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

As of December 31, 2024,2025, we had $40.0$60.0 million of indebtedness outstanding under our credit facility with MidCapPerceptive FinancialCredit TrustHoldings V, LP (“MidCapPerceptive”) that matures in MayNovember 2027.2030.

In addition, the MidCapPerceptive credit facility contains certain covenants that limit our ability to engage in certain transactions that may be in our long-term best interests, including the incurrence of additional indebtedness, effecting certain corporate changes, making certain investments, acquisitions or dispositions and paying dividends.

Macroeconomic conditions, including those placing financial strain on hospital systems and their ability to perform the procedures in which our products are used, or those stemming from external cybersecurity events, supply chain disruptions of critical surgical supplies, inflationary pressures, tariffs, geopolitical conflict or other macroeconomic events, may adversely impact our business, financial condition and prospects. These financial and resource strains on the healthcare system, including those first arising in response to the COVID-19 pandemic, may further impair labor and staffing in the hospital sector, and in turn hospital capacity for elective procedures. Any prolonged delays in normalized levels of elective surgeries by governmental, hospital or payor actions would continue to impair net sales of our products.

General supply chain disruptions, initially arising from COVID-19, have in the wake of severe weather events and geopolitical turmoil, such as the ongoing Russia-Ukraine conflictconflict, recent events in Venezuela and the current conflictconflicts in the Middle East (including any escalation or expansion) continue to threaten trade globally and weaken supply systems. We currently rely on Aroa, which is headquartered in New Zealand, for supply of our products. While there have been minimal disruptions to our supply chain to date, there is a risk that in the future supplies of our products could be disrupted or delayed based on competition within the supply chain or otherwise affected by substantial inflationary pressures from other underlying macroeconomic conditions. There can be no assurance that we would be able to timely implement any mitigation plans relating to our supply chain.

Continued concerns about the systemic impact of potential economic slowdown or recession, liquidity constraints, failures and instability in the U.S. and international financial banking systems, and geopolitical turmoil, including the ongoing Russia-Ukraine conflictconflict, recent events in Venezuela and the current conflictconflicts in the Middle East (including any escalation or expansion), have contributed to increased market volatility and diminished expectations for economic growth in the world. These conditions may lead to continued volatility in the future, which could result in a decline in our stock price, high inflation, increase our cost of capital and adversely affect our ability to access the capital markets in the future even after local conditions improve.

Inflation rates, particularly in the U.S., have increased recently to levels not seen in years. Increased inflation may result in decreased demand for our products, increased operating costs (including our labor costs), reduced liquidity, and limitations on our ability to access credit or otherwise raise debt and equity capital. In addition, the United States Federal Reserve has in the past raised, and may in the futureagain raise, interest rates in response to concerns about inflation. Increases in interest rates, especially if coupled with reduced government spending and volatility in financial markets, may have the effect of further increasing economic uncertainty and heightening these risks. In an inflationary environment, we may be unable to raise the prices of our products at or above the rate at which our costs increase, which could/would reduce our profit margins and have a material adverse effect on our financial results. We also may experience lower than expected sales and potential adverse impacts on our competitive position if there is a decrease in consumer spending or a negative reaction to our pricing.pricing or the pricing of those who do or will collaborate with. A reduction in our revenue would be detrimental to our profitability and financial condition and could also have an adverse impact on our future growth.

Sales of our OviTex products accounted for 66%,64%, 67%66% and 70%67% of total revenue for the years ended December 31, 2024,2025, 20232024 and 2022,2023, respectively. We first commercialized OviTex products in the U.S. in 2016 and have subsequently launched our OviTex products in Europe, introduced our larger sized OviTex products, as well as OviTex LPR and OviTex IHR product configurations for deeper penetration into laparoscopic and robotic-assisted hernia surgical repairs. In addition to our OviTex products, we have also commercialized our OviTex PRS products for use in surgery for soft-tissue repair or reinforcement in plastic and reconstructive proceduresprocedures, introduced our larger sized OviTex PRS products and mostcontinue recentlyto distribute the LIQUIFIX Hernia Mesh Fixation Devices (LIQUIFIX FIX8™ and LIQUIFIX Precision™) pursuant to our distribution agreement with Advanced Medical Solutions Limited. While we continue to diversify our portfolio and revenue sources, we expect that sales of our OviTex products will account for the majority of our revenue for the foreseeable future while we continue to grow market share for our OviTex PRS products, LIQUIFIX and any complementary products that we may develop or distribute from time to time. Our failure to successfully increase sales of these products or any other event impeding our ability to sell these products would result in a material adverse effect on our business, financial condition and results of operations.

The products we commercialize have been cleared by the FDA and other regulatory authorities for specific indications. Our OviTex products are reinforced tissue matrices designed for use as a surgical mesh to reinforce and/or repair soft-tissue where weakness exists and indications for use of our OviTex products include the repair of hernia and/or abdominal wall defects which require the use of reinforcing or bridging material to obtain the desired surgical outcome. Our OviTex PRS products are reconstructive reinforced tissue matrices designed for implantation to reinforce soft-tissue where weakness exists in patients requiring soft tissue repair or reinforcement in plastic and reconstructive surgery. In connection with the March 2019 meeting of the General and Plastic Surgery Devices Panel of the Medical Devices Advisory Committee, the FDA stated that no surgical mesh device has been cleared or approved for use in breast surgery, and that to obtain such indication, the product sponsor must obtain an approved PMA. This statement applies to our OviTex PRS products as they are not cleared or approved for use in breast surgery and thus, we are prohibited from marketing them for that use. OviTex PRS or any other product we may develop for use in breast surgery will need to be approved specifically for that indication and there can be no guarantee that it will be approved. In October 2024, we received approval from the FDA for our investigational device exemption application relating to the study of the safety and effectiveness of our OviTex PRS product in implant-based breast reconstruction,reconstruction. butIn October 2025, we completed the required IDE annual Report filing and anticipate additional FDA interactions related to identification of an adequate clinical protocol that would be sufficient to support a pre-market application to obtain approval for an indication for OviTex PRS for use in breast reconstruction. There can be no assurance that we will be able to secure a PMA approval in a timely manner, or at all. Any marketing for OviTex PRS or any other product for a use in breast reconstruction surgery would be deemed off-label promotion of that product if it has been cleared for a general indication of use to reinforce or repair soft-tissue and has not received an approval specifically for use in breast surgery. We train our marketing personnel and direct sales force to not promote our OviTex or OviTex PRS products for uses outside of the FDA-cleared indications for use, known as “off-label uses.” We cannot, however, prevent a surgeon or medical professional from using our OviTex or OviTex PRS products or other products we may commercialize in the future for off-label uses.

Although we train our direct sales force not to promote our products for off-label uses, and our instructions for use in all markets specify that our products are not intended for use outside of those indications cleared or approved for use, the FDA or another regulatory authority could conclude that we have engaged in off-label promotion. If the FDA determines that our promotional or training materials constitute promotion of an off-label use, or make claims that are not supported by the available clinical data, it could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions. It is also possible that other federal, state or non-U.S. enforcement authorities might take action under other regulatory authorityauthorities if they consider our business activities to constitute promotion of an off-label use, or are otherwise objectionable, which could result in significant penalties, including, but not limited to, criminal, civil and administrative penalties, damages, fines, disgorgement, exclusion from participation in government healthcare programs and the curtailment of our operations.

Aroa is required under the Aroa License to manufacture all of our OviTex and OviTex PRS products at its manufacturing and warehousing facility in Auckland, New Zealand. The production of all of our OviTex and OviTex PRS products in a single location exposes us to the risk of Aroa’s facility being harmed or rendered inoperable by natural or man-made disasters or pandemics, which may render it difficult or impossible for Aroa to perform its manufacturing and assembly activities for some time. Although we and Aroa intend to establish redundant production facilities to lessen the risk of production disruptions, we will need to ensure that any manufacturing facility complies with our quality expectations and applicable regulatory requirements.requirements, including QMSR. If we are unable to establish redundant manufacturing facilities in a timely manner, any disruption in the manufacture of our OviTex and OviTex PRS products at Aroa’s manufacturing and warehouse facility, the continued commercialization of our OviTex and OviTex PRS products, the supply of our OviTex and OviTex PRS products to customers and the development of any new reinforced tissue matrix products will be suspended, delayed, limited or prevented, which could have material adverse effect on our business, financial condition and results of operations.

We, or our partners, may experience development or manufacturing problems, capacity constraints, disruptions or delays in the production of our products that could limit the potential growth of our revenue or increase our losses.

We own twenty-threetwenty-six issued or allowed U.S. patents and have twelveten pending U.S. patent applications. As of December 31, 2024,2025, we had rights, whether through ownership or licensing, to twenty-fivetwenty-eight issued or allowed U.S. patents, twelveten pending U.S. patent applications, eighteleven issued non-U.S. patents and sevenfourteen pending non-U.S. patent applications., including sixseven applications under the Patent Cooperation Treaty (“PCT”). Our issued U.S. patents will expire between 2035 and 2041. The licensed patents will expire between 2029 and 2031.

Our products are regulated as medical devices. We and our products are subject to extensive regulation in the U.S. and internationally including by the FDA and competent authorities of the EU member states. The FDA and other foreign equivalents regulate, among other things, with respect to medical devices: design, development and manufacturing; testing, labeling, content and language of instructions for use and storage; clinical trials; product safety; establishment registration and device listing; marketing, sales and distribution; premarket clearance and approval; record keeping procedures; advertising and promotion; recalls and field safety corrective actions; post-market surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to recur, could lead to death or serious injury; post-market approval studies; and product import and export.export restrictions.

Modifications to products that are approved through a PMA application generally require FDA approval. Similarly, certain modifications made to products cleared through a 510(k) may require a new 510(k) clearance. Both the PMA approval and the 510(k) clearance process can be expensive, lengthy and uncertain. The FDA’s 510(k) clearance process usually takes from three to 12 months, but can generally last longer. The process of obtaining a PMA is much more costly and uncertain than the 510(k) clearance process and generally takes from one to three years, or even longer, from the time the application is filed with the FDA. In addition, a PMA generally requires the performance of one or more clinical trials. Despite the time, effort and cost, we cannot assure you that any particular device will be approved or cleared by the FDA. Any delay or failure to obtain necessary regulatory clearances or approvals could harm our business.

AnyWe believe that any of these sanctions could result in higher than anticipated costs or lower than anticipated sales and harm our reputation, business, financial condition and results of operations.

Even after we have obtained the proper regulatory approval to market our products, they will be subject to ongoing regulatory requirements for design, development, manufacturing, testing, labeling, packaging, storage, advertising, promotion, sampling, record-keeping, recalls and field safety corrective actions, conduct of post-marketing studies and submission of safety, effectiveness and other post-market information, including both federal and state requirements in the U.S. and requirements of comparable non-U.S. regulatory authorities. Our failure to comply with applicable regulatory requirements could result in enforcement action by the FDA andor applicable statestate, or non-U.S. regulatory authorities, which may include any of the following sanctions:

The methods used in, and the facilities used for, the manufacture of our products must comply with the FDA’s QSRQMSR which is a complex regulatory scheme that covers the procedures and documentation of the design, testing, production, process controls, quality assurance, labeling, packaging, handling, storage, distribution, installation, servicing and shipping of medical devices. Furthermore, Aroa must maintain facilities, procedures and operations that comply with our quality standards and applicable regulatory requirements. TheBeginning February 2, 2026 the FDA enforcesis enforcing the QSRharmonized QMSR through periodic announced or unannounced inspections of medical device manufacturing facilities, which may include the facilities of subcontractors. Our products are also subject to similar state regulations and various EU laws and regulations governing manufacturing.

Aroa may not take the necessary steps to comply with applicable regulations, which could cause delays in the delivery of our products. For example, following an inspection in March 2017, Aroa received an FDA Form 483 that contained multiple observations related to its manufacturing processes and procedures. In addition, failure to comply with applicable FDA requirements or later discovery of previously unknown problems with our products or manufacturing processes could result in, among other things: untitled letters or warning letters; fines, injunctions or civil penalties; suspension or withdrawal of approvals; seizures or recalls of our products; total or partial suspension of production or distribution; administrative or judicially imposed sanctions; the FDA’s refusal to grant pending or future clearances or approvals for our products; clinical holds; refusal to permit the import or export of our products; and criminal prosecution of us or our employees.

If guidelines for soft-tissue reconstruction surgery change or the standard of care evolves, we may need to redesign and seek new marketing authorization from the FDA for our OviTex andOviTex, OviTex PRS products or other products we may commercialize in the future.

We are subject to the FDA’s medical device reporting regulations and similar EU and other foreign regulations, which require us to report to the FDA when we receive or become aware of information that reasonably suggests that one or more of our products may have caused or contributed to a death or serious injury or malfunctioned in a way that, if the malfunction were to recur, could cause or contribute to a death or serious injury. The timing of our obligation to report is triggered by the date we become aware of the adverse event as well as the nature of the event. We may fail to report adverse events of which we become aware within the prescribed timeframe. We may also fail to recognize that we have become aware of a reportable adverse event, especially if it is not reported to us as an adverse event or if it is an adverse event that is unexpected or removed in time from the use of the product. If we fail to comply with our reporting obligations, the FDA could take action, includingwhich could include untitled letters, warning letters, FDA Form 483s, administrative actions, criminal prosecution, imposition of civil monetary penalties, revocation of related approvals, seizure of our products or delay in clearance or approval of future products.

The FDA and foreign regulatory agencies have the authority to require the recall of commercialized products in the event of material deficiencies or defects in design or manufacture of a product or in the event that a product poses an unacceptable risk to health. The FDA’s authority to require a recall must be based on a finding that there is reasonable probability that the device could cause serious injury or death. We may also choose to voluntarily recall a product if any material deficiency is found. For example, in April 2018, Aroa, as the product manufacturer, issued a voluntary recall of our resorbable OviTex products due to a reduction in the labeled shelf life of such products from 24 months to 18 months. The recall included a total of 1,974 units from 48 manufacturing lots and was ultimately terminated in April 2019. A government-mandated or voluntary recall by us could also occur as a result of an unacceptable risk to health, component failures, malfunctions, manufacturing defects, labeling or design deficiencies, packaging defects or other deficiencies or failures to comply with applicable regulations. Product defects or other errors may occur in the future.

From time to time, legislation is drafted and introduced in Congress that could significantly change the statutory provisions governing the regulation of medical devices, or the FDA may change its clearance and approval policies, adopt additional regulations or revise existing regulations, or take other actions which may prevent or delay approval or clearance of our future products under development. In addition, FDA regulations and guidance are often revised or reinterpreted by the FDA in ways that may significantly affect our business and our products. For example, beginning February 2, 2026, FDA began enforcement of the QMSR, which replaced the prior Quality System (QS) Regulation by an amendment to 21 C.F.R. Part 820. Any new statutes, regulations or revisions or reinterpretations of existing regulations may impose additional costs or lengthen review times of any future products or make it more difficult to obtain clearance of or approval for, manufacture, market or distribute our products. We cannot determine what effect changes in regulations, statutes, legal interpretation or policies, when and if promulgated, enacted or adopted may have on our business in the future. Such changes could, among other things, require: additional testing prior to obtaining clearance or approval; changes to manufacturing methods; recall, replacement or discontinuance of our products; or additional record keeping.

The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory, leadership and policy changes. Average review times at the FDA have fluctuated in recent years as a result. In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.

Disruptions at the FDA and other agencies may also slow the time necessary for new devices to be reviewed and/or approved or cleared by necessary government agencies, which would adversely affect our business. For example, over the last several years, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA employees and stop critical activities. Currently, federal agencies in the U.S. are operating under a continuing resolution that is set to expire at the end of September 2025. A prolonged government shutdown, significant leadership, personnel, and/or policy changes, or other substantial modification in agency activities could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business.

Current or future presidential administrations could issue or promulgate executive orders, regulations, policies or guidance that adversely affects us or creates a more challenging or costly environment in which to operate our business. In 2017, the U.S. Congress and the Trump administration made substantial changes to U.S. policies, which included comprehensive corporate and individual tax reform. In addition, the Trump administration called for significant changes to U.S. trade, healthcare, immigration and government regulatory policy. With the transition to the Biden administration in early 2021, changes to U. S. policy occurred and sinceSince the start of the Trump Administration in 2025, U.S. policy changes have been implemented at a rapid pace and additional changes are likely. Changes to U.S. policy implemented by the U.S. Congress, the Trump administration or any new administration have impacted and may in the future impact, among other things, the U.S. and global economy, international trade relations, unemployment, immigration, healthcare, taxation, the U.S. regulatory environment, inflation and other areas. Although we cannot predict the impact, if any, of these changes to our business, they could adversely affect our business. Until we know what policy changes are made, whether those policy changes are challenged and subsequently upheld by the court system and how those changes impact our business and the business of our competitors over the long term, we will not know if, overall, we will benefit from them or be negatively affected by them.

Our business processes personal data, including some data related to health. When conducting clinical trials, we face risks associated with collecting trial participants’ data, especially health data, in a manner consistent with applicable laws and regulations. We also face risks inherent in handling large volumes of data and in protecting the security of such data. We could be subject to attacks on our systems by outside parties or fraudulent or inappropriate behavior by our service providers or employees. Third parties may also gain access to users’ accounts using stolen or inferred credentials, computer malware, viruses, spamming, social engineering (including via phishing attacks) or other means, and may use such access to obtain users’ personal data or prevent use of their accounts. Further, our general liability insurance and corporate risk program may not cover all potential claims to which we are exposed and may not be adequate to indemnify us for all liability that may be imposed.

As our operations and business grow, we may become subject to or affected by new or additional data protection laws and regulations and face increased scrutiny or attention from regulatory authorities. In the U.S., HIPAA imposes, among other things, certain standards relating to the privacy, security, transmission and breach reporting of individually identifiable health information. Certain states have also adopted comparable privacy and security laws and regulations, some of which may be more stringent than HIPAA. Such laws and regulations will be subject to interpretation by various courts and other governmental authorities, thus creating potentially complex compliance issues for us and our future customers and strategic partners. Further, led by California, with its CCPA, which created individual privacy rights for California residents and increased the privacy and security obligations of entities handling certain personal data, a great number of states have passed comprehensive privacy laws. These laws may increase our compliance costs and potential liability. Further, similar laws have been proposed in numerous other states and privacy-related laws have also been proposed at the federal level. There are also states that are specifically regulating health information. For example, Washington’s My Health My Data Act, which went into effect in March 2024, requires regulated entities to obtain consent to collect health information, grants consumers certain rights, including to request deletion, and provides for robust enforcement mechanisms, including enforcement by the state attorney-general and by litigants through a private right of action for consumer claims. Connecticut and Nevada have also passed similar laws regulating consumer health data. In addition, a small number of states, such as Illinois and Texas, have enacted laws that specifically target the collection and use of biometric information. In addition, a small number of states, such as Illinois and Texas, have enacted laws that specifically target the collection and use of biometric information, These current and future data privacy laws and regulations may require us to modify our data collection or processing practices and policies, incur substantial costs and expenses in an effort to comply and increase our potential exposure to regulatory enforcement, reputational damage, and/or litigation.

A failure to comply - or even a perceived failure to comply under uncertain standards - with these current or future federal and state laws and regulations and industry standards relating to data privacy and security could lead to investigatory or regulatory action, private litigation or class actions that could result in exposure to civil or criminal penalties, monetary or statutory damages, attorney fee awards and/or exposure to adverse publicity that could negatively affect our operating results and business. Risks, complexity and uncertainty relating to privacy and data protection laws may also impact our business activities, for example by slowing, impeding or restricting clinical trial participant recruitment and marketing initiatives.

ThisThese riskrisks isare enhanced in certain jurisdictions as we expand our operations internationally. The EU’s GDPR became effective in May 2018. The GDPR applies extraterritorially and imposes several stringent requirements for controllers and processors of personal data, of data subjects residing in the European Economic Area. For example, the GDPR imposes higher standards for obtaining consent from individuals to process their personal data (where consent is required), more robust disclosures to individuals and a strengthened individual data rights regime, shortened timelines for data breach notifications, limitations on retention of information, increased requirements pertaining to special categories of personal data and pseudonymised (i.e., key-coded) data and additional obligations when we contract third-party processors in connection with the processing of the personal data. This risk is increased because EU member states have made their own laws and regulations limiting the processing of personal data, including special categories of data (e.g., racial or ethnic origin, political opinions, religious or philosophical beliefs) and profiling and automated individual decision-making of individuals, which limits our ability to process personal data or other data and could cause our compliance costs and liability risks to increase, harming our business and financial condition.

The GDPR also regulates cross-border transfers of personal data and requires transferee countries to have protections equivalent to protections available in the EU. The GDPR imposes strict rules on the transfer of personal data to countries outside the EEA, Switzerland or the United Kingdom, including the United States, to other countries in respect of which the European Commission or the United Kingdom government has not issued a so-called “adequacy decision” or “ adequacy regulation” (known as “third countries”), unless the parties to the transfer have implemented specific safeguards to protect the transferred personal data. This includes putting in place the European Commission’s Standard Contractual Clauses (SCCs) for transfers outside of the EEA and a similar transfer mechanism for transfers of personal data outside of the United Kingdom, the International Data Transfer Agreement or Addendum (IDTA). Under both the GDPR and the UK GDPR, exporters are also required to assess the risk of the data transfer on a case-by-case basis, including conducting an analysis of the laws in the destination country. FinalizingThe thecontinued implementation of the updated SCCs and UK IDTA, and conducting the required risk assessments, may continue to necessitate significant contractual overhaul of our data transfer arrangements with customers, sub-processors and vendors. OnThe Juneinternational 28,transfer 2021,obligations under the UK and EU data protection regimes will continue to require significant effort and cost, and may result in us needing to make strategic considerations around where UK and EEA personal data is transferred and which vendors we can utilize for the processing of UK and EEA personal data. Any inability to transfer personal data from the UK and EEA to the U.S (and other third countries) in compliance with data protection laws may adversely affect our operations and our business and financial position. The European Commission published its decision recognizing the United Kingdom as having adequate laws to the protect the rights and freedoms of data subjects suchensures that personal data maycan transfer to from the EUEEA to the United Kingdom without an approved transfer mechanism. The United Kingdom Government also confirmed that data transfers to the EUEEA remain free flowing.

Significant political, trade, or regulatory developments in the jurisdictions in which we sell our products, such as those stemming from the change in U.S. federal administration, are difficult to predict and may have a material adverse effect on us. Similarly, changes in U.S. federal policy that affect the geopolitical landscape could give rise to circumstances outside our control that could have negative impacts on our business operations. For exampleexample, in March 2025, the U.S.United initiallyStates placed an additional 20% tariff on most goods from China, imposed aan additional 25% tariff on importsmost products from Canada and Mexico,Mexico and(with imposedan aexception 20% tariff on imports from China. The U.S. largely reversed course andfor goods eligiblethat qualify for duty-free treatment under the 2020 United States-Mexico-CanadaU.S.-Mexico-Canada Agreement (“USMCA”) canand entera 10% tariff on certain non-USMCA energy products), and implemented 25% Section 232 tariffs on various articles of steel and aluminum. Section 232 tariffs are import restrictions imposed, based on a finding that certain imports threaten to impair U.S. national security. In April 2025, the U.S. tariffgovernment freeimposed until25% AprilSection 2, 2025. Historically, tariffs have led to increased trade and political tensions. In response to tariffs, other countries have implemented retaliatory232 tariffs on U.S.passenger goods. In retaliation to the recent U.S. imposed tariffs, China imposed tariffs up to 15% on a wide array of U.S. farm exports,vehicles and Canadalight andtrucks Mexico(with havesimilar statedSection they will impose232 tariffs on components for such vehicles expected to be imposed beginning in May 2025); an additional reciprocal tariff of 125% on most imports from China; and an additional reciprocal tariff of 10% on most imports from U.S. trading partners other than China, Canada, Mexico, and countries with which the U.S. Politicaldoes tensionsnot ashave normal trade relations. In May 2025, the U.S. and Chinese governments announced a resulttrade deal temporarily suspending such reciprocal tariffs of trade125%. policiesThere couldare reducecertain tradeproducts volume,exempt investment,from technologicalthe exchangereciprocal tariff measures, including items subject to Section 232 tariffs (e.g., steel and aluminum articles); certain pharmaceuticals and pharmaceutical products; and certain semiconductors, computers, and other economicproducts activitiesderivative betweenof majorcritical internationalminerals. economies,However, resultingthe inscope aof materialthese adverseexclusions effectis onsubject globalto economicchange. conditionsIn addition, the U.S. Department of Commerce has recently initiated Section 232 investigations into additional products, including semiconductors and therelated stabilitymanufacturing ofequipment, globalprocessed financialcritical markets.minerals and derivative products; and medium-duty and heavy-duty trucks and parts therefor. Any changes in political, trade, regulatory, and economic conditions, including U.S. trade policies, could have a material adverse effect on our financial condition, results of operations or our industry. On February 20, 2026, the U.S. Supreme Court struck down certain reciprocal tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”). Following the Supreme Court decision, the U.S. federal administration announced a new 10% global tariff under Section 122 of the Trade Act of 1974, subject to certain carve outs, effective February 24, 2026. These tariffs are authorized to remain in effect for a period of up to 150 days and the U.S. federal administration has stated that it intends to use other authorities to maintain historically elevated tariffs. The impact of these potential tariffs on our financial condition, results of operations or industry, if any, is subject to a number of factors that are not yet known, including any countermeasures that the target countries may take in response to such tariffs. In light of these uncertainties, we can provide no assurance that any mitigating actions that may become available to us, such as our ability to pass along some or all of the costs of any tariffs to some or all of our customers, will be successful.

In the U.S., we currently compete with Allergan, a subsidiary of AbbVie, C.R. Bard, a subsidiary of Becton, Dickinson and Company, MTF Biologics, RTI Surgical and Integra Life Sciences, which produce, among other things, soft-tissue reconstruction surgery products, including Strattice and Alloderm, Phasix, FlexHD, Cortiva,andCortiva, and SurgiMend and DuraSorb, respectively. In the EEA, we compete with Bard, who produces other soft-tissue reinforcement products. Many of these competitors are large, well-capitalized companies with significantly greater market share and contracting power than us, selling products that have been on the market prior to the commercialization of our products. As a consequence, they are able to spend more on product development, marketing, sales and other product initiatives than we can, while benefiting from greater brand awareness. We believe other emerging businesses are in the early stages of developing similar products designed for soft-tissue reconstruction surgery. Although we are the only ovine-derived implantable product designed for soft-tissue reconstruction surgery, there are other soft tissue reconstruction surgery products derived solely, or in part, from other biological sources.

Global supply chains have been impacted because of severe weather, recent geopolitical tensions such as the ongoing Russia-Ukraine conflictconflict, andrecent events in Venezuela, the current conflictconflicts in the Middle East (including any escalation or expansion) and tensions in other regions and other factors, and this may impact the availability of raw materials and components used in the manufacture of our products. Additionally, even when we and our suppliers are able to source such materials and components, they may cost more and may only be available on a delayed basis. Higher materials and component costs could adversely affect our margins if we are unable to pass such costs along to customers in the form of price increases. Delays in receipt of materials and components could also interrupt our production and cause us to go into backorder on certain of our products, further exacerbating the effect of the global supply chain disruption.

Our single arm multicenter post-market clinical study, which we refer to as our BRAVO study, was fully enrolled at 92 patients. We conducted this study to support the marketing of our OviTex products for their cleared indicated uses, and do not currently have anylimited clinical data for use of our OviTex PRS products in patients. The long-term effects of using certain of our products in a large number of patients have not been studied and the results of short-term clinical use of such products do not necessarily predict long-term clinical benefits or reveal long-term adverse effects. The results of preclinical studies and clinical studies of our products conducted to date and ongoing or future studies and trials of our current, planned or future products may not be predictive of the results of later clinical trials, and interim results of a clinical trial do not necessarily predict final results. Our interpretation of data and results from our clinical trials do not ensure that we will achieve similar results in future clinical trials in other patient populations. In addition, preclinical and clinical data are often susceptible to various interpretations and analyses, and many companies that have believed their products performed satisfactorily in preclinical studies and earlier clinical trials have nonetheless failed to replicate results in later clinical trials. Products in later stages of clinical trials may fail to show the desired safety and efficacy despite having progressed through nonclinical studies and earlier clinical trials.

Interim “top-line” or preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.

From time to time, we may publicly disclose interim or preliminary data from our clinical studies, which is based on a preliminaryinitial analysis of then-available data, and the results and related findings and conclusions are subject to change following a full analyses of all data related to the particular trial. We may also make assumptions, estimations, calculations and conclusions as part of our preliminary or topline analyses of data, and we may not have received or had the opportunity to fully and carefully evaluate all data. As a result, the interim results that we report may differ from future results of the same trials, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated. Interim or preliminary data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, interim or preliminary data should be viewed with caution until the final data are available. We may also disclose interim data from our clinical trials. Interim data from clinical trials that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Adverse differences between preliminary or interim data and final data could significantly harm our business prospects.

Further, others, including regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusionsconclusions, study population size, safety database size, interpretations of data or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular product candidate or product and our business in general. In addition, the information we choose to publicly disclose regarding a particular study or clinical trial is based on what is typically extensive information, and you or others may not agree with what we determine is the material or otherwise appropriate information to include in our disclosure, and any information we determine not to disclose may ultimately be deemed significant with respect to future decisions, conclusions, views, activities or otherwise regarding a particular drug,current or future product candidate or our business. If the interim or preliminary data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to use such results to support the marketing of our products may be jeopardized.

We rely on our own direct sales force, which as of December 31, 20242025 consisted of 9171 quota-carrying representatives in the U.S. and 12 quota-carrying representatives in Europe, to market and sell our products. A direct sales force may subject us to higher fixed costs than those of companies that market competing products through independent third parties, due to the costs that we will bear associated with employee benefits, training and managing sales personnel. As a result, we may be at a competitive disadvantage. Additionally, these fixed costs may slow our ability to reduce costs in the face of a sudden decline in demand for our products, which could have a material adverse effect on our business, financial condition and results of operations.

Although we develop and maintain systems and controls designed to prevent these events from occurring, there can be no assurance that our internal information technology systems or those of our third-party vendors will be sufficient to protect against breakdowns, service disruption, data deterioration or loss in the event of a system malfunction, or prevent data from being stolen or corrupted in the event of a cyberattack, security incident, data breach, industrial espionage attacks, ransomware, denial-of-service attacks, attacks enhanced or facilitated by artificial intelligence (“AI”), business email compromises, wrongful intrusions, social engineering (including phishing attacks), or insider threat attacks. Attempts to disrupt or gain unauthorized access to our and our third-party service providers’ information systems from malicious third parties or insider threats may incorporate widely varying and frequently changing tactics, which may be enhanced or facilitated by AI. Like other companies in our industry, we have experienced and may in the future experience, threats and cybersecurity incidents or data breaches relating to our, our third-party vendors’, and our customers’ information systems.

Provisions in our fourth amended and restated certificate of incorporationincorporation, as amended, and our third amended and restated bylaws may discourage, delay or prevent a merger, acquisition or other change in control of us that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock. In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors. As our board of directors is responsible for appointing the members of our management team, these provisions could in turn affect any attempt by our stockholders to replace current members of our management team. These provisions provide, among other things, that:

Our fourth amended and restated certificate of incorporationincorporation, as amended, provides that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

Our fourth amended and restated certificate of incorporationincorporation, as amended, provides that the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the United State District Court for the District of Delaware) is the exclusive forum, to the fullest extent permitted by law, for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty or other wrongdoing by any of our directors, officers, employees or agents to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL or our fourth amended and restated certificate of incorporationincorporation, as amended, or third amended and restated bylaws or (iv) any action asserting a claim governed by the internal affairs doctrine, except, in each case, (A) any claim as to which such court determines that there is an indispensable party not subject to the jurisdiction of such court (and the indispensable party does not consent to the personal jurisdiction of such court within 10 days following such determination), (B) which is vested in the exclusive jurisdiction of a court or forum other than such court, or (C) for which such court does not have subject matter jurisdiction, in all cases subject to the courts having jurisdiction over indispensable parties named as defendants. This provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees. For example, stockholders who do bring a claim in the Court of Chancery could face additional litigations costs in pursuing any such claim, particularly if they do not reside in or near the State of Delaware. The Court of Chancery may also reach different judgments or results than would other courts, including courts where a stockholder considering an action may be located or would otherwise choose to bring the action, and such judgments or results may be more favorable to us than to our stockholders. The enforceability of similar choice of forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is possible that, in connection with any applicable action brought against us, a court could find the choice of forum provisions contained in our fourth amended and restated certificate of incorporationincorporation, as amended, to be inapplicable or unenforceable in such action. Alternatively, if a court were to find the choice of forum provision contained in our fourth amended and restated certificate of incorporationincorporation, as amended, to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions. This provision will not apply to actions arising under the Securities Act or Exchange Act. Our fourth amended and restated certificate of incorporationincorporation, as amended, and third amended and restated bylaws further provide that the federal district courts of the U.S. will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. Section 22 of the Securities Act, however, creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Accordingly, there is uncertainty as to whether a court would enforce such a forum selection provision as written in connection with claims arising under the Securities Act.

Our OviTex portfolio consists of multiple product configurations intended to address various surgical procedures within hernia repair and abdominal wall reconstruction, including ventral, inguinal, and hiatal hernia repair. In addition, we have also designed an OviTex product specifically for use in laparoscopic and robotic-assisted hernia repair, which we market as OviTex LPR and began commercializing in November 2018. In February 2023, we launched two larger configurations of OviTex LPR, designed for ventral and incisional hernias. In April 2024, we launched OviTex IHR Reinforced Tissue Matrix, a new OviTex configuration specifically designed to address inguinal hernia procedures performed robotically and laparoscopically.laparoscopically in the U.S., followed by a launch in the European markets in June 2025.

We have also focused on evaluating and publishing clinical data on the effectiveness and safety of our OviTex products. To date, there have been over fortysixty-five published or presented works relating to these clinical findings, either by us or a third-party evaluating one or more product configurations in our OviTex portfolio. In October 2022, the 24-month results of our single arm, multicenter post-market clinical study, which we refer to as our BRAVO study, were published in the Annals of Medicine and Surgery. The BRAVO study was designed to evaluate the clinical performance of OviTex for primary or recurrent ventral hernias using open, laparoscopic, or robotic techniques in 92 enrolled patients. The recurrence rate at the 24-month time point was 2.6%, and surgical site occurrences (“SSOs”), were observed in 38% of the study population. Of the enrolled patients, 78% were characterized as high risk for experiencing an SSO based on at least one known risk factor, which included obesity, active smoking, chronic obstructive pulmonary disease (“COPD”), diabetes mellitus, coronary artery disease, or advanced age (≥75 years). The results also indicated that BRAVO patients experienced statistically significant and clinically meaningful improvements in their quality of life and perceived health based on patient responses to the EuroQol-5 Dimension (EQ-5D) health assessment and the validated 12-question Hernia-Related Quality of Life survey (HerQLes). In addition to the BRAVO study, we have also initiated other clinical data collection initiatives evaluating the use of OviTex across a variety of hernia and abdominal wall reconstruction procedures. Among these other initiatives, we continue to enroll patients for our BRAVO II study, a prospective study evaluating the use of OviTex in robot-assisted ventral and inguinal hernia repairs.

Our second portfolio of products, the OviTex PRS Reinforced Tissue Matrix, (“OviTex PRS”) which we first commercialized in the U.S. in May 2019, addresses unmet needs in plastic and reconstructive surgery. OviTex PRS is indicated for use in implantation to reinforce soft-tissue where weakness exists in patients requiring soft-tissue repair or reinforcement in plastic and reconstructive surgery. Our OviTex PRS portfolio consists of three product configurations with two or three layers of high-quality tissue derived from ovine rumen, which is reinforced with either permanent or resorbable polymer for added strength, stabilization, and controlled stretch. These products are designed to improve outcomes by facilitating functional tissue remodeling while controlling the degree and direction of stretch. OviTex PRS Long-Term Resorbable, our most recent product configuration, launched in August 2023, and was designed to enhance the OviTex PRS portfolio with specific design features including bi-directional stretch and a fully resorbable, long-term polymer for reinforcement. In March 2025, we announced the U.S. launch of larger sizes of OviTex PRS, which we believe may reduce the need for multiple smaller pieces and have the potential to simplify more complex plastic and reconstructive procedures.

Our OviTex PRS portfolio is supported by non-human primate data that demonstrated more rapid tissue integration and tissue remodeling compared to the market leading biologic matrix used in this indication. In addition, there have been a growing number of published or presented works evaluating the use of OviTex PRS in plastic and reconstruction applications. We also continue to enrollcollect patientspatient data in our OPERA study, a retrospective-prospective trial evaluating the safety profile of OviTex PRS in previous pre-pectoral and sub-pectoral implant-based breast reconstructions. Based on the current sales of biologic matrices in the U.S., we estimate the annual U.S. current addressable market opportunity for our OviTex PRS products to be approximately $800 million.

Our OviTex products have received 510(k) clearances from the U.S. Food and Drug Administration, (“FDA”) which clearances were obtained and are currently held by our exclusive contract manufacturer of these products, Aroa. In April 2019, our first OviTex PRS products received 510(k) clearance from the FDA, which clearance was initially obtained by Aroa and is currently held by us. In March 2023, we received an additional 510(k) clearance for our OviTex PRS Long-Term Resorbable device, which is currently held by us. In May 2024, we received clearance of a Special 510(k) related to minor changes to our OviTex PRS Permanent and Short-Term Resorbable devices. In October 2024, we received approval from the FDA for our investigational device exemption application relating to the study of the safety and effectiveness of our OviTex PRS product in implant-based breast reconstruction. We continue to evaluate and finalize the clinical study protocol and anticipate additional FDA interactions related to such to support a pre-market application to obtain approval for an indication for OviTex PRS for use in breast reconstruction. In December 2024, we received clearance of a Special 510(k) related to two new additional large size product offerings in our OviTex PRS portfolio.

Historically, we have sought to expand our service offerings beyond our OviTex and OviTex PRS products through commercial partnerships to distribute complimentary soft tissue preservation and restoration solutions. Some additional product offerings include or have included atraumatic mesh fixation devices or surgical wound management and infection control solutions. In September 2023, we entered into a distribution agreement with Advanced Medical Solutions Limited, a company registered in England, to distribute their LiquiFixLIQUIFIX Hernia Mesh Fixation Devices (LIQUIFIX FIX8™ and LIQUIFIX Precision™). In March 2024, we announced the full commercial launch of LiquiFixLIQUIFIX in the U.S. We previously co-developed and commercialized the NIVIS Fibrillar Collagen Pack, (“NIVIS”) an absorbent matrix of Type I and Type III bovine collagen designed to manage moderately to heavily exudating wounds and to control minor bleeding, in partnership with Regenity Biosciences. In March 2024, we sold our distribution rights to MiMedx Group, Inc. in exchange for an initial $5.0 million payment and additional future payments aggregating between a minimum of $3.0 million and a maximum of $7.0 million based on net sales of NIVIS (now marketed as HELIOGEN) during the first two years following its launch by MiMedx Group, Inc. We may assess additional strategic partnerships with medical device companies whereby we may enter into distribution, product development and/or licensing agreements for additional products complimentary to, or related to, existing and future products in our distribution channel, which could result in the payment by us of single digit percentage royalties or other product acquisition costs We have a broad portfolio of intellectual property protecting our products that we believe, when combined with the proprietary manufacturing processes associated with our products and our know-how, provides significant barriers to entry. Our intellectual property applies to our differentiated product construction and materials. In addition, we believe our exclusive manufacturing and long-term supply and license agreement with Aroa (the “Aroa License”) creates a competitive advantage by allowing us to secure an exclusive supply of ovine rumen at a low cost. Ovine rumen, the forestomach of a sheep, is the source of the biologic material used in both of our OviTex and OviTex PRS products. We use biologic material from ovine rumen because of its plentiful supply, optimal biomechanical profile and open collagen architecture that allows for rapid cellular infiltration. Our OviTex and OviTex PRS products are manufactured by Aroa at their FDA registered and ISO 13485 compliant facility in Auckland, New Zealand. We purchase product from Aroa at a fixed transfer cost as a percentage of Aroa’s cost of goods sold, and subject to a true-up adjustment, resulting in an amount equal to 27% of our net sales of our OviTex and OviTex PRS products, with the exception of OviTex IHR product configurations, for which we pay the greater of the initial fixed transfer cost or 27% of our net sales of OviTex IHR. This revenue sharing arrangement allows us to competitively price our products and pass along cost-savings to our customers.costs.

We primarily market our products through a single direct sales force, predominantly in the U.S., with a small number of sales representatives in the United Kingdom and European Union, and also utilize a smaller number of independent contractors and distributors in the United States and certain European countries. We have invested in our direct sales and marketing infrastructure to expand our presence and to promote awareness and adoption of our products. As of December 31, 2024, we had 75 sales territories in the U.S. and 13 sales territories in Europe. We believe we can enhance the productivity of our sales force by improving customer segmentation and targeting, implementing and further refining our proprietary training programs, leveraging support from our medical education and medical affairs functions to drive physician awareness, education and clinical understanding of our products, and utilizing engagement analytics to support further product development and enhancement opportunities. Additionally, we have contracted with three national group purchasing organizations (“GPOs”) in the United States covering our OviTex and OviTex PRS products and plan to continue to contract with additional GPOs and other integrated delivery networks (“IDNs”) to increase access to and penetration of hospital accounts for all products we commercialize.

We are currently devoting research and development resources to develop additional variations of our OviTex and OviTex PRS products, including larger versions of our current OviTex PRS product configurations, the development of OviTex configurations with longer-acting resorbable polymers and other potential product and packaging enhancements to extend the shelf life of our products. In addition, we also continue to explore the development of lower-cost, higher-margin resorbable polymer-based devices targeting our current indications. We are also exploring additional technologies that may complement our existing products, or expand the number of our products, in each case within the hernia, plastic and reconstruction, and broader soft-tissue reconstruction market. We intend to continue to make investments in research and development efforts to develop improvements and enhancements to our product portfolio.

Our revenue for the years ended December 31, 20242025 and 20232024 was $69.3$80.3 million and $58.5$69.3 million, respectively, which represents an increase of $10.8$11.0 million, or 19%16% for the year ended December 31, 2024.2025. Our net loss for the same time periods was $37.8$38.8 million and $46.7$37.8 million, respectively, which represents aan decreaseincrease of $8.8$1.0 million, or 19%3% for the year ended December 31, 20242025 inclusive of the gain recognized of $7.6 million on the sale of NIVIS to the MiMedx Group, Inc.Inc for the year ended December 31, 2024. As of December 31, 2024,2025, we had an accumulated deficit of $358.7$397.6 million. The vast majority of our revenue to date has been generated from sales of our OviTex and OviTex PRS products in the U.S., with the remainder generated from sales of our OviTex products in Europe and the sale of other products.

General Economic Uncertainty: Continued concerns about the systemic impact of a potential economic downturn or recession, increasingchanges in interest rates, further economic downturn or banking instability, monetary policypolicy, changes in trade policies (including the imposition of tariffs, changestariffs and trade protection measures), geopolitical issues, including the ongoing Russia-Ukraine conflict, recent events in Venezuela, the current conflictconflicts in the Middle East (including any escalation or expansion) and increasing tensions between China and Taiwan, have contributed to increased market volatility and diminished expectations for economic growth in the world. Due to this uncertainty and other factors, we have experienced high volatility in our stock price over the prior year. Continued uncertainty, perception of worsening market conditions and the introduction of new products which may, or may be perceived to, negatively impact the demand for our products now or in the future could result in a decline in our stock price, high inflation, an increase in our cost of capital and an adverse effect on our ability to access the capital markets in the future on terms acceptable to us or at all.

Revenue increased by $10.8$11.0 million, or 19%,16%, to $80.3 million for the year ended December 31, 2025 from $69.3 million for the year ended December 31, 2024 from $58.5 million for the year ended December 31, 2023.2024. The increase in revenue was primarily driven by an increase in unit sales of our products due to the addition of new customers andcustomers, growing international sales.sales and the U.S. launch of the new larger-sized PRS configuration. This growth was partially offset by a decrease in average selling prices for our hernia products caused by product mix as the share of smaller-sized units increased. During the year ended December 31, 2024,2025, we sold 18,12122,063 units of OviTex compared to 13,67518,121 units of OviTex during the year ended December 31, 2023,2024, a 33%22% increase in unit sales volume. Additionally, we sold 4,6455,189 units of OviTex PRS compared to 3,5444,645 units during the year ended December 31, 2023, a 31%12% increase in unit sales volume.

Cost of revenue (excluding amortization of intangible assets) increased by $4.5$3.1 million, or 25%,14%, to $25.6 million for the year ended December 31, 2025 from $22.4 million for the year ended December 31, 2024 from $18.0 million for the year ended December 31, 2023.2024. The increase in cost of revenue was primarily the result of an increase in products purchased to support demand from our higher unit sales and a higher charge for excess and obsolete inventory.sales.

Gross margin decreasedincreased to 68% for the year ended December 31, 2025 from 67% for the year ended December 31, 2024 from 69% for the year ended December 31, 2023.2024. The decreaseincrease was primarily due to higherlower expense recognized for excess and obsolete inventory adjustments as a percentage of revenue which resulted from the introduction of newer generation products.revenue.

Sales and marketing expenses increaseddecreased by $5.0$1.5 million, or 8%,2%, to $63.2 million for the year ended December 31, 2025 from $64.6 million for the year ended December 31, 2024 from $59.7 million for the year ended December 31, 2023.2024. The increasedecrease was primarily due to higherlower compensation costs,and benefits primarily from commissionslower severance costs, consulting and travel expenses which offset higher commission expense on an increased revenue base and severance costs, increased travel and consulting expense, and additional selling-related expenses related to product sampling and meeting expenses, which were partially offset by decreased marketing expenses.base.

General and administrative expenses decreasedincreased by $0.2$1.0 million, or 1%,7%, to $15.7 million for the year ended December 31, 2025 from $14.7 million for the year ended December 31, 2024 from $14.9 million for the year ended December 31, 2023.2024. The decreaseincrease was primarily due to decreases in professional fees, bad debt and insurance expense, partially offset by higher compensation costs.and benefits and professional fees.

Research and development expenses decreasedincreased by $0.8$0.4 million, or 8%,5%, to $9.2 million for the year ended December 31, 2025 from $8.8 million for the year ended December 31, 2024 from $9.6 million for the year ended December 31, 2023.2024. The decreaseincrease was primarily due to reducedhigher clinicalstudy and preclinicaldevelopment studycosts costs, including associated consulting expense, partiallywhich offset by higherlower compensation costs.and benefits

Interest expense increaseddecreased by $0.1 million, or 1%, to $5.2 million for the year ended December 31, 2025 from $5.3 million for the year ended December 31, 2024 from $5.2 million for the year ended December 31, 2023 due to increasesdecreases in the variable component of our interest rate. We expect interest expense to increase next year with the new credit facility with Perceptive due to the increase in the borrowing base and the increase in the interest rate.

Other Income (Expense)

Other income (expense) decreased by $1.2$0.1 million primarily due to lower interest income ondue to lower interest rates and lower cash balances andthrough foreign currency translation adjustments.2025.

Income Tax (Expense) Benefit

We recorded a tax benefitexpense of $0.1$0.2 million related to our foreign jurisdiction asfor wethe releasedyear aended valuationDecember allowance31, against2025.We recorded an income tax benefit of $0.1 million for the year ended December 31, 2024 also related to our netforeign operating loss tax asset.jurisdiction.

On OctoberNovember 24,13, 2024,2025, we completedexecuted an underwriting agreement in connection with an underwritten publicregistered direct offering of 14,670,0004,189,000 shares of our common stock, including the exercise in full of the underwriters’ overallotment option to purchase additional shares of common stock, at a price to the public of $2.25$1.11 per share and, in lieu of common stock to investors who so chose, pre-funded warrants to purchase 5,800,0007,523,000 shares of our common stock at a publican offering price of $2.2499$1.1099 per pre-funded warrant, which represents the per share public offering price for the shares of common stock less the $0.0001 per share exercise price for each pre-funded warrant. The offering closed on November 17, 2025. The offering resulted in net proceeds of $42.9approximately $11.6 million, after deducting underwriting discounts and commissions and other estimated offering expenses and assuming no subsequent exercise of the pre-funded warrants. The exercise of the pre-funded warrants, if any, is not expected to provide significant additional funding to the Company.us.

We have incurred operating losses since our inception, and we anticipate that our operating losses will continue in the near term as we seek to invest in our sales and marketing initiatives to support our growth in existing and new markets and in additional research and development activities. As of December 31, 2024,2025, we had $40.0$60.0 million of borrowings outstanding under our Creditcredit and Security Agreementfacility (the “MidCapPerceptive Credit Agreement”) with MidCapPerceptive FinancialCredit Trust,Holdings asV, agentLP and certain lender parties thereto.(“Perceptive”). The MidCapPerceptive Credit Agreement matures in MayNovember 2027.2030. Upon closing, we used a portion of the proceeds to repay borrowings under a previous credit facility and intend to use the remaining proceeds to fund operations and other general corporate purposes.

Based on our current business plan, we believe that our existing cash resources will be sufficient to meet our capital requirements and fund our operations for at least the next 12 months from the issuance of this Annual Report. If these sources are insufficient to satisfy our liquidity requirements, we may seek to sell common or preferred equity or debt securities or enter into a new credit facility. In November 2023, we entered into a new Equity Distribution Agreement (the “2023 Equity Agreement”) with Piper Sandler & Co, (“Piper”) in connection with the establishment of an at-the-market offering program under which we may sell shares of our common stock, from time to time through Piper as sales agent, in an initial amount of up to $50 million. No sales werehave ever been made under the 2023 Equity Agreement or during the year ended December 31, 2024.Agreement. If we raise additional funds by issuing equity or equity-linked securities, our stockholders would experience dilution and any new equity securities could have rights, preferences and privileges superior to those of holders of our common stock. Debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt. We cannot be assured that additional equity, equity-linked or debt financing will be available on terms favorable to us or our stockholders, or at all, including as a result of market volatility stemming from macroeconomic conditions, including those related to banking instability, increasingchanging interest rates or other factors. If we are unable to obtain adequate financing, we may be required to delay or reduce the current development, commercialization and marketing plans for our products.

During the year ended December 31, 2025, cash provided by investing activities was $0.8 million, consisting of proceeds received from the sale of NIVIS of $1.3 million, partially offset by $0.4 million in purchases of property and equipment During the year ended December 31, 2024, cash provided by investing activities was $4.5 million, consisting of proceeds received from the sale of NIVIS of $5.4 million, partially offset by $1.0 million in purchases of property and equipment.

During the year ended December 31, 2024,2025, cash provided by financing activities was $43.1$25.7 million, consisting primarily of $42.9$60.0 million in proceeds from the issuance of long-term debt and warrants, $11.8 million of proceeds received from the sale of our common stock and pre-funded warrants. $0.3 million of proceeds received from the issuance of stock under the employee stock purchase plan and $0.2 million of proceeds received from the exercise of stock options,warrants, partially offset by the payment of withholding$42.4 taxesmillion relatedof tolong-term stock-baseddebt compensationand to$3.6 employees.million of debt financing costs.

You should carefully consider the risk factors described in our Annual Report, under the caption “Item 1A. Risk Factors.” ThereExcept as described below, there have been no material changes in our risk factors disclosed in our Annual Report.

Our OviTex portfolio consists of multiple product configurations intended to address various surgical procedures within hernia repair and abdominal wall reconstruction, including ventral, inguinal, and hiatal hernia repair. In addition, we have also designed an OviTex product specifically for use in laparoscopic and robotic-assisted hernia repair, which we market as OviTex LPR and began commercializing in November 2018. In February 2023, we launched two larger configurations of OviTex LPR, designed for ventral and incisional hernias. In April 2024, we launched OviTex IHR Reinforced Tissue Matrix,Matrix (“RTM”), a new OviTex configuration specifically designed to address inguinal hernia procedures performed robotically and laparoscopically in the U.S., followed by a launch in the European markets in June 2025. In April 2026, we launched OviTex RTM with Long-Term Resorbable Reinforcement (PLGA).

The vast majority of our revenue to date has been generated by the sale of our OviTex products. Our revenue increaseddecreased by $0.5$0.9 million, or 3%,4%, from $18.5$20.2 million for the three months ended MarchJune 31,30, 2025 to $19.1$19.3 million for the three months ended MarchJune 31,30, 2026 and by $0.4 million, or 1%, from $38.7 million for the six months ended June 30, 2025 to $38.4 million for the six months ended June 30, 2026. Our net loss increased by $1.0$1.3 million, or 9%,13%, from $9.9 million for the three months ended June 30, 2025 to $11.3 million for the three months ended MarchJune 31,30, 20252026 toand $12.3increased by $2.3 million, or 11% from $21.2 million for the threesix months ended MarchJune 31,30, 2025 to $23.5 million for the six months ended June 30, 2026. We have not been profitable since inception and as of MarchJune 31,30, 2026, we had an accumulated deficit of $409.8$421.1 million. We expect to incur losses for the foreseeable future.

The majority of our revenue consists of direct sales of our products to hospital accounts in the U.S. Depending on the terms of our agreements with our customers, we recognize revenue related to product sales when control transfers, which generally occurs when the product is shipped to the customer, or when the product is utilized in a surgical procedure in the case of consignment agreements. Fees charged to customers for shipping are recognized as revenue. RecentThe recent revenue growthdecline has been driven by increasingdecreasing revenueOviTex from productPRS sales dueand price mix headwinds in the U.S. related to our expanding customer base and deeper penetration across procedures in existing customer accounts, although macroeconomic pressures described in this Quarterly Report may impair our ability to continue to generate revenue, expand our customer base, and increase utilizationgrowth of oursmaller productssized in existing customer accounts at historic rates.units.

