What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-10-30 compared with 2025-07-31 · 54 added, 44 removed, 177 unchanged (36% of the section changed)

34 unchanged sentences

Our product costs consist primarily of raw materials, component parts, direct labor, and overhead.

The product costs of certain of our biologics products

include the cost of procuring and processing human tissue.

The product costs of certain of our biologics products include the cost of procuring and processing human tissue.

We incur royalties related to the technologies that we license from others and the products that are developed in part by surgeons with whom we collaborate in the product development process.

12 unchanged sentences

Total interest expense and other expense, net includes interest income, interest expense, gains and losses from foreign currency exchanges, loss on debt extinguishment, gain on derivative liability, and other non-operating gains and losses.

Income tax provision.

Income tax provision primarily consists of an estimate of federal, state, and foreign income taxes based on enacted state and foreign tax rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in the valuation of our deferred tax assets and liabilities, and changes in tax laws.

Income tax provision (benefit).

Income tax provision (benefit) primarily consists of an estimate of federal, state, and foreign income taxes based on enacted state and foreign tax rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in the valuation of our deferred tax assets and liabilities, and changes in tax laws.

Critical Accounting Policies and Estimates

5 unchanged sentences

Critical accounting policies are those that, in management’s view, are most important in the portrayal of our financial condition and results of operations.

Management believes there have been no material changes during the three months ended June 30, 2025, to the critical accounting policies discussed in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC.

Management believes there have been no material changes during the three months ended September 30, 2025, to the critical accounting policies discussed in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC.

Results of Operations

1 unchanged sentence

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

(in thousands, except %)

Revenue from products and services

Revenue from products and services increased $40.0 million, or 27%, and $70.7 million, or 25%, during the three and six months ended June 30, 2025, respectively, compared to the same period in 2024.

Revenue from products and services increased $45.8 million, or 30%, and $116.5 million, or 27%, during the three and nine months ended September 30, 2025, respectively, compared to the same period in 2024.

The increase was primarily due to an increase in product volume that was due to the increase in our surgeon user base, continued expansion of our new product portfolio, and increasing adoption of our technology.

1 unchanged sentence

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

(in thousands, except %)

Cost of sales

Cost of sales increased $13.5 million, or 31%, and $25.5 million, or 30%, for the three and six months ended June 30, 2025, respectively, compared to the same period in 2024.

Cost of sales increased $11.2 million, or 23%, and $36.7 million, or 28%, for the three and nine months ended September 30, 2025, respectively, compared to the same period in 2024.

The increase was primarily due to an increase in product volume.

1 unchanged sentence

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

(in thousands, except %)

7 unchanged sentences

Research and development expenses .

Research and development expenses decreased $0.8 million, or 4%, and $1.8 million, or 5%, for the three and six months ended June 30, 2025, respectively, compared to the same period in 2024.

The decrease during the three months and six months ended June 30, 2025 was primarily due to a decrease in stock-based compensation.

Research and development expenses decreased $1.7 million, or 8%, and $3.5 million, or 6%, for the three and nine months ended September 30, 2025, respectively, compared to the same period in 2024.

The decrease during the three months and nine months ended September 30, 2025 was primarily due to a decrease in stock-based compensation.

Sales, general and administrative expenses.

Sales, general and administrative expenses increased $5.8 million, or 5%, and $19.2 million, or 8%, during the three and six months ended June 30, 2025, respectively, compared to the same period in 2024.

Sales, general and administrative expenses increased $15.1 million, or 14%, and $34.3 million, or 10%, during the three and nine months ended September 30, 2025, respectively, compared to the same period in 2024.

The increase was primarily due to higher compensation-related costs and variable selling expenses associated with the increase in revenue, and our continued investment in building our strategic distribution channel.

Litigation-related expenses.

Litigation-related expenses decreased $0.5 million, or 24%, and increased $7.3 million, or 112%, for the three and six months ended June 30, 2025, respectively, compared to the same period in 2024.

The increase for the six month period ended June 30, 2025 was primarily related to a litigation settlement during the three months ended March 31, 2025.

Litigation-related expenses increased $4.4 million, or 212%, and $11.7 million, or 136%, for the three and nine months ended September 30, 2025, respectively, compared to the same period in 2024.

The increase for the three month period ended September 30, 2025 was primarily related to ongoing litigation.

The increase for the nine month period ended September 30, 2025 was primarily related to a litigation settlement during the three months ended March 31, 2025, and ongoing litigation matters.

Amortization of acquired intangible assets.

Amortization of acquired intangible assets remained consistent for the three and six months ended June 30, 2025, respectively, compared to the same period in 2024.

Amortization of acquired intangible assets remained consistent for the three and nine months ended September 30, 2025, respectively, compared to the same period in 2024.

Restructuring expenses.

Restructuring expenses decreased $0.1 million, or 95%, and $0.5 million, or 59%, during the three and six months ended June 30, 2025, respectively, compared to the same period in 2024.

Restructuring expenses decreased $0.9 million, or 100%, and $1.5 million, or 80%, during the three and nine months ended September 30, 2025, respectively, compared to the same period in 2024.

The decrease in restructuring expenses is primarily due to costs associated with the relocation of office facilities in Paris, France and personnel related expenses in the prior period that did not recur.

1 unchanged sentence

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

(in thousands, except %)

2 unchanged sentences

Loss on debt extinguishment

(Loss) gain on derivative liability

Gain on derivative liability

Other income, net

Total other expense, net

Interest expense, net, increased $6.5 million, or 112%, and $9.0 million, or 81%, during the three and six months ended June 30, 2025, respectively, compared to the same period in 2024.

Interest expense, net, increased $6.3 million, or 96%, and $15.3 million, or 86%, during the three and nine months ended September 30, 2025, respectively, compared to the same period in 2024.

The increase in interest expense, net, was primarily due to drawing an additional $50.0 million on the Braidwell Term Loan in October 2024, and the amortization of debt discount associated with the 2030 Notes.

Net cash interest was $5.3 million and $10.6 million for the three and six months ended June 30, 2025, respectively.

Net non-cash interest was $7.0 million and $9.5 million for the three and six months ended June 30, 2025, respectively.

Loss on debt extinguishment increased $17.6 million, or 100%, during the six months ended June 30, 2025, compared to the same period in 2024.

Net cash interest was $5.3 million and $16.0 million for the three and nine months ended September 30, 2025, respectively.

Net non-cash interest was $7.6 million and $17.1 million for the three and nine months ended September 30, 2025, respectively.

Loss on debt extinguishment increased $17.6 million, or 100%, during the nine months ended September 30, 2025, compared to the same period in 2024.

The increase in loss on debt extinguishment relates to the redemption of 80% of the 2026 Notes.

(Loss)/gain on derivative liability increased $16.8 million, or 100%, and $0.6 million, or 100%, during the three and six months ended June 30, 2025, respectively, compared to the same period in 2024.

The increase in (loss)/gain on derivative liability relates to the change in the valuation of the derivative liability associated with 2030 Notes from inception to June 30, 2025.

Other income, net, increased $0.8 million, or 537%, and $1.1 million, or 385%, during the three and six months ended June 30, 2025, respectively, compared to the same period in 2024.

The increase in other income, net, during the three and six months ended June 30, 2025, was primarily due to receiving the employee retention credit and fluctuations in foreign currency rates.

Gain on derivative liability increased $0.6 million, or 100%, during the nine months ended September 30, 2025, compared to the same period in 2024.

The increase in gain on derivative liability relates to the change in the valuation of the derivative liability associated with 2030 Notes from inception to June 12, 2025, the date the conditions necessary for separate accounting of the conversion option as a derivative liability were no longer met.

Other income, net, decreased $0.3 million, or 51%, and increased $0.7 million, or 82%, during the three and nine months ended September 30, 2025, respectively, compared to the same period in 2024.

The increase in other income, net, during the nine months ended September 30, 2025, was primarily due to receiving the employee retention credit and fluctuations in foreign currency rates.

Income tax provision

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

(in thousands, except %)

Income tax benefit

The change in the income tax benefit for the three and six months ended June 30, 2025, compared to the same period in 2024, was primarily related to the recognition of income tax benefits in several jurisdictions.

Income tax provision (benefit)

The change in the income tax provision (benefit) for the three and nine months ended September 30, 2025, compared to the same period in 2024, was primarily related to the recognition of income taxes in several jurisdictions.

Liquidity and Capital Resources

19 unchanged sentences

We have disclosed all material accruals for pending litigation or investigations in Note 8, Commitments and Contingencies, in the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

Cash and cash equivalents were $157.1 million and $138.8 million at June 30, 2025, and December 31, 2024, respectively.

Cash and cash equivalents were $155.7 million and $138.8 million at September 30, 2025, and December 31, 2024, respectively.

We believe that our existing funds, cash generated from our operations and our existing sources of and access to financing are adequate to satisfy our needs for working capital, capital expenditure and debt service requirements, and other business initiatives we plan to strategically pursue.

Summary of Cash Flows

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands)

6 unchanged sentences

Operating Activities

Cash provided of $10.5 million from operating activities for the six months ended June 30, 2025, primarily driven by favorable working capital changes, partially offset by inventory purchases and the timing of cash payments and receipts.

Cash provided of $24.5 million from operating activities for the nine months ended September 30, 2025, primarily driven by favorable working capital changes, partially offset by inventory purchases and the timing of cash payments and receipts.

Investing Activities

We used cash of $23.8 million in investing activities for the six months ended June 30, 2025, which is primarily related to the purchase of surgical instruments to support the growth of our business and commercial launch of new products.

We used cash of $37.7 million in investing activities for the nine months ended September 30, 2025, which is primarily related to the purchase of surgical instruments to support the growth of our business and commercial launch of new products and an equity investment.

Financing Activities

Financing activities provided cash of $31.1 million for the six months ended June 30, 2025, which is primarily related to proceeds from our 2030 Notes, offset by the repurchase of 80% of our 2026 Notes, the purchase of capped calls of the 2030 Notes, and payments on our revolving line of credit.

Financing activities provided cash of $29.8 million for the nine months ended September 30, 2025, which is primarily related to proceeds from our 2030 Notes, offset by the repurchase of 80% of our 2026 Notes, the purchase of capped calls of the 2030 Notes, and payments on our revolving line of credit.

Debt and Commitments

As of June 30, 2025, we had $200.0 million outstanding under the Braidwell Term Loan.

As of September 30, 2025, we had $200.0 million outstanding under the Braidwell Term Loan.

The outstanding loans under the Braidwell Term Loan bear interest at the sum of Term SOFR plus 5.75% per annum.

The Braidwell Term Loan matures on January 6, 2028.

As of June 30, 2025, we had $15.0 million outstanding under the Revolving Credit Facility.

As of September 30, 2025, we had $15.0 million outstanding under the Revolving Credit Facility.

The outstanding loans under the Revolving Credit Facility bear interest at the sum of Term SOFR plus 3.5% per annum.

The Revolving Credit Facility matures on the earlier of September 29, 2027, or 90 days prior to the final maturity date of any of our 2026 Notes.

As of June 30, 2025, we had $63.3 million outstanding under the 2026 Notes.

The Revolving Credit Facility matures on September 29, 2027.

As of September 30, 2025, we had $63.3 million outstanding under the 2026 Notes.

The 2026 Notes accrue interest at a rate of 0.75%, payable semi-annually in arrears on February 1 and August 1 of each year.

1 unchanged sentence

Based on the terms we have the option to pay or deliver cash, shares of our common stock, or a combination thereof, when a conversion notice is received.

As of June 30, 2025, we had $405.0 million outstanding under the 2030 Notes.

As of September 30, 2025, we had $405.0 million outstanding under the 2030 Notes.

The 2030 Notes accrue interest at a rate of 0.75%, payable semi-annually in arrears on March 15 and September 15 of each year.

1 unchanged sentence

Based on the terms we have the option to pay or deliver cash, shares of our common stock, or a combination thereof, when a conversion notice is received.

As of June 30, 2025, we had $2.8 million in other debts that are due in monthly and quarterly installments through maturity in 2027.

As of September 30, 2025, we had $2.3 million in other debts that are due in monthly and quarterly installments through maturity in 2027.

We have an inventory purchase commitment agreement with a third-party supplier, where we are obligated to meet certain minimum purchase commitment requirements through December 2026.

As of June 30, 2025, the remaining minimum purchase commitment under the agreement was $7.5 million.

As of September 30, 2025, the remaining minimum purchase commitment under the agreement was $6.2 million.

Contractual obligations and commercial commitments

As of June 30, 2025, there have been no material changes, outside the normal course of business, in our outstanding contractual obligations from those disclosed within the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

As of September 30, 2025, there have been no material changes, outside the normal course of business, in our outstanding contractual obligations from those disclosed within the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Off-Balance Sheet Arrangements

1 unchanged sentence

Recent Accounting Pronouncements

Aside from the changes disclosed in Note 1 to the Notes to Condensed Consolidated Financial Statements (Unaudited) under the heading “Recently Issued Accounting Pronouncements,” if any, there have been no new accounting pronouncements or changes to accounting pronouncements during the six months ended June 30, 2025, as compared to the recent accounting pronouncements described in our Annual Report on Form 10-K for the year ended December 31, 2024, that was filed with the SEC.

Aside from the changes disclosed in Note 1 to the Notes to Condensed Consolidated Financial Statements (Unaudited) under the heading “Recently Issued Accounting Pronouncements,” if any, there have been no new accounting pronouncements or changes to accounting pronouncements during the nine months ended September 30, 2025, as compared to the recent accounting pronouncements described in our Annual Report on Form 10-K for the year ended December 31, 2024, that was filed with the SEC.

Forward Looking Statements

31 unchanged sentences

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-Q

Item 2. Management’s Discussion and Analysis