What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-12 compared with 2025-08-14 · 192 added, 185 removed, 227 unchanged (62% of the section changed)

9 unchanged sentences

These complications include infection, device migration, erosion, implant rejection, non-union of implants, fibrosis and scar formation.

We estimate that in 2024, more than 700,000 surgical procedures were performed annually in the United States involving the implantation of medical devices such as pacemakers, defibrillators, neurostimulators or tissue expanders for breast reconstruction.

This number has been driven by advances in medical device technologies, reimbursement models focused on patient outcomes, and an aging population with a growing incidence of comorbidities, including diabetes, obesity and cardiovascular and peripheral vascular diseases.

These comorbidities can exacerbate various immune responses and contribute to other complications upon device implant.

Our products are targeted to address unmet clinical needs with the goal of promoting healthy tissue formation and avoiding complications associated with medical device implants, such as scar tissue formation, capsular contraction, erosion, migration and infection.

We currently focus on two priority markets – Device Protection and Women’s Health.

In Device Protection, we sell EluPro, a unique bioenvelope designed to mitigate cardiac implantable electronic device complications including infection, device migration and erosion.

As more fully described below, on October 1, 2025, we sold substantially all of the assets that are related to our business of researching, developing, administering, operating, commercializing, manufacturing, selling and marketing our cardiac implantable electronic device (“CIED”) products, including CanGaroo® and EluPro™, to Boston Scientific Corporation (“BSC”) and Cardiac Pacemakers Inc (“CPI) for an aggregate purchase price of up to $88 million in cash.

EluPro is a unique bioenvelope designed to mitigate cardiac implantable electronic device complications including, device migration, erosion and bacterial colonization that can lead to infection.

The bioenvelope features a biomatrix comprised of extracellular matrix, which supports healthy wound healing and may facilitate re-operative procedures by reducing scar formation and fibrosis.

Additionally, EluPro is embedded with the powerful antibiotics rifampin and minocycline, which are gradually released into the surrounding tissue over several weeks post-implantation to provide antimicrobial protection.

Currently, EluPro is the only drug-eluting biomatrix (“DEB”) offering in the U.S.

implantable electronic device protection market.

Alongside EluPro, we market the CanGaroo bioenvelope, our first generation product, which uses the same biomatrix but does not contain antibiotics.

In Women’s Health, we have developed both patented and proprietary technologies, culminating in the creation of SimpliDerm—a novel biological matrix that leverages the inherent science of natural healing processes.

SimpliDerm’s design uses human-based hydrated acellular dermal matrix (“ADM”) with heightened structural integrity and superior handling capabilities, which may mitigate inflammation and enhance tissue incorporation, leading to a better healing experience as compared to other ADM products.

We believe that these acellular dermal matrices represent an ideal choice for tissue repair and reconstruction, finding applications in fields such as breast reconstruction, sports medicine, hernia repair and trauma reconstruction.

With respect to pipeline products, we plan to expand our DEB offerings beyond EluPro and are pioneering DEBs to help solve problems unaddressed by available options.

We also intend to leverage our DEB platform technology by developing and commercializing products for markets with similar unmet needs, including breast reconstruction and neurostimulation.

We sell EluPro and CanGaroo in the United States using our direct sales force and our commercial partner, Boston Scientific, which acts as a sales agent and gives us access to approximately 900 sales representatives and clinical specialists to further expand our footprint and accelerate our sales.

Our primary customers are electrophysiologists, cardiac surgeons and neurosurgeons.

Our direct sales force is focused on gaining additional market access and driving market penetration, not only by selling our products, but also, where appropriate, by managing our commercial partners and providing technical assistance for selling our products.

Our sales team provides the critical knowledge of the advantages that EluPro and CanGaroo provide for patients over those of our competitors.

We ship the product directly to hospitals.

Additionally, EluPro is embedded with the powerful antibiotics rifampin and minocycline, which are gradually released over several weeks post-implantation to provide antimicrobial protection.

The CanGaroo bioenvelope, our first generation bioenvelope product, utilizes the same biomatrix but does not contain antibiotics.

In connection with the sale to BSC and CPI, we entered into a transition services agreement pursuant to which we will provide certain paid post-closing transitional support services in connection with the transfer of the CIED Business.

We also entered into a non-competition agreement with respect to the CIED Business for five years and a transition services agreement pursuant to which we agreed to provide certain paid post-closing transitional support services to BSC and CPI in connection with the transfer of the CIED Business (generally for periods of 12 to 30 months).

Following the divestiture, Elutia continues to market and sell its biologic products, including SimpliDerm, a human-derived acellular dermal matrix used in soft tissue reconstruction, and its cardiovascular (“CV”) portfolio, which comprises ProxiCor, VasCure, and Tyke.

SimpliDerm is currently the key component of our Women’s Health segment, and the CV portfolio represents the commercial offerings of our Cardiovascular segment.

These products form our established commercial foundation and provide a revenue base that supports ongoing investment in next-generation innovation.

We are now focused on advancing our proprietary drug-eluting biomatrix (“DEB”) platform for use in surgical reconstruction and related applications.

This platform combines our expertise in biologics and localized drug delivery to address complications that lead to poor outcomes in reconstructive procedures.

Our first commercial product under this platform, EluPro, demonstrated the clinical potential of combining a biologic scaffold with antibiotic drug delivery to reduce device-related complications.

We believe the same foundational technology can be applied to broader reconstructive and soft tissue repair markets where biologic matrix products are widely used but where outcomes remain suboptimal due to causes of failure, such as infection, inflammation, and fibrosis.

Despite the broad use of biologic matrices, innovation in these fields has been limited over the past two decades.

Few meaningful product improvements have emerged, and clinical outcomes have been compromised by persistently high

complication rates.

Traditional biologic matrices provide only passive structural support and do not actively promote healing.

By incorporating therapeutic agents, our DEB products are designed to overcome these limitations by improving the biologic environment around implants, reducing the foreign body response, and lowering postoperative complication rates.

The clinical and economic need in these markets is substantial, reflecting both the volume of reconstructive surgery and the persistence of high complication rates.

For example, in implant-based breast reconstruction and complex abdominal wall repair, infection rates can exceed 15% to 20%, leading to frequent reoperations and hospital readmissions.

Each year, in the United States, there are approximately 162,000 post-mastectomy breast reconstruction procedures, and roughly one in three experiences a serious complication such as infection, capsular contracture, or implant loss.

Biologic matrices represent an estimated $1.5 billion U.S.

market and account for more than 60% of reconstruction spending, yet meaningful innovation has been limited and unmet medical need remains.

Our lead development programs, NXT-41 and NXT-41x, are designed as next-generation biologic scaffolds combined with local antibiotic delivery.

NXT-41 features a porcine-derived engineered matrix that provides superior handling, consistency, and incorporation compared to human-derived acellular dermal matrices.

In NXT-41x, drug is incorporated into the matrix, and rifampin and minocycline are released locally over extended periods, offering broad-spectrum antimicrobial protection against the pathogens most associated with implant infections, without systemic toxicity.

The objective is to materially reduce complications arising from contamination, biofilm formation, and inflammation while maintaining surgeon-preferred handling, flexibility, and soft-tissue reinforcement for implant support.

We believe Elutia is well-positioned to pioneer a new class of active, performance-enhancing biomatrices for reconstructive biosurgery, combining biologic innovation and localized pharmacologic activity to improve outcomes for patients at favorable economics for healthcare systems.

In Women’s Health, we continue to advance our patented and proprietary technologies, building on extensive experience in regenerative materials.

We developed and launched SimpliDerm, a human acellular dermal matrix (hADM), designed for superior structural integrity, handling, and consistency that leverages the body’s natural healing processes.

Its proprietary processing methods help preserve key biologic components and reduce immunogenicity, which may mitigate inflammation and enhance tissue incorporation, leading to improved healing compared with other human ADM products.

SimpliDerm complements our NXT-41 and NXT-41x pipeline programs within the reconstructive biosurgery portfolio.

These products address overlapping call points with reconstructive and plastic surgeons, who consider biologic matrices essential tools in surgical reconstruction.

SimpliDerm establishes and strengthens the commercial channel for NXT-41 and NXT-41x, while building relationships, surgeon experience, and organizational capabilities to support the introduction of our next-generation biologic and drug-eluting technologies.

We sell SimpliDerm through independent sales agents to plastic and reconstructive surgeons.

Additionally, in March 2023, we entered into an agreement with Sientra, a medical aesthetics company uniquely focused on plastic surgery, to expand the distribution of SimpliDerm.

In April 2024, the agreement was acquired by Tiger Aesthetics Medical (“Tiger”) in connection with their asset acquisition of Sientra.

Under the agreement terms, Elutia has granted Tiger certain non-exclusive rights in the United States to market, sell and distribute SimpliDerm.

This agreement with Tiger gives us access to approximately 50 sales representatives to further expand our footprint and accelerate our sales.

We also sell legacy products into the Cardiovascular market.

In Cardiovascular, we sell our specialized porcine small intestine submucosa, which is based on the same biomatrix used to make EluPro and CanGaroo, for use as an intracardiac and vascular patch as well as for pericardial reconstruction.

In addition, our TYKE product is designed for use in the neonatal patient population.

From May 2017 through March 2023, we sold these products directly to hospitals and other healthcare facilities primarily through our sales force and independent sales agents.

In April 2023, we entered into an exclusive distribution agreement with LeMaitre Vascular through which we sold these products in the United States.

On May 1, 2025, the exclusive distribution agreement terminated and we began selling these products directly to hospitals and other healthcare facilities through independent sales agents.

We produce all of our EluPro, CanGaroo and cardiovascular products at our manufacturing facility in Roswell, Georgia and stock inventory of raw materials, supplies and finished goods at this location.

To expand our distribution, in March 2023, we entered into a non-exclusive distribution agreement with Sientra, a medical aesthetics company focused on plastic surgery.

Subsequently, in April 2024, Tiger Aesthetics Medical (“Tiger”) assumed this agreement in connection with their acquisition of Sientra.

The agreement with Tiger was terminated by Elutia effective in October 2025.

We are now evaluating future commercial strategies to strengthen the Women’s Health channel and reassessing distribution approaches with the goal of achieving better alignment with reconstructive market priorities, including SimpliDerm, NXT-41, and NXT-41x.

SimpliDerm was historically processed at our Richmond, California facility, which was included in the divestiture of the Orthobiologics Business.

SimpliDerm is now supplied to Elutia through a long-term supply agreement with Berkeley Biologics, LLC (“Berkeley”).

In Cardiovascular, we market a portfolio of specialized porcine extracellular matrix products, including ProxiCor and VasCure, used for intracardiac and vascular repair as well as for pericardial reconstruction.

Our TYKE product is specifically designed for use in the neonatal patient population.

From May 2017 through March 2023, these products were sold directly to hospitals and other healthcare facilities through our sales force and independent sales agents.

In April 2023, we entered into an exclusive distribution agreement with LeMaitre Vascular for these products in the United States.

The agreement was terminated on April 30, 2025, and we resumed selling these products directly to hospitals and other healthcare facilities through independent sales agents.

Our supply chain strategy is designed to ensure the quality and continuity of our cardiovascular product manufacturing and distribution.

We rely on a single or limited number of suppliers for certain raw materials and supplies.

We have a long-term supply agreement with Cook Biotech, now owned by Evergen, the porcine tissue supplier of our raw materials for EluPro, CanGaroo and our cardiovascular products.

SimpliDerm was historically processed by us at our Richmond, California facility;

however, that facility was included with the divestiture of the Orthobiologics Business, and SimpliDerm is now provided to us through a long-term supply agreement with the purchaser of the Orthobiologics Business, Berkeley Biologics, LLC (“Berkeley”).

We intend to develop our own in-house capability for the production of certain components of EluPro as well as the potential internal production of current and future Women’s Health products.

To this end, in March 2025, we signed a lease for 26,598 square feet of production, laboratory and administrative space in Gaithersburg, Maryland and moved our executive offices to that location in May 2025.

We anticipate being able to internally produce certain components of EluPro in the fourth quarter of 2025.

We have focused much of our attention recently on EluPro, which was cleared for marketing by the FDA in June 2024 and is indicated for use with implantable electronic devices including cardiac and neurostimulator devices.

We believe the Company’s success is highly dependent on the successful commercialization, marketing and sale of EluPro, as well as the extension of our DEB technology into potential adjacent applications.

Furthermore, we believe the commercialization and marketing efforts with respect to EluPro will require significant investments in time and resources.

However, there can be no assurance that we will have or be able to obtain sufficient resources to make the necessary investments in order to increase the sales and market penetration of EluPro, or that if made, such investments will yield the results sought.

Discontinued Operations – Sale of Orthobiologics Business

We have a long-term supply agreement with Cook Biotech, now owned by Evergen, the supplier of our porcine extracellular matrix for our cardiovascular products.

We historically performed the minor finished goods conversion activities along with the stocking and distribution of the cardiovascular products at our manufacturing facility in Roswell, Georgia.

Our Roswell facility was acquired by BSC in connection with the sale of the CIED Business, and these logistics are now provided to us through a third-party logistics provider, ensuring uninterrupted supply.

In March 2025, we signed a lease for 26,598 square feet of production, laboratory and administrative space in Gaithersburg, Maryland and moved our executive offices to that location in May 2025.

We are currently using this space for administrative purposes along with development of NXT-41 and NXT-41x and anticipate using this facility for the commercial production of these products, to the extent marketing authorization is obtained.

Discontinued Operations - Sale of CIED Businesses

On September 8, 2025, Elutia executed an Asset Purchase Agreement (the “APA”) with Boston Scientific Corporation (“BSC”), a Delaware corporation, and Cardiac Pacemakers Inc.

(“CPI”), a Minnesota corporation (collectively with BSC, the “Buyers”).

On October 1, 2025, at the closing of the transactions contemplated by the APA, the Buyers purchased from Elutia substantially all of the assets that are related to our business of researching, developing, administering, operating, commercializing, manufacturing, selling and marketing its cardiac implantable electronic device (“CIED”) products, including its CanGaroo®, CanGaroo® RM, EluPro™ and CIED envelope products, including next generation CIED envelope products (collectively the “CIED Business”).

Prior to the divestiture, we sold EluPro and CanGaroo in the United States using our direct sales force and our commercial partner, BSC, which acted as a sales agent and gave us access to approximately 900 sales representatives and clinical specialists to further expand our footprint and accelerate our sales.

Our primary customers were electrophysiologists and neurosurgeons.

Our direct sales force was focused on gaining additional market access and driving market penetration, not only by selling our products, but also, where appropriate, by managing our commercial partners and providing technical assistance for selling our products.

Our sales team provided the critical knowledge of the advantages that EluPro and CanGaroo provide for patients over those of our competitors.

We shipped the product directly to hospitals.

The APA provides for an aggregate purchase price, subject to certain adjustments pursuant to the terms of the APA, of up to $88 million in cash, with $80.3 million (which included a preliminary inventory adjustment of $0.3 million) that was paid in cash to Elutia at closing of the transactions and $8 million that was deposited at the closing of the transactions in escrow for a period of twelve months, which is subject to potential reduction in the event of certain post-closing breaches of representations and warranties within the APA by Elutia.

The assets of the CIED Business constitute substantially all of the assets held in Elutia’s Device Protection segment.

The Buyers are only assuming certain liabilities related to performance of the contracts transferred in the APA.

As described in Note 2 to the condensed consolidated financial statements, the sale of the CIED Business is accounted for as Discontinued Operations for all periods presented in accordance with Accounting Standards Codification (“ASC”) 205-20, Discontinued Operations .

The related assets and liabilities of the CIED Business are classified as assets and liabilities of discontinued operations as of September 30, 2025 and December 31, 2024 in the condensed consolidated balance sheets and the results of operations from the CIED Business are reported as discontinued operations in the condensed consolidated statements of operations for the three and nine months ended September 30, 2025 and 2024.

Applicable amounts in the prior year have been recast to conform to this discontinued operations presentation.

Payoff and Termination of SWK Loan Facility

On October 1, 2025, in connection with and through the proceeds of the sale of the Company’s CIED Business described in Note 2 to the condensed consolidated financial statements, we fully repaid the SWK Loan Facility as required by the terms of the credit agreement.

As of such date, the outstanding principal, including the accrued exit fee, and accrued

interest totaled approximately $26.5 million.

The total payment by the Company to SWK in full satisfaction of the debt and termination of the credit agreement was $27.8 million.

Discontinued Operations - Sale of Orthobiologics Businesses

On November 8, 2023, we completed the sale of substantially all of the assets relating to our former Orthobiologics Business to Berkeley.

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The assets sold represent the entirety of our Orthobiologics segment.

In the sale, we received $14.6 million, and we may earn up to an additional $20 million, in the aggregate, in the form of earn-

out payments.

In the sale, we received $14.6 million, and we may earn up to an additional $20 million, in the aggregate, in the form of earn-out payments.

The earn-out payments are equal to 10% of the actual revenue earned by Berkeley in each of the five years after the closing of the sale from sales of specified Orthobiologics products under the purchase agreement (including improvements, modifications, derivatives and enhancements related to those products).

There have been no earn-out payments made to date.

Additionally, the purchase agreement provides for a customary indemnity holdback in the amount of $1.5 million to be retained by Berkeley for 24 months after close.

The indemnity holdback is available as a source of recovery for Berkeley for claims of indemnification under the purchase agreement, and some or all of the holdback may be retained by Berkeley if Berkeley is successful in asserting a claim or claims for indemnification against us.

Additionally, the purchase agreement provides for a customary indemnity holdback in the amount of $1.5 million to be retained by Berkeley for 24 months after closing.

In the purchase agreement, the Company has retained the liabilities arising out of the viable bone matrix (“VBM”) and FiberCel matters, as described in Note 10, both of which products were part of the Orthobiologics Business.

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We recognize revenue on the sale of our products.

Our Device Protection products are sold to hospitals and other healthcare facilities primarily through our direct sales force, commercial partners or independent sales agents.

Our Women’s Health products are sold directly to hospitals and other healthcare facilities through independent sales agents or through our distribution agreement with Tiger.

Our Women’s Health products are sold directly to hospitals and other healthcare facilities through independent sales agents, and until its termination in October 2025, through our distribution agreement with Tiger.

From April 2023 through April 2025, our cardiovascular products were sold through a distribution agreement with LeMaitre Vascular.

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We may, however, still experience more significant expense increases to the extent we expand our sales and marketing, product development and clinical and research activities.

As a result, we will need to generate significant net sales in order to achieve profitability.

As a result, we will need to generate significant net

sales in order to achieve profitability.

Below is a breakdown of our main expense categories and the related expenses incurred in each category:

Cost of Goods Sold

Our cost of goods sold relate to purchased raw materials and the processing and conversion costs of such raw materials consisting primarily of salaries and benefits, supplies, quality control testing and the manufacturing overhead incurred at our processing facility in Roswell, Georgia.

The Roswell facility has additional capacity, which if utilized,

would further leverage our fixed overhead.

Cost of goods sold also includes the amortization of intangibles generated from the CorMatrix Acquisition in 2017.

Our cost of goods sold relate to the purchase costs of the SimpliDerm finished goods and the purchased raw materials and minor finished good conversion costs required for the Cardiovascular products.

Cost of goods sold also includes the amortization of intangibles related to the Cardiovascular products generated from the CorMatrix Acquisition in 2017.

Sales and Marketing Expenses

Sales and marketing expenses are primarily related to our direct sales force, consisting of salaries, commission compensation, fringe benefits, meals and other expenses.

Auto and travel costs also contribute to sales and marketing expenses.

Outside of our direct sales force, we incur significant expenses relating to commissions to our CanGaroo and SimpliDerm commercial partners and independent sales agents.

Additionally, this expense category includes distribution costs as well as market research, trade show attendance, advertising and public relations related to our products, and customer service expenses.

Sales and marketing expenses are primarily related to the sales commissions of our SimpliDerm and Cardiovascular independent sales agents.

Additionally, this expense category includes distribution and customer service costs as well as market research, trade show attendance, advertising and public relations related to our products.

General and Administrative Expenses

General and administrative (“G&A”) expenses consist primarily of compensation, consulting, legal, human resources, information technology, accounting, insurance and general business expenses.

Our G&A expenses have increased as a result of operating as a public company, especially as a result of hiring additional personnel and incurring greater director and officer insurance premiums, greater investor relations costs, and additional costs associated with accounting, legal, tax-related and other services associated with maintaining compliance with exchange listing and SEC requirements.

Our G&A expenses have increased as a result of operating as a public company, in particular as a result of hiring additional personnel and incurring greater director and officer insurance premiums, greater investor relations costs, and additional costs associated with accounting, legal, tax-related and other services associated with maintaining compliance with exchange listing and SEC requirements.

Research and Development Expenses

Research and development (“R&D”) expenses consist primarily of salaries and fringe benefits, laboratory supplies, clinical studies and outside service costs.

Over the last several years, our product development efforts have primarily related to activities associated with the development of EluPro, our initial DEB product offering, which gained FDA clearance in June 2024.

Future development efforts are expected to focus on (i) expanding our EluPro offering with additional sizes and product features, (ii) developing new products within the DEB product portfolio and (iii) conducting clinical studies to validate the performance characteristics of our products and to capture patient data necessary to support our commercial efforts.

Future development efforts and associated internal and external costs are expected to focus on our lead development programs, NXT-41 and NXT-41x, which are designed as next-generation biologic scaffolds combined with local antibiotic delivery.

Litigation Costs, net

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Results of Operations

Comparison of the Three Months Ended June 30, 2025 and 2024

Three Months Ended June 30,

Comparison of the Three Months Ended September 30, 2025 and 2024

Three Months Ended September 30,

Change 2024 / 2025

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Net income (loss) from continuing operations

Discontinued operations

Loss from discontinued operations

Net income (loss)

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Net sales information for our products is summarized as follows:

Three Months Ended June 30,

Three Months Ended September 30,

Change 2024 / 2025

(in thousands, except percentages)

Device Protection

Women's Health

1 unchanged sentence

Total Net Sales

Total net sales were $6.3 million in both the three months ended June 30, 2025 and 2024.

While total net sales were essentially unchanged, the revenues from Device Protection increased by $0.9 million compared to the prior year’s second quarter due to volume growth from EluPro, for which the full commercial launch commenced in January 2025 after FDA clearance in June 2024.

Such increase, however, was offset by declines in Women’s Health and Cardiovascular.

The decline in Women’s Health was caused by various physician users of SimpliDerm who transferred to hospitals where SimpliDerm is not yet available and by decreased sales generated by Tiger.

With respect to Cardiovascular, as noted above, the exclusive distribution agreement with LeMaitre Vascular terminated in April 2025, and we recommenced selling these products directly through independent sales agents in May 2025.

We anticipate Cardiovascular sales will increase in future quarters of 2025, both through volume growth and higher unit prices as such sales will be at end-user pricing versus contracted prices.

Total net sales were $3.3 million in the three months ended September 30, 2025, a decrease of $0.4 million compared to $3.7 million in the three months ended September 30, 2024.

The decrease was due to Women’s Health where the sales of SimpliDerm generated by Tiger totaled $0.5 million in the three months ended September 30, 2025, a decline of $0.4 million from the prior year three-month period.

As noted above, we terminated the distribution agreement with Tiger effective in October 2025.

Cost of Goods Sold

Cost of goods sold and gross margin percentage information for our products is summarized as follows:

Three Months Ended June 30,

Three Months Ended September 30,

Change 2024 / 2025

(in thousands, except percentages)

Device Protection

Women's Health

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Total Cost of Goods Sold

Total cost of goods sold decreased $0.3 million to $3.2 million in the three months ended June 30, 2025 compared to $3.5 million in the three months ended June 30, 2024.

Gross margin was 48.8% in the three months ended June 30, 2025 compared to 44.5% in the three months ended June 30, 2024.

Gross margin, excluding intangible asset amortization, was 62.4% in the three months ended June 30, 2025 compared to 58.0% in the three months ended June 30, 2024.

The improvement between years was due primarily to favorability in Device Protection, where the gross margins in the 2024 period were impacted by certain production inefficiencies that were not present in the 2025 period with robust production being now required to ensure the supply of EluPro keeps pace with anticipated sales growth.

Total cost of goods sold decreased $0.4 million to $1.5 million in the three months ended September 30, 2025 compared to $1.9 million in the three months ended September 30, 2024.

Gross margin was 55.8% in the three months ended September 30, 2025 compared to 48.9% in the three months ended September 30, 2024.

Gross margin, excluding intangible asset amortization, was 63.9% in the three months ended September 30, 2025 compared to 56.3% in the three months ended September 30, 2024.

The improvement between years was due primarily to Cardiovascular, where we terminated our exclusive distribution agreement with LeMaitre Vascular on April 30, 2025, upon which we resumed selling these products directly to hospitals and other healthcare facilities through independent sales agents with end user pricing.

Operating Expenses

Sales and Marketing

Sales and marketing expenses increased $0.5 million, or 13.5%, to $3.8 million in the three months ended June 30, 2025 compared to $3.3 million in the three months ended June 30, 2024.

As a percentage of sales, sales and marketing expenses increased to 60.3% in the three months ended June 30, 2025 from 52.9% in the three months ended June 30, 2024.

The increase was largely attributable to sales commission expense growth commensurate with higher Device Protection revenues and a return in the second quarter of 2025 to the direct selling of our Cardiovascular products.

These increases were partially offset by lower non-cash equity compensation in the 2025 period.

Sales and marketing expenses increased $0.4 million, or 29.0%, to $1.6 million in the three months ended September 30, 2025 compared to $1.2 million in the three months ended September 30, 2024.

As a percentage of sales, sales and marketing expenses increased to 48.2% in the three months ended September 30, 2025 from 33.9% in the three months ended September 30, 2024.

The increase was largely attributable to sales commission expense growth commensurate with the resumption in the second quarter of 2025 of the direct selling of our Cardiovascular products as well as higher percentage of SimpliDerm sales occurring through our commissioned independent sales representatives in 2025.

General and Administrative

G&A expenses decreased $1.0 million, or 21.2%, to $3.7 million in the three months ended June 30, 2025 compared to $4.7 million in the three months ended June 30, 2024.

As a percentage of net sales, G&A expenses decreased to 59.0% in the three months ended June 30, 2025 from 74.5% in the three months ended June 30, 2024.

G&A expenses decreased $0.8 million, or 18.9%, to $3.5 million in the three months ended September 30, 2025 compared to $4.3 million in the three months ended September 30, 2024.

The decrease in expense was primarily driven by lower non-cash equity compensation in the 2025 period.

Research and Development

R&D expenses increased $0.5 million, or 45.5% to $1.5 million in the three months ended June 30, 2025 compared to $1.0 million in the three months ended June 30, 2024.

The increase in expense reflects our heightened development activity in the 2025 period.

Our future development efforts are focused on expanding our EluPro offering with additional sizes and product features, (ii) developing new products within the DEB product portfolio and (iii) conducting clinical studies to validate the performance characteristics of our products and to capture patient data necessary to support our commercial efforts.

R&D expenses increased $0.4 million, or 55.0% to $1.1 million in the three months ended September 30, 2025 compared to $0.7 million in the three months ended September 30, 2024.

The increase in expense reflects our heightened development activity in the 2025 period as we aggressively pursue the development of NXT-41 and NXT-41x, our next-generation biologic scaffolds combined with local antibiotic delivery.

Litigation Costs, net

Litigation costs, net increased to $4.0 million in the three months ended June 30, 2025 compared to $2.3 million in the three months ended June 30, 2024.

The increase in expense was primarily due to the continued evaluation of the contingent FiberCel liability.

As of June 30, 2025, insurance remains available to cover the cost of the VBM Litigation and related defense costs;

Litigation costs, net decreased to $0.9 million in the three months ended September 30, 2025 compared to $4.7 million in the three months ended September 30, 2024.

The decrease in expense was primarily due to significant reductions

in our FiberCel activities and related contingent liability fluctuations with nearly all cases having been settled as of September 30, 2025.

As of September 30, 2025, insurance remains available to cover the cost of the VBM Litigation and related defense costs;

however, we have no more insurance to cover the cost of the FiberCel Litigation and the related defense costs.

See further discussion in Note 9 to the condensed consolidated financial statements.

Interest Expense

Interest expense was approximately $0.5 million in the three months ended June 30, 2025 compared to $1.3 million in the three months ended June 30, 2024.

The decrease was primarily due to the error correction related to the January 2024 Ligand amendment described in Note 7 to the condensed consolidated financial statements.

Comparison of the Six Months Ended June 30, 2025 and 2024

Six Months Ended June 30,

Interest Expense, net

Interest expense, net was approximately $0.3 million in the three months ended September 30, 2025 compared to $0.1 million in the three months ended September 30, 2024.

With our sale of the CIED Business and the required repayment of our SWK debt upon close, all interest expense related to our SWK Loan Facility (see Note 7 to the condensed consolidated financial statements) has been included within Loss from Discontinued Operations for all periods presented.

The remaining interest expense relates to our Amended Revenue Interest Obligation (see Note 8 to the condensed consolidated financial statements) and the financing of certain insurance premiums.

The increase between periods was due to higher interest income (offset to interest expense) in the 2024 period due to larger amounts of cash on hand.

Discontinued Operations

Loss from discontinued operations was $3.5 million and $2.1 million for the three months ended September 30, 2025 and 2024, respectively.

The increase between years was due to higher sales and marketing costs in the 2025 period which offset the growth in CIED sales and gross profit in the current year.

Also contributing to the increase were legal fees totaling approximately $0.9 million recognized in the three months ended September 30, 2025 which were incurred in connection with the CIED Business divestiture in October 2025.

Comparison of the Nine months Ended September 30, 2025 and 2024

Nine Months Ended September 30,

Change 2024 / 2025

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Net loss from continuing operations

Discontinued operations

Loss from discontinued operations

NM = not meaningful

Net sales information for our products is summarized as follows:

Six Months Ended June 30,

Nine Months Ended September 30,

Change 2024 / 2025

(in thousands, except percentages)

Device protection

Women's health

1 unchanged sentence

Total Net Sales

Total net sales decreased $0.7 million, or 5.3%, to $12.3 million in the six months ended June 30, 2025 compared to $13.0 million in the six months ended June 30, 2024.

Revenues from Device Protection increased compared to the prior year period due to volume growth from EluPro, for which the full commercial launch commenced in January 2025 after FDA clearance in June 2024.

Such increase, however, was offset by declines in Women’s Health and Cardiovascular.

The decline in Women’s Health was caused by various physician users of SimpliDerm who transferred to hospitals where SimpliDerm is not yet available and by decreased sales generated by Tiger.

With respect to Cardiovascular, as noted above, the exclusive distribution agreement with LeMaitre Vascular terminated in April 2025 and we recommenced selling these products directly through independent sales agents in May 2025.

We anticipate Cardiovascular sales will increase in future quarters of 2025 both through volume growth and higher unit prices as such sales will be at end-user pricing versus contracted prices.

Total net sales decreased $2.6 million, or 22.6%, to $9.0 million in the nine months ended September 30, 2025 compared to $11.7 million in the nine months ended September 30, 2024.

The decrease was due primarily to Women’s Health and caused, in large part, by various physician users of SimpliDerm who transferred to hospitals where SimpliDerm is not yet available.

Additionally, sales of SimpliDerm generated by Tiger totaled $1.9 million in the nine months ended September 30, 2025, a decrease of $0.9 million from the prior year nine-month period.

Cost of Goods Sold

Cost of goods sold and gross margin percentage information for our products is summarized as follows:

Six Months Ended June 30,

Nine Months Ended September 30,

Change 2024 / 2025

(in thousands, except percentages)

Device protection

Women's health

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Total Cost of Goods Sold

Total cost of goods sold decreased $0.6 million to $6.8 million in the six months ended June 30, 2025 compared to $7.3 million in the six months ended June 30, 2024.

Gross margin was 44.9% in the six months ended June 30, 2025 compared to 43.5% in the six months ended June 30, 2024.

Gross margin, excluding intangible asset amortization, was 58.7% in the six months ended June 30, 2025 compared with 56.5% in the six months ended June 30, 2024.

While the overall changes between years in the gross margin measures were modest, the overall increase included growth in the Women’s Health gross margin due to certain non-recurring write-offs in the prior year period, and declines to the Device Protection gross margin due to the addition of EluPro in 2025, which currently carries a lower gross margin than CanGaroo.

Total cost of goods sold decreased $1.9 million to $4.3 million in the nine months ended September 30, 2025 compared to $6.3 million in the nine months ended September 30, 2024.

Gross margin was 51.9% in the nine months ended September 30, 2025 compared to 46.3% in the nine months ended September 30, 2024.

Gross margin, excluding intangible asset amortization, was 60.8% in the nine months ended September 30, 2025 compared with 53.2% in the nine months ended September 30, 2024.

Operating Expenses

Sales and Marketing

Sales and marketing expenses increased $0.2 million, or 2.6%, to $6.8 million in the six months ended June 30, 2025 compared to $6.6 million in the six months ended June 30, 2024.

As a percentage of sales, sales and marketing expenses increased to 55.4% in the six months ended June 30, 2025 from 51.1% in the six months ended June 30, 2024.

These increases were partially offset by lower non-cash equity compensation in the 2025 period.

Sales and marketing expenses increased $0.1 million, or 1.9%, to $3.9 million in the nine months ended September 30, 2025 compared to $3.8 million in the nine months ended September 30, 2024.

As a percentage of sales, sales and marketing expenses increased to 42.8% in the nine months ended September 30, 2025 from 32.5% in the nine months ended September 30, 2024.

The increase was largely attributable to sales commission expense growth commensurate with the resumption in the second quarter of 2025 of the direct selling of our Cardiovascular products.

General and Administrative

G&A expenses decreased $2.2 million, or 22.4%, to $7.6 million in the six months ended June 30, 2025 compared to $9.7 million in the six months ended June 30, 2024.

As a percentage of net sales, G&A expenses decreased to 61.5% in the six months ended June 30, 2025 from 75.0% in the six months ended June 30, 2024.

The decrease in expense resulted largely from the non-cash equity compensation grants made in January 2024.

G&A expenses decreased $3.0 million, or 22.0%, to $10.8 million in the nine months ended September 30, 2025 compared to $13.8 million in the nine months ended September 30, 2024.

The decrease in expense was primarily driven by lower non-cash equity compensation in the 2025 period.

Research and Development

R&D expenses increased to $2.4 million in the six months ended June 30, 2025 compared to $2.2 million in the six months ended June 30, 2024.

The increase in expense reflects our heightened development activity in the 2025 period.

R&D expenses increased to $2.9 million in the nine months ended September 30, 2025 compared to $2.3 million in the nine months ended September 30, 2024.

Litigation Costs, net

FiberCel litigation costs increased to $6.6 million in the six months ended June 30, 2025 compared to $4.1 million in the six months ended June 30, 2024.

The increase in expense was primarily due to the continued evaluation of the contingent FiberCel liability.

As of June 30, 2025, insurance remains available to cover the cost of the VBM Litigation and related defense costs;

FiberCel litigation costs decreased to $7.4 million in the nine months ended September 30, 2025 compared to $8.8 million in the nine months ended September 30, 2024.

The decrease in expense was primarily due to the continued evaluation of the contingent FiberCel liability and significant reductions in our FiberCel activities with nearly all cases having been settled as of September 30, 2025.

As of September 30, 2025, insurance remains available to cover the cost of the VBM Litigation and related defense costs;

however, we have no more insurance to cover the cost of the FiberCel Litigation and the related defense costs.

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Interest Expense

Interest expense was approximately $1.6 million in the six months ended June 30, 2025 compared to $2.6 million in the six months ended June 30, 2024.

Interest expense was less than $0.1 million in the nine months ended September 30, 2025 compared to $0.8 million in the nine months ended September 30, 2024.

The decrease was primarily due to the error correction related to the January 2024 Ligand amendment described in Note 7 to the condensed consolidated financial statements.

Discontinued Operations

Loss from discontinued operations was $8.0 million and $6.7 million for the nine months ended September 30, 2025 and 2024, respectively.

The increase was due to higher sales and marketing costs in the 2025 period which offset the growth in CIED sales and gross profit in the current year.

Also contributing to the increase were legal fees totaling approximately $0.9 million recognized in the nine months ended September 30, 2025 which were incurred in connection with the CIED Business divestiture in October 2025.

Non-GAAP Financial Measures

This Quarterly Report presents our gross margin, excluding intangible asset amortization, for the three and six months ended June 30, 2025 and 2024.

This Quarterly Report presents our gross margin, excluding intangible asset amortization, for the three and nine months ended September 30, 2025 and 2024.

We calculate gross margin, excluding intangible asset amortization, as gross profit, excluding amortization expense relating to intangible assets we acquired in the CorMatrix Acquisition, divided by net sales.

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In addition, other companies, including companies in our industry, may use other measures to evaluate their performance, which could reduce the usefulness of this non-GAAP financial measure as a tool for comparison.

The following table presents a reconciliation of our gross margin, excluding intangible asset amortization, for the six months ended June 30, 2025 and 2024, to the most directly comparable GAAP financial measure, which is our GAAP gross margin (in thousands).

The following table presents a reconciliation of our gross margin, excluding intangible asset amortization, for the nine months ended September 30, 2025 and 2024, to the most directly comparable GAAP financial measure, which is our GAAP gross margin (in thousands).

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Cost of goods sold

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Liquidity and Capital Resources

As of June 30, 2025, we had cash of approximately $8.5 million compared to $13.2 million as of December 31, 2024.

Since inception, we have financed our operations primarily through amounts borrowed under our credit facilities, proceeds from our initial public offering (“IPO”), sales of our products and more recently, the sale of our Orthobiologics Business, proceeds from follow-on offerings and private placements of our common stock and warrants and substitution of certain cash payment obligations with stock issuances.

Our historical cash outflows have primarily been associated with acquisitions and integration, manufacturing and administrative costs, general and marketing, research and development, clinical activity, purchase of property and equipment used in our production activities, litigation defense and settlement costs and investing in our commercial infrastructure through our direct sales force and our commercial partners in order to expand our presence and to promote awareness and adoption of our products.

Such commercial infrastructure costs are likely to become more significant in the future as we further commercialize the newly approved EluPro product.

As of June 30, 2025, our accumulated deficit was $243.1 million.

As of September 30, 2025, we had cash of approximately $4.7 million.

Additionally, on October 1, 2025, upon closing of the sale of our CIED Business, and the payment of transaction expenses and the required repayment of our SWK debt, we received cash proceeds of approximately $49 million.

Since inception, we have financed our operations primarily through amounts borrowed under our credit facilities, proceeds from our initial public offering (“IPO”), sales of our products and more recently, the sale of our Orthobiologics and CIED Businesses and proceeds from follow-on offerings and private placements of our common stock and warrants.

Our historical cash outflows have primarily been associated with manufacturing and administrative costs, general and marketing, research and development, clinical activity, purchase of property and equipment used in our production activities, litigation defense and settlement costs and investing in our commercial infrastructure.

We expect to incur operating losses and negative cash flows from operations for the foreseeable future as we advance our development and commercialization of NXT-41 and NXT-41x.

Because of the numerous risks and uncertainties associated with our development and commercialization efforts, we are unable to predict when we will become profitable, and we may never become profitable.

Our inability to achieve and then maintain profitability would negatively affect our business, financial condition, results of operations and cash flows.

The future viability of Elutia is dependent on our ability to generate cash flows from current or future product sales and/or raise additional capital to finance its operations.

We may seek to raise capital through the issuance of common stock or debt such as the offerings described below or pursue asset sales or other transactions, such as the sale of the Orthobiologics and CIED Businesses described above.

However, such transactions may not be successful, and we may not be able to raise additional equity, refinance our debt instruments, sell assets or obtain waivers or amendments to our obligations on acceptable terms, or at all.

On February 4, 2025, we sold, in a registered direct offering (“2025 Registered Offering”) an aggregate of (i) 5,520,000 shares of our Class A common stock and (ii) prefunded warrants (“2025 Prefunded Warrants”) to purchase up to an aggregate of 480,000 shares of Class A Common Stock.

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The 2024 Prefunded Warrants have an exercise price of $0.001 per share of Class A Common Stock, are exercisable immediately and will expire when exercised in full.

On September 21, 2023, we sold, in a private offering (“Private Offering”) an aggregate of (i) 6,852,811 units (“Common Units”), each comprised of (a) one share of our Class A common stock and (b) a warrant (“Common Warrant”) to purchase one and one half shares of Class A Common Stock, and (ii) 503,058 units (the “Prefunded Units”), each comprised of (a) a prefunded warrant (“2023 Prefunded Warrant”) to purchase one share of Class A Common Stock, and

(b) a Common Warrant.

The Common Units were sold at a purchase price of $1.4275 per unit, and the 2023 Prefunded Units were sold at a purchase price of $1.4265 per unit, for aggregate gross proceeds of approximately $10.5 million, before deducting offering expenses.

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Each 2023 Prefunded Warrant is exercisable at any time at a nominal exercise price per share of $0.001 (with the remainder of the exercise price per share of Class A Common Stock having been prefunded to us).

We expect our losses to continue for the foreseeable future and these losses will continue to have an adverse effect on our financial position.

Because of the numerous risks and uncertainties associated with our commercialization and development efforts, including our ability to successfully commercialize our new EluPro product, we are unable to predict when we will become profitable, and we may never become profitable.

Our inability to achieve and then maintain profitability would negatively affect our business, financial condition, results of operations and cash flows.

In order to mitigate the current and potential future liquidity issues caused by the matters noted above, we may seek to raise capital through the issuance of equity or debt securities, as we did in the 2025 Registered Offering, 2024 Registered Offering and Private Offering described above;

issue common stock to satisfy certain obligations in lieu of cash, as we did in the May 2025 Ligand amendment described below or pursue asset sale or other transactions, such as the sale of the Orthobiologics Business described above.

In the future, the Company may also seek to obtain waivers, amendments or other accommodations with lenders or other obligees in order to help manage the Company’s indebtedness and other obligations, such as the May 2025 amendment to the SWK Loan Facility described below.

As such, based on our current operating plans, we believe there is uncertainty as to whether our future cash flows along with our existing cash, issuances of additional equity and cash generated from expected future sales will be sufficient to meet our anticipated operating needs through twelve months from the financial statement issuance date.

Due to these factors, there is substantial doubt about our ability to continue as a going concern within one year after the issuance of the financial statements.

Cash Flows for the Six Months ended June 30, 2025 and 2024

Six Months Ended

Cash Flows for the Nine months ended September 30, 2025 and 2024

Nine Months Ended

September 30,

(in thousands)

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Financing activities

Net decrease in cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Cash Flows From Operating Activities

Net cash used in operating activities for the six months ended June 30, 2025 was $17.1 million compared to $7.0 million for the six months ended June 30, 2024.

The year-over-year increase was primarily due to inventory growth in the 2025 period to keep pace with EluPro sales growth, as well as FiberCel settlement payments of $7.1 million in the six months ended June 30, 2025.

Net cash used in operating activities for the nine months ended September 30, 2025 was $20.0 million compared to $10.4 million for the nine months ended September 30, 2024.

The increase was primarily due to inventory growth in the 2025 period to keep pace with EluPro sales growth, as well as FiberCel settlement payments of $8.1 million in the nine months ended September 30, 2025.

Cash Flows From Investing Activities

Net cash used in investing activities for the six months ended June 30, 2025 was $0.4 million compared to net cash provided by investing activities of $0.2 million for the six months ended June 30, 2024.

The current year period reflects purchases of property and equipment for our production facilities.

The prior year period reflects our receipt of an adjustment payment related to the final working capital received by Berkeley at the sale date of our Orthobiologics Business.

Net cash used in investing activities for the nine months ended September 30, 2025 was $1.0 million compared to $0.4 million for the nine months ended September 30, 2024.

The increase primarily reflects higher investments in our production facilities in 2025 as we continue the buildout of our new Gaithersburg location in preparation for the commercial production of NXT-41 and NXT-41x to the extent marketing authorization is obtained.

Cash Flows From Financing Activities

Net cash provided by financing activities for the six months ended June 30, 2025 was $12.8 million compared to cash used in financing activities of $5.7 million for the six months ended June 30, 2024.

The current year’s cash generation was primarily through the 2025 Registered Offering which yielded net proceeds of $13.8 million.

Net cash provided by financing activities for the nine months ended September 30, 2025 was $12.5 million compared to $17.2 million for the nine months ended September 30, 2024.

The current year’s cash generation was primarily through the 2025 Registered Offering which yielded net proceeds of $13.8 million offset by financed insurance premium payments.

The prior year’s cash generation was primarily through the 2024 Registered Offering and warrant exercises, which yielded net proceeds of $28.1 million offset by long-term debt and the revenue interest obligation payments totaling $8.3 million.

Credit Facilities

As of June 30, 2025, we had $24.3 million of indebtedness outstanding, consisting of $23.8 million outstanding under our SWK Loan Facility described below and $1.0 million of exit fee liabilities, net of $0.5 million of unamortized discount and deferred financing costs.

Such indebtedness currently has a principal payment commencement date of November 15, 2025, with quarterly principal payments in an amount equal to 5% of the outstanding principal.

O n August 10, 2022 (the “Closing Date”), we entered into a senior secured term loan facility with SWK Funding LLC (“SWK”), as agent, and other lenders party thereto (as amended and modified subsequent to the Closing Date, the “SWK Loan Facility”) for an aggregate principal amount of $25 million.

An initial draw of $21 million was made on the Closing Date with the additional $4 million drawn on December 14, 2022.

The SWK Loan Facility also allows for the establishment of a separate, new asset-based revolving loan facility of up to $8 million, which has not been entered into to date.

As of June 30, 2025, we had $23.8 million of indebtedness outstanding under our SWK Loan Facility and an exit fee liability to SWK of $1.0 million, with such balances being net of $0.5 million of unamortized discount and deferred financing costs.

As of September 30, 2025, we had $26.1 million of indebtedness outstanding under our SWK Loan Facility and an exit fee liability to SWK of $1.1 million, with such balances being net of $0.4 million of unamortized discount and deferred financing costs.

On August 15, 2025, we entered into a fifth amendment (the “Fifth Amendment”) to the credit agreement governing the SWK Loan Facility, which, among other things, provided that the following amounts were capitalized into the unpaid principal balance of the SWK Loan Facility:

(i) all accrued and unpaid interest due and owing to the lenders on the payment date in August 2025, (ii) a $50,000 amendment fee agreed to by us on June 30, 2025, and (iii) a $10,000 amendment fee to be paid pursuant to the Fifth Amendment.

On October 1, 2025, in connection with and through the proceeds of the sale of the Company’s CIED Business described in Note 2 to the condensed consolidated financial statements, Elutia fully repaid the SWK Loan Facility as required by the terms of the credit agreement.

As of such date, the outstanding principal, including the accrued exit fee, and accrued interest totaled approximately $26.5 million.

The total payment by the Company to SWK in full satisfaction of the debt and termination of the credit agreement was $27.8 million.

Interest Rates

All of the SWK Loan Facility borrowings take the form of Secured Overnight Financing Rate (“SOFR”) loans and bear interest at a rate per annum equal to the sum of an applicable margin of (i) 7.75% and the “Term SOFR Rate” (based upon an interest period of 3 months), or (ii) if we have elected the PIK Interest option (as defined below), 3.75% and the “Term SOFR Rate.” We may elect a portion of the interest due, to be paid in-kind at a rate per annum of 4.5% (“PIK Interest”), and such election may be made until November 15, 2025.

The “Term SOFR Rate” is subject to a floor of 2.75%.

Mandatory Prepayments

Prior to the May 2025 amendment described below, the SWK Loan Facility Agreement required certain mandatory prepayments, subject to certain exceptions, with:

(1) 100% of any net casualty proceeds in excess of $250,000 and (2) for non-ordinary course asset sales, an amount equal to the difference between (x) the proportion of divested gross profit (as defined in the SWK Loan Facility) to the Company’s total gross profit (as defined in the SWK Loan Facility) multiplied by the outstanding loans under the SWK Loan Facility, and (y) the difference between $1,000,000 and the aggregate sale proceeds of any assets previously sold during the fiscal year.

The closing of the sale of the Orthobiologics Business in November 2023 triggered the mandatory prepayment of $4.0 million.

Of such amount, $2.0 million wa s paid shortly after closing of the divestiture of the Orthobiologics Business in 2023 and the remainder was paid on February 15, 2024 based on mutual agreement between the parties.

No such mandatory prepayments were required in the three months ended March 31, 2025.

All of the SWK Loan Facility borrowings took the form of Secured Overnight Financing Rate (“SOFR”) loans and bear interest at a rate per annum equal to the sum of an applicable margin of (i) 7.75% and the “Term SOFR Rate” (based upon an interest period of 3 months), or (ii) if we had elected the PIK Interest option (as defined below), 3.75% and the “Term SOFR Rate.” We could elect a portion of the interest due, to be paid in-kind at a rate per annum of 4.5% (“PIK Interest”), and such election could be made until November 15, 2025.

The “Term SOFR Rate” was subject to a floor of 2.75%.

Optional Prepayment

The agreement, as amended, governing the SWK Loan Facility also includes an exit fee equal to 6.5% of the aggregate principal amount funded prior to termination plus $112,500.

Amortization and Final Maturity

The SWK Loan Facility matures on August 10, 2027 and accrues interest, payable quarterly in arrears.

Principal amortization of the SWK Loan Facility starts on November 15, 2025.

Principal payments during the amortization period will be limited based on revenue-based caps.

As of June 30, 2025, quarterly principal payments will be in an amount equal to 5% of the aggregate principal amount funded with the balance paid at maturity.

All obligations under the SWK Loan Facility are, and any future guarantees of those obligations will be, secured by, among other things, and in each case subject to certain exceptions, a first priority lien on and security interest in, upon, and to all of our assets, whether now owned or hereafter acquired, wherever located.

The agreement, as amended, governing the SWK Loan Facility also included an exit fee equal to 6.5% of the aggregate principal amount funded prior to termination plus $112,500.

Covenants and Other Matters

The SWK Loan Facility Agreement that governs the SWK Loan Facility contains a number of covenants that, among other things and subject to certain exceptions, restrict our ability to:

The SWK Loan Facility Agreement that governed the SWK Loan Facility contained a number of covenants that, among other things and subject to certain exceptions, restricted our ability to:

incur additional indebtedness;

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amend or modify certain material agreements;

● alter the business conducted by us and our subsidiaries.

In addition, the SWK Loan Facility Agreement contains two financial covenants.

The first covenant, which is measured quarterly, requires us to achieve a specified Minimum Aggregate Revenue (as defined in the SWK Loan Facility) for the preceding 12-month period or, alternatively, to maintain Consolidated Unencumbered Liquid Assets (as defined in the SWK Loan Facility) greater than either (i) the outstanding principal balance of the loan, or (ii) the aggregate operating cash burn (as defined in the SWK Loan Facility) for the preceding 12-month period.

and alter the business conducted by us and our subsidiaries.

In addition, the SWK Loan Facility

Agreement contained two financial covenants.

The first covenant, which was measured quarterly, required us to achieve a specified Minimum Aggregate Revenue (as defined in the SWK Loan Facility) for the preceding 12-month period or, alternatively, to maintain Consolidated Unencumbered Liquid Assets (as defined in the SWK Loan Facility) greater than either (i) the outstanding principal balance of the loan, or (ii) the aggregate operating cash burn (as defined in the SWK Loan Facility) for the preceding 12-month period.

The second covenant initially required us to maintain a minimum liquidity (as defined in the SWK Loan Facility) of the greater of (a) $5.0 million and (b) the sum of the operating cash burn for the two prior consecutive fiscal quarters then ended (the “Liquidity Covenant”).

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In consideration for the amendment, the Company agreed to issue SWK 50,000 shares of its Class A Common Stock in a private placement.

The SWK Loan Facility Agreement contains events of default, including, most significantly, a failure to timely pay interest or principal, insolvency, or an action by the FDA or such other material adverse event impacting the operations of Elutia.

As of June 30, 2025, we were in compliance with the financial covenants, as amended, and all other covenants.

As of September 30, 2025, we were in compliance with the financial covenants, as amended, and all other covenants under the credit agreement governing the SWK Loan Facility.

Ligand Revenue Interest Obligation

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Through the amendment, $2.2 million in outstanding royalty obligations (royalty obligations for the fiscal quarters ended December 31, 2024 and March 31, 2025) owed by Elutia to Ligand under the Revenue Interest Obligation as amended were satisfied by the issuance of 1,105,528 shares of Elutia’s Class A common stock to Ligand in a transaction registered with the Securities and Exchange Commission.

On October 1, 2025, in connection with sale of the CIED Business described in Note 2, Ligand and the Company further amended the Amended Revenue Interest Obligation.

Such amendment primarily consisted of a consent to the sale of the CIED Business and a release by Ligand of its security and royalty interest in the assets of the CIED Business including EluPro and CanGaroo.

Funding Requirements

We expect to continue to incur significant expenses and operating losses for the foreseeable future as we further commercialize EluPro and expand our product development and clinical and research activities.

As of October 31, 2025, we had cash and cash equivalents of approximately $44 million.

This amount is the resulting balance from our cash on hand as of September 30, 2025, plus the cash proceeds from the sale of our CIED Business less transaction expenses, full repayment of our SWK debt, payments of $2.2 million on Ligand obligations, certain FiberCel settlements and other working capital requirements.

We expect to continue to incur significant expenses and operating losses for the foreseeable future as we further expand our product development and clinical and research activities.

In addition, we expect to continue to incur significant costs and expenses associated with operating as a public company.

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However, such transactions may not be successful and we may not be able to raise additional equity or debt, sell or license assets or obtain waivers or amendments on acceptable terms, or at all.

We may also consider raising additional capital in the future to expand our business, pursue strategic investments or take advantage of financing opportunities.

We may also consider raising additional capital in the future to expand our

business, pursue strategic investments or take advantage of financing opportunities.

Our present and future funding requirements will depend on many factors, including, among other things:

● the cost of fully commercializing our EluPro product;

● the cost of our research and development activities and the cost and timing of commercializing new products or technologies;

● the costs of defending against, or the damages payable in connection with the FiberCel Litigation and VBM Litigation, associated litigation related to indemnity claims by other defendants to the FiberCel Litigation and any future litigation that we may be subject to (to the extent above the applicable insurance coverage);

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● the scope, rate of progress and cost of our current and future pre-clinical and clinical studies;

● the cost of our research and development activities and the cost and timing of commercializing new products or technologies;

● the cost and timing of expanding our sales and marketing capabilities;

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● unanticipated general, legal and administrative expenses.

● the effects on any of the above from any pandemic, epidemic or outbreak of infectious disease or any other public health crisis.

In addition, our operating plans may change as a result of any number of factors, including those set forth above and other factors currently unknown to us, and we may need additional funds sooner than anticipated.

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“Risk Factors — Risks Related to Our Business — Our future capital needs are uncertain and we may need to raise funds in the future, and such funds may not be available on acceptable terms or at all .”

Based on our current operating plans, we believe there is uncertainty as to whether our future cash flows along with our existing cash, issuances of additional equity, cash saved through substitution of cash payment obligations with equity issuances and cash generated from expected future sales will be sufficient to meet our anticipated operating needs through twelve months from the financial statement issuance date.

Due to these factors, there is substantial doubt about our ability to continue as a going concern within one year after the issuance of the financial statements.

Critical Accounting Policies and Estimates

The preparation of our unaudited condensed consolidated financial statements in accordance with GAAP requires us to make estimates and assumptions that affect reported amounts and related disclosures.

We have discussed the policies and estimates that we believe are critical and require the use of complex judgment in their application in our Annual Report, and, during the six months ended June 30, 2025, there were no material changes to those previously disclosed other than those outlined in Note 2, “Summary of Significant Accounting Policies.”

We have discussed the policies and estimates that we believe are critical and require the use of complex judgment in their application in our Annual Report, and, during the nine months ended September 30, 2025, there were no material changes to those previously disclosed other than those outlined in Note 2, “Summary of Significant Accounting Policies.”

Recent Accounting Pronouncements

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis