MDXG 10-K & 10-Q changes, risk factors and insider trading

An investment in our Common Stock involves a substantial risk of loss. Set forth below is a summary of the risks and uncertainties affecting our business that we currently believe to be material. Our future operating results could differ materially from the results described in this Annual Report due to the risks and uncertainties described below. We caution you to read the following risk factors, which have affected, and/or in the future could affect, our business, prospects, operating results, and financial condition. Additional risks and uncertainties not currently known to us or that we currently deem immaterial may also affect our business, prospects, operating results, and financial condition. Additional risks and uncertainties are described under other captions in this report and should also be considered by our stockholders. If any of these risks materialize, our business, financial condition or operating results could suffer. In this case, the trading price of our Common Stock could decline, and you may lose part or all of your investment.

Our business is in a very competitive and evolving field. Competition from other tissue processors, medical device companies, and biotherapeutic companies, and from research and academic institutions, is intense, expected to increase and subject to rapid change and could be significantly affected by new product introductions as well as changes in reimbursement that could favor certain products and competitors over others. Established competitors and newer market entrants are investing in additional clinical research that may allow them to gain further clinician usage, adoption and payer coverage of their products. In addition, consolidation and cost containment measures in the healthcare industry may cause hospitals to consolidate their purchases with suppliers that have a broad portfolio of products. This would continue to give rise to demands for price concessions, which could have an adverse effect on our business, results of operations and financial condition. Further, competitors may introduce placental-based membrane products in the future at lower prices, adding new features or gaining additional reimbursement coverage, or utilize sales and marketing practices that negatively impact the industry. Further, they may copy our products inside or outside the United States. The presence of this competition may lead to pricing pressure, which could have an adverse effect on our business, results of operations and financial condition.

The commercial success of our human tissue products depends upon, among other factors, the availability of tissue from human donors. Any failure to obtain tissue from our sources will interfere with our ability to effectively meet demand for our products incorporating human tissue. The availability of donated tissue could also be adversely impacted by regulatory changes, public opinion of the donor process and our own reputation in the industry. We may not be successful in our ability to scale tissue recovery efforts to meet the potential future demand of our pipeline. Obtaining adequate supplies of human tissue involves several risks, including limited control over availability (due toto, for example, access to hospital accounts and the number of consenting mothers), quality, delivery schedules, and eligibility requirements. In addition, any interruption in the supply of any human tissue component could harm our ability to manufacture our products until a new source of supply, if any, could be found. We also utilize third-party providers of placental donations on an as-needed basis to mitigate risks but there can be no assurance that these third parties will be able to provide donated tissues at all times. We may be unable to find a sufficient alternative supply channel in a reasonable time period or on commercially reasonable terms, if at all, which would have an adverse effect on our business, results of operations and financial condition.

The reimbursement landscape for our products varies depending upon the site in which the products are administered. If we are not successful in obtaining adequate coverage and reimbursement for our products from these third-party payers in one or more of the sites of service where our products are used, it could have an adverse effect on market acceptance of our products. Inadequate reimbursement levels would likely also create downward price pressure on our products. Even if we do succeed in obtaining widespread coverage and reimbursement rates or policies for our products, future changes in coverage or reimbursement rates or policies could have a negative impact on our business, financial condition and results of operations.

Changes in the coverage and reimbursement environment as described above and the impact it could have on clinical practice and physician behavior, which will only become clear as implementation progresses, could result in declines in our revenue that would adversely affect our business, financial condition and results of operation.

Our agreements with GPOs and IDNs allow us to sell our products efficiently to large groups of customers. Our agreements with GPOs and IDNs typically provide their members with favorable ordering terms and conditions and access to favorable product pricing. These customers purchase our product through GPO and IDN arrangements in part because of the favorable pricing and terms and conditions. IfIf, as a result of competition, pricing, or any other reason, our agreement with any GPO or IDN is terminated or expires without being extended, renewed or renegotiated, this could adversely affect our revenue, results of operations and cash flows.

•their lack of experience with advanced therapeutics, such as our placenta-based allograftsallografts, xenografts or xenograftsother advanced therapies;

•lack of evidence supporting additional patient benefits of advanced therapeutics, such as our placenta-based allograftsallografts, xenografts or xenografts,other advanced therapies, over conventional methods in certain therapeutic applications;

To ensure protection of our information, we have invested in cybersecurity and have implemented processes and procedural controls to maintain the confidentiality and integrity of such information. We measure these controls and their success through a cybersecurity framework that is based on industry standards. Refer to Item 1C, Cybersecurity, for additional discussion. While we have invested in the protection of our data and technology, there can be no guarantees that our efforts will prevent all service interruptions or security breaches. Any such interruption or breach of our systems could adversely affect our business operations and result in the loss of critical or sensitive confidential information or intellectual property, and could result in financial, legal and reputational harm to our business, including legal claims and proceedings, liability under laws that protect the privacy of personal information, government enforcement actions and regulatory penalties, as well as remediation costs. We also maintain cyber liability insurance. However, this insurance may not be sufficient to cover the financial, legal or reputational losses that may result from an interruption or breach of our systems.

Some of our revenues are derived from sales, both direct and through a distributor,sales to the government. Any disruption of our products on the FSS or any change in the way the government purchases products like ours or the price it is willing to pay for our products could adversely affect our business, results of operations and financial condition.

ManyCurrently, all of the products we manufacture and process are derived from human tissue. Amniotic and other birth tissue have in the past generally been regulated as HCT/P and were therefore eligible to be subject to regulation solely under Section 361 (“Section 361 HCT/P”) depending on whether the specific product at issue and the claims made for it were consistent with the applicable criteria. HCT/Ps that do not meet these criteria are subject to more extensive regulation as drugs, medical devices, biological products, or combination products. These HCT/Ps must comply with both the FDA’s requirements for HCT/Ps and the requirements applicable to biologics, devices or drugs, including pre-market clearance or approval from the FDA. Obtaining FDA pre-market clearance or approval involves significant time and investment by the Company.

The process of obtaining formal FDA clearance or approval, such as a 510(k), BLA,Biological License Application (“BLA”), or equivalent, including clinical trial development and execution as well as manufacturing processes, requires the expenditure of substantial time, effort and financial resources and may take years to complete, including costs incurred on top of those fees incurred as part of conducting various clinical studies. The fee for filing such submissions and program fees payable with respect to any establishment that manufactures biologics are substantial. The FDA may not grant approval on a timely basis, or at all, or we may decide not to pursue this pathway for certain products or indications, or need to conduct additional trials for a given indication. Additionally, the FDA may limit the indications for use or place other conditions on any approvals that could restrict the commercial application of the products. If we do receive approval, some types of changes to the approved product, such as adding new indications or doses, manufacturing changes and additional labeling claims, are subject to further testing requirements and FDA review and approval. Our revenues could be adversely affected if we fail to obtain approvals and clearances on a timely basis or at all, or if the FDA limited the indications for use or required other conditions that restrict the commercial application of our products.

Finally, we and other manufacturers of skin substitutes are required to provide average sales price (“ASP”) information to CMS on a quarterly basis. The Medicare payment rates are updated quarterly based on this ASP information. If a manufacturer is found to have made a misrepresentation in the reporting of ASP, such manufacturer is subject to civil monetary penalties of up to $10,000 for each misrepresentation for each day in which the misrepresentation was applied, and potential False Claims Act liability. See “We and our sales representatives, whether employees or independent contractors, must comply with various federal and state anti-kickback, self-referral, false claims and similar laws, any breach of which could cause an adverse effect on our business, results of operations and financial condition.”

As a general rule, FDA regulations require that the marketing of Section 361 HCT/Ps only be for appropriate homologous uses, and that the promotion of pre-approved biological products or devices only be for FDA-approved indications. Generally, unless the products are approved by the FDA for alternative uses, the FDA contends that we may not make claims about the safety or effectiveness of our products, or promote them as safe or effective for uses other than those specifically approved by the FDA. Such limitations present a risk that the FDA or other federal or state law enforcement authorities could determine that the nature and scope of our sales, marketing and support activities, though designed to comply with all FDA requirements, constitute the promotion of our products for an unapproved use in violation of the Federal Food Drug & Cosmetic Act. We also face the risk that the FDA or other governmental authorities might pursue enforcement based on past activities that we have discontinued or changed, including sales activities, prior marketing materials, arrangements with institutions and doctors, educational and training programs and other activities.

Nevertheless, while we believe we are fully in compliance with the FDA's Guidance on HCT/Ps, there can be no assurance that we have correctly interpreted the FDAFDA’s Guidance, or that we will not need to discontinue marketing a product and/or may be subject to fines, penalties, injunctions, and other sanctions if we are deemed to be promoting the use of our products for unapproved uses. Such regulatory penalties by the FDA could adversely affect our business and results of operations.

