What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-02-26 compared with 2024-02-28 · 412 added, 338 removed, 750 unchanged (50% of the section changed)

4 unchanged sentences

Consolidated Statements of Operations – For the years ended December 31, 2024, 2023 and 2022

Consolidated Statements of Stockholders’ Equity ( Deficit) – For the years ended December 31, 2023, 2022 and 2021

Consolidated Statements of Cash Flows – For the years ended December 31, 2024, 2023 and 2022

Consolidated Statements of Stoc kholders’ Equity (Deficit) – Fo r the years ended December 31, 2024, 2023 and 2022

Notes to Consolidated Financial Statements

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The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Net Sales - Revenue Recognition — Refer to Note 2 to the Financial Statements

Net Sales - Revenue Recognition — Refer to Note 2 in the financial statements

Critical Audit Matter Description

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• We evaluated the appropriateness and consistency of the methods and assumptions utilized by management to estimate consignment revenue.

• We tested a sample of consignment revenue transactions manually accrued as of year-end and evaluated whether the transactions were recorded in the correct period.

• We selected a sample of ship and bill revenue transactions close to period end by agreeing the amounts recognized to source documents and evaluating whether the transaction was recorded in the correct period.

• We tested a sample of credits issued after year end by agreeing to documents supporting the authorization for the issuance of the credit and to evaluate if the credit was issued in the correct period.

• We tested a sample of consignment revenue transactions accrued as of year-end and evaluated whether the transactions were recorded in the correct period.

• We tested a sample of ship and bill revenue transactions close to period end by agreeing the amounts recognized to source documents and evaluating whether the transaction was recorded in the correct period.

• We tested a sample of sale refunds issued after year end by agreeing to documents supporting the authorization for the issuance of the refund and evaluating if the refund was recorded in the correct period.

/s/ Deloitte & Touche LLP

11 unchanged sentences

Prepaid expenses 5,018 5,624

Current assets of discontinued operations — 1,331

Other current assets 2,817 1,745

6 unchanged sentences

Other assets 1,106 205

Noncurrent assets of discontinued operations — 535

Total assets $ 263,915 $ 239,047

LIABILITIES, CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS’ EQUITY (DEFICIT)

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Current portion of long term debt $ 1,000 $ 1,000

Accounts payable 7,409 9,048

1 unchanged sentence

Accrued expenses 9,012 9,361

Current portion of Profit Share Payments 1,421 —

Current liabilities of discontinued operations — 1,352

5 unchanged sentences

Commitments and contingencies (Note 18)

Convertible preferred stock Series B;

$ .001 par value;

100,000 shares authorized, 0 shares issued and outstanding at December 31, 2023 and 100,000 shares issued and outstanding at December 31, 2022

Stockholders’ equity (deficit)

Stockholders’ equity

Common stock;

$ .001 par value;

250,000,000 shares authorized, 146,227,639 issued and outstanding at December 31, 2023 and 187,500,000 authorized, 113,705,447 issued and outstanding at December 31, 2022

250,000,000 shares authorized, 146,932,032 issued and outstanding at December 31, 2024 and 146,227,639 issued and outstanding at December 31, 2023

Additional paid-in capital 284,219 276,249

Accumulated deficit ( 91,259 ) ( 133,678 )

Total stockholders’ equity (deficit) 142,717 ( 17,988 )

Total liabilities, convertible preferred stock, and stockholders’ equity (deficit)

Total stockholders’ equity

193,107 142,717

Total liabilities and stockholders’ equity

$ 263,915 $ 239,047

See notes to the consolidated financial statements.

19 unchanged sentences

Income (loss) from continuing operations before income tax provision 57,294 30,633 ( 19,747 )

Income tax provision benefit (expense) from continuing operations 36,806 ( 206 ) ( 247 )

Net income (loss) from continuing operations 67,439 ( 19,953 ) ( 12,301 )

(Loss) income from discontinued operations, net of tax

Income tax provision (expense) benefit from continuing operations

( 15,296 ) 36,806 ( 206 )

Net income (loss) from continuing operations 41,998 67,439 ( 19,953 )

Income (loss) from discontinued operations, net of tax 421 ( 9,211 ) ( 10,244 )

Net income (loss) $ 42,419 $ 58,228 $ ( 30,197 )

Net income (loss) from continuing operations available to common stockholders (Note 10) $ 55,796 $ ( 26,533 ) $ ( 18,437 )

Net income (loss) available to common stockholders from continuing operations $ 41,998 $ 55,796 $ ( 26,533 )

Basic net income (loss) per common share:

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Continuing operations $ 0.28 $ 0.43 $ ( 0.24 )

$ 0.43 $ ( 0.24 ) $ ( 0.17 )

Discontinued operations 0.00 ( 0.06 ) ( 0.09 )

( 0.06 ) ( 0.09 ) 0.02

Diluted net income (loss) per common share:

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AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(in thousands, except share data)

Common Stock Additional

Paid-in Treasury Stock Accumulated

Shares Amount Capital Shares Amount Deficit Total

Balance at December 31, 2020 112,703,926 $ 113 $ 158,610 1,773,683 $ ( 7,449 ) $ ( 151,424 ) $ ( 150 )

Deemed dividends — — ( 926 ) — — — ( 926 )

Share-based compensation expense — — 14,757 — — — 14,757

Exercise of stock options — — ( 1,199 ) ( 487,361 ) 2,636 — 1,437

Issuance of restricted stock — — ( 4,053 ) ( 810,405 ) 4,053 — —

Restricted stock shares canceled/forfeited — — 515 73,056 ( 515 ) — —

Shares repurchased for tax withholding — — — 469,239 ( 4,751 ) — ( 4,751 )

Other — — ( 2,009 ) ( 239,502 ) 2,009 — —

Net loss — — — — — ( 10,285 ) ( 10,285 )

Balance at December 31, 2021 112,703,926 $ 113 $ 165,695 778,710 $ ( 4,017 ) $ ( 161,709 ) $ 82

Share-based compensation expense — — 12,666 — — — 12,666

Issuance of restricted stock 840,759 1 ( 3,969 ) ( 882,251 ) 3,968 — —

Restricted stock shares canceled/forfeited — — 30 5,338 ( 30 ) — —

Exercise of stock options 160,762 — ( 618 ) ( 151,239 ) 1,269 — 651

Shares repurchased for tax withholding — — — 249,442 ( 1,190 ) — ( 1,190 )

Net loss — — — — — ( 30,197 ) ( 30,197 )

Balance at December 31, 2022 113,705,447 $ 114 $ 173,804 — $ — $ ( 191,906 ) $ ( 17,988 )

Conversion of Series B Preferred Stock 29,761,650 30 87,840 — — — 87,870

Repurchase of Series B Preferred Stock — — ( 4,935 ) — — — ( 4,935 )

Employee stock purchase plan 444,809 — 1,367 — — — 1,367

Share-based compensation expense — — 17,178 — — — 17,178

Exercise of stock options 130,129 — 885 ( 17,032 ) 112 — 997

Issuance of restricted stock 2,185,604 2 ( 268 ) ( 73,335 ) 266 — —

Restricted stock shares canceled/forfeited — — 378 90,367 ( 378 ) — —

Net income — — — — — 58,228 58,228

Balance at December 31, 2023 146,227,639 $ 146 $ 276,249 — $ — $ ( 133,678 ) $ 142,717

See notes to the consolidated financial statements.

MIMEDX GROUP, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)

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Adjustments to reconcile net income (loss) from continuing operations to net cash flows provided by (used in) operating activities of continuing operations:

Share-based compensation 16,933 16,959 11,328

Deferred income tax provision

12,472 ( 37,802 ) —

Share-based compensation 16,959 11,328 14,156

Shares received in settlement of litigation ( 9,300 ) — —

Amortization of intangible assets 3,762 762 701

Depreciation 2,279 2,665 3,345

Bad debt expense 1,449 2,820 —

Loss on extinguishment of debt 1,401 — —

Non-cash lease expenses 1,310 1,268 1,259

Amortization of intangible assets 762 701 820

Amortization of deferred financing costs 505 467 1,055

Accretion of asset retirement obligation 93 92 81

Loss (gain) on fixed asset disposal 15 ( 17 ) 262

Impairment of intangible assets — — 53

Credit loss expense 595 1,449 2,820

Other 1,112 613 542

Increase (decrease) in cash resulting from changes in:

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Net cash flows provided by (used in) operating activities of continuing operations 67,128 34,937 ( 7,972 )

Net cash flows (used in) provided by operating activities of discontinued operations

Net cash flows used in operating activities of discontinued operations

( 930 ) ( 8,162 ) ( 9,921 )

3 unchanged sentences

Purchases of equipment ( 1,683 ) ( 1,987 ) ( 1,514 )

Patent application costs ( 168 ) ( 170 ) ( 252 )

Sales of equipment — 24 —

Cash paid for licensing agreement — ( 1,000 ) —

Principal payments from note receivable — — 75

Cash paid for acquisitions ( 7,862 ) — —

( 38 ) ( 168 ) ( 1,146 )

Net cash flows used in investing activities ( 9,583 ) ( 2,155 ) ( 2,660 )

Cash flows from financing activities:

Proceeds from Citizens Revolving Credit Facility 30,000 — —

Proceeds from Citizens Term Loan Facility 19,783 — —

Prepayment premium on Hayfin term loan ( 500 ) — —

Deferred financing cost ( 1,101 ) — —

Repayment of Hayfin term loan ( 50,000 ) — —

Repayment of Citizens Revolving Credit Facility ( 30,000 ) — —

Principal payments on Citizens Term Loan Facility ( 1,000 ) — —

Proceeds from exercise of stock options 1,397 997 651

Payments under finance lease obligations ( 52 ) ( 41 ) ( 38 )

Repurchase of Series B Preferred Shares ( 9,515 ) — —

Stock repurchased for tax withholdings on vesting of restricted stock ( 2,641 ) — ( 1,190 )

Repurchase of Series B Preferred Shares — ( 9,515 ) —

( 137 ) ( 52 ) ( 41 )

Net cash flows used in financing activities

( 34,199 ) ( 8,570 ) ( 580 )

Net change in cash and cash equivalents 16,050 ( 21,133 ) ( 8,729 )

Net change in cash

22,416 16,050 ( 21,133 )

Cash and cash equivalents, beginning of period

82,000 65,950 87,083

Cash and cash equivalents, end of period

$ 104,416 $ 82,000 $ 65,950

See notes to the consolidated financial statements.

1 unchanged sentence

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(in thousands, except share data)

Common Stock Additional

Paid-in Treasury Stock Accumulated

Shares Amount Capital Shares Amount Deficit Total

Balance at December 31, 2021 112,703,926 $ 113 $ 165,695 778,710 $ ( 4,017 ) $ ( 161,709 ) $ 82

Share-based compensation expense — — 12,666 — — — 12,666

Exercise of stock options 160,762 — ( 618 ) ( 151,239 ) 1,269 — 651

Issuance of restricted stock 840,759 1 ( 3,969 ) ( 882,251 ) 3,968 — —

Restricted stock shares canceled/forfeited — — 30 5,338 ( 30 ) — —

Shares repurchased for tax withholding — — — 249,442 ( 1,190 ) — ( 1,190 )

Net loss — — — — — ( 30,197 ) ( 30,197 )

Balance at December 31, 2022 113,705,447 $ 114 $ 173,804 — $ — $ ( 191,906 ) $ ( 17,988 )

Share-based compensation expense — — 17,178 — — — 17,178

Employee stock purchase plan 444,809 — 1,367 — — — 1,367

Issuance of restricted stock 2,185,604 2 ( 268 ) ( 73,335 ) 266 — —

Restricted stock shares canceled/forfeited — — 378 90,367 ( 378 ) — —

Exercise of stock options 130,129 — 885 ( 17,032 ) 112 — 997

Repurchase of Series B Preferred Stock — — ( 4,935 ) — — — ( 4,935 )

Conversion of Series B Preferred Stock 29,761,650 30 87,840 — — — 87,870

Net income — — — — — 58,228 58,228

Balance at December 31, 2023 146,227,639 $ 146 $ 276,249 — $ — $ ( 133,678 ) $ 142,717

