What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-03-12 compared with 2023-03-31 · 505 added, 469 removed, 1037 unchanged (48% of the section changed)

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Notes to the Consolidated Financial Statements

GRANT THORNTON LLP REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

4140 ParkLake Ave., Suite 130

Raleigh, NC 27612-3723

D +1 919 881 2700

F +1 919 881 2795

Opinion on the financial statements

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In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

Going concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the financial statements, uncertainty exists related to the Company’s ability to meet certain financial covenants within 12 months from the date of report issuance.

These conditions, along with other matters as set forth in Note 1, raise substantial doubt about the Company’s ability to continue as a going concern.

Management’s plans in regard to these matters are also described in Note 1.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for opinion

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Depreciation and amortization 8,842 9,748 8,363

Impairment of assets 78,615 — —

Impairment of goodwill — 124,697 —

Loss on disposals 3,577 — —

Impairment of variable interest entity assets — — 5,674

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(Loss) income before income taxes ( 121,111 ) ( 189,025 ) 9,488

Income tax (benefit) expense, net ( 50,508 ) ( 1,966 ) 1,192

Income tax expense (benefit), net 85 ( 44,374 ) ( 1,966 )

Net (loss) income from continuing operations ( 121,196 ) ( 144,651 ) 11,454

Loss from discontinued operations, net of tax ( 74,429 ) ( 68,740 ) ( 1,868 )

Net (loss) income ( 195,625 ) ( 213,391 ) 9,586

Loss attributable to noncontrolling interest 54,687 9,789 1,689

Loss attributable to noncontrolling interest - continuing operations 24,458 40,732 9,789

Loss attributable to noncontrolling interest - discontinued operations 14,937 13,955 —

Net (loss) income attributable to Bioventus Inc.

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Other comprehensive (loss) income, net of tax

Change in prior service cost and unrecognized gain (loss)

Change in prior service cost and unrecognized (loss) gain

for defined benefit plan adjustment ( 8 ) 133 60

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Comprehensive (loss) income ( 194,493 ) ( 213,759 ) 8,328

Comprehensive loss attributable to noncontrolling interest 54,766 9,789 1,689

Comprehensive loss attributable to noncontrolling interest - continuing operations 24,230 40,811 9,789

Comprehensive loss attributable to noncontrolling interest - discontinued operations 14,937 13,955 —

Comprehensive (loss) income attributable to Bioventus Inc.

$ ( 155,326 ) $ ( 158,993 ) $ 18,117

Loss per share of Class A common stock from (1) :

Continuing operations, basic and diluted $ ( 1.54 ) $ ( 1.70 ) $ ( 0.11 )

Discontinued operations, basic and diluted ( 0.95 ) ( 0.89 ) ( 0.04 )

Loss per share of Class A common stock, basic and diluted $ ( 2.49 ) $ ( 2.59 ) $ ( 0.15 )

$ ( 2.59 ) $ ( 0.15 )

Weighted-average shares of Class A common stock

outstanding, basic and diluted (1) :

Weighted-average shares of Class A common stock outstanding,

basic and diluted (1) :

62,647,554 61,389,107 45,472,483

(1) Per share information for the year ended December 31, 2021 represents loss per share of Class A common stock and weighted-average shares of Class A common stock outstanding from February 16, 2021 through December 31, 2021, the period following Bioventus Inc.'s initial public offering and related transactions described in Note 8.

Organization and Note 9.

Stockholders’ equity and Note 9.

Earnings per share within the Notes to the Consolidated Financial Statements.

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Cash and cash equivalents $ 36,964 $ 30,186

Restricted cash 23 5,280

Accounts receivable, net 122,789 136,295

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Prepaid and other current assets 16,913 18,551

Current assets attributable to discontinued operations — 2,777

Total current assets 267,999 272,575

Restricted cash, less current portion — 50,000

Property and equipment, net 36,605 27,456

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Operating lease assets 13,353 16,690

Deferred tax assets — 481

Investment and other assets 3,141 2,621

Long-term assets attributable to discontinued operations — 405,994

Total assets $ 810,910 $ 1,372,649

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Accrued liabilities 119,795 111,570

Accrued equity-based compensation — 10,875

Current portion of long-term debt 27,848 33,056

Current portion of deferred consideration 117,615 —

Other current liabilities 4,816 3,607

Current liabilities attributable to discontinued operations — 119,087

Total current liabilities 175,497 304,017

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Deferred income taxes 1,213 2,248

Deferred consideration, less current portion 79,269 —

Contingent consideration 18,150 17,431

Other long-term liabilities 27,934 22,810

Long-term liabilities attributable to discontinued operations — 228,911

Total liabilities 589,792 960,427

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Accumulated deficit ( 321,536 ) ( 165,306 )

Accumulated other comprehensive (loss) income ( 110 ) 179

Accumulated other comprehensive income (loss) 794 ( 110 )

Total stockholders’ equity attributable to Bioventus Inc.

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(Amounts in thousands, except share amounts)

Class A Common Stock Class B Common Stock

Equity Shares Amount Shares Amount Additional Paid-in Capital Accumulated other comprehensive (loss) income Accumulated Deficit Non-

Equity Class A Common Stock Class B Common Stock Additional Paid-in Capital Accumulated other comprehensive income (loss) Accumulated Deficit Non-

Interest Total Stockholders' and

Balance at December 31, 2019 $ 145,617

Equity-based compensation 26

Distribution to members ( 19,250 )

Debt conversion 973

Net income 14,722

Other comprehensive income 2,072

Balance at December 31, 2020 $ 144,160 — $ — — $ — $ — $ — $ — $ — $ 144,160

Shares Amount Shares Amount

December 31, 2020 $ 144,160 — $ — — $ — $ — $ — $ — $ — $ 144,160

Prior to Organizational Transactions:

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Acquisition of noncontrolling interest — — — — — — — — 200 200

Change in noncontrolling interest allocations — — — — — 8,046 — — 65,821 73,867

Other comprehensive income — — — — — — 179 — 70 249

Balance at December 31, 2021 $ — 59,548,504 $ 59 15,786,737 $ 16 $ 465,272 $ 179 $ ( 6,602 ) $ 74,865 $ 533,789

December 31, 2021 $ — 59,548,504 $ 59 15,786,737 $ 16 $ 473,318 $ 179 $ ( 6,602 ) $ 140,686 $ 607,656

Issuance of Class A common stock for equity plans 2,514,510 3 — — 5,819 — — — 5,822

Deferred taxes on equity rebalancing — — — — ( 1,977 ) — — — ( 1,977 )

Net loss — — — — — — ( 158,704 ) ( 54,687 ) ( 213,391 )

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Equity based compensation — — — — 14,180 — — 3,405 17,585

Change in noncontrolling interest allocations — — — — 2,588 — — ( 2,588 ) —

Other comprehensive loss — — — — — ( 289 ) — ( 79 ) ( 368 )

Balance at December 31, 2022 62,063,014 $ 62 15,786,737 $ 16 $ 481,919 $ ( 110 ) $ ( 165,306 ) $ 23,751 $ 340,332

December 31, 2022 62,063,014 $ 62 15,786,737 $ 16 $ 490,576 $ ( 110 ) $ ( 165,306 ) $ 86,984 $ 412,222

Issuance of Class A common stock for equity plans 1,204,422 1 — — 777 — — — 778

Net loss — — — — — — ( 156,230 ) ( 39,395 ) ( 195,625 )

Equity based compensation — — — — 2,388 — — 334 2,722

Change in noncontrolling interest allocations — — — — 513 — — ( 513 ) —

Distributions to members — — — — — — — ( 111 ) ( 111 )

Other comprehensive income — — — — — 904 — 228 1,132

December 31, 2023 63,267,436 $ 63 15,786,737 $ 16 $ 494,254 $ 794 $ ( 321,536 ) $ 47,527 $ 221,118

The accompanying notes are an integral part of these consolidated financial statements .

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Net (loss) income $ ( 195,625 ) $ ( 213,391 ) $ 9,586

Loss from discontinued operations, net of tax ( 74,429 ) ( 68,740 ) ( 1,868 )

(Loss) income from continuing operations ( 121,196 ) ( 144,651 ) 11,454

Adjustments to reconcile net (loss) income to net cash from operating activities:

Depreciation and amortization 57,365 55,398 34,875

Provision for expected credit losses 5,190 485 1,215

(Benefit) provision for expected credit losses ( 1,103 ) 5,190 485

Equity-based compensation from 2021 Stock Incentive Plan 2,722 17,585 19,844

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Change in fair value of Equity Participation Rights — — ( 2,774 )

Impairment of goodwill and asset impairment charges 199,482 — —

Impairments related to variable interest entity — 7,043 —

Impairments of assets 78,615 134,982 7,043

Loss on debt retirement and modification — — 2,162

Revaluation gain on previously held equity interest in CartiHeal ( 23,709 ) — ( 511 )

Loss on disposals 3,577 — —

Unrealized loss (gain) on foreign currency fluctuations 665 1,383 472

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Accounts receivable 10,055 ( 17,672 ) ( 20,052 )

Inventories ( 18,618 ) 3,183 ( 528 )

Inventory ( 5,991 ) ( 18,618 ) 3,183

Accounts payable and accrued expenses ( 5,275 ) ( 3,099 ) 18,211

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Acquisitions, net of cash acquired — — ( 262,870 )

Proceeds from sale of a business 34,675 — —

Purchase of property and equipment ( 7,362 ) ( 10,042 ) ( 13,520 )

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Proceeds from the issuance of long-term debt, net of issuance costs — 79,659 257,453

Debt financing costs ( 3,661 ) — —

Payments on long-term debt ( 38,264 ) ( 20,038 ) ( 91,250 )

Distributions to members — ( 367 ) ( 19,886 )

Other, net ( 506 ) ( 15 ) ( 404 )

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Supplemental disclosure of noncash investing and financing activities

Accrued liabilities for distribution rights $ — $ — $ 1,000

Accrued member distributions $ — $ 3,181 $ 31

Debt conversion $ — $ — $ 973

Accrued liabilities for distribution rights and member distributions $ 709 $ — $ 3,181

Accounts payable for purchase of property, plant and equipment $ 1,311 $ 419 $ 695

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Bioventus Inc.

(together with its subsidiaries, the “Company”) was formed as a Delaware corporation for the purpose of facilitating an initial public offering (“IPO”) and other related transactions in order to carry on the business of Bioventus LLC and its subsidiaries (“BV LLC”).

(together with its subsidiaries, the “Company”) was formed as a Delaware corporation for the purpose of facilitating an initial public offering and other related transactions in order to carry on the business of Bioventus LLC and its subsidiaries (“BV LLC”).

Bioventus Inc.

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BV LLC commenced operations in May 2012.

On February 16, 2021, the Company completed its initial public offering (“IPO”), which was conducted through what is commonly referred to as an umbrella partnership C Corporation (“UP-C”) structure.

The Company has majority interest, sole voting interest and controls the management of BV LLC.

As a result, the Company consolidates the financial results of BV LLC and reports a noncontrolling interest representing the interest of BV LLC held by its continuing LLC owner.

The Company is focused on developing and commercializing clinically differentiated, cost efficient and minimally invasive treatments that engage and enhance the body’s natural healing processes.

The Company is headquartered in Durham, North Carolina and has approximately 970 employees at December 31, 2023.

Initial Public Offering

On February 16, 2021, the Company closed an IPO of 9,200,000 shares of Class A common stock at a public offering price of $ 13.00 per share, which includes 1,200,000 shares issued pursuant to the underwriters' over-allotment option.

The Company received $ 111,228 in proceeds, net of underwriting discounts and commissions of $ 8,372 , which was used to purchase newly-issued membership interests from BV LLC at a price per interest equal to the IPO price of $ 13.00 .

The Company also incurred offering expenses totaling $ 4,778 in addition to the underwriting discounts and commissions.

Offering expenses of $ 1,327 were paid in 2020 and $ 3,451 were paid in 2021.

The Company is the sole managing member of, has a majority economic interest in, has the sole voting interest in, and controls the management of BV LLC.

As a result, the Company consolidates the financial results of BV LLC and reports a non-controlling interest for the interest not held by the Company.

IPO Transactions

In connection with the IPO, the Company completed the following transactions (“Transactions”).

• Amended and restated the limited liability company agreement of BV LLC (“BV LLC Agreement”), to, among other things, (i) provide for a new single class of common membership interests in BV LLC (“LLC Interests”);

(ii) exchange all of the existing membership interests in BV LLC (“Original BV LLC Owners”) for new LLC Interests;

and (iii) appoint Bioventus Inc.

as the sole managing member of BV LLC.

Refer to Note 8.

Stockholders’ equity for further information.

• Amended and restated the Bioventus Inc.

certificate of incorporation to, among other things, (i) provide for an increase in the authorized shares of Class A common stock;

(ii) provide for Class B common stock with voting rights but no economic interest, which shares were issued to the Original BV LLC Owners on a one -for-one basis with the number of LLC Interests they owned;

and (iii) provide for undesignated preferred stock.

Refer to Note 8.

Stockholders’ equity for further information.

• Acquired, by merger, ten entities that were Original BV LLC Owners (“Former LLC Owners”), for which the Company issued 31,838,589 shares of Class A common stock as merger consideration (“IPO Mergers”).

The only assets held by the Former LLC Owners were 31,838,589 LLC Interests and a corresponding number of shares of Class B common stock.

Upon consummation of the IPO Mergers, the 31,838,589 shares of Class B common stock were canceled, and the Company recognized the 31,838,589 LLC Interests at carrying value, as the IPO Mergers are considered to be a recapitalization transaction.

The financial statements for periods prior to the IPO and Transactions have been adjusted to combine the previously separate entities for presentation purposes.

Prior to the Transactions, Bioventus Inc.

had no operations.

Interim periods

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Each quarter ends on the Saturday closest to calendar quarter-end, with the exception of the fourth quarter, which ends on December 31.

The 13-week quarterly periods for fiscal year 2022 ended on April 2, July 2 and October 1.

The 13-week quarterly periods for fiscal year 2023 ended on April 1, July 1 and September 30.

Comparable periods for 2022 ended on April 2, July 2 and October 1.

The fourth and first quarters may vary in length depending on the calendar year.

Correction of immaterial misstatements

During the quarter ended April 1, 2023 and as part of the balance sheet review process, the Company identified misstatements in its calculation of the carrying amount of noncontrolling interest as it applies to the Company’s complex UP-C tax and ownership structure as prescribed in the amended and restated limited liability company agreement of BV LLC.

Specifically, the Company failed to adjust the carrying amount of its noncontrolling interest to reflect changes in ownership interests relating to BV LLC.

As a result, the previously issued consolidated financial statements reflect an understatement of noncontrolling interest and an overstatement of additional paid-in capital.

As a result of further research conducted, the Company discovered an additional error related to historical deferred income tax balances.

The Company concluded that it had inappropriately calculated deferred income taxes by using an incorrect book basis in its investment of BV LLC during the Company’s IPO, which resulted in an overstatement of deferred tax liabilities, an understatement of noncontrolling interest and an understatement of additional paid-in capital.

The statements affected by these errors include the consolidated balance sheets and consolidated statements of stockholders’ and members’ equity issued in the Company’s Annual Report on Form 10-K for the years ended December 31, 2022 and December 31, 2021.

There was no impact to any other financial statements for the periods presented.

The Company concluded that these misstatements were not material, individually or in the aggregate, as evaluated under the Securities and Exchange Commission Staff Bulletin No.

99, Materiality;

108, Considering the Effects of Prior Year Misstatements in Current Year Financial Statements ;

and Financial Accounting Standards Board ASC 250-10, Accounting Changes and Error Corrections .

However, because of the significance of these items, and to facilitate comparison among periods, the Company decided to revise its previously issued consolidated financial statements on a prospective basis.

The Company corrected its prior period presentation for this error in its 2023 quarterly financial statements included in its Forms 10-Q and 2023 Annual Report on Form 10-K for the period ended December 31, 2023.

The adjustments did not have an impact on revenues, total assets or cash flows.

The following are selected line items from our aforementioned impacted financial statements illustrating the effect of the error corrections thereon:

Consolidated Balance Sheets — December 31, 2022 As Previously Reported Adjustments As Adjusted

Deferred income taxes (b)(d)(e)

$ 74,138 $ ( 71,890 ) $ 2,248

Total liabilities 1,032,317 ( 71,890 ) 960,427

Additional paid-in capital (a)(b)(c)(d)

481,919 8,657 490,576

Noncontrolling interest (a)(c)

23,751 63,233 86,984

Total stockholders’ equity 340,332 71,890 412,222

Consolidated Balance Sheets — December 31, 2021 As Previously Reported Adjustments As Adjusted

Deferred income taxes (b)

$ 133,518 $ ( 73,867 ) $ 59,651

Total liabilities 692,073 ( 73,867 ) 618,206

Additional paid-in capital (a)(b)

465,272 8,046 473,318

Noncontrolling interest (a)

74,865 65,821 140,686

Total stockholders’ equity 533,789 73,867 607,656

The Company’s consolidated statements of changes in stockholders’ and members equity as of December 31, 2022 and December 31, 2021 have been corrected to reflect the above adjustments.

The Company revised the amounts originally reported for the years ended December 31, 2022 and December 31, 2021 for the following items:

(a) Recorded a $ 65,821 decrease to additional paid-in capital and a corresponding increase to noncontrolling interest.

This action effectively rebalanced equity appropriately between the Company and its noncontrolling interests according to their respective BV LLC ownership interests.

(b) Recorded a $ 73,867 decrease to deferred income tax balances and an increase to additional paid in capital to reflect the correction of an error that occurred during the calculation of deferred taxes at the Company’s IPO.

(c) Reflects the entry as discussed in (a) above and additional rebalancing activity of $ 2,588 relating to the issuance of Class A common stock for equity plans during the year ended December 31, 2022.

(d) Reflects the entry as discussed in (b) and an additional $ 1,977 increase to deferred income tax balances and a reduction to additional paid in capital to reflect the deferred tax impact during the year ended December 31, 2022.

(e) The previously reported amount reflects a reclassification of $ 79,863 of deferred tax liabilities associated with the deconsolidation of CartiHeal (2009) Ltd.

into long-term liabilities attributable to discontinued operations as illustrated in the December 31, 2022 consolidated balance sheets.

Refer to Note 4.

Acquisitions and divestitures and Note 15.

Discontinued operations for further details.

Consolidation

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and (iii) it has available discrete financial information.

The Company’s CODM is its Chief Executive Officer.

The Company’s CODM is its President and Chief Executive Officer.

The CODM reviews financial information at the operating segment level to allocate resources and to assess the operating results and financial performance for each operating segment.

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GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities, at the date of the financial statements, as well as the reported amounts of revenues and expenses during the period.

On an ongoing basis, management evaluates these estimates, including those related to contractual allowances and sales incentives, allowance for credit losses, inventory reserves, goodwill and intangible assets impairment, valuation of assets and liabilities assumed in acquisitions, useful lives of long lived assets, noncontrolling interest, fair value measurements, litigation and contingent liabilities, income taxes, and equity-based compensation.

On an ongoing basis, management evaluates these estimates, including those related to contractual allowances and sales incentives, allowance for credit losses, inventory reserves, goodwill and intangible assets impairment, valuation of assets and liabilities assumed in acquisitions, useful lives of long lived assets, fair value measurements, litigation and contingent liabilities, income taxes, and equity-based compensation.

Management bases its estimates on historical experience, future expectations and other relevant assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

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The Company repaid $ 1,440 in both December 2022 and 2021, including payments on deferred payroll tax balances acquired in business combinations.

As a result of the CARES Act and at the direction of the U.S.

Department of Health and Human Services (HHS), the Company received $ 4,101 in Provider Relief Fund Payments in 2020.

The Company determined it complied with the conditions to be able to keep and use the funds to reimburse for health care related expenses and lost revenue attributable to the public health emergency resulting from COVID-19.

The payments were recorded as other income on the consolidated statement of operations and comprehensive (loss) income for the year ended December 31, 2020.

Going Concern

The accompanying consolidated financial statements have been prepared under the going concern basis of accounting, which presumes that the Company’s liquidation is not imminent;

however, certain conditions and events raise substantial doubt about the Company’s ability to continue as a going concern.

As of December 31, 2022, the Company was not in compliance with the maximum debt leverage requirement that was then applicable under the Credit and Guaranty Agreement, dated December 6, 2019 (as amended on October 29, 2021, July 11, 2022 and March 31, 2023, the “Amended 2019 Credit Agreement”).

On March 31, 2023, the Company entered into an amendment to the Amended 2019 Credit Agreement to modify certain financial covenants and to avoid an event of default by waiving the noncompliance at December 31, 2022.

For additional information regarding this amendment, see Note 5.

Financial Instruments below.

Although management has concluded that there is substantial doubt regarding the Company’s ability to continue as a going concern, this conclusion is based on analysis under applicable accounting principles.

If the Company’s current operating projections are met, the Company believes that it should be able to meet its obligations as they come due within the twelve month period after the date the financial statements contained herein are issued.

However, the Company has based this estimate on assumptions of revenues and operating costs that may prove to be wrong.

Moreover, given the risks associated with employee turnover and retention of key talent, and the previously disclosed material weaknesses in internal controls over financial reporting, there is substantial risk that the Company might not meet its projections.

If the Company does not meet its projections, there is substantial risk that the Company may not be able to meet its obligations as they come due within the twelve month period after the date the financial statements were issued.

It is therefore probable that there is substantial doubt about the Company’s ability to continue as a going concern despite recent covenant relief from its lenders.

In light of this, the Company is continuing to actively pursue plans to mitigate these conditions and events, including seeking covenant waivers or amendments from lenders, and other potential actions such as implementing various cost cutting measures and exploring divestiture opportunities for non-core assets;

however, there can be no assurances that it is probable these measures will successfully mitigate these conditions and events.

Therefore, these plans do not alleviate the substantial doubt about the Company’s ability to continue as a going concern.

However, if mitigating steps are not taken or are not successful, the Company is at substantial risk of failing its covenants in the second quarter of 2024.

A breach of a financial covenant under the Amended 2019 Credit Agreement could accelerate repayment of our obligations under the agreement.

Refer to Note 5.

Financial instruments for further discussion concerning the Company’s long-term debt obligations.

As part of efforts to improve its financial condition, on February 27, 2023, the Company reached an agreement to return the assets and liabilities of CartiHeal (2009) Ltd.

(“CartiHeal”), a wholly-owned subsidiary of the Company, to its former securityholders.

The deconsolidation of CartiHeal relieved deferred consideration liabilities and milestone obligations related to the acquisition of CartiHeal.

Refer to Note 4.

Acquisitions and investments and Note 15.

Subsequent events for further information regarding the acquisition and subsequent deconsolidation of CartiHeal.

In addition, the Company announced a restructuring plan in December 2022 to align the Company’s organizational and management cost structure to improve profitability and cash flow.

Refer to Item 8.

Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 10.

Restructuring costs for further information.

Significant accounting policies

Recent accounting pronouncements

The Company is an accelerated public company filer.

Therefore, required effective dates for adopting new or revised accounting standards are generally earlier than when emerging growth companies are required to adopt.

Recently issued accounting pronouncements

In addition to being a smaller reporting company and an emerging growth company, the Company also is an accelerated filer under SEC rules and regulations.

Therefore, required effective dates for adopting new or revised accounting standards are generally earlier than when smaller reporting companies and emerging growth companies who are not accelerated filers are required to adopt.

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2023-09 (“ASU 2023-09”), Income Taxes, which enhances the transparency of income tax disclosures by expanding annual disclosure requirements related to the rate reconciliation and income taxes paid.

The amendments are effective for fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The amendments should be applied on a prospective basis.

Retrospective application is permitted.

The Company is currently evaluating this ASU to determine its impact on the Company's disclosures.

In November 2023, the FASB issued Accounting Standards Update 2023-07 (“ASU 2023-07”), Segment Reporting , which improves reportable segment disclosure requirements.

ASU 2023-07 primarily enhances disclosures about significant segment expenses by requiring that a public entity disclose significant segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of segment profit or loss.

This ASU also (i) requires that a public entity disclose, on an annual and interim basis, an amount for other segment items by reportable segment, and a description of its composition;

(ii) requires that all annual disclosures are provided in the interim periods;

(iii) clarifies that if the CODM uses more than one measure of profitability in assessing segment performance and deciding how to allocate resources, that one or more of those measures may be reported;

(iv) requires disclosure of the title and position of the CODM and a description of how the reported measures are used by the CODM in assessing segment performance and in deciding how to allocate resources;

(v) requires that an entity with a single segment provide all new required disclosures.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 and requires retrospective application.

Early adoption is permitted.

The amendments under ASU 2023-07 relate to financial disclosures and its adoption will not have an impact on the Company’s results of operations, financial position or cash flows.

The Company will adopt ASU 2023-07 for the annual reporting period ending December 31, 2024 and for interim reporting periods thereafter.

Variable Interest Entity

The Company reviews each investment and collaboration agreement to determine if it has a variable interest in the entity.

In assessing whether the Company has a variable interest in the entity as a whole, the Company considers and makes judgments regarding the purpose and design of entity, the value of the licensed assets to the entity, the value of the entity’s total assets and the significant activities of the entity.

In assessing whether the Company has a variable interest in the entity as a whole, the Company considers and makes judgments regarding the purpose and design of the entity, the value of the licensed assets to the entity, the value of the entity’s total assets and the significant activities of the entity.

If the Company has a variable interest in the entity as a whole, the Company assesses whether or not the Company is a primary beneficiary of that variable interest entity (“VIE”), based on a number of factors, including:

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Foreign currency transaction gains and losses are included in other expense on the consolidated statements of operations and other comprehensive (loss) income.

There were losses of $ 250 and $ 132 for the years ended December 31, 2022 and December 31, 2021, respectively, and gains of $ 117 for the year ended December 31, 2020.

There was a gain of $ 351 for the year ended December 31, 2023 and losses of $ 250 and $ 132 for the years ended December 31, 2022 and 2021, respectively.

Comprehensive (loss) income

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Sale of Products

The Company derives revenue primarily from product sales in its (i) Pain Treatments portfolio, which includes osteoarthritic (OA) joint pain treatments, which are hyaluronic acid (“HA”), viscosupplementation therapies and peripheral nerve stimulation products (ii) Surgical Solutions portfolio, which includes bone graft substitutes, tissue resection, ultrasonic bone cutting and sculpting systems and other surgical products, and (iii) Restorative Therapies portfolio, which includes minimally invasive fracture treatments, rehabilitation and wound products.

The Company derives revenue primarily from product sales in its (i) Pain Treatments portfolio, which includes osteoarthritic (OA) pain treatments, which are hyaluronic acid (“HA”), viscosupplementation therapies and peripheral nerve stimulation products, (ii) Surgical Solutions portfolio, which includes bone graft substitutes, tissue resection, ultrasonic bone cutting and sculpting systems and other surgical products, and (iii) Restorative Therapies portfolio, which includes minimally invasive fracture treatments and rehabilitation products.

The Company sells product directly to healthcare institutions, patients, distributors and dealers.

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An unconditional obligation to pay for the product does not exist until the customer uses it.

The Company consistently recognizes revenue from sales of its ultrasonic products acquired through the Misonix acquisition in accordance with shipping terms.

The Company consistently recognizes revenue from sales of its ultrasonic products in accordance with shipping terms.

Control is transferred to the customer when the product is shipped or received, and revenue is recognized accordingly.

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Upon retirement or sale of property and equipment, the cost of assets disposed of and the related accumulated depreciation and amortization are removed from the accounts, and any resulting gain or loss is included in income from operations.

The Company recorded an impairment loss of $ 78,615 for the year ended December 31, 2023 in the U.S.

reporting segment of net intellectual property attributable to the TheraSkin and TheraGenesis products, which were sold in May 2023.

The loss was recorded in impairment of assets within the consolidated statements of operations and comprehensive (loss) income.

During the year ended December 31, 2021, the Company recognized an impairment of $ 5,674 on long lived assets related to a VIE of which $ 5,176 is attributable to the non-controlling interests, refer to Note 4.

Acquisitions and investments for further information.

Except for the impairment related to the VIE, there were no other events, facts or circumstances for the years ended December 31, 2022, 2021 and 2020 that resulted in any impairment charges to the Company’s property, equipment, intangible or other long-lived assets.

Acquisitions and divestitures for further information regarding both of these impairments.

Except for the previously described impairments of intangibles and the Company’s VIE, there were no other events, facts or circumstances for the years ended December 31, 2023, 2022 and 2021 that resulted in any impairment charges to the Company’s property, equipment, intangible or other long-lived assets.

Property and equipment

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Depreciation and amortization expense are recognized using the straight-line method over the estimated useful life of each asset, or the shorter of the lease term or useful life if related to leasehold improvements.

Refer to Note 12.

Commitments and contingencies for further details regarding leased assets.

