Mimedx Group, Inc.: Form 10-Q for the period ended Sep 30, 2025

Executive Summary

During the third quarter of 2025, the Company delivered the following operational and financial highlights:

• Net sales of $114 million, reflecting 35% growth over the prior year period, which were comprised of:
• Net sales of Wound products of $77 million, reflecting an increase of 40% compared to the prior year period
• Net sales of Surgical products of $37 million, reflecting an increase of 26% compared to the prior year period
• GAAP net income and net income margin for the third quarter of 2025 of $17 million and 15%, respectively.
• GAAP fully diluted earnings per share for the third quarter of 2025 of $0.11 compared to $0.05 in the prior year period.
• Increased cash balance to $142 million, representing a $23 million increase sequentially and a $53 million increase compared to September 30, 2024.

Reimbursement Update

On July 14 and 15, 2025, the Centers for Medicare and Medicaid Services (“CMS”) released the CY 2026 Physician Fee Schedule (“PFS”) proposal and the CY 2026 Hospital Outpatient Prospective Payment System (“OPPS”) proposal. Under these proposed rules, which are scheduled for implementation on January 1, 2026, CMS is calling for a consistent payment approach for skin substitutes across the private office and Hospital Outpatient Departments (“HOPDs”) settings with a fixed price of $125.38 per square centimeter. The comment period for both the PFS and OPPS proposals ended in mid-September. We expect that CMS will publish its final rules for reimbursement in these care settings prior to the end of this year. Together with the Local Coverage Determinations (“LCDs”) and the recently announced Wasteful and Inappropriate Service Reduction model, there are several significant potential changes to reimbursement of skin substitutes that could begin impacting the industry and MIMEDX beginning January 1, 2026.

Overview

MIMEDX is a pioneer and leader focused on helping humans heal. With more than a decade of experience helping clinicians manage acute and chronic wounds, MIMEDX has been dedicated to providing a leading portfolio of products for applications in the wound care, burn, and surgical sectors of healthcare. All of our products sold in the United States are regulated by the U.S. Food & Drug Administration (“FDA”). We apply Current Good Tissue Practices (“CGTP”) and other applicable quality standards in addition to terminal sterilization to produce our allografts.

This discussion, which presents our results for the three and nine months ended September 30, 2025 and 2024, should be read in conjunction with the unaudited condensed consolidated financial statements and accompanying notes included in this Form 10-Q and the financial statements and accompanying notes 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 26, 2025 (the “2024 Form 10-K”).

Results of Operations

Three Months Ended September 30, 2025 Compared to the Three Months Ended September 30, 2024

(in thousands)

Changes noted as “nm” in the table above indicate that the percentage change is not meaningful.

Net Sales

We recorded net sales for the three months ended September 30, 2025 of $113.7 million, which is an increase of $29.7 million, or 35.3% compared to the three months ended September 30, 2024, in which we recognized net sales of $84.1 million.

Our sales by product line were as follows (amounts in thousands):

Net sales of our Wound product portfolio were $77.1 million for the three months ended September 30, 2025, a $22.0 million or 40.0% increase compared to $55.1 million for the three months ended September 30, 2024. Third quarter Wound product sales growth was driven by sales of our newer products, CELERA and EMERGE, which offset decreases in sales of other products in our Wound portfolio. The increase is also attributable to the non-recurrence during the current year period of the turnover of certain of our sales team and customers, as well as commercial challenges associated with competitive behavior in the marketplace during the three months ended September 30, 2024.

Net sales of our Surgical products totaled $36.6 million for the three months ended September 30, 2025, reflecting an increase of $7.6 million, or 26.3%, compared to $29.0 million for the three months ended September 30, 2024. This increase was driven by contributions across the Surgical portfolio, including strong growth from AMNIOFIX and AMNIOEFFECT, as well as the continuing commercial uptake of HELIOGEN.

Cost of Sales and Gross Profit Margin

Cost of sales for the three months ended September 30, 2025 and 2024 was $18.7 million and $15.3 million, respectively, an increase of $3.4 million, or 22.2%, year-over-year. Gross profit margin for the three months ended September 30, 2025 was 83.5% compared to 81.8% for the three months ended September 30, 2024. The year-over-year increase in gross margin was driven by the timing of positive production variances and product mix.

Selling, General and Administrative Expense

Selling, general and administrative (“SG&A”) expense for the three months ended September 30, 2025 was $69.0 million, compared to $53.5 million for the three months ended September 30, 2024. The following table shows the composition of this expense between selling and marketing (“S&M”) and general and administrative (“G&A”) components (amounts in thousands):

Sales and marketing expenses increased $12.0 million or 28.8%, year over year, which was driven by increases in commissions due to higher sales and higher effective commission rates. General and administrative expenses increased $3.5 million or 29.6%, year over year, which was driven by incremental spend from legal and regulatory disputes in the current period, including our ongoing litigation with certain competitors and several former employees.