Share-based compensation expense — — 16,933 — — — 16,933

Employee stock purchase plan 245,640 — 1,582 — — — 1,582

Issuance of restricted stock, net 1,451,067 2 ( 2,643 ) — — — ( 2,641 )

Exercise of stock options 207,686 — 1,397 — — — 1,397

Shares received in settlement of litigation ( 1,200,000 ) ( 1 ) ( 9,299 ) — — — ( 9,300 )

Net income — — — — — 42,419 42,419

Balance at December 31, 2024 146,932,032 $ 147 $ 284,219 — $ — $ ( 91,259 ) $ 193,107

See notes to the consolidated financial statements.

MIMEDX GROUP, INC.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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The Company’s business is focused primarily on the United States of America but the Company also has a small commercial presence in several international locations, including Japan.

Disbanding of Regenerative Medicine Business Unit

On June 20, 2023, the Company announced the disbanding of its Regenerative Medicine business unit and the suspension of its Knee Osteoarthritis clinical trial program.

During the fourth quarter of 2023, the Company completed the regulatory obligations associated with the clinical trial and concluded that the business unit met the criteria for presentation as a discontinued operation at that time.

Refer to Note 13, Discontinued Operations , for further discussion.

Significant Accounting Policies

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Reclassifications

Increases in cash resulting from changes in income taxes of $ 0 and $ 9.3 million for the years ended December 31, 2022 and 2021, respectively, were separately presented in previously issued consolidated statements of cash flows.

These amounts are reflected as part of changes in other assets in the consolidated statements of cash flows included in these consolidated financial statements.

Current portion of long term debt of $ 1.0 million as of December 31, 2023, which was presented in other current liabilities in previously-issued financial statements, has been reclassified to be presented in a separate line item, still within current liabilities, in these consolidated financial statements to conform to current year presentation.

Use of Estimates

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Actual results could differ from those estimates.

Significant estimates include estimated useful lives and potential impairment of property and equipment, goodwill and intangible assets, estimates of loss for contingent liabilities, estimate of allowance for doubtful accounts, estimate of fair value of share-based payments, the extent of probable achievement of performance conditions in share-based payment awards, estimates of returns and allowances, and valuation of deferred tax assets.

Significant estimates include estimates of useful lives of property and equipment and intangible assets, impairment of property and equipment, goodwill and intangible assets, estimates of loss for contingent liabilities, estimate of allowance for doubtful accounts, estimate of fair value of and the probable achievement of performance conditions associated with share-based payment awards, estimates of returns and allowances, estimate of fair value of Profit Share Payments (as defined below), and valuation of deferred tax assets.

Segment Reporting

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The Company reassesses the existence of operating segments when facts and circumstances suggest that there may have been a change in the way that the Company is managed.

Prior to the fourth quarter of 2023, the Company assessed that it operated as two operating and reportable segments:

Wound & Surgical and Regenerative Medicine.

During the fourth quarter of 2023, upon the conclusion that the Regenerative Medicine segment met all the requirements to be classified as a discontinued operation, the Company reassessed its operating segments, concluding that the CODM assesses performance and resources as one reportable segment.

The Company assessed that the CODM assesses performance and resources as one reportable segment.

Refer to Note 13, Segment Information, for further discussion.

Cash and Cash Equivalents

4 unchanged sentences

Federal Deposit Insurance Corporation (“ FDIC ”) provides insurance coverage for deposits up to $250,000 for substantially all depository accounts.

As of December 31, 2023 and 2022, the Company had cash and cash equivalents of approximately $ 81.3 million and $ 65.2 million, respectively, in excess of the insured amounts in five depository institutions.

As of December 31, 2024 and 2023, the Company had cash and cash equivalents of approximately $ 103.7 million and $ 81.3 million, respectively, in excess of the insured amounts in three depository institutions.

Accounts Receivable

1 unchanged sentence

Generally, the Company does not require collateral or any other security to support its receivables.

The allowance for doubtful accounts is calculated based on the Company’s current expectations for credit losses, which is generally informed by historical trends.

The Company’s policy to reserve for potential bad debts based on the age of the individual receivable as well as customer-specific qualitative factors, such as bankruptcy proceedings.

Accounts receivable is presented net of the Company’s allowance for doubtful accounts.

The allowance for credit losses is calculated based on the Company’s current expectations for credit losses, which is generally informed by historical trends.

The Company’s policy to reserve for potential bad debts based on the age of the individual receivable and the character of the customer, as well as customer-specific qualitative factors, such as bankruptcy proceedings.

The Company manages credit risk by routinely performing credit checks on customers prior to sales.

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Historical yields and normal capacities are utilized in the calculation of production overhead rates.

Write-downs are utilized to account for slow-moving inventory as well as inventory no longer needed due to diminished demand or regulatory action.

Inventory is written down to the lower of cost or net realizable value to reflect slow-moving inventory as well as inventory no longer needed due to diminished demand or regulatory action.

Property and Equipment

9 unchanged sentences

Subsequent revisions to estimates for future cash flows related to the asset retirement obligations are recorded as equal increases or decreases to the retirement asset and liability.

Intangible Assets, Net

Intangible assets are assets which lack physical substance and (a) grant the Company with a legal right or (b) are capable of being separated and sold.

Intangible assets acquired outside of a business combination are capitalized based on the cost to acquire the assets, allocated pro rata based on the fair value of the individual assets acquired.

Any contingent consideration issued in connection with the acquisition of assets is capitalized at the time at which all contingencies regarding its payment are resolved.

The Company amortizes the capitalized cost of finite-lived intangible assets over a period generally reflective of the anticipated contributions to cash flow generation.

Amortization of intangible assets is recorded as part of cost of sales or operating expenses in the consolidated statements of operations depending on the nature of the underlying intangible asset and its use in the Company’s operations.

Impairment of Long-lived Assets

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When a situation arises which results in a conclusion that it is more likely than not that an asset is not recoverable, the Company estimates cash flows expected to be derived from the continuing use and eventual disposition of the asset.

If the sum of those cash flows, not discounted to present value, does not exceed the net book value of the asset, the Company estimates the fair value of the asset.

If the sum of those undiscounted cash flows does not exceed the net book value of the asset, the Company estimates the fair value of the asset.

Impairment loss is recorded to the extent that the net book value exceeds the fair value of the asset.

2 unchanged sentences

Actual results may differ from these estimates.

The Company recorded no impairment losses on intangible assets for the years ended December 31, 2023 and 2022 and $ 0.1 million for the year ended December 31, 2021.

The Company recorded no impairment losses with respect to any other classes of long-lived assets in those periods.

Goodwill and Indefinite-lived Intangible Assets

4 unchanged sentences

In performing the quantitative test, impairment loss is recorded to the extent that the carrying value of the reporting unit exceeds its assessed fair value.

If the Company concludes that the way in which it is being managed has changed and results in a change to its concluded reporting units, the goodwill assigned to the original reporting unit is allocated to the new reporting units based on the relative fair value of the new reporting units.

The Company determines the fair value of reporting units using the income and market approaches, as applicable.

3 unchanged sentences

Under the market approach, the Company uses market multiples derived from various comparable companies based on measures salient to investors in those companies.

On June 20, 2023, the Company announced the disbanding of its Regenerative Medicine business unit and the suspension of its Knee Osteoarthritis clinical trial program.

As a result of this event, the Company evaluated goodwill associated with the Regenerative Medicine reporting unit for potential impairment.

The Company estimated fair value for the reporting unit using the income approach;

specifically, a discounted cash flow method.

As a result of this assessment, management concluded that the fair value of the reporting unit exceeded its carrying value by an amount that exceeded its goodwill balance.

Accordingly, the Company recognized an impairment loss for the full amount of the goodwill ascribed to the Regenerative Medicine reporting unit.

Impairment loss is recorded to the extent the carrying value of a reporting unit exceeds the fair value.

No impairment loss is recognized if the fair value of the reporting unit exceeds the carrying value.

The Company incurs certain legal and related costs in connection with patent applications.

8 unchanged sentences

The lease term and applicable payments include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options.

