What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-04 compared with 2026-05-05 · 54 added, 43 removed, 162 unchanged (37% of the section changed)

11 unchanged sentences

To deliver consistent, predictable growth, we have added, and intend to continue to add, clinically astute and exclusive sales team members to reach untapped surgeons, hospitals, and national accounts and better penetrate existing accounts and territories.

Recent Developments

JP Morgan Credit Agreement

In May 2026, we entered into a senior secured credit agreement (the "Credit Agreement") with JP Morgan Chase Bank, N.A., consisting of a $175.0 million term loan facility (the "JPM Term Loan") and a $125.0 million revolving credit facility (the "JPM Revolving Credit Facility" and, together with the JPM Term Loan, the "JPM Credit Facilities"), each maturing on May 1, 2031.

On May 1, 2026, we borrowed $175.0 million under the term loan and $40.0 million under the revolving credit facility.

We used the proceeds, together with cash on hand, to repay in full all outstanding obligations under our prior Braidwell term loan and MidCap revolving credit facility, which were concurrently terminated.

The new credit facilities bear interest at variable rates based on Term SOFR or an alternate base rate, plus an applicable margin, and are subject to customary financial maintenance covenants and other terms.

Revenue and Expense Components

34 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 March 31, 2026, 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, 2025, filed with the SEC.

Management believes there have been no material changes during the three months ended June 30, 2026, 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, 2025, filed with the SEC.

Results of Operations

1 unchanged sentence

Three Months Ended

Six Months Ended

(in thousands, except %)

Revenue from products and services

Revenue from products and services increased $22.9 million, or 14%, during the three months ended March 31, 2026, compared to the same period in 2025.

Revenue from products and services increased $28.0 million, or 15%, and $50.9 million, or 14%, for the three and six months ended June 30, 2026, respectively, compared to the same periods in 2025.

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

(in thousands, except %)

Cost of sales

Cost of sales increased $2.4 million, or 5%, for the three months ended March 31, 2026, compared to the same period in 2025.

The increase was primarily due to an increase in product volume offset by a decrease in stock-based compensation.

Cost of sales increased $3.0 million, or 5%, and $5.4 million, or 5% for the three and six months ended June 30, 2026, respectively, compared to the same periods in 2025.

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

Operating expenses

Three Months Ended

Six Months Ended

(in thousands, except %)

7 unchanged sentences

Research and development expenses .

Research and development expenses increased $1.0 million, or 6%, for the three months ended March 31, 2026, compared to the same period in 2025.

The increase was primarily due to an increase in compensation expense.

Research and development expenses remained consistent for the three and six months ended June 30, 2026, compared to the same periods in 2025.

Sales, general and administrative expenses.

Sales, general and administrative expenses increased $10.0 million, or 8%, during the three months ended March 31, 2026, compared to the same period in 2025.

Sales, general and administrative expenses increased $15.5 million, or 13%, and $25.5 million, or 10%, for the three and six months ended June 30, 2026, respectively, compared to the same periods in 2025.

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 $11.7 million, or 96%, for the three months ended March 31, 2026, compared to the same period in 2025.

The decrease was primarily related to a litigation settlement during the three months ended March 31, 2025.

Litigation-related expenses decreased $1.7 million, or 105%, and $13.4, or 97%, for the three and six months ended June 30, 2026, respectively, compared to the same periods in 2025.

The decrease was primarily related to a litigation settlement during the six months ended June 30, 2025.

Amortization of acquired intangible assets.

Amortization of acquired intangible assets remained consistent for the three months ended March 31, 2026, compared to the same period in 2025.

Amortization of acquired intangible assets remained consistent for the three and six months ended June 30, 2026, compared to the same periods in 2025.

Restructuring expenses.

Restructuring expenses decreased $0.4 million, or 100%, during the three months ended March 31, 2026, compared to the same period in 2025.

Restructuring expenses decreased $0.4 million, or 100%, for the six months ended June 30, 2026, compared to the same period in 2025.

The decrease in restructuring expenses is primarily due to personnel related expenses in the prior period that did not recur.

1 unchanged sentence

Three Months Ended

Six Months Ended

(in thousands, except %)

2 unchanged sentences

Loss on debt extinguishment

Gain on derivative liability

Other income, net

(Loss) gain on derivative liability

Other (expense) income, net

Total other expense, net

Interest expense, net, increased $3.9 million, or 49%, during the three months ended March 31, 2026, compared to the same period in 2025.

The increase in interest expense, net, was primarily due the amortization of debt discount associated with the 2030 Notes.

Net cash interest was $4.9 million for the three months ended March 31, 2026.

Net non-cash interest was $6.8 million for the three months ended March 31, 2026.

Loss on debt extinguishment decreased $17.6 million, or 100%, during the three months ended March 31, 2026, compared to the same period in 2025.

The decrease in loss on debt extinguishment relates to the redemption of 80% of the 2026 Notes in March 2025.

Gain on derivative liability decreased $17.4 million, or 100%, during the three months ended March 31, 2026, compared to the same period in 2025.

The decrease in gain on derivative liability relates to the change in the valuation of the derivative liability associated with 2030 Notes from inception to March 31, 2025.

Interest expense, net, decreased $1.3 million, or 11%, and increased $2.5 million, or 13%, for the three and six months ended June 30, 2026, respectively, compared to the same periods in 2025.

The decrease in interest expense, net, for the three months ended June 30, 2026, was primarily due to a decrease in cash interest expense.

The increase in interest expense, net, for the six months ended June 30, 2026 was primarily due to the amortization of debt discount associated with the 2030 Notes.

Net cash interest was $4.3 million and $9.3 million for the three and six months ended June 30, 2026, respectively.

Net non-cash interest was $6.6 million and $13.4 million for the three and six months ended June 30, 2026, respectively.

Loss on debt extinguishment decreased $11.9 million, or 100%, and $5.7 million, or 32%, for the three and six months ended June 30, 2026, compared to the same periods in 2025.

The decrease in loss on debt extinguishment relates to the redemption of 80% of the 2026 Notes in March 2025 offset by the extinguishment of the Braidwell Term loan and MidCap Revolving credit facilities during the three months ended June 30, 2026.

(Loss) gain on derivative liability decreased $16.8 million, or 100%, and $0.6 million, or 100%, for the three and six months ended June 30, 2026, respectively, compared to the same periods in 2025.

The decrease 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.

As of June 12, 2025 the conditions necessary for separate accounting of the conversion option as a derivative liability were no longer met.

Other income, net, increased $0.1 million, or 32%, during the three months ended March 31, 2026, compared to the same period in 2025.

The increase in other income, net, during the three months ended March 31, 2026, was primarily due to fluctuations in foreign currency rates.

Other (expense) income, net, increased $1.9 million, or 188%, and $1.8 million, or 132%, for the three and six months ended June 30, 2026, respectively, compared to the same periods in 2025.

The increase in other income, net, during the six months ended June 30, 2026, was primarily due to fluctuations in foreign currency rates.

Income tax provision

Three Months Ended

Six Months Ended

(in thousands, except %)

Income tax provision (benefit)

The change in the income tax provision (benefit) for the three months ended March 31, 2026, compared to the same period in 2025, was primarily related to the recognition of income taxes in several jurisdictions.

The change in the income tax provision (benefit) for the three and six months ended June 30, 2026, compared to the same period in 2025, was primarily related to the recognition of income taxes in several jurisdictions.

Liquidity and Capital Resources

Our principal sources of liquidity are our existing cash and cash equivalents, our Revolving Credit Facility and cash from operations.

Our principal sources of liquidity are our existing cash and cash equivalents, our JPM Revolving Credit Facility and cash from operations.

Our liquidity and capital structure are evaluated regularly within the context of our annual operating and strategic planning process.

17 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 $139.9 million and $160.8 million at March 31, 2026, and December 31, 2025, respectively.

Cash and cash equivalents were 118.7 million and $160.8 million at June 30, 2026, and December 31, 2025, 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

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands)

4 unchanged sentences

Effect of exchange rate changes on cash

Net increase (decrease) in cash and cash equivalents

Net change in cash and cash equivalents

Operating Activities

Operating activities provided net cash of $1.3 million for the three months ended March 31, 2026, which is primarily related to cash collections offset by costs associated with the continued expansion of our business and inventory purchases.

Operating activities provided net cash of $21.8 million for the six months ended June 30, 2026, which is primarily related to cash collections offset by costs associated with the continued expansion of our business and inventory purchases.

Investing Activities

We used cash of $19.9 million in investing activities for the three months ended March 31, 2026, which is primarily related to the purchase of surgical instruments to support the growth of our business and commercial launch of new products and a $5.0 million note receivable.

We used cash of $42.6 million in investing activities for the six months ended June 30, 2026, which is primarily related to the purchase of surgical instruments to support the growth of our business and commercial launch of new products and a $5.0 million note receivable.

Financing Activities

Financing activities used cash of $1.8 million for the three months ended March 31, 2026, which is primarily related to cash paid for net settlement of shares, offset by proceeds from financed insurance.

Financing activities used cash of $21.3 million for the six months ended June 30, 2026, which is primarily related to proceeds from issuance of term and revolving credit facilities, offset by repayment of term and revolving credit facilities.

Debt and Commitments

As of March 31, 2026, 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 March 31, 2026, we had $15.1 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 September 29, 2027.

As of March 31, 2026, we had $63.3 million outstanding under the 2026 Notes.

As of June 30, 2026, we had $175.0 million outstanding under the JPM Term Loan.

The outstanding loans under the JPM Term Loan bear interest at the sum of Term SOFR plus an applicable margin determined by reference to the Company’s Senior Secured Net Leverage Ratio.

The JPM Term Loan Matures on May 1, 2031.

As of June 30, 2026, we had $40.0 million outstanding under the JPM Revolving Credit Facility.

The outstanding loans under the JPM Revolving Credit Facility bear interest at the sum of Term SOFR plus an applicable margin determined by reference to the Company’s Senior Secured Net Leverage Ratio.

The JPM Revolving Credit Facility matures on May 1, 2031.

As of June 30, 2026, 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 March 31, 2026, we had $405.0 million outstanding under the 2030 Notes.

As of June 30, 2026, 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 March 31, 2026, we had $1.6 million in other debts that are due in monthly and quarterly installments through maturity in 2027.

As of June 30, 2026, we had $1.3 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 March 31, 2026, the remaining minimum purchase commitment under the agreement was $3.7 million.

As of June 30, 2026, the remaining minimum purchase commitment under the agreement was $2.4 million.

Contractual obligations and commercial commitments

As of March 31, 2026, 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, 2025.

As of June 30, 2026, 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, 2025.

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 three months ended March 31, 2026, as compared to the recent accounting pronouncements described in our Annual Report on Form 10-K for the year ended December 31, 2025, 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 six months ended June 30, 2026, as compared to the recent accounting pronouncements described in our Annual Report on Form 10-K for the year ended December 31, 2025, 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