Research and Development Expense

Our research and development (“R&D”) expense for the three months ended September 30, 2025 was $3.7 million, compared to $2.9 million for the three months ended September 30, 2024, an increase of $0.8 million, or 26.9%. R&D spend in the quarter was driven by the ongoing enrollment of our EPIEFFECT randomized clinical trial along with ongoing investments in the development of future products in our pipeline.

Investigation, Restatement and Related Expense

Investigation, restatement and related expense was $0.6 million for the three months ended September 30, 2024. This reflected the last material payment towards the resolution of the historical Audit Committee Investigation. Investigation, restatement and related costs ceased in 2024.

Interest Income, Net

Interest income, net was $0.8 million for the three months ended September 30, 2025 compared to $0.3 million interest income for the three months ended September 30, 2024, an increase of $0.5 million. The increase was generally driven by increases in our cash balances, year over year, decrease in long term debt and a decrease in interest rates.

Income Tax Provision

The effective tax rates for the Company were 26.7% and 31.0% for the three months ended September 30, 2025 and September 30, 2024, respectively. The effective tax rate for both periods were unfavorably impacted by executive compensation deduction limitations.

The income tax provision for the three months ended September 30, 2025 reflects the provisions of the Tax Act. The Tax Act resulted in a current tax benefit resulting from the utilization of deferred tax assets, primarily relating to the utilization of capitalized research and development expenses, and did not affect our effective tax rate in the three months ended September 30, 2025.

Nine Months Ended September 30, 2025 Compared to the Nine Months Ended September 30, 2024

(in thousands)

Changes noted as “nm” in the table above indicate that the percentage change is not meaningful.

Net Sales

We recorded net sales for the nine months ended September 30, 2025 of $300.5 million, a $44.6 million, or 17.4%, increase compared to the nine months ended September 30, 2024, for which we recorded net sales of $256.0 million.

Our sales by product were as follows (amounts in thousands):

Net sales of our Wound product portfolio were $197.6 million for the nine months ended September 30, 2025, a $28.0 million or 16.5% increase compared to $169.6 million for the nine months ended September 30, 2024. The increase was primarily driven by sales of our newer products, CELERA and EMERGE, which offset decreases in sales of other Wound products. The increase is also attributable to the non-recurrence during the current year period of turnover of certain of our sales team and customers, as well as commercial challenges associated with competitive behavior in the marketplace during the nine months ended September 30, 2024.

Net sales of our Surgical products totaled $102.9 million, reflecting growth of $16.6 million, or 19.2%, compared to the nine months ended September 30, 2024. This increase was driven by contributions across the Surgical portfolio, including strong growth from AMNIOFIX and AMNIOEFFECT, as well as the continuing commercial uptake of HELIOGEN.

Cost of Sales and Gross Profit Margin

Gross profit margin for the nine months ended September 30, 2025 was 82.0% compared to 83.1% for the nine months ended September 30, 2024. The year-over-year decrease in gross margin was driven by higher production costs and product mix. Cost of sales for the nine months ended September 30, 2025 was $54.0 million, an increase of $10.8 million, or 25.0%, compared to $43.2 million for the nine months ended September 30, 2024. In addition, amortization of our acquired intangible assets during the nine months ended September 30, 2025 further decreased margins.

Selling, General and Administrative Expense

Selling, general and administrative expenses for the nine months ended September 30, 2025 increased by $29.1 million, or 17.7%, to $193.1 million, compared to $164.0 million for the nine months ended September 30, 2024. The following table shows the composition of this expense between selling and marketing S&M and G&A components (amounts in thousands):

Sales and marketing expenses increased $20.5 million or 16.0%, year over year, which was driven by increases in commissions due to higher sales and higher effective commission rates. General and administrative expenses increased $8.6 million or 23.7%, year over year, which was driven by incremental spend from legal and regulatory disputes in the current period, including our ongoing litigation with a competitor and several former employees.

Research and Development Expense

Our research and development expenses for the nine months ended September 30, 2025 was $10.3 million, compared to $8.8 million for the nine months ended September 30, 2024. This increase was driven by the ongoing enrollment of our EPIEFFECT randomized clinical trial along with ongoing investments in the development of future products in our pipeline.

Investigation, Restatement and Related Benefit

Investigation, restatement and related benefit was $8.7 million for the nine months ended September 30, 2024. The benefit resulted from various settlements related to former officers and other related matters. Investigation, restatement and related expenses ceased in 2024.

Impairment of Intangible Assets

Impairment for the nine months ended September 30, 2024 was $0.4 million, which related to abandoned patents.

Interest Income (Expense), Net

Interest income, net was $2.0 million for the nine months ended September 30, 2025 compared to interest expense, net of $1.4 million for the nine months ended September 30, 2024, an increase of $3.4 million, or (244)%. The change was driven by increased cash balances, year over year. Additionally, 2024 reflects loss on extinguishment of debt arising from the repayment and termination of a previous loan agreement ($1.4 million).

Income Tax Provision

The effective tax rates for the Company were 24.9% and 24.9% for the nine months ended September 30, 2025 and 2024, respectively. The effective tax rates in each period were favorably impacted by vestings of restricted stock. These effects were partially offset by deduction limitations on executive compensation.

