ELUT 10-K & 10-Q changes, risk factors and insider trading
Elutia Inc. · Nasdaq · Biological Products, (No Diagnostic Substances) · CIK 1708527 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “We may from time to time evaluate opportunities to make acquisitions of, investments in, and licenses or other commercial arrangements involving, other companies or technologies, and to enter into other strategic transactions. These transactions entail significant risks.”
New heading “We may not be able to maintain a listing of our Class A common stock on the Nasdaq Capital Market.”
Removed heading “We have identified conditions and events that raise substantial doubt regarding our ability to continue as a going concern.”
Removed heading “Our indebtedness and our Revenue Interest Obligation to Ligand Pharmaceuticals Incorporated may limit our flexibility in operating our business and adversely affect our financial health and competitive position.”
Removed heading “We regularly evaluate opportunities to make acquisitions of, investments in, and licenses or other commercial arrangements involving, other companies or technologies, and to enter into other strategic transactions. These transactions entail significant risks.”
Removed heading “The processing of porcine tissue for our products is technically complex, requiring high levels of quality control and precision, which subjects us to increased production risks.”
Removed heading “We are subject to anti-bribery, anti-corruption and anti-money laundering laws, including the U.S. Foreign Corrupt Practices Act, as well as export control laws, customs laws, sanctions laws and other laws governing our operations. If we fail to comply with these laws, we could be subject to civil or criminal penalties, other remedial measures and legal expenses, any of which would adversely affect our business, financial condition and results of operations.”
Removed heading “As we conduct clinical studies designed to generate long-term data on some of our existing products, the data we generate may not be consistent with our existing data and may demonstrate less favorable safety or efficacy.”
Removed heading “Failure to comply with post-marketing regulatory requirements could subject us to enforcement actions, including substantial penalties, and might require us to recall or withdraw a product from the market.”
Removed heading “We may be unable to enforce our intellectual property rights throughout the world.”
Removed heading “Outside of the United States we cannot be certain that any country’s patent or trademark office will not implement new rules that could seriously affect how we draft, file, prosecute and maintain patents, trademarks and patent and trademark applications.”
Removed heading “Our principal stockholders have significant voting power and may take actions that may not be in the best interests of our other stockholders.”
Removed heading “A significant portion of our total outstanding shares are eligible to be sold into the market in the near future, which could cause the market price of our Class A common stock to drop significantly, even if our business is doing well.”
Removed heading “The dual class structure of our common stock and the option of the holders of shares of our Class B common stock to convert into shares of our Class A common stock may limit your ability to influence corporate matters.”
Largest changes
“We are subject to anti-bribery, anti-corruption and anti-money laundering laws, including the U.S. Foreign Corrupt Practices Act, as well as export control laws, customs laws, sanctions laws and other laws governing our operations. If we fail to comply with these laws, we could be subject to civil or criminal penalties, other remedial measures and legal expenses, any of which would adversely affect our business, financial condition and results of operations.”see in full comparison
“In addition to these covenants, the agreement governing our SWK Loan Facility also contains two financial covenants, the first of which is measured quarterly, and requires us to achieve a specified minimum aggregate revenue (as defined therein) for the preceding 12-month period, and the second of which requires us to maintain a minimum liquidity (as defined therein) of the greater of $5.0 million and the sum of the operating burn (as defined therein) for the two prior consecutive fiscal quarters then ended. …”see in full comparison
“As noted above, we cannot assure you that we will achieve profitability or sustain it if we do. Without sustained profitability, we may not be able to satisfy our obligations as they become due, including our indebtedness or our obligations related to the FiberCel Recall or VBM Recall, which are described in further detail in Part I, Item 3, “Legal Proceedings” and Note 17 to the consolidated financial statements, in this Annual Report. As a result, we anticipate that we will need additional funding to support our continuing operations and pursue our growth strategy. …”see in full comparison
“We are also subject to economic sanctions laws, export control laws and regulations, as well as customs regulations, in the various jurisdictions in which we operate, including those administered and enforced by OFAC, the U.S. Department of State, BIS, His Majesty’s Treasury of the United Kingdom, the United Nations Security Council, the European Union (and its member states) and other relevant sanctions authorities. …”see in full comparison
“For example, the impact of the withdrawal of the U.K. from the EU will not be known for some time, which could lead to a period of uncertainty relating to our ability to obtain and maintain patents and trademarks in the U.K. In 2012, the European Patent Package, or EU Patent Package, regulations were passed with the goal of providing for a single pan-European Unitary Patent, and a new European Unified Patent Court, or UPC, for litigation of European patents. It is possible that implementation of the EU Patent Package will occur in the first half of 2023. …”see in full comparison
“Failure to comply with post-marketing regulatory requirements could subject us to enforcement actions, including substantial penalties, and might require us to recall or withdraw a product from the market.”see in full comparison
Full comparison: every changed paragraph (127)
Our future results largely depend upon our ability to successfully develop, commercialize, market and sell ourbreast newlyreconstruction approvedbiologic EluPro antibacterial envelope device and the success of a smaller suite of established products than has historically been the case.products.
The Company has focused much of its attention recently on EluPro, which was cleared for marketing by the U.S. Food and Drug Administration (“FDA”) in June 2024 and is indicated for use with implantable electronic devices including cardiac and neurostimulator devices. We believe the Company’s success is highly dependent on the successful commercialization, marketing and sale of EluPro, as well as the extension of our drug-eluting biomatrix (“DEB”) technology into potential adjacent applications. Alongside EluPro, we continue to market the CanGaroo bioenvelope, our first generation product, which uses the same biomatrix but does not contain antibiotics. Our Device Protection products, EluPro and CanGaroo, are sold through both our internal sales force and independent sales agents and our commercial partner, Boston Scientific Corporation. We believe the commercialization and marketing efforts with respect to EluPro will require significant investments in time and resources. However, there can be no assurance that we will have or be able to obtain sufficient resources to make the necessary investments in order to increase the sales and market penetration for EluPro, or that if made, such investments will yield the results sought. If we fail to successfully commercialize, market and sell EluPro, the Company’s business and financial condition may be materially adversely affected.
We have focused much of our attention recently on EluPro, which was cleared for marketing by the U.S. Food and Drug Administration (“FDA”) in June 2024 and was indicated for use with implantable electronic devices including cardiac and neurostimulator devices. On NovemberOctober 8,1, 2023,2025, we soldcompleted the sale of all of our Orthobiologics Business for consideration of $14.6 million up front, as adjusted, and up to $20 million payable in the form of earn-out payments over the five years following the closing. The purchaser did not assume any liabilitiesassets related to theits FiberCelbusiness orof VBMresearching, Recalls,developing, oradministering, anyoperating, claimscommercializing, ormanufacturing, lawsuits related thereto. Our former Orthobiologics segment accounted for 52%selling and 39%marketing ofcardiac ourimplantable consolidatedelectronic netdevice sales(“CIED”) products, including its CanGaroo, CanGaroo RM, EluPro and grossCIED profit,envelope respectivelyproducts, inincluding next generation CIED envelope products (collectively the year“CIED endedBusiness”). DecemberConsequently, 31, 2022. Ourour future results now depend on the success of our Device Protection, Women’s Health and Cardiovascular businesses. There can be no guarantee, however, that we will be able to increase the sales or profitability of the remaining businesses sufficiently to replace or exceed the financial contributioncontribution, or potential financial contribution, from the Orthobiologicssold CIED Business.
Elutia’s current strategy principally focuses on applying the Company’s drug-eluting biologics platform to advance NXT-41x, a biomatrix that seeks to improve the interaction between implanted medical devices and patients by reducing complications associated with surgery, including infection, migration, erosion, implant rejection, and fibrosis. We believe the development, commercialization and marketing efforts with respect to NXT-41x will require significant investments in time and resources. Although the sale of the CIED Business has resulted in significant cash net proceeds to the Company, there can be no assurance that these resources, or other resources we may raise or have access to in the future, will be sufficient to make the necessary investments in order to develop and commercially exploit NXT-41x, or that if made, such investments will yield the results sought.
Moreover, there is no guarantee that the FDA approvals we may seek will be granted on a timely basis, or at all, or that other actions or approvals are not required.
If we fail to successfully develop, commercialize, market and sell NXT-41x, the Company’s business and financial condition may be materially adversely affected.
Our enhanced reliance in the wake of the disposition of the OrthobiologicsCIED Business on a smaller suite of existing products and on future products may poseposes risks to the Company’s growth. If the financial contribution from remaining legacy products and NXT-41x and other DEBpotential future drug-eluting biomatrix products fail to replace lost contribution from the OrthobiologicsCIED Business, or otherwise fail to meet expectations, the Company’s business and financial condition may be materially adversely affected.
We have incurred operating losses and may continue to do so in the near-term, and we cannot assure you that we will be able to generate sufficient revenue to achieve or sustain profitability.
For the years ended December 31, 20242025 and 2023,2024, we had netlosses lossesfrom continuing operations of $53.9$26.9 million and $37.7$30.7 million, respectively. We expect our losses to continue for the foreseeable future, and these losses will continue to have an adverse effect on our financial position. Our ability to achieve profitability will depend on our ability to generate sales from existing or new products sufficient to exceed our ongoing operating expenses and capital requirements. Because of the numerous risks and uncertainties affecting product sales and our ongoing commercialization and product development efforts, including our ability to commercialize our flagship Device Protection product, EluPro, we are unable to predict with any certainty whether we will be able to increase sales of our products or the timing or amount of ongoing expenditures we will be required to incur. Sales of our products, as well as meaningful reductions, suspensions or discontinuations of such sales, may not offset our operating expenses. As a result, we expect to continue to incur operating losses in the future and may never achieve profitability. Furthermore, even if we do achieve profitability, we may not be able to sustain or increase profitability on an ongoing basis. Our inability to achieve and then maintain profitability would negatively affect our business, financial condition, results of operations and cash flows, negatively affect the value of our securities and our ability to raise capital and continue operations.
We have identified conditions and events that raise substantial doubt regarding our ability to continue as a going concern.
We have incurred net losses since our inception in 2015. For the year ended December 31, 2024, we had a net loss of $53.9 million and as of December 31, 2024, we had an accumulated deficit of $229.6 million. To date, we have financed our operations primarily through amounts borrowed under our credit facilities, sales of our products, proceeds from offerings and sales of our common stock and more recently, through the sale of our Orthobiologics Business. We have devoted the majority of our resources to manufacturing costs, research and development, clinical and administrative activity and investing in our commercial infrastructure through our direct sales force and commercial partners in order to expand our presence and to promote awareness and adoption of our products.
As noted above, we cannot assure you that we will achieve profitability or sustain it if we do. Without sustained profitability, we may not be able to satisfy our obligations as they become due, including our indebtedness or our obligations related to the FiberCel Recall or VBM Recall, which are described in further detail in Part I, Item 3, “Legal Proceedings” and Note 17 to the consolidated financial statements, in this Annual Report. As a result, we anticipate that we will need additional funding to support our continuing operations and pursue our growth strategy. In order to mitigate the current and potential future liquidity issues caused by the matters noted above, we may seek to raise capital through the issuance of common stock or pursue asset sales or other transactions, such as the sale of the Orthobiologics Business described above. However, such transactions may not be successful, and we may not be able to raise additional equity, refinance our debt instruments, or sell assets on acceptable terms, or at all. As such, there can be no assurance that we will be able to continue as a going concern.
Our indebtedness and our Revenue Interest Obligation to Ligand Pharmaceuticals Incorporated may limit our flexibility in operating our business and adversely affect our financial health and competitive position.
As of December 31, 2024, we had $23.9 million of indebtedness outstanding, consisting of $23.5 million outstanding under our SWK Loan Facility (as defined under Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Credit Facilities”), plus $0.9 million of exit fee liabilities, less $0.5 million of unamortized discount and deferred financing costs. In addition, we are party to a royalty agreement with Ligand Pharmaceuticals Incorporated (“Ligand”) pursuant to a long-term obligation to Ligand, which we amended in January 2024 (the “Revenue Interest Obligation”). The Revenue Interest Obligation requires us to pay Ligand 5.0% of future sales of our CanGaroo, ProxiCor, Tyke and VasCure products, and substantially similar products, such as EluPro, through May 31, 2027, subject to annual minimum payments of $4.4 million. See Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Significant Judgment and Estimates — Revenue Interest Obligation.”
In order to service this indebtedness and our Revenue Interest Obligation, and any additional indebtedness or other long-term obligations we may incur in the future, we need to generate sufficient levels of cash from our operating activities. Our ability to generate cash is subject, in part, to our ability to successfully execute our business strategy, as well as general economic, financial, competitive, regulatory and other factors beyond our control. We cannot assure you that our business will be able to generate sufficient levels of cash from operations or that future borrowings or other financings will be available to us in an amount sufficient to enable us to service our indebtedness, satisfy our obligations under the Revenue Interest Obligation and fund our other liquidity needs. To the extent we are required to use cash from operations or the proceeds of any future financing to service our indebtedness and satisfy our obligations under the Revenue Interest Obligation instead of funding working capital, capital expenditures or other general corporate purposes, we will be less able to plan for, or react to, changes in our business, industry and in the economy generally. This will place us at a competitive disadvantage compared to our competitors that have less indebtedness.
In addition, the agreements governing our SWK Loan Facility contains, and any agreements evidencing or governing other future indebtedness may also contain, certain covenants that limit our ability to engage in certain transactions that may be in our long-term best interests. Subject to certain limited exceptions, these covenants limit our ability to, among other things:
In addition to these covenants, the agreement governing our SWK Loan Facility also contains two financial covenants, the first of which is measured quarterly, and requires us to achieve a specified minimum aggregate revenue (as defined therein) for the preceding 12-month period, and the second of which requires us to maintain a minimum liquidity (as defined therein) of the greater of $5.0 million and the sum of the operating burn (as defined therein) for the two prior consecutive fiscal quarters then ended. While we were in compliance with all covenants under the agreement as of December 31, 2024, there can be no guarantee that we will not breach these covenants in the future.
Our ability to comply with these covenants may be affected by events and factors beyond our control. In the event that we breach one or more covenants, our lenders may choose to declare an event of default and require that we immediately repay all amounts outstanding, terminate any commitment to extend further credit and foreclose on the collateral granted to them to collateralize such indebtedness. The occurrence of any of these events could have a material adverse effect on our business, financial condition and results of operations.
In addition, we may incur significant additional indebtedness in the future. Although the agreement governing our SWK Loan Facility contains restrictions on the incurrence of additional indebtedness by us, such restrictions are subject to a number of qualifications and exceptions, and the indebtedness incurred in compliance with these restrictions could be substantial. Also, these restrictions do not prohibit us from incurring obligations that do not constitute indebtedness as defined therein. To the extent that we incur additional indebtedness or such other obligations, the risks associated with our substantial indebtedness described above will increase.
Various events permit the lender under the SWK Loan Facility to terminate the agreement, following a cure period. Such events include, without limitation, a failure to timely pay interest or principal, insolvency, or an action by the FDA or such other material adverse event impacting the operations of Elutia. If the lender were to terminate either the SWK Loan Facility, the lender may declare all or any portion of these obligations to become immediately due and payable.
We face significant litigation related to our FiberCel and Viable Bone Matrix recalls,recalls and have no more insurance coverage on the FiberCel recall.
Our business exposes us to the risk of product liability claims that are inherent in the manufacturing, processing, investigating and marketing of medical devices and human and animal tissue products. For example, within our recently divested Orthobiologics Business, in June 2021, the FiberCel Recall occurred and in July 2023, the VBM Recall occurred. Since September 2021, we have received notice of 110 separate lawsuits or claims related to the FiberCel Recall alleging that the plaintiffs contracted tuberculosis and/or suffered substantial symptoms and complications following the implantation of FiberCel during spinal fusion operations. As of December 31, 2024,2025, 66five unsettled lawsuits or claims related to the FiberCel Recall and 1511 unsettled lawsuits and claims related to the VBM Recall remain outstanding. These lawsuits and claims are described in further detail in See Part II, Item 1, “Legal Proceedings” and Note 17 to the consolidated financial statements included elsewhere in this Annual Report.
Additionally, we may be subject to product liability claims, proceedings and lawsuits, even if the apparent injury is due to the actions of others or the pre-existing health of the patient. For example, we rely on physicians and other healthcare providers to use our products properly and correctly use our products.correctly. If these physicians or other healthcare providers are not properly trained or are negligent in using our products, the capabilities of our products may be diminished, or the patient may suffer critical injury. In addition, we may be subject to product liability claims, as well as a number of other risks, as a result of physicians and other healthcare providers using our products “off-label.” See the risk factor entitled “The misuse or off-label use of our products may harm our reputation in the marketplace, result in injuries that lead to product liability suits or result in costly investigations, fines or sanctions by regulatory bodies if we are deemed to have engaged in the promotion of these uses, any of which could be costly to our business” included in this Annual Report.
Our future capital needs are uncertainuncertain, and we may need to raise funds in the future, and such funds may not be available on acceptable terms or at all.
Our future capital needs are uncertain and, as such, we may seek to raise additional capital through equity offerings, debt financings, collaborations or other arrangements to finance our ongoing operations, including our efforts to commercialize,develop, commercialize and market NXT-41 and sellNXT-41x EluPro,, our next-generation biologic scaffolds combined with local antibiotic delivery, or as all or part of the consideration paid for acquisitions and strategic investments that we may make in the future. Any future funding requirements will depend on many factors, including, among other things:
In addition, our operating plan may change as a result of anya number of factors, including those set forth above and other factors currently unknown to us, and we may need additional funds sooner than anticipated. Any additional equity or debt financing that we raise may contain terms that are not favorable to us or our stockholders. If we raise additional funds by selling additional shares of our common stock or other securities convertible (directly or indirectly) into or exercisable or exchangeable for shares of our common stock, the issuance of such securities will result in dilution to our stockholders. The price per share at which we sell additional shares of our common stock, or securities convertible into or exercisable or exchangeable for shares of our common stock, in future transactions may be higher or lower than the price per share paid by you. Furthermore, investors purchasing any securities we may issue in the future may have rights superior to your rights as a holder of our common stock.
We are subject to risks arising from adverse changes in general domestic and global economic conditions, including any recession, economic slowdown or disruption of credit markets. During the year ended December 31, 2024,2025, global markets continued to experience significant volatility, driven by concerns over persistent inflation, rising interest rates, slowing economic growthgrowth, government shutdowns and geopolitical uncertainty. These events, and any financial crisis that may occur in the future, could make it more difficult and more expensive for hospitals and health systems to obtain credit, which may contribute to pressures on their operating margins. As a result, hospitals and healthcare systems may curtail and reduce capital and overall spending, which may have a significant adverse effect on our business.
If we are not successful in expanding our indications and developing, acquiring and commercializing new products and product enhancements, our ability to increase our net sales may be impaired, which could have a material adverse effect on our business, financial condition and results of operations. In addition, our research and development efforts may require a substantial investment of time and resources before we are adequately able to determine the commercial viability of a new product, technology or other innovation.
Even if we are successful in obtaining the required regulatory clearance, there can be no assurances that we will be able to achieve market acceptance or that we will be able to realize the intended benefits from commercializing this product candidate. In addition, we will be required to invest additional time and resources to address the outstanding items and provide the additional data requested to FDA, which could divert management’s attention from core business and result in additional research and development expenses. For instance, on June 14, 2024, we received written notice from the FDA that it had reviewed our premarket notification report filed under Section 510(k) of the Federal Food, Drug and Cosmetic Act of 2022 related to the antibacterial envelope device known during development as CanGarooRM, and now known as EluPro, that the FDA had determined “substantial equivalence” with respect to such device, and that such device may be marketed and sold subject to the general controls provisions of that law. In order for Elutia to capitalize on such clearanceclearance, however, the companywe will have to invest time and resources into commercializing and marketing EluProthis product candidate in order to increase its sales and market penetration, and to leverage the company’sour drug-eluting bioenvelope technology into potential adjacent applications. These efforts will require significant investments. There can be no guarantee that Elutia will have or be able to obtain sufficient resources to make the necessary investments, or that if made, such investments will yield the results sought.
Even if we are able to successfully develop and commercialize new product offerings or enhancements, they may be quickly rendered obsolete by changing customer preferences or the introduction by our competitors of products embodying new technologies or features and/or otherwise not produce sales in excess of the costs of development, any of which could also materially and adversely affect our business, financial condition and results of operations. Furthermore, to the extent we seek to enhance our products and broaden our product portfolio through acquisitions or other commercial transactions, we will be subject to additional risks. See other risk factor entitled “— We regularly evaluate opportunities to make acquisitions of, investments in, and licenses or other commercial arrangements involving, other companies or technologies, and to enter into other strategic transactions. These transactions entail significant risks.”
On November 8, 2023, we completed the sale of the assets of our former Orthobiologics Business to Berkeley. In the sale, we received $14.6 million, and we may earn up to an additional $20$20.0 million, in the aggregate, in the form of earn-out payments. The earn-out payments are equal to 10% of the actual revenue earned by Berkeley in each of the five years after the closing of the sale from sales of specified Orthobiologics products under the purchase agreement (including improvements, modifications, derivatives and enhancements related to those products). Additionally, the purchase agreement providesprovided for a customary indemnity holdback in the amount of $1.5 million to be retained by Berkeley for 24 months after close.the closing of the transaction. In March 2026, the indemnity holdback was resolved with Berkeley remitting $0.4 million to Elutia.
There can be no assurance that we will be able to realize the expected benefits of the transaction, or that we will receive all of the potential consideration associated with the earn-out payments or customary indemnity holdback.payments. If we are unable to or do not realize the expected strategic, economic, or other benefits of the transaction, it could adversely affect our business and financial position.
We obtain some of our raw materials from a limited group of suppliers and, for reasons of quality assurance, cost-effectiveness, availability or constraints resulting from regulatory requirements, we rely on a single supplier, Cook, to source the SIS ECM biomaterial used to manufacture EluPro, CanGaroo and our Cardiovascular products. Additionally, with the sale of our Orthobiologics Business in November 2023 to Berkeley, we no longer operate our former Richmond, California human tissue processing and distribution facility; however, we continue to have contract manufacturing relationship with Berkeley under which we receive SimpliDerm. At present, Berkeley is our single source of supply for SimpliDerm, but we are evaluating additional options for supply redundancy.SimpliDerm.
A substantial portion of ourOur net sales isare generated through our commercial partners and independent sales agents, which subjects us to various risks.
We currently rely on the efforts of our commercial partners and independent sales agents to generate a substantial portion of our netWomen’s Health and Cardiovascular sales, and we expect to continue to rely on these third parties to generate a substantial portion of our netthese sales in the future while we work to grow our direct sales force. For example, we have commercial agreements with major medical device companies, including Boston Scientific, Tiger and LeMaitre Vascular. As a result, the impairment or termination of these relationships for any reason, or the failure of these parties to diligently sell our products and comply with applicable laws and regulations, has and could in the future materially and adversely affect our ability to generate revenue and profits.future. Because our commercial partners and independent sales agents control the relationships with our end customers, if our relationship with any commercial partner or independent sales agent ends, we will likely also lose our relationship with their customers. Furthermore, our success is partially dependent on the willingness and ability of the sales representatives and other employees of our commercial partners and independent sales agents to diligently sell our products. However, we cannot guarantee that they will be successful in marketing our products. In addition, because our commercial partners and independent sales agents do not sell our products exclusively, they may focus their sales efforts and resources on other products that produce better margins or greater commissions for them or are incorporated into a broader strategic relationship with a partner. Because we do not control the sales representatives and other employees of our commercialindependent partners,sales agents, we cannot guarantee that our sales processes, regulatory compliance and other priorities will be consistently communicated and executed. In addition, we do not have staff in many of the areas covered by our commercial partners and independent sales agents, which makes it particularly difficult for us to monitor their performance. While we may take steps to mitigate the risks associated with noncompliance by our commercial partners and independent sales agents, there remains a risk that they will not comply with regulatory requirements or our requirements and policies. Actions by the sales representatives and other employees of our commercial partners and independent sales agents that are beyond our control could adversely impact sales in that territory or result in harm to the reputation of the Company or our products or legal liability, any of which could have a material adverse effect on our business, financial condition and results of operations. In addition to the risk of losing customers, the operation of local laws and our agreements with our commercial partners and independent sales agents would make it difficult for us to replace a commercial partner oran independent sales agent we believe is underperforming.
The loss of one or more significant commercial partners, a material reduction in their purchases of our product or their inability to perform their contractual obligations, including, for example, committed purchase requirements could adversely affect our business, financial condition and results of operations.
In order to increase our sales, we intend to develop relationships and arrangements with additional commercial partners and/or independent sales agents, which we may not be able to do on commercially reasonable terms or at all. If we are unable to establish new commercial partner and independent sales agent relationships and maintain our relationships with our existing commercial partners and independent sales agents, in each case, on commercially reasonable terms, we will be unable to maintain or increase sales of our commercial products, which, in turn, could materially and adversely affect our business, financial condition and results of operations.
We focus our sales, marketing and training efforts on physicians, surgeons and other healthcare professionals. The acceptance of our products depends in part on our ability to educate these individuals as to the distinctive characteristics, benefits, safety, clinical efficacy and cost-effectiveness of our products compared to alternative products, procedures and therapies. We support our direct sales force, commercial partners and independent sales agentsforce through in-person and online educational programs, among other things. We also produce and distribute marketing and educational materials, including materials outlining our products, for our sales teams using printed, video and multimedia formats. However, our efforts to educate physicians, surgeons and other healthcare professionals regarding our products may not be successful, particularly in markets where we rely exclusively on the efforts of our commercial partners and independent sales agents. If we do not adequately educate physicians, surgeons and other healthcare professionals about our products, as well as any adverse events involving these products, our products may not gain or maintain market acceptance, which may adversely affect our business, financial condition and results of operations.
We conduct a variety of pre-clinical and clinical studies, comparative effectiveness studies and economic and other studies of our products in an effort to generate clinical and real-world outcomes and cost effectiveness data in order to obtain product approval and drive further penetration in the markets we serve. If a clinical study conducted by us or a third party fails to demonstrate statistically significant results supporting performance, use benefits or compelling health or economic outcomes from using our products, physicians may elect not to use our products. Furthermore, in the event of an adverse clinical study outcome, our products may not achieve “standard-of-care” status, where they exist, for the conditions in question, which could deter the adoption of our products. Also, if serious adverse events are reported during the conduct of a study, it could affect continuation of the study, product approval, certification or clearance and product adoption. In addition, U.S. and foreign regulatory authorities routinely conduct audits of clinical studies and such audits may result in adverse regulatory actions. If we are unable to develop a body of statistically significant evidence from our clinical study program, whether due to adverse results or the inability to complete properly designed studies, domestic and international public and private payors could refuse to cover procedures using our products, limit the manner in which they cover our products or reduce the price they are willing to pay or reimburse for procedures using our products. Any of these events could have a negative impact on market acceptance of procedures using our products and their profitability, which could have a material adverse effect on our business, financial condition and results of operations.