Options to renew or terminate a lease are included in the lease term to the extent that such provisions

are reasonably certain to be exercised.

This determination is reassessed as new information arises and is accounted for prospectively.

1 unchanged sentence

The Company has made an accounting policy election not to separate lease components from non-lease components in the event that the agreement contains both.

Modifications to existing leases are recognized on the modification date.

In such cases, the lease liability is remeasured based on the estimated present value of lease payments from the modification date.

The difference between the lease liability immediately before and immediately after lease modification is reflected as an equal and offsetting adjustment to the associated ROU asset.

Operating lease right of use assets and the related liabilities are included in right of use asset, other current liabilities, and other liabilities, respectively, in the consolidated balance sheets.

5 unchanged sentences

Treasury Stock

Shares repurchased by the Company are recorded as treasury stock at the cost to acquire such shares.

Except for shares retired by the Company upon repurchase, shares repurchased by the Company are recorded as treasury stock at the cost to acquire such shares.

Subsequent issuances of shares held in treasury are assumed to be released on a FIFO basis.

During 2024, all shares repurchased were retired.

Contingencies

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Cost of sales includes all costs directly related to bringing the Company’s products to their final selling destination.

Amounts include direct and indirect costs to manufacture products including raw materials, personnel costs and direct overhead expenses necessary to convert collected tissues into finished goods, product testing costs, quality assurance costs, facility costs associated with the Company’s manufacturing and warehouse facilities, including depreciation, freight charges, costs to operate equipment and other shipping and handling costs for products shipped to customers.

Amounts include direct and indirect costs to manufacture products including raw materials, personnel costs and direct overhead expenses necessary to convert collected tissues into finished goods, costs to acquire product from third-party manufacturers, product testing costs, quality assurance costs, facility costs associated with the Company’s manufacturing and warehouse facilities, including depreciation, freight charges, costs to operate equipment and other shipping and handling costs for products shipped to customers.

The Company obtains raw material in the form of human placenta donations from participating mothers who give birth via scheduled Caesarean section.

11 unchanged sentences

The Company recognizes deferred tax assets to the extent that it believes these assets are more likely than not to be realized.

If the Company determines that it would be able to realize its deferred tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the deferred tax asset valuation allowance.

The Company evaluates the realizability of its deferred tax assets quarterly.

In evaluating the Company’s ability to recover its deferred tax assets within the jurisdiction from which they arise, management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies, results of recent operations, and changes in tax laws.

In projecting future taxable income, the Company begins with historical results and incorporates assumptions about the amount of future state and federal pretax operating income adjusted for items that do not have tax consequences.

The assumptions about future taxable income require significant judgment and are consistent with the plans and estimates the Company uses to manage the underlying businesses.

The assumptions about future taxable income require significant judgment and are consistent with the plans and estimates the Company uses to manage the underlying business.

In evaluating the objective evidence that historical results provide, management considers three years of cumulative income (loss) exclusive of items that will not recur, such as discontinued operations.

4 unchanged sentences

federal income tax purposes and across numerous state jurisdictions.

ASC Topic 740, Income Taxes , states that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical

Accounting Standards Codification (“ ASC ”) Topic 740, Income Taxes , states that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or

litigation processes, on the basis of the technical merits.

The Company records unrecognized tax benefits within other current liabilities on the consolidated balance sheets and adjusts these liabilities when management’s judgment changes as a result of the evaluation of new information not previously available.

3 unchanged sentences

The Company recognizes interest and penalties related to unrecognized tax benefits within the income tax expense line in the consolidated statements of operations.

Accrued interest and penalties, if any, are included within the related deferred tax liability line in the consolidated balance sheets and recorded as a component of income tax expense.

Accrued interest and penalties, if any, are included within the other liabilities line in the consolidated balance sheets and recorded as a component of income tax expense.

Share-based Compensation

2 unchanged sentences

Grants are issued outside of the annual cadence for certain new hires, promotions, and other events.

The Company has two share-based compensation plans which provide for the granting of equity awards, including qualified incentive and non-qualified stock options and restricted stock awards.

The Company has three types of awards to employees and directors:

restricted stock units (“ RSUs ’), performance stock units (“ PSUs ”), and stock options.

The amount of expense to be recognized is determined by the fair value of the award using inputs available as of the grant date.

The fair value of equity incentive awards that are not subject to a market condition is the value of common stock on the grant date.

For equity incentive awards that are subject to a market condition, the fair value of common stock on the grant date is adjusted to reflect the value of the market condition, generally using a path-dependent pricing model, such as a Monte Carlo simulation.

For awards with service-based vesting conditions only, the Company recognizes share-based compensation expense on a straight-line basis through the vesting date of the last tranche of the award.

The basis of fair value for RSUs and PSUs is the closing stock price on the date of the grant.

The fair value of stock options is determined based on an appropriate option pricing model using inputs available as of the grant date, generally using a Black-Scholes model.

In each case, the fair value is adjusted for the presence of a market condition using an appropriate pricing model.

For awards with service-based vesting conditions only, the Company recognizes the grant date fair value as share-based compensation expense on a straight-line basis through the vesting date of the last tranche of the award.

For awards which are subject to a condition other than a service condition, the Company recognizes stock-based compensation expense using the graded-vesting method, treating each tranche as if it were a separately-granted award and recognizing expense through the vesting date of each individual tranche.

In each scenario, the Company recognizes share-based compensation expense based upon the probability that the award will ultimately vest.

In each case, the Company recognizes share-based compensation expense to the extent that vesting is “probable”.

The Company recognizes the cumulative effect of changes in the probability outcomes in the period in which the changes occur.

For awards subject to a market condition, the resolution of the market condition is not subsequently considered in expense recognition.

The resolution of a market condition is not subsequently considered in expense recognition.

Consequently, the Company could recognize expense for awards that do not ultimately vest.

1 unchanged sentence

Basic net income (loss) per common share is calculated as net income (loss) from continuing operations available to common stockholders divided by weighted average common shares outstanding for the applicable period.

Net income (loss) from continuing operations available to common stockholders is calculated by adjusting net income (loss) for dividends on the Company’s previously outstanding Series B Convertible Preferred Stock (“ Series B Preferred Stock ”).

Net income (loss) from continuing operations available to common stockholders is calculated by adjusting net income (loss) for dividends on the Company’s historical Series B Convertible Preferred Stock (“ Series B Preferred Stock ”), which fully converted during 2023.

This amount is divided by the weighted average common shares outstanding during the period.

4 unchanged sentences

Diluted net income (loss) per common share adjusts basic net income (loss) per common share for convertible securities, options, equity incentive awards, and other share-based payment awards which have yet to vest and vest only upon the satisfaction of a service condition.

Equity incentive awards and options that are subject to a performance or market condition are included only if the performance or market condition would be satisfied if the end of the applicable period were the end of the performance period.

Equity incentive awards and options that are subject to a performance or market condition

are included only if the performance or market condition would be satisfied if the end of the applicable period were the end of the performance period.

In any case, these adjustments are reflected in the calculation of diluted net income (loss) per common share to the extent that they reduce basic net income (loss) from continuing operations per common share.

Basic and diluted net income (loss) per common share from discontinued operations are evaluated using the same denominator as basic and diluted net income (loss) per common share from continued operations.

The Company uses the if-converted method to calculate the dilutive effect of the Series B Preferred Stock and other convertible securities to the extent they are outstanding.

The Company used the if-converted method to calculate the dilutive effect of the Series B Preferred Stock.

The if-converted method assumes that convertible securities are converted at the later of the issuance date and the beginning of the period.

25 unchanged sentences

The Company receives benefits from various government entities for various purposes from time to time.

With respect to any benefits that are not dependent on income (which are subject to the policy described under Income Taxes , above), the Company recognizes such benefits at the point in time in which all barriers to receive the assistance have been overcome in an amount equal to the expected benefit.

With respect to any benefits that are not dependent on income (which are subject to the policy described under Income Taxes , above), the Company

recognizes such benefits at the point in time in which all barriers to receive the assistance have been overcome in an amount equal to the expected benefit.

Benefits are reflected in the consolidated statements of operations in the line item to which the associated benefit relates.

Recently Adopted