Depreciation of generators used with certain surgical solutions are consigned to customers and depreciation is charged to selling expenses.

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Distribution rights 11.2

Customer relationships 12.0

Developed technology 9.8

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reporting unit for the year ended December 31, 2022.

The impairment was recorded within impairment of goodwill on the consolidated statements of operations and comprehensive (loss) income.

The impairment was recorded within impairment of assets on the consolidated statements of operations and comprehensive (loss) income.

Refer to Note 3.

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If the fair value of the intangible assets is less than the carrying amount, an impairment loss is recognized for the difference.

Equity method investments

Investments in which the Company can exercise significant influence, but does not control, are recorded under the equity method of accounting and are included in investments and other assets on the consolidated balance sheets.

The Company’s share of net earnings or losses is included in other (income) expense within the consolidated statements of operations and comprehensive (loss) income on a quarter lag.

The Company evaluates investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may be impaired.

Impairment losses are recorded within earnings within the current period.

Concentration of risk

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Diluted earnings per share is calculated using net income attributable to Bioventus, Inc.

Class A common stock holders, divided by the weighted average Class A common stock outstanding adjusted for the effect of granted stock awards determined to be dilutive under the treasury stock method.

Class A common stockholders, divided by the weighted average Class A common stock outstanding adjusted for the effect of granted stock awards determined to be dilutive under the treasury stock method.

Balance sheet information

Cash, cash equivalents and restricted cash

A summary of cash and cash equivalents and restricted cash as of December 31 follows:

Cash and cash equivalents $ 31,814 $ 43,933

Restricted cash

Current 23 5,280

Noncurrent — 50,000

$ 31,837 $ 99,213

As of December 31, 2021, current restricted cash consisted of an escrow deposit with a financial institution for the purpose of paying a Paycheck Protection Program loan acquired as part of a business combination.

This loan was forgiven during the second quarter of 2022.

As of December 31, 2021, noncurrent restricted cash consisted of an escrow deposit with a financial institution for the acquisition of CartiHeal (2009) Ltd.

Cash, cash equivalents and restricted cash totaled $ 36,964 and $ 30,186 as of December 31, 2023 and 2022.

Cash and restricted cash of $ 1,628 and $ 23 , respectively, attributable to CartiHeal has been reclassified to current assets attributable to discontinued operations within the December 31, 2022 consolidated balance sheets.

Refer to Note 4.

Acquisitions and investment s for further information.

Acquisitions and divestitures and Note 15.

Discontinued operations for further details regarding the deconsolidation of CartiHeal.

Accounts receivable, net

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Accounts receivable, net of allowances, consisted of the following as of December 31:

Accounts receivable $ 143,667 $ 128,365

Accounts receivable (a)

$ 127,008 $ 143,317

Allowance for credit losses ( 4,219 ) ( 7,022 )

$ 122,789 $ 136,295

(a) Other receivables of $ 350 attributable to CartiHeal was reclassified to current assets attributable to discontinued operations within the December 31, 2022 consolidated balance sheets.

Refer to Note 4.

Acquisitions and divestitures and Note 15.

Discontinued operations for further details regarding the deconsolidation of CartiHeal.

Due to the short-term nature of its receivables, the estimate of expected credit losses is based on aging of the account receivable balances.

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The Company has a diverse customer base with no single customer representing ten percent or more of sales.

The Company has one customer representing approximately 12.1 % of the accounts receivable balance as of December 31, 2022.

There was no single customer representing ten percent of sales or accounts receivable for the year ended December 31, 2021.

The Company had one customer representing approximately 16.0 % and 12.1 % of the accounts receivable balance as of December 31, 2023 and 2022, respectively.

Historically, the Company’s reserves have been adequate to cover credit losses.

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Beginning balance $ ( 7,022 ) $ ( 3,402 )

Provision ( 5,190 ) ( 485 )

Benefit (provision) for expected credit losses 1,103 ( 5,190 )

Write-offs 2,827 2,105

Recoveries ( 1,557 ) ( 535 )

Disposals 430 —

Ending balance $ ( 4,219 ) $ ( 7,022 )

Inventory consisted of the following as of December 31:

Raw materials and supplies $ 19,775 $ 12,213

Finished goods 67,484 50,805

Gross 87,259 63,018

Excess and obsolete reserves ( 1,851 ) ( 1,330 )

Raw materials and supplies (a)

$ 21,062 $ 18,454

Changes in excess and obsolete reserves for inventory were as follows for the years ended December 31:

Beginning balance $ ( 1,330 ) $ ( 868 )

Provision for losses ( 2,088 ) ( 1,835 )

Write-offs 1,567 1,373

Ending balance $ ( 1,851 ) $ ( 1,330 )

Prepaid and other current assets

Prepaid and other current assets consisted of the following as of December 31:

Prepaid taxes $ 4,442 $ 12,236

Prepaid and other current assets 14,243 15,003

Finished goods 70,271 66,312

$ 91,333 $ 84,766

(a) Raw material inventory of $ 642 attributable to CartiHeal has been reclassified to current assets attributable to discontinued operations within the December 31, 2022 consolidated balance sheets.

Refer to Note 4.

Acquisitions and divestitures and Note 15.

Discontinued operations for further details regarding the deconsolidation of CartiHeal.

Property and equipment, net

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Furniture and fixtures 4,163 2,356

Machinery and equipment 2,754 2,722

Finance leases 15,737 222

Machinery and equipment (a)

Assets not yet placed in service 4,065 3,805

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$ 36,605 $ 27,456

Depreciation expense was $ 5,766 , $ 3,204 and $ 2,106 for the years ended December 31, 2022, 2021 and 2020, respectively.

(a) Machinery and equipment and accumulated depreciation attributable to CartiHeal of $ 269 and $ 78 , respectively, were reclassified to long-term assets attributable to discontinued operations within the December 31, 2022 consolidated balance sheets.

Refer to Note 4.

Acquisitions and divestitures and Note 15.

Discontinued operations for further details regarding the deconsolidation of CartiHeal.

Depreciation expense from continuing operations was $ 12,121 , $ 5,688 and $ 3,204 for the years ended December 31, 2023, 2022 and 2021, respectively.

The Company incurred a $ 2,038 disposal loss on fixed assets during the year ended December 31, 2023 as a result of the integration of acquisitions.

The loss is recorded in loss on disposals within the consolidated condensed statements of operations and other comprehensive (loss) income.

Changes in the carrying amounts of goodwill by reportable segment during the years ended December 31, 2023 and December 31, 2022 are as follows:

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Additions 55,295 4,999 60,294

Balance at December 31, 2021 $ 138,863 $ 8,760 $ 147,623

Additions 55,295 4,999 60,294

Deconsolidation of noncontrolling interest ( 494 ) — ( 494 )

Purchase accounting adjustments ( 4,467 ) — ( 4,467 )

Impairment of goodwill ( 189,197 ) — ( 189,197 )

Impairment ( 189,197 ) — ( 189,197 )

Reclassification (a)

— ( 6,297 ) ( 6,297 )

Balance at December 31, 2022 $ — $ 7,462 $ 7,462

Additions during the year ended December 31, 2022 were the result of the acquisition of CartiHeal (2009) Ltd.

and purchase accounting adjustments stem from changes in the preliminary fair values of assets acquired and liabilities assumed in previous and current acquisitions.

Additions during the year ended December 31, 2021 resulted from the acquisitions of Misonix, Inc.

and Bioness Inc.

Balance at December 31, 2023 (b)

$ — $ 7,462 $ 7,462

(a) Goodwill of $ 6,297 attributable to CartiHeal was reclassified to long-term assets attributable to discontinued operations within the December 31, 2022 consolidated balance sheets.

Refer to Note 4.

Acquisitions and investments for further information.

The impairment was recorded within impairment of goodwill on the consolidated statements of operations and comprehensive (loss) income.

Acquisitions and divestitures and Note 15.

Discontinued operations for further details regarding the deconsolidation of CartiHeal.

(b) There was no activity related to goodwill during the year ended December 31, 2023.

Additions during the year ended December 31, 2022 were the result of the acquisition of CartiHeal and purchase accounting adjustments stem from changes in the preliminary fair values of assets acquired and liabilities assumed in previous and current acquisitions.

Refer to Note 4.

Acquisitions and divestitures for further information.

Due to the significant decline in the Company’s Class A common stock, the Company recorded a non-cash goodwill impairment charge of $ 189,197 within the United States reporting unit for the year ended December 31, 2022 of which $ 124,697 was recorded in the impairment of assets and $ 64,500 in loss on discontinued operations, net of tax within the consolidated statements of operations and comprehensive (loss) income.

The impairment was recorded within impairment of assets on the consolidated statements of operations and comprehensive (loss) income.

There were no accumulated goodwill impairment losses as of December 31, 2021.

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Intangible assets consisted of the following as of December 31:

Intellectual property $ 1,200,249 $ 789,195

Intellectual property (a)(b)

$ 677,258 $ 790,049

Distribution rights 61,325 61,325

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Less accumulated amortization:

Intellectual property ( 199,094 ) ( 140,767 )

Intellectual property (a)

( 218,031 ) ( 187,767 )

Distribution rights ( 49,301 ) ( 44,319 )

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$ 482,350 $ 639,851

There were $ 410,200 and $ 545,000 of intangible additions during the year ended December 31, 2022 and 2021, respectively, as a result of acquisitions.

(a) Intellectual property and accumulated depreciation attributable to CartiHeal totaling $ 410,200 and $ 11,327 , respectively, were reclassified to long-term assets attributable to discontinued operations within the December 31, 2022 consolidated balance sheets.

Refer to Note 4.

Acquisitions and investments for further information.

Amortization expense related to intangible assets was $ 67,042 , $ 35,480 and $ 27,565 for the years ended December 31, 2022, 2021 and 2020, respectively, of which $ 20,975 , $ 12,179 and $ 7,455 are included in ending inventory at December 31, 2022, 2021 and 2020, respectively.

Acquisitions and divestitures and Note 15.

Discontinued operations for further details regarding the deconsolidation of CartiHeal.

(b) The Company recorded an impairment loss of $ 78,615 for the year ended December 31, 2023 in the U.S.

reporting segment of net intellectual property attributable to the TheraSkin and TheraGenesis products, which were sold in May 2023.

The loss was recorded in impairment of assets within the consolidated statements of operations and comprehensive loss.

Refer to Note 4.

Acquisitions and divestitures for further details regarding businesses held for sale.

Amortization expense from continuing operations related to intangible assets was $ 45,244 , $ 55,715 and $ 35,480 for the years ended December 31, 2023, 2022 and 2021, respectively, of which $ 23,848 , $ 20,975 and $ 12,179 are included in ending inventory at December 31, 2023, 2022 and 2021, respectively.

Estimated amortization expense for the years ended December 31, 2024 through 2028 is expected to be $ 45,140 , $ 42,503 , $ 39,011 , $ 38,659 and $ 37,853 , respectively.

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Compensation and benefits 9,709 11,428

Accrued interest 6,606 217

Income and other taxes 4,749 2,572

Other liabilities 17,548 21,382

Other liabilities (a)

19,702 16,947

Acquisitions and investments

$ 119,795 $ 111,570

(a) Other liabilities attributable to CartiHeal of $ 384 were reclassified into current liabilities attributable to discontinued operations within December 31, 2022 consolidated balance sheets.

Refer to Note 4.

Acquisitions and divestitures and Note 15.

Discontinued operations for further details.

Acquisitions and divestitures

Wound Business

On May 22, 2023, the Company closed the sale of certain assets within its Wound Business, including the TheraSkin and TheraGenesis products (collectively, the “Wound Business” or the “Disposal Group”), for potential consideration of $ 84,675 , including $ 34,675 at closing, $ 5,000 deferred for 18 months and up to $ 45,000 in potential earn-out payments (“Earn-out Payments”), which are based on the achievement of certain revenue thresholds by the purchaser of the Wound Business for sales of the TheraSkin and TheraGenesis products during the 2024, 2025 and 2026 fiscal years.

The Company incurred $ 3,880 in transactional fees resulting from the sale of the Wound Business.

The loss resulting from the deconsolidation of the Disposal Group totaled $ 1,539 for the year ended December 31, 2023 and was recorded in loss on disposals within the consolidated statements of operations and comprehensive (loss) income.

The Company used the proceeds from the sale of its Wound Business to prepay $ 30,000 of long-term debt obligations.

Refer to Note 5.

Financial Instruments for further details regarding the Company’s outstanding long-term debt obligations.

The Company evaluated the Wound Business for impairment prior to its sale and recorded a $ 78,615 impairment within the consolidated statements of operations and comprehensive (loss) income during the year ended December 31, 2023 as a result of this evaluation to reduce the intangible assets of the Disposal Group to reflect their respective fair values less any costs to sell.

The fair value of the Disposal Group’s intangibles was determined based on the consideration received for the Wound Business.

CartiHeal (2009) Ltd.

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The Company previously held an equity interest in CartiHeal’s fully diluted shares with a carrying value of $ 15,768 and $ 16,771 as of July 12, 2022 and December 31, 2021, respectively.

Net equity losses associated with CartiHeal for the years ended December 31, 2022, 2021 and 2020 totaled $ 1,003 , $ 1,868 and $ 467 , respectively, which are included in other (income) expense on the consolidated statements of operations and comprehensive (loss) income.

The Company acquired CartiHeal (the “CartiHeal Acquisition”) for an aggregate purchase price of approximately $ 315,000 and an additional $ 135,000 , becoming payable after closing upon the achievement of a certain sales milestone (“Sales Milestone”, or “CartiHeal Contingent Consideration”).

Net equity losses associated with CartiHeal for the years ended December 31, 2022 and 2021 totaled $ 1,003 and $ 1,868 , respectively, which are included in discontinued operations, net of tax on the consolidated statements of operations and comprehensive (loss) income.

The Company acquired CartiHeal (the “CartiHeal Acquisition”) for an aggregate purchase price of approximately $ 315,000 and an additional $ 135,000 , payable after closing upon the achievement of a certain sales milestone (“Sales Milestone”, or “CartiHeal Contingent Consideration”).

The Company paid $ 100,000 of the aggregate purchase price upon closing consisting of a $ 50,000 deposit held in trust and $ 50,000 from a financing arrangement (Refer to Note 5.

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The Company also paid approximately $ 8,622 of CartiHeal’s transaction-related fees and expenses and deferred $ 215,000 (“Deferred Amount”) of the aggregate purchase price otherwise due at closing.

