What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2026-03-03 compared with 2025-03-17 · 117 added, 118 removed, 283 unchanged (45% of the section changed)

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In the event of positive “free cash flow” as defined in the 2024 Cooperation Agreement dated May 28, 2024, with Caligan Partners LP, Caligan Partners Master Fund LP and David Johnson, for the period from July 1, 2024 through June 30, 2025, the amount under the share repurchase program shall be increased by 50% of such positive amount and in no event would we be required to make any purchases in the event that our cash would be less than $45.0 million after taking into account the share repurchase and reasonably anticipated capital expenditures and restructuring costs.

On May 28, 2024, the Company entered into a share repurchase agreement under a Rule 10b5-1 with Bank of America.

On May 28, 2024, we entered into a share repurchase agreement under a Rule 10b5-1 plan with Bank of America and we completed the first $15.0 million tranche of the 2024 Share Repurchase Program in March 2025.

On November 6, 2026, we entered into a share repurchase agreement under a Rule 10b5-1 plan with Clear Street LLC for another $15.0 million related to the 2024 Share Repurchase Program.

As of December 31, 2025, the Company had repurchased 1,308,545 shares at an average cost of $15.63 per share, representing 51% of the then estimated total number of shares expected to be repurchased under the 2024 Share Repurchase Program.

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Our proprietary technologies for modifying the HA molecule allow product properties to be tailored specifically to multiple uses, including enabling longer residence time to support OA Pain Management and creating a solid form of HA called Hyaff, which is a platform utilized in our regenerative solutions portfolio.

In early 2020, we expanded our overall technology platform, product portfolio, and significantly expanded our commercial infrastructure, especially in the United States, through our strategic acquisitions of Parcus Medical, LLC, a sports medicine and instrumentation solutions provider, and Arthrosurface Incorporated, a company specializing in bone preserving partial and total joint replacement solutions.

These acquisitions augmented our HA-based OA Pain Management and regenerative products with a broad suite of products and capabilities focused on early intervention joint preservation primarily in upper and lower extremities such as shoulder, foot/ankle, knee and hand/wrist.

In October 2024, we announced a strategic shift to concentrate on OA Pain Management and our Regenerative Solutions products.

This strategic decision involved the sale of Arthrosurface Incorporated in October 2024 and the divestiture of Parcus Medical, LLC, in March 2025.

As we look towards the future, our business is positioned to capture value within our target market of OA Pain Management and Regenerative Solutions product portfolios.

In early 2020, we expanded our product portfolio and commercial capabilities through the acquisitions of Parcus Medical, LLC and Arthrosurface Incorporated, adding sports medicine, joint preservation, and instrumentation offerings to our business.

In 2024, we refined our strategic focus to prioritize OA Pain Management and regenerative solutions and, consistent with this focus, divested Arthrosurface Incorporated in October 2024 and Parcus Medical, LLC in March 2025.

As we look forward to the future, our business is positioned to capture value within our target market of OA Pain Management and Regenerative Solutions product portfolios.

We believe our success will be driven by our:

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Integrity Implant System and Hyalofast) markets;

Launching the Integrity Implant System, our arthroscopic patch system for rotator cuff repair, in 2024;

Growth of the Integrity Implant System, our HA-based scaffold for rotator cuff and other tendon repairs;

Targeting to introduce key HA-based products into the US market upon FDA approval/clearance, such as Cingal and Hyalofast, and developing additional products that leverage our proprietary Hyaff regenerative platform;

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Cingal is our next generation fast-acting, long-lasting, non-opioid, clinically proven osteoarthritis pain product which is designed to provide both short- and long-term pain relief, through at least six months.

It is currently sold outside the United States in over 35 countries.

It is currently sold outside the United States in 53 countries.

In 2022, we completed a third Phase III clinical trial for Cingal, which achieved its primary endpoint.

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regulatory approval.

We acquired the Aristospan New Drug Application (“NDA”) regulatory approval in the United States in September 2024 to assist with our Cingal regulatory filing with the FDA.

Regenerative Solutions

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Total operating expenses

(Loss) income from operations

Interest and other expense, net

(Loss) income before income taxes

Provision for (benefit from) income taxes

Loss from operations

Interest and other income, net

Loss before income taxes

Provision for income taxes

Loss from continuing operations

Loss from discontinued operations, net of tax

During the year ended December 31, 2024, we changed our classification of revenue.

We previously disclosed revenue in three categories:

OA Pain Management, Joint Preservation and Restoration and Non-Orthopedic.

As a result of a change in strategic focus announced by us in 2024, revenue classification was delineated to provide the investment community a clear view to our value drivers.

Revenue has been split between the Commercial Channel and the Original Equipment Manufacturer (“OEM”) Channel.

We classify our revenue between the Original Equipment Manufacturer (“OEM”) Channel and the Commercial Channel.

In the OEM Channel, we are responsible for development and manufacturing of products sold to our OEM partners governed by long-term agreements, but we do not control sales, marketing, or pricing with end users.

In the Commercial Channel, we have full responsibility for sales, marketing, and pricing of products through our commercial leaders, direct sales representatives, and independent distributors.

Revenue from our Regenerative Solutions and international OA Pain Management businesses is included in the Commercial Channel.

Revenue from our U.S.

OA Pain Management business and the Non-Orthopedic business is now included in the OEM Channel.

All other revenue is reported in the Commercial Channel.

The following table presents revenue by product family for fiscal years 2025 and 2024 (dollars in thousands):

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Revenue for the year ended December 31, 2025 was $112.8 million, a decrease of $7.1 million, or 6%, compared to the prior year.

The decrease in revenue was driven by lower sales activity with our OEM channel partners, primarily J&J MedTech and the discontinuation of certain non-orthopedic products.

Revenue from our OEM Channel product family decreased 8% for the year ended December 31, 2024, as compared to prior year, due to lower J&J MedTech revenue, mostly related to Orthovisc and the discontinuation of certain non-orthopedic products.

Revenue from our Commercial Channel product family increased 17% for the year ended December 31, 2024, as compared to prior year, due to an international sales growth on all our main OA Pain Management products (Monovisc, Cingal and Orthovisc).

We also launched a full market release of Integrity in the U.S.

The decrease in revenue was driven by lower pricing with our OEM channel partners, primarily J&J MedTech.

Revenue from our OEM Channel product family decreased 17% for the year ended December 31, 2025, as compared to prior year, due to a $12.6 million decrease in J&J MedTech revenue, primarily due to lower pricing contributing $10.0 million of the decrease and lower volumes contributing to $2.6 million of the decrease.

There was a $0.8 million decrease in the Non-Orthopedic category revenue with prior year due to lower veterinary sales offset by higher ophthalmic and surgery product sales.

Revenue from our Commercial Channel product family increased 15% for the year ended December 31, 2025, as compared to prior year, due to international sales growth on Cingal and Orthovisc, offset by lower Monovisc shipments due to manufacturing delays.

This sales growth in international OA Pain Management products was primarily related to increased product demand of $3.6 million and minimal change on pricing with international customers.

We also continued our full market release of Integrity in the U.S.

in 2025 which contributed to a $3.4 million increase during the year ended December 31, 2025 and we had a $0.8 million increase in Hyalofast which is sold only outside of the United States.

These increases in international OA Pain Management, Hyalofast and Integrity revenues were offset by a $1.5 million decrease in Tactoset sales during 2025.

Gross Profit and Margin

Gross profit for the year ended December 31, 2025 was $63.8 million, or gross margin of 57%, as compared with $76.0 million, or gross margin of 63%, for the year ended December 31, 2024.

The decrease in gross profit for the year ended December 31, 2024, primarily resulted from lower revenue, primarily related to OA Pain Management products in the U.S., product channel mix and higher inventory product rationalization charges.

The decrease in gross profit for the year ended December 31, 2025, primarily resulted from lower revenue, primarily related to OA Pain Management products in the U.S., product channel mix with a higher percentage of international sales which have a lower selling price, increased manufacturing costs and higher inventory reserves.

Research and Development

Research and development expenses for the year ended December 31, 2024 were $25.5 million, an increase of $3.7 million, or 17%, as compared to the prior year, primarily due to increased costs to ensure compliance with growing regulatory requirements globally, such as EU MDR, as well as regulatory, clinical and product development costs associated with our research and development pipeline, led by Hyalofast, in which we submitted the first part of our modular PMA application with the FDA in October 2024.

Research and development costs for the years ended December 31, 2025 and 2024 were as follows:

Years Ended December 31,

(in thousands, except percentages)

External costs by program

Hyalofast clinical study

Integrity development costs

Cingal clinical study

Regulatory external costs

Other early programs and unallocated expenses

Total external costs

Internal costs:

Employee compensation and benefits

Facility and other

Total internal costs

Total research and development expense

Research and development external costs for the years ended December 31, 2025 and 2024 were $11.1 million and $9.7 million, respectively.

The increase in research and development external costs was primarily due to increased spending on Cingal regulatory submission activities offset by lower regulatory costs related to EU MDR requirements.

Research and development internal costs for the years ended December 31, 2025 and 2024 were $14.7 million and $15.8 million, respectively.

The decrease in internal research and development costs was primarily due to a reduction in headcount and a $0.1 million gain on the sale of an intangible asset during the year ended December 31, 2025.

For additional information on our research and development activities, please see the section captioned “Part I.

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Selling, general and administrative (“SG&A”) expenses for the year ended December 31, 2025 were $49.1 million, a decrease of $6.5 million, or 12%, as compared to the prior year.

The decrease in SG&A expenses for the year ended December 31, 2023 was primarily due to lower headcount and reduced shareholder activism costs.

Income (Loss) from Operations

For the year ended December 31, 2024, the loss from operations was $5.1 million, compared to income from operations of $0.8 million for the prior year.

The $5.9 million decrease in income from operations was due to lower gross profit and higher research and development costs.

The decrease in SG&A expenses for the year ended December 31, 2025 was due primarily to lower general and administrative expenses such as $2.2 million in shareholder activism costs that occurred in prior year, $1.5 decrease in stock-based compensation and the remainder attributable to lower headcount and professional fees.

We have been investing and expect to continue to invest in selling and marketing expenses primarily related to our Commercial Channel.

Loss from Continuing Operations

For the year ended December 31, 2025, the loss from continuing operations was $10.0 million, compared to a loss from continuing operations of $8.8 million for the prior year.

The $1.2 million decrease in the loss from continuing operations was due to lower revenues, primarily from J&J MedTech offset somewhat by lower operating expenses, primarily related to lower SG&A expenses.

The provision for income taxes was $0.7 million for the year ended December 31, 2025, resulting in an effective tax rate of (7.1%).

The provision from income taxes was $6.1 million for the year ended December 31, 2024, resulting in an effective tax rate of (219.4%).

The decrease in our effective rate for the year ended December 31, 2024 as compared to the year ended December 31, 2023 is primarily due to a lower valuation allowance being recorded on U.S.

deferred tax assets in 2024.

The decrease in our effective rate for the year ended December 31, 2025 as compared to the year ended December 31, 2024 is primarily due to the fact that we did not incur current income taxes in the United States during the year ended December 31, 2025.

Non-GAAP Financial Measures

We present certain information with respect to adjusted gross profit and adjusted gross margin, adjusted Earnings Before Interest, Tax, Depreciation and Amortization (“EBITDA”), adjusted net income, adjusted diluted earnings per share or adjusted Earnings Per Share (“EPS”), which are financial measures not based on any standardized methodology prescribed by accounting principles generally accepted in the United States (“GAAP”), and is not necessarily comparable to similarly titled measures presented by other companies.

We have presented adjusted gross profit and adjusted gross margin, adjusted EBITDA, adjusted net income, adjusted EPS, because they are key measures used by our management and board of directors to understand and evaluate our operating performance and to develop operational goals for managing our business.

We present certain information with respect to adjusted Earnings Before Interest, Tax, Depreciation and Amortization (“EBITDA”), adjusted net income, adjusted diluted earnings per share or adjusted Earnings Per Share (“EPS”), which are financial measures not based on any standardized methodology prescribed by accounting principles generally accepted in the United States (“GAAP”), and is not necessarily comparable to similarly titled measures presented by other companies.

We have presented adjusted EBITDA, adjusted net income, adjusted EPS, because they are key measures used by our management and board of directors to understand and evaluate our operating performance and to develop operational goals for managing our business.

We believe these financial measures help identify underlying trends in our business that could otherwise be masked by the effect of the expenses that we exclude.

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Accordingly, we believe that these measures provide useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects and allowing for greater transparency with respect to key financial metrics used by our management in their financial and operational decision-making.

Adjusted Gross Profit and Adjusted Gross Margin

We define adjusted gross profit as our gross profit excluding certain product rationalization charges.

We define adjusted gross margin as adjusted gross profit divided by total revenue.

The following is a reconciliation of adjusted gross profit to gross profit for the years ended December 31, 2024 and 2023, respectively:

Years Ended December 31,

Product rationalization charges

Adjusted gross profit

Adjusted gross margin

Adjusted gross profit for the year ended December 31, 2024 decreased $6.7 million to $76.6 million representing 64% of revenue.

Adjusted gross profit for the year ended December 31, 2023 was $83.3 million, or 69% of revenue.

The decrease in adjusted gross profit for the year ended December 31, 2024 as compared to 2023, primarily resulted from slower manufacturing production, higher supply chain costs, and a higher proportion of international sales in which product margins are generally lower.

Adjusted EBITDA

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we exclude stock-based compensation expense from adjusted EBITDA although (a) it has been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our employee compensation strategy and (b) if we did not pay out a portion of our compensation in the form of stock-based compensation, the cash salary and bonus expense included in operating expenses likely would be higher, which would affect our cash position;

we exclude acquisition related expenses, including transaction costs and other related expenses, amortization and depreciation of acquired assets in recent acquisitions, and the impact of inventory fair-value step up on cost of goods sold;

we exclude acquisition related expenses, including transaction costs and other related expenses, amortization and depreciation of acquired assets in recent acquisitions ;

we exclude certain impairment charges, including impairment related to intangible assets, certain product rationalization charges;

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Net loss from continuing operations

Interest and other expense, net

Interest and other income, net

Provision for income taxes

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Product rationalization charges

Non-recurring professional fees

Costs of shareholder activism

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Adjusted EBITDA for year ended December 31, 2025 was $5.3 million, a decrease of $10.2 million as compared to 2024.

The decrease in adjusted EBITDA was primarily due to lower adjusted gross profit and higher research and development spending in 2024 on product development and clinical activity, primarily with Integrity, Hyalofast and Cingal.

The decrease in adjusted EBITDA was primarily due to lower revenues, primarily related to J&J MedTech and lower gross profit due to higher inventory reserves and manufacturing costs.

Adjusted Net Loss and Adjusted EPS from Continuing Operations

We present information below with respect to adjusted net loss and adjusted EPS from continuing operations.

We define adjusted net loss from continuing operations as our net loss from continuing operations excluding amortization and depreciation of acquired assets, the impact of inventory fair-value step up on cost of revenue, changes in the fair value of contingent consideration, as well as certain impairment charges, including impairment related to IPR&D assets and non-cash product rationalization charges, each on a tax effected basis.

We define adjusted net loss from continuing operations as our net loss from continuing operations excluding amortization and depreciation of acquired assets, changes in the fair value of contingent consideration, as well as certain impairment charges, including impairment related to IPR&D assets and non-cash product rationalization charges, each on a tax effected basis.

Acquisition-related expenses are those that we would not have incurred except as a direct result of acquisition transactions.

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Share-based compensation, tax effected

Non-recurring professional fees, tax effected

Costs of shareholder activism, tax effected

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Share-based compensation, tax effected

Non-recurring professional fees

Costs of shareholder activism, tax effected

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Adjusted net income from continuing operations in 2025 was $1.6 million, a decrease of $0.8 million as compared to 2024.

The decrease in adjusted net income from continuing operations and adjusted diluted income from continuing operations per share for the period was primarily due to higher manufacturing expenses and research and development costs during the year.

The decrease in adjusted net income from continuing operations and adjusted diluted income from continuing operations per share for the period was primarily due to lower revenues and higher manufacturing expenses during the year.

