What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-13 compared with 2025-03-11 · 172 added, 230 removed, 206 unchanged (66% of the section changed)

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At Elutia, our mission is to humanize medicine so that patients can thrive without compromise.

As a commercial-stage company, we seek to leverage our unique understanding of biologics combined with local drug delivery to improve the interaction between implanted medical devices and patients by reducing complications associated with these surgeries.

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 CIED complications including infection, device migration and erosion.

The bioenvelope features a biomatrix comprised of ECM, 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 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.

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, such agreement was acquired by 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 the 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.

These cardiovascular products are sold in the United States through an exclusive distribution agreement with LeMaitre Vascular.

This agreement also provided LeMaitre with an option to acquire the Cardiovascular product line, exercisable through March 2026.

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

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, the porcine tissue supplier of our raw materials for our CanGaroo and cardiovascular products.

SimpliDerm has historically been 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 on a go-forward basis through a long-term supply agreement with the purchaser of the Orthobiologics Business, Berkeley Biologics, LLC (“Berkeley”).

We also intend to develop our own in-house capability for the production of SimpliDerm.

To this end, in March 2025, we signed a lease for 26,598 square feet in Gaithersburg, Maryland for purposes of, among other things, the internal production of SimpliDerm.

We expect to be able to internally produce SimpliDerm by the third 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 for EluPro, or that if made, such investments will yield the results sought.

Discontinued Operations – Sale of Orthobiologics Business

We develop proprietary drug-eluting biomatrix products for use in surgical reconstruction and related applications.

These products are designed to improve the interaction between implanted medical devices and patients.

Our focus is on addressing unmet medical needs and reducing complications associated with surgery, including infection, migration, erosion, implant rejection, and fibrosis.

Our operations span research and development through the commercial distribution of biologic matrix products used in plastic and reconstructive surgery.

We have applied these capabilities to develop and commercialize products for specific surgical applications.

As more fully described below, on October 1, 2025, we divested one such product family through the sale of substantially all of the assets related to our business of developing, commercializing, manufacturing, selling and marketing our cardiac implantable electronic device (“CIED”) products, EluPro™ and CanGaroo®, to Boston Scientific Corporation (“BSC”) and Cardiac Pacemakers Inc (“CPI”) for an aggregate purchase price of up to $88.0 million in cash.

EluPro was the first antibiotic-eluting biologic matrix envelope for use with CIEDs.

This transaction reflects the technical and commercial value of solutions developed using our biologic matrices and local drug delivery capabilities.

Following the sale of the CIED business, we are focused on advancing our drug-eluting biomatrix (“DEB”) platform.

This platform builds on our biologic matrix and local drug delivery capabilities to address complications that lead to poor outcomes in reconstructive procedures and surgical repair.

EluPro demonstrated the commercial 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 reconstructive and soft tissue repair markets where biologic matrix products are widely used, but where outcomes remain suboptimal due to complications such as infection, inflammation, and fibrosis.

The clinical and economic need in the reconstructive and soft tissue repair 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 approximate 15% to 20%, leading to frequent reoperations and hospital readmissions.

Each year, in the United States, there are approximately 163,000 post-mastectomy breast reconstruction procedures, and roughly one in three experiences a serious complication such as infection, capsular contracture, or implant loss.

We believe biologic matrices represent an estimated $1.5 billion U.S.

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

Our lead development programs comprise NXT-41, a next-generation biologic matrix, and NXT-41x, which builds on the NXT-41 matrix by incorporating local antibiotic delivery.

NXT-41 is an advanced biomatrix designed to provide consistent handling and incorporation while enabling scalable manufacturing.

In NXT-41x, antibiotics are incorporated into the matrix and released locally over extended periods, offering broad-spectrum antimicrobial protection against common causes of post-surgical infection.

Elutia continues to market and sell its proprietary biologic matrix products, including SimpliDerm®, a human acellular dermal matrix (“hADM”) used in soft tissue reconstruction, and its cardiovascular repair portfolio, comprising ProxiCor, VasCure, and Tyke.

SimpliDerm is the primary commercial product in our Women’s Health segment, and the cardiovascular products reside in our Cardiovascular segment.

These products are sold directly to healthcare facilities through independent sales agents.

As part of our current commercial product portfolio, SimpliDerm supports our commercial presence in plastic and reconstructive surgery.