We regularly evaluate opportunities to make acquisitions of, investments in, and licenses or other commercial arrangements involving, other companies or technologies, and to enter into other strategic transactions. These transactions entail significant risks.
Our success depends, in part, on our ability to continually enhance and broaden our product offerings in response to changing customer demands, competitive pressures and advances in technologies. Accordingly, although we have no current commitments with respect to any acquisition or investment, we regularly review potential acquisitions of, investments in, and licenses or other commercial arrangements involving, complementary businesses, products or technologies instead of developing them ourselves. In addition, in regularly evaluating our financial and operating performance, we may decide to sell one or more of our product lines or another portion of our business as we did with our Orthobiologics Business. Opportunities to engage in these transactions may not be readily available to us at commercially reasonable prices, on other terms acceptable to us or at all. Even if such opportunities are available, these transactions involve significant risks. In connection with one or more of these transactions, we may:
From time to time, we may implement or acquire new lines of business or introduce new products and services within our existing business lines. There are risks and uncertainties associated with these efforts, particularly in instances where the markets are not fully developed or are evolving. In developing and commercializing new lines of business and new products and services, we may invest significant time and resources. External factors, such as regulatory compliance obligations, competitive alternatives, lack of market acceptance and shifting market preferences, may also affect the successful implementation of a new line of business or a new product or service. Failure to successfully plan for and manage these risks in the development and implementation of new lines of business or new products or services could have a material adverse effect on our business, financial condition and results of operations.
We operate in highly competitive markets that are characterized by intense competition, subject to rapid change and significantly affected by new product introductions, technological advancements and other market activities of industry participants. Our competitors have historically dedicated, and will continue to dedicate, significant resources to promotepromoting their products and to developdeveloping new products that compete with ours. Customers in our target markets consider many factors when selecting a product, including product efficacy, ease of use, price, availability of payor coverage and adequate third-party reimbursement for procedures using the product, customer support services for technical-, clinical- and reimbursement-related matters and customer preference for, and loyalty to, particular products or a particular manufacturer. We expect competition to remain intense as competitors introduce additional competing products and enhancements to their existing products, and continue expanding into geographic markets where we currently operate or plan to expand. Product introductions or enhancements by competitors, which may have advanced technology, better features or lower pricing, may make our products obsolete or less competitive. As a result, we will be required to devote continued efforts and financial resources to develop and commercialize new products and enhancements to our existing products, deliver cost-effective clinical outcomes, manage our costs and expand our geographic reach. In addition, digital technologies, including artificial intelligence (“AI”) and machine learning capabilities, have and may continue to increase in their applicability and importance to various aspects of our business, operating and competitive environments, research and development pipeline and product portfolio. We believe we will need to develop new and enhanced digital capabilities and competencies in order to remain competitive.
Many of our current and potential competitors have longer operating histories and substantially greater financial, technical, marketing, sales, distribution and other resources than we do, which may prevent us from achieving significant market penetration or improved operating results. Certain competitors’ products, such as competitors of SimpliDerm, are subject to a simpler reimbursement process than are our products.products are. Competitors may also be able to leverage their market share and other resources to set prices at a level below that which is profitable for us. These companies may also enjoy other competitive advantages, including, without limitation:
The processing of porcine tissue for our products is technically complex, requiring high levels of quality control and precision, which subjects us to increased production risks.
We manufacture our porcine tissue products using technically complex processes requiring specialized facilities, highly specific raw materials, skill and diligence by our personnel and other production constraints. The complexity of these processes, as well as strict company and government standards for the manufacture and storage of our products, subject us to production risks. In addition to ongoing production risks, process deviations or unanticipated effects of approved process changes may result in non-compliance with regulatory requirements, including stability requirements or specifications. The occurrence of this or any other actual or suspected production or distribution problem can lead to lost inventory, customer returns and, in some cases, recalls, with consequential damage to our reputation and customer relationships and the risk of product liability.
Product recalls and investigations, and the remediation of any potential or identified problems can cause production delays and result in substantial additional expenses and lost revenue. In addition, we may experience difficulties in scaling up processing and production of our porcine tissue products, including problems related to yields, quality control and assurance, tissue availability, adequacy of control policies and procedures and availability of skilled personnel. Furthermore, developing and maintaining our production capabilities has required, and will continue to require, the investment of significant resources, and we cannot guarantee that we will be able to achieve economies of scale. If we are unable to process and produce our porcine tissue products on a timely basis, at acceptable quality and costs and in sufficient quantities, or if we experience technological problems, delays in production, failure in the storage of our products or other loss of supply, our business would be materially and adversely affected.
Expedited, reliable shipping is essential to our operations. We rely heavily on providers of transport services for reliable, timely and secure point-to-point transport of our products to our customers and for tracking of these shipments. Should a carrier encounter delivery performance issues such as loss, delays, damage or destruction of any of our products, it would be costly to replace these products in a timely mannermanner, and such occurrences may damage our reputation and lead to decreased demand for our products and increased cost and expense to our business. In addition, any significant increase in shipping rates could adversely affect our operating margins and results of operations. Similarly, strikes, severe weather, natural disasters, terrorism, civil or political unrest, equipment malfunctions or other service interruptions affecting the delivery services we use, would impair our ability to process orders for our products on a timely basis or at all, which could have a material adverse effect on our business, financial condition and results of operations.
If our facilitiesresearch areand development facility is damaged or becomebecomes inoperable, we will be unable to continue to research,research and develop our product candidates and supplydelays in our productsproduct and,development ascould aresult result, there will bein an adverse effect on our business until we are able to secure new facilities and rebuild our inventory.business.
We do not have redundant facilities. The SIS ECM biomaterial used in our medical device products are manufactured by Cook at their facility in West Lafayette, Indiana and converted to a finished product at our facility in Roswell, Georgia. Regulatory approvals or certifications of our products are limited to one or more specifically approved manufacturing facilities. As a result, if we fail to produce enough of a product at a facility, or if any of our production facilities were to be shut down or otherwise become unavailable for any reason, finding alternative manufacturing capabilities and obtaining the necessary regulatory approvals or certifications would require a considerable amount of time and expense and would cause a significant disruption in service to our customers.
All of our research and development for our new products and product candidates takes place at our facility in Gaithersburg, Maryland. We do not have redundant facilities. Disruption to our facilitiesGaithersburg, Maryland facility could arise for a variety of reasons, including technical, labor or other difficulties, equipment malfunction, contamination, the failure of our employees to follow specific protocols and procedures, the destruction of, or damage to, anyour facility (as a result of a natural or man-made disaster, including, but not limited to, a tornado, flood, fire, power outage or other eventevent, or as a result of political or civil unrest, terrorist act or act of war or otherwise), quality control issues or other reasons. Any disruption in the operation of our facilitiesfacility as a result of any of the above could impair our product development and commercialization efforts and result in lost sales, lost customers and harm to our reputation, any of which would negatively impact our growth prospects and profitability and have a material adverse effect on our business, financial condition and results of operations. In addition, certain of these events, such as natural or man-made disasters, or damage to our facilities caused by civil or political unrest, terrorist acts, or otherwise, would cause us to incur additional losses, including the time and expense required to repair and/or replace our equipment and to rebuild our inventory.equipment. Our insurance for damage to our property and the disruption of our business may not be sufficient to cover all of our potential losses and may not continue to be available to us on acceptable terms or at all.
While we must maintain sufficient inventory levels to operate our business successfully and meet customer demand for our products, we must be careful to avoid amassing excess inventory. To ensure adequate inventory supply, we must forecast inventory needs and place orders with our suppliers based on our estimates of future demand for our products. Demand for our products can change, and has changed,changed rapidly and unexpectedly, including during the time between when raw materials are ordered from our suppliers and the finished product is offered for sale. Our ability to accurately forecast demand for our products could be negatively affected by a number of factors, many of which are beyond our control, including our failure to accurately manage our expansion strategy, product introductions by competitors, an increase or decrease in customer demand for our products or for products of our competitors, our failure to accurately forecast customer acceptance of new products, unanticipated changes in general market conditions, reimbursement or regulatory matters and weakening of economic conditions. Inventory levels that exceed the demand for our products may result in inventory write-downs or write-offs, which would adversely affect our gross margins. Conversely, if we underestimate demand for our products, additional supplies of raw materials or additional manufacturing capacity may not be available when required on terms that are acceptable to us or at all, and suppliers or our third-party manufacturer may not be able to allocate sufficient capacity in order to meet our increased requirements. As a result, we may not be able to meet customer demand for our products, resulting in lost sales and potential damage to our reputation and customer relationships, any of which would adversely affect our business, financial condition and results of operations.
The healthcare industry in the United States has experienced a trend toward cost containment as government and private payors seek to control healthcare costs by paying service providers lower rates. While it is expected that hospitals will be able to obtain coverage for procedures using our products, the level of payment available to them for such procedures may change over time. State and federal healthcare programs, such as Medicare and Medicaid, closely regulate provider payment levels and have sought to contain, and sometimes reduce,reduce payment levels. Private payors frequently follow government payment policies and are likewise interested in controlling increases in the cost of medical care. In addition, some payors are adopting pay-for-performance programs that differentiate payments to healthcare providers based on the achievement of documented quality-of-care metrics, cost efficiencies or patient outcomes. These programs are intended to provide incentives to providers to deliver the same or better results while consuming fewer resources. As a result of these programs, and related payor efforts to reduce payment levels, hospitals and other providers are seeking ways to reduce their costs, including the amounts they pay to medical device manufacturers. We may not be able to sell our products profitably if third-party payors deny or discontinue coverage or reduce their levels of payment below that which we project, or if our production costs increase at a greater rate than payment levels. Adverse changes in payment rates by payors to hospitals could adversely impact our ability to market and sell our products and negatively affect our financial performance.
Quality is extremely important to us and our customers due to the serious and costly consequences of product failure. Quality and safety issues may occur with respect to any of our products, and our future operating results will depend on our ability to maintain an effective quality control system and effectively train and manage our workforce with respect to our quality system. The development, manufacture and control of our products are subject to extensive and rigorous regulation by numerous government agencies, including the FDA. Compliance with these regulatory requirements, including but not limited to the FDA’s Quality Management System Regulation (“QSRQMSR”), current Good Manufacturing Practices (“GMPs”) and adverse events/recall reporting requirements in the United States and other applicable regulations worldwide, is subject to continual review and is monitored rigorously through periodic inspections by the FDA. If we fail to comply with our reporting obligations, the FDA or other regulatory authority could take action, including issuance of warning letters and/or untitled letters, administrative actions, criminal prosecution, imposition of civil monetary penalties, revocation of our device clearance, seizure of our products or delay in the clearance of future products.
If our products do not function as designed, or are designed improperly, we or the third-party manufacturer of such products may withdraw such products from the market, whether by choice or as a result of regulatory requirements. We had two recalls in products formerly distributed through our recently divested Orthobiologics Business – one in June 2021 and one in July 2023. These recalls had negative effects on our business, financial condition and results of operations and resulted in a number of lawsuits filed against us as discussed under the risk factor“We face significant litigation related to our FiberCel and Viable Bone Matrix recalls, and have no more insurance coverage on the FiberCel recall” included in this Annual Report. Any product recall we or a third-party manufacturer may conduct in the future, whether voluntary or required, could also have a negative impact on our business, financial condition and results of operations, and this effect may be material.
Our quarterly and annual results of operations may vary significantly in the future, and period-to-period comparisons of our operating results may not be meaningful. Accordingly, the results of any one quarter or other period should not be relied upon as an indication of our future performance. Our quarterly and annual financial results may fluctuate as a result of a variety of factors, many of which are outside our control and, as a result, may not fully reflect the underlying performance of our business. OneFactors suchthat factormay includescause seasonal variationsfluctuations in our sales. We have experiencedquarterly and may in the future experience higher sales in the fourth quarter as hospitals in the United States increase their purchases of our products to coincide with the end of their budget cycles. Satisfaction of patient deductibles through the course of the year alsoannual results ininclude, increasedamong salesother later in the year. In general, our first quarter usually has lower sales than the preceding fourth quarter as patient deductibles are re-established with the new year, thereby increasing the patients’ out-of-pocket costs.things:
Other factors that may cause fluctuations in our quarterly and annual results include, among other things:
In the ordinary course of our business, we may become exposed to, or collect and store, sensitive data, including procedure-based information and legally protected health information, credit card, and other financial information, insurance information and other potentially personally identifiable information.information on information technology (“IT”) systems, some of which are managed by third parties. We also store sensitive intellectual property and other proprietary business information. Regardless of any precautions we may take, our information technology (“IT”) and infrastructure, and that of our technology partnerspartners, vendors and providers, may be vulnerable to attack, damage and interruption from computer viruses and malware (e.g. ransomware), malicious code, natural disasters, terrorism, war, telecommunication and electrical failures, hacking, cyberattacks, phishing attacks and other social engineering schemes, credential theft, employee thefttheft, misuse or misuse,other malfeasance, human error, fraud, denial or degradation of service attacks, sophisticated nation-state and nation-state-supported actors oractors, unauthorized access or use by persons inside our organization, or persons with access to systems inside our organization.organization or exploitation of vulnerabilities in third-party software and systems.
Attacks upon IT systems are increasing in their frequency, levels of persistence, sophistication and intensity, and are being conducted by sophisticated and organized groups and individuals with a wide range of motives and expertise. In addition to unauthorized access to or acquisition of personal information, confidential information, intellectual property or other sensitive information, such attacks could include the deployment of harmful malware and ransomware, and may use a variety of methods, including denial-of-service attacks, social engineering and other means, to attain such unauthorized access or acquisition or otherwise affect service reliability and threaten the confidentiality, integrity and availability of information. As a result of the COVID-19 pandemic, we may also face increased cybersecurity risks due to our reliance on internet technologyCyberattacks and the number of our employees who are working remotely, which may create additional opportunities for cybercriminals to exploit vulnerabilities. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems changeare frequentlydiverse and oftenconstantly areevolving, notespecially foreseeablegiven orthe recognizedadvances untilin, launchedand the rise of the use of, artificial intelligence, thereby increasing the difficulty of preventing, detecting, and successfully defending against athem, target, weand may be unablemore difficult to anticipatedetect, thesemitigate techniques or toand implement adequate preventative measures.measures, including as threat actors use artificial intelligence and other advanced tools to enhance attacks and impersonation tactics. We may also experience security breaches that may remain undetected for an extended period. Even if identified, we may be unable to adequately investigate or remediate incidents or breaches due to attackers increasingly using tools and techniques that are designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic evidence. Any breakdowns or breaches of our systems, or resulting access, disclosure, or other loss of information, could significantly disrupt our business and result in legal claims or proceedings, liability under laws that protect the privacy of personal information, and damage to our reputation, any of which could have a material and adverse effect on our business, financial condition and results of operations.
Despite our security measures, there can be no assurance that our efforts will prevent breakdowns or breaches to our or our third-party providers’ databases or systems, or any resulting unauthorized access to, or disclosure and use of, non-public or other legally protected information. Our general liability and cybersecurity insurance coverage may not cover all claims, continue to be available to us on reasonable terms or be sufficient in amount to cover one or more large claims. Additionally, the insurer may disclaim coverage as to any claim. The successful assertion of one or more large claims against us that exceed or are not covered by our insurance coverage or changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, prospects, operating results and financial condition.
Management's Discussion & Analysis (MD&A)
New heading “Payoff and Termination of SWK Loan Facility”
New heading “Discontinued Operations - Sale of Orthobiologics Businesses”
New heading “Other Expense (Income), net”
New heading “Ligand Revenue Interest Obligation”
Removed heading “Product Recalls”
Removed heading “Impact of Inflation”
Removed heading “Interest Expense”
Removed heading “Discontinued Operations”
Removed heading “Mandatory Prepayments”
Removed heading “Amortization and Final Maturity”
Removed heading “Warrant Liability”
Largest changes
“In order to mitigate the current and potential future liquidity issues caused by the matters noted above, we may seek to raise capital through the issuance of common stock, such as the 2025 Registered Offering, 2024 Registered Offering and Private Offering described above, pursue asset sale or other transactions, such as the sale of the Orthobiologics Business described above. However, such transactions may not be successful, and we may not be able to raise additional equity, refinance our debt instruments, or sell assets on acceptable terms, or at all. …”see in full comparison
“The SWK Loan Facility Agreement contains events of default, including, most significantly, a failure to timely pay interest or principal, insolvency, or an action by the FDA or such other material adverse event impacting the operations of Elutia. As of December 31, 2024, we were in compliance with the financial covenants and all other covenants.”see in full comparison
“Defending any current or future claims, proceedings or lawsuits, regardless of merit, could be costly, divert management attention and result in adverse publicity, which could result in the withdrawal of, or reduced acceptance of, our products in the market. If we cannot successfully defend against product liability claims, we could incur substantial liability and costs. Additionally, following the public announcement of our voluntary recall, there has been various media coverage surrounding the recall and patients impacted. …”see in full comparison
“In May 2025, we entered into an amendment to the SWK Loan Facility. The amendment, among other things: (i) allowed for 100% of the interest payment due and owing in May 2025 to be paid as PIK interest, (ii) removed mandatory repayment obligations related to non-ordinary course asset sales, (iii) allowed us to request that SWK advance a new term loan in the amount of up to $5.0 million, which advance will be in the sole and absolute discretion of SWK and (iv) fixed the amount of the Liquidity Covenant to a minimum liquidity of $8.0 million. …”see in full comparison
“On March 27, 2024, we entered into an amendment to the SWK Loan Facility Agreement, which modified the Minimum Aggregate Revenue covenant under the SWK Facility to provide that as of the last business day of each fiscal quarter of the Company beginning with the first fiscal quarter of 2024, our required Minimum Aggregate Revenue (as defined in the SWK Facility) for the trailing twelve-month period must be equal to or greater than $20.0 million.”see in full comparison
Full comparison: every changed paragraph (113)
At Elutia, our mission is to humanize medicine so that patients can thrive without compromise. AsWe adevelop commercial-stageproprietary company,drug-eluting webiomatrix seekproducts tofor leverageuse ourin uniquesurgical understandingreconstruction ofand biologicsrelated combinedapplications. withThese localproducts drugare deliverydesigned to improve the interaction between implanted medical devices and patientspatients. byOur focus is on addressing unmet medical needs and reducing complications associated with thesesurgery, surgeries. These complications includeincluding infection, device migration, erosion, implant rejection, non-unionand fibrosis. Our operations span research and development through the commercial distribution of implants,biologic fibrosismatrix products used in plastic and scarreconstructive formation.surgery.
We have applied these capabilities to develop and commercialize products for specific surgical applications. As more fully described below, on October 1, 2025, we divested one such product family through the sale of substantially all of the assets related to our business of developing, commercializing, manufacturing, selling and marketing our cardiac implantable electronic device (“CIED”) products, EluPro™ and CanGaroo®, to Boston Scientific Corporation (“BSC”) and Cardiac Pacemakers Inc (“CPI”) for an aggregate purchase price of up to $88.0 million in cash. EluPro was the first antibiotic-eluting biologic matrix envelope for use with CIEDs. This transaction reflects the technical and commercial value of solutions developed using our biologic matrices and local drug delivery capabilities.
Following the sale of the CIED business, we are focused on advancing our drug-eluting biomatrix (“DEB”) platform. This platform builds on our biologic matrix and local drug delivery capabilities to address complications that lead to poor outcomes in reconstructive procedures and surgical repair. EluPro demonstrated the commercial potential of combining a biologic scaffold with antibiotic drug delivery to reduce device-related complications. We believe the same foundational technology can be applied to reconstructive and soft tissue repair markets where biologic matrix products are widely used, but where outcomes remain suboptimal due to complications such as infection, inflammation, and fibrosis.
The clinical and economic need in the reconstructive and soft tissue repair markets is substantial, reflecting both the volume of reconstructive surgery and the persistence of high complication rates. For example, in implant-based breast reconstruction and complex abdominal wall repair, infection rates approximate 15% to 20%, leading to frequent reoperations and hospital readmissions. Each year, in the United States, there are approximately 163,000 post-mastectomy breast reconstruction procedures, and roughly one in three experiences a serious complication such as infection, capsular contracture, or implant loss. We believe biologic matrices represent an estimated $1.5 billion U.S. market opportunity and account for more than 60% of reconstruction spending, yet meaningful innovation has been limited and significant unmet medical need remains.
Our lead development programs comprise NXT-41, a next-generation biologic matrix, and NXT-41x, which builds on the NXT-41 matrix by incorporating local antibiotic delivery. NXT-41 is an advanced biomatrix designed to provide consistent handling and incorporation while enabling scalable manufacturing. In NXT-41x, antibiotics are incorporated into the matrix and released locally over extended periods, offering broad-spectrum antimicrobial protection against common causes of post-surgical infection.
Elutia continues to market and sell its proprietary biologic matrix products, including SimpliDerm®, a human acellular dermal matrix (“hADM”) used in soft tissue reconstruction, and its cardiovascular repair portfolio, comprising ProxiCor, VasCure, and Tyke. SimpliDerm is the primary commercial product in our Women’s Health segment, and the cardiovascular products reside in our Cardiovascular segment. These products are sold directly to healthcare facilities through independent sales agents.
As part of our current commercial product portfolio, SimpliDerm supports our commercial presence in plastic and reconstructive surgery. It provides operational and market insight relevant to the advancement of our drug-eluting biomatrix development programs and strengthens our commercial channel with reconstructive and plastic surgeons, who routinely use biologic matrices in surgical reconstruction. Our NXT-41x development program is initially intended for use in reconstructive applications, and SimpliDerm supports the development of surgeon relationships, experience, and organizational capabilities relevant to the potential introduction of our next-generation biologic drug-eluting technologies SimpliDerm was historically processed at our former Richmond, California facility, which was included in the divestiture of the Orthobiologics Business in 2023. SimpliDerm is now supplied to Elutia through a long-term supply agreement with Berkeley, the acquiror of our Orthobiologics Business. The porcine SIS-ECM for our Cardiovascular products is supplied by Cook Biotech Incorporated (“Cook”), now owned by Evergen, through a long-term supply agreement. Both Berkeley and Cook are currently our sole sources of supply within the respective product offerings, and we cannot guarantee that an interruption in supply will not occur.
In March 2025, we signed a lease for 26,598 square feet of production, laboratory and administrative space in Gaithersburg, Maryland, which now serves as our headquarters and primary operations site. This facility supports administrative functions as well as the development of NXT-41 and NXT-41x and, subject to obtaining the necessary FDA marketing authorizations, is expected to support the commercial production of these products, to the extent marketing authorization is obtained.
We estimate that in 2024, more than 700,000 surgical procedures were performed annually in the United States involving the implantation of medical devices such as pacemakers, defibrillators, neurostimulators or tissue expanders for breast reconstruction. This number has been driven by advances in medical device technologies, reimbursement models focused on patient outcomes, and an aging population with a growing incidence of comorbidities, including diabetes, obesity and cardiovascular and peripheral vascular diseases. These comorbidities can exacerbate various immune responses and contribute to other complications upon device implant.
Our products are targeted to address unmet clinical needs with the goal of promoting healthy tissue formation and avoiding complications associated with medical device implants, such as scar tissue formation, capsular contraction, erosion, migration and infection. We currently focus on two priority markets – Device Protection and Women’s Health.
In Device Protection, we sell EluPro, a unique bioenvelope designed to mitigate CIED complications including infection, device migration and erosion. The bioenvelope features a biomatrix comprised of ECM, which supports healthy wound healing and may facilitate re-operative procedures by reducing scar formation and fibrosis. Additionally, EluPro is embedded with the powerful antibiotics rifampin and minocycline, which are gradually released into the surrounding tissue over several weeks post-implantation to provide antimicrobial protection. Currently, EluPro is the only drug-eluting biomatrix (“DEB”) offering in the U.S. implantable electronic device protection market. Alongside EluPro, we market the CanGaroo bioenvelope, our first generation product, which uses the same biomatrix but does not contain antibiotics.
In Women’s Health, we have developed both patented and proprietary technologies, culminating in the creation of SimpliDerm—a novel biological matrix that leverages the inherent science of natural healing processes. SimpliDerm’s design uses human-based hydrated acellular dermal matrix with heightened structural integrity and superior handling capabilities, which may mitigate inflammation and enhance tissue incorporation, leading to a better healing experience as compared to other ADM products. We believe that these acellular dermal matrices represent an ideal choice for tissue repair and reconstruction, finding applications in fields such as breast reconstruction, sports medicine, hernia repair and trauma reconstruction.
With respect to pipeline products, we plan to expand our DEB offerings beyond EluPro and are pioneering DEBs to help solve problems unaddressed by available options. We also intend to leverage our DEB platform technology by developing and commercializing products for markets with similar unmet needs, including breast reconstruction and neurostimulation.
We sell EluPro and CanGaroo in the United States using our direct sales force and our commercial partner, Boston Scientific, which acts as a sales agent and gives us access to approximately 900 sales representatives and clinical specialists to further expand our footprint and accelerate our sales. Our primary customers are electrophysiologists, cardiac surgeons and neurosurgeons. Our direct sales force is focused on gaining additional market access and driving market penetration, not only by selling our products, but also, where appropriate, by managing our commercial partners and providing technical assistance for selling our products. Our sales team provides the critical knowledge of the advantages that EluPro and CanGaroo provide for patients over those of our competitors. We ship the product directly to hospitals.
We sell SimpliDerm through independent sales agents to plastic and reconstructive surgeons. Additionally, in March 2023, we entered into an agreement with Sientra, a medical aesthetics company uniquely focused on plastic surgery, to expand the distribution of SimpliDerm. In April 2024, such agreement was acquired by Tiger in connection with their asset acquisition of Sientra. Under the agreement terms, Elutia has granted Tiger certain non-exclusive rights in the United States to market, sell and distribute SimpliDerm. This agreement with Tiger gives us access to approximately 50 sales representatives to further expand our footprint and accelerate our sales.
We also sell legacy products into the Cardiovascular market. In Cardiovascular, we sell our specialized porcine small intestine submucosa, which is based on the same the biomatrix used to make EluPro and CanGaroo, for use as an intracardiac and vascular patch as well as for pericardial reconstruction. In addition, our TYKE product is designed for use in the neonatal patient population. These cardiovascular products are sold in the United States through an exclusive distribution agreement with LeMaitre Vascular. This agreement also provided LeMaitre with an option to acquire the Cardiovascular product line, exercisable through March 2026.
We produce all of our CanGaroo and cardiovascular products at our manufacturing facility in Roswell, Georgia and stock inventory of raw materials, supplies and finished goods at this location. We rely on a single or limited number of suppliers for certain raw materials and supplies. We have a long-term supply agreement with Cook, the porcine tissue supplier of our raw materials for our CanGaroo and cardiovascular products. SimpliDerm has historically been processed by us at our Richmond, California facility; however, that facility was included with the divestiture of the Orthobiologics Business, and SimpliDerm is now provided to us on a go-forward basis through a long-term supply agreement with the purchaser of the Orthobiologics Business, Berkeley Biologics, LLC (“Berkeley”). We also intend to develop our own in-house capability for the production of SimpliDerm. To this end, in March 2025, we signed a lease for 26,598 square feet in Gaithersburg, Maryland for purposes of, among other things, the internal production of SimpliDerm. We expect to be able to internally produce SimpliDerm by the third quarter of 2025.
We have focused much of our attention recently on EluPro, which was cleared for marketing by the FDA in June 2024 and is indicated for use with implantable electronic devices including cardiac and neurostimulator devices. We believe the Company’s success is highly dependent on the successful commercialization, marketing and sale of EluPro, as well as the extension of our DEB technology into potential adjacent applications. Furthermore, we believe the commercialization and marketing efforts with respect to EluPro will require significant investments in time and resources. However, there can be no assurance that we will have or be able to obtain sufficient resources to make the necessary investments in order to increase the sales and market penetration for EluPro, or that if made, such investments will yield the results sought.
Discontinued Operations –- Sale of OrthobiologicsCIED BusinessBusinesses
On September 8, 2025, we executed an Asset Purchase Agreement (the “APA”) with BSC CPI. On October 1, 2025, at the closing of the transactions contemplated by the APA, the CIED Buyers purchased from Elutia substantially all of the assets that are related to its business of researching, developing, administering, operating, commercializing, manufacturing, selling and marketing our CIED products, including the CanGaroo®, CanGaroo® RM, EluPro™ and CIED envelope products, including next generation CIED envelope products (collectively the “CIED Business”).
The APA provides for an aggregate purchase price, subject to certain adjustments pursuant to the terms of the APA, of up to $88 million in cash, with $80.4 million (which included an inventory adjustment of $0.4 million) that was paid in cash to Elutia at closing of the transactions, and $8 million that was deposited at the closing of the transactions in escrow for a period of twelve months, which is subject to potential reduction in the event of certain post-closing breaches of representations and warranties within the APA by Elutia. The assets of the CIED Business constituted substantially all of the assets previously held in Elutia’s Device Protection segment. The CIED Buyers only assumed certain liabilities related to performance of the contracts transferred in the APA.
As described in Note 2 to the consolidated financial statements, the sale of the CIED Business is accounted for as Discontinued Operations for all periods presented in accordance with Accounting Standards Codification (“ASC”) 205-20, Discontinued Operations. The related assets and liabilities of the CIED Business are classified as assets and liabilities of discontinued operations as of December 31, 2024 in the consolidated balance sheets and the results of operations from the CIED Business are reported as discontinued operations in the consolidated statements of operations for the years ended December 31, 2025 and 2024. Applicable amounts in the prior year have been recast to conform to this discontinued operations presentation.
Prior to the divestiture, we marketed EluPro and CanGaroo in the United States through our direct sales force, supported by a commercial partner, BSC. As part of the divestiture, the sales organization supporting the CIED business transferred to the CIED Buyers.
Payoff and Termination of SWK Loan Facility
On October 1, 2025, in connection with and through the proceeds of the sale of the Company’s CIED Business described in Note 2 to the consolidated financial statements, we fully repaid the SWK Loan Facility as required by the terms of the credit agreement. As of such date, the outstanding principal, including the accrued exit fee, and accrued interest totaled approximately $26.9 million. The total payment by the Company to SWK in full satisfaction of the debt and termination of the credit agreement was $27.8 million.
Discontinued Operations - Sale of Orthobiologics Businesses
On November 8, 2023, we completed the sale of substantially all of the assets relating to our former Orthobiologics Business to Berkeley. The Orthobiologics Business was comprised of assets relating to researching, developing, administering, insuring, operating, commercializing, manufacturing, selling and marketing our Orthobiologics products, and the business of contract manufacturing of particulate bone, precision milled bone, cellular bone matrix, acellular dermis, soft tissue and other products. The assets sold representrepresented the entirety of our Orthobiologics segment. In the sale, weWe received approximately $14.6 million, and we may earn up to an additional $20$20.0 million, in the aggregate, in the form of earn-out payments. The earn-out payments are equal to 10% of the actual revenue earned by Berkeley in each of the five years after the closing of the sale from sales of specified Orthobiologics products under the purchase agreement (including improvements, modifications, derivatives and enhancements related to those products). There have been no earn-out payments made to date. Additionally, the purchase agreement provides for a customary indemnity holdback in the amount of $1.5 million to be retained by Berkeley for 24 months after close. The indemnity holdback is available as a source of recovery for Berkeley for claims of indemnification under the purchase agreement, and some or all of the holdback may be retained by Berkeley if Berkeley is successful in asserting a claim or claims for indemnification against us. In the purchase agreement, thewe Company hashave retained the liabilities arising out of the viable bone matrix (“VBM”) and FiberCel recall matters, as described in Note 17,17 to the consolidated financial statements, both of which products were part of the Orthobiologics Business. We recognized a gain of $6.0 million on the sale of the Orthobiologics Business in 2023 and an additional gain of $0.2 million in the second quarter of 2024 from an adjustment payment related to the final working capital received by Berkeley at the sale date. Additionally, the purchase agreement provided for a customary indemnity holdback in the amount of $1.5 million to be retained by Berkeley for 24 months after closing of the transaction. The indemnity holdback was available as a source of recovery for Berkeley for claims of indemnification under the purchase agreement, and some or all of the holdback could be retained by Berkeley if Berkeley was successful in asserting a claim or claims for indemnification against us. In March 2026, the indemnity holdback was resolved with Berkeley remitting $0.4 million to Elutia. Such amount will be recognized as additional gain in the first quarter of 2026. Should we receive incremental proceeds in the future through an earn-out payment or payment of the holdback amount,payment, an additional gain will be recorded upon the receipt of such amounts.
Product Recalls
In June 2021, we issued a voluntary recall pertaining to a single donor lot of our FiberCel Fiber Viable Bone Matrix, a bone repair product formerly manufactured under a contract with Medtronic PLC, which also distributed the product. The recall was issued after learning of postsurgical infections reported in several patients treated with the product, including some patients that tested positive for tuberculosis. Additionally, in July 2023, we announced a voluntary recall of a single lot of one of our VBM products and the market withdrawal of all of our VBM products produced after a specified date. Notice of the voluntary recall was issued to centers after we learned of post-surgical tuberculosis infections in two patients treated with product from a single donor lot of our VBM product. Both of these products were part of our Orthobiologics Business, which we have fully divested as described above. These product recalls and the associated legal proceedings in which we are involved as well as their possible future financial implications are described in further detail in Part I, Item 3, “Legal Proceedings” and Note 17 to the consolidated financial statements, included elsewhere in this Annual Report.
Defending any current or future claims, proceedings or lawsuits, regardless of merit, could be costly, divert management attention and result in adverse publicity, which could result in the withdrawal of, or reduced acceptance of, our products in the market. If we cannot successfully defend against product liability claims, we could incur substantial liability and costs. Additionally, following the public announcement of our voluntary recall, there has been various media coverage surrounding the recall and patients impacted. Such negative publicity related to the perceived quality and safety of our products could affect our brand image, decrease confidence in our products or have an adverse effect on our ability to retain existing and attract new customers, suppliers and distribution partners, any one of which could result in decreased revenue, having an adverse effect on our business, financial condition and operating results.
Impact of Inflation
Inflationary factors, such as increases in our cost of goods sold or other operating expenses, may adversely affect our operating results. While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, we do not believe inflation had a material effect on our financial condition or results of operations during the years ended December 31, 2024 and 2023. We cannot assure you, however, that we will be able to increase the selling prices of our products or reduce our operating expenses in an amount sufficient to offset the effects future inflationary pressures may have on our gross margin. Accordingly, we cannot assure you that our financial condition and results of operations will not be materially impacted by inflation in the future.
We recognize revenue from the sale of our products. Our Women’s Health products are sold directly to hospitals and other healthcare facilities through independent sales agents, and until its termination in October 2025, through our distribution agreement with Tiger. From April 2023 through April 2025, our Cardiovascular products were sold through a distribution agreement with LeMaitre Vascular. In April 2025, this agreement with LeMaitre Vascular terminated, and, in May 2025, we resumed selling these products directly to hospitals and other healthcare facilities through independent sales agents.
We recognize revenue on the sale of our products. Our Device Protection products are sold to hospitals and other healthcare facilities primarily through our direct sales force, commercial partners or independent sales agents. Our cardiovascular products are sold domestically through a distribution agreement with LeMaitre Vascular and were previously sold internationally through commercial partners. Our Women’s Health products are sold directly to hospitals and other healthcare facilities through independent sales agents or through our distribution agreement with Tiger.
CostsCost of Goods Sold
Our cost of goods sold relate to the purchase costs of the SimpliDerm finished goods and the purchased raw materials and minor finished good conversion costs required for the Cardiovascular products. Cost of goods sold also includes the amortization of intangibles related to the Cardiovascular products generated from the CorMatrix Acquisition in 2017.
Our cost of goods sold relate to purchased raw materials and the processing and conversion costs of such raw materials consisting primarily of salaries and benefits, supplies, quality control testing and the manufacturing overhead incurred at our processing facilities in Roswell, Georgia and our former Orthobiologics facility in Richmond, California. The Roswell facility has additional capacity, which if utilized, would further leverage our fixed overhead. Cost of goods sold also includes the amortization of intangibles generated from the CorMatrix Acquisition in 2017.
Sales and marketing expenses are primarily related to our directthe sales force, consisting of salaries, commission compensation, fringe benefits, meals and other expenses. Auto and travel costs also contribute to sales and marketing expenses. Outsidecommissions of our direct sales force, we incur significant expenses relating to commissions to our CanGarooSimpliDerm and SimpliDerm commercial partners andCardiovascular independent sales agents. Additionally, this expense category includes distribution and customer service costs as well as market research, trade show attendance, advertising and public relations related to our products, and customer service expenses.products.
General and administrative (“G&A”) expenses consist primarily of compensation, consulting, legal, human resources, information technology, accounting, insurance (including directors and officer premiums), SEC compliance, and general business expenses.
General and administrative (“G&A”) expenses consist primarily of compensation, consulting, legal, human resources, information technology, accounting, insurance and general business expenses. Our G&A expenses have increased as a result of operating as a public company, especially as a result of hiring additional personnel and incurring greater director and officer insurance premiums, greater investor relations costs, and additional costs associated with accounting, legal, tax-related and other services associated with maintaining compliance with exchange listing and SEC requirements.
Research and development (“R&D”) expenses consist primarily of salaries and fringe benefits, laboratory supplies, clinical studies and outside service costs. Over the last several years, our product development efforts have primarily related to activities associated with the development of EluPro (referred to as CanGarooRM during development),EluPro, our initial DEB product offering.offering, Seewhich abovegained PartFDA I,clearance Itemin 1,June “Business”2024 forand discussionwas sold in connection with the divestiture of the JuneCIED 2024Business FDAin clearanceOctober of EluPro.2025. Future development efforts and associated internal and external costs are expected to focus on (i) expanding our EluProlead offeringdevelopment programs, NXT-41 and NXT-41x, which are designed as next-generation biologic scaffolds combined with additionallocal sizesantibiotic and product features, (ii) developing new products within the DEB product portfolio and (iii) conducting clinical studies to validate the performance characteristics of our products and to capture patient data necessary to support our commercial efforts.delivery.
Total net sales decreased $2.2 million, or 15.0%, to $12.3 million in the year ended December 31, 2025 compared to $14.5 million in the year ended December 31, 2024. The decrease was due primarily to Women’s Health and caused, in part, by various physician users of SimpliDerm who transferred to hospitals where SimpliDerm is not yet available. Additionally, sales of SimpliDerm generated by Tiger totaled $2.2 million in the year ended December 31, 2025, a decrease of $1.5 million from the prior year period. Our distribution agreement with Tiger terminated in October 2025.
Total net sales decreased $0.4 million, or 1.5%, to $24.4 million in the year ended December 31, 2024 compared to $24.7 million in the year ended December 31, 2023. Revenues from Device Protection and Women’s Health increased compared to the corresponding period of the prior year due to volume growth, but such increases were offset by a decrease in revenues from Cardiovascular due to lower sales volumes in the current year as well as the commencement in April 2023 of our distribution agreement with LeMaitre Vascular which provides for sales at a contracted price to the distributor versus sales prior to such agreement being made at end-user pricing. Revenues from EluPro, which are within the Device Protection segment, commenced in September 2024 (after its FDA clearance in June 2024) and contributed to the segment’s current year sales increase. EluPro revenues as well as overall Device Protection revenues are expected to continue to grow as we further commercialize this product in 2025.
Total cost of goods sold decreased $2.1 million to $5.7 million in the year ended December 31, 2025 compared to $7.8 million in the year ended December 31, 2024. Gross margin was 53.7% in the year ended December 31, 2025 compared to 46.4% in the year ended December 31, 2024. Gross margin, excluding intangible asset amortization, was 62.4% in the year ended December 31, 2025 compared with 53.9% in the year ended December 31, 2024. The improvement between years was due to both Women’s Health and Cardiovascular, where, in 2025, we resumed selling these products only directly to hospitals and other healthcare facilities through our independent sales agents where end user pricing (versus contracted prices with distributors) yield higher margins.
Total cost of goods sold was unchanged at $13.7 million for both the years ended December 31, 2024 and 2023. Gross margin was 43.9% in the year ended December 31, 2024 compared to 44.7% in the year ended December 31, 2023. Gross margin, excluding intangible asset amortization, was 57.9% in the year ended December 31, 2024 compared to 58.4% in the year ended December 31, 2023. The slight decline in gross margin was primarily due to the Cardiovascular business which decreased due to the commencement of the LeMaitre Vascular distribution agreement described above. Gross margin in the Device Protection segment is expected to slightly decline in 2025 versus 2024 due to a higher percentage of the revenues in such segment coming from EluPro and shifting away CanGaroo. Until we can achieve certain economies of scale and fully implement other cost reduction opportunities, our gross margins on EluPro will be lower than CanGaroo.
Sales and marketing expenses increased $0.8 million, or 15.6%, to $5.8 million in the year ended December 31, 2025 compared to $5.0 million in the year ended December 31, 2024. As a percentage of sales, sales and marketing expenses increased to 46.9% in the year ended December 31, 2025 from 34.5% in the year ended December 31, 2024. The increase was largely attributable to sales commission expense growth commensurate with the resumption in the second quarter of 2025 of the direct selling of our Cardiovascular products.
Sales and marketing expenses decreased $0.6 million, or 4.1%, to $12.5 million in the year ended December 31, 2024 compared to $13.1 million in the year ended December 31, 2023. As a percentage of sales, sales and marketing expenses decreased to 51.5% in the year ended December 31, 2024 from 52.9% in the year ended December 31, 2023. The decrease in expense was largely attributable to a reduction in force which occurred in the first quarter of 2023 and primarily impacted certain members of sales and marketing management. Such decrease from the reduction in force was partially offset by an increase in expense from the non-cash equity compensation grants made in January 2024. We anticipate that our sales and marketing costs will increase in 2025 versus 2024 as we continue to commercialize EluPro.
G&A expenses increaseddecreased $4.6$3.0 million, or 32.3%,16.6%, to $18.7$15.1 million in the year ended December 31, 20242025 compared to $14.1$18.1 million in the year ended December 31, 2023. As a percentage of net sales, G&A expenses increased to 76.5% in the year ended December 31, 2024 from 57.0% in the year ended December 31, 2023.2024. The increasedecrease in expense resultedwas largelyprimarily fromdriven theby lower non-cash equity compensation grants made in Januarythe 2024.2025 period.
R&D expenses increased to $4.2 million in the year ended December 31, 2025 compared to $3.0 million in the year ended December 31, 2024. The increase in expense reflects our heightened development activity in the 2025 period as we aggressively pursue the development of NXT-41 and NXT-41x, our next-generation biologic scaffolds combined with local antibiotic delivery.
R&D expenses decreased to $3.8 million in the year ended December 31, 2024 compared to $4.4 million in the year ended December 31, 2023. Over the last several years, our R&D efforts have primarily related to activities associated with the development of EluPro (referred to as CanGarooRM during development). With the FDA’s approval of EluPro in June 2024, the related costs were less in the year ended December 31, 2024 versus the prior year’s comparable period.
Increases in non-cash equity compensation recognized in 2024 served to partially offset the EluPro development cost decrease noted above.
FiberCel litigation costs decreased to $8.5 million in the year ended December 31, 2025 compared to $11.4 million in the year ended December 31, 2024. The decrease in expense was primarily due to the continued evaluation of the contingent FiberCel liability and significant reductions in our FiberCel activities with nearly all cases having been settled as of December 31, 2025. As of December 31, 2025, insurance remains available to cover the cost of the VBM Litigation and related defense costs; however, we have no more insurance to cover the cost of the FiberCel Litigation and the related defense costs. See further discussion in Note 17 to the consolidated financial statements.
Litigation costs, net increased to $11.4 million in the year ended December 31, 2024 compared to $10.0 million in the year ended December 31, 2023. The continued evaluation and settlements of our FiberCel and VBM contingent litigation liabilities along with increases in legal defense costs resulted in higher expenses in the 2024 period. Such increase was partially offset by our recovery in September 2024 of $1.6 million in connection with the settlement of certain disputed indemnity and contribution amounts related to the FiberCel Litigation. See further discussion in Note 17 to the consolidated financial statements included elsewhere in this Annual Report.
Interest Expense
Interest expense was approximately $4.8 million in the year ended December 31, 2024 compared to $5.8 million in the year ended December 31, 2023. The decrease was primarily due to lower principal outstanding on the SWK debt in the current year period as a result of mandatory repayments in connection with our sale of the Orthobiologics Business in November 2023.
Discontinued Operations
Income from discontinued operations for the year ended December 31, 2024 was $0.2 million and the loss from discontinued operations for the year ended December 31, 2023 was $3.6 million. See Notes 1 and 4 to the consolidated financial statements included elsewhere in this Annual Report for further discussion.
OtherInterest (Income) Expense, net
Interest (income) expense, net was interest income of $0.4 million in the year ended December 31, 2025 and interest expense of $0.9 million in the year ended December 31, 2024. The decrease in interest expense was primarily due to the error correction related to the January 2024 Ligand amendment described in Note 11 to the consolidated financial statements.
Other Expense (Income), net
What changed in the latest 10-Q
Risk Factors
New heading “The sale of our SimpliDerm Business may not be completed within the expected timeframe, or at all, and the failure to complete the transaction could adversely affect our business, our financial condition and the market price of our stock.”
New heading “Even if the Disposition is completed, the amount of net proceeds that we will receive from the Disposition will be subject to uncertainties.”
New heading “Even if the Disposition is completed, we may not realize some or all of the anticipated benefits of the sale of our SimpliDerm Business.”
New heading “If the Disposition is completed, our future results of operations, which will be solely dependent on our ability to successfully develop, commercialize and grow our drug-eluting biomatrix platform and on the operations of our Cardiovascular segment, may differ materially from our previous results.”
New heading “We may not be able to maintain a listing of our Class A common stock on the Nasdaq Capital Market.”
Largest changes
“On July 16, 2026, we entered into an Asset Purchase Agreement (the “SimpliDerm APA”) to sell our SimpliDerm Business to Cellution Biologics Inc. (the “Disposition”). …”see in full comparison
“We will continue to actively monitor the closing bid price of our Common Stock and will evaluate available options, including, without limitation, seeking to effect a reverse stock split, in order to resolve the deficiency and regain compliance with the Minimum Bid Price requirement. However, if we fail to regain compliance with the Minimum Bid Price requirement, or otherwise violate or fail to meet any Nasdaq listing requirements, our Common Stock may be delisted. …”see in full comparison
“If the Disposition is completed, our future results of operations, which will be solely dependent on our ability to successfully develop, commercialize and grow our drug-eluting biomatrix platform and on the operations of our Cardiovascular segment, may differ materially from our previous results.”see in full comparison
“If we do not regain compliance during the Compliance Period, we may be eligible for an additional 180-calendar day period to regain compliance with the Minimum Bid Price, provided that we meet the applicable market value of publicly held shares requirement for continued listing and all other applicable standards for initial listing on The Nasdaq Capital Market (except the Minimum Bid Price requirement), and notify Nasdaq of our intent to cure the deficiency by effecting a reverse stock split of our Common Stock, if necessary. …”see in full comparison
“The sale of our SimpliDerm Business may not be completed within the expected timeframe, or at all, and the failure to complete the transaction could adversely affect our business, our financial condition and the market price of our stock.”see in full comparison
“Even if the Disposition is completed, the amount of net proceeds that we will receive from the Disposition will be subject to uncertainties.”see in full comparison
Full comparison: every changed paragraph (14)
Our business, financial condition and operating results can be affected by a number of factors, whether currently known or unknown, including but not limited to those described as risk factors, any one or more of which could, directly or indirectly, cause our actual operating results and financial condition to vary materially from past, or anticipated future, operating results and financial condition. For a discussion of these potential risks and uncertainties, see Part I, Item 1A. “Risk Factors” of our 2025 Annual Report. Any of these factors, in whole or in part, could materially and adversely affect our business, financial condition, operating results and the price of our common stock. ThereExcept as set forth below, there have been no material changes in our risk factors tofrom those included in our 2025 Annual Report.Report:
The sale of our SimpliDerm Business may not be completed within the expected timeframe, or at all, and the failure to complete the transaction could adversely affect our business, our financial condition and the market price of our stock.
On July 16, 2026, we entered into an Asset Purchase Agreement (the “SimpliDerm APA”) to sell our SimpliDerm Business to Cellution Biologics Inc. (the “Disposition”). The consummation of the Disposition is subject to closing conditions, including, among others, (i) the accuracy of representations and warranties set forth in the SimpliDerm APA (subject to customary materiality qualifiers), (ii) the absence of any Material Adverse Effect (as defined in the SimpliDerm APA) with respect to the SimpliDerm Business, (iii) material compliance with covenants set forth in the SimpliDerm APA, (iv) the execution and delivery of certain related ancillary documents, (v) no termination or material impairment of assumed or shared contracts, (vi) resolution of certain supply related matters, and (vii) certain other conditions set forth in the SimpliDerm APA. Subject to the satisfaction or waiver of the conditions to the closing of the Disposition, the Company expects the Disposition to occur in the third quarter of 2026. However, we cannot predict when or if these conditions will be satisfied. There can be no assurance that our business, our relationships or our financial condition will not be adversely affected, as compared to the condition prior to the announcement of the Disposition, if the Disposition is not consummated in a timely matter, or at all. If the Disposition is not completed, our directors, executive officers and other employees will have expended time and effort and experienced distractions from their work during the pendency of the Disposition and we will have incurred third-party transaction costs, in each case, without any commensurate benefit, which may have a material and adverse effect on our stock price, financial condition and results of operations.
Even if the Disposition is completed, the amount of net proceeds that we will receive from the Disposition will be subject to uncertainties.
The amount of net proceeds that we will receive from the Disposition is subject to uncertainties. The SimpliDerm APA provides for aggregate consideration payable to us of up to $11 million, consisting of: (i) a base purchase price of $8 million in cash, payable at closing of the transaction, subject to adjustment for any inventory shortfall; (ii) a contingent payment of up to $2 million, payable upon completion of certain technology transfer and manufacturing transition milestones within an 18-month period following the closing of the transaction, subject to reduction for sales shortfalls against monthly SimpliDerm sales targets during such transition period (the “Milestone Payments”); and (iii) contingent payments of up to $1 million, in the aggregate, in the form of earn-out payments, payable for any four of the first five quarters following the closing of the transaction in which SimpliDerm sales exceed a specified quarterly revenue target (the “Earn-Out Payments”). However, there can be no assurance that these technology transfer and manufacturing transition milestones will be achieved, or that these revenue targets will be met, on a timely basis. Accordingly, we may not receive a portion, or any of, the contingent Milestone Payments and/or contingent Earn-Out Payments following the Disposition. In addition, following the Disposition, if Cellution successfully asserts claims against us pursuant to the SimpliDerm APA, the amount of net proceeds may be subject to further reduction. We may also have unforeseen liabilities and expenses that must be satisfied from the after-tax net proceeds of the Disposition. As a result, the amount of the net proceeds from the Disposition is subject to substantial uncertainty, and it is possible that the net proceeds from the Disposition will be materially less than we expect.
Even if the Disposition is completed, we may not realize some or all of the anticipated benefits of the sale of our SimpliDerm Business.
We may not be able to achieve the full strategic and financial benefits expected to result from the sale of our SimpliDerm Business, or such benefits may be delayed or not occur at all. Our ability to realize the anticipated benefits of the Disposition will depend significantly on our ability to successfully develop, commercialize and grow our drug-eluting biomatrix (“DEB”) platform. In addition, some of the anticipated benefits may not occur for a significant time period following the completion of the Disposition. If our strategy is not successful and does not achieve our expectations over the long term, our business, financial condition and results of operations may be adversely affected and the price of our stock could decline.
If the Disposition is completed, our future results of operations, which will be solely dependent on our ability to successfully develop, commercialize and grow our drug-eluting biomatrix platform and on the operations of our Cardiovascular segment, may differ materially from our previous results.
The SimpliDerm Business generated approximately 61% of our aggregate revenue for the first six months of 2026, and approximately 81% of our aggregate revenue for the first six months of 2025. Accordingly, our future financial results may differ from our previous results since our future financial results will be dependent solely (i) on our ability to successfully develop, commercialize and grow our drug-eluting biomatrix platform and (ii) on the existing operations of our Cardiovascular segment. In addition, as we have previously announced, we are also exploring the potential divestiture of our Cardiovascular product line.
As we have previously disclosed, following the sale of the CIED Business, we are focused on advancing our DEB platform. Our lead development programs in our DEB platform comprise NXT 41, a next-generation biologic matrix, and NXT-41x, which builds on the NXT-41 matrix by incorporating local antibiotic delivery. However, we have not yet received FDA clearance for either NXT-41 or NXT-41x. Moreover, there is no guarantee that the FDA approvals we may seek will be granted on a timely basis, or at all, or that other actions or approvals are not required. If we fail to successfully develop, commercialize, market and sell NXT-41x, the Company’s business and financial condition may be materially adversely affected.
We may not be able to maintain a listing of our Class A common stock on the Nasdaq Capital Market.
Because our Class A common stock is listed on the Nasdaq Capital Market, we must meet certain financial and liquidity criteria to maintain such listing. On August 6, 2026, we received a letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”), notifying us that, for the last 30 consecutive business days, the closing bid price for our Class A common stock, par value $0.001 per share (the “Common Stock”), was below $1.00 per share, which is the minimum closing bid price (the “Minimum Bid Price”) required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Notice”). We were provided a compliance period of 180 calendar days from the date of the Notice, or until February 2, 2027 (the “Compliance Period”), to regain compliance with the Minimum Bid Price requirement. As of the date of this filing, we have not had a closing bid price over $1.00 and there can be no assurance that we will regain compliance with the Minimum Bid Price requirement prior to the end of the Compliance Period or that we will otherwise maintain compliance with any of the other Nasdaq listing requirements.
If we do not regain compliance during the Compliance Period, we may be eligible for an additional 180-calendar day period to regain compliance with the Minimum Bid Price, provided that we meet the applicable market value of publicly held shares requirement for continued listing and all other applicable standards for initial listing on The Nasdaq Capital Market (except the Minimum Bid Price requirement), and notify Nasdaq of our intent to cure the deficiency by effecting a reverse stock split of our Common Stock, if necessary. If Nasdaq determines that we are not eligible for an additional 180 calendar days compliance period or we will not be able to cure the deficiency with the Minimum Bid Price requirement within the allotted compliance period, the Common Stock will be subject to delisting.
We will continue to actively monitor the closing bid price of our Common Stock and will evaluate available options, including, without limitation, seeking to effect a reverse stock split, in order to resolve the deficiency and regain compliance with the Minimum Bid Price requirement. However, if we fail to regain compliance with the Minimum Bid Price requirement, or otherwise violate or fail to meet any Nasdaq listing requirements, our Common Stock may be delisted. A delisting of our Common Stock from Nasdaq may materially impair our stockholders’ ability to buy and sell our Common Stock and could have an adverse effect on the market price of, and the efficiency of the trading market for, our Common Stock. In the event our Common Stock is delisted from Nasdaq, the delisting of our Common Stock could significantly impair our ability to raise capital and stockholder value.
Management's Discussion & Analysis (MD&A)
New heading “Agreement to Divest SimpliDerm Business”
New heading “New Loan Agreement”
New heading “Comparison of the Six Months Ended June 30, 2026 and 2025”
New heading “Cost of Goods Sold”
New heading “Operating Expenses”
New heading “Sales and Marketing”
New heading “General and Administrative”
New heading “Research and Development”
New heading “Litigation Costs, net”
New heading “Interest Income, net”
Largest changes
“On August 11, 2026 (the “Loan Agreement Closing Date”), the Company entered into a loan and security agreement, and supplement to loan and security agreement (collectively, the “Loan Agreement”), with Avenue Venture Opportunities Fund II, L.P., as administrative agent and collateral agent for the lenders (in such capacities, the “Loan Agent”) and as lender (“Avenue 2”), and Avenue Growth Lending Fund III, L.P., as a lender (“Avenue 3”; …”see in full comparison
“Litigation costs, net decreased to $2.7 million in the six months ended June 30, 2026 compared to $6.6 million in the six months ended June 30, 2025. The decrease in expense was primarily due to significant reductions in our FiberCel activities and related contingent liability fluctuations with nearly all cases having been settled as of June 30, 2026. As of June 30, 2026, insurance remains available to cover the cost of the VBM Litigation and related defense costs; however, we have no more insurance to cover the cost of the FiberCel Litigation and the related defense costs. …”see in full comparison
Full comparison: every changed paragraph (53)
Elutia continues to market and sell its proprietary biologic matrix products, including its cardiovascular repair portfolio, comprising ProxiCor, VasCure, and Tyke, and SimpliDerm®, a human acellular dermal matrix (“hADM”) used in soft tissue reconstruction,reconstruction. and itsThe cardiovascular repairproducts portfolio,reside comprisingin ProxiCor,our VasCure,Cardiovascular segment and Tyke. SimpliDerm is the primary commercial product in our Women’s Health segment, and the cardiovascular products reside in our Cardiovascular segment. These products are sold directly to healthcare facilities through independent sales agents. See “Agreement to Divest SimpliDerm Business” below for a discussion regarding the pending disposition of our SimpliDerm Business.
Agreement to Divest SimpliDerm Business
On July 16, 2026, we entered into an Asset Purchase Agreement (the “SimpliDerm APA”) with Cellution Biologics Inc. (“Cellution”). Subject to the terms and conditions of the SimpliDerm APA, at the closing of the transactions contemplated by the SimpliDerm APA, Cellution will purchase from us substantially all of the assets related to our business of commercializing, manufacturing, distributing, selling and/or marketing human acellular dermis (hADM) products for use in the field of breast reconstruction under the SimpliDerm brand (the “SimpliDerm Business”). The assets of the SimpliDerm Business constitute substantially all of the assets currently held in our Women’s Health segment. Cellution is only assuming certain liabilities related to performance of the contracts transferred in the SimpliDerm APA. Subject to the satisfaction or waiver of the conditions to closing, we expect the closing of the transaction to occur in the third quarter of 2026. Following the sale of the SimpliDerm Business, we intend to remain focused on advancing our DEB platform.
The SimpliDerm APA provides for aggregate consideration payable to us of up to $11 million, consisting of: (i) a base purchase price of $8 million in cash, payable at closing of the transaction, subject to adjustment for any inventory shortfall; (ii) a contingent payment of up to $2 million, payable upon completion of certain technology transfer and manufacturing transition milestones within an 18-month period following the closing of the transaction, subject to reduction for sales shortfalls against monthly SimpliDerm sales targets during such transition period; and (iii) contingent payments of up to $1 million, in the aggregate, in the form of earn-out payments, payable for any four of the first five quarters following the closing of the transaction in which SimpliDerm sales exceed a specified quarterly revenue target.
New Loan Agreement
On August 11, 2026 (the “Loan Agreement Closing Date”), the Company entered into a loan and security agreement, and supplement to loan and security agreement (collectively, the “Loan Agreement”), with Avenue Venture Opportunities Fund II, L.P., as administrative agent and collateral agent for the lenders (in such capacities, the “Loan Agent”) and as lender (“Avenue 2”), and Avenue Growth Lending Fund III, L.P., as a lender (“Avenue 3”; together with Avenue 2, the “Lenders”), which provides for a senior secured term loan facility of up to $15 million in the aggregate that matures on March 1, 2030, consisting of (i) an initial term loan of $10 million (the “First Tranche Term Loan”), which was fully funded on the Loan Agreement Closing Date, and (ii) a $5 million delayed draw term loan (the “Second Tranche Term Loan”), which will be made available between May 1, 2027 and September 30, 2027, subject to the satisfaction of certain regulatory approvals and liquidity conditions (the “Second Tranche Term Loan”, which together with the First Tranche Term Loan, the “Term Loans”). See Note 13 to the condensed consolidated financial statements for further discussion of the new Loan Agreement and the 2026 Warrants issued to the lenders in connection with the new Loan Agreement.
On September 8, 2025, we executed an Asset Purchase Agreement (the “CIED APA”) with Boston Scientific Corporation (“BSC”) and Cardiac Pacemakers Inc. (collectively with BSC, the “CIED Buyers”). On October 1, 2025, at the closing of the transactions contemplated by the CIED APA, the CIED Buyers purchased from Elutia substantially all of the assets related to its business of researching, developing, administering, operating, commercializing, manufacturing, selling and marketing CIED products, including the CanGaroo®, CanGaroo® RM, EluPro™ and CIED envelope products, including next generation CIED envelope products (collectively the “CIED Business”).
The CIED APA provided for an aggregate purchase price, subject to certain adjustments pursuant to the terms of the CIED APA, of up to $88 million in cash, with $80.4 million (which included an inventory adjustment of $0.4 million) that was paid in cash to Elutia at the closing of the transactions, and $8.0 million that was deposited at the closing of the transactions in escrow for a period of twelve months, which is subject to potential reduction in the event of certain post-closing breaches of representations and warranties within the CIED APA by Elutia. The assets of the CIED Business constituted substantially all of the assets previously held in Elutia’s Device Protection segment. The CIED Buyers only assumed certain liabilities related to performance of the contracts transferred in the CIED APA.
As described in Note 2 to the condensed consolidated financial statements, the sale of the CIED Business was accounted for as Discontinued Operations for all periods presented in accordance with Accounting Standards Codification (“ASC”) 205-20, Discontinued Operations. Consequently, the results of operations from the CIED Business are reported as discontinued operations in the condensed consolidated statements of operations for the three and six months ended MarchJune 31,30, 2025.
On November 8, 2023, we completed the sale of substantially all of the assets relating to our former Orthobiologics Business to Berkeley. The Orthobiologics Business was comprised of assets relating to researching, developing, administering, insuring, operating, commercializing, manufacturing, selling and marketing our Orthobiologics products, and the business of contract manufacturing of particulate bone, precision milled bone, cellular bone matrix, acellular dermis, soft tissue and other products. The assets sold represented the entirety of our Orthobiologics segment. We received approximately $14.6 million, and we may earn up to an additional $20.0 million, in the aggregate, in the form of earn-out payments. The earn-out payments are equal to 10% of the actual revenue earned by Berkeley in each of the five years after the closing of the sale from sales of specified Orthobiologics products under the purchase agreement (including improvements, modifications, derivatives and enhancements related to those products). There have been no earn-out payments made to date. Pursuant to the purchase agreement, we retained the liabilities arising out of the viable bone matrix (“VBM”) and FiberCel recall matters, as described in Note 1710 to the condensed consolidated financial statements, both of which products were part of the Orthobiologics Business. We recognized a gain of $6.0 million on the sale of the Orthobiologics Business in 2023 and an additional gain of $0.2 million in the second quarter of 2024 from an adjustment payment related to the final working capital received by Berkeley at the sale date. Additionally, the purchase agreement provided for a customary indemnity holdback in the amount of $1.5 million to be retained by Berkeley for 24 months after closing of the transaction. In March 2026, the indemnity holdback was resolved with Berkeley remitting $0.4 million to Elutia. Such amount was recognized as additional gain in the first quarter of 2026. Should we receive incremental proceeds in the future through an earn-out payment, an additional gain will be recorded upon the receipt of such amounts.
Our cost of goods sold relaterelates to the purchase costs of the SimpliDerm finished goods and the purchased raw materials and minor finished good conversion costs required for the Cardiovascular products. Cost of goods sold also includes the amortization of intangibles related to the Cardiovascular products generated from the CorMatrix Acquisition in 2017.
General and administrative (“G&A”) expenses consist primarily of compensation, consulting, legal, human resources, information technology, accounting, insurance (including directorsdirectors’ and officerofficers’ liability premiums), SEC compliance, and general business expenses.
Research and development (“R&D”) expenses consist primarily of salaries and fringe benefits, laboratory supplies, clinical studies and outside service costs. Over the last several years, our product development efforts have primarily related to activities associated with the development of EluPro, our initial DEB product offering, which gained FDA clearance in June 2024 and was sold in connection with the divestiture of the CIED Business in October 2025. FutureSince then and in the future, our development efforts and associated internal and external costs are expected to focus on our lead development programs consisting of next-generation biologic scaffolds combined with local antibiotic delivery.
Litigation costs, net consist primarily of legal fees and the estimated and actual costs to resolve the outstanding FiberCel and VBM litigation cases offset by the estimated and actual amounts recoverable or recovered under insurance, indemnity and contribution agreements for such costs. Such expenses also include the FiberCel-related Medtronic litigation.litigation, which has been dismissed pursuant to the terms of a settlement agreement reached in June 2026. See Note 10 to the condensed consolidated financial statements for further discussion of all litigation proceedings.
Comparison of the Three Months Ended MarchJune 31,30, 2026 and 2025
Total net sales were $3.1$2.4 million in the three months ended MarchJune 31,30, 2026, ana increasedecrease of $0.2$0.3 million compared to $2.9$2.7 million in the three months ended MarchJune 31,30, 2025. The increasedecrease was due to higherlower sales of CardiovascularWomen’s Health compared to the three months ended MarchJune 31,30, 2025, partially offset by declinesgrowth in Women’s Health.Cardiovascular. With respect to Cardiovascular, our former exclusive distribution agreement with LeMaitre Vascular terminated in April 2025, and we resumed selling these products directly through independent sales agents in May 2025. The sales increases in the three months ended MarchJune 31,30, 2026 were generated by both volume growth and higher unit prices as such sales are now at end-user pricing versus contracted prices (which are lower than end-user pricing). The decrease in Women’s Health was caused by a disruption in product supply from our contract manufacturer as well as our termination of the Tiger distribution agreement as noted above, partially offset by growth in sales by our independent sales agents.above. Sales of SimpliDerm generated by Tiger totaled $0.9$0.5 million in the three months ended MarchJune 31,30, 2025.
Total cost of goods sold decreased by $0.3 million to $1.3$1.0 million infor the three months ended MarchJune 31,30, 20262026, compared towith $1.6$1.3 million infor the three months ended MarchJune 31,30, 2025. Gross margin wasincreased 57.9%to in59.6% for the three months ended MarchJune 31,30, 20262026, comparedfrom to52.9% 46.8% infor the three months ended MarchJune 31,30, 2025. Gross margin, excludingExcluding intangible asset amortization, wasgross 66.5%margin inincreased to 70.7% from 62.7% during the threerespective months ended March 31, 2026 compared to 55.9% in the three months ended March 31, 2025.periods. The improvement between years was due to both Women’s Health and Cardiovascular, where,for which, in mid to late 2025, we resumed selling these products only directly to hospitals and other healthcare facilities through our independent sales agents where end user pricing (versus contracted prices with distributors) yields higher margins.
Sales and marketing expenses increased $0.5$0.1 million, or 48.7%,7.3%, to $1.5$1.4 million in the three months ended MarchJune 31,30, 2026 compared to $1.0$1.3 million in the three months ended MarchJune 31,30, 2025. As a percentage of sales, sales and marketing expenses increased to 47.5%56.3% in the three months ended MarchJune 31,30, 2026 from 33.7%46.3% in the three months ended MarchJune 31,30, 2025. The increase was largely attributable to sales commission expense growth commensurate with the resumption in the direct selling of our Cardiovascular products as well as the entirety of SimpliDerm sales occurring through our commissioned independent sales agents in 2026.
G&A expenses increaseddecreased $0.4$0.1 million, or 9.9%,2.8%, to $4.1$3.5 million in the three months ended MarchJune 31,30, 2026 compared to $3.7$3.6 million in the three months ended MarchJune 31,30, 2025. The increasedecrease in expense was primarily driven by theslightly incrementallower facilitylegal costsfees associated with our Gaithersburg headquarterscompared to whichthe weprior moved in May 2025.year.
R&D expenses increased $1.1$1.5 million, or 126.5%155.5% to $2.0$2.5 million in the three months ended MarchJune 31,30, 2026 compared to $0.9$1.0 million in the three months ended MarchJune 31,30, 2025. The increase in expense reflects our heightened development activity in the 2026 period as we aggressively pursue the development of NXT-41 and NXT-41x, our next-generation biologic scaffoldsmatrices, which in the case of NXT-41x, is combined with local antibiotic delivery.
Litigation costs, net decreased to $0.6$2.1 million in the three months ended MarchJune 31,30, 2026 compared to $2.6$4.0 million in the three months ended MarchJune 31,30, 2025. The decrease in expense was primarily due to significant reductions in our FiberCel activities and related contingent liability fluctuations with nearly all cases having been settled as of MarchJune 31,30, 2026. As of MarchJune 31,30, 2026, insurance remains available to cover the cost of the VBM Litigation and related defense costs; however, we have no more insurance to cover the cost of the FiberCel Litigation and the related defense costs. See further discussion in Note 10 to the condensed consolidated financial statements.
Interest (Income) Expense,Income, net
Interest (income) expense,income, net was interestless income ofthan $0.1 million in the three months ended MarchJune 31,30, 2026 and interest expense of $0.2$0.5 million in the three months ended MarchJune 31,30, 2025. The changedecrease resultswas fromprimarily adue higherto averagethe casherror balancecorrection related to the January 2024 Ligand amendment described in theNote 2026 period yielding greater interest income8 to offset the interestcondensed expenseconsolidated incurredfinancial on the Ligand Revenue Interest Obligation deseribed below.statements.
Comparison of the Six Months Ended June 30, 2026 and 2025
NM = not meaningful
Net Sales
Net sales information for our products is summarized as follows:
Total net sales were $5.5 million for the six months ended June 30, 2026, a decrease of $0.2 million, or 2.8%, compared with $5.7 million for the six months ended June 30, 2025. The decrease was attributable to lower Women’s Health sales resulting from a disruption in product supply from our contract manufacturer as well as the termination of the Tiger distribution agreement, partially offset by growth in Cardiovascular sales, as discussed above.
Cost of Goods Sold
Cost of goods sold and gross margin percentage information for our products is summarized as follows:
Total cost of goods sold decreased $0.6 million to $2.3 million in the six months ended June 30, 2026 compared to $2.9 million in the six months ended June 30, 2025. Gross margin was 58.6% in the six months ended June 30, 2026 compared to 49.8% in the six months ended June 30, 2025. Gross margin, excluding intangible asset amortization, was 68.4% in the six months ended June 30, 2026 compared to 59.3% in the six months ended June 30, 2025. The improvement between years was due to both Women’s Health and Cardiovascular, for which, in mid to late 2025, we resumed selling these products only directly to hospitals and other healthcare facilities through our independent sales agents where end user pricing (versus contracted prices with distributors) yields higher margins.
Operating Expenses
Sales and Marketing
Sales and marketing expenses increased $0.6 million, or 25.5%, to $2.8 million in the six months ended June 30, 2026 compared to $2.3 million in the six months ended June 30, 2025. As a percentage of sales, sales and marketing expenses increased to 51.4% in the six months ended June 30, 2026 from 39.8% in the six months ended June 30, 2025. The increase was largely attributable to sales commission expense growth commensurate with the resumption in the direct selling of our Cardiovascular products as well as the entirety of SimpliDerm sales occurring through our commissioned independent sales agents in 2026.
General and Administrative
G&A expenses increased $0.3 million, or 3.7%, to $7.5 million in the six months ended June 30, 2026 compared to $7.3 million in the six months ended June 30, 2025. The increase in expense was primarily driven by the incremental facility costs associated with our Gaithersburg headquarters to which we moved in May 2025.
Research and Development
R&D expenses increased $2.6 million, or 141.9% to $4.5 million in the six months ended June 30, 2026 compared to $1.9 million in the six months ended June 30, 2025. The increase in expense reflects our heightened development activity in the 2026 period as we aggressively pursue the development of NXT-41 and NXT-41x, our next-generation biologic scaffolds combined with local antibiotic delivery.
Litigation Costs, net
Litigation costs, net decreased to $2.7 million in the six months ended June 30, 2026 compared to $6.6 million in the six months ended June 30, 2025. The decrease in expense was primarily due to significant reductions in our FiberCel activities and related contingent liability fluctuations with nearly all cases having been settled as of June 30, 2026. As of June 30, 2026, insurance remains available to cover the cost of the VBM Litigation and related defense costs; however, we have no more insurance to cover the cost of the FiberCel Litigation and the related defense costs. See further discussion in Note 10 to the condensed consolidated financial statements.
Interest Income, net
Interest income, net was interest income of $0.1 million in the six months ended June 30, 2026 and interest income, net of $0.3 million in the six months ended June 30, 2025. The decrease was primarily due to the error correction related to the January 2024 Ligand amendment described in Note 8 to the condensed consolidated financial statements.
This Quarterly Report presents our gross margin, excluding intangible asset amortization, for the three and six months ended MarchJune 31,30, 2026 and 2025. We calculate gross margin, excluding intangible asset amortization, as gross profit, excluding amortization expense relating to intangible assets we acquired in the CorMatrix Acquisition, divided by net sales. Gross margin, excluding intangible asset amortization, is a supplemental measure of our performance, is not defined by or presented in accordance with U.S. generally accepted accounting principles (“GAAP”), has limitations as an analytical tool and should not be considered in isolation or as an alternative to our GAAP gross margin, gross profit or any other financial performance measure presented in accordance with GAAP. We present gross margin, excluding intangible asset amortization, because we believe that it provides meaningful supplemental information regarding our operating performance by removing the impact of amortization expense, which is not indicative of our overall operating performance. We believe this provides our management and investors with useful information to facilitate period-to-period comparisons of our operating results. Our management uses this metric and the results of the segments in assessing the health of our business and our operating performance, and we believe investors’ understanding of our operating performance is similarly enhanced by our presentation of this metric.
The following table presents a reconciliation of our gross margin, excluding intangible asset amortization, for the three and six months ended MarchJune 31,30, 2026 and 2025, to the most directly comparable GAAP financial measure, which is our GAAP gross margin (in thousands).
As of MarchJune 31,30, 2026, we had cash and cash equivalents of approximately $28.5$19.9 million. Since inception, we have financed our operations primarily through amounts borrowed under our credit facilities, proceeds from our initial public offering (“IPO”), sales of our products and more recently, the sale of our Orthobiologics and CIED Businesses and proceeds from follow-on offerings and private placements of our common stock and warrants. Our historical cash outflows have primarily been associated with manufacturing and administrative costs, sales and marketing, research and development, clinical activity, purchase of property and equipment used in our production activities, litigation defense and settlement costs and investing in our commercial infrastructure. We expect to incur operating losses and negative cash flows from operations for the foreseeable future as we advance our development and commercialization of NXT-41 and NXT-41x. Because of the numerous risks and uncertainties associated with our development and commercialization efforts, we are unable to predict when we will become profitable, and we may never become profitable. Our inability to achieve and then maintain profitability would negatively affect our business, financial condition, results of operations and cash flows. The future viability of Elutia is dependent on our ability to generate cash flows from current or future product sales and/or raise additional capital to finance its operations. We may seek to raise capital through the issuance of common stock or debt such as the offerings described below and in Note 13 to the condensed consolidated financial statements or pursue asset sales or other transactions, such as the sale of the Orthobiologics and CIED Businesses and the pending sale of the SimpliDerm business described above. However, such transactions may not be successful, and we may not be able to raise additional equity, refinance our debt instruments, sell assets or obtain waivers or amendments to our obligations on acceptable terms, or at all.
On October 1, 2025, in connection with and through the proceeds of the sale of the Company’s CIED Business described in Note 2 to the condensed consolidated financial statements, we fully repaid the SWK Loan Facility as required by the terms of the credit agreement. As of such date, the outstanding principal, including the accrued exit fee, and accrued interest totaled approximately $26.9 million. The total payment by the Company to SWK in full satisfaction of the debt and termination of the credit agreement was $27.8 million.
Cash Flows for the ThreeSix Months ended MarchJune 31,30, 2026 and 2025
Net cash used in operating activities for the threesix months ended MarchJune 31,30, 2026 was $7.9$16.3 million compared to $8.9$17.1 million for the threesix months ended MarchJune 31,30, 2025. The decrease was primarily due to a lower operating loss in the current year.
Net cash used in investing activities for the threesix months ended MarchJune 31,30, 2026 was less than $0.1 million compared to $0.3$0.4 million for the threesix months ended MarchJune 31,30, 2025. The decrease was primarily due to proceeds received from the sale of our Orthobiologics Business during the first quarter of 2026.
Net cash providedused byin financing activities for the threesix months ended MarchJune 31,30, 2026 was less than $0.1 million compared to $13.3net cash provided by financing activities of $12.7 million for the threesix months ended MarchJune 31,30, 2025. The prior year’s cash generation was primarily through the 2025 Registered Offering.
On August 10, 2022 (the “Closing Date”),2022, we entered into a senior secured term loan facility with SWK Funding LLC (“SWK”), as agent, and other lenders party thereto (as amended and modified subsequent to theAugust Closing10, Date,2022, the “SWK Loan Facility”) for an aggregate principal amount of $25 million. On October 1, 2025, in connection with and through the proceeds of the sale of the Company’s CIED Business described in Note 2 to the condensed consolidated financial statements, Elutia fully repaid the SWK Loan Facility as required by the terms of the credit agreement. As of such date, the outstanding principal, including the accrued exit fee, and accrued interest totaled approximately $26.9 million. The total payment by the Company to SWK in full satisfaction of the debt and termination of the credit agreement was $27.8 million.
As of MarchJune 31,30, 2026, we had cash and cash equivalents of approximately $28.5$19.9 million. We expect to continue to incur significant expenses and operating losses for the foreseeable future as we further expand our product development and clinical and research activities. In addition, we expect to continue to incur significant costs and expenses associated with operating as a public company.
The preparation of our unaudited condensed consolidated financial statements in accordance with GAAP requires us to make estimates and assumptions that affect reported amounts and related disclosures. We have discussed the policies and estimates that we believe are critical and require the use of complex judgment in their application in our 2025 Annual Report, and, during the threesix months ended MarchJune 31,30, 2026, there were no material changes to those previously disclosed.
ELUT 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 0 filings. 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 |
|---|---|---|---|---|---|
| 2026-09-10 | Williams Michelle Leroux |
Shares withheld for tax | 4,269 | $0.80 | $3.4K |
| 2026-09-10 | Williams Michelle Leroux |
Option exercise | 12,500 | — | — |
| 2026-09-10 | Ferguson Matthew |
Shares withheld for tax | 4,486 | $0.80 | $3.6K |
| 2026-09-10 | Ferguson Matthew |
Option exercise | 12,500 | — | — |
| 2026-09-10 | Mills C Randal |
Shares withheld for tax | 9,718 | $0.80 | $7.8K |
| 2026-09-10 | Mills C Randal |
Option exercise | 27,083 | — | — |
| 2026-06-21 | Mills C Randal |
Shares withheld for tax | 8,064 | $1.06 | $8.5K |
| 2026-06-21 | Mills C Randal |
Option exercise | 22,473 | — | — |
| 2026-06-10 | Williams Michelle Leroux |
Shares withheld for tax | 4,269 | $1.04 | $4.4K |
| 2026-06-10 | Williams Michelle Leroux |
Option exercise | 12,500 | — | — |
| 2026-06-10 | Ferguson Matthew |
Shares withheld for tax | 4,485 | $1.04 | $4.7K |
| 2026-06-10 | Ferguson Matthew |
Option exercise | 12,500 | — | — |
| 2026-06-10 | Mills C Randal |
Option exercise | 27,083 | — | — |
| 2026-06-10 | Mills C Randal |
Shares withheld for tax | 9,718 | $1.04 | $10.1K |
| 2026-06-01 | Highcape Partners Qp Ii, L.p. |
Other | 50,000 | — | — |
| 2026-06-01 | Highcape Partners Qp Ii, L.p. |
Gift | 70,000 | — | — |
| 2025-12-10 | Neels Guido J |
Option exercise | 6,250 | — | — |
Well-known investors holding ELUT (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Renaissance Technologies | 2026-06-30 | 201,816 | $197.7K | 0.0% | Added 144% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 123,505 | $121.0K | 0.0% | Added 10% |