Mimedx Group, Inc.: Form 10-Q for the period ended Mar 31, 2026

Executive Summary

During the first quarter of 2026, the Company delivered the following financial results:

• Net sales of $59 million, reflecting a 33% decrease over the prior year period. which was comprised of:
• Surgical net sales of $36 million, reflecting an increase of 13% compared to the prior year period; and
• Wound net sales of $23 million, reflecting a decrease of 60% compared to the prior year period
• GAAP net loss and net loss margin for the first quarter of 2026 of $11 million and 18%, respectively.
• GAAP fully diluted earnings per share for the first quarter of 2026 of $(0.07) compared to $0.05 in the prior year period.
• Cash balance of $160 million, representing a $6 million decrease sequentially and a $53 million increase compared to March 31, 2025.

Additionally during the quarter, the Company launched two new organically developed products, AMNIOFIX® Thyroid Shields and CHORIOFIX™ and entered into an exclusive distribution agreement with Summit Products Group for multiple additional Surgical products, namely G4Derm® Plus, Hydrelix Collagen Matrix and Novaform®.

Overview

MIMEDX is a pioneer and leader focused on helping humans heal. The Company has more than a decade and a half of experience developing and commercializing products used in the treatment of a wide range of Surgical and Wound management applications. 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 months ended March 31, 2026 and 2025, 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, 2025 filed with the SEC on February 25, 2026 (the “2025 Form 10-K”).

Results of Operations

Three Months Ended March 31, 2026 Compared to the Three Months Ended March 31, 2025

(in thousands)

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

Net Sales

Net sales were $59.0 million for the three months ended March 31, 2026, representing a decrease of $29.2 million, or 33.1%, compared to $88.2 million for the three months ended March 31, 2025.

Sales by product category were as follows (amounts in thousands):

Surgical net sales were $36.4 million for the three months ended March 31, 2026, representing an increase of $4.2 million, or 13.2%, compared to $32.1 million for the three months ended March 31, 2025. This increase was driven by continued growth across the AMNIOFIX®, AMNIOEFFECT®, AXIOFILL®, and HELIOGEN™ product lines as adoption expanded across multiple surgical procedures.

Wound net sales were $22.6 million for the three months ended March 31, 2026, representing a decrease of $33.5 million or 59.7%, compared to $56.1 million for the three months ended March 31, 2025. This decline was primarily driven by the Medicare reimbursement changes that went into effect on January 1, 2026, which resulted in reduced reimbursement rates for skin substitute products, created administrative barriers for patients to receive these products and led to lower realized pricing and volumes within the Wound Care business. During the quarter, the Company also saw initial contributions from sales of its RegenKit PRP offering.

Cost of Sales and Gross Profit Margin

Cost of sales were $17.4 million for the three months ended March 31, 2026, representing an increase of $0.8 million, or 4.9%. compared to $16.6 million for the three months ended March 31, 2025. This increase was driven by higher production cost and increased volume in the Surgical business, largely offset by lower volume in the Wound Care business and reduced amortization of acquired intangible assets.

Gross profit margin was 70.6% for the three months ended March 31, 2026, compared to 81.2% for the three months ended March 31, 2025. This decline was primarily driven by lower Wound Care pricing following the Medicare reimbursement changes, as well as unfavorable product mix and higher costs.

Selling, General and Administrative Expense

Selling, general and administrative (“SG&A”) expense was $53.2 million for the three months ended March 31, 2026, compared to $60.0 million for the three months ended March 31, 2025. 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 decreased $2.9 million or 6.3%, year over year, primarily driven by lower commission expense resulting from reduced sales and lower travel and meeting expenses. This decrease was partially offset by higher bad debt expense.

General and administrative expenses decreased $3.8 million or 28.9% year over year, due to the reduction of compensation-related costs, primarily related to the reversal of stock-based compensation expense associated with outstanding performance stock unit awards. These savings were largely offset by increased legal and regulatory expenses, including cost associated with the ongoing litigation with certain competitors and certain former employees.

Research and Development Expense

Research and development (“R&D”) expense was $4.1 million for the three months ended March 31, 2026, representing an increase of $0.8 million, or 24.4%, compared to $3.3 million for the three months ended March 31, 2025. This increase was driven by higher costs associated with the ongoing EPIEFFECT randomized clinical trial, as well as continued investment in the development of future products within the Company’s pipeline.

Interest Income, Net

Interest income, net was $0.9 million for the three months ended March 31, 2026, representing an increase of $0.4 million or 75.1% compared to $0.5 million for the three months ended March 31, 2025. This increase was primarily driven by higher average cash balances maintained in the Company’s interest-bearing accounts and a reduction in outstanding debt.

Income Tax Provision

The effective tax rates for the Company were 29.2% and 18.5% for the three months ended March 31, 2026 and March 31, 2025, respectively.

The increase in the effective tax rate for the three months ended March 31, 2026 was primarily due to the timing of stock-based compensation adjustments, partially offset by limits on the deductibility of executive compensation.

Discussion of Cash Flows

Operating Activities

Cash generated by operating activities was $1.9 million during the three months ended March 31, 2026, representing a decrease of $3.4 million, compared to $5.3 million for the three months ended March 31, 2025. This decrease was primarily driven by lower net income, partially offset by significant accounts receivable collections.

Investing Activities

Cash used for investing activities was $5.6 million during the three months ended March 31, 2026, compared to $0.4 million for the three months ended March 31, 2025. This increase reflects a $5.0 million payment to acquire exclusive distribution rights for RegenKit®‑Wound Gel.

Financing Activities

Cash used for financing activities was $2.6 million during the three months ended March 31, 2026, compared to $2.9 million for the three months ended March 31, 2025. Cash used during both periods was primarily driven by stock repurchases to satisfy tax withholding obligations upon vesting of employee equity awards, a principal payment under the Citizens Credit Agreement, and a profit-share payment to TELA Bio, Inc. related to HELIOGEN® sales performance.

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 March 31, 2026, we had $159.8 million of cash and cash equivalents, total current assets of $240.3 million and total current liabilities of $44.6 million. We had $17.6 million of long term debt outstanding and $75.0 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 a $75.0 million Revolving Credit Facility and $20.0 million Term Loan Facility. We had no outstanding borrowings under the Revolving Credit Facility facility as of March 31, 2026. The Term Loan Facility matures on January 19, 2029.

The Citizens Credit Agreement requires that we comply with certain financial covenants, including a maximum total net leverage ratio and a minimum consolidated fixed charge coverage ratio, as well as other customary restrictive covenants.

As of March 31, 2026, the Company has $17.6 million of principal outstanding on the Term Loan Facility that bears interest at 6.0% and no borrowings outstanding under the Revolving Credit Facility.

Contractual Obligations

There were no significant changes to our contractual obligations during the three months ended March 31, 2026 from those disclosed in the section Item 7, “Management’s Discussion and Analysis of Financial Condition and Results from Operations”, in the 2025 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 2025 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 2025 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 March 31, 2026 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.