AXGN 10-K & 10-Q changes, risk factors and insider trading
Axogen, Inc. · Nasdaq · Electromedical & Electrotherapeutic Apparatus · CIK 805928 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “The manufacturing process for Avance is complex and we or our third-party contractors may encounter difficulties in production. If we or our third-party contractors encounter such difficulties, our ability to supply Avance for commercial sale could be delayed or halted entirely, which would have a material adverse effect on our business.”
New heading “If our estimates of the TAM for peripheral nerve repair and reconstruction are inaccurate, our growth prospects and financial performance could be materially adversely affected.”
New heading “We obtained regulatory approval for certain uses of Avance through the FDA’s accelerated approval pathway and traditional approval will be contingent on successful completion of a confirmatory post-approval trial. Failure to successfully complete our confirmatory post-approval trial or obtain traditional approval would have a material adverse effect on our business.”
New heading “If the FDA were to withdraw or suspend our BLA approval, narrow the approved indication, or otherwise limit the use of our Avance Products, our revenues would be significantly impacted and thus would have a material adverse effect on us.”
Removed heading “•Approximately 60% of our total revenues are from sales of Avance Nerve Graft and any adverse decision from the FDA would negatively impact our operations and financial condition.”
Removed heading “•Our revenue growth depends on our ability to increase distribution and sales to existing customers and develop new customers, domestically and abroad, and there can be no assurance that these efforts will result in significant increases in sales.”
Removed heading “•Our revenue depends on a limited number of products.”
Removed heading “•We are highly dependent on the continued availability of our facilities and could be harmed if we continue to experience operating challenges with our APC Facility or if any of our facilities are unavailable for any prolonged period of time.”
Removed heading “•There may be significant fluctuations in our operating results.”
Removed heading “•Macroeconomic trends, such as the inflationary pressure, and political instability could continue to have a material adverse effect on our ability to operate, results of operations, financial condition, liquidity, and capital investments.”
Removed heading “•Our operating results could be adversely impacted if we are unable to effectively manage and sustain our future growth or scale our operations.”
Removed heading “•We have a history of net losses and have not consistently experienced positive cash flow from operations, and our ability to achieve consistent positive cash flow will depend on increasing revenue from distribution of our products, which may not be achievable.”
Removed heading “•Failure to successfully manage the transition associated with the recent management changes could have an adverse impact on our business.”
Removed heading “•Loss of key members of management, who we need to succeed, could adversely affect our business.”
Removed heading “•Our success will be dependent on continued acceptance of our products by the medical community.”
Removed heading “•Delays, interruptions, or the cessation of production by our third-party suppliers, including products supplied by single suppliers, of important materials may prevent or delay our ability to manufacture or process the final products.”
Removed heading “•Technological change and competition for newly developed products could reduce demand for our products.”
Removed heading “•We may not be successful in our efforts to build a pipeline of additional product candidates.”
Removed heading “•We must maintain high quality processing of our products.”
Removed heading “•Our revenue depends upon prompt and adequate reimbursement from public and private insurers and national health systems.”
Removed heading “•Negative publicity concerning methods of donating human tissue and screening of donated tissue may reduce demand for our products and negatively impact the supply of available donor tissue.”
Removed heading “•The failure of third parties to perform many necessary services for the commercialization of our products, including services related to recovery/acquisition, sterilization, distribution, and transportation, would impair our ability to meet commercial demand.”
Removed heading “•We are dependent on our relationships with independent agencies to generate a material portion of our revenue.”
Removed heading “•If we do not manage product inventory in an effective and efficient manner, it could adversely affect profitability.”
Removed heading “•We may be unsuccessful in commercializing our products outside the U.S.”
Removed heading “•We may seek to expand our business in ways that could result in diversion of resources and extra expenses.”
Removed heading “•We may be subject to future product liability litigation, which could be expensive, and our insurance coverage may not be adequate.”
Removed heading “•We are currently operating in a period of economic uncertainty and capital markets disruption, which has been significantly impacted by geopolitical instability and tensions, Russia's ongoing invasion of Ukraine and illegal annexation of Ukrainian territories, and record inflation and could materially and adversely affect our business, financial condition and results of operations.”
Removed heading “•Changes in U.S. trade policy, threats of international tariffs, and changes to the U.S. political landscape may adversely affect our business, results of operations, financial condition, and prospects.”
Removed heading “•Our results of operations could be negatively affected by potential fluctuations in foreign currency exchange rates.”
Removed heading “•Our failure to protect our technology systems and comply with data protection laws and regulations could lead to government enforcement actions and significant penalties against us, and adversely impact our business, results of operations, financial condition, and prospects.”
Removed heading “•We are dependent on internal information and telecommunications systems, and any failure of these systems, including system security breaches, data protection breaches or other cybersecurity attacks, may negatively impact our business and results of operations.”
Removed heading “•Our business and financial performance could be adversely affected, directly or indirectly, by natural or man-made disasters or other similar events.”
Removed heading “•Changes in the tax code could have a material adverse effect on our results of operations, financial condition, liquidity, and capital investments.”
Removed heading “•We may have exposure to additional tax liabilities as a result of our foreign operations.”
Removed heading “•Our business and stock price may be adversely affected if our internal controls are not effective.”
Removed heading “•We incur costs as a result of operating as a public company, and our management is required to devote substantial time to compliance initiatives.”
Removed heading “•Our business, results of operations, financial condition, and prospects could be adversely affected, directly or indirectly, by the effects of a focus on environmental, social and governance issues.”
Removed heading “Risks Related to the Regulatory Environment in which We Operate”
Removed heading “•Our Avance Nerve Graft product is currently distributed pursuant to enforcement discretion and a transition plan with the FDA; however, we completed the rolling BLA submission for Avance Nerve Graft in September of 2024. If the FDA does not approve our BLA, approves a narrower indication than Avance Nerve Graft’s current use or otherwise limits use of our Avance Nerve Graft product, it would have a significant impact on our revenues and thus would have a material adverse effect on us.”
Removed heading “•Even if we obtain regulatory approval for Avance Nerve Graft, we will remain subject to ongoing and new regulatory requirements. Maintaining compliance with ongoing regulatory requirements may result in significant additional expense to us, and any failure to maintain such compliance could subject us to penalties and cause our business to suffer.”
Removed heading “•Our business is subject to continuing regulatory compliance by the FDA and other authorities, which is costly and could result in negative effects on our business.”
Removed heading “•Failure to obtain regulatory and pricing approvals in foreign jurisdictions after BLA approval for Avance Nerve Graft or our other products could delay or prevent commercialization of our products abroad.”
Removed heading “•The use, misuse or off-label use of our products may harm our reputation and the reputation of our products, which could result in injuries leading to product liability suits, and could be costly to our business, and/or result in FDA sanctions.”
Removed heading “•U.S. governmental regulation could restrict the use of our Avance Nerve Graft product, restrict our procurement of tissue or increase costs.”
Removed heading “•Failure to obtain regulatory or other approvals from certain states in which we operate after BLA approval for Avance Nerve Graft could delay, hinder, or prevent commercialization of our products.”
Removed heading “•BLA approval for Avance Nerve Graft could result in different protocol to hospitals access for the product, as well as different reimbursement protocols, both of which may negatively affect surgeons’ access to, revenues derived from and profitability of Avance Nerve Graft.”
Removed heading “•Our Axoguard products are subject to FDA and international regulatory requirements.”
