characteristics, consistent with their FDA regulatory status, recognizes the clinical and resource differences in product types and would incentivize competition to create more innovative products, while also resulting in significant savings to the Medicare Trust Fund. CMS proposed, for calendar year 2026, to use a single payment rate reflecting the highest average for these three categories of skin substitute products to ensure it is not underestimating the resources involved with furnishing these services. For future years, CMS intends to propose payment rates that differentiate between the three FDA regulatory categories. CMS is proposing to implement these policy changes in both the non-facility setting paid under the PFS and the hospital outpatient department setting paid under OPPS to remain consistent across these different sites of care. While we believe CMS’ proposed payment structure will curb abuse under the current system, and the resulting rapid escalation in Medicare spending, and ensure a much-needed consistent payment approach across sites of care, the changes could also materially impact utilization of our products, our business, and our revenue.

Filed Aug 7, 2025.
Source: SEC EDGAR, the filing index for accession 0000950170-25-105048. Last ingested by Listed: Oct 24, 2026, 15:15 ET. No prices; not investment advice.