The income tax provision for the nine months ended September 30, 2025 reflects the provisions of the Tax Act. The Tax Act resulted in a current tax benefit resulting from the utilization of deferred tax assets, primarily relating to the utilization of capitalized research and development expenses, and did not affect our effective tax rate in the nine months ended September 30, 2025.

Discussion of Cash Flows

Operating Activities

Net cash provided by operating activities from continuing operations during the nine months ended September 30, 2025 was $49.0 million, compared to $47.4 million for the nine months ended September 30, 2024. The increase of $1.6 million in cash flows from operating activities was primarily the result of an increase in profitability during the nine months ended September 30, 2025.

Investing Activities

Net cash used for investing activities during the nine months ended September 30, 2025 was $6.6 million, compared to $6.8 million for the nine months ended September 30, 2024. Activity for the nine months ended September 30, 2024 reflects our $5.4 million investment to expand our product portfolio through the TELA and Regenity agreements compared to the $3.8 million in cash paid for acquisitions during the nine months ended September 30, 2025. In addition, cash flows from investing activities for the nine months ended September 30, 2025 reflects our $2.0 million investment in Vaporox, Inc. in the form of a Convertible Note. The remaining difference reflects a year-over-year decrease in capital expenditures.

Financing Activities

Net cash used for financing activities during the nine months ended September 30, 2025 was $4.8 million. Cash used for financing activities was $33.8 million during the nine months ended September 30, 2024. The cash used during the nine months ended September 30, 2024 was primarily due to the repayment of the initial $30.0 million draw under the Revolving Credit Facility. There was no equivalent activity during the same period in 2025. The cash used during the nine months ended September 30, 2025 was primarily related to tax withholdings on vestings of restricted stock.

Liquidity and Capital Resources

We require capital for our operating activities, including costs associated with the sale of product through direct and indirect sales channels, research and development activities, compliance costs, costs to sell and market our products, regulatory fees, and legal and consulting fees in connection with ongoing litigation and other matters. We generally fund our operating capital requirements through our operating activities and cash reserves. We expect to use capital to invest in the broadening of our product portfolio, including through potential acquisitions, licensing agreements or other arrangements, the international expansion of our business and certain capital projects.

As of September 30, 2025, we had $142.1 million of cash and cash equivalents, total current assets of $254.1 million and total current liabilities of $57.7 million, reflecting a current ratio of 4.4. We had $18.3 million of long term debt outstanding and $75 million of availability under our Revolving Credit Facility (as discussed below).

The Company is currently paying its obligations in the ordinary course of business. We believe that our cash from operating activities, existing cash and cash equivalents, and available credit under the Citizens Credit Agreement, as defined below, will enable us to meet our operational liquidity needs for the twelve months following the filing date of this Quarterly Report.

Citizens Credit Agreement

On January 19, 2024, the Company entered into the Citizens Credit Agreement, which provided the Company with $30.0 million under the Revolving Credit Facility and $20.0 million under the Term Loan Facility. On February 27, 2024, the Company repaid the initial $30.0 million draw under the Revolving Credit Facility and had no outstanding borrowings under this facility as of September 30, 2025. The Term Loan Facility matures on January 19, 2029.

Borrowings under the Citizens Credit Agreement bear interest at a rate per annum equal to (i) the Alternate Base Rate, as defined therein, or (ii) a Term SOFR as defined therein, in each case plus an applicable margin ranging from 1.25% and 2.50% with respect to Alternate Base Rate borrowings and 2.25% and 3.50% for Term SOFR borrowings, plus a fallback provision of 0.1%. The Term Loan Facility carried an interest rate of 6.5% as of September 30, 2025.

As of September 30, 2025, the Company has $18.3 million of principal outstanding on the Term Loan Facility that bears interest at 6.5% and no borrowings outstanding under the Revolving Credit Facility.

Contractual Obligations

There were no significant changes to our contractual obligations during the nine months ended September 30, 2025 from those disclosed in the section Item 7, “Management’s Discussion and Analysis of Financial Condition and Results from Operations”, in the 2024 Form 10-K.

Critical Accounting Estimates

In preparing financial statements, we follow accounting principles generally accepted in the United States, which require us to make certain estimates and apply judgments that affect our financial position and results of operations. We regularly review our accounting policies and financial information disclosures. A summary of critical accounting estimates in preparing the financial statements was provided in our Annual Report in the 2024 Form 10-K. There were no new critical accounting estimates applied in the preparation of this Form 10-Q.

Recent Accounting Pronouncements

For the effect of recent accounting pronouncements, see Note 2, Significant Accounting Policies, to the unaudited condensed consolidated financial statements contained herein.

We are exposed to risks associated with changes in interest rates that could adversely affect our results of operations and financial condition. We do not hedge against interest rate risk.

There have been no material changes in market risk from the information provided in “Item 7A. Quantitative and Qualitative Disclosures about Market Risk” in the 2024 Form 10-K.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended, or the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective at a reasonable assurance level in ensuring that information required to be disclosed by us in reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely discussions regarding required disclosure. We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the fiscal quarter ended September 30, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.