Results of Operations

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Total operating expenses

Income (loss) from operations

(Loss) income from operations

Interest and other expense, net

Income before income taxes

Provision for income taxes

(Loss) income from continuing operations

Loss from discontinued operations

(Loss) income before income taxes

Provision for (benefit from) income taxes

Loss from continuing operations

Loss from discontinued operations, net of tax

The following table presents revenue by product family for fiscal years 2024 and 2023 (dollars in thousands):

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Commercial Channel

Revenue for the year ended December 31, 2023 was $120.8 million, an increase of $7.0 million, or 6%, compared to the prior year.

The increase in revenue was driven by growing global commercial adoption of our OA Pain Management products as well as our introduction of new products in recent years.

Revenue from our OEM channel product family increased 4% for the year ended December 31, 2023, as compared to prior year, due to domestic sales growth of our Monovisc single injection pain product and favorable ordering patterns from J&J MedTech.

Revenue from our Commercial Channel product family increased 12% for the year ended December 31, 2023, as compared to prior year, due to international sales growth of our Monovisc single injection pain product and our Cingal next generation non-opioid single injection pain product, as well as favorable ordering patterns from our distributors.

Revenue for the year ended December 31, 2024 was $119.9 million, a decrease of $0.9 million, or 1%, compared to the prior year.

The decrease in revenue was driven by lower sales activity with our OEM channel partners, primarily J&J MedTech and the discontinuation of certain non-orthopedic products.

Revenue from our OEM Channel product family decreased 8% for the year ended December 31, 2024, as compared to prior year, due to lower J&J MedTech revenue, primarily due to lower volumes resulting in a decrease of $4.3 million and lower pricing contributing to a $1.6 million decrease and the discontinuation of certain non-orthopedic products resulting in a decrease of $1.1 million.

This sales growth for international OA Pain Management products was primarily related to increased product demand of $4.3 million and minimal change on pricing with international customers.

We also launched a full market release of Integrity in the U.S.

in 2024 which contributed to a $1.7 million increase in regenerative product sales during the year ended December 31, 2024.

Gross Profit and Margin

Gross profit for the year ended December 31, 2024 was $76.0 million, or gross margin of 63%, as compared with $82.5 million, or gross margin of 68%, for the year ended December 31, 2023.

The increase in gross profit for the year ended December 31, 2023, primarily resulted from higher revenue growth, improved manufacturing efficiency and lower product rationalization charges.

This increase was partially offset by higher costs due to inflationary pressures for raw materials and freight charges.

Research and Development

Research and development expenses for the year ended December 31, 2023 were $21.8 million, an increase of $3.5 million, or 19%, as compared to the prior year, primarily due to increased costs to ensure compliance with growing regulatory requirements globally, such as EU MDR, as well as new product development associated with our research and development pipeline, led by Integrity, which received FDA clearance in August 2023 and was launched with first surgeries in rotator cuff repair and other tendon procedures in November 2023.

Research and development costs for the years ended December 31, 2024 and 2023 were as follows:

Years Ended December 31,

(in thousands, except percentages)

External costs by program

Hyalofast clinical study

Integrity development costs

Cingal clinical study

Regulatory external costs

Other early programs and unallocated expenses

Total external costs

Internal costs:

Employee compensation and benefits

Facility and other

Total internal costs

Total research and development expense

For additional information on our research and development activities, please see the section captioned “Part I.

Business— Research and Development ” in this Annual Report on Form 10-K.

Selling, General and Administrative

Selling, general and administrative (“SG&A”) expenses for the year ended December 31, 2023 were $59.9 million, an increase of $8.7 million, or 17%, as compared to the prior year.

The increase in SG&A expenses for the year ended December 31, 2023 was primarily due to shareholder activism and related corporate costs during the year.

Income from Operations

Selling, general and administrative (“SG&A”) expenses for the year ended December 31, 2024 were $55.6 million, a decrease of $4.4 million, or 7%, as compared to the prior year.

The decrease in SG&A expenses from the prior year was primarily due to reduced shareholder activism costs of $0.8 million, lower stock-based compensation of $0.8 million, and $1.2 million in other non-recurring costs incurred in 2023 with the remainder attributed to lower headcount.

Income (Loss) from Continuing Operations

For the year ended December 31, 2024, the loss from operations was $5.1 million, compared to income from operations of $0.8 million for the prior year.

The $2.8 million decrease in income from operations was due higher operating expenses.

The $5.9 million decrease in income from operations was due to lower gross profit and higher research and development costs.

The provision for income taxes was $6.1 million for the year ended December 31, 2024, resulting in an effective tax rate of (219.4%).

The provision from income taxes was $6.6 million for the year ended December 31, 2023, resulting in an effective tax rate of 209.0%.

The increase in our effective rate for the year ended December 31, 2023 as compared to the year ended December 31, 2022 is primarily due to a higher valuation allowance being recorded on U.S.

The decrease in our effective rate for the year ended December 31, 2024 as compared to the year ended December 31, 2023 is primarily due to a lower valuation allowance being recorded on U.S.

deferred tax assets in 2024.

Concentration of Risk

We have historically derived the majority of our revenue from a small number of customers, most of whom resell our products to end-users and are significantly larger companies than us.

We have historically derived most of our revenue from a small number of customers, most of whom resell our products to end-users and are significantly larger companies than us.

For the year ended December 31, 2025, J&J MedTech accounted for 50% of revenue, as compared to 57% in prior year.

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The failure of these customers to purchase our products in the amounts they historically have or in amounts that we expect could materially impact our business.

We also have Notes Receivable that we have recorded as consideration related to the divestiture of the Arthrosurface asset group in which repayment will be dependent upon the cash flows from the Arthrosurface asset group.

In addition, if present and future customers terminate their purchasing arrangements with us, significantly reduce or delay their orders, or seek to renegotiate their agreements on terms less favorable to us, our business, financial condition, and results of operations will be adversely affected.

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We require cash to fund our operating activities and to make capital expenditures and other investments in the business.

We expect that our requirements for cash to fund these uses will increase as our operations expand.

We expect that our requirements for cash to fund these uses will increase as our operations, particularly for our expansion of manufacturing capacity.

We believe that our operating cash flows, cash currently on our balance sheet and availability under our credit facility will be sufficient to allow us to continue to invest in our existing business, to manage our capital structure on a short and long-term basis, and to meet our anticipated operating cash needs.

Cash, cash equivalents, and investments aggregated $55.6 million and $68.7 million, and working capital totaled $90.3 million and $132.3 million, at December 31, 2024 and 2023, respectively.

Cash and cash equivalents aggregated $57.5 million and $55.6 million, and working capital totaled $80.2 million and $90.3 million, at December 31, 2025 and 2024, respectively.

We entered into a Third Amendment to Credit Agreement, on November 12, 2021, with Bank of America N.A.

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Effect of exchange rate changes on cash

Net decrease in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

The following changes contributed to the net change in cash and cash equivalents from 2024 to 2025.

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Cash provided by (used in) operating activities was $11.2 million, $5.4 million and $(1.8) million for 2025, 2024 and 2023, respectively.

The change in 2024 was primarily attributable to a lower net loss in 2024, compared to the same period in 2023.

For the foreseeable future, we expect to continue to invest in research and development for new products and clinical trials related to our HA-based technology to support our growth strategy.

The increase in cash provided by operating activities was primarily due to a lower net loss in 2025 as we incurred a $47.6 million loss from discontinued operations, offset somewhat by $44.1 million in non-cash impairment charges with the divestitures of Arthrosurface and Parcus Medical during the year ended December 31, 2024.

For the foreseeable future, we expect to continue to invest in research and development for new products and clinical trials related to our HA-based technology to support our growth strategy, particularly on Cingal and Integrity.

These costs will be funded with a combination of cash on hand and cash expected to be generated from future operations.

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Cash used in investing activities was $0.4 million, $8.3 million and $5.4 million for 2025, 2024 and 2023, respectively.

The change was primarily due to an increase in capital expenditures in 2024 to support the expansion of manufacturing capacity at our Bedford facility and a purchase of developed technology for $0.6 million.

The decrease in cash used in investing activities was primarily related to proceeds received from the sales of Arthrosurface and Parcus Medical offset by an increase in capital expenditures in 2025 to support the expansion of manufacturing capacity at our Bedford facility.

Financing Activities

Cash used in financing activities was $10.6 million, $12.7 million and $6.3 million for 2025, 2024 and 2023, respectively.

The change in 2024 was primarily due to $10.9 million used to fund the stock repurchase program we started in May 2024.

The decrease in cash used in financing activities was primarily due a reduction in stock repurchases as we incurred $9.5 million in 2025 versus $10.9 million on the stock repurchase program we started in May 2024.

We also had lower payments in cash withheld for taxes related the vesting of restricted stock awards.

For a discussion of our liquidity and capital resources as of December 31, 2024, and our cash flow activities for the fiscal year ended December 31, 2024, see “Part II, Item 7.

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For commercial partnership sales, we sell our products directly to these partners, who perform most of the downstream sales and marketing activities to customers and end users.

These arrangements may include the grant of certain licenses, performance of development services, and the supply of product.

Our largest such customer, J&J MedTech, represented 57% of total revenues for the year ended December 31, 2024.

These arrangements may include the grant of certain licenses, performance of development services, and the supply of products.

We recognize revenue from product sales when the customer obtains control of our product, which typically occurs upon shipment to the customer.

Commercial partnership agreements may also include sales-based royalties and milestones.

As we considered the license to be the predominant item to which the royalties relate for these agreements, sales-based royalties and milestones are only recognized when the later of the underlying sale occurs or the performance obligation to which some or all of the sales-based royalty has been satisfied (or partially satisfied).

This is generally in the same period that our licensees complete their product sales in their territory, for which we are contractually entitled to a percentage-based royalty.

Sales-based royalties and milestones are only recognized when the latter of the underlying sale occurs or the performance obligation to which some or all of the sales-based royalties have been satisfied (or partially satisfied).

This is generally in the same period that our commercial partners complete their product sales in their territory, for which we are contractually entitled to a percentage-based royalty.

We record royalty revenues based on estimated net sales of licensed products as reported to us by our commercial partners.

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Revenue from sales-based royalties is included in revenues in our consolidated statement of operations.

For sales to hospitals and ambulatory service centers, which generally pairs in-house sales representatives with local or regional distributors, the inventory is generally consigned so that products are available when needed for surgical procedures.

Our largest customer, J&J MedTech, represented 50% of total revenues for the year ended December 31, 2025.

Our collaboration agreement with J&J MedTech includes contracts with Orthovisc and Monovisc products, which were entered into in 2003 and 2011, respectively.

Pursuant to the J&J MedTech contracts, we are the exclusive supplier responsible for the manufacture and sale to J&J MedTech of the Orthovisc and Monovisc products pursuant to J&J MedTech’s purchase orders, while J&J MedTech is responsible for the marketing, sales and distribution to end-customers.

In general, our long-term contractual arrangements do not allow for any other product source suppliers for the OEM Channel partners.

Furthermore, given the proprietary nature of the products, manufacturing would not be easily replicated by the OEM Channel partners, including J&J MedTech nor would an alternative source of supply be available, such that the product supply and license are not distinct.

For these reasons, we believe that revenue earned from the combined fixed and variable consideration paid for the sales of the product meets the objective of ASC 606-10-50-5 in depicting how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.

For sales to hospitals and ambulatory service centers, which generally pair in-house sales representatives with local or regional distributors, the inventory is generally consigned so that products are available when needed for surgical procedures.

No revenue is recognized upon the placement of inventory into consignment, as we retain the ability to control the inventory.

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Performance obligations are generally settled quickly after purchase order acceptance.

We have no performance obligations greater than one year;

therefore, the value of unsatisfied performance obligations at the end of any reporting period is generally insignificant.

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If the prospective discounts or free-of-charge sample units are considered material rights, these would be separate performance obligations, and a portion of the sales transaction price is allocated to the material right.

Revenue allocated to the material right is recognized when the additional goods are transferred to the customer or when the option expires.

Revenue allocated to the material rights are recognized when the additional goods are transferred to the customer or when the option expires.

During 2025, the consideration allocated to material rights was not significant.

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Generally, customer contracts contain Free on Board (“FOB”) or Ex-Works shipping point terms where the customer pays the shipping company directly for all shipping and handling costs.

In those contracts in which we pay for the shipping and handling, the associated costs are generally recorded along with the product sale at the time of shipment in cost of revenue when control over the products has transferred to the customer.

Value-add and other taxes we collected concurrently with revenue-producing activities are excluded from revenue.

In those contracts in which we pay for shipping and handling, the associated costs are generally recorded along with the product sale at the time of shipment in cost of revenue when control over the products has been transferred to the customer.

Value-added and other taxes we collected concurrently with revenue-producing activities are excluded from revenue.

Our general product warranty does not extend beyond an assurance that the product or services delivered will be consistent with stated contractual specifications, which does not create a separate performance obligation.

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Other long-term assets include inventory expected to remain on hand beyond one year.

Goodwill is the amount by which the purchase price of acquired net assets in a business combination exceeded the fair values of net identifiable assets on the date of acquisition.

Goodwill is not amortized but is subject to impairment test annually or more frequently if events or changes in circumstances suggest that the carrying value of goodwill may not be recoverable, utilizing either the qualitative or quantitative method.

We test goodwill for impairment at the reporting unit level on an annual basis as of November 30 or more frequently if we believe indicators of impairment exist.

We have two reporting units:

the legacy Anika reporting unit and a reporting unit established in 2020 upon the acquisitions of Parcus Medical and Arthrosurface.

The remaining goodwill as of December 31, 2024 pertains to the legacy Anika reporting unit, as the goodwill with respect to the Parcus Medical and Arthrosurface reporting unit was fully impaired in 2020.

We have the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value.

We used the quantitative method in 2024, we considered several factors, including the following:

the amount by which the fair value of the reporting unit exceeded its carrying value as of the date of the most recent quantitative impairment analysis, which indicated there would need to be substantial negative developments in the markets in which the reporting unit operates for there to be potential impairment;

the carrying value of the reporting unit as of the assessment date compared to their previously calculated fair value as of the date of the most recent quantitative impairment analysis;

the current forecasts as compared to the forecasts included in the most recent quantitative impairment analysis;

public information from competitors and other industry information to determine if there were any significant adverse trends in our competitors' businesses;

changes in the value of major U.S.

stock indices that could suggest declines in overall market stability that could impact the valuation of our reporting unit;

whether there had been any significant increases in the weighted-average cost of capital rates for the reporting unit, which could materially lower our prior valuation conclusions under a discounted cash flow approach.

Significant assumptions utilized in the impairment analysis included valuation multiple with respect to revenue and weighted-average cost of capital.

Based on sensitivity analysis performed on key assumptions at November 30, 2024, a 10% decrease in valuation multiples or a 10% increase in the weighted average cost of capital assumption would not have resulted in a fair value below the reporting unit’s carrying value.

Accordingly, we determined it was not more likely than not that the fair value of the legacy Anika reporting unit is less than its carrying amount and thus goodwill was not impaired as of November 30, 2024.

Long-Lived Assets

Long-lived assets primarily include property and equipment and intangible assets with finite lives.

Our intangible assets are comprised of purchased developed technologies, patents, trade names, customer relationships and distributor relationships.

These intangible assets are carried at cost, net of accumulated amortization.

Amortization is recorded on a straight-line basis over the intangible assets' useful lives, which range from approximately three to sixteen years.

We review long-lived assets for impairment when events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of those assets are no longer appropriate.

Each impairment test is based on a comparison of the undiscounted cash flows to the recorded value of the asset.

If impairment is indicated, the asset is written down to its estimated fair value based on a discounted cash flow analysis.

During the years ended December 31, 2024 and 2023, we determined that certain of our intangible assets related to our Arthrosurface and Parcus reporting unit were impaired mainly due to slower than expected revenue growth from product sales that have impacted cash flows with this reporting unit.

As a result, we recorded $1.5 million and $62.2 million in impairment charges to intangible assets related to our Arthrosurface and Parcus reporting units during the years ended December 31, 2024 and 2023, respectively in discontinued operations.

In determining the useful lives of intangible assets, we consider the expected use of the assets and the effects of obsolescence, demand, competition, anticipated technological advances, changes in surgical techniques, market influences and other economic factors.

For technology-based intangible assets, we consider the expected life cycles of products, absent unforeseen technological advances, which incorporate the corresponding technology.

Recent Accounting Pronouncements

A discussion of recent accounting pronouncements is included in Note 2 to the consolidated financial statements in this Annual Report on Form 10-K.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity