Mimedx Group, Inc.: Form 10-Q for the period ended Jun 30, 2026

Executive Summary

During the second quarter of 2026, we continued to execute our strategic priorities, including expanding our Surgical portfolio, launching new products, advancing recent cost reduction initiatives, and returning capital to shareholders through our Share Repurchase Plan. These efforts contributed to continued growth in the Surgical business, which demonstrated a sixth consecutive quarter of double-digit year-over-year growth.

• Net sales were $64 million, a decrease of 35% compared to the prior year period, driven by a 61% decline in Wound sales, partially offset by 15% growth in Surgical sales. Surgical growth was driven by continued adoption of AMNIOFIX®, AMNIOEFFECT®, and our particulate portfolio, as well as contributions from the Company’s distribution agreement with Summit Products Group, namely G4Derm® Plus.
• We reported a GAAP net loss of $15 million or $0.10 per diluted share, and ended the quarter with $136 million of cash and cash equivalents.
• During the quarter, we completed a reduction-in-force and implemented additional cost reduction initiatives designed to align our cost structure with current business needs and support operating efficiency.
• Separately, we repurchased approximately $13 million of common stock under our Share Repurchase Plan, reflecting our continued commitment to disciplined capital allocation and delivering long-term shareholder value.

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 and six months ended June 30, 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 June 30, 2026 Compared to the Three Months Ended June 30, 2025

(in thousands)

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

Net Sales

Net sales were $64.4 million for the three months ended June 30, 2026, representing a decrease of $34.2 million, or 34.7%, compared to $98.6 million for the three months ended June 30, 2025.

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

Surgical net sales were $39.3 million for the three months ended June 30, 2026, representing an increase of $5.2 million, or 15.1%, compared to $34.1 million for the three months ended June 30, 2025. This increase was primarily driven by continued growth in the AMNIOFIX and AMNIOEFFECT sheet products.

Wound net sales were $25.1 million for the three months ended June 30, 2026, representing a decrease of $39.4 million or 61.1%, compared to $64.5 million for the three months ended June 30, 2025. This decline was primarily driven by the continued impact of Medicare reimbursement changes effective January 1, 2026, which adversely affected both pricing and sales volumes for these products.

Cost of Sales and Gross Profit Margin

Cost of sales were $20.0 million for the three months ended June 30, 2026, representing an increase of $1.3 million, or 7.0%. compared to $18.7 million for the three months ended June 30, 2025. This increase was primarily driven by increased sales volume and one-time expenses related to our cost reduction initiative.

Gross profit margin was 69.0% for the three months ended June 30, 2026, compared to 81.1% for the three months ended June 30, 2025. This decline was primarily driven by lower pricing in the Wound business following the Medicare reimbursement changes and higher manufacturing costs.

Selling, General and Administrative Expense

Selling, general and administrative (“SG&A”) expense was $59.8 million for the three months ended June 30, 2026, compared to $64.2 million for the three months ended June 30, 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 $1.5 million or 3.0%, year over year, primarily driven by lower personnel, travel, and meeting expense resulting from our recent cost reduction initiative, as well as lower commission expense driven by reduced sales. These decreases were offset by bad debt expense, which increased $5.0 million, year over year. This increase is associated with the credit deterioration of certain legacy customers.

General and administrative expenses decreased $2.9 million or 17.9% year over year, primarily due to lower personnel expense resulting from our recent cost reduction initiative. This decrease was partially offset by increased legal expense associated with ongoing legal matters.

Research and Development Expense

Research and development (“R&D”) expense was $2.8 million for the three months ended June 30, 2026, representing a decrease of $0.5 million, or 15.9%, compared to $3.3 million for the three months ended June 30, 2025. This decrease was primarily driven by completion of patient activities in our EPIEFFECT study and the results of our cost reduction initiative. These impacts were offset by costs incurred toward our 510(k) submissions.

Interest Income, Net

Interest income, net was $0.8 million for the three months ended June 30, 2026, representing an increase of $0.1 million or 6.8% compared to $0.7 million for the three months ended June 30, 2025. The increase was driven by higher average cash balances maintained in the Company’s interest-bearing accounts and a reduction in outstanding debt. These impacts were offset by lower market interest rates.