It provides operational and market insight relevant to the advancement of our drug-eluting biomatrix development programs and strengthens our commercial channel with reconstructive and plastic surgeons, who routinely use biologic matrices in surgical reconstruction.

Our NXT-41x development program is initially intended for use in reconstructive applications, and SimpliDerm supports the development of surgeon relationships, experience, and organizational capabilities relevant to the potential introduction of our next-generation biologic drug-eluting technologies

SimpliDerm was historically processed at our former Richmond, California facility, which was included in the divestiture of the Orthobiologics Business in 2023.

SimpliDerm is now supplied to Elutia through a long-term supply agreement with Berkeley, the acquiror of our Orthobiologics Business.

The porcine SIS-ECM for our Cardiovascular products is supplied by Cook Biotech Incorporated (“Cook”), now owned by Evergen, through a long-term supply agreement.

Both Berkeley and Cook are currently our sole sources of supply within the respective product offerings, and we cannot guarantee that an interruption in supply will not occur.

In March 2025, we signed a lease for 26,598 square feet of production, laboratory and administrative space in Gaithersburg, Maryland, which now serves as our headquarters and primary operations site.

This facility supports administrative functions as well as the development of NXT-41 and NXT-41x and, subject to obtaining the necessary FDA marketing authorizations, is expected to support the commercial production of these products, to the extent marketing authorization is obtained.

Discontinued Operations - Sale of CIED Businesses

On September 8, 2025, we executed an Asset Purchase Agreement (the “APA”) with BSC CPI.

On October 1, 2025, at the closing of the transactions contemplated by the APA, the CIED Buyers purchased from Elutia substantially all of the assets that are related to its business of researching, developing, administering, operating, commercializing,

manufacturing, selling and marketing our CIED products, including the CanGaroo®, CanGaroo® RM, EluPro™ and CIED envelope products, including next generation CIED envelope products (collectively the “CIED Business”).

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 $80.4 million (which included an inventory adjustment of $0.4 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 constituted substantially all of the assets previously held in Elutia’s Device Protection segment.

The CIED Buyers only assumed certain liabilities related to performance of the contracts transferred in the APA.

As described in Note 2 to the 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 December 31, 2024 in the consolidated balance sheets and the results of operations from the CIED Business are reported as discontinued operations in the consolidated statements of operations for the years ended December 31, 2025 and 2024.

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

Prior to the divestiture, we marketed EluPro and CanGaroo in the United States through our direct sales force, supported by a commercial partner, BSC.

As part of the divestiture, the sales organization supporting the CIED business transferred to the CIED Buyers.

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 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 $26.9 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.

The Orthobiologics Business was comprised of assets relating to researching, developing, administering, insuring, operating, commercializing, manufacturing, selling and marketing our Orthobiologics products, and the business of contract manufacturing of particulate bone, precision milled bone, cellular bone matrix, acellular dermis, soft tissue and other products.

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.

The assets sold represented the entirety of our Orthobiologics segment.

We received approximately $14.6 million, and we may earn up to an additional $20.0 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.

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 17, both of which products were part of the Orthobiologics Business.

We recognized a gain of $6.0 million on the sale of the Orthobiologics Business in 2023 and an additional gain of $0.2 million in 2024 from an adjustment payment related to the final working capital received by Berkeley at the sale date.

Should we receive incremental proceeds in the future through an earn-out payment or payment of the holdback amount, an additional gain will be recorded upon the receipt of such amounts.

Product Recalls

In June 2021, we issued a voluntary recall pertaining to a single donor lot of our FiberCel Fiber Viable Bone Matrix, a bone repair product formerly manufactured under a contract with Medtronic PLC, which also distributed the product.

The recall was issued after learning of postsurgical infections reported in several patients treated with the product,

including some patients that tested positive for tuberculosis.

Additionally, i n July 2023, we announced a voluntary recall of a single lot of one of our VBM products and the market withdrawal of all of our VBM products produced after a specified date.

Notice of the voluntary recall was issued to centers after we learned of post-surgical tuberculosis infections in two patients treated with product from a single donor lot of our VBM product.

Both of these products were part of our Orthobiologics Business, which we have fully divested as described above.

These product recalls and the associated legal proceedings in which we are involved as well as their possible future financial implications are described in further detail in Part I, Item 3, “Legal Proceedings” and Note 17 to the consolidated financial statements, included elsewhere in this Annual Report.

Defending any current or future claims, proceedings or lawsuits, regardless of merit, could be costly, divert management attention and result in adverse publicity, which could result in the withdrawal of, or reduced acceptance of, our products in the market.

If we cannot successfully defend against product liability claims, we could incur substantial liability and costs.

Additionally, following the public announcement of our voluntary recall, there has been various media coverage surrounding the recall and patients impacted.

Such negative publicity related to the perceived quality and safety of our products could affect our brand image, decrease confidence in our products or have an adverse effect on our ability to retain existing and attract new customers, suppliers and distribution partners, any one of which could result in decreased revenue, having an adverse effect on our business, financial condition and operating results.

Impact of Inflation

Inflationary factors, such as increases in our cost of goods sold or other operating expenses, may adversely affect our operating results.

While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, we do not believe inflation had a material effect on our financial condition or results of operations during the years ended December 31, 2024 and 2023.

We cannot assure you, however, that we will be able to increase the selling prices of our products or reduce our operating expenses in an amount sufficient to offset the effects future inflationary pressures may have on our gross margin.

Accordingly, we cannot assure you that our financial condition and results of operations will not be materially impacted by inflation in the future.

In the purchase agreement, we have retained the liabilities arising out of the viable bone matrix (“VBM”) and FiberCel recall matters, as described in Note 17 to the consolidated financial statements, both of which products were part of the Orthobiologics Business.

We recognized a gain of $6.0 million on the sale of the Orthobiologics Business in 2023 and an additional gain of $0.2 million in the second quarter of 2024 from an adjustment payment related to the final working capital received by Berkeley at the sale date.

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

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

In March 2026, the indemnity holdback was resolved with Berkeley remitting $0.4 million to Elutia.

Such amount will be recognized as additional gain in the first quarter of 2026.

Should we receive incremental proceeds in the future through an earn-out payment, an additional gain will be recorded upon the receipt of such amounts.

Components of Our Results of Operations

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 cardiovascular products are sold domestically through a distribution agreement with LeMaitre Vascular and were previously sold internationally through commercial partners.

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.

We recognize revenue from the sale of our products.

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.

In April 2025, this agreement with LeMaitre Vascular terminated, and, in May 2025, we resumed selling these products directly to hospitals and other healthcare facilities through independent sales agents.

In recent years, we have incurred significant costs in the operation of our business.

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

Costs 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 facilities in Roswell, Georgia and our former Orthobiologics facility in Richmond, California.

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.

Cost of Goods Sold

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.

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

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 (referred to as CanGarooRM during development), our initial DEB product offering.

See above Part I, Item 1, “Business” for discussion of the June 2024 FDA clearance of EluPro.

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.

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 and was sold in connection with the divestiture of the CIED Business in October 2025.

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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Loss from continuing operations

Interest expense

Loss on revaluation of warrant liability

Other (income) expense, net

Loss before provision of income taxes

Interest (income) expense, net

(Gain) loss on revaluation of warrant liability

Other expense (income), net

Loss from continuing operations before provision of income taxes

Income tax expense

Net loss from continuing operations

Income from discontinued operations

Income (loss) from discontinued operations

Net income (loss)

NM = not meaningful

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(in thousands, except percentages)

Device Protection

Women's Health

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Total net sales decreased $2.2 million, or 15.0%, to $12.3 million in the year ended December 31, 2025 compared to $14.5 million in the year ended December 31, 2024.

Revenues from Device Protection and Women’s Health increased compared to the corresponding period of the prior year due to volume growth, but such increases were offset by a decrease in revenues from Cardiovascular due to lower sales volumes in the current year as well as the commencement in April 2023 of our distribution agreement with LeMaitre Vascular which provides for sales at a contracted price to the distributor versus sales prior to such agreement being made at end-user pricing.

Revenues from EluPro, which are within the Device Protection segment, commenced in September 2024 (after its FDA clearance in June 2024) and contributed to the segment’s current year sales increase.

EluPro revenues as well as overall Device Protection revenues are expected to continue to grow as we further commercialize this product in 2025.

The decrease was due primarily to Women’s Health and caused, in 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 $2.2 million in the year ended December 31, 2025, a decrease of $1.5 million from the prior year period.

Our distribution agreement with Tiger terminated in October 2025.

Cost of Goods Sold

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(in thousands, except percentages)

Device Protection

Women's Health

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Total Cost of Goods Sold

Total cost of goods sold was unchanged at $13.7 million for both the years ended December 31, 2024 and 2023.

Total cost of goods sold decreased $2.1 million to $5.7 million in the year ended December 31, 2025 compared to $7.8 million in the year ended December 31, 2024.

Gross margin was 53.7% in the year ended December 31, 2025 compared to 46.4% in the year ended December 31, 2024.

Gross margin, excluding intangible asset amortization, was 57.9% in the year ended December 31, 2024 compared to 58.4% in the year ended December 31, 2023.

The slight decline in gross margin was primarily due to the Cardiovascular business which decreased due to the commencement of the LeMaitre Vascular distribution agreement described above.

Gross margin in the Device Protection segment is expected to slightly decline in 2025 versus 2024 due to a higher percentage of the revenues in such segment coming from EluPro and shifting away CanGaroo.

Until we can achieve certain economies of scale and fully implement other cost reduction opportunities, our gross margins on EluPro will be lower than CanGaroo.

Gross margin, excluding intangible asset amortization, was 62.4% in the year ended December 31, 2025 compared with 53.9% in the year ended December 31, 2024.

The improvement between years was due to both Women’s Health and Cardiovascular, where, in 2025, we resumed selling these products only directly to hospitals and other healthcare facilities through our independent sales agents where end user pricing (versus contracted prices with distributors) yield higher margins.

Operating Expenses

Sales and Marketing

Sales and marketing expenses decreased $0.6 million, or 4.1%, to $12.5 million in the year ended December 31, 2024 compared to $13.1 million in the year ended December 31, 2023.

As a percentage of sales, sales and marketing expenses decreased to 51.5% in the year ended December 31, 2024 from 52.9% in the year ended December 31, 2023.

The decrease in expense was largely attributable to a reduction in force which occurred in the first quarter of 2023 and primarily impacted certain members of sales and marketing management.

Such decrease from the reduction in force was partially offset by an increase in expense from the non-cash equity compensation grants made in January 2024.

We anticipate that our sales and marketing costs will increase in 2025 versus 2024 as we continue to commercialize EluPro.

Sales and marketing expenses increased $0.8 million, or 15.6%, to $5.8 million in the year ended December 31, 2025 compared to $5.0 million in the year ended December 31, 2024.

As a percentage of sales, sales and marketing expenses increased to 46.9% in the year ended December 31, 2025 from 34.5% in the year ended December 31, 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 increased $4.6 million, or 32.3%, to $18.7 million in the year ended December 31, 2024 compared to $14.1 million in the year ended December 31, 2023.

As a percentage of net sales, G&A expenses increased to 76.5% in the year ended December 31, 2024 from 57.0% in the year ended December 31, 2023.

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

G&A expenses decreased $3.0 million, or 16.6%, to $15.1 million in the year ended December 31, 2025 compared to $18.1 million in the year ended December 31, 2024.

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

Research and Development

R&D expenses decreased to $3.8 million in the year ended December 31, 2024 compared to $4.4 million in the year ended December 31, 2023.

Over the last several years, our R&D efforts have primarily related to activities associated with the development of EluPro (referred to as CanGarooRM during development).

With the FDA’s approval of EluPro in June 2024, the related costs were less in the year ended December 31, 2024 versus the prior year’s comparable period.

Increases in non-cash equity compensation recognized in 2024 served to partially offset the EluPro development cost decrease noted above.

R&D expenses increased to $4.2 million in the year ended December 31, 2025 compared to $3.0 million in the year ended December 31, 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 $11.4 million in the year ended December 31, 2024 compared to $10.0 million in the year ended December 31, 2023.

The continued evaluation and settlements of our FiberCel and VBM contingent litigation liabilities along with increases in legal defense costs resulted in higher expenses in the 2024 period.

Such increase was partially offset by our recovery in September 2024 of $1.6 million in connection with the settlement of certain disputed indemnity and contribution amounts related to the FiberCel Litigation.

See further discussion in Note 17 to the consolidated financial statements included elsewhere in this Annual Report.

Interest Expense

Interest expense was approximately $4.8 million in the year ended December 31, 2024 compared to $5.8 million in the year ended December 31, 2023.

The decrease was primarily due to lower principal outstanding on the SWK debt in the current year period as a result of mandatory repayments in connection with our sale of the Orthobiologics Business in November 2023.

Discontinued Operations

Income from discontinued operations for the year ended December 31, 2024 was $0.2 million and the loss from discontinued operations for the year ended December 31, 2023 was $3.6 million.

See Notes 1 and 4 to the consolidated financial statements included elsewhere in this Annual Report for further discussion.

Other (Income) Expense, net

FiberCel litigation costs decreased to $8.5 million in the year ended December 31, 2025 compared to $11.4 million in the year ended December 31, 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 December 31, 2025.

As of December 31, 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 17 to the consolidated financial statements.

Interest (Income) Expense, net

Interest (income) expense, net was interest income of $0.4 million in the year ended December 31, 2025 and interest expense of $0.9 million in the year ended December 31, 2024.

The decrease in interest expense was primarily due to the error correction related to the January 2024 Ligand amendment described in Note 11 to the consolidated financial statements.

Other Expense (Income), net

Other (income) expense, net was expense of $2.8 million in the year ended December 31, 2025 and was primarily attributable to the $1.3 million loss on early repayment of debt and the reversal of the $1.4 million gain on the revaluation of our Revenue Interest Obligation to Ligand.

See Notes 10 and 11 to the consolidated financial statements included elsewhere in this Annual Report for additional information.

Other (income) expense, net was income of approximately $1.2 million in the year ended December 31, 2024 and was primarily attributable to the $1.4 million gain on the revaluation of our Revenue Interest Obligation to Ligand.

See Note 11 to the consolidated financial statements included elsewhere in this Annual Report for additional information.

Other (income) expense, net was an expense of approximately $0.8 million in the year ended December 31, 2023 and was attributable to the transaction fees incurred in connection with the 2023 Private Offering which were allocated to the Common Warrants (defined below) and Prefunded Warrants (defined below).

See Note 14 to the consolidated financial statements included elsewhere in this Annual Report for additional information.

Non-GAAP Financial Measures

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“Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Annual Report, we present our gross margin, excluding intangible asset amortization.

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.

Gross margin, excluding intangible asset amortization, is a supplemental measure of our performance, is not defined by or presented in accordance with U.S.

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Our management uses this metric and the results of the segments in assessing the health of our business and our operating performance, and we believe investors’ understanding of our operating performance is similarly enhanced by our presentation of this metric.

Although we use gross margin, excluding intangible asset amortization, as described above, this metric has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information

presented in accordance with GAAP.

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.

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We have experienced and may in the future experience higher sales in the fourth quarter as a result of hospitals in the United States increasing their purchases of our products to coincide with the end of their budget cycles.

Satisfaction of patient deductibles throughout the course of the year also results in increased sales later in the year, once patients have paid their annual insurance deductibles in full, which reduces their out-of-pocket costs.

Satisfaction of patient deductibles throughout the course of the year also results in increased sales later in the year, once patients have paid their annual insurance t deductibles in full, which reduces their out-of-pocket costs.

Conversely, our first quarter generally has lower sales than the preceding fourth quarter as patient deductibles are re-established with the new year, which increases their out-of-pocket costs.

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As of December 31, 2025, we had cash and cash equivalents of approximately $36.4 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 Business and proceeds from a follow-on offering and private placements of our common stock and warrants.

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 December 31, 2024, our accumulated deficit was $229.6 million.

Subsequent to year-end, 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.

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, sales 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.

The public offering price for each share of Class A Common Stock was $2.50, and the public offering price for each 2025 Prefunded Warrant was $2.499 , for aggregate gross proceeds of approximately $15.0 million, before deducting offering expenses.

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On June 16, 2024, we sold, in a registered direct offering (“2024 Registered Offering”) an aggregate of (i) 3,175,000 shares of our Class A common stock and (ii) prefunded warrants (“2024 Prefunded Warrants”) to purchase up to an aggregate of 725,000 shares of Class A Common Stock.

The public offering price for each share of Class A Common

Stock was $3.40, and the public offering price for each 2024 Prefunded Warrant was $3.399 , for aggregate gross proceeds of approximately $13.3 million, before deducting offering expenses.

The public offering price for each share of Class A Common Stock was $3.40, and the public offering price for each 2024 Prefunded Warrant was $3.399 , for aggregate gross proceeds of approximately $13.3 million, before deducting offering expenses.

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.

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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.

Each Common Warrant was exercisable until July 31, 2024, the date which was 30 trading days after the clearance by the FDA of the Company’s EluPro product, at an exercise price per share of $1.4275.

Each Common Warrant was exercisable until July 31, 2024, the date which was 30 trading days after the clearance by the FDA of EluPro, at an exercise price per share of $1.4275.

All Common Warrants were exercised by such date yielding exercise proceeds of $15.7 million in 2024.

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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 common stock, such as the 2025 Registered Offering, 2024 Registered Offering and Private Offering described above, pursue asset sale or other transactions, such as the sale of the Orthobiologics Business described above.

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

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.

As of such date, the outstanding principal, including the accrued exit fee, and accrued interest totaled approximately $26.9 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.

Cash Flows for the Years Ended December 31, 2025 and 2024

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Net increase (decrease) in cash

Net Cash Used in Operating Activities

Net Cash From Operating Activities

Net cash used in operating activities for the year ended December 31, 2025 was $44.8 million compared to $22.7 million for the year ended December 31, 2024.

The year-over-year increase was primarily due to cash disbursed in satisfaction of FiberCel legal settlements and related defense costs.

In the second half of 2024, our insurance available to cover such costs was fully utilized.

Net Cash Used in Investing Activities

Net cash used in investing activities for the year ended December 31, 2024 was $0.4 million compared to net cash provided by investing activities of $14.2 million for the year ended December 31, 2023.

The current year period mainly reflects the purchase of property and equipment for our production facilities.

The prior year period’s cash generation resulted from the sale of substantially all of the assets relating to our former Orthobiologics Business to Berkeley which yielded proceeds of $14.6 million.

Net Cash Provided by Financing Activities

Net cash provided by financing activities for the year ended December 31, 2024 was $17.1 million compared to $9.8 million for the year ended December 31, 2023.

Both years included proceeds from the issuance of common stock ($12.4 million in 2024 and $10.1 million in 2023);

however, the year ended December 31, 2024 also included the proceeds from the exercise of Common Warrants yielding exercise proceeds of $15.7 million.

Such cash infusions in 2024 were offset by payments on our Ligand revenue interest obligation which totaled $7.4 million during the year ended December 31, 2024.

The increase was primarily due to higher FiberCel settlement payments of $9.4 million in the year ended December 31, 2025 as well as reductions to our short-term trade obligations and repayments of all PIK Interest (as defined below) after or in connection with the sale of the CIED Business in October 2025.

Net Cash From Investing Activities

Net cash provided by investing activities for the year ended December 31, 2025 was $78.6 million compared to net cash used in investing activities of $0.5 million for the year ended December 31, 2024.

The significant cash generation in 2025 resulted from the sale of our CIED Business which yielded proceeds of $80.4 million.

Both the 2025 and 2024 periods included investments in our production facilities 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.

Net Cash From Financing Activities

Net cash used in financing activities for the year ended December 31, 2025 was $10.6 million compared to net cash provided by financing activities of $17.1 million for the year ended December 31, 2024.

The current year’s cash usage was primarily due to the repayment of our long-term debt totaling $23.1 million in connection with the sale of the CIED Business partially offset by the 2025 Registered Offering which yielded net proceeds of $13.8 million.

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

Credit Facilities

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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 December 31, 2024, we had $23.5 million of indebtedness outstanding under our SWK Loan Facility and an exit fee liability to SWK of $0.9 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 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 $26.9 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

The SWK Loan Facility Agreement requires 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 other such mandatory prepayments were required in the year ended December 31, 2024.

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 December 31, 2024, 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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redeem, repurchase or refinance subordinated indebtedness;

● consolidate, merge or sell or otherwise dispose of their assets;

consolidate, merge or sell or otherwise dispose of assets;

make investments, loans, advances, guarantees and acquisitions;

enter into transactions with affiliates;

● amend or modify their governing documents;

● amend or modify certain material agreements;

● alter the business conducted by them and their 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.

The second covenant requires 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”).

On March 27, 2024, we entered into an amendment to the SWK Loan Facility Agreement, which modified the Minimum Aggregate Revenue covenant under the SWK Facility to provide that as of the last business day of each fiscal

quarter of the Company beginning with the first fiscal quarter of 2024, our required Minimum Aggregate Revenue (as defined in the SWK Facility) for the trailing twelve-month period must be equal to or greater than $20.0 million.

On September 30, 2024, we entered into an amendment to the SWK Loan Facility Agreement, which (i) deferred the commencement of principal repayment under the SWK Facility from November 15, 2024 to November 15, 2025, (ii) extended the date until which the Company may elect a portion of the interest due under the SWK Facility to be paid in-kind from November 15, 2024 to November 15, 2025, and (iii) modified the exit fee upon termination of the SWK Facility from (a) 6.50% of the aggregate amount of Term Loan funded prior to such termination date plus $62,500 to (b) 6.50% of the aggregate amount of Term Loan funded prior to such termination date plus $112,500.

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 December 31, 2024, we were in compliance with the financial covenants and all other covenants.

amend or modify our governing documents;

amend or modify certain

material agreements;

and alter the business conducted by us and our subsidiary.

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”).

In May 2025, we entered into an amendment to the SWK Loan Facility.

The amendment, among other things:

(i) allowed for 100% of the interest payment due and owing in May 2025 to be paid as PIK interest, (ii) removed mandatory repayment obligations related to non-ordinary course asset sales, (iii) allowed us to request that SWK advance a new term loan in the amount of up to $5.0 million, which advance will be in the sole and absolute discretion of SWK and (iv) fixed the amount of the Liquidity Covenant to a minimum liquidity of $8.0 million.

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

Ligand Revenue Interest Obligation

We are also a party to a royalty agreement with Ligand Pharmaceuticals Incorporated (“Ligand”) pursuant to which we have incurred a long-term obligation to Ligand (the “Revenue Interest Obligation”).

The Revenue Interest Obligation, as amended in January 2024, requires us to pay Ligand 5.0% of future sales of our CanGaroo, ProxiCor, Tyke and VasCure products, and substantially similar products, such as EluPro, through May 31, 2027, subject to annual minimum payments of $4.4 million.

Effective May 8, 2025, we entered into a subscription agreement and further amendment to the Revenue Interest Obligation with Ligand.

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 December 31, 2025, we had cash and cash equivalents of approximately $36.4 million.

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.

As of December 31, 2024, we had $23.9 million of indebtedness outstanding, consisting of $23.5 million outstanding under our SWK Loan Facility and $0.9 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.

In addition, we are party to a royalty agreement with Ligand Pharmaceuticals Incorporated (“Ligand”) pursuant to a long-term obligation to Ligand (the “Revenue Interest Obligation”).

If our available cash balances and cash flow from operations are insufficient to satisfy our liquidity requirements, we may seek to raise additional capital through equity offerings, debt financings, or asset sale or other transactions.

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

In the future, we may also seek to preserve existing capital by obtaining waivers, amendments or similar accommodations from our lender and other obligees.

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.

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);

● continued patient, physician and market acceptance of our products;

● 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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● the cost of defending, in litigation or otherwise, any claims that we infringe, misappropriate or otherwise violate third-party patents or other intellectual property rights;

● the costs of defending against or the damages payable in connection with the FiberCel 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);

● the cost and timing of additional regulatory approvals;

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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 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.

Off-Balance Sheet Arrangements

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The preparation of financial statements in conformity with U.S.

GAAP requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities

at the date of the financial statements and the amounts of revenues and expenses reported during the period.

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

On an ongoing basis, management evaluates these estimates and judgments, including those related to inventories, receivables, long-lived assets, stock-based awards, revenue interest obligation, the warrant liability, the contingent liability for legal proceedings and deferred income taxes.

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Inventory Valuation

Inventories, consisting of purchased materials, direct labor and manufacturing overhead, are stated at the lower of cost or net realizable value, with cost determined using the average cost method.

Inventories, consisting primarily of purchased materials, are stated at the lower of cost or net realizable value, with cost determined using the average cost method.

At each balance sheet date, we also evaluate inventories for excess quantities, obsolescence or shelf-life expiration.

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Amortization is recorded over the estimated useful lives of the respective assets.

We periodically evaluate the period of amortization for purchased intangible assets to determine whether current circumstances warrant revised estimates of useful lives.

We periodically evaluate the period of amortization for purchased intangible assets to determine whether current circumstances warrant revised estimates of

useful lives.

We review our purchased intangible assets for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable.

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Impairment exists when the carrying value of our asset exceeds the related estimated undiscounted future cash flows expected to be derived from the asset.

impairment exists, the carrying value of that asset is adjusted to its fair value.

A discounted cash flow analysis is used to estimate an asset’s fair value, using assumptions that market participants would apply.

If impairment exists, the carrying value of that asset is adjusted to its fair value.

An impairment loss would be recorded for the excess of net carrying value over the fair value of the asset impaired.

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The terms of the Revenue Interest Obligation, as amended in January 2024, require us to pay Ligand 5.0% of future sales of our CanGaroo, ProxiCor, Tyke and VasCure products, and substantially similar products, through May 31, 2027, subject to annual minimum payments of $4.4 million.

Furthermore, a $5.0 million payment will be due if cumulative sales exceed $300 million or the assets related to CanGaroo and any substantially similar products undergo a change of control during the ten-year term of the agreement which expires on May 31, 2027.

We have estimated the fair value of the Revenue Interest Obligation, including contingent milestone payments and estimated sales-based payments, based on assumptions related to future sales of the acquired products.

At each reporting period, the value of the Revenue Interest Obligation is re-measured based on current estimates of the net present value of future payments, with changes to be recorded in the consolidated statements of operations.

The January 2024 amendment to the Revenue Interest Obligation changed the timing and extent of our future payments to Ligand and such change to the estimated future payments yielded a reduction to the total obligation of approximately $1.4 million during the year ended December 31, 2024.

The resulting gain was recognized as other income in the accompanying consolidated statement of operations.

There was no change to estimated future payments during the year ended December 31, 2023, and thus, no re-measurement gain or loss was recognized.

The estimation of future sales and the possible attainment of sales milestones is subject to significant judgment.

The estimation of future sales and the possible attainment of sales milestones is subject to judgment.

Different judgments would yield different valuations of the Revenue Interest Obligation and these differences could be significant.

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While we believe our estimated liability to be reasonable, the actual loss amounts are highly variable and turn on a case-by-case analysis of the relevant facts.

As such, actual settlement amounts may differ from our estimates and such differences may be material.

Warrant Liability

We account for warrants in accordance with ASC 815, Derivatives and Hedging – Contracts in Entity's Own Equity , as either liabilities or as equity instruments depending on the specific terms of the warrant agreement.

The 2024 Prefunded Warrants from the Registered Offering and the Common Warrants and the 2023 Prefunded Warrants from the Private Offering (see Note 14 to the consolidated financial statements included elsewhere in this Annual Report) are classified as liabilities and are recorded at fair value.

The warrants are subject to re-measurement at each settlement date and at each balance sheet date and any change in fair value is recognized in other (income) expense, net in the consolidated

statements of operations.

The Company estimates the fair value of the Common Warrant liability using a Black-Scholes pricing model.

We are required to make assumptions and estimates in determining an appropriate term, risk-free interest rate, volatility factor, dividend yield, and the fair value of common stock.

Any significant adjustments to the unobservable inputs would have a direct impact on the fair value of the warrant liability.

Different assumptions relative to the fair valuation of our Prefunded and Common Warrants would result in a change to such valuation and these differences could be material.

As such, actual settlement amounts may differ from our estimates.

and such differences may be material.

Stock-Based Compensation

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The fair value of stock options is determined on the grant date using assumptions for the estimated fair value of the underlying common stock, expected term, expected volatility, dividend yield and the risk-free interest rate.

We use the simplified method for estimating the expected term used to determine the fair value of options.

simplified method for estimating the expected term used to determine the fair value of options.

We use a zero-dividend yield assumption as we have not paid dividends since inception, nor do we anticipate paying dividends in the future.

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Different assumptions relative to the fair valuation of our stock options and restricted stock units would result in a different period expense and such differences may be material.

Section 107 of the JOBS Act permits us, as an “emerging growth company,” to take advantage of an extended transition period for adopting new or revised accounting standards until those standards would otherwise apply to private companies.

We have elected to avail ourselves of this exemption and, as a result, for so long as we remain an emerging growth company, unless we subsequently choose to affirmatively and irrevocably opt out of the extended transition period, our financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies.

Section 107 of the JOBS Act provides that we can elect to opt out of the extended transition period at any time, which election is irrevocable.

We will remain an emerging growth company, and will be able to take advantage of the foregoing exemptions, until the earliest of:

(i) the last day of the first fiscal year in which our annual gross revenues are $1.235 billion or more;

(ii) the last day of 2025;

(iii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common equity held by non-affiliates is $700 million or more as of the last business day of our most recently completed second fiscal quarter;

or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the previous three years.

Recently Issued 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-K

Item 7. Management’s Discussion and Analysis