Removed heading “•Our operations must comply with FDA and other governmental requirements.”
Removed heading “•Our business is subject to continuing compliance with standards set by various accreditation and registration bodies, which is costly, and loss of accreditation or registration could result in negative effects on our business.”
Removed heading “•Defective products could lead to recall or other negative business conditions.”
Removed heading “•Clinical trials can be long and expensive, and results are ultimately uncertain.”
Removed heading “•We rely on third parties to conduct our clinical trials, and they may not perform as contractually required or expected.”
Removed heading “•Healthcare law and policy changes may have a material adverse effect on us.”
Removed heading “•We could be subject to civil or criminal penalties if we are found to have violated laws protecting the confidentiality of health information, which could increase our liabilities and harm our reputation or our business.”
Removed heading “Risks Related to Our Intellectual Property”
Removed heading “•Failure to protect or maintain our IP rights could result in costly and time-consuming litigation and our loss of any potential competitive advantage.”
Removed heading “•Future protection for our proprietary rights is uncertain and may impact our ability to successfully compete in our industry.”
Removed heading “•The patent protection for our products may expire before we are able to maximize their commercial value, which may subject us to increased competition and reduce or eliminate our opportunity to generate product revenue.”
Removed heading “•Others may claim an ownership interest in our IP or claim that we infringe on their IP rights, which could expose us to litigation and have a significant adverse effect on our prospects.”
Removed heading “•Our trademarks are valuable, and our business may be adversely affected if trademarks are not adequately protected.”
Removed heading “•Patent reform legislation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents.”
Removed heading “Risks Related to Financing Our Business”
Removed heading “•Our credit facility and payment obligations under the Revenue Participation Agreement with TPC Investments II LP and Argo SA LLC, each affiliates of Oberland Capital (collectively, “Oberland Capital”), contains operating and financial covenants that restrict our business and financing activities, require cash payments over an extended period of time and are subject to acceleration in specified circumstances, which may result in Oberland Capital taking possession and disposing of any collateral.”
Removed heading “•We may need to raise additional funds to finance our future capital or operating needs, which could have adverse impacts on our business, results of operations, and the interests of our shareholders.”
Removed heading “Risks Related to Our Common Stock”
Removed heading “•An active trading market in our common stock may not be maintained.”
Removed heading “•The price of our common stock could be volatile due to a number of factors, which could lead to losses by investors and costly securities litigation.”
Removed heading “•We may fail to meet our publicly announced guidance or other expectations about our business and future operating results, which could cause a decline in our stock price.”
Removed heading “•We do not anticipate paying any cash dividends in the foreseeable future.”
Removed heading “•Anti-takeover provisions in Minnesota law may deter acquisition bids for us that you might consider favorable.”
Removed heading “•Our management has broad discretion in the use and placement of our cash and cash equivalents and, despite management’s efforts, cash and cash equivalents may be used in a manner that does not increase the value of shareholders’ investments or placed in otherwise reputable financial institutions that fail.”
Removed heading “ITEM 1A. RISK FACTORS”
Removed heading “Risks Related to Our Business and Strategy”
Removed heading “Macroeconomic trends, such as the inflationary pressure, and political instability could continue to have a material adverse effect on our ability to operate, results of operations, financial condition, liquidity, and capital investments.”
Removed heading “Failure to successfully manage the transition associated with the recent management changes could have an adverse impact on our business.”
Removed heading “We must maintain high quality processing of our products.”
Removed heading “Our results of operations could be negatively affected by potential fluctuations in foreign currency exchange rates.”
Removed heading “Our business, results of operations, financial condition, and prospects could be adversely affected, directly or indirectly, by the effects of a focus on environmental, social and governance issues.”
Removed heading “Our Avance Nerve Graft product is currently distributed pursuant to enforcement discretion and a transition plan with the FDA; however, we completed the rolling BLA submission for Avance Nerve Graft in September of 2024. If the FDA does not approve our BLA, approves a narrower indication than Avance Nerve Graft’s current use or otherwise limits use of our Avance Nerve Graft product it would have a significant impact on our revenues and thus would have a material adverse effect on us.”
Removed heading “Our credit facility and payment obligations under the Revenue Participation Agreement with Oberland Capital contain operating and financial covenants that restrict our business and financing activities, require cash payments over an”
Removed heading “P55 extended period of time and are subject to acceleration in specified circumstances, which may result in Oberland Capital taking possession and disposing of any collateral.”
Largest changes
“If we or our third-party contractors fail to comply with the requirements of the FDA or other regulatory authorities or fail to comply with other post-approval commitments, it could result in sanctions being imposed on us, including fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, clinical holds or termination of clinical trials. …”see in full comparison
“The FDA considers our Avance Nerve Graft product to be a biological product, subject to BLA approval requirements. Although the Avance Nerve Graft product has not yet been approved by the FDA through a BLA, it is currently distributed under the controls applicable to an HCT/P regulated under section 361 of the PHS Act and 21 CFR Part 1271 of FDA’s regulations, subject to FDA’s enforcement discretion and our compliance with a transition plan established by the FDA. See “Business — Government Regulations — U.S. …”see in full comparison
We are exposed to the risk of changes in social, geopolitical, legal, and economic conditions. The global economy has been, and may continue to be, negatively impacted bysee in full comparisonRussia’sregionalinvasion of Ukraineconflicts andillegal annexation of Ukrainian territories. The negative impacts arising from the war andassociated sanctions andexporttraderestrictions imposed by various countries,restrictions, includingthoseasimposedabyresultRussia, may includeof reduced consumer demand, supply chain disruptions, increased cybersecurity risks, and increased costs for transportation, energy, and raw materials. Additionally, further escalation of trade tensions between the U.S. and China,escalationheightenedofgeopoliticaltensions between China and Taiwan, further escalationcompetition in theconflictIndo-pacificbetweenregion,theperiodicStateflare-ups ofIsrael, and the Islamic Republic of Iran and its proxy terror organizations including Hamas, Hezbollah and the Houthis, as well as further escalation of tensions between the State of Israel and various countries or terror organizations in the Middle East and North Africa, further escalation of tensions between the Houthis and the U.S. led multinational force stationed in the Middle East as well as broader involvement of the U.S. in the conflictinstability in the Middle East, as well as other localized or emerging geopolitical disruptions, could result in a global economic slowdown and long-term changes to global trade. Although we do not have material operations inRussia,regionsUkraine,experiencingChina,suchTaiwan, Israel,conflicts orother countries in the Middle East and North Africa,instability, further escalation of geopolitical tensions could have a broader impact that expands into other markets where we have material operations, which may adversely affect our business, financial condition and results of operations.
“If we breach certain of our debt covenants and are unable to cure such breach, revert to the provided liquidity covenant or are not granted waivers in relation to such breach, it may constitute an event of default under the credit facility, giving Oberland Capital the right to require us to repay the then-outstanding debt immediately. If we are unable to pay the outstanding debt immediately, Oberland Capital could, among other things, foreclose on the collateral granted to them to collateralize such indebtedness. …”see in full comparison
“Finally, regulatory expectations in the U.S. are subject to constant change. There can be no assurance that we can meet the requirements of future regulations and guidance or that compliance with current regulations and guidance assures future capability to distribute and sell our products. It is possible that governmental authorities will conclude that our business practices do not comply with current or future statutes, regulations, agency guidance or case law involving applicable fraud and abuse or other healthcare laws and regulations. …”see in full comparison
“Although, to date, our business has not been materially impacted by Russia's ongoing invasion of Ukraine and illegal annexation of Ukrainian territories, geopolitical tensions between China and the U.S. geopolitical tensions between China and Taiwan, the escalation of the conflict between the State of Israel and Hamas, or record inflation, it is impossible to predict the extent to which our operations could be impacted in the short and long term, or the ways in which such matters may impact our business.”see in full comparison
Full comparison: every changed paragraph (227)
Our business involves a number of risks, some of which are beyond our control. The risk and uncertainties described below are not the only ones we face. Set forth below is a discussion of the risks and uncertainties that management believes to be material to us and could adversely affect our business, financial condition, results of operations, cash flows, growth prospects and the trading price of our common stock. Additional risks not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or results of operations in future periods.
Below is a summary of our risk factors. Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found below under the heading “Risk Factors” and should be carefully considered, together with other information in this Form 10-K and our other filings with the SEC before making an investment decision regarding our common stock.
•Approximately 60% of our total revenues are from sales of Avance Nerve Graft and any adverse decision from the FDA would negatively impact our operations and financial condition.
•Our revenue growth depends on our ability to increase distribution and sales to existing customers and develop new customers, domestically and abroad, and there can be no assurance that these efforts will result in significant increases in sales.
•Our revenue depends on a limited number of products.
•We are highly dependent on the continued availability of our facilities and could be harmed if we continue to experience operating challenges with our APC Facility or if any of our facilities are unavailable for any prolonged period of time.
•There may be significant fluctuations in our operating results.
•Macroeconomic trends, such as the inflationary pressure, and political instability could continue to have a material adverse effect on our ability to operate, results of operations, financial condition, liquidity, and capital investments.
•Our operating results could be adversely impacted if we are unable to effectively manage and sustain our future growth or scale our operations.
•We have a history of net losses and have not consistently experienced positive cash flow from operations, and our ability to achieve consistent positive cash flow will depend on increasing revenue from distribution of our products, which may not be achievable.
•Failure to successfully manage the transition associated with the recent management changes could have an adverse impact on our business.
•Loss of key members of management, who we need to succeed, could adversely affect our business.
•Our success will be dependent on continued acceptance of our products by the medical community.
•Delays, interruptions, or the cessation of production by our third-party suppliers, including products supplied by single suppliers, of important materials may prevent or delay our ability to manufacture or process the final products.
•Technological change and competition for newly developed products could reduce demand for our products.
•We may not be successful in our efforts to build a pipeline of additional product candidates.
•We must maintain high quality processing of our products.
•Our revenue depends upon prompt and adequate reimbursement from public and private insurers and national health systems.
•Negative publicity concerning methods of donating human tissue and screening of donated tissue may reduce demand for our products and negatively impact the supply of available donor tissue.
•The failure of third parties to perform many necessary services for the commercialization of our products, including services related to recovery/acquisition, sterilization, distribution, and transportation, would impair our ability to meet commercial demand.
•We are dependent on our relationships with independent agencies to generate a material portion of our revenue.
•If we do not manage product inventory in an effective and efficient manner, it could adversely affect profitability.
•We may be unsuccessful in commercializing our products outside the U.S.
•We may seek to expand our business in ways that could result in diversion of resources and extra expenses.
•We may be subject to future product liability litigation, which could be expensive, and our insurance coverage may not be adequate.
•We are currently operating in a period of economic uncertainty and capital markets disruption, which has been significantly impacted by geopolitical instability and tensions, Russia's ongoing invasion of Ukraine and illegal annexation of Ukrainian territories, and record inflation and could materially and adversely affect our business, financial condition and results of operations.
•Changes in U.S. trade policy, threats of international tariffs, and changes to the U.S. political landscape may adversely affect our business, results of operations, financial condition, and prospects.
•Our results of operations could be negatively affected by potential fluctuations in foreign currency exchange rates.
P32
•Our failure to protect our technology systems and comply with data protection laws and regulations could lead to government enforcement actions and significant penalties against us, and adversely impact our business, results of operations, financial condition, and prospects.
•We are dependent on internal information and telecommunications systems, and any failure of these systems, including system security breaches, data protection breaches or other cybersecurity attacks, may negatively impact our business and results of operations.
•Our business and financial performance could be adversely affected, directly or indirectly, by natural or man-made disasters or other similar events.
•Changes in the tax code could have a material adverse effect on our results of operations, financial condition, liquidity, and capital investments.
•We may have exposure to additional tax liabilities as a result of our foreign operations.
•Our business and stock price may be adversely affected if our internal controls are not effective.
•We incur costs as a result of operating as a public company, and our management is required to devote substantial time to compliance initiatives.
•Our business, results of operations, financial condition, and prospects could be adversely affected, directly or indirectly, by the effects of a focus on environmental, social and governance issues.
Risks Related to the Regulatory Environment in which We Operate
•Our Avance Nerve Graft product is currently distributed pursuant to enforcement discretion and a transition plan with the FDA; however, we completed the rolling BLA submission for Avance Nerve Graft in September of 2024. If the FDA does not approve our BLA, approves a narrower indication than Avance Nerve Graft’s current use or otherwise limits use of our Avance Nerve Graft product, it would have a significant impact on our revenues and thus would have a material adverse effect on us.
•Even if we obtain regulatory approval for Avance Nerve Graft, we will remain subject to ongoing and new regulatory requirements. Maintaining compliance with ongoing regulatory requirements may result in significant additional expense to us, and any failure to maintain such compliance could subject us to penalties and cause our business to suffer.
•Our business is subject to continuing regulatory compliance by the FDA and other authorities, which is costly and could result in negative effects on our business.
•Failure to obtain regulatory and pricing approvals in foreign jurisdictions after BLA approval for Avance Nerve Graft or our other products could delay or prevent commercialization of our products abroad.
•The use, misuse or off-label use of our products may harm our reputation and the reputation of our products, which could result in injuries leading to product liability suits, and could be costly to our business, and/or result in FDA sanctions.
•U.S. governmental regulation could restrict the use of our Avance Nerve Graft product, restrict our procurement of tissue or increase costs.
•Failure to obtain regulatory or other approvals from certain states in which we operate after BLA approval for Avance Nerve Graft could delay, hinder, or prevent commercialization of our products.
•BLA approval for Avance Nerve Graft could result in different protocol to hospitals access for the product, as well as different reimbursement protocols, both of which may negatively affect surgeons’ access to, revenues derived from and profitability of Avance Nerve Graft.
•Our Axoguard products are subject to FDA and international regulatory requirements.
•Our operations must comply with FDA and other governmental requirements.
•Our business is subject to continuing compliance with standards set by various accreditation and registration bodies, which is costly, and loss of accreditation or registration could result in negative effects on our business.
•Defective products could lead to recall or other negative business conditions.
•Clinical trials can be long and expensive, and results are ultimately uncertain.
•We rely on third parties to conduct our clinical trials, and they may not perform as contractually required or expected.
•Healthcare law and policy changes may have a material adverse effect on us.
•We could be subject to civil or criminal penalties if we are found to have violated laws protecting the confidentiality of health information, which could increase our liabilities and harm our reputation or our business.
P33
Risks Related to Our Intellectual Property
•Failure to protect or maintain our IP rights could result in costly and time-consuming litigation and our loss of any potential competitive advantage.
•Future protection for our proprietary rights is uncertain and may impact our ability to successfully compete in our industry.
•The patent protection for our products may expire before we are able to maximize their commercial value, which may subject us to increased competition and reduce or eliminate our opportunity to generate product revenue.
•Others may claim an ownership interest in our IP or claim that we infringe on their IP rights, which could expose us to litigation and have a significant adverse effect on our prospects.
Management's Discussion & Analysis (MD&A)
New heading “Subsequent Events”
Removed heading “Financial information for prior periods has been reclassified to reflect the retrospective application of voluntary changes in the Company’s accounting policy for shipping and handling costs and changes to certain allocated corporate costs, as discussed under “Note 2 – Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements in this Form 10-K.”
Removed heading “Comparison of the Years Ended December 31, 2023 and 2022”
Removed heading “Costs and Expenses”
Removed heading “Other (Expense) Income”
Largest changes
“Financial information for prior periods has been reclassified to reflect the retrospective application of voluntary changes in the Company’s accounting policy for shipping and handling costs and changes to certain allocated corporate costs, as discussed under “Note 2 – Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements in this Form 10-K.”see in full comparison
“Total other expense increased $6,423, or 2528.7%, to $6,677 for the year ended December 31, 2024, as compared to $254 for the year ended December 31, 2023. The increase was primarily due to the increase in interest expense of $5,372 which was a result of no longer capitalizing interest due to the completion of the Axogen Processing Center facility (the "APC Facility") in 2023. …”see in full comparison
Full comparison: every changed paragraph (84)
The following information should be read in conjunction with our consolidated financial statements and the notes thereto contained in Item 8 of Part II in this Form 10-K, “Forward-Looking Statements” contained in Part 1I of this Form 10-K, “Risk Factors” contained in Item 1A of this Form 10-K, and the other information appearing elsewhere in, or incorporated by reference into, this Form 10-K. Dollar amounts referenced in this Item 7 are in thousands, except per share amounts.
Financial information for prior periods has been reclassified to reflect the retrospective application of voluntary changes in the Company’s accounting policy for shipping and handling costs and changes to certain allocated corporate costs, as discussed under “Note 2 – Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements in this Form 10-K.
•Avance® (acellular nerve allograft-arwx) an FDA-approved acellular nerve scaffold for the treatment of adult and pediatric patients aged one month or older with sensory, mixed, and motor peripheral nerve discontinuities (“Avance”).
•Avance® Nerve Graft, a biologically active off-the-shelf processed human nerve allograft for bridging severed peripheral nerves without the comorbidities associated with a second surgical site.site (“Avance Nerve Graft” and together with Avance, the “Avance Products”).
•Axoguard Nerve Protector®, a porcine submucosa ECM product used to wrap and protect damaged peripheral nerves and reinforce the nerve reconstruction while preventingminimizing soft tissue attachments.
•Axoguard HA+ Nerve Protector™, is comprised of a processed porcine submucosa ECM base layer coated with a proprietary hyaluronate-alginate gelgel, coatinga next-generation technology designed to enhance nerve gliding and provide short- and long-term protection for peripheral nerve injuries. The gel layer facilitates enhanced nerve gliding to aid in minimizing soft tissue attachments, while the base layer is remodeled into a long-term protective tissue layer.
Our portfolio of products is currently available in the United States ("“U.S."”), and 19 other countries including Canada, Germany, the United Kingdom, Spain and several other European, Asian and Latin American countries.
On December 3, 2025, the FDA approved the Biologics License Application (“BLA”) for Avance (acellular nerve allograft-arwx). Continued approval depends on verification and description of clinical benefits in confirmatory studies.
On June 24, 2024, we announced the launch of Avive+ Soft Tissue Matrix. Avive+ Soft Tissue Matrix is processed and distributed in accordance with U.S. Food and Drug Administration ("FDA") requirements for Human Cellular and Tissue-based Products under the Code of Federal Regulations ("CFR") Title 21 Part 1271 regulations and U.S. Public Health Service Act regulations as a Section 361 human tissue product. Products regulated solely under Section 361 of the Public Health Service Act are a product category under close scrutiny by the FDA for compliance with the regulatory requirements and potentially P64 subject to regulatory change in the future. Failure to comply with applicable regulatory requirements could expose us to potential compliance actions by the FDA or state regulators and could risk the commercial availability of the product.
•We completed the Biologics License Application ("BLA") submission for Avance Nerve Graft on September 6, 2024. On November 1, 2024, the FDA informed us that they had accepted the BLA for filing and assigned a Prescription Drug User Fee Act goal date of September 5, 2025. The FDA further indicated that it does not currently plan to hold an advisory committee meeting for the application.
•Gross margin reflects one-time costs of approximately $1.9 million, or 1% for full-year 2025, respectively, related to the FDA BLA approval of Avance®. 67% of the one-time costs are non-cash and relate to the vesting of certain stock compensation awards containing FDA BLA approval of Avance® milestones.
•Net loss for the full-year 2025 was $15.7 million, or $0.34 per share, compared to $10.0 million, or $0.23 per share for 2024.
•As of December 31, 2025, cash and cash equivalents, restricted cash, and investments was $45.5 million, as compared to $39.5 million as of December 31, 2024, an increase of $6.0 million.
•Expanded coverage and reimbursement for nerve repair for peripheral nerve injuries using synthetic conduits or allografts, increasing the total number of new lives covered in 2025 to approximately 19.8 million and bringing coverage amongst commercial payers to more than 65%.
•Effective January 1, 2026, CMS created a new Level 3 Nerve Procedure Code, increasing Avance facility reimbursement 40% year-over-year to $9 for hospital outpatient and 35% to $6 for ASC-based procedures.
•On January 23, 2026, we closed an upsized public offering with the sale of 4,600,000 shares of common stock and receipt of $133,338 of net proceeds. $69,707 of the net proceeds were used to fully repay and terminate our term loan facility on January 28, 2026 with the remaining funds available for working capital, capital expenditures, and other general corporate purposes.
The following table sets forth, for the periods indicated,forth our results of operations expressed as dollar amounts and as percentages of total revenue for the periods presented:
Revenues
Revenues for the year ended December 31, 20242025 increased $28,326,$37,870, or 17.8%,20.2%, to $187,338,$225,208, as compared to $159,012$187,338 for the year ended December 31, 2023.2024. Revenue growth was driven by an increase in unit volume of approximately 9.0%,volume, as well as the net impact of changes in product mixprice and priceproduct of approximately 5.5% and 3.3%, respectively.mix.
P65
Gross profit for the year ended December 31, 20242025 increased $20,108,$25,376, or 16.5%,17.9%, to $141,977,$167,353, as compared to $121,869$141,977 for the year ended December 31, 2023.2024. Gross margin as a percentage of revenue decreased to 74.3% for the year ended December 31, 2025, as compared to 75.8% for the year ended December 31, 2024,2024. asGross comparedmargin reflects one-time costs of approximately $1,900, or 1%, related to 76.6%the forFDA BLA approval of Avance, with approximately 67% of such costs related to the yearvesting endedof Decemberstock 31,compensation 2023.awards containing FDA BLA approval of Avance milestones. The decrease in gross margin was due to the change in ourhigher product mix.costs and BLA-related stock-based compensation costs, partially offset by lower inventory write-offs.
Following is a summary of the change in costs and expenses for the year ended December 31, 2025:
(1)The increase in compensation costs is primarily due to higher: (i) stock-based compensation, primarily due to $7,236 from PSU awards vesting in connection with Avance BLA approval by the FDA, and (ii) salaries and sales commissions, due to higher headcount and sales volume. BLA approval-related stock compensation expenses included $749 in sales and marketing, $4,600 in research and development, and $1,887 in general and administrative.
Total costs and expenses increased $1,933, or 1.3%, to $145,264 for the year ended December 31, 2024, as compared to $143,331 for the year ended December 31, 2023. The increase in total operating costs was primarily attributable to the following: (i) $9,745 in compensation costs; (ii) $1,288 in professional services fees; and (iii) $308 in net other costs, partially offset by decreases of (i) $3,593 in research and development project costs; (ii) $3,114 in royalty expenses; (iii) $1,621 in marketing program costs; and (iv) $218 in travel costs.
Sales and marketing costs and expenses increased $881, or 1.1%, to $78,461 for the year ended December 31, 2024, as compared to $77,580 for the year ended December 31, 2023. The increase in sales and marketing costs and expenses was due to the following: (i) $6,028 in compensation costs and (ii) $311 in occupancy related costs, partially offset by decreases of (i) $3,114 in royalty expenses; (ii) $1,621 in marketing program costs; (iii) $173 in travel costs; (iv) $153 in professional services fees; and (v) $396 in net other costs.
Research(2)The decrease in research and development costs and expenses increased $428, or 1.6%, to $27,767 for the year ended December 31, 2024, as compared to $27,339 for the year ended December 31, 2023. The increase was primarily due to product development and clinical expenses. Product development costs include spending for a number of specific programs, including the non-clinical expenses related to the BLA for Avance Nerve Graft.Avance. Product development costs and expenses represented approximately 53%50% and 60%53% of total research and development costs and expenses for the years ended December 31, 20242025 and 2023,2024, respectively. Clinical trial costs and expenses represented approximately 47%50% and 40%47% of total research and development costs and expenses for the years ended December 31, 20242025 and 2023,2024, respectively. The increase in research and development costs and expenses was due to the following: (i) $3,027 in compensation costs and (ii) $1,814 in professional services fees, partially offset by decreases of (i) $3,593 in research and development project costs; (ii) $414 in occupancy related costs; (iii) $173 in travel costs; and (iv) $97 in other costs to support these clinical and non-clinical expenses.
General and administrative costs and expenses increased $624, or 1.6%, to $39,036 for the year ended December 31, 2024, as compared to $38,412 for the year ended December 31, 2023. The increase was primarily due to (i) $921 in bad debt expense and (ii) $254 in occupancy related costs; partially offset by decreases of (i) $373 in professional services fees and (ii) $187 in compensation costs.
Total other expense, net increased $1,177, or 17.6%, to $7,854 for the year ended December 31, 2025, as compared to $6,677 for the year ended December 31, 2024. The increase was primarily due to the change in the fair value of debt derivative liabilities. See Note 6 - Fair Value Measurement in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Form 10-K for details regarding the valuation of the debt derivative liabilities.
Total other expense increased $6,423, or 2528.7%, to $6,677 for the year ended December 31, 2024, as compared to $254 for the year ended December 31, 2023. The increase was primarily due to the increase in interest expense of $5,372 which was a result of no longer capitalizing interest due to the completion of the Axogen Processing Center facility (the "APC Facility") in 2023. In connection with our credit facility with Oberland Capital ("Credit Facility"), we recognized total interest charges of $8,101 and $8,083 for the years ended December 31, 2024 and 2023, respectively, and of the total interest charges, we capitalized to the construction of the APC Facility interest charges of $— and $5,285 for the years ended December 31, 2024 and 2023, respectively. The decrease in investment income was primarily related to the Federal Reserve decreasing interest rates 100 basis points throughout 2024.
We had no federal income tax expense or benefit for the years ended December 31, 20242025 and 20232024 due to the incurrence of net operating losses in both years, the benefits of which have a full valuation allowance. From time to time, we receive notices of examination of prior tax filings from federal and state authorities. The Internal Revenue Service is currently examining the Company'sCompany’s 2021 federal income tax return. We do not believe that there are any additional tax expenses or benefits currently available.
P66
Comparison of the Years Ended December 31, 2023 and 2022
The following table sets forth, for the periods indicated, our results of operations expressed as dollar amounts and as percentages of total revenue:
Revenues for the year ended December 31, 2023 increased $20,428, or 14.7%, to $159,012, as compared to $138,584 for the year ended December 31, 2022. Revenue growth was driven by an increase in unit volume of approximately 8.6%, as well as the net impact of changes in price and product mix of approximately 3.7% and 2.5%, respectively. The unit volume increase was attributed to growth in our core and active accounts. As of December 31, 2023, we had 1,006 active accounts, an increase of 3.9% from 968 at December 31, 2022 and 376 core accounts, an increase of 13.3% from 332 at December 31, 2022.
Gross Profit
Gross profit for the year ended December 31, 2023 increased $13,060, or 12.0%, to $121,869, as compared to $108,809 for the year ended December 31, 2022. Gross margin as a percentage of revenue decreased to 76.6% for the year ended December 31, 2023, as compared to 78.5% for the year ended December 31, 2022.
Costs and Expenses
Total costs and expenses increased $4,815, or 3.5%, to $143,331 for the year ended December 31, 2023, as compared to $138,516 for the year ended December 31, 2022. The increase in total operating costs and expenses was due to the following: (i) $5,469 in compensation costs; (ii) $1,243 in marketing program costs; (iii) $1,156 in professional services fees; (iv) $852 in travel costs; and (v) $326 in occupancy related costs; partially offset by decreases of (i) $1,190 in research and development projects and (ii) $3,041 of other general business costs, including insurance expenses of $1,033, bad debt recovery of $883, merchant fees of $727, and other items administrative in nature of $398.
Sales and marketing costs and expenses increased $5,597, or 7.8%, to $77,580 for the year ended December 31, 2023, as compared to $71,983 for the year ended December 31, 2022. The increase in sales and marketing costs and expenses was due to the following: (i) $2,497 in compensation costs; (ii) $1,243 in marketing program costs; (iii) $831 in travel costs; (iv) $625 in professional services fees; (v) other items administrative in nature of $251 and (vi) $150 in occupancy related costs.
P67
Research and development costs and expenses increased $1,712, or 6.7%, to $27,339 for the year ended December 31, 2023, as compared to $25,627 for the year ended December 31, 2022. The increase in research and development costs and expenses was primarily due to product development and clinical expenses. Product development costs include spending for a number of specific programs, including the non-clinical expenses related to the BLA for Avance Nerve Graft. Product development costs and expenses represented approximately 60% and 52% of total research and development costs and expenses for the years ended December 31, 2023 and 2022, respectively. Clinical trial costs and expenses represented approximately 40% and 48% of total research and development costs and expenses for the years ended December 31, 2023 and 2022, respectively. The increase in research and development costs and expenses was due to the following: (i) $2,171 in compensation costs; (ii) $331 in professional services fees; (iii) $287 in occupancy related costs; and (iv) $98 in travel costs to support these clinical and non-clinical expenses, partially offset by a decrease of $1,190 in research and development projects.
General and administrative costs and expenses decreased $2,494, or 6.1%, to $38,412 for the year ended December 31, 2023, as compared to $40,906 for the year ended December 31, 2022. The decrease in general and administrative costs and expenses was primarily due to the following: (i) $1,033 in insurance expenses, (ii) $883 in bad debt recovery, (iii) $727 in merchant fees, (iv) $330 in other services, (v) $205 in licenses and fees; (vi) other items administrative in nature of $128; (vi) $112 in occupancy related costs; and (vii) $78 in travel costs, partially offset by increases of (i) $801 in compensation costs and (ii) $201 in professional services fees.