Income Tax Provision

The effective tax rates for the Company were 16.5% and 26.1% for the three months ended June 30, 2026 and June 30, 2025, respectively.

Note that we generated pre-tax loss for the three months ended June 30, 2026, meaning that decreases in our effective tax rate would be unfavorable for that period. Conversely, we generated pre-tax income for the three months ended June 30, 2025, meaning that decreases in our effective tax rate would favorable for that period.

The effective tax rate for the three months ended June 30, 2026 was unfavorably impacted due to deduction limitations on executive compensation, in part resulting from one-time costs associated with our recent cost reduction initiative. Shortfall on restricted stock vestings further contributed to the unfavorability.

The effective tax rate for the three months ended June 30, 2025 was favorably impacted by windfall on restricted stock vestings. This was offset by deduction limitations on executive compensation.

Six Months Ended June 30, 2026 Compared to the Six Months Ended June 30, 2025

(in thousands)

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

Net Sales

Net Sales were $123.4 million for the six months ended June 30, 2026, representing a decrease of $63.5 million, or 34.0%, compared to $186.8 million for the six months ended June 30, 2025.

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

21

Surgical net sales were $75.7 million for the six months ended June 30, 2026, representing an increase of $9.4 million, or 14.2%, compared to the six months ended June 30, 2025. This increase was primarily driven by continued growth in the AMNIOFIX and AMNIOEFFECT sheet products.

Wound net sales were $47.7 million for the six months ended June 30, 2026, representing a decrease of 72.9 million or 60.4%, compared to the six months ended June 30, 2025. This decrease was primarily driven by the continued impact of Medicare reimbursement changes which adversely affected both pricing and sales volumes for these products.

Cost of Sales and Gross Profit Margin

Cost of sales were $37.3 million for the six months ended June 30, 2026, representing an increase of $2.1 million, or 6.0%, compared to $35.2 million for the six months ended June 30, 2025. This increase was primarily driven by increased sales volumes and one-time expenses related to our cost reduction initiative.

Gross profit margin was 69.7% for the six months ended June 30, 2026 compared to 81.1% for the six months ended June 30, 2025. This decline was driven by lower pricing in the Wound business following the Medicare reimbursement changes and higher manufacturing costs.

Selling, General and Administrative Expense

Selling, general and administrative expense was $113.0 million for the six months ended June 30, 2026, compared to $124.1 million for the six months ended June 30, 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 $4.4 million or 4.6%, year over year, primarily driven by lower personnel, travel, and meeting expense resulting from our recent cost reduction initiative as well as lower commission expense driven by reduced sales. These decreases were partially offset by bad debt expense, which increased $5.6 million, year over year. This increase is associated with the credit deterioration of certain legacy customers.

General and administrative expenses decreased $6.7 million or 22.8%, year over year, primarily due to the reversal of stock-based compensation expense associated with unvested performance stock unit awards and lower personnel costs. These savings were partially offset by increased legal xpense associated with ongoing legal matters

Research and Development Expense

Research and development (“R&D”) expense was $6.9 million for the six months ended June 30, 2026, compared to $6.6 million for the six months ended June 30, 2025. This increase was primarily driven by costs associated with increased enrollment for the EPIEFFECT® randomized controlled trial. These increases were partially offset by lower personnel costs associated with our recent cost reduction activities.

Interest Income, Net

Interest income, net was $1.7 million for the six months ended June 30, 2026 compared to interest income, net of $1.2 million for the six months ended June 30, 2025, an increase of $0.4 million, or 34%. The increase was 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 22.4% and 23.0% for the six months ended June 30, 2026 and 2025, respectively.

Note that we generated pre-tax loss for the six months ended June 30, 2026, meaning that decreases in our effective tax rate would be unfavorable for that period. Conversely, we generated pre-tax income for the six months ended June 30, 2025, meaning that decreases in our effective tax rate would favorable for that period.

The effective tax rate for the six months ended June 30, 2026 was unfavorably impacted by deduction limitations on executive compensation, in part resulting from one-time costs associated with our recent cost reduction initiative. Shortfall on restricted stock vestings further contributed to the unfavorability.

The effective tax rate for the six months ended June 30, 2025 was favorably impacted by windfall on restricted stock vestings. This favorability was offset by the deduction limitations on executive compensation.

Discussion of Cash Flows

Operating Activities

Cash used in operating activities was $8.1 million during the six months ended June 30, 2026, representing a decrease of $27.9 million, compared to cash provided by operating activities of $19.7 million for the six months ended June 30, 2025. This decrease was primarily attributable to lower cash collections associated with reduced sales, annual incentive compensation payments made during the first quarter of 2026, and cost reduction initiative-related severance payments made during the second quarter of 2026. These impacts were partially offset by lower operating expenditures resulting from the Company’s ongoing cost reduction initiative.

Investing Activities

Cash used for investing activities was $6.3 million during the six months ended June 30, 2026, compared to $1.3 million for the six months ended June 30, 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 $15.9 million during the six months ended June 30, 2026, compared to $4.0 million for the six months ended June 30, 2025. This increase was primarily attributable to repurchases of common stock under the Company’s Share Repurchase Plan, including $12.5 million of cash paid for repurchases during the second quarter of 2026, higher principal payments under the Citizens Credit Agreement, and increased profit-share payments to TELA Bio, Inc. related to HELIOGEN® sales. These increases were partially offset by lower share repurchases related to employee tax withholding obligations associated with the vesting of equity awards.

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 June 30, 2026, we had $135.8 million of cash and cash equivalents, total current assets of $205.4 million and total current liabilities of $38.5 million. We had $17.3 million of long term debt outstanding and $75.0 million of availability under our Revolving Credit Facility.

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 June 30, 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 June 30, 2026, the Company has $17.3 million of principal outstanding on the Term Loan Facility that bears interest at 6.0% and no borrowings outstanding under the Revolving Credit Facility.

Share Repurchase Plan

In February 2026, our Board of Directors (the “Board”) authorized us to periodically repurchase up to $100.0 million of our outstanding common stock (the “Share Repurchase Plan”) through February 2028. The timing and amount of repurchases, if any, will depend on a number of factors, including capital requirements for inorganic business development, market conditions, our financial condition, operating results, and other business considerations. Notwithstanding the Share Repurchase Plan, management’s focus remains on executing on our strategic initiatives, including inorganic growth investments. The Share Repurchase Plan does not obligate us to repurchase any shares.

During the three and six months ended June 30, 2026, we repurchased 3.5 million shares on the open market for $12.7 million. Pursuant to the terms of the Share Repurchase Plan, we have $87.3 million of authorized purchase capacity as of June 30, 2026.

Contractual Obligations

There were no significant changes to our contractual obligations during the six months ended June 30, 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 2025 Form 10-K.

In addition to those Critical Accounting Estimates identified in our 2025 Form 10-K, we have identified the following critical accounting estimates:

Allowance for Credit Losses

Description

We present our trade accounts receivable net of our current expectation for credit losses. Allowance for credit losses is estimated periodically and changes to the allowance for credit losses are recognized as expense in the period of change.

Judgments and Uncertainties

Our expectations for credit losses are evaluated based on relevant, available information as of each reporting date. This information includes, among other information:

1. The current aging of outstanding receivables,

2. Historical collection patterns from various classes of customers, and

3. Customer-specific indications of deteriorated credit quality, such as bankruptcies, collections, or similar events.

Write-offs of associated receivables cause us to reduce the allowance and do not impact the consolidated statement of operations in the period in which it occurs. Other revisions to the reserve, which reflect changes in our expectations in credit losses, are accounted for prospectively as credit loss expense or reversal.

Sensitivity of the Estimate to Change

We have reserved $14.8 million for credit losses against a gross accounts receivable balance of $56.1 million as of June 30, 2026. Subsequent deviations in customer collection patterns relative to historical norms, as well significant, customer-specific changes in facts and circumstances could cause us to materially revise our allowance for credit losses. Such changes will result in the reflection of credit loss expense or reversal in the period such changes are identified.

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 June 30, 2026 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.