The FCA imposes civil liability on any person or entity that knowingly submits, or causes the submission of, a false or fraudulent claim to the U.S. government. Damages under the FCA can be significant and consist of the imposition of fines and penalties. The FCA also allows a private individual or entity to sue on behalf of the government to recover civil penalties and treble damages as a whistleblower. FCA liability is potentially significant in the healthcare industry because the statute provides for treble damages and mandatory penalties of between $13,946$14,308 and $27,894$28,619 per false claim or statement for penalties assessed after FebruaryJuly 12,3, 2024,2025, with respect to violations occurring after November 2, 2015.

Within our industry, Medicare expenditures on skin substitute products have increased dramatically from 2019, when annual spending on these products administered in private physician offices and associated care settings was approximately $0.5 billion. By 2023,2024, annual expenditures for this class of products totaled overapproximately $4$10 billion, and more recently, spending by Medicare hasapproached reacheda an excess of $1$15 billion perannual monthrun in the category.rate. As a result, CMS”) and the MACs have sought ways to implement coverage and payment reform in order to curb the dramatically increasing expenditures in our industry.

Changes to the manner and amounts Medicare reimburses for our products could have an impact on their utilization. We believe that substantial uncertainty remainsand unknowns remain regarding the specific reform measures and proposed legislation that could impact our industry. Any changes will likely take time to unfold and could have an impact on coverage and reimbursement for healthcare items and services, including our products.

We currently market our products in a smalllimited number of foreign countries, including in Japan. Foreign jurisdictions require separate regulatory approvals and compliance with numerous and varying regulatory requirements. The approval procedures vary among countries and may involve requirements for additional testing. Certain of our products require clearance or approval by the FDA. However, such clearance or approval does not ensure approval or certification by regulatory authorities in other countries or jurisdictions, and approval or certification by one foreign regulatory authority does not ensure approval or certification by regulatory authorities in other foreign countries or by the FDA. The foreign regulatory approval or certification process may include all of the risks associated with obtaining FDA clearance or approval. We may not obtain foreign regulatory approvals on a timely basis, if at all. We may not be able to file for regulatory approvals or certifications and may not receive necessary approvals to commercialize our products in any foreign jurisdiction. Furthermore, many foreign jurisdictions operate under socialized medical care, and obtaining reimbursement for our products under that construct may also prove difficult. If we fail to receive necessary approvals, certifications, or reimbursements necessary to commercialize our products in foreign jurisdictions on a timely basis, or at all, our business, results of operations and financial condition could be adversely affected. Further, governmental authorities outside the U.S. have become increasingly stringent in their regulation of medical devices, and our products may become subject to more rigorous regulation by non-U.S. governmental authorities in the future. U.S. or non-U.S. government regulations may be imposed in the future that may have a material adverse effect on our business and operations.

Our success depends significantly on our ability to protect our proprietary rights to the technologies used in our products. We rely on patent protection, as well as a combination of copyright, trade secret and trademark laws and nondisclosure, confidentiality and other contractual restrictions to protect our proprietary technology, including our licensed technology. These legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep any competitive advantage. In addition, our pending patent applications include claims to material aspects of our products and procedures that may not be protected by issued patents. The patent application process can be time consuming and expensive. Our pending patent applications might not result in issued patents, and issued patents may later be determined to be invalid or unenforceable as a result of district court litigation or related administrative proceedings. Competitors may be able to design around our patents or develop products that provide outcomes that are comparable or even superior to ours. Although we have taken steps to protect our intellectual property and proprietary technology, including entering into confidentiality agreements and intellectual property assignment agreements with some of our officers, employees, consultants and advisors, such agreements may not be enforceable or may not provide meaningful protection for our trade secrets or other proprietary information in the event of unauthorized use or disclosure or other breaches of the agreements.

As of December 2024,2025, the Companywe had aggregate borrowings outstanding of $19.0$18.0 million under itsour Term Loan Facility, pursuant to itsour Citizens Credit Agreement (as defined below in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations). Our outstanding debt may limit our ability to borrow additional funds or may adversely affect the terms on which such additional funds may be available. Additionally, a default under certain other indebtedness constitutes an event of default under the Citizens Credit Agreement. Consequently, the effects of a default under other debt may be amplified by the lenders exercising the remedies available to it in the Citizens Credit Agreement for events of default, including foreclosure on the collateral securing our obligations and the declaration that all amounts outstanding under the Citizens Credit Agreement are immediately due and payable.

The Citizens Credit Agreement also contains certain customary events of default, including, without limitation, (i) failure to pay interest or principal when due, (iii) failure to provide notice of certain material events and (iii) failure to perform or observe certain covenants under the Citizens Credit Agreement or any related loan documents (subject to a 30-day grace period in certain circumstances). If an event of default occurs and is continuing, the agent under the agreement may, and at the direction of the lenders, take one or more of the following actions: (i) terminate the commitments, (ii) declare any amounts outstanding immediately due and payable, and (iii) exercise any other right it has under the Citizens Credit Agreement or at law. Compliance with such covenants may restrict our operating flexibility, and in the event that we were unable to comply with such covenants, leading to default and acceleration, this could adversely affect our business, results of operations and financial condition.

As of December 31, 2024,2025, EW Healthcare Partners and their affiliates beneficially owned approximately 19.3%19% of our Common Stock (calculated on the basis described in Item 12, “Security Ownership Of Certain Beneficial Owners And Management” below).Stock. Also, for as long as EW Healthcare Partners and its affiliates collectively hold at least (i) 10% of the outstanding shares of our Common Stock, EW Healthcare Partners has the right to select two individuals that the Company must include among its nominees to serve on our Board and (ii) 5% (but less than 10%) of the outstanding shares of our outstanding Common Stock, EW Healthcare Partners has the right to select one individual that the Company must include among its nominees to serve on our Board. EW Healthcare Partners designated Martin P. Sutter and William A. Hawkins, III, who continue to serve on our board as directors. The interests of EW Healthcare Partners may conflict with those of our other shareholders, and EW Healthcare Partners may seek to influence, and may be able to influence, us through its director nomination rights and its share ownership.

We have never declared or paid cash dividends on our Common Stock. We currently expect to usedeploy availableour fundscapital andtoward anyvarious futuregoals, earnings; inincluding the development, operation and expansion of our business;business, tothe repayrepayment debt;of debt, and, to the extent authorized by our Board, repurchasingpotential repurchases of our Common Stock. We do not anticipate paying any cash dividends on our Common Stock in the foreseeable future. As a result, capital appreciation, if any, of our Common Stock will be an investor’s only source of potential gain from our Common Stock for the foreseeable future.

MIMEDX is a pioneer and leader in placental biologics focused on deliveringhelping innovativehumans solutions to patients and the healthcare professionals who treat them.heal. With morenearly thantwo a decadedecades of experience helping clinicians manage acutechronic and chronicother hard-to-heal wounds, MIMEDX has been dedicated to providingprovides a leading portfolio of products for applications in the wound care, burn, and surgical sectors of healthcare. All of our products sold in the United States are regulated by the FDA.U.S. Food and Drug Administration (“FDA”). We apply Current Good Tissue Practices (“CGTP”) and other applicable quality standards in addition to terminal sterilization to produce our allografts.

Our product portfolio is divided into two categories (1) Wound Care Products and (2) Surgical and Other Products.Surgical.

Our net sales are derived from selling our Wound and Surgical products to a wide range of customers, including hospitals, wound care centers and private physician offices that have clinicians using our suite of products to aid in the management of patients with chronic or hard-to-heal wounds. These customers choose products like ours based upon a variety of factors, including clinical efficacy, customer engagement programs, availability, handling characteristics, and reimbursement coverage and payer sources. Net sales are recognized based on the consideration we expect to receive from the sale at the point in time when control of the goods is transferred to the customer, which generally occurs upon our delivery to a third-party carrier or implantation for consignment arrangements. Net sales consists of the gross selling price of the product, less any discounts, rebates and other customer incentives, fees paid to GPOs, and returns.

Cost of goods sold includes product testing costs, quality assurance costs, personnel costs, manufacturing costs, raw materials and product costs, depreciationdepreciation, amortization of certain purchased assets and facility costs associated with our manufacturing and warehouse facilities. Fluctuations in our cost of goods sold correspond with the fluctuations in these costs as well as sales volume.

Selling, general and administrative expense consists of both selling and marketing (“S&M”) and general and administrative (“G&A”) expenses. S&Mexpense includes costs to execute our sales strategy, which includes personnel costs pertaining to our sales force and sales support functions, including salaries, commissions and other incentive compensation, commissions to sales agents, customer support, travel expenses, and bad debt expense. G&A expense reflects costs related to functions which support our business, such as legal, finance, human resources, and other such functions, including personnel costs associated with these functions, insurance, and certain professional fees. We expect our S&M expense to fluctuate based on revenue fluctuations, geographic changes, and any changes to the size of our headcount, particularly that of our sales and marketing forces. Certain of these costs scale with sales, but can fluctuate depending on sales mix. For example, we pay sales agents a greater commission than our internal sales force, meaning that we could incur greater commission expenses if a greater proportion of our sales are through sales agents. We expect our G&A expense to fluctuate based on headcount.

Research and development expense relates to our investments to expand our product pipeline and platforms, including historically through clinical trials,trials as well as expenditures in improvements to our manufacturing process and the enhancement of existing products. Our research and development costs also include expenses such as salaries and benefits related to our research department,departments, consulting costs andcosts, advisory costs, and regulatory costs.

We expense research and development costs as incurred. Fluctuations in research and development expenses canare be impacteddriven by the timing and cadence of our clinical trials.

Investigation, restatement and related expense primarily related to legal fees that were advanced to certain former officers and directors of the Company under certain indemnification agreements and our liability from certain legal proceedings that were taken against us. These costs ceasedended during the year ended December 31, 2024 and are not expected to reoccur.2024.

Interest expense,income (expense), net

We incur interest expense primarily throughfrom stated interest on our outstanding term loan and revolving loans,credit facilities, to the extent thatsuch theyborrowings are outstanding. The interestInterest on ourthese termfacilities and revolving loans areis currently tiedbased toon the applicable term Secured Overnight Financing RatesRate (“SOFR”)., Increasesand fluctuations in SOFR couldmay cause our interest expense to increase.vary. OtherWe activity influencinggenerate interest expense relates to the amortization of deferred financing costs and original issue discount associated with credit facilities outstanding. This amount is presented net of interest income, which we generateincome from ouramounts treasuryheld management.in various money market accounts.

Gross margin in 20242025 was 82.8%,82.6%, compared to 83.0%82.8% in 2023.2024. The decreaseslight in margindecline was driven by thelower amortizationyield, ofand variousmanufacturing intangibleinefficiencies. assetsThese acquiredpressures duringwere 2024. This effect waspartially offset by a more favorable product mixmix, andreflecting oura continuedgreater executionproportion onof scraphigher-price improvementproducts projects,in partiallythe offsetsales by throughput pressures.portfolio.

Cost of sales for the year ended December 31, 20242025 was $60.1$73.0 million, an increase of $5.4$12.9 million, or 10.0%,21.5%, compared to $54.6$60.1 million for the year ended December 31, 2023.2024. The increase in cost of sales was driven by the increase inhigher sales volumevolume, and theincreased changesmanufacturing in margins noted above.inefficiencies.

SG&A expense increased $14.0$41.1 million, or 6.6%,18.3%, to $266.2 million for December 31, 2025, compared to $225.1 million for December 31, 2024, compared to $211.1 million for December 31, 2023.2024. The following table shows the composition of this expense between selling and marketing (“S&M”) and general and administrative (“G&A”) components (amounts in thousands):

Sales and marketing expenses increased $13.7$34.1 million, or 8.5%,19.4%, year over year, which was driven by increases in commissionsprimarily due to higher commissions driven by increased sales and higherelevated effective commission rates.rates, along with higher bad debt expense. General and administrative expense increased $0.2$7.0 million, or 0.5%,14.1%, year-over-year. The increase wasyear-over-year, driven by generalongoing increaseslegal inand salariesregulatory fromdisputes, merittransaction-related increases,costs, offset by reductions inand severance expense and professional services.costs.

Investigation, restatement, and related expenses for the year ended December 31, 2024 was a benefit of $8.7 million, compared to expense of $5.2 million for the year ended December 31, 2023.million. The benefit was resulted from various settlements related to former officers and other related matters during 2024. This was offset by the last material payment towards the resolution of matters stemming from the findings of our historical Audit Committee investigationinvestigation. duringThese theexpenses year ended December 31, 2024. We do not expect activity to be materialceased in future periods.2024.

Amortization expense related to intangible assets werefor the year ended December 31, 2025 was $0.4 million, compared to $0.8 million for each of the yearsyear ended December 31, 2024 and 2023.2024.

ImpairmentThere was no impairment for the year ended December 31, 20242025, wascompared to $0.4 million,million whichfor relatesthe year ended December 31, 2024. The impairment of intangible assets in 2024 related to abandoned patents.

Interest Expense,Income (Expense), Net

InterestNet interest income (expense) decreasedwas $5.5 million to $1.0$2.9 million for the year ended December 31, 20242025, fromcompared $6.5to $(1.0) million for the year ended December 31, 2023.2024. The decreasefavorable increase was theprimarily resultdriven ofby improved treasury management. a decreasereduction in outstanding debtdebt, and lower ratesinterest underrates. theAdditionally, Citizenswe Credit Facilities after the Debt Refinancing Transactions (as defined below) was completed in January 2024. Improvements in our treasury management further aided the decrease. This decrease was partially offset byrecorded a $1.4 million loss on extinguishment of debt due to repaying and terminating a previous loan agreement duringin the first quarter of 2024.2024 due to the repayment and termination of a previous loan agreement.

Our effective tax rates for 20242025 and 20232024 waswere 26.7% and (120.2)%,26.7%, respectively, on income from continuing operations before income tax provision of $57.3$66.3 million and $30.6$57.3 million for 20242025 and 2023,2024, respectively. The effective tax rate in each period was favorably impacted by vestings of restricted stock, offset by executive compensation deduction limitations.

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

This discussion, which presents our results for the three and six months ended MarchJune 31,30, 2026 and 2025, should be read in conjunction with the unaudited condensed consolidated financial statements and accompanying notes included in this Form 10-Q and the financial statements and accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the SEC on February 25, 2026 (the “2025 Form 10-K”).

Three Months Ended MarchJune 31,30, 2026 Compared to the Three Months Ended MarchJune 31,30, 2025

Net sales were $59.0$64.4 million for the three months ended MarchJune 31,30, 2026, representing a decrease of $29.2$34.2 million, or 33.1%,34.7%, compared to $88.2$98.6 million for the three months ended MarchJune 31,30, 2025.

Surgical net sales were $36.4$39.3 million for the three months ended MarchJune 31,30, 2026, representing an increase of $4.2$5.2 million, or 13.2%,15.1%, compared to $32.1$34.1 million for the three months ended MarchJune 31,30, 2025. This increase was primarily driven by continued growth acrossin the AMNIOFIX®, AMNIOEFFECT®, AXIOFILL®, and HELIOGEN™AMNIOEFFECT productsheet lines as adoption expanded across multiple surgical procedures.products.

Cost of sales were $17.4$20.0 million for the three months ended MarchJune 31,30, 2026, representing an increase of $0.8$1.3 million, or 4.9%.7.0%. compared to $16.6$18.7 million for the three months ended MarchJune 31,30, 2025. This increase was primarily driven by higherincreased productionsales volume and one-time expenses related to our cost andreduction increased volume in the Surgical business, largely offset by lower volume in the Wound Care business and reduced amortization of acquired intangible assets.initiative.

Gross profit margin was 70.6%69.0% for the three months ended MarchJune 31,30, 2026, compared to 81.2%81.1% for the three months ended MarchJune 31,30, 2025. This decline was primarily driven by lower pricing in the Wound Care pricingbusiness following the Medicare reimbursement changes, as well as unfavorable product mixchanges and higher manufacturing costs.

Selling, general and administrative (“SG&A”) expense was $53.2$59.8 million for the three months ended MarchJune 31,30, 2026, compared to $60.0$64.2 million for the three months ended MarchJune 31,30, 2025. The following table shows the composition of this expense between selling and marketing (“S&M”) and general and administrative (“G&A”) components (amounts in thousands):

Sales and marketing expenses decreased $2.9$1.5 million or 6.3%,3.0%, year over year, primarily driven by lower commissionpersonnel, travel, and meeting expense resulting from reducedour salesrecent andcost reduction initiative, as well as lower travelcommission andexpense meetingdriven expenses.by Thisreduced decreasesales. wasThese partiallydecreases were offset by higher bad debt expense.expense, which increased $5.0 million, year over year. This increase is associated with the credit deterioration of certain legacy customers.

General and administrative expenses decreased $3.8$2.9 million or 28.9%17.9% year over year, primarily due to thelower personnel expense resulting from our recent cost reduction ofinitiative. compensation-relatedThis costs,decrease primarilywas related to the reversal of stock-based compensation expense associated with outstanding performance stock unit awards. These savings were largelypartially offset by increased legal and regulatory expenses, including costexpense associated with the ongoing litigationlegal with certain competitors and certain former employees.matters.

Research and development (“R&D”) expense was $4.1$2.8 million for the three months ended MarchJune 31,30, 2026, representing ana increasedecrease of $0.8$0.5 million, or 24.4%,15.9%, compared to $3.3 million for the three months ended MarchJune 31,30, 2025. This increasedecrease was primarily driven by highercompletion of patient activities in our EPIEFFECT study and the results of our cost reduction initiative. These impacts were offset by costs associatedincurred withtoward theour ongoing510(k) EPIEFFECT randomized clinical trial, as well as continued investment in the development of future products within the Company’s pipeline.submissions.

Interest income, net was $0.9$0.8 million for the three months ended MarchJune 31,30, 2026, representing an increase of $0.4$0.1 million or 75.1%6.8% compared to $0.5$0.7 million for the three months ended MarchJune 31,30, 2025. ThisThe increase was primarily driven by higher average cash balances maintained in the Company’s interest-bearing accounts and a reduction in outstanding debt. These impacts were offset by lower market interest rates.

The effective tax rates for the Company were 29.2%16.5% and 18.5%26.1% for the three months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025, respectively.

The increase in the effective tax rate for the three months ended MarchJune 31,30, 20262025 was primarilyfavorably dueimpacted toby thewindfall timingon ofrestricted stock-basedstock compensationvestings. adjustments,This partiallywas offset by limitsdeduction limitations on the deductibility of executive compensation.

Cash generatedused byin operating activities was $1.9$8.1 million during the threesix months ended MarchJune 31,30, 2026, representing a decrease of $3.4$27.9 million, compared to $5.3cash provided by operating activities of $19.7 million for the threesix months ended MarchJune 31,30, 2025. This decrease was primarily drivenattributable byto lower netcash income,collections associated with reduced sales, annual incentive compensation payments made during the first quarter of 2026, and cost reduction initiative-related severance payments made during the second quarter of 2026. These impacts were partially offset by significantlower accountsoperating receivableexpenditures collections.resulting from the Company’s ongoing cost reduction initiative.

Cash used for investing activities was $5.6$6.3 million during the threesix months ended MarchJune 31,30, 2026, compared to $0.4$1.3 million for the threesix months ended MarchJune 31,30, 2025. This increase reflects a $5.0 million payment to acquire exclusive distribution rights for RegenKit®‑Wound Gel.

Cash used for financing activities was $2.6$15.9 million during the threesix months ended MarchJune 31,30, 2026, compared to $2.9$4.0 million for the threesix months ended MarchJune 31,30, 2025. CashThis used during both periodsincrease was primarily drivenattributable byto repurchases of common stock repurchasesunder tothe satisfyCompany’s taxShare withholdingRepurchase obligationsPlan, uponincluding vesting$12.5 million of employeecash equitypaid awards,for arepurchases during the second quarter of 2026, higher principal paymentpayments under the Citizens Credit Agreement, and aincreased profit-share paymentpayments to TELA Bio, Inc. related to HELIOGEN® salessales. performance.These increases were partially offset by lower share repurchases related to employee tax withholding obligations associated with the vesting of equity awards.

As of MarchJune 31,30, 2026, we had $159.8$135.8 million of cash and cash equivalents, total current assets of $240.3$205.4 million and total current liabilities of $44.6$38.5 million. We had $17.6$17.3 million of long term debt outstanding and $75.0 million of availability under our Revolving Credit Facility (as discussed below).Facility.

On January 19, 2024, the Company entered into the Citizens Credit Agreement, which provided the Company with a $75.0 million Revolving Credit Facility and $20.0 million Term Loan Facility. We had no outstanding borrowings under the Revolving Credit Facility facility as of MarchJune 31,30, 2026. The Term Loan Facility matures on January 19, 2029.

As of MarchJune 31,30, 2026, the Company has $17.6$17.3 million of principal outstanding on the Term Loan Facility that bears interest at 6.0% and no borrowings outstanding under the Revolving Credit Facility.