What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-05-13 compared with 2024-11-14 · 185 added, 286 removed, 424 unchanged (53% of the section changed)

2 unchanged sentences

(In Thousands, Except for Share and Per Share Data)

September 30,

Current assets:

1 unchanged sentence

Accounts receivable, net

Receivables of litigation costs

Insurance receivables of litigation costs

Prepaid expenses and other current assets

15 unchanged sentences

Warrant liability

Other long-term liabilities

Long-term operating lease liabilities

Total liabilities

1 unchanged sentence

Stockholders’ equity (deficit):

Class A Common stock, $ 0.001 par value per share, 200,000,000 shares authorized as of September 30, 2024 and December 31, 2023, and 30,248,692 and 18,884,196 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

Class B Common stock, $ 0.001 par value per share, 20,000,000 shares authorized as of September 30, 2024 and December 31, 2023 and 4,313,406 issued and outstanding as of September 30, 2024 and December 31, 2023

Class A Common stock, $ 0.001 par value per share, 200,000,000 shares authorized as of March 31, 2025 and December 31, 2024, and 36,552,348 and 30,897,232 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively

Class B Common stock, $ 0.001 par value per share, 20,000,000 shares authorized as of March 31, 2025 and December 31, 2024 and 4,313,406 issued and outstanding as of March 31, 2025 and December 31, 2024

Additional paid-in capital

6 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Cost of goods sold

8 unchanged sentences

Other expense (income), net

Income (loss) before provision for income taxes

Loss before provision for income taxes

Income tax expense

Net income (loss) from continuing operations

Income (loss) from discontinued operations

Net income (loss)

Undistributed net income to participating securities

Net income (loss) attributable to common stockholders

dilutive gain on revaluation of warrant liability, net of addback for undistributed net income to participating securities

Net loss attributable to common stockholders for diluted earnings per share

Net income (loss) attributable to common stockholders from continuing operations per share - basic

Net loss per share attributable to common stockholders from continuing operations per share - diluted

Net income (loss) attributable to common stockholders from discontinued operations per share - basic and diluted

Net income (loss) attributable to common stockholders per share - basic

Net loss attributable to common stockholders per share - diluted

dilutive gain on revaluation of warrant liability

Net loss for diluted earnings per share

Net loss per share - basic

Net loss per share - diluted

Weighted average common shares outstanding - basic

5 unchanged sentences

Equity (Deficit)

Balance, June 30, 2024

Exercise of stock options

Exercise of Common Warrants

Issuance of common stock under Employee Stock Purchase Plan

Vesting of restricted stock units, net of shares withheld and taxes paid

Stock-based compensation

Balance, September 30, 2024

Balance, June 30, 2023

Issuance of common stock in connection with private placement, net of issuance costs of $ 0.2 million

Issuance of common stock under Employee Stock Purchase Plan

Vesting of restricted stock units

Stock-based compensation

Balance, September 30, 2023

Stockholders'

Equity (Deficit)

Balance, December 31, 2024

Issuance of common stock in connection with registered direct offering, net of issuance costs of $ 1.2 million

Exercise of stock options

Exercise of Common Warrants and Prefunded Warrants

Issuance of common stock under Employee Stock Purchase Plan

1 unchanged sentence

Stock-based compensation

Balance, September 30, 2024

Balance, March 31, 2025

Balance, December 31, 2023

Issuance of common stock in connection with private placement, net of issuance costs of $ 0.2 million

Exercises of Common Warrants and Prefunded Warrants

Issuance of common stock under Employee Stock Purchase Plan

1 unchanged sentence

Stock-based compensation

Balance, September 30, 2023

Balance, March 31, 2024

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

1 unchanged sentence

(In Thousands)

Nine Months Ended

September 30,

Three Months Ended

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

Gain on sale of Orthobiologics Business

(Gain) loss on revaluation of warrant liability

3 unchanged sentences

Stock-based compensation

Bad debt expense

Losses associated with viable bone matrix recall and market withdrawal

Changes in operating assets and liabilities:

2 unchanged sentences

Prepaid expenses and other

Accounts payable and accrued expenses and payables to tissue suppliers

Accounts payable and accrued expenses

Contingent liability for legal proceedings

2 unchanged sentences

INVESTING ACTIVITIES:

Proceeds from sale of Orthobiologics Business

Expenditures for property, plant and equipment

Expenditures for property and equipment

Net cash used in investing activities

FINANCING ACTIVITIES:

Proceeds from private placement and warrants, net of offering costs of $ 0.2 million

Proceeds from private placement and warrants, net of offering costs

Repayments of long-term debt

4 unchanged sentences

Proceeds from stock option exercises and issuance of common stock under ESPP

Net cash provided by financing activities

Net cash provided by (used in) financing activities

Net increase (decrease) in cash and cash equivalents

4 unchanged sentences

Fair value of warrants issued

Operating lease right-of-use asset extensions executed

Conversion of Common Warrants and Prefunded Warrants to common stock

10 unchanged sentences

Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the Company’s condensed consolidated financial statements and accompanying notes included in the Company's annual report on Form 10-K (“Annual Report”) for the fiscal year ended December 31, 2024.

The financial information as of September 30, 2024 and for the three and nine months ended September 30, 2024 and 2023 is unaudited, but in the opinion of management, all adjustments considered necessary for a fair statement of the results for these interim periods have been included.

The financial information as of March 31, 2025 and for the three months ended March 31, 2025 and 2024 is unaudited, but in the opinion of management, all adjustments considered necessary for a fair statement of the results for these interim periods have been included.

The condensed consolidated balance sheet data as of December 31, 2024 was derived from audited financial statements but does not include all disclosures required by GAAP.

7 unchanged sentences

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 were no earn-out payments earned or paid in the nine months ended September 30, 2024.

There were no earn-out payments earned or paid in the three months ended March 31, 2025.

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.

1 unchanged sentence

The Company recognized a gain of $ 6.0 million on the sale of the Orthobiologics Business in the fourth quarter of 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.

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 the Company.

claims for indemnification against the Company.

The Company is aware of certain indemnity-related claims raised, including a claim from a former supplier alleging breach of contract.

Based on the Company’s ongoing assessment

of these claims, along with the remaining indemnity holdback of $ 1.5 million, the Company does not consider a loss to be probable or estimable as of September 30, 2024.

Based on the Company’s ongoing assessment of these claims, along with the remaining indemnity holdback of $ 1.5 million, the Company does not consider a loss to be probable or estimable as of March 31, 2025.

Should the Company 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.

See Note 4 for further discussion of the sale of the Orthobiologics Business and the presentation of such business as discontinued operations for the three and nine months ended September 30, 2023.

Unless indicated otherwise, the information in the notes to condensed consolidated financial statements for the three and nine months ended September 30, 2023 relates to continuing operations.

In accordance with Accounting Standards Update (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40) , the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued.

For the nine months ended September 30, 2024, the Company incurred a net loss of $ 44.9 million, and as of September 30, 2024, the Company had an accumulated deficit of $ 220.5 million.

In addition, during the nine months ended September 30, 2024, the Company used $ 10.4 million of cash in operating activities and expects to continue to incur cash outflows during the remainder of 2024.

For the three months ended March 31, 2025, the Company incurred a net loss of $ 3.9 million, and as of March 31, 2025, the Company had an accumulated deficit of $ 233.5 million.

In addition, during the three months ended March 31, 2025, the Company used $ 8.9 million of cash in operating activities and expects to continue to incur cash outflows during the remainder of 2025.

Because of the numerous risks and uncertainties associated with the Company’s commercialization and development efforts, the Company is unable to predict when it will become profitable, and it may never become profitable.

1 unchanged sentence

Furthermore, even if the Company does achieve profitability, it may not be able to sustain or increase profitability on an ongoing basis, or, in general, be able to satisfy its obligations, including those related to the FiberCel Litigation and VBM Litigation described in Note 9, when they become due.

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 or pursue asset sales or other transactions, such as the sale of the Orthobiologics Business described above.

In order to mitigate the current and potential future liquidity issues caused by the matters noted above, the Company may seek to raise capital through the issuance of common stock or debt such as the offerings described in Note 8, issue common stock to satisfy certain obligations in lieu of cash such as the Ligand amendment described in Note 7 or pursue asset sales 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.

3 unchanged sentences

That is, the accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities in the ordinary course of business.

Reclassifications

Certain reclassifications have been made to prior year amounts to conform to current year financial statement presentation.

Use of Estimates

3 unchanged sentences

Actual results could differ from those estimates.

Net Income (Loss) per Share Attributable to Common Stockholders

Net Income (Loss) per Share

Our common stock has a dual class structure, consisting of Class A common stock, $ 0.001 par value per share (the “Class A common stock”) and Class B common stock, $ 0.001 par value per share (the “Class B common stock”).

Other than voting rights, the Class B common stock has the same rights as the Class A common stock, and therefore, both are treated as the same class of stock for purposes of the earnings per share calculation.

Basic net income per share is computed by dividing net income available to each class of shares by the weighted-average number of shares of common stock and participating securities outstanding during the period.

Basic net loss per share is computed by dividing net loss available to each class of shares by the weighted-average number of shares of common stock and participating securities outstanding during the period.

Participating securities include common and prefunded warrants.

Net loss is not allocated to participating securities as they do not have an obligation to fund losses.

For purposes of the diluted net income per share attributable to common stockholders calculation, stock options, restricted stock units (“RSUs”) and warrants are considered to be common stock equivalents.

See Note 11 for further discussion of net income per share attributable to common stockholders.

For purposes of the diluted net loss per share attributable to common stockholders calculation, stock options, restricted stock units (“RSUs”) and warrants are considered to be common stock equivalents.

See Note 10 for further discussion of net loss per share attributable to common stockholders.

Fair Value of Financial Instruments

22 unchanged sentences

At each balance sheet date, the Company also evaluates inventory for excess quantities, obsolescence or shelf-life expiration.

This evaluation includes analysis of the Company’s current and future strategic plans, historical sales levels by product, projections of future demand, the risk of technological or competitive obsolescence for products, general market conditions and a review of the shelf-life expiration dates for products.

shelf-life expiration dates for products.

To the extent that management determines there is excess or obsolete inventory or quantities with a shelf life that is too near its expiration for the Company to reasonably expect that it can sell those products prior to their expiration, the Company adjusts the carrying value to estimated net realizable value.

18 unchanged sentences

The Company combines lease and non-lease elements for office leases.

During the nine months ended September 30, 2024, the Company entered into lease extensions in Silver Spring, Maryland and Roswell, Georgia and entered into a new lease in San Diego, California, which, upon execution, collectively resulted in operating lease right-of-use assets and liabilities of $ 1.4 million.

Such new leases will result in future cash obligations of $ 0.2 million for the three months ended December 31, 2024 and $ 0.6 million, $ 0.7 million and $ 0.1 million for the years ended December 31, 2025, 2026 and 2027, respectively.

In March 2025, the Company executed a new lease for 26,598 square feet.

This new facility will be utilized for office, manufacturing and laboratory space.

The lease expires in January 2036 with early termination dates in 2029 and 2033.

Monthly lease payments (including allocation portions of property taxes, insurance and other landlord operating expenses) total approximately $ 75,000 with annual rent escalations of 3 %.

Rent is abated for the first 12 months of occupancy and is discounted at 50 % for months 13 through 18.

As of March 31, 2025, the property was not yet made available for use to Elutia by the landlord due to the significant improvement work being performed by the landlord.

Consequently, the Company determined that the lease has not yet commenced for accounting purposes.

Long-Lived Assets

3 unchanged sentences

The Company reviews its property and equipment and intangible assets for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable.

Impairment exists when the carrying value of the company’s asset exceeds the related estimated

undiscounted future cash flows expected to be derived from the asset.

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

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

1 unchanged sentence

The results of impairment tests are subject to management’s estimates and assumptions of projected cash flows and operating results.

Changes in assumptions or market conditions could result in a change in estimated future cash flows and could result in a lower fair value and therefore an impairment, which could impact reported results.

There were no impairment losses for the three and nine months ended September 30, 2024 or 2023.

Changes in assumptions or market conditions could result in a

change in estimated future cash flows and could result in a lower fair value and therefore an impairment, which could impact reported results.

There were no impairment losses for the three months ended March 31, 2025 or 2024.

Warrant Liability

The Company accounts for its 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 warrants issued in connection with the September 2023 private placement and June 2024 registered direct offering (see Note 9) 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 expense (income), net in the condensed consolidated statements of operations.

The Company estimates the fair value of the 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.

The warrants issued in connection with the September 2023 private placement, June 2024 registered direct offering and 2025 registered direct offering (see Note 8) 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 (gain) loss on revaluation of warrant liability net in the condensed consolidated statements of operations.

Revenue Recognition

9 unchanged sentences

A portion of the Company’s product revenue is generated from consigned inventory maintained at hospitals and from inventory physically held by distributors and direct sales representatives.

For these types of products sales, the Company retains control until the product has been used or implanted, at which time revenue is recognized.

For these types of product sales, the Company retains control until the product has been used or implanted, at which time revenue is recognized.

The Company elected to account for shipping and handling activities as a fulfillment cost rather than a separate performance obligation.

6 unchanged sentences

The Company permits returns of its products in accordance with the terms of contractual agreements with customers.

Allowances for returns are provided based upon analysis of the Company’s historical patterns of returns

matched against the revenues from which they originated.

Allowances for returns are provided based upon analysis of the Company’s historical patterns of returns matched against the revenues from which they originated.

The Company records estimated returns as a reduction of revenue in the same period revenue is recognized.

Stock-Based Compensation Plans

The Company accounts for its stock-based compensation plans in accordance with ASC 718, Accounting for Stock Compensation .

ASC 718 requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors, including employee stock options and restricted stock.

The Company accounts for its stock-based compensation plans in accordance with FASB Accounting Standards Codification (“ASC”) 718, Accounting for Stock Compensation .

ASC 718 requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors, including employee stock options and

restricted stock units.

Stock-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense on a straight-line basis over the requisite service period of the entire award.

4 unchanged sentences

The Company’s cash balances with individual institutions may at times exceed the federally insured limits.

There were two customers that represented 15 % and 10 %, respectively, of the Company’s net sales for the nine months ended September 30, 2024 and 15 % and 8 % of the Company’s net sales for the three months ended September 30, 2024.

Additionally, there was one customer that represented 14 % of the Company’s accounts receivable as of September 30, 2024.

There was one customer that represented 15 % and 17 % of the Company’s net sales for the three months ended March 31, 2025 and 2024, respectively.

Additionally, there was one customer that represented 15 % and 14 % of the Company’s accounts receivable as of March 31, 2025 and December 31, 2024, respectively.

Comprehensive Income (Loss)

Comprehensive income (loss) comprises net income (loss) and other changes in equity that are excluded from net income (loss).

For the three and nine months ended September 30, 2024 and 2023, the Company’s net loss equaled its comprehensive loss and accordingly, no additional disclosure is presented.

For the three months ended March 31, 2025 and 2024, the Company’s net loss equaled its comprehensive loss and accordingly, no additional disclosure is presented.

The Company uses the asset and liability method of accounting for income taxes.

7 unchanged sentences

Recently Issued Accounting Standards

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

This update improves reportable segment disclosure requirements, primarily through enhanced disclosures of significant segment expenses.

The amendments in this update should be applied retrospectively to all prior periods presented in the condensed consolidated financial statements and are effective for fiscal years beginning

after December 31, 2023 and interim periods within fiscal years beginning after December 31, 2024.

Early adoption is permitted.

The Company does not expect the adoption of this guidance to have any material effects on its financial condition, results of operations or cash flows and upon adoption expects that any impact would be limited to additional segment expense disclosures in the footnotes to the Company’s consolidated financial statements.

The Company is currently evaluating any new disclosures that may be required upon adoption of ASU 2023-07.

In December 2023, the FASB issued ASU No.

6 unchanged sentences

The Company is currently evaluating any new disclosures that may be required upon adoption of ASU 2023-09.

Sale of Orthobiologics Business

As described in Note 2, on November 8, 2023, the Company completed the sale of its Orthobiologics Business.

Accordingly, the Orthobiologics Business is reported as discontinued operations in accordance with ASC 205-20 - Discontinued Operations and the amounts for the three and nine months ended September 30, 2023 have been recast to conform to this discontinued operations presentation.

In accordance with ASC 205-20, only expenses specifically identifiable and related to a business to be disposed may be presented in discontinued operations.

The following table shows the financial results of the discontinued operations for the three and nine months ended September 30, 2023.

Additionally, a gain of $ 0.2 million was recognized in the second quarter of 2024 related to the final working capital adjustment received from Berkeley.

Three Months Ended

Nine Months Ended

September 30,

Cost of goods sold

Sales and marketing

General and administrative

Research and development

Total operating expenses

Interest expense

Total operating and investing cash flows of discontinued operations for the nine months ended September 30, 2023 are comprised of the following:

Nine Months Ended

September 30,

Significant operating non-cash reconciliation items

Stock-based compensation

Changes in operating assets and liabilities:

Accounts receivable

Prepaid expenses and other

Accounts payable and accrued expenses and other current liabilities

Obligations to tissue suppliers

Significant investing items

Expenditures for property, plant and equipment

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Topic 220-40).

This update assesses the disaggregation of income statement expense which requires more detailed information about specified categories of expenses included in certain expense captions presented on the face of the income statement.

The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Early adoption is permitted.

amendments may be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the financial statements.

The Company is currently evaluating any new disclosures that may be required upon adoption of ASU 2024-03.

Stock-Based Compensation

5 unchanged sentences

In addition, the shares reserved for issuance under the 2020 Plan also include shares reserved but not issued under the 2015 Plan as well as an annual increase as set forth in the 2020 Plan.

As of September 30, 2024, the Company had 389,075 shares of Class A common stock available for issuance under the 2020 Plan.

As of March 31, 2025, the Company had 1,746,811 shares of Class A common stock available for issuance under the 2020 Plan.

Stock Options

The Company’s policy is to grant stock options at an exercise price equal to 100 % of the market value of a share of Class A common stock at closing on the date of the grant.

The Company’s stock options generally have contractual terms of ten years and vest over a period of either three or four years from the date of grant.

A summary of stock option activity under the Company’s 2015 Plan and 2020 Plan for the nine months ended September 30, 2024 is as follows:

The Company’s stock options generally have contractual terms of ten years and vest over a four-year period from the date of grant.

A summary of stock option activity under the Company’s 2015 Plan and 2020 Plan for the three months ended March 31, 2025 is as follows:

Number of Shares

1 unchanged sentence

Outstanding, December 31, 2024

Outstanding, September 30, 2024

Vested and exercisable, September 30, 2024

The weighted average grant date fair value of options granted during the nine months ended September 30, 2024 was $ 2.38 .

As of September 30, 2024, there was approximately $ 3.8 million of total unrecognized compensation expense related to unvested stock options.

Outstanding, March 31, 2025

Vested and exercisable, March 31, 2025

As of March 31, 2025, there was approximately $ 2.7 million of total unrecognized compensation expense related to unvested stock options.

These costs are expected to be recognized over a weighted-average period of 1.7 years.

1 unchanged sentence

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.

Before the completion of the Company’s IPO, the Board of Directors determined the fair value of common stock considering the state of the business, input from management, third party valuations and other considerations.

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

The expected volatility of the Class A common stock is partially based on the historical volatility of comparable companies in the industry whose share prices are publicly available.

The expected volatility of the Class A common stock is based on the Company’s historical stock data.

The Company uses a zero -dividend yield assumption as the Company has not paid dividends since inception nor does it anticipate paying dividends in the future.

2 unchanged sentences

The period expense is then determined based on the valuation of the options and is recognized on a straight-line basis over the requisite service period for the entire award.

The following weighted-average assumptions were used to determine the fair value of time-based options granted during the nine months ended September 30, 2024 and 2023:

Nine Months Ended

September 30,

No options were granted during the three months ended March 31, 2025;

however, the following weighted-average assumptions were used to determine the fair value of time-based options granted during the three months ended March 31, 2024:

Expected term (years)

2 unchanged sentences

Dividend yield

During the nine months ended September 30, 2024, the Company granted 397,640 options that vested on a defined date following the U.S.

Food and Drug Administration’s (“FDA”) clearance of the Company’s EluPro product (referred to as CanGarooRM during development) product.

With the FDA’s approval of EluPro in June 2024, such vesting occurred in August 2024.

Consistent with the above, these performance vesting options were valued using the Black-Scholes model.

During the nine months ended September 30, 2024, the Company also granted 162,500 stock options that vest in equal installments upon the achievement of certain share price thresholds for twenty consecutive days of trading at each respective threshold.

The Company has granted stock options that vest upon the achievement of certain share price thresholds for twenty consecutive days of trading at each respective threshold.

For these stock options, the Company accounted for the awards as market condition awards and used an option pricing model, the Monte Carlo model, to determine the fair value of the respective equity instruments and an expense recognition term of approximately three years.

As of September 30, 2024, there were a total of 345,011 stock options outstanding that are market condition stock option awards.

As of March 31, 2025, there were a total of 345,011 stock options outstanding that are market condition stock option awards.

Restricted Stock Units

1 unchanged sentence

There is no exercise price and no monetary payment is required for receipt of restricted stock units or the shares issued in settlement of the award.

A summary of the RSU activity under the Company’s 2020 Plan for the nine months ended September 30, 2024 is as follows:

A summary of the RSU activity under the Company’s 2020 Plan for the three months ended March 31, 2025 is as follows:

Number of Shares

1 unchanged sentence

Unvested, December 31, 2024

( 1,004,270 )

Unvested, September 30, 2024

The total fair value of the RSUs granted during the nine months ended September 30, 2024 was $ 8.3 million.

Unvested, March 31, 2025

The total fair value of the RSUs granted during the three months ended March 31, 2025 was $ 0.3 million.

For the performance vesting RSUs, the fair value was based on the fair market value of the Company's Class A common stock on the date of grant.

1 unchanged sentence

The respective fair values are amortized to expense on a straight-line basis over the vesting period of generally three to four years .

As of September 30, 2024, $ 4.9 million of unrecognized compensation costs related to RSUs is expected to be recognized over a weighted average period of 2.2 years.

During the nine months ended September 30, 2024, the Company granted 560,625 RSUs that vested on a defined date following the FDA’s clearance of the Company’s EluPro product.

With the FDA’s approval of EluPro in June 2024, such vesting occurred in August 2024.

These performance vesting RSUs were valued using the fair value of the Company’s Class A common stock on the date of grant.

The Company has also granted 162,500 RSUs that vest in equal installments upon the achievement of certain share price thresholds for twenty consecutive days of trading at each respective threshold.

As of March 31, 2025, $ 3.9 million of unrecognized compensation costs related to RSUs is expected to be recognized over a weighted average period of 1.8 years.

The Company has granted RSUs that vest upon the achievement of certain share price thresholds for twenty consecutive days of trading at each respective threshold.

For these RSUs, the Company accounted for the awards as market condition awards and used a Monte Carlo model to determine the fair value of these RSUs as well as the expense recognition term of approximately three years using the graded vesting method.

As of September 30, 2024, there were 252,394 RSUs outstanding that were market condition RSU awards.

As of March 31, 2025, there were 252,394 RSUs outstanding that were market condition RSU awards.

Employee Stock Purchase Plan

3 unchanged sentences

The ESPP is considered compensatory for purposes of stock-based compensation expense.

The number of shares reserved under the ESPP will automatically increase on the first day of each fiscal year through January 1, 2030, in an amount as set forth in the ESPP.

As of September 30, 2024, the total shares of Class A common stock authorized for issuance under the ESPP was 774,341 , of which 471,126 remained available for future issuance.

During the three and nine months ended September 30, 2024, shares of Class A common stock totaling 31,199 and 96,658 , respectively were issued under the ESPP.

The number of shares reserved under the ESPP will automatically increase on the first day of each fiscal year through January 1, 2030, in an amount as

set forth in the ESPP.

As of March 31, 2025, the total shares of Class A common stock authorized for issuance under the ESPP was 1,126,448 , of which 791,675 remained available for future issuance.

During the three months ended March 31, 2025, shares of Class A common stock totaling 31,558 were issued under the ESPP.

Stock-Based Compensation Expense

Stock-based compensation expense recognized during the three and nine months ended September 30, 2024 and 2023 was comprised of the following (in thousands):

Stock-based compensation expense recognized during the three months ended March 31, 2025 and 2024 was comprised of the following (in thousands):

Three Months Ended

Nine Months Ended

September 30,

Sales and marketing

3 unchanged sentences

Total stock-based compensation expense

Inventory was comprised of the following (in thousands):

September 30,

Inventory as of March 31, 2025 and December 31, 2024 was comprised of the following (in thousands):

Raw materials

7 unchanged sentences

Principal amortization of the SWK Loan Facility, as amended in September 2024, starts in November 2025.

Principal payments during the amortization period will be limited based on revenue-based caps, although as of September 30, 2024, no such caps are applicable and quarterly principal payments will be in an amount equal to 5 % of the aggregate principal amount funded with the balance paid at maturity.

T he SWK Loan Facility also includes both revenue and liquidity covenants, restrictions as to payment of dividends, and is secured by all assets of the Company, subject to certain customary exceptions.

As of September 30, 2024, Elutia was in compliance with its financial covenants under the agreement governing the SWK Loan Facility (“SWK Loan Facility Agreement”).

Principal payments during the amortization period will be limited based on revenue-based caps, although as of March 31, 2025, no such caps are applicable and quarterly principal payments will be in an amount equal to 5 % of the aggregate principal amount funded with the balance paid at maturity.

T he SWK Loan Facility also includes both minimum revenue and liquidity covenants, restrictions as to payment of dividends, and is secured by all assets of the Company, subject to certain customary exceptions.

As of March 31, 2025, Elutia was in compliance with its financial covenants under the agreement governing the SWK Loan Facility (“SWK Loan Facility Agreement”).

See below for discussion of an amendment to the minimum liquidity covenant in May 2025.

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 the Company has elected the PIK Interest option (as defined below), 3.75 % and the “Term SOFR Rate.” The Company 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.

1 unchanged sentence

The agreement 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 .

The weighted average interest rate on the SWK Loan Facility was 13.5 % for the three months ended September 30, 2024 and 2023 and 13.5 % and 13.1 % for the nine months ended September 30, 2024 and 2023, respectively.

On August 10, 2022, the Company issued to SWK Funding LLC a warrant (“Class A Warrant”) to purchase, in the aggregate, up to 187,969 shares of Class A common stock of the Company, $ 0.001 par value per share at an exercise price of $ 6.65 per share.

The Class A Warrant is immediately exercisable for up to 187,969 shares of Class A common stock from time to time on or after the Closing Date.

The exercise price and number of shares of Class A common stock issuable upon exercise of the Class A Warrant are subject to adjustment in the event of stock dividends, stock splits and certain other events affecting the Class A common stock.

Unless earlier exercised or terminated in accordance with its terms, the Class A Warrant will expire on the seventh anniversary of the Closing Date.

Upon issuance, the Company valued the Class A Warrant at approximately $ 0.6 million using the Black-Scholes model.

The recognition of the Class A Warrant as well as deferred financing costs of approximately $ 0.5 million incurred in securing the SWK Loan Facility served to reduce the recorded value of the associated debt.

The weighted average interest rate on the SWK Loan Facility was 12.7 % and 13.5 % for the three months ended March 31, 2025 and 2024, respectively.

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

This amendment, among other things:

(i) allows for 100 % of the interest payment due in May 2025 to be paid as PIK Interest, (ii) removed mandatory repayment

obligations related to non-ordinary course asset sales, (iii) allows the Company 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 minimum liquidity covenant to be $ 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.

On August 10, 2022 (the “Closing Date”), the Company issued to SWK Funding LLC a warrant (“SWK Warrant”) to purchase, in the aggregate, up to 187,969 shares of Class A common stock of the Company, $ 0.001 par value per share at an exercise price of $ 6.65 per share.

The SWK Warrant is immediately exercisable for up to 187,969 shares of Class A common stock from time to time on or after the Closing Date.

The exercise price and number of shares of Class A common stock issuable upon exercise of the SWK Warrant are subject to adjustment in the event of stock dividends, stock splits and certain other events affecting the SWK common stock.

Unless earlier exercised or terminated in accordance with its terms, the SWK Warrant will expire on the seventh anniversary of the Closing Date.

Upon issuance, the Company valued the SWK Warrant at approximately $ 0.6 million using the Black-Scholes model.

The recognition of the SWK Warrant as well as deferred financing costs of approximately $ 0.5 million incurred in securing the SWK Loan Facility served to reduce the recorded value of the associated debt.

The debt discount and deferred financing costs will be recognized as interest expense through the maturity of the loan.

The SWK Loan Facility Agreement requires certain mandatory prepayments, subject to certain exceptions, with:

Prior to the May 2025 amendment described above, 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 Agreement) to the Company’s total gross profit (as defined in the SWK Loan Facility Agreement) 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 divestiture of the Orthobiologics Business in November 2023

triggered the mandatory prepayment of $ 4.0 million.

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

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

As noted above, the Company executed an amendment to the SWK Loan Facility in September 2024 which, among other items, served to defer the commencement of principal repayment from November 2024 to November 2025.

Long-term debt was comprised of the following (in thousands):

September 30,

Term Loan Facility, net of unamortized discount and deferred financing costs

1 unchanged sentence

Long-Term Debt

The fair value of all debt instruments, which is based on inputs considered to be Level 2 under the fair value hierarchy, approximates the respective carrying values as of September 30, 2024 and December 31, 2023.

In addition to the above, the Company finances the annual premiums of certain insurance policies through short-term financing arrangements and includes the liabilities associated with such arrangements within accrued liabilities in accompanying consolidated balance sheets.

The fair value of all debt instruments, which is based on inputs considered to be Level 2 under the fair value hierarchy, approximates the respective carrying values as of March 31, 2025 and December 31, 2024.

Revenue Interest Obligation

1 unchanged sentence

(“CorMatrix”) and acquired all CorMatrix commercial assets and related intellectual property (the “CorMatrix Acquisition”).

As part of the CorMatrix Acquisition, the Company assumed a restructured, long-term obligation (the “Revenue Interest Obligation”) to Ligand Pharmaceuticals Incorporated (“Ligand”) with an estimated present value on the acquisition date of $ 27.7 million.

Subject to annual minimum payments of $ 2.75 million per year, the terms of the Revenue Interest Obligation required Elutia to pay Ligand 5 % of future sales of the products Elutia acquired from CorMatrix, including CanGaroo, ProxiCor, Tyke and VasCure, as well as products substantially similar to those products, such as the recently-approved EluPro.

Furthermore, a $ 5.0 million payment would be due to Ligand if cumulative sales of these products exceed $ 100 million and a second $ 5.0 million will be due if cumulative sales exceed $ 300 million during the ten-year term of the agreement which expires on May 31, 2027.

As part of the CorMatrix Acquisition, the Company assumed a restructured, long-term royalty obligation (the “Revenue Interest Obligation”) to Ligand Pharmaceuticals Incorporated (“Ligand”) with an estimated present value on the acquisition date of $ 27.7 million.

On January 10, 2024, the Company entered into an amendment to the Revenue Interest Obligation (the “Amended Revenue Interest Obligation”).

Pursuant to the Amended Revenue Interest Obligation, the parties modified and restructured the Revenue Interest Obligation by revising the annual minimum payments for 2024 and each subsequent fiscal year during the term of the agreement from $ 2.75 million to $ 4.4 million.

Such minimums are payable quarterly within 30 days after each quarter-end date.

Additionally, the Company made payments totaling $ 3.0 million ( 50 % paid in January 2024 and 50 % paid in April 2024) in satisfaction of all royalty obligations for the first three fiscal quarters of 2023 and made a payment in February 2024 of $ 1.1 million in satisfaction of the royalty obligations for the fourth quarter of 2023.

Furthermore, as part of the Amended Revenue Interest Obligation, Ligand waived the Company’s obligation to make the $ 5.0 million milestone payment that became due to Ligand in the second quarter of 2023.

Total payments to Ligand during the nine months ended September 30, 2024 were $ 6.3 million comprised of the aforementioned 2023 amounts due and 2024 quarterly minimum payments of $ 2.2 million.

Pursuant to the Amended Revenue Interest Obligation, subject to annual minimum payments of $ 4.4 million per year, the terms of the Revenue Interest Obligation require Elutia to pay Ligand 5 % of future sales of the products Elutia acquired from CorMatrix, including CanGaroo, ProxiCor, Tyke and VasCure, as well as products substantially similar to those products, such as EluPro.

Furthermore, a $ 5.0 million payment would be due to Ligand if cumulative sales exceed $ 300 million during the ten-year term of the agreement which expires on May 31, 2027.

In connection with the execution of the Amended Revenue Interest Obligation, the Company made payments totaling $ 3.0 million ( 50 % paid in January 2024 and 50 % paid in April 2024) in satisfaction of all royalty obligations for the first three fiscal quarters of 2023 and made a payment in February 2024 of $ 1.1 million in satisfaction of the royalty obligations for the fourth quarter of 2023.

Total payments to Ligand during the three months ended March 31, 2024 were $ 2.6 million comprised of the aforementioned 2023 amounts due.

No payments to Ligand were made in the three months ended March 31, 2025.

In May 2025, Elutia entered into a subscription agreement and further amendment to the Amended Revenue Interest Obligation with Ligand.

Through such 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 Amended Revenue Interest Obligation was 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.

The Company records the present value of the estimated total future payments under both the Revenue Interest Obligation and Amended Revenue Interest Obligation as a long-term obligation, with the short-term portion being recorded as described below.

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

The Amended Revenue Interest Obligation changed the timing and extent of future payments by the Company to Ligand and such change to the estimated future payments yielded a reduction to the total obligation of approximately $ 1.4 million during the nine months ended September 30, 2024.

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

Interest expense related to the Revenue Interest Obligation of approximately $ 0.4 million and $ 0.6 million was recorded for the three months ended September 30, 2024 and 2023, respectively and approximately $ 1.3 million and $ 1.6 million was recorded for the nine months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024, the short-term portion of the Amended Revenue Interest Obligation is comprised of the newly established annual minimum payments of $ 4.4 million.

As of December 31, 2023, the short-term portion of the Initial Revenue Interest Obligation is comprised of (i) the 2023 and 2024 minimum payments, (ii) the first $ 5.0 million sales milestone payment noted above and (iii) the unpaid portion of the 2022 minimum payments.

Interest expense related to the Revenue Interest Obligation of approximately $ 0.3 million and $ 0.5 million was recorded for the three months ended March 31, 2025 and 2024, respectively.

Common Stock and Warrants

Registered Direct Offering of Common Stock and Warrants

On February 4, 2025, the Company 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.

The 2025 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.

The Company incurred transaction fees, including commissions and legal fees, of approximately $ 1.3 million in connection with the 2025 Registered Offering, of which $ 1.2 million were allocated to the issuance of the common stock.

On June 16, 2024, the Company sold, in a registered direct offering (“2024 Registered Offering”), an aggregate of (i) 3,175,000 shares of the Company’s 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.

4 unchanged sentences

On September 21, 2023, the Company sold, in a private offering (“Private Offering”) an aggregate of (i) 6,852,811 units (“Common Units”) each comprised of (a) one share of the Company’s 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 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.

The Common Units were sold at a purchase price of $ 1.4275 per unit, and

the 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 .

1 unchanged sentence

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 the Company).

The Company incurred transaction fees, including commissions and legal fees, of approximately $ 1.1 million in connection with the Private Offering, of which $ 0.4 million ($ 0.2 million as of September 30, 2023) were allocated to the issuance of the common stock.

See below for discussion of the accounting for the warrants and the allocation of the remainder of the transaction fees from both the Registered Offering and Private Offering.

The Company incurred transaction fees, including commissions and legal fees, of approximately $ 1.1 million in connection with the Private Offering, of which $ 0.4 million were allocated to the issuance of the common stock.

See below for discussion of the accounting for the warrants and the allocation of the remainder of the transaction fees from the 2025 Registered Offering, 2024 Registered Offering and Private Offering.

Warrant Liabilities

The Company has concluded that the 2024 Prefunded Warrants from the Registered Offering and the Common Warrants and the 2023 Prefunded Warrants from the Private Offering do not meet the equity contract scope exception under ASC 815-40 as in the event of a (i) fundamental transaction such as a merger and (ii) failure to timely deliver warrant shares upon exercise, certain provisions of which may require the Company to adjust the settlement value in a manner that is not consistent with a fixed-for-fixed option pricing model.

As a result, with respect to the 2024 Prefunded Warrants, the Company allocated $ 2.5 million of the gross proceeds from the Registered Offering to such warrants based on their fair value.

Similarly, with respect to the Common Warrants and 2023 Prefunded Warrants, the Company allocated $ 8.6 million of the gross proceeds from the Private Offering to such warrants based on their fair value.

Additionally, the Company allocated a portion of the transaction fees from both the Registered Offering and the Private Offering to the respective warrants and recognized the expense within other expense (income), net.

Such expenses totaled $ 0.3 million during the nine months ended September 30, 2024, and $ 0.8 million during the three and nine months ended September 30, 2023.

No such expenses were incurred in the three months ended September 30, 2024.

The Company has concluded that the outstanding 2025 Prefunded Warrants, 2024 Prefunded Warrants and 2023 Prefunded Warrants do not meet the equity contract scope exception under ASC 815-40 as in the event of a (i) fundamental transaction such as a merger and (ii) failure to timely deliver warrant shares upon exercise, certain provisions of which may require the Company to adjust the settlement value in a manner that is not consistent with a fixed-for-fixed option pricing model.

As a result, the Company allocated a portion of the gross proceeds from the respective offerings to 2025 Prefunded Warrants, 2024 Prefunded Warrants and 2023 Prefunded Warrants based on their fair values and have recorded such amounts as a warrant liability in the accompanying condensed consolidated balance sheet as of March 31, 2025 and December 31, 2024.

Additionally, the Company allocated a portion of the transaction fees from the 2024 Registered Offering, 2025 Registered Offering and the Private Offering to the respective warrants and recognized the expense within other expense (income), net.

Such expenses totaled $ 0.1 million for the three months ended March 31, 2025.

As noted above, the last exercise date for the Common Warrants was July 31, 2024.

1 unchanged sentence

Certain of these exercises ultimately resulted in their conversion to 2023 Prefunded Warrants.

The liability associated with the 2024 Prefunded Warrants, Common Warrants and 2023 Prefunded Warrants is recorded as warrant liability in the accompanying condensed consolidated balance sheet as of September 30, 2024 and December 31, 2023.

A summary of the warrant activity for the nine months ended September 30, 2024 is as follows:

Common Warrants

A summary of the warrant activity for the three months ended March 31, 2025 is as follows:

2023 Prefunded Warrants

2024 Prefunded Warrants

2025 Prefunded Warrants

Outstanding, December 31, 2024

Conversions of Common Warrants to 2023 Prefunded Warrants

( 3,896,130 )

( 7,137,674 )

Outstanding, September 30, 2024

Outstanding, March 31, 2025

The valuation of the warrants is adjusted to fair value (Level 3) at each subsequent balance sheet date until the warrants are settled.

The following table provides a rollforward of the aggregate fair value of the warrant liability for the nine months ended September 30, 2024 (in thousands):

Common Warrants

The following table provides a rollforward of the aggregate fair value of the warrant liability for the three months ended March 31, 2025 (in thousands):

2023 Prefunded Warrants

2024 Prefunded Warrants

2025 Prefunded Warrants

Total Offering Warrants

1 unchanged sentence

Fair value upon issuance

Loss on revaluation of warrant liability

Conversions of Common Warrants to 2023 Prefunded Warrants

Warrant liability, September 30, 2024

The fair value adjustments, which include a $ 12.7 million gain recognized during the three months ended September 30, 2024, were driven mainly by changes in the Company’s stock price since December 31, 2023 and have been recorded as (gain) loss on revaluation of warrant liability in the accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2024.

The Company had previously calculated the fair value of the Common Warrants using the Black-Scholes option pricing model with the following inputs as of December 31, 2023:

Gain on revaluation of warrant liability

Warrant liability, March 31, 2025

The Company has used the price of its Class A Common Stock to estimate the fair value of the 2025 Prefunded Warrants, 2024 Prefunded Warrants and 2023 Prefunded Warrants at each measurement date.

The price of the Company’s Class A Common Stock approximates fair value of the 2025 Prefunded Warrants , 2024 Prefunded Warrants and 2023

Prefunded Warrants due to the exercise price per share of $ 0.001 .

The fair value adjustments have been recorded as (gain) loss on revaluation of warrant liability in the accompanying condensed consolidated statements of operations for the three months ended March 31, 2025.

The Company had previously calculated the fair value of the Common Warrants using the Black-Scholes option pricing model with the following inputs as of March 31, 2024:

Common stock price

3 unchanged sentences

Dividend yield

The Company has used the price of its Class A Common Stock to estimate the fair value of the 2024 Prefunded Warrants and 2023 Prefunded Warrants at each measurement date.

The price of the Company’s Class A Common Stock approximates fair value of the 2024 Prefunded Warrants and 2023 Prefunded Warrants due to the exercise price per share of $ 0.001 .

Commitments and Contingencies

Cook Biotech License and Supply Agreements

Elutia has entered into a license agreement with Cook Biotech (“Cook”), now owned by RTI Surgical, for an exclusive, worldwide license to the porcine tissue for use in the Company’s Cardiac Patch and CanGaroo products, subject to certain co-exclusive rights retained by Cook (the “Cook License Agreement”).

Elutia has entered into a license agreement, as amended, with Cook Biotech (“Cook”), now owned by Evergen, for an exclusive, worldwide license to the porcine tissue for use in the Company’s Cardiac Patch and CanGaroo products, subject to certain co-exclusive rights retained by Cook (the “Cook License Agreement”).

The term of such license is through the date of the last to expire of the licensed Cook patents, which is anticipated to be July 2031.

2 unchanged sentences

The supply agreement expires on the same date as the related license agreement.

No royalties were paid to Cook during the three and nine months ended September 30, 2024 or 2023.

Elutia has also entered into an amendment to the Cook License Agreement (the “Cook Amendment”) in order to add fields of exclusive use.

Specifically, the Cook Amendment provides for a worldwide exclusive license to the porcine tissue for use with neuromodulation devices in addition to cardiovascular devices.

The Cook Amendment includes license fee payments of $ 0.1 million per year in each of the years 2021 through 2026.

Such license payments would accelerate if a change in control, as defined in the Cook Amendment, occurs within Elutia.

No royalties were due or paid to Cook during the three months ended March 31, 2025 or 2024.

The Cook License Agreement also provides for a worldwide exclusive license to the porcine tissue for use with neuromodulation devices in addition to cardiovascular devices and includes license fee payments of $ 0.1 million per year in each of the years 2021 through 2026.

Such license payments would accelerate if Elutia undergoes a change in control, as defined in the Cook License Agreement.

The Company, in its sole discretion, can terminate the Cook License Agreement at any time.

9 unchanged sentences

Since September 2021, 110 product liability lawsuits or claims have been filed or asserted against the Company involving FiberCel.

As of September 30, 2024, there were 79 active lawsuits or claims against the Company, including 26 lawsuits or claims where settlements have been reached but not yet been paid by quarter-end.

As of March 31, 2025, there were 58 active lawsuits or claims against the Company, including 18 lawsuits or claims where settlements have been reached but had not yet been paid by quarter-end.

The lawsuits, which have been filed against Elutia, certain Medtronic entities, and others, allege that the plaintiffs were exposed to and/or contracted tuberculosis and/or suffered substantial symptoms and complications following the implantation of FiberCel during orthopedic fusion operations.

4 unchanged sentences

As also previously disclosed, in July 2023, the Company announced a voluntary recall of a single lot of a certain viable bone matrix (“VBM”) product and the market withdrawal of all of its VBM products produced after a specified date (the “VBM Recall”).

As of September 30, 2024, there were 15 active lawsuits or claims filed or asserted against the Company.

As of March 31, 2025, there were 12 active lawsuits or claims filed or asserted against the Company.

The lawsuits, which have been filed against Elutia and others, allege that the plaintiffs were exposed to and/or contracted tuberculosis and/or suffered substantial symptoms and complications following the implantation of VBM during orthopedic fusion operations.

10 unchanged sentences

The counterclaim does not specify the amount of any alleged damages.

On October 15, 2024, Medtronic filed a motion to dismiss Elutia’s claims, and a hearing is set for January 9, 2025.

Given the early stages of this matter and the Company’s intention to vigorously defend this counterclaim, we do not consider a loss to be probable or estimable at this time.

On October 15, 2024, Medtronic filed a motion to dismiss Elutia’s claims.

The court held a hearing on January 9, 2025, and a decision was rendered by the court on April 8, 2025.

In its decision, the court dismissed the Company’s claim with respect to Medtronic’s failure to obtain insurance coverage, but allowed the Company to continue with its claim that Medtronic breached its indemnity obligations to Elutia.

Given the early stages of this matter and the Company’s intention to vigorously defend Medtronic’s counterclaim, we do not consider a loss to be probable or estimable at this time.

Contingent Liability for Legal Proceedings

2 unchanged sentences

In total, Elutia’s liability in 52 of the cases has been settled for a total cash outlay of $ 17.5 million.

For the remaining 79 cases, the Company estimated a probable loss related to each case and has recorded a liability at a total estimated amount of $ 20.4 million at September 30, 2024, which is recorded as Contingent Liability for Legal Proceedings in the accompanying condensed consolidated balance sheets.

Such liability includes $ 10.5 million for which the settlements have been reached but have not yet been paid.

For the remaining 58 cases, the Company estimated a probable loss related to each case and has recorded a liability at a total estimated amount of $ 14.3 million at March 31, 2025, which is recorded as Contingent Liability for Legal Proceedings in the accompanying condensed consolidated balance sheets.

Such liability includes $ 6.7 million for which the settlements have been reached but had not yet been paid by quarter-end.

In order to reasonably estimate the liability for the unsettled FiberCel Litigation cases, the Company, along with outside legal counsel, has assessed a variety of factors, including (i) the extent of the injuries incurred, (ii) recent experience on the settled claims, (iii) settlement offers made to the other parties to the litigation and (iv) any other factors that may have a material effect on the FiberCel Litigation.

5 unchanged sentences

Since June 2023, the Company has also engaged in a process to negotiate and attempt to resolve many of the cases in the VBM Litigation.

In total, Elutia’s liability in nine of the cases has been settled for a total cash outlay of approximately $ 1.0 million.

For the remaining 26 cases, which includes unasserted claims that the Company believes are probable of assertion, the Company estimated a probable loss at an estimated amount of $ 3.9 million at September 30, 2024, which is recorded as Contingent Liability for Legal Proceedings in the accompanying condensed consolidated balance sheets.

The expense related to this estimate was recorded within Litigation costs, net in the accompanying condensed consolidated statement of operations, with the entirety of such expense offset by the insurance received or receivable as further described below.

In total, Elutia’s liability in 12 of the cases has been settled for a total cash outlay of

approximately $ 1.5 million.

For the remaining 23 cases, which includes unasserted claims that the Company believes are probable of assertion, the Company estimated a probable loss at an estimated amount of $ 3.6 million at March 31, 2025, which is recorded as Contingent Liability for Legal Proceedings in the accompanying consolidated balance sheets.

The expense related to this estimate was recorded within Litigation costs, net in the accompanying consolidated statement of operations, with the entirety of such expense offset by insurance recoveries received or receivable as further described below.

In order to reasonably estimate the liability for the unsettled VBM Litigation cases and unasserted claims, the Company, along with outside legal counsel, has assessed a variety of factors, including (i) the extent of the injuries incurred, (ii) recent experience on the settled claims, (iii) settlement offers made to the other parties to the litigation and (iv) any other factors that may have a material effect on the VBM Litigation.

While the Company believes its estimated liability to be reasonable, the actual loss amounts are highly variable and are dependent upon the relevant facts and case-by-case resolutions.

As more information is learned about asserted and unasserted claims and potential future trends,

adjustments may be made to this Contingent Liability for Legal Proceedings as appropriate.

As more information is learned about asserted and unasserted claims and potential future trends, adjustments may be made to this Contingent Liability for Legal Proceedings as appropriate.

Management believes that it is reasonably possible that the Company could incur liabilities in excess of amounts accrued and the ultimate liability could be material to the Company’s financial position, results of operations and cash flows in the period recognized.

3 unchanged sentences

The Company has purchased insurance coverage that, subject to common contract exclusions, provided coverage for the FiberCel Litigation and VBM Litigation product liability losses as well as legal defense costs.

Additionally, the Company has various potential indemnity and/or contribution rights against third party sources with respect to certain product liability losses.

When settlements are reached and/or amounts are recorded in the related Contingent Liability for Legal Proceedings, the Company calculates amounts due to be reimbursed pursuant to the terms of the coverage and related agreements, and pursuant to other indemnity or contribution claims, in respect of product liability losses and related defense costs.

1 unchanged sentence

The determination that the recorded receivables are probable of collection is based on the terms of agreements reached in respect of indemnity and contribution claims as well as the advice of the Company’s outside legal counsel.

These receivables at September 30, 2024 totaled $ 4.6 million, with $ 0.4 million relating to the FiberCel Litigation and $ 4.2 million related to the VBM Litigation, respectively and are recorded as Receivables of Litigation Costs in the accompanying condensed consolidated balance sheets.

The Company had been pursuing additional recovery amounts in respect of indemnity and contribution claims with certain insurance providers.

During the three months ended September 30, 2024, the Company resolved these matters through a settlement entered into in September 2024.

The settlement totaled $ 1.6 million, with such recovery being recognized during the three months ended September 30, 2024 and recorded within Litigation costs, net in the accompanying condensed consolidated statement of operations.

As of both September 30, 2024 and 2023, the Company was not a party to, or aware of, any legal matters or claims with material financial exposure, except for the FiberCel Litigation, VBM Litigation and Medtronic matter.

These receivables as of March 31, 2025 totaled $ 3.9 million and are recorded as Insurance Receivables of Litigation Costs in the accompanying consolidated balance sheets.

As of March 31, 2025, all amounts recorded as Insurance Receivables of Litigation Costs related to the VBM Litigation, and additional insurance remains available to cover the future cost of the VBM Litigation and related defense costs.

Conversely, the Company has no more insurance to cover the cost of the FiberCel Litigation and the related defense costs.

As of both March 31, 2025 and 2024, the Company was not a party to, or aware of, any legal matters or claims with material financial exposure, except for the FiberCel Litigation, VBM Litigation and Medtronic matter.

Net Income (Loss) Per Share

Three Months Ended

Nine Months Ended

(in thousands, except share and per share data)

September 30,

Net income (loss) from continuing operations

Undistributed net income to participating securities

Net income (loss) from continuing operations attributable to common stockholders

Income (loss) attributable to common stockholders from discontinued operations

Net income (loss) attributable to common stockholders

dilutive gain on revaluation of warrant liability, net of addback for undistributed net income to participating securities

Net loss attributable to common stockholders for diluted earnings per share

dilutive gain on revaluation of warrant liability

Net loss for diluted earnings per share

Weighted average number of common shares - basic

Effect of dilutive common and prefunded warrants

Effect of dilutive prefunded warrants

Weighted average number of common shares - diluted

Net income (loss) attributable to common stockholders from continuing operations per share - basic

Net loss per share attributable to common stockholders from continuing operations per share - diluted

Net income (loss) attributable to common stockholders from discontinued operations per share - basic and diluted

Net income (loss) attributable to common stockholders per share - basic

Net loss attributable to common stockholders per share - diluted

Basic net loss per share is computed by dividing net loss for the period by the weighted average number of common shares outstanding during the period.

Diluted net loss per share is computed by dividing the net loss, adjusted for gains on the revaluation of warrant liability (see Note 9), by the weighted average number of common shares outstanding for the period, adjusted for the dilutive effect of shares of common stock equivalents resulting from the exercise of the Common Warrants, 2023 Prefunded Warrants and 2024 Prefunded Warrants.

The treasury stock method was used to calculate the potential dilutive effect of these common stock equivalents.

Potentially dilutive shares were excluded from the computation of diluted net loss when their effect was antidilutive.

The following outstanding common stock equivalents as of the end of their respective periods were excluded from the computation of diluted net loss per share for the periods presented because including them would have been anti-dilutive:

Net loss per share - basic

Net loss per share - diluted

Certain of the Company’s potential dilutive securities have been excluded from the computation of diluted net loss per share as the effect would be anti-dilutive.

The Company excluded the following potential common shares, presented based on amounts outstanding at period end, from the computation of diluted net loss per share:

Three Months Ended

Nine Months Ended

September 30,

Options to purchase common stock

Restricted stock units

Class A common stock warrants

Common Warrants

1 unchanged sentence

2024 Prefunded Warrants

2025 Prefunded Warrants

Segment Information

With the sale of the Orthobiologics Business, the Company now operates in three segments.

These segments are based on financial information that is utilized by the Company’s chief operating decision maker to assess performance and allocate resources.

This financial information does not include the assets by segment.

With the divestiture of the Orthobiologics Business, the Company now operates in three segments.

The Company determined its operating and reportable segments to be consistent with its major product groupings – Device Protection, Women’s Health and Cardiovascular.

The Company’s net sales disaggregated by segment were as follows (in thousands):

Three Months Ended

Nine Months Ended

September 30,

The accounting policies of the segments are the same as those described in the summary of significant accounting policies.

The Chief Operating Decision Maker ("CODM") is the Chief Executive Officer.

The CODM evaluates the performance of our segments based upon, among other things, segment net sales and segment gross profit, excluding intangible asset amortization (“segment gross profit”).

Segment gross profit is what the CODM uses in evaluating our results of operations and the financial measure that provides insight into our overall performance and financial position.

The CODM considers budget-to-actual variances and variances against prior years using segment gross profit when making decisions about allocating resources to the segments.

Asset information is not provided as the Company's CODM does not regularly review or utilize detailed asset data to assess segment performance.

For the three months ended March 31, 2025, the Company’s segment gross profit was comprised of the following (in thousands):

Device Protection

1 unchanged sentence

Cardiovascular

Total net sales

The Company’s gross profit disaggregated by segment were as follows (in thousands):

Three Months Ended

Nine Months Ended

September 30,

Gross profit:

Cost of goods sold, excluding intangible asset amortization

Segment gross profit

The net sales for the three months ended March 31, 2025 include the revenues derived from one customer which represents 15 % of total net sales.

Such customer is included within the Women’s Health segment.

For the three months ended March 31, 2024, the Company’s segment gross profit was comprised of the following (in thousands):

Device Protection

1 unchanged sentence

Cardiovascular

Gross profit, excluding intangible asset amortization

Intangible asset amortization expense

The following table is a reconciliation of segment gross profit to the consolidated loss before provision for income taxes (in thousands):

Cost of goods sold, excluding intangible asset amortization

Segment gross profit

The net sales for the three months ended March 31, 2024 include the revenues derived from one customer which represents 17 % of total net sales.

Such customer is included within the Women’s Health segment.

The following table is a reconciliation of segment gross profit to the consolidated loss before provision for income taxes for the three months ended March 31, 2025 and 2024, (in thousands):

Three Months Ended

Nine Months Ended

September 30,

Gross profit, excluding intangible asset amortization

Segment Gross Profit

Intangible asset amortization expense

7 unchanged sentences

Other expense (income), net

Income (loss) before provision for income taxes

Loss before provision for income taxes

During the three months ended March 31, 2025 and 2024, the Company did not have any material international product sales, and the Company did not own any long-lived assets outside the United States.

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 1. Financial Statements