Comparison of the Three Months Ended MarchJune 31,30, 2026 and 2025

Revenue increaseddecreased by $0.5$0.9 million, or 3%,4%, to $19.1$19.3 million for the three months ended MarchJune 31,30, 20262026, from $18.5$20.2 million for the three months ended MarchJune 31,30, 2025. The increasedecrease in revenue was primarily driven by growinga internationaldecline sales,in partiallyOviTex offsetPRS bysales and price mix headwinds in the U.S. related to growth of smaller sized units.units and partially offset by growing international sales. During the three months ended MarchJune 31,30, 2026, we sold 5,7795,776 units of OviTex as compared to 4,9925,178 units of OviTex during the three months ended MarchJune 31,30, 2025, a 16%12% increase in unit sales volume. Additionally, we sold 1,1331,050 units of OviTex PRS during the three months ended MarchJune 31,30, 2026 as compared to 1,1701,362 units during the three months ended MarchJune 31,30, 2025, a 3%23% decline in unit sales volume.

Cost of revenue (excluding amortization of intangible assets) increaseddecreased by $0.5$0.7 million, or 9%,12%, to $6.4$5.3 million for the three months ended MarchJune 31,30, 2026 from $5.9$6.0 million for the three months ended MarchJune 31,30, 2025. The increasedecrease in cost of revenue was primarily due to the result of an increasedecline in products purchased to support demand from our higher unit salesrevenue and a higherrefund chargeof fortariffs excesspaid andin obsolete2025 inventory.of $0.6 million

Amortization of intangible assets was $95,000 for both the three months ended MarchJune 31,30, 2026 and 2025.

Gross margin decreasedincreased to 66%72% for the three months ended MarchJune 31,30, 20262026, from 68%70% for the three months ended MarchJune 31,30, 2025. The decreaseincrease was primarily due to a higherlower charge for excess and obsolete inventory as a percentage of revenue.revenue and the tariff refund.

Sales and marketing expenses decreased by $0.1$0.4 million, or 2%, to $16.5$16.4 million for the three months ended MarchJune 31,30, 20262026, from $16.6$16.9 million for the three months ended MarchJune 31,30, 2025. The decrease was due to lower compensation and benefits primarily from lowera commissiondecrease expense,in headcount which offset higher meeting and training costs.

General and administrative expenses increaseddecreased by $0.3 million,$65,000, or 9%,2%, to $4.2$4.1 million for the three months ended MarchJune 31,30, 20262026, from $3.8$4.1 million for the three months ended MarchJune 31,30, 2025. The increaseslight decrease was primarily due to lower compensation costs from a decrease in headcount partially offset by higher professional fees and travel expenses.fees.

Research and development expenses decreasedincreased by $0.2$0.5 million, or 8%,24%, to $2.3$2.7 million for the three months ended MarchJune 31,30, 2026 from $2.5$2.2 million for the three months ended MarchJune 31,30, 2025. The decreaseincrease was primarily due to lowerhigher compensation and benefits from additional headcount and increased study costs.

Interest expense increased by $0.8$0.9 million, or 68%75% to $2.1 million for the three months ended MarchJune 31,30, 20262026, from $1.2 million for the three months ended MarchJune 31,30, 2025 due to an increase in the borrowing base and the interest rate from our new credit facility.

Other income decreased by $0.1$0.2 million, or 24%,59%, to $0.2 million for the three months ended June 30, 2026, from $0.4 million for the three months ended MarchJune 31, 2026 from $0.5 million for the three months ended March 31,30, 2025 primarily due primarily to lower interest income from lower cash balances and lower interest rates.

We recorded tax expense of $60,000 and $52,000$33,000 related to our foreign jurisdiction for the three months ended MarchJune 31,30, 2026 and 2025, respectively.

As of MarchJune 31,30, 2026, we had cash and cash equivalents of $39.5$30.4 million, working capital of $46.5$36.3 million and an accumulated deficit of $409.8$421.1 million. As of December 31, 2025, we had cash and cash equivalents of $50.8 million, working capital of $57.6 million and an accumulated deficit of $397.6 million.

We have incurred operating losses since our inception, and we anticipate that our operating losses will continue in the near term as we seek to invest in our sales and marketing initiatives to support our growth in existing and new markets and in additional research and development activities. As of MarchJune 31,30, 2026, we had $60.0 million of borrowings outstanding under our credit facility (the “Perceptive Credit Agreement”) with Perceptive Credit Holdings V, LP (“Perceptive”). The Perceptive Credit Agreement matures in November 2030.

During the threesix months ended MarchJune 31,30, 2026, we used $11.2$20.6 million of cash in operating activities, resulting from our net loss of $12.3$23.5 million and changes in operating assets and liabilities of $1.2$0.8 million, partially offset by our non-cash items of $2.3$3.8 million. Our non-cash items were primarily comprised of stock-based compensation expense of $0.8$1.4 million, our excess and obsolete inventory charge of $0.9$1.2 million, depreciation and amortization expense of $0.3$0.5 million and noncash interest expense of $0.2$0.5 million. The change in our operating assets and liabilities was primarily related to an increase in inventory and a decrease in accrued expenses and other current liabilities offset by an increase in accounts payable. Consistent with historical trends, cash used in operations in each of the remaining quarters of the fiscal year ending December 31, 2026 is expected to be lower than the amount reported for the threesix months ended MarchJune 31,30, 2026.

During the threesix months ended MarchJune 31,30, 2025, we used $9.7$17.6 million of cash in operating activities, resulting from our net loss of $11.3$21.2 million, changes in operating assets and liabilities of $0.6$0.2 million partially offset by our non-cash items of $2.1$3.8 million. Our non-cash items were primarily comprised of stock-based compensation expense of $1.0$2.0 million, our excess and obsolete inventory charge of $0.6$0.9 million, depreciation and amortization expense of $0.3$0.5 million and noncash interest expense of $0.2$0.3 million. The change in our operating assets and liabilities was primarily related to changesan increase in inventory and accounts receivable andpartially offset by a decrease in accrued expenses and other current liabilities partially offset by increases in accounts payable.inventory.

During the threesix months ended MarchJune 31,30, 2026, cash provided by investing activities was $0.2$0.4 million consisting of proceeds received from the sale of NIVIS of $0.3$0.6 million offset by $0.1$0.2 million in purchases of property and equipment.

During the threesix months ended MarchJune 31,30, 2025, cash provided by investing activities was $0.1$0.3 million consisting of proceeds received from the sale of NIVIS of $0.2$0.5 million offset by $32,000$0.1 million in purchases of property and equipment.

During the threesix months ended MarchJune 31,30, 2026, cash used in financing activities was $0.3 million, consisting primarily of payments of accrued offering costs and payments of withholding taxes related to stock-based compensation to employees partially offset by proceeds received from the issuance of common stock under the employee stock purchase plan.

During the threesix months ended MarchJune 31,30, 2025, cash used in financing activities was $0.1 million, consisting primarily of payments of withholding taxes related to stock-based compensation to employees partially offset by proceeds received from the issuance of common stock under the employee stock purchase plan.

On November 13, 2025, the Company entered into a Credit Agreement and Guaranty (the “Credit Agreement”) with Perceptive, which provides for a senior secured term loan facility in an aggregate principal amount of up to $70.0 million. An initial loan in an aggregate principal amount of $60.0 million (the “Initial Loan”) was funded under the Perceptive Term Loan Facility on November 14, 2025 (the “Closing Date”). In addition to the Initial Loan, the Perceptive Term Loan Facility includes an additional delayed draw loan in an aggregate principal amount of $10.0 million to be available in a single drawing after the Closing Date on or prior to the Delayed Draw Commitment Termination Date (as defined in the Credit Agreement but not later than April 30, 2027) (the “Delayed Draw Loan,” together with the Initial Loan, the “Loans”), which will be accessible by the Company socontingent long ason it satisfiesachieving net revenue thresholds and satisfying certain customary conditions precedent, including but not limited to, the achievement of net revenue thresholds.precedent. The Perceptive Term Loan Facility has a maturity date of November 14, 2030.

As of MarchJune 31,30, 2026, there were no significant changes to our commitments and future minimum contractual obligations as set forth in our Annual Report.