The Deferred Amount will be paid in five tranches commencing in 2023 and ending no later than 2027 as follows:

The Deferred Amount was to be paid in five tranches commencing in 2023 and ending no later than 2027 as follows:

• $ 50,000 due upon the earliest to occur — the publication in a peer-reviewed orthopedic journal of an article that presents the results of the pivotal clinical trial (“First Paper Milestone”) or July 1, 2023;

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Category 1 Current Procedural Terminology (“CPT”) code from Centers for Medicare and Medicaid Services (“CMS”) for Agili-C or January 1, 2027.

Pursuant to the CartiHeal Amendment (as defined below), the Company will pay interest on each tranche of the Deferred Amount at a rate of 8.0 % annually, until such tranche is paid.

Pursuant to the CartiHeal Amendment (as defined below), the Company owed interest on each tranche of the Deferred Amount at a rate of 8.0 % annually, until such tranche was paid.

The Sales Milestone will be payable upon the achievement of $ 75,000 in trailing twelve month sales pursuant to the CartiHeal Amendment.

The Company had entered into an Option and Equity Purchase Agreement with CartiHeal (“Option Agreement”) in January 2020 and subsequent amendment in June 2022 (“CartiHeal Amendment”).

The Company had entered into an Option and Equity Purchase Agreement with CartiHeal (“Option Agreement”) in January 2020 and a subsequent amendment in June 2022 (“CartiHeal Amendment”).

The Option Agreement provided the Company with an exclusive option to acquire 100 % of CartiHeal’s shares (“Call Option”), and provided CartiHeal with a put option that would require the Company to purchase 100 % of CartiHeal’s shares under certain conditions.

In August 2021, CartiHeal achieved pivotal clinical trial success, as defined in the Option Agreement, for the Agili-C implant.

In order to preserve the Company’s Call Option, in accordance with the Option Agreement and upon approval of the Company’s Board of Directors (“BOD”), the Company deposited $ 50,000 into escrow in August 2021 for the potential acquisition of CartiHeal, which was included in restricted cash on the consolidated balance sheets at December 31, 2021.

The First Paper Milestone under the Option Agreement occurred on February 13, 2023, triggering the Company to make the first payment of the Deferred Amount, plus applicable interest.

The First Paper Milestone under the Option Agreement occurred on February 13, 2023, which obligated the Company to make the first $ 50,000 payment, plus applicable interest, under the Option Agreement.

On February 27, 2023, the Company entered into a settlement agreement (the “Settlement Agreement”) with Elron Ventures Ltd.

as representative of CartiHeal’s selling securityholders under the Option Agreement.

Upon execution of the Settlement Agreement, the Company transferred 100 % of its shares in CartiHeal to a trustee for the benefit of CartiHeal’s selling securityholders.

Refer to Note 15.

Subsequent events for further information regarding the Settlement Agreement.

(“Elron” and together with the Company, the “Parties”) as representative of CartiHeal’s selling securityholders under the Option Agreement (collectively, the “Former Securityholders”).

Pursuant to the Settlement Agreement, Elron, on behalf of the Former Securityholders, agreed to forbear from initiating any legal action or proceedings relating to non-payment of any obligations arising under the Option Agreement during a period of 30 calendar days (the “Interim Period”) in exchange for (i) a one-time non-refundable amount of $ 10,000 and (ii) a one-time non-refundable payment of $ 150 to Elron to be used in accordance with the expense fund provisions of the Option Agreement.

The Interim Period expired on March 29, 2023 and the Company did not exercise its right to extend the Interim Period.

In addition, the Parties mutually released any further claims under the Option Agreement and related transaction documents, including without limitation a release by the Former Securityholders of any rights to enforce the provisions of the Option Agreement or make further monetary claims against the Company and/or its respective affiliates and representatives.

The Company transferred 100 % of its shares in CartiHeal to a trustee (the “Trustee”) for the benefit of the Former Securityholders pursuant to the Settlement Agreement.

The Company had no ownership interest and no voting rights during the Interim Period.

Accordingly, the Company concluded that upon execution of the Settlement Agreement, the Company ceased to control CartiHeal for accounting purposes, and therefore, deconsolidated CartiHeal effective February 27, 2023.

CartiHeal was part of the Company’s international reporting segment.

The Company treated the deconsolidation of CartiHeal as a discontinued operation.

The loss upon disposal was $ 60,639 and was recorded within discontinued operations, net of tax within the consolidated statements of operations and comprehensive (loss) income.

The loss on disposal is comprised of the book value of CartiHeal’s net assets at the time of disposal, goodwill attributable to CartiHeal and the previously discussed non-refundable payments made to Elron.

The Company allowed the Interim Period to expire on March 29, 2023 as the Company was not able to find a financing solution to fund the payment obligations under the Option and Equity Purchase Agreement on terms the Company believed to be favorable to it and its shareholders.

The fair value of consideration for the CartiHeal Acquisition is comprised of the following:

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and (iii) applying the calculated value to the Company’s 10.03 % ownership in CartiHeal’s fully diluted shares at the acquisition date.

The Company accounted for the CartiHeal Acquisition using the acquisition method of accounting whereby the total purchase price was preliminary allocated to tangible and intangible assets acquired and liabilities assumed based on respective fair values.

The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed at the acquisition date:

The Company accounted for the CartiHeal Acquisition using the acquisition method of accounting whereby the total purchase price was preliminarily allocated to tangible and intangible assets acquired and liabilities assumed based on respective fair values.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date:

Fair value of consideration $ 393,400

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Resulting goodwill $ 60,294

As of December 31, 2022, the purchase price allocation for the CartiHeal Acquisition was preliminary in nature and subject to completion.

Adjustments to the current fair value estimates in the above table may occur as the process conducted for various valuations and assessments is finalized, including intangible assets, tax liabilities and other working capital accounts.

Nearly 100% of the goodwill represents estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized and is attributable to expected revenue growth in new markets.

The goodwill is not expected to be deductible for tax purposes and $ 55,295 and $ 4,999 was allocated to the U.S.

Goodwill of $ 55,295 and $ 4,999 was allocated to the U.S.

and International reporting units, respectively.

The Company incurred $ 4,436 in acquisition costs related to CartiHeal during the year ended December 31, 2022.

CartiHeal’s intangibles consists of the following:

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Misonix, Inc.

On October 29, 2021, in order to broaden its portfolio, the Company acquired 100 % of the capital stock of Misonix, Inc.

(“Misonix”) in a cash-and-stock transaction (the “Misonix Acquisition”).

Misonix manufactures minimally invasive surgical ultrasonic medical devices used for precise bone sculpting, removal of soft and hard tumors and tissue debridement, primarily in the areas of neurosurgery, orthopedic surgery, plastic surgery, wound care and maxillo-facial surgery.

Misonix also exclusively distributes skin allografts and wound care products used to support healing of wounds.

The fair value of the consideration for the Misonix Acquisition comprised the following:

Common Shares Price per Share (a)

Cash $ 182,988

Bioventus Class A shares 18,340,790 $ 14.97 274,562

Value of Misonix options settled in Bioventus options

Merger consideration 485,186

Other cash consideration 40,130

Total Misonix consideration $ 525,316

(a) Closing price of the Company’s Class A common stock as of October 28, 2021.

The Company accounted for the Misonix Acquisition using the acquisition method of accounting whereby the total purchase price was allocated to tangible and intangible assets acquired and liabilities assumed based on respective fair values.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date:

Fair value of consideration $ 525,316

Assets acquired and liabilities assumed:

Cash and cash equivalents 7,126

Accounts receivable 13,301

Inventory 23,428

Prepaid and other current assets 419

Property and equipment, net 10,280

Intangible assets 486,500

Operating lease assets 1,049

Deferred tax assets 6,448

Other assets 77

Accounts payable and accrued liabilities ( 16,888 )

Other current liabilities ( 589 )

Deferred income taxes ( 94,012 )

Other liabilities ( 1,351 )

Net assets acquired 435,788

Resulting goodwill $ 89,528

Nearly 100% of the goodwill represents the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized.

The factors contributing to the recognition of goodwill are based on several strategic and synergistic benefits that are expected to be realized from the Misonix Acquisition.

The goodwill is not tax deductible and was allocated to the U.S.

reporting unit for purposes of the evaluation for any future goodwill impairment.

Changes in the preliminary purchase price allocation during the six months ended July 2, 2022 related to a deferred tax asset recognition of $ 6,448 and a reduction in inventory and property and equipment, net of $ 1,292 and $ 291 , respectively.

The following table summarizes the fair values of identifiable intangible assets and their useful lives:

Useful Life (in years) Fair Value

Intellectual property 15 - 20 years

Customer relationships 12 years 9,500

The fair value of the Misonix intellectual property was determined using a variation of the income approach or the multi-period excess earnings method, with projected earnings discounted at a rate of 12.0 %.

The fair value of the customer relationship asset was determined using the income approach or the profit-split method, with projected cash flow discounted at a rate of 12.0 %.

The determination of the useful lives was based upon consideration of market participant assumptions and transaction specific factors.

Bioness, Inc.

On March 30, 2021, the Company acquired 100 % of the capital stock of Bioness, Inc.

(the “Bioness Acquisition”) for $ 48,933 in cash and future contingent consideration payments.

The Company acquired 100 % of the capital stock of Misonix, Inc.

(“Misonix”) in a cash-and-stock transaction (the “Misonix Acquisition”) on October 29, 2021.

Total consideration for the Misonix Acquisition was $ 525,316 comprised of $ 274,562 in Bioventus Class A common stock, $ 223,118 in cash and $ 27,636 in value for Misonix options settled with Bioventus options.

Misonix also exclusively distributes skin allografts used to support healing.

Bioness, Inc.

The Company acquired 100 % of the capital stock of Bioness, Inc.

(“Bioness”) for $ 48,933 in cash and future contingent consideration payments (the “Bioness Acquisition”).

Bioness is a global leader in neuromodulation and advanced rehabilitation medical devices through its innovative peripheral nerve stimulation therapy and premium advanced rehabilitation solutions.

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The Bioness Acquisition Agreement includes maximum earn-out payments of $ 50,000 as follows:

• $ 15,000 for obtaining FDA approval for U.S.

commercial distribution of a certain product for certain indications on or before June 30, 2022;

• $ 20,000 for meeting net sales targets for certain implantable products over a three year period ending on June 30, 2025 at the latest;

• Up to $ 10,000 for meeting net sales milestones for certain implantable products over a three year period ending on June 30, 2025 at the latest;

• $ 20,000 for maintaining Centers for Medicare & Medicaid Services coverage and reimbursement for certain products at specified levels as of December 31, 2024.

In December 2021, it became clear that the $ 15,000 FDA approval milestone would not be met, and therefore, it was assigned no value and was recorded as a measurement period adjustment.

The maximum contingent earn-out payment decreased to $ 50,000 as a result.

Consolidated Pro Forma Results

The results of operations of Bioness, acquired March 30, 2021, Misonix, acquired October 29, 2021 and CartiHeal, acquired July 12, 2022, have been included in the accompanying consolidated financial statements since their respective acquisition dates.

Net losses of CartiHeal included during the year ended December 31, 2022 since its acquisition date were $ 69,441 .

There are no net sales attributable to CartiHeal for the year ended December 31, 2022.

Revenue and earnings for the operations of Bioness, Misonix and CartiHeal as if the companies were acquired on January 1, 2021, are as follows for the years ended December 31:

(unaudited) (unaudited)

Net sales $ 512,117 $ 504,619

Net loss $ ( 201,790 ) $ ( 88,251 )

The historical consolidated financial information of the Company, Misonix, Bioness and CartiHeal have been adjusted in the pro forma information to give effect to pro forma events that are (1) directly attributable to the Misonix, Bioness and CartiHeal acquisitions, (2) factually supportable and (3) expected to have a continuing impact on the combined results.

The unaudited pro forma results include adjustments to reflect the inventory step-up amortization, the incremental intangible asset amortization to be incurred based on the valuations of the assets acquired, transaction costs that would have been incurred in the prior period, vesting of equity-based compensation that was accelerated due to the Misonix Acquisition, adjustments to financing costs to reflect the new capital structure as well as the income tax effect and the noncontrolling interest impact of these adjustments.

These pro forma amounts are not necessarily indicative of the results that would have been obtained if the acquisitions had occurred prior to the beginning of the period presented or that may occur in the future, and do not reflect future synergies, integration costs, or other such costs or savings.

(i) $ 20,000 for meeting net sales targets for certain implantable products over a three year period ending on June 30, 2025 at the latest;

(ii) up to $ 10,000 for meeting net sales milestones for certain implantable products over a three year period ending on June 30, 2025 at the latest;

and (iii) $ 20,000 for maintaining Centers for Medicare & Medicaid Services coverage and reimbursement for certain products at specified levels as of December 31, 2024.

The Company had a fully diluted 8.8 % ownership of Harbor Medtech Inc.’s (“Harbor”) Series C Preferred Stock and an exclusive Collaboration Agreement with Harbor, which resulted in the consolidation of Harbor.

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The Company continues to have license rights to certain technology obtained from Harbor and is continuing product development initiated under the Collaboration Agreement.

On August 23, 2021, the Company purchased shares of Trice Medical, Inc.’s (“Trice”) Series D Preferred Stock for $ 10,000 , representing a 8.4 % ownership interest of its fully diluted shares.

On August 23, 2021, the Company purchased shares of Trice Medical, Inc.’s (“Trice”) Series D Preferred Stock for $ 10,000 , representing an 8.4 % ownership interest of its fully diluted shares.

Trice is a privately held company that develops and commercializes minimally invasive technologies for sports medicine and orthopedic surgical procedures and it did not have a readily determinable fair value.

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$ 382,448 $ 420,712

Revolver due October 2025 ( 9.88 % at December 31, 2023)

Current portion of long-term debt ( 27,848 ) ( 33,056 )

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Amended Term Loan

On December 6, 2019, the Company entered into an Amended 2019 Credit Agreement that was originally comprised of a $ 200,000 term loan (“Original Term Loan”) and a $ 50,000 revolving facility (the “Revolver”).

The Company amended the 2019 Credit Agreement on October 29, 2021 in connection with the Misonix Acquisition in which the Company prepaid $ 80,000 on the Original Term Loan.

On December 6, 2019, the Company entered into a Credit and Guaranty Agreement (the “2019 Credit Agreement”) that was comprised of a $ 200,000 term loan (“Original Term Loan”) and a $ 50,000 revolving facility (the “Revolver”).

The Company amended the 2019 Credit Agreement on August 29, 2021, and then again on October 29, 2021 in connection with the Misonix Acquisition in which the Company prepaid $ 80,000 on the Original Term Loan.

The 2019 Credit Agreement, as amended, subsequent to the prepayment, was comprised of a $ 360,750 term loan (“Term Loan”) and the Revolver.

On July 11, 2022, the Company further amended the 2019 Credit Agreement, as amended on October 29, 2021 (the “Amended 2019 Credit Agreement”), in conjunction with the CartiHeal Acquisition.

Pursuant to the Amended 2019 Credit Agreement, an $ 80,000 term loan facility (the “July 2022 Term Loan” and, together with the Term Loan, the “Term Loan Facilities”) was extended to the Company to be used for:

On July 11, 2022, the Company further amended the 2019 Credit Agreement in conjunction with the CartiHeal Acquisition.

Pursuant to that amendment, an $ 80,000 term loan facility (the “July 2022 Term Loan” and, together with the Term Loan, the “Term Loan Facilities”) was extended to the Company to be used for:

(i) the financing of the CartiHeal Acquisition;

(ii) the payment of related fees and expenses;

(iii) repayment of the draws made on the Revolver during 2022 totaling $ 25,000 ;

(iii) repayment of the draws made on the Revolver;

and (iv) working capital needs and general corporate purposes of the Company, including without limitation for permitted acquisitions.

The Company was not in compliance with certain financial covenants as of December 31, 2022.

As a result, on March 31, 2023 (the “Closing Date”), the Company entered into another amendment to the Amended 2019 Credit Agreement to, among other things, modify certain financial covenants, waive the noncompliance at December 31, 2022, and to modify interest rates applicable to borrowings under the agreement, as described below.

The Term Loan Facilities will mature on October 29, 2026 (“Maturity”).

As a result, on March 31, 2023, the Company entered into another amendment to the 2019 Credit Agreement to, among other things, modify certain financial covenants, waive the noncompliance at December 31, 2022, and to modify interest rates applicable to borrowings under the 2019 Credit Agreement.

The Company was in compliance as of December 31, 2023 with the financial covenants as stated within the 2019 Credit Agreement then in effect.

On January 18, 2024 (the “Closing Date”), the Company further amended the 2019 Credit Agreement (collectively, with the August 2021, October 2021, July 2022 and March 2023 amendments, the “Amended 2019 Credit Agreement”), to further modify certain financial covenants under the 2019 Credit Agreement.

The Term Loan Facilities will now mature on October 29, 2026 (“Maturity”).

The Revolver will mature on October 29, 2025.

SOFR loans and base rate loans had a margin of 3.25 % and 2.25 %, respectively, subsequent to July 11, 2022 and prior to the Closing Date.

As of the Closing Date, SOFR loans and base rate loans had a margin of 4.25 % and 3.25 %, respectively.

As of the March 31, 2023 amendment, SOFR loans and base rate loans had a margin of 4.25 % and 3.25 %, respectively.

All obligations under the Amended 2019 Credit Agreement are guaranteed by the Company and certain wholly owned subsidiaries where substantially all the assets of the Company collateralize the obligations.

The Amended 2019 Credit Agreement contains customary affirmative and negative covenants, including those related to financial reporting and notification, restrictions on the declaration or payment of certain distributions on or in respect of Bioventus LLC’s equity interests, restrictions on acquisitions, investments and certain other payments, limitations on the incurrence of new indebtedness, limitations on transfers, sales and other dispositions of assets of Bioventus LLC and its subsidiaries, as well as limitations on making changes to the business and organizational documents of Bioventus LLC and its subsidiaries.

Financial covenant requirements include (i) a maximum debt leverage ratio of not greater than 6.84 to 1.00 for the testing period ending March 31, 2023, 6.50 to 1.00 for the testing period ending June 30, 2023, 7.26 to 1.00 for the testing period ending September 30, 2023, 5.64 for the testing period ending December 31, 2023, 5.65 to 1.00 for the testing period ending March 31, 2024, 4.25 for the testing period ending June 30, 2024, 4.25 to 1.00 for the testing period ending September 30, 2024, and 4.00 to 1.00 for the testing period ending December 31, 2024 and each testing period thereafter, and, beginning with the testing period ending December 31, 2024, to be subject to a temporary increase to 4.50 to 1.00 upon certain events, and (ii) an interest coverage ratio not less than 2.25 to 1.00 for the testing period ending March 31, 2023, 2.21 to 1.00 for the testing period ending June 30, 2023, 1.70 to 1.00 for the testing period ending September 30, 2023, 1.98 to 1.00 for the testing period ending December 31, 2023, 2.25 to 1.00 for the testing period ending March 31, 2024, 2.25 to 1.00 for the testing period ending June 30, 2024, 2.25 to 1.00 for the testing period ending September 30, 2024 and 3.00 to 1.00 for the testing period ending December 31, 2024 and each testing period thereafter.

In addition, during the period commencing on the Closing Date and ending upon the satisfaction of certain conditions occurring not prior to the delivery of financial statements of the Company for the fiscal quarter ending June 30, 2024, the Company will be subject to certain additional requirements and covenants, including a requirement to maintain Liquidity (as defined in the Amended 2019 Credit Agreement) of not less than $ 10,000 as of the end of each calendar month during such period.

July 2022 Term Loan had an original issue discount of $ 240 and deferred financing costs of $ 101 .

Financial covenant requirements include (i) a maximum debt leverage ratio of not greater than 5.65 to 1.00 for the testing period ending March 31, 2024, 5.00 to 1.00 for the testing period ending June 30, 2024, 4.75 to 1.00 for the testing period ending September 30, 2024, 4.50 to 1.00 for the testing period ending December 31, 2024, 4.25 to 1.00 for testing period ending March 31, 2025, 4.00 to 1.00 for testing period ending June 30, 2025 and each testing period thereafter, and, beginning with the testing period ending March 31, 2025, to be subject to a temporary increase to 4.50 to 1.00 upon certain events, and (ii) an interest coverage ratio not less than 1.75 to 1.00 for the testing period ending March 31, 2024, 1.75 to 1.00 for the testing period ending June 30, 2024, 1.75 to 1.00 for the testing period ending September 30, 2024, 2.00 to 1.00 for the testing period ending December 31, 2024, 2.00 to 1.00 for the testing period ending March 31, 2025, 2.25 to 1.00 for the testing period ending June 30, 2025, 2.50 to 1.00 for the testing period ending September 30, 2025 and 3.00 to 1.00 for the testing period ending December 31, 2025 and each testing period thereafter.

In addition, during the period commencing on the Closing Date and ending upon the satisfaction of certain conditions occurring not prior to October 29, 2025, the Company will be subject to certain additional requirements and covenants, including a requirement to maintain Liquidity (as defined in the Amended 2019 Credit Agreement) of not less than $ 10,000 as of the end of each calendar month during such period.

The July 2022 Term Loan had an original issue discount of $ 240 and deferred financing costs of $ 101 .

No financing or deferred costs were expensed and there was no loss on debt refinancing and modification as a result of the July 2022 amendment.

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The Company recorded $ 1,706 , $ 853 and $ 588 for deferred cost amortization in interest expense for the years ended December 31, 2023, 2022 and 2021, respectively.

Scheduled quarterly principal payments of the Term Loan Facilities, which commenced on September 30, 2022, totaled $ 8,264 for the years 2023 and 2024 and $ 11,019 for the years 2025 and 2026 with a final payment of $ 277,467 at Maturity.

Contractual maturities of long term debt for the next four years are as follows:

Scheduled quarterly principal payments of the Term Loan Facilities are $ 3,056 for the first quarter of 2024, $ 8,264 for the second, third and fourth quarters of 2024 and $ 11,019 for the year 2025 and the first three quarters of 2026 with a final payment of $ 277,469 at Maturity.

Contractual maturities of long term debt for the next three years are as follows:

2024—$ 27,848 , 2025—$ 44,075 and 2026—$ 310,525 , respectively.

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These additional prepayments will be applied to the scheduled installments of principal in direct order of maturity of first the Base Rate (BR) portions of the Term Loan Facilities and then the Eurodollar portions.

The estimated fair value of the Term Loan Facilities under the Amended 2019 Credit Agreement as of December 31, 2022 was $ 410,195 .

The fair value of these obligations was determined based on the midpoint of the Bloomberg Valuation (BVAL), as of December 31, 2022.

The estimated fair value of the Term Loan Facilities was $ 382,926 as of December 31, 2023.

The fair value of these obligations was determined based on the midpoint of the Bloomberg Valuation, as of December 31, 2023.

This is classified as a Level 2 instruments within the fair value hierarchy.

The Revolver is a five-year revolving credit facility that includes revolving and swingline loans as well as letters of credit (“LOC”) and, inclusive of all, cannot exceed $ 50,000 at any one time.

The Revolver is a five-year revolving credit facility that includes revolving and swingline loans as well as letters of credit (“LOC”) and, inclusive of all, cannot exceed $ 45,000 at any one time as the Revolver capacity was reduced at December 31, 2023 in accordance with the 2019 Credit Agreement then in effect.

The Revolver credit capacity will be further reduced by $ 5,000 on June 30, 2024.

LOCs are available in an amount not to exceed $ 7,500 .

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Swingline loans are due the fifteenth or last day of a calendar month or Maturity whichever is earlier.

As of December 31, 2022, the Company had one nominal LOC outstanding leaving approximately $ 50,000 available.

The Revolver had no outstanding borrowings as of December 31, 2022 and 2021.

The Term Loan Facilities and Revolver permits the Company to elect either the secured overnight financial rate (SOFR) or base interest rate (“BR”) options for the entire amount or certain portions of the loans.

As of December 31, 2023, the Company had three LOCs outstanding leaving approximately $ 43,200 available.

The Revolver had $ 15,000 in outstanding borrowings as of December 31, 2023 and zero at December 31, 2022.

The Term Loan Facilities and Revolver permit the Company to elect either the secured overnight financial rate (“SOFR”) or base interest rate (“BR”) options for the entire amount or certain portions of the loans.

Both the SOFR and BR options have interest rates equal to a formula driven base interest rate plus a margin, tied to a leverage ratio.

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BR portions of the Term Loan Facilities have interest due the last day of each calendar quarter-end.

Pursuant to the March 2023 amendment to the Amended 2019 Credit Agreement, the margin at each applicable leverage ratio will be increased by 1.00 % per annum.

Pursuant to the Amended 2019 Credit Agreement, the margin at each applicable leverage ratio will be increased by 1.00 % per annum.

SOFR portions of the Term Loan Facilities have one, three or six-month interest reset periods and interest is due on the last day of each three-month period or the last day of the loan term if less than three months.

Pricing grids are used to determine the applicable loan margins based on the type of loan and the leverage ratio.

The loan margin is adjusted after the quarterly financial statements are delivered to the lenders in accordance with the below pricing grid, which reflects the margins in effect following the March 2023 amendment to the Amended 2019 Credit Agreement:

Leverage ratio

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The fee is payable quarterly in arrears on the last day of the calendar quarters and at Maturity.

The commitment fee rate is adjusted after the quarterly financial statements are delivered to lenders based on the below pricing grid, which remained unchanged following the March 2023 amendment to the Amended 2019 Credit Agreement:

The commitment fee rate is adjusted after the quarterly financial statements are delivered to lenders based on the below pricing grid under the Amended 2019 Credit Agreement:

Leverage ratio

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The Company had one non-designated interest rate swap agreement that was terminated on October 28, 2022 and subsequently received $ 7,738 upon its termination.

The swap was carried at fair value on the balance sheet (Refer to Note 6.

Fair value measurements ) with changes in fair value recorded as interest income or expense within the consolidated statements of operations and comprehensive (loss) income.

Net interest income of $ 6,396 , $ 2,730 and expense of $ 1,599 was recorded related to the change in fair value of the interest rate swap for the years ended December 31, 2022, 2021 and 2020, respectively.

The swap was carried at fair value on the balance sheet with changes in fair value recorded as interest income or expense within the consolidated statements of operations and comprehensive (loss) income.

Net interest income of $ 6,396 and $ 2,730 was recorded related to the change in fair value of the interest rate swap for the years ended December 31, 2022 and 2021, respectively.

Fair value measurements

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Total Level 2 Level 3 Total Level 2 Level 3

Interest rate swap $ — $ — $ — $ 1,128 $ 1,128 $ —

Deferred Amount - Current $ 117,615 $ — $ 117,615 $ — $ — $ —

Deferred Amount - Long Term 79,269 — 79,269 — — —

CartiHeal Contingent Consideration 67,251 — 67,251 — — —

Deferred Amount - Current (a)

$ — $ — $ — $ 117,615 $ — $ 117,615

Deferred Amount - Long Term (a)

— — — 79,269 — 79,269

CartiHeal Contingent Consideration (a)

— — — 67,251 — 67,251

Bioness Contingent Consideration 18,150 — 18,150 17,431 — 17,431

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$ 18,150 $ — $ 18,150 $ 281,566 $ — $ 281,566

Interest rate swap

The Company values interest rate swaps using discounted cash flows.

Forward curves and volatility levels are used to estimate future cash flows that are not certain.

These are determined using observable market inputs when available and based on estimates when not available.

The fair value of the swap was recorded in the Company’s consolidated balance sheets within prepaid and other current assets .

Changes in fair value are recognized as interest income or expense within the consolidated statements of operations and comprehensive (loss) income.

(a) The Deferred Amount and contingent consideration attributable to CartiHeal have been reclassified to discontinued operations within the December 31, 2022 balance sheet.

CartiHeal was fully deconsolidated during the first quarter of 2023.

Refer to Note 4.

Acquisitions and divestitures and Note 15.

Discontinued operations for further details regarding the deconsolidation of CartiHeal.

Deferred Amount

The Deferred Amount resulting from the CartiHeal Acquisition was calculated based on the total amount payable on each due date for the five payment tranches including applicable interest as described in Note 4.

Acquisitions and investments .

As previously discussed, the Company reached a settlement Agreement with the Former Securityholders.

Pursuant to the Settlement Agreement, the Company was relieved of the obligations under the Deferred Amount.

The Deferred Amount that resulted from the CartiHeal Acquisition was calculated based on the total amount payable on each due date for the payment tranches including applicable interest.

As previously discussed, the Company reached a Settlement Agreement with the Former Securityholders which relieved the Company of the obligations under the Deferred Amount.

Refer to Note 4.

Subsequent events for further information.

Bioness & CartiHeal contingent consideration

Acquisitions and divestitures for further information.

Contingent consideration

The Company initially values contingent consideration related to business combinations using a probability-weighted calculation of potential payment scenarios discounted at rates reflective of the risks associated with the expected future cash flows for certain milestones.

For other milestones, the Company used a variation of the income approach where revenue was simulated in a risk-neutral framework using Geometric Brownian Motion, a stock price behavior model.

Key assumptions used to estimate the fair value of contingent consideration include projected financial information, market data and the probability and timing of achieving the specific targets as discussed in Note 4.

Acquisitions and investment s.

Key assumptions used to estimate the fair value of contingent consideration include projected financial information, market data and the probability and timing of achieving the specific targets.

After the initial valuation, the Company generally uses its best estimate to measure contingent consideration at each subsequent reporting period using unobservable Level 3 inputs.

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Refer to Note 4.

Subsequent events for further information.

Acquisitions and divestitures for further information.

Unobservable inputs

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Valuation Technique Unobservable inputs Range

CartiHeal Deferred Amount Discounted cash flow Payment discount rate 14.4 % - 15.5 %

Payment Period 2022 - 2027

CartiHeal Contingent Consideration Discounted cash flow Payment discount rate 14.0 % - 15.6 %

Payment Period 2022 - 2029

Bioness Contingent Consideration Discounted cash flow Payment discount rate 6.4 % - 6.8 %

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Changes in contingent consideration related to the Bioness Acquisition totaled $ 719 , $ 1,102 and $ 829 for the years ended December 31, 2023, 2022 and 2021, respectively, and were recorded as the change in fair value of contingent consideration within the consolidated statements of operations and comprehensive (loss) income.

Changes in contingent consideration related to the CartiHeal Acquisition totaled $ 5,350 for year ended December 31, 2022.

Changes in contingent consideration related to the CartiHeal Acquisition totaled $ 1,710 and $ 5,350 for years ended December 31, 2023 and 2022, respectively and were recorded in discontinued operations, net of tax within the consolidated statements of operations and comprehensive (loss) income.

comprehensive loss.

Pursuant to the Settlement Agreement, the Company was relieved of CartiHeal related obligations.

The Company deconsolidated the remaining $ 68,961 contingent consideration liability as a result.

Refer to Note 4.

Acquisitions and divestitures for further details regarding the deconsolidation of CartiHeal.

Management incentive plan and liability-classified awards

BV LLC had operated two equity-based compensation plans, the management incentive plan (MIP) and the BV LLC Phantom Profits Interest Plan (“Phantom Plan” and, together with the MIP, the “Plans”), which were terminated on February 11, 2021 in connection with the Company’s IPO.

BV LLC had operated two equity-based compensation plans, the management incentive plan (the “MIP”) and the BV LLC Phantom Profits Interest Plan (together with the MIP, the “Phantom Plans”), which were terminated on February 11, 2021 in connection with the Company’s IPO.

Awards granted under the MIP Plan and the 2015 Phantom Units were liability-classified and the 2012 Phantom Units were equity-classified.

Prior to the IPO and during the year ended December 31, 2021, the Company settled the remaining 183,078 units with the sole MIP awardee for $ 10,802 .

No awards under the Plans were granted post-IPO and the Phantom Plan awards were settled 12 months following the termination.

Vested awardees whose BV LLC employment terminated prior to the IPO had their awards settled in March 2022 for $ 10,413 , which was included in accrued equity-based compensation on the consolidated balance sheets at December 31, 2021.

Awardees that were active BV LLC employees at the IPO were entitled to receive an aggregate of 798,422 shares of Class A common stock.

In February 2022, awardees received 538,203 shares of Class A common stock, of which 260,219 shares were withheld to satisfy employee payroll taxes.

The following table provides a reconciliation of the beginning and ending balances for the MIP and liability-classified awards at fair value using significant unobservable inputs or Level 3:

Balance at December 31, 2020 $ 40,303

Change in fair value ( 25,185 )

Initial estimate (vesting) 829

Payments ( 11,281 )

Phantom plan conversion to Class A common stock ( 4,666 )

Balance at December 31, 2021 $ —

Prior to the IPO and during the year ended December 31, 2021, the Company settled with the sole MIP awardee for $ 10,802 .

No awards under the Phantom Plans were granted post-IPO and the Phantom Plan awards were settled 12 months following the termination.

Vested awardees whose BV LLC employment terminated prior to the IPO had their awards settled in March 2022 for $ 10,413 .

Due to the changes in fair value for these awards granted prior to the Company’s IPO, compensation award activity from the Phantom Plans resulted in a net gain of $ 24,356 for the year ended December 31, 2021.

Equity-based compensation

Terminated plans

Prior to the IPO, BV LLC operated two equity-based compensation plans, the MIP and the Phantom Plan, which were terminated on February 11, 2021 in conjunction with the IPO.

Prior to the Plans’ termination, during the year ended December 31, 2021, (i) the Company granted 90,000 Phantom Plan units;

Prior to the Phantom Plans’ termination, during the year ended December 31, 2021, (i) the Company granted 90,000 Phantom Profits Interest Plan units;

(ii) there were no MIP awards granted;

(iii) 900 Phantom Plan units were forfeited;

and (iv) other Phantom Units were redeemed for $ 479 .

Compensation expense related to the Phantom Plan totaled $ 829 for the year ended December 31, 2021.

(iii) 900 Phantom Profits Interest Plan units were forfeited;

and (iv) other Phantom Plan units were redeemed for $ 479 .

Compensation expense related to the Phantom Plans totaled $ 829 for the year ended December 31, 2021.

This amount excludes the $ 25,185 decrease in fair market value of accrued equity-based compensation due to adjustments to reflect the difference between the expected public offering price of the IPO and the actual offering price, of which $ 1,777 was recorded in research and development expense within the consolidated statements of operations and comprehensive (loss) income for the year ended December 31, 2021.

The Plans’ compensation expense totaled $ 10,103 for the year ended December 31, 2020.

The Company operates an equity-based compensation plan (“2021 Plan”), which allows for the issuance of stock options (incentive and nonqualified), restricted stock, dividend equivalents, restricted stock units (“RSUs”), other stock-based awards, and cash awards (collectively, “Awards”).

As of December 31, 2022, 11,278,656 shares of Class A common stock were authorized to be awarded and 2,086,777 shares were available for Awards.

New shares are issued for restricted units vested and options exercised.

Equity-based compensation expense for Awards granted under the 2021 Plan for the years ended December 31, 2022 and 2021 totaled $ 17,114 and $ 19,504 , respectively.

As of December 31, 2023, 14,781,895 shares of Class A common stock were authorized to be awarded and 7,843,854 shares were available for 2021 Plan Awards.

The Company also operates the 2023 Retention Equity Award Plan (the “2023 Plan” and, together with the 2021 Plan, the “Plans”), the purpose of which is to retain and motivate critical personnel over the short-term by providing them additional incentives in the form of RSUs (the “Retention Awards” and together with the “2021 Plan Awards,” the “Awards”).

As of December 31, 2023, 600,000 shares of Class A common stock were authorized to be awarded under the 2023 Plan and 73,200 shares were available for Retention Awards.

Activity under the Plans

Equity-based compensation expense for Awards granted under the Plans and inducement awards for the years ended December 31, 2023, 2022 and 2021 totaled $ 2,370 , $ 17,114 and $ 19,504 , respectively.

The expense is primarily included in selling, general and administrative expense with a nominal amount in research and development expense on the consolidated statements of operations and comprehensive (loss) income based upon the classification of the employee.

There were no income tax benefits related to equity-based compensation expense for the years ended December 31, 2023 and 2021.

Income tax benefits totaled $ 2,951 related to compensation expense for the year ended December 31, 2022.

There was no income tax benefit related to equity-based compensation expense for the year ended December 31, 2021.

Restricted Stock Units

During the year ended December 31, 2022 and 2021, the Company granted time-based RSUs which vest at various dates through December 5, 2026.

During the years ended December 31, 2023 and 2022, the Company granted time-based RSUs which vest at various dates through December 4, 2027.

RSU compensation expense is recognized over the vesting period, which is typically between 1 and 4 years.

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A summary of the RSU award activity for the years ended December 31, 2023 and 2022 are as follows (number of units in thousands):

Number of units Weighted-average grant-date fair value per unit

Number of units Weighted-average grant-

date fair value per unit

Unvested at December 31, 2021 1,024 $ 14.41

Granted 1,248 10.73

Vested ( 756 ) 14.74

Forfeited or canceled ( 327 ) 8.45

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Stock Options

During the year ended December 31, 2022 and 2021, the Company granted time-based stock options which vest over 2 to 4 years following the date of grant and expire within 10 years.

During the years ended December 31, 2023 and 2022, the Company granted time-based stock options which vest over 1 to 4 years following the date of grant and expire within 10 years.

The fair value of time-based stock options is determined using the Black-Scholes valuation model, with such value recognized as expense over the service period, which is typically 1 to 4 years, net of actual forfeitures.

A summary of the Company’s assumptions used in determining the fair value of the stock options granted during the years ended December 31, 2022 and December 31, 2021 are shown in the following table:

A summary of the Company’s assumptions used in determining the fair value of the stock options granted during the years ended December 31, 2023 and 2022 are shown in the following table:

Risk-free interest rate 3.5 % - 4.7 %

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employees that meet minimum age requirements.

Beginning in April 2021, the Company matches 100 % of the employees’ contribution up to 4 % of the employees’ wages and 50 % on the next 2 %.

Prior to this change, the Company matched 50 % of the employees’ contribution up to 6 % of the employees’ wages.

The Company matches 100 % of the employees’ contribution up to 4 % of the employees’ wages and 50 % on the next 2 %.

Plan also provides for an additional 1 % to 3 % at the Company’s discretion.

For the years ended December 31, 2022, 2021 and 2020, Company contributions totaled $ 6,407 , $ 4,477 , and $ 3,379 respectively, for all global plans.

The expense is included in cost of sales, selling, general and administrative expense and research and development expense on the consolidated statement of operations and comprehensive income based upon the classification of the employee.

Company contributions totaled $ 5,836 , $ 6,407 , and $ 4,477 for all global plans during the years ended December 31, 2023, 2022 and 2021, respectively.

The expense is included in cost of sales, selling, general and administrative expense and research and development expense on the consolidated statement of operations and comprehensive (loss) income based upon the classification of the employee.

Stockholders’ equity

Initial Public Offering

The Company also incurred offering expenses totaling $ 4,778 in addition to the underwriting discounts and commissions.

Offering expenses of $ 1,327 were paid in 2020 and $ 3,451 were paid in 2021.

The Company is the sole managing member of, has a majority economic interest in, has the sole voting interest in, and controls the management of BV LLC.

As a result, the Company consolidates the financial results of BV LLC and reports a non-controlling interest for the interest not held by the Company.

IPO Transactions

In connection with the IPO, the Company completed the following transactions (“Transactions”).

(ii) exchange all of the existing membership interests in BV LLC (“Original BV LLC Owners”) for new LLC Interests;

and (iii) appoint Bioventus Inc.

as the sole managing member of BV LLC.

• Amended and restated the Bioventus Inc.

certificate of incorporation to, among other things, (i) provide for an increase in the authorized shares of Class A common stock;

and (iii) provide for undesignated preferred stock.

The only assets held by the Former LLC Owners were 31,838,589 LLC Interests and a corresponding number of shares of Class B common stock.

The Company issued 15,786,737 shares of Class B common stock to the Original BV LLC Owners.

The financial statements for periods prior to the IPO and Transactions have been adjusted to combine the previously separate entities for presentation purposes.

Prior to the Transactions, Bioventus Inc.

had no operations.

Amendment and restatement of certificate of incorporation

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Shares of Class B common stock will be canceled on a one -for-one basis upon the redemption or exchange of any outstanding LLC Interests.

The Company must, at all times, maintain a one -to-one ratio between the number of outstanding shares of Class A common stock and the number of LLC Interests owned by the Company.

BV LLC recapitalization

As described in Note 1.

Organization , on February 16, 2021, the Company amended and restated the BV LLC Agreement to, among other things, (i) provide for the new LLC Interests;

On February 16, 2021, the Company amended and restated the BV LLC Agreement to, among other things, (i) provide for new LLC Interests;

(ii) exchange all of the then existing membership interests of the Original BV LLC Owners for new LLC Interests;

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as the sole managing member of BV LLC.

The BV LLC Agreement also provides that holders of LLC Interests may, from time to time, require the Company to redeem all or a portion of their LLC Interests for newly-issued shares of Class A common stock on a one -for-one basis.

The BV LLC Agreement provides that holders of LLC Interests may, from time to time, require the Company to redeem all or a portion of their LLC Interests for newly-issued shares of Class A common stock on a one -for-one basis.

The Company may elect to settle any such redemption in shares of Class A common stock or in cash.

The amendment also requires that the Company, at all times, maintain (i) a one -to-one ratio between the number of outstanding shares of Class A common stock and the number of LLC Interests owned by the Company and (ii) a one -to-one ratio between the number of shares of Class B common stock owned by the Continuing LLC Owner and the number of LLC Interests owned by the Continuing LLC Owner.

Initial public offering

In connection with the IPO, the Company issued 15,786,737 shares of Class B common stock to the Original BV LLC Owners.

As described in Note 1.

Organization , the Company acquired, by merger the Former LLC Owners, for which the Company issued 31,838,589 shares of Class A common stock as merger consideration.

In connection with the IPO Merger, the Company canceled 15,786,737 shares of Class B common stock and the Company received 15,786,737 of LLC Interests.

Noncontrolling interest

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The following table sets forth the computation of basic and diluted loss per share of Class A common stock for the periods presented (amounts in thousands, except share and per share data):

December 31, 2022 February 16, 2021 through December 31, 2021

Net loss $ ( 213,391 ) $ ( 16,391 )

December 31, 2023 December 31, 2022 February 16, 2021 through the Year Ended December 31, 2021

Net loss from continuing operations $ ( 121,196 ) $ ( 144,651 ) $ ( 14,523 )

Net loss attributable to noncontrolling interests —

continuing operations 24,458 40,732 9,789

Net loss attributable to Bioventus Inc.

Class A common stockholders $ ( 158,704 ) $ ( 6,602 )

Weighted-average shares of Class A common stock outstanding -

common stockholders — continuing operations $ ( 96,738 ) $ ( 103,919 ) $ ( 4,734 )

Net loss from discontinued operations $ ( 74,429 ) $ ( 68,740 ) $ ( 1,868 )

Net loss attributable to noncontrolling interests —

discontinued operations 14,937 13,955 —

Net loss attributable to Bioventus Inc.

common stockholders — discontinued operations $ ( 59,492 ) $ ( 54,785 ) $ ( 1,868 )

Weighted-average shares of Class A common stock

outstanding - basic and diluted 62,647,554 61,389,107 45,472,483

Net loss per share of Class A common stock, from

continuing operations, basic and diluted $ ( 1.54 ) $ ( 1.70 ) $ ( 0.11 )

Net loss per share of Class A common stock, from

discontinued operations, basic and diluted ( 0.95 ) ( 0.89 ) ( 0.04 )

Net loss per share of Class A common stock,

basic and diluted $ ( 2.49 ) $ ( 2.59 ) $ ( 0.15 )

Net loss per share of Class A common stock, basic and diluted $ ( 2.59 ) $ ( 0.15 )

Shares of Class B common stock do not share in the losses of the Company and are therefore not participating securities.

1 unchanged sentence

The following number of weighted-average potentially dilutive shares as of December 31, 2023 and 2022 were excluded from the calculation of diluted loss per share because the effect of including such potentially dilutive shares would have been antidilutive upon conversion:

December 31, 2022 February 16, 2021 through December 31, 2021

December 31, 2023 Year Ended

December 31, 2022 February 16, 2021 through the Year Ended December 31, 2021

LLC Interests held by Continuing LLC Owner (a)

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Liabilities associated from restructuring costs are recorded in accrued liabilities on the consolidated balance sheets.

The Company announced a restructuring plan in December 2022 (“2022 Restructuring Plan”) that is intended to align the Company’s organizational and management cost structure to improve profitability and cash flow.

The Company expects to incur $ 4,000 to $ 5,000 of pre-tax costs under the 2022 Restructuring Plan primarily consisting of employee severance and additional expenses for third-party and other related costs.

Pre-tax charges recognized during the year ended December 31, 2022 totaled $ 4,581 .

The Company announced a restructuring plan in December 2022 (“2022 Restructuring Plan”) that was intended to align the Company’s organizational and management cost structure to improve profitability and cash flow.

The 2022 Restructuring Plan primarily consisted of employee severance and additional expenses for third-party and other related costs.

Pre-tax charges recognized during the year ended December 31, 2023 and 2022 totaled $ 793 and $ 4,581 , respectively.

The 2022 Restructuring Plan is complete.

The Company adopted restructuring plans for businesses acquired to reduce headcount, reorganize management structure and consolidate certain facilities during the second half of 2021 (“2021 Acquisition Restructuring Plan”) and during the first quarter of 2022 (“2022 Acquisition Restructuring Plan”).

The Company planned total pre-tax charges for the 2021 Acquisition Restructuring Plan to be $ 3,500 , of which $ 719 and $ 2,487 was recognized during the year ended December 31, 2022 and 2021, respectively.

Expected pre-tax charges related to the 2022 Acquisition Restructuring Plan is $ 2,300 , of which $ 1,479 was recognized during the year ended December 31, 2022.

The Company planned total pre-tax charges for the 2021 Acquisition Restructuring Plan and the 2022 Acquisition Restructuring Plan were $ 3,500 and $ 2,300 , respectively.

There was nominal activity related to the 2021 Acquisition Restructuring Plan during the year ended December 31, 2023, and $ 719 and $ 2,487 was recognized during the years ended December 31, 2022 and 2021, respectively.

The 2021 Acquisition Restructuring Plan is complete.

Costs attributable to the 2022 Acquisition Restructuring Plan totaled $ 84 and $ 1,479 during the years ended December 31, 2023 and 2022, respectively.

The Company’s restructuring charges and payments for plans related to businesses acquired comprised of the following:

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International 4,565 ( 1,454 ) ( 23 )

(Loss) income before income taxes $ ( 263,899 ) $ 7,620 $ 15,914

(Loss) income before income taxes - continuing operations $ ( 121,111 ) $ ( 189,025 ) $ 9,488

The provision for income taxes on operations consists of the following for the years ended December 31:

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Total deferred ( 2,377 ) ( 46,666 ) ( 9,758 )

Total income tax (benefit) expense $ ( 50,508 ) $ ( 1,966 ) $ 1,192

Total income tax expense (benefit) - continuing operations $ 85 $ ( 44,374 ) $ ( 1,966 )

Cash paid for income taxes totaled $ 2,955 , $ 1,518 and $ 7,456 for the years ended December 31, 2023, 2022 and 2021, respectively.

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GAAP impairment — ( 3.5 ) —

Stock compensation ( 4.0 ) — —

Other 2.4 4.4 2.6

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Deferred tax assets:

Capital loss carryforward $ 17,407 $ —

Interest 13,374 7,020

Net operating losses and tax credit carryforwards 10,792 18,419

Tax credits 1,567 1,759

Investment in Bioventus LLC 1,221 —

Transaction costs 975 980

Accrued liabilities 168 862

Stock-based compensation 947 681

Research & Development 69 63

Fixed assets 18 30

Interest 7,020 —

Accrued liabilities 7 6

Other 470 571

Gross deferred tax assets 41,200 19,703

Gross deferred tax asset 46,847 29,529

Valuation allowance ( 46,007 ) ( 2,536 )

2 unchanged sentences

Investment in Bioventus LLC — 26,814

Acquired intangible 93,798 4,157

Operating lease assets 162 726

192,665 150,420

Intangibles 2,053 2,427

Gross deferred tax liability 2,053 29,241

Net deferred tax liability $ 1,213 $ 2,248

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The net change in the valuation allowance was $ 43,471 .

The valuation allowance at December 31, 2022 and December 31, 2021 principally relates to recognizing a full valuation allowance against foreign NOLs.

The valuation allowance at December 31, 2023 is primarily against NOLs, interest carryover and capital loss carryforward.

The valuation allowance at December 31, 2022 principally relates to recognizing a full valuation allowance against foreign NOLs.

Beginning in 2022, the Tax Cuts and Jobs Act of 2017 eliminated the option to deduct research and development expenditures immediately in the year incurred and requires companies to amortize such expenditures over five or fifteen years for tax purposes, depending on whether the activities were incurred in the United States or outside of the United States.

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Short-term lease cost (a)

Financing lease cost:

Amortization of finance lease assets 1,175 36 35

Interest on lease liabilities 823 4 1

Total lease cost $ 6,759 $ 5,288 $ 4,182

2 unchanged sentences

2023 2022 2021

Cash paid for amounts included in measurement of lease liabilities:

Operating cash flows from operating leases $ 4,516 $ 4,374 $ 3,616

Right-of-use assets obtained in exchange for operating lease obligations $ 4,792 $ 4,665 $ 1,497

Operating cash flows from financing leases $ 793 $ 5 $ 5

Financing cash flows from finance leases $ 506 $ 53 $ 37

Right-of-use assets obtained in exchange for lease obligations:

Operating lease obligations $ 344 $ 4,792 $ 4,665

Finance lease obligations $ 15,567 $ — $ 114

Supplemental balance sheet and other information related to operating leases were as follows for the years ended December 31:

3 unchanged sentences

Total operating lease liabilities $ 14,630 $ 17,907

Financing leases

Property, plant and equipment - net $ 14,279 $ 128

Finance lease liabilities - current $ 759 $ 55

Finance lease liabilities - noncurrent 10,386 76

Total financing lease liabilities $ 11,145 $ 131

Weighted average remaining lease term (years):

Weighted average remaining lease term (years) for operating leases 4.8 5.6

Weighted average discount rate for operating leases 4.8 % 4.7 %

Maturities of operating lease liabilities as of December 31, 2022 were as follows:

Operating leases 3.8 4.8

Finance leases 9.3 2.4

Weighted average discount rate:

Operating leases 4.7 % 4.8 %

Finance leases 8.1 % 3.3 %

Future maturities of operating and finance lease liabilities are as follows:

Operating leases Finance Leases

2024 $ 4,565 $ 1,623

2025 4,078 1,617

2026 3,245 1,630

2027 2,619 1,662

2028 1,497 1,696

Thereafter — 7,753

Total future lease payments (a)

Total undiscounted cash flows 16,004 15,981

Less imputed interest ( 1,374 ) ( 4,836 )

Present value of future lease payments $ 14,630 $ 11,145

(a) The above table does not reflect the future maturities of a lease entered into during November 2021 in which the Company agreed to lease a facility to expand its manufacturing operations and relocate from its current leased facilities in Memphis, Tennessee.

The lease term is 10 years and partial occupancy began January 2023.

Expected payments of the partial lease is as follows for the next five years and thereafter:

$ 842 , $ 939 , $ 958 , $ 977 , $ 997 and $ 5,662 .

Governmental and legal contingencies

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The Company’s standard practice is to cooperate with regulators and investigators in responding to inquiries.

The Company is presently unable to predict the duration, scope, or result of the following matters.

The Company is presently unable to predict the duration, scope, or result of these matters.

As such, the Company is presently unable to develop a reasonable estimate of a possible loss or range of losses, if any, related to these matters.

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In the opinion of management, the outcome of any existing claims and legal or regulatory proceedings, other than the specific matters described below, if decided adversely, is not expected to have a material adverse effect on the Company's business, financial condition, results of operations, or cash flows.

Bioventus shareholder litigation

Bioventus stockholder litigation

On January 12, 2023, the Company and certain of its current and former directors and officers were named as defendants in a putative class action lawsuit filed in the Middle District of North Carolina, Ciarciello v.

Bioventus, Inc.

Bioventus, Inc., No.

1:23– CV – 00032-CCE-JEP (M.D.N.C.

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The complaint seeks damages in an unspecified amount.

The case is in its early stages, and a lead plaintiff has not yet been appointed.

The Company believes the claims alleged lack merit and intends to file a motion to dismiss.

The outcome of the litigation is not presently determinable, and any loss is neither probable nor reasonable estimable.

Bioness patent litigation

On June 15, 2022, the Company, through its subsidiary Bioness, filed a lawsuit in the United States District Court for the Eastern District of Virginia against Aretech, LLC (“Aretech”) alleging infringement by Aretech of various patents related the Bioness’ Vector Gait and Safety Support System ® .

On August 8, 2022, Aretech filed an answer to the lawsuit denying infringement and asserting various affirmative defenses and counterclaims to the Bioness complaint.

Bioness filed a motion to dismiss the defendant’s counterclaims on September 28, 2022.

In response to Bioness’ motion to dismiss the counterclaims, on October 19, 2022, Aretech filed an amended answer and counterclaims.

On November 16, 2022, Bioness filed a partial motion to dismiss certain of the amended counterclaims.

On January 23, 2023, the court granted-in-part Bioness’ motion dismissing Aretech’s antitrust and inventorship-related counterclaims, but allowed certain of Aretech’s counterclaims to proceed.

The parties are presently finalizing a joint discovery plan and timeline.

On March 23, 2023 the parties entered into a settlement and license agreement that provides for a payment by Aretech to the Company of $ 1,500 to resolve all claims in the litigation.

The agreement also provides cross licenses to the parties for certain of their respective patents relevant to the claims asserted in the litigation.

Misonix stockholder

On September 15, 2021, a purported stockholder of Misonix filed an action in the United States District Court for the Eastern District of New York, captioned Stein v.

Misonix, Inc., et al., Case No.

2:21-cv-05127 (E.D.N.Y.) (the “Stein Complaint”).

The Stein Complaint named Misonix and members of its board of directors as defendants.

The Stein Complaint was dismissed on April 6, 2022.

On September 16, 2021, a purported stockholder of Misonix filed an action in the United States District Court for the Southern District of New York, captioned Ciccotelli v.

Misonix, Inc.

et al., Case No.

1:21-cv-07773 (S.D.N.Y.) (the “Ciccotelli Complaint”) against Misonix, members of its board of directors, the Company, and its subsidiaries, Merger Sub I and Merger Sub II, as defendants.

Plaintiff voluntarily dismissed the Ciccotelli Complaint on November 10, 2021.

On October 12, 2021, another purported stockholder of Misonix filed an action in the United States District Court for the Eastern District of New York, captioned Rubin v.

Misonix, Inc.

et al., Case No.

1:21-cv-05672 (S.D.N.Y.) (the “Rubin Complaint”) and on October 15, 2021, another purported stockholder of Misonix filed an action in the United States District Court for the Southern District of New York, captioned Taylor v.

Misonix, Inc.

et al., Case No.

1:21-cv-08513 (S.D.N.Y.) (the “Taylor Complaint”).

The Rubin Complaint and the Taylor Complaint name Misonix and members of its board of directors as defendants.

Plaintiffs voluntarily dismissed the Rubin and Taylor Complaints on January 21, 2022 and February 18, 2022, respectively.

The complaints asserted claims under Section 14(a) and Section 20(a) of the Exchange Act and SEC Rule 14a-9, challenging the adequacy of disclosures in the proxy statement/prospectus filed with the SEC on September 8, 2021 or the Definitive Proxy Statement filed with the SEC on September 24, 2021, regarding Misonix and/or Bioventus’ projections and J.P.

Morgan’s financial analysis.

The complaints had sought, among other relief, (i) injunctive relief preventing the parties from proceeding with the merger;

(ii) rescission in the event that the merger is consummated;

and (iii) an award of costs, including attorneys’ and experts’ fees.

Misonix former distributor

On April 12, 2023, the Court appointed Wayne County Employees’ Retirement System as lead plaintiff.

The plaintiff’s amended consolidated complaint was filed with the Court on June 12, 2023.

On July 17, 2023, the defendants filed a motion to dismiss the complaint raising a number of legal and factual deficiencies with the amended consolidated complaint.

In response to the defendants’ motion to dismiss, the lead plaintiff filed a second amended complaint on July 31, 2023.

The defendants moved to dismiss the second amended complaint on August 21, 2023, which the Court granted in part and denied in part on November 6, 2023.

The Court dismissed the plaintiff’s Securities Act claims, but allowed the plaintiff’s Exchange Act claims to proceed into discovery.

On October 4, 2023, certain of the Company’s current and former directors and officers were named as defendants in a derivative shareholder lawsuit (in which the Company is a nominal defendant) filed in the United States District Court for the District of Delaware, Grogan, on behalf of Bioventus Inc., v.

Reali, et.al., No.

1:23-CV-01099-RGA (D.

The complaint asserts violations of Section 14(a) of the Exchange Act, breaches of fiduciary duties and related state law claims, and a claim for contribution, and generally alleges the same purported misconduct as alleged in the Ciarciello case.

On January 12, 2024, the Court agreed to stay this case pending resolution of the Ciarciello case.

On February 9, 2024, another plaintiff filed a derivative shareholder lawsuit against certain of the Company’s current and former directors and officers (in which the Company is a nominal defendant) filed in the United States District Court for the District of Delaware, Sanderson, on behalf of Bioventus Inc., v.

Reali, et.al., No.

1:24-cv-00180-RGA (D.

Like the Grogan case, this case asserts violations of Section 10(b) of the Exchange Act, breaches of fiduciary duties and related state law claims, and a claim for contribution, and generally alleges the same purported misconduct as alleged in the Ciarciello case.

The parties are in discussions to consolidate the two derivative matters and stay them on terms similar to those entered in the Grogan case.

The Company believes the claims alleged in each of the above matters lack merit and intends to defend itself vigorously.

The outcome of these matters is not presently determinable, and any loss is neither probable nor reasonably estimable.

Misonix former distributor litigation

On March 23, 2017, Misonix’s former distributor in China, Cicel (Beijing) Science & Technology Co., Ltd., filed a lawsuit against Misonix and certain of its officers and directors in the United States District Court for the Eastern District of New York.

7 unchanged sentences

On July 18, 2022, Cicel voluntarily dismissed the remaining claim for trade secret theft and later filed an appeal to the United States Court of Appeals for the Second Circuit.

The Company believes that it has various legal and factual defenses to these claims and intends to vigorously defend the appeal of the lower court’s summary judgment rulings in its favor.

Bioness shareholder

Prior to closing the Bioness Acquisition, Bioness had been named as a defendant in a lawsuit, for which the Company is indemnified under the indemnification provisions contained in the Bioness Merger Agreement.

The case relates to an action brought in February 2021 in the Delaware State Court of Chancery by a former minority shareholder and director of Bioness, seeking a temporary restraining order contesting the acquisition of Bioness.

While the complaint to block the Bioness acquisition was dismissed by the court, a separate action was brought against the Company under the indemnification provisions of the Bioness Certificate of Incorporation to recover attorney fees and other expenses totaling approximately $ 3,000 incurred by the director and shareholder in connection with the matter.

On August 19, 2021, the court issued a ruling granting, in part, plaintiff’s motion for summary judgment, awarding plaintiff attorney’s fees and related expenses incurred in connection with performance of the plaintiff’s directorial duties, and denying fees and expenses incurred in a non-director capacity.

In its ruling, the court’s order also directed the parties to agree upon a process that will govern the payment of and challenges to plaintiff’s payment requests and required Bioness to pay 50 % of the demanded amount into escrow if more than 50 % of the total invoiced amount was in dispute.

Pursuant to the court’s order, to date, Bioness has paid approximately $ 1,300 into escrow.

On November 1, 2022, at a hearing before Delaware State Court of Chancery, the court ruled in favor of the former Bioness director awarding attorney’s fees in connection with the underlying pre-merger litigation and the advancement action in the amounts claimed, less approximately $ 50 .

On December 23, 2022, Bioness and the plaintiff entered into a settlement agreement resolving the matter for the aggregate sum of $ 2,500 payable to the plaintiff.

The settlement was satisfied by releasing the $ 1,300 previously paid by Bioness and held in escrow and by an additional payment of $ 1,200 .

Pursuant to the indemnification obligations under the Bioness Merger Agreement, this subsequent payment was made on behalf of Bioness on December 28.

2022, by the selling majority shareholder under that agreement.

The Company subsequently recovered the $ 1,300 paid into escrow from the selling Bioness shareholders pursuant an indemnification request under the Bioness Merger Agreement.

An order dismissing the case was entered by the court on January 27, 2023.

On February 8, 2022, the above referenced minority shareholder of Bioness filed another action in the Delaware State Court of Chancery in connection with the Company’s acquisition of Bioness.

On March 6, 2024, the Second Circuit Court of Appeals issued its ruling affirming the lower Court’s summary judgment in favor of Misonix in all respects.

Bioness stockholder litigation

On February 8, 2022, a minority shareholder of Bioness filed an action in the Delaware State Court of Chancery in connection with the Company’s acquisition of Bioness, Teuza, a Fairchild Technology Venture Ltd.

2022-0130 -SG.

This action names the former Bioness directors, the Alfred E.

5 unchanged sentences

A hearing on Bioness’ and other the defendant’s motions was held before the Court of Chancery on January 19, 2023.

The Court has not yet ruled on any of these motions.

The Company believes that there are various legal and factual defenses to the claims plaintiff made against us and intend to defend ourselves vigorously.

On April 27, 2023, the Court issued an order which, among other things, dismissed Bioventus from the cas e.

Other matters

On November 10, 2021, the Company entered into an asset purchase agreement for a hyaluronic acid (“HA”) product and made an upfront payment of $ 853 .

An additional payment of $ 853 was made in 2022 upon the transfer of certain seller customer data.

If the Company is able to obtain a Medical Device Regulation Certification for the product, $ 1,707 will be paid to the seller within five days.

The Company is required to pay royalties through 2026 of 5.0 % on the first $ 569 in sales and 2.5 % thereafter.

On August 23, 2019, the Company was assigned a third-party license on a product currently in development and the Company is subject to a 3 % royalty on certain commercial sales, or a nominal minimum amount per quarter, beginning in 2023.

If the Company is able to obtain a Medical Device Regulation Certification for the product $ 1,707 (the “Milestone Payment”) will be paid to the seller within five days .

The Company is also required to pay royalties if certifications are achieved before December 31, 2024.

Royalties will be payable through 2026 of 5.0 % on the first $ 569 in sales and 2.5 % thereafter.

On March 8, 2023, the parties amended the agreement under which the Milestone Payment was reduced to $ 1,418 , of which $ 709 was paid on January 31, 2024, and the remainder is due upon receipt of the Medical Device Regulation Certification for the product provided that is obtained prior to December 31, 2024.

As a result, the Company recorded an intellectual property intangible asset totaling $ 709 for the initial payment.

On May 29, 2019, the Company and the Musculoskeletal Transplant Foundation, Inc.

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The fair values of the LOCs reflect the amount of the underlying obligation and are subject to fees payable to the issuers, competitively determined in the marketplace.

As of December 31, 2022 and 2021, the Company had one LOC outstanding for a nominal amount.

As of December 31, 2023 the Company had three LOCs outstanding for $ 1,800 and as of December 31, 2022, the Company had one LOC outstanding for a nominal amount.

The Company currently maintains insurance for risks associated with the operation of its business, provision of professional services and ownership of property.

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and to all foreign countries based on the legal entity from which the sale originated.

The following table presents the Company’s net sales disaggregated by major products (“Vertical”) within each segment as follows for the years ended December 31:

The following table presents the Company’s net sales disaggregated by major products within each segment as follows for the years ended December 31:

2023 2022 2021

14 unchanged sentences

The Company’s products are primarily sold to orthopedists, musculoskeletal and sports medicine physicians, podiatrists, neurosurgeons and orthopedic spine surgeons, as well as to their patients.

The Company does not disclose segment information by asset as the Chief Operating Decision Maker (“CODM”) does not review or use it to allocate resources or to assess the operating results and financial performance.

The Company does not disclose segment information by asset, nor does it disclose transactions between reportable segments, as the CODM does not review or use it to allocate resources or to assess the operating results and financial performance.

Transactions between reportable segments are executed in accordance with our transfer pricing arrangements and are eliminated in consolidation and not presented in the measures below.

Segment adjusted EBITDA is the segment profitability metric reported to the Company’s CODM for purposes of decisions about allocation of resources to, and assessing performance of, each reportable segment.

7 unchanged sentences

Acquisition and related costs ( 5,694 ) ( 21,731 ) ( 22,964 )

Remeasurement gain on equity method investment 23,709 — ( 6,172 )

Restructuring and succession charges ( 2,331 ) ( 7,453 ) ( 3,717 )

Equity compensation ( 2,722 ) ( 17,585 ) 4,512

COVID-19 benefits, net — — 4,123

Equity loss in unconsolidated investments ( 1,003 ) ( 1,868 ) ( 467 )

Foreign currency impact ( 250 ) ( 132 ) 117

Financial restructuring costs ( 7,291 ) — —

Impairments of assets ( 78,615 ) ( 10,285 ) —

Impairment of goodwill — ( 124,697 ) —

Asset impairment charges ( 10,285 ) — —

Loss on disposal of a business ( 1,539 ) — —

Impairments related to variable interest entity — — ( 7,043 )

1 unchanged sentence

(Loss) income before income taxes $ ( 121,111 ) $ ( 189,025 ) $ 9,488

Subsequent events

CartiHeal Deconsolidation

As previously discussed, the Company consolidated CartiHeal on July 12, 2022 and reported the acquisition in its Quarterly Report on Form 10-Q filed by the Company with the SEC on November 21, 2022.

Discontinued operations

On February 27, 2023 the Company reached a Settlement Agreement with the Former Securityholders of CartiHeal that resulted in the transfer of 100 % of Company’s shares in CartiHeal to a Trustee.

Refer to Note 4.

Acquisitions and investments for additional information regarding the acquisition of CartiHeal.

The First Paper Milestone under the Option Agreement occurred on February 13, 2023, triggering an obligation of the Company to make the first $ 50,000 payment, plus applicable interest, under the Option Agreement.

On February 27, 2023, the Company entered into a settlement agreement (the “Settlement Agreement”) with Elron Ventures Ltd.

(“Elron” and together with the Company, the “Parties”) as representative of CartiHeal’s selling securityholders under the Option Agreement collectively, the “Former Securityholders”).

Pursuant to the Settlement Agreement, Elron, on behalf of the Former Securityholders, have agreed to forbear from initiating any legal action or proceedings relating to non-payment of any obligations arising under the Option Agreement during a period of 30 calendar days (the “Interim Period”) in exchange for (i) a one-time non-refundable amount of $ 10,000 and (ii) a one-time non-refundable payment of $ 150 to Elron to be used in accordance with the expense fund provisions of the Option Agreement.

The Interim Period expired on March 29, 2023 and the Company did not exercise its right to extend the Interim Period.

Upon execution of the Settlement Agreement, the Company transferred 100 % of its shares in CartiHeal to a trustee (the “Trustee”) for the benefit of the Former Securityholders.

This transfer was irrevocable, unless and until the Former Securityholders received the entire amount of the aggregate purchase price and corresponding milestones and any interest to be accrued thereon in accordance with the provisions of the Option Agreement prior to the expiration of the Interim Period.

The Company had no ownership interest and no voting rights during the Interim Period.

Accordingly, the Company concluded that upon execution of the Settlement Agreement, the Company ceased to control CartiHeal for accounting purposes, and therefore, has deconsolidated CartiHeal (the “Deconsolidation”, or “Disposal”) effective February 27, 2023.

The Company also concluded that this disposal will be treated as a discontinued operation.

The loss upon disposal is estimated to be $ 60,600 and will be recorded within loss from discontinued operations due at closing.

Because the Company was not able to find a financing solution to fund the payment obligations under the Option and Equity Purchase Agreement on terms the Company believes to be favorable to it and its shareholders, the Company elected to allow the Interim Period to expire on March 29, 2023.

The Company hopes to continue to explore opportunities to reacquire CartiHeal in a manner consistent with its financial objectives, but can give no assurance that the Company will be able to obtain the necessary financing or negotiate acceptable terms to reacquire CartiHeal and its assets.

During January and February 2023, the Company borrowed $ 49,000 on its Revolver for working capital needs.

However, on the Closing Date of the amendment to the Amended 2019 Credit Agreement, as part of the closing conditions, the Company repaid $ 20,000 of these borrowings.

Additionally, the Company paid $ 1,250 in closing fees, and will be required to pay an additional $ 600 by December 31, 2023 unless the Total Net Leverage Ratio as at September 30, 2023 is below 5.25 to 1.00.

Acquisitions and divestitures for further details concerning the CartiHeal Settlement Agreement and its deconsolidation from the Company’s financial statements.

CartiHeal had no sales for the year ended December 31, 2022 and December 31, 2023.

The following table summarizes CartiHeal’s major classes of assets and liabilities as reported on the consolidated balance sheets as of December 31, 2022 as the balances were fully deconsolidated as of December 31, 2023:

December 31, 2022

Carrying amounts of major classes of assets included as part of discontinued operations

Restricted cash 23

Other receivables 350

Inventory 642

Prepaid and other current assets 134

Current assets attributable to discontinued operations 2,777

Property and equipment, net 191

Goodwill 6,297

Intangible assets, net 398,873

Operating lease assets 618

Other assets 15

Long-term assets attributable to discontinued operations 405,994

Total assets attributable to discontinued operations $ 408,771

Carrying amounts of major liabilities included as part of discontinued operations

Accounts payable $ 852

Accrued liabilities 384

Current portion of deferred consideration 117,615

Other current liabilities 236

Current liabilities attributable to discontinued operations 119,087

Deferred income taxes 79,863

Deferred consideration 79,269

Contingent consideration 67,251

Other long-term liabilities 2,528

Long-term liabilities attributable to discontinued operations 228,911

Total liabilities attributable to discontinued operations $ 347,998

The following table summarizes the major income and expense line items of these discontinued operations, as reported in the consolidated statements of operations for the years ended December 31:

2023 2022 2021

Selling, general and administrative expense $ 1,728 $ 472 $ —

Research and development expense 396 2,087 —

Change in fair value of contingent consideration (a)

1,710 5,350 —

Depreciation and amortization (a)

4,264 11,405 —

Impairments of assets — 64,500 —

Operating loss from discontinued operations ( 8,098 ) ( 83,814 ) —

Interest expense, net (a)

4,889 13,774 —

Other expense (income) (b)

61,442 ( 22,714 ) 1,868

Other expense (income) 66,331 ( 8,940 ) 1,868

Loss before income taxes ( 74,429 ) ( 74,874 ) ( 1,868 )

Income tax benefit, net — ( 6,134 ) —

Net loss from discontinued operations ( 74,429 ) ( 68,740 ) ( 1,868 )

Loss attributable to noncontrolling interest —

discontinued operations 14,937 13,955 —

Net loss attributable to Bioventus Inc.

discontinued operations $ ( 59,492 ) $ ( 54,785 ) $ ( 1,868 )

(a) Depreciation and amortization, the change in fair value of contingent consideration and interest expense represent the significant operating non-cash items of discontinued operations.

(b) Other expense includes the $ 60,639 loss on deconsolidation, of which $ 10,150 was attributable to non-refundable payments.

Total investing cash outflows included these non-refundable payments and $ 1,356 cash on hand at disposal.

Subsequent events

As disclosed in Note 5.

Financial Instruments , the Company amended the 2019 Credit Agreement on January 18, 2024 to further modify certain financial covenants applicable to borrowings under the 2019 Credit Agreement.

Financial instruments .

Changes in and Disagreements with Accountants on Accounting and Financial Disclosures.

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 8. Financial Statements and Supplementary Data