Other (Expense) Income
Total other expense increased $1,013, or 133.5%, to expense of $254 for the year ended December 31, 2023, as compared to income of $759 for the year ended December 31, 2022. The increase was primarily due to the increase in interest expense of $2,211 and other expenses of $208, partially offset by the increase in investment income of $918 and the fair value of the derivative liability of $488. In connection with the Credit Facility, we recognized total interest charges of $8,083 and $6,721 for the years ended December 31, 2023 and 2022, respectively, and of this interest we capitalized to the construction of the APC Facility, interest charges of $5,285 and $6,155 for the years ended December 31, 2023 and 2022, respectively. The increase in investment income was primarily related to the Federal Reserve raising interest rates 100 basis points throughout 2023.
Income Taxes
We had no federal income tax expense or benefit for the years ended December 31, 2023 and 2022 due to the incurrence of net operating losses in both years, the benefits of which have been fully reserved. We do not believe that there are any additional tax expenses or benefits currently available.
As of December 31, 2024,2025, our principal sources of liquidity were our cash and cash equivalents and investments totaling $33,482.$41,528. Our cash equivalent is comprised of a money market mutual fund and our investments are comprised of U.S. Treasuries. Our cash and cash equivalents and investments increased $2,458$8,046 to $33,482$41,528 from $31,024$33,482 at December 31, 2023,2024, primarily due to proceeds from the exercise of stock options and an increase in proceeds from the sale of investments, net of investment purchases, partially offset by a reduction in capitalcash expendituresgenerated andfrom general operating activities. On December 31, 20242025 and 2023,2024, our current assets exceeded our current assets liabilities by $68,607$96,866 and $57,574,$68,607, respectively. Based on current estimates, we believe that our existing cash and cash equivalents and investments, as well as cash provided by sales of our products will allow us to fund our operations through at least the next twelve months from the date of issuance of the accompanying financial statements.
The following table presents a summary of our cash flows from operating, investing and financing activities for the periods presented:
P68
Net Cash Provided By (Used In) Operating Activities
Net cash provided by operating activities was $4,535$812 compared to net cash used in operating activities of $5,716$4,535 for the years ended December 31, 20242025 and 2023,2024, respectively. The favorableunfavorable change in net cash provided by operating activities of $10,251$3,723 was due to an unfavorable change in working capital of $13,855 and the decreaseincrease in net loss of $11,751$5,739, andpartially offset by the favorable change in noncash accounts of $6,093, partially offset by an unfavorable change in working capital of $7,594.$16,589.
A discussion of net cash used in operating activities during the year ended December 31, 2022 can be found in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the Securities and Exchange Commission ("SEC") on March 5, 2024.
Net Cash (Used In) Provided By Investing Activities
Net cash used in investing activities was $10,297$5,317 compared to net cash provided by investing activities of $19,253$10,297 for the yearsyear ended December 31, 2024 and 2023, respectively.2024. The unfavorablefavorable change in net cash used in investing activities of $29,550$4,980 was primarily due to the decreaseincrease in proceeds from the sale of investments, net of investment purchases, totaling $39,944,$6,050, partially offset by a net decreaseincrease in capital expenditures of $10,771, primarily related to the renovation of the APC Facility completed in 2023.$644.
A discussion of net cash used in investing activities during the year ended December 31, 2022 can be found in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on March 5, 2024.
Net cash provided by financing activities was $2,290$10,499 as compared to $1,954$2,290 for the yearsyear ended December 31, 2024 and 2023, respectively,2024, an increase of $335,$8,209, or 17%.358%. The increase in net cash provided by financing activities was primarily due to an increase of $336$8,231 in proceeds from the exercise of stock options and Employee Stock Purchase Plan (“ESPP”) purchases year-over-year.
A discussion of net cash provided by financing activities during the year ended December 31, 2022 can be found in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on March 5, 2024.
Our expected future capital requirements may depend on many factors including expanding our customer base and sales forceforce, andthe timing and extent of spending in obtaining regulatory approvalapproval, strategic opportunities and introduction of new products. Additional sources of liquidity available to us include issuance of additional equity securities through public or private equity offerings, debt financings or from other sources. The sale of additional equity may result in dilution to our shareholders. There is no assurance that we will be able to secure funding on terms acceptable to us, or at all. The increasing need for capital could also make it more difficult to obtain funding through either equity or debt. Should additional capital not become available to us as needed, we may be required to take certain actions, such as slowing sales and marketing expansion, delaying regulatory approvals, or reducing headcount.
As of December 31, 2024,2025, we had $50,000 outstanding in indebtedness under athe creditTerm facilityLoan Agreement, dated June 30, 2020, with Oberland Capital and its affiliates, TPC Investments II LP and Argo LLC (as amended, the “Credit Facility”); $35,000 maturing on June 30, 2027 and $15,000 maturing on June 30, 2028. Quarterly interest only and revenue participation payments are due through each of the maturity dates. Interest is calculated as 7.5% plus the greater of the forward-looking term rate based on the secured overnight financing rate as set by the Federal Reserve Bank of New York plus 0.10% ("“Adjusted SOFR"”) or 2.0% (12.19%11.59% as of December 31, 20242025). Revenue participation payments are calculated as a percentage of our net revenues, up to $70,000 in any given year, adding approximately 1.5% per year of additional interest payments on the outstanding indebtedness. Upon each maturity date or upon such date earlierearly repayment occurs, we willare required repay the principal balance and provide a make-whole payment calculated to generate an internal rate of return to the lender equal to 11.5%, less the total of all quarterly interest and revenue participation payments previously paid.paid (the “Make-Whole Payment”). See Note 9 - Long-Term Debt, Net of Debt Discount and Financing Fees and Note 15 - Commitments and Contingencies in the Notes to the Consolidated Financial Statements Part II, Item 8 of this Form 10-K.
P69
What changed in the latest 10-Q
Risk Factors
There have been no material changes to the risk factors disclosed in our 2025 Annual Report on Form 10-K. Any investment in our business involves a high degree of risk. Before making an investment decision, you should carefully consider the information we include in this Quarterly Report on Form 10-Q, including our unaudited interim condensed consolidated financial statements and accompanying notes, our Annual Report on Form 10-K for the year ended December 31, 2025, including our financial statements and related notes contained therein, and the additional information in the other reports we file with the SEC. These risks may result in material harm to our business and our financial condition and results of operations. In this event, the market price of our common stock may decline, and you could lose part or all of your investment. Additional risks that we currently believe are immaterial may also impair our business operations. Our business, financial condition and future prospects and the trading price of our common stock could be harmed as a result of any of these risks.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “Other Income (Expense), Net”
New heading “Comparison of the Six Months Ended June 30, 2026 and 2025”
New heading “Costs and Expenses”
New heading “Uses of Capital”
Largest changes
Gross profit for the three months endedsee in full comparisonMarchJune31,30, 2026 increased$11,256,$8,656, or32.2%,20.6%, to$46,189,$50,674, as compared to$34,933$42,018 for the three months endedMarchJune31,30, 2025. Gross margin as a percentage of revenues was75.2%72.7% and71.9%74.2% for the three months endedMarchJune31,30, 2026 and 2025, respectively.HigherCompared to the three months ended June 30, 2025, margins on products soldweredeclineddrivenprimarily due to higher product costs, partially offset by lower inventorywrite-offswrite-offs. Elevated product costs were largely attributable to increased sales of higher-cost biologic Avance product commencing in April 2026 andlowerincreasedshippingdemandcostsofonlongproductsAvancesold,products,partiallyprimarilyoffsetdriven byhighergrowthproductincosts.breast Resensation® procedures.
“Net cash used in investing activities for the three months ended March 31, 2026 was $15,964 compared to net cash provided by investing activities of $1,339 for the three months ended March 31, 2025. The unfavorable change in net cash used in investing activities of $17,303 was primarily due to the purchase of $19,000 of investments, offset by the sale of $4,000 of investments, during the three months ended March 31, 2026, compared to the sale of $2,000 of investments during the three months ended March 31, 2025, and an increase in purchases of property and equipment of $2,533.”see in full comparison
Full comparison: every changed paragraph (44)
On December 3, 2025, the FDA approved the BLABiologics License Application for Avance. Continued approval depends on verification and description of clinical benefits in confirmatory studies.
•Revenues were $61,457$69,731 for the quarter ended MarchJune 31,30, 2026, an increase of $12,897$13,069 or 26.6%23.1% compared to the quarter ended MarchJune 31,30, 2025.
•Gross profit was $46,189$50,674 for the quarter ended MarchJune 31,30, 2026, an increase of $11,256$8,656 or 32.2%20.6% compared to the quarter ended MarchJune 31,30, 2025.
•Year-to-date revenue growth through the second quarter of 2026 was broad-based, across all markets, which includes Extremities, Oral Maxillofacial & Head and Neck, and Breast, driven by 20% plus year-over-year account productivity, expanding sales force coverage, and improving commercial insurance coverage and payment.
•Publication of REPOSE, a prospective, randomized clinical study evaluating Axoguard Nerve Cap for symptomatic neuroma management, providing Level 1 evidence supporting nerve end protection and demonstrating favorable outcomes in pain burden, medication utilization, and recovery-related measures.
•Initiation of Nerve-RESTORE, a prospective, randomized, assessor-blinded study comparing Avance Nerve Graft to sural nerve autograft in mixed and motor nerve reconstruction, designed to generate Level 1 evidence in support of broader adoption of nerve repair globally.
•Acquired a minority ownership stake in Trace Biosciences, including a limited right of first refusal, to support development of its nerve-specific imaging technology.
•Received positive coverage decisions from Cigna and Elevance Health, two of the nation’s largest commercial insurers.
•Effective January 1, 2026, CMS created a new Level 3 Nerve Procedure Code, increasing Avance facility reimbursement 40% year-over-year to $9 for hospital outpatient and 35% to $6 for ASC-based procedures.
•On January 23, 2026, Axogen closed an upsized public offering with the sale of 4,600,000 shares of common stock, yielding net proceeds of $133,252. From these net proceeds, $69,707 were used to fully repay and terminate our Credit Facility on January 28, 2026. Remaining funds are available for working capital, capital expenditures, and other general corporate purposes.
Comparison of the Three Months Ended MarchJune 31,30, 2026 and 2025
The following table sets forth, for the periods indicated,presented, our results of operations expressed as dollar amounts and percentage of total revenue:
Revenues for the three months ended MarchJune 31,30, 2026 increased $12,897,$13,069, or 26.6%,23.1%, to $61,457,$69,731, as compared to $48,560$56,662 for the three months ended MarchJune 31,30, 2025. The increase in revenues was primarily driven by an increase in unit volume and the impact of changes in price.
Gross profit for the three months ended MarchJune 31,30, 2026 increased $11,256,$8,656, or 32.2%,20.6%, to $46,189,$50,674, as compared to $34,933$42,018 for the three months ended MarchJune 31,30, 2025. Gross margin as a percentage of revenues was 75.2%72.7% and 71.9%74.2% for the three months ended MarchJune 31,30, 2026 and 2025, respectively. HigherCompared to the three months ended June 30, 2025, margins on products sold weredeclined drivenprimarily due to higher product costs, partially offset by lower inventory write-offswrite-offs. Elevated product costs were largely attributable to increased sales of higher-cost biologic Avance product commencing in April 2026 and lowerincreased shippingdemand costsof onlong productsAvance sold,products, partiallyprimarily offsetdriven by highergrowth productin costs.breast Resensation® procedures.
Following is a summary of the change in costs and expenses for the three months ended MarchJune 31,30, 2026:
(3)Clinical trial costs and expenses represented approximately 59%53% and 43%47% of total research and development costs and expenses for the three months ended MarchJune 31,30, 2026 and 2025, respectively. Product development costs and expenses represented approximately 41%47% and 57%53% of total research and development costs and expenses for the three months ended MarchJune 31,30, 2026 and 2025, respectively.
Other Income (Expense), Net
Other income, net, for the three months ended June 30, 2026 increased $1,733, or 158.6%, to $640, as compared to Other expense, net, of $1,093 for the three months ended June 30, 2025. The increase in total other income, net, was primarily due to a decrease of $1,976 in interest expense and an increase of investment income of $561, partially offset by decreases of $480 from the change in fair value of the debt derivative liabilities and $324 from other income.
Income Taxes
We had no material income tax expense or benefit during the three months ended June 30, 2026 and 2025 due to the incurrence of fiscal year net operating losses in both periods, the benefits of which have a full valuation allowance.
Comparison of the Six Months Ended June 30, 2026 and 2025
The following table sets forth, for the periods presented, our results of operations expressed as dollar amounts and percentage of total revenue:
Revenues
Revenues for the six months ended June 30, 2026 increased $25,966, or 24.7%, to $131,188, as compared to $105,222 for the six months ended June 30, 2025. The increase in revenues was primarily driven by an increase in unit volume and the impact of changes in price.
Gross Profit
Gross profit for the six months ended June 30, 2026 increased $19,912, or 25.9%, to $96,863, as compared to $76,951 for the six months ended June 30, 2025. Gross margin as a percentage of revenues was 73.8% and 73.1% for the six months ended June 30, 2026 and 2025, respectively. Higher margins on products sold were driven by lower inventory write-offs partially offset by the impact of higher product costs.
Costs and Expenses
Following is a summary of the change in costs and expenses for the six months ended June 30, 2026:
(1)Primarily due to higher salaries, employee benefits, sales commissions, incentive compensation and payroll taxes, due to higher headcount and sales volumes.
(2)Primarily due to anticipated above target achievement for certain PSU awards due to sales growth.
(3)Clinical trial costs and expenses represented approximately 55% and 44% of total research and development costs and expenses for the six months ended June 30, 2026 and 2025, respectively. Product development costs and expenses represented approximately 45% and 56% of total research and development costs and expenses for the six months ended June 30, 2026 and 2025, respectively.
Other expense, netnet, for the threesix months ended MarchJune 31,30, 2026 increased $14,579,$12,846, or 670.9%,393.3%, to $16,752,$16,112, as compared to $2,173$3,266 for the threesix months ended MarchJune 31,30, 2025. The increase in total other expense, netnet, was primarily due to loss on the extinguishment of debt of $16,849, and decreases of $322 from the change in fair value of the debt derivative liabilities and $264 from other income. These increases were partially offset by a decrease of $1,556$3,532 in interest expense and an increase of $496$1,057 in investment income.
We had no material income tax expense or benefit during the threesix months ended MarchJune 31,30, 2026 and 2025 due to the incurrence of net operating losses in both periods, the benefits of which have a full valuation allowance. From time to time, we receive notices of examination of prior tax filings from federal and state authorities. During the threesix months ended MarchJune 31,30, 2026, the IRS completed examining our 2021 federal income tax return with no material findings. We do not believe that there are any material additional tax expenses or benefits.
As of MarchJune 31,30, 2026, our principal sources of liquidity were our cash and cash equivalents and investments totaling $101,601.$111,412. Our cash equivalents are comprised of money market mutual funds and our investments primarily consist of U.S. Treasuriestreasuries and corporate bonds. Our cash and cash equivalents and investments increased $60,073$69,884 to $101,601$111,412 from $41,528 at December 31, 2025. The increase was primarily as a result of net proceeds from the Offering of $133,252 and the release of $2,000 of restricted cash under the contractual terms of a lease agreement. These increases were partially offset by cash used for early payoff and termination of the Credit Facility of $69,707$69,707, payment of employee tax withholdings for shares withheld from vested stock awards and payment of annual bonuses during the first quarter of 2026.
On MarchJune 31,30, 2026 and December 31, 2025, our current assets exceeded our current liabilities by $158,695$170,002 and $96,866, respectively, and we had a current ratios of 7.1x6.6x and 5.1x, respectively. Based on current estimates, we believe that our existing cash and cash equivalents and investments, as well as cash provided by sales of our products, will allow us to fund our operations through at least the next twelve months from the date of issuance of the accompanying financial statements.
The following table presents a summary of cash flows from operating, investing and financing activities for the periods indicatedpresented:
Net cash provided by operating activities was $1,565$8,786 during the threesix months ended MarchJune 31,30, 2026 as compared to net cash used in operating activities of $13,179$5,449 during the threesix months ended MarchJune 31,30, 2025. The increase in net cash provided by operating activities of $14,744,$14,235, or 111.9%,261.2%, was primarily due to a net favorable change in non-cash charges and working capital accounts of $20,487$24,484 and $10,179,$8,108, respectively, offset by an increase in net loss of $15,750.$17,845.
Net Cash (Used in) Provided by Investing Activities
Net cash used in investing activities was $15,464 and $5,608 for the six months ended June 30, 2026 and 2025, respectively, an increase of $9,856 primarily as a result of an increase in the purchase of investments of $10,913 and an increase in the purchase of property and equipment of $2,704, partially offset by the sale of $8,000 of investments during the six months ended June 30, 2026, compared to the sale of $4,000 of investments during the six months ended June 30, 2025.
Net cash used in investing activities for the three months ended March 31, 2026 was $15,964 compared to net cash provided by investing activities of $1,339 for the three months ended March 31, 2025. The unfavorable change in net cash used in investing activities of $17,303 was primarily due to the purchase of $19,000 of investments, offset by the sale of $4,000 of investments, during the three months ended March 31, 2026, compared to the sale of $2,000 of investments during the three months ended March 31, 2025, and an increase in purchases of property and equipment of $2,533.
Net cash provided by financing activities was $59,505$63,702 and $2,382$3,539 for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively, an increase of $57,123$60,163 primarily as a result of net proceeds from the Offering and proceeds fromOffering, the exercise of stock options,options and ESPP purchases, partially offset by cash used for early payoff and termination of the Credit Facility and paymentspayment of employee tax withholding on vested stock awards in exchange for shares withheld.
Uses of Capital
On July 28, 2026, we invested $7,000 in Trace Biosciences, a privately held biotechnology company. We funded this investment with cash on hand.
(2)Purchase obligations include agreements to purchase goods or services that are enforceable, legally binding and specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction.
AXGN insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 10 filings (8 insiders, 6 trade dates, 136,473 shares, about $6.3M; 4 of these filings say the sales were made under a Rule 10b5-1 trading plan). Net open-market shares: -136,473 (purchases minus sales); net value about -$6.3M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-02 | Tyndall Joseph A. |
Open-market sale |
3,500 | $49.70 | $173.9K |
| 2026-08-11 | Wendell Amy Mcbride |
Option exercise |
13,353 | $14.85 | $198.3K |
| 2026-08-11 | Wendell Amy Mcbride |
Open-market sale |
13,353 | $48.42 | $646.6K |
| 2026-08-10 | Began Marc A |
Option exercise |
67,500 | $8.16 | $550.8K |
| 2026-08-10 | Began Marc A |
Open-market sale |
67,500 | $47.35 | $3.2M |
| 2026-08-07 | Weiler Kathy Johnson |
Open-market sale |
14,150 | $45.30 | $641.0K |
| 2026-06-19 | Levine Alan M |
Option exercise | 14,150 | — | — |
| 2026-06-19 | Weiler Kathy Johnson |
Option exercise | 14,150 | — | — |
| 2026-06-19 | Wendell Amy Mcbride |
Option exercise | 14,150 | — | — |
| 2026-06-19 | Thomas Paul |
Option exercise | 18,867 | — | — |
| 2026-06-19 | Tyndall Joseph A. |
Option exercise | 14,150 | — | — |
| 2026-06-19 | Johnson John |
Option exercise | 14,150 | — | — |
| 2026-06-19 | Burke William P. Mr. |
Option exercise | 14,150 | — | — |
| 2026-05-08 | Wendell Amy Mcbride |
Option exercise | 1,647 | $14.85 | $24.5K |
| 2026-05-08 | Wendell Amy Mcbride |
Open-market sale | 1,647 | $42.60 | $70.2K |
| 2026-05-07 | Johnson John |
Option exercise | 11,050 | $7.04 | $77.8K |
| 2026-05-07 | Johnson John |
Open-market sale | 11,050 | $43.26 | $478.0K |
| 2026-05-07 | Weiler Kathy Johnson |
Option exercise | 16,344 | $6.95 | $113.6K |
| 2026-05-07 | Weiler Kathy Johnson |
Open-market sale | 16,344 | $44.09 | $720.6K |
| 2026-05-07 | Kemp Jens |
Open-market sale | 4,000 | $43.44 | $173.8K |
| 2026-05-07 | Hartley Lindsey Marie |
Option exercise | 2,963 | $8.27 | $24.5K |
| 2026-05-07 | Hartley Lindsey Marie |
Open-market sale | 478 | $43.67 | $20.9K |
| 2026-05-07 | Hartley Lindsey Marie |
Option exercise | 2,500 | $8.20 | $20.5K |
| 2026-05-07 | Hartley Lindsey Marie |
Open-market sale | 573 | $43.67 | $25.0K |
| 2026-05-07 | Quackenbush Doris |
Open-market sale | 3,878 | $43.51 | $168.7K |
Well-known investors holding AXGN (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 1,360,831 | $62.9M | 0.04% | Added 455% |
| First Eagle Investment Management | 2026-06-30 | 341,077 | $15.8M | 0.03% | Reduced 4% |
| Two Sigma Investments | 2026-06-30 | 319,203 | $14.7M | 0.01% | Reduced 53% |
| D. E. Shaw & Co. | 2026-06-30 | 277,738 | $12.8M | 0.01% | Added 5% |
| Point72 Asset Management (Steve Cohen) | 2026-06-30 | 224,618 | $10.4M | 0.02% | Added 11% |
| Millennium Management (Israel Englander) | 2026-06-30 | 27,240 | $1.3M | 0.0% | Reduced 97% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 21,217 | $980.0K | 0.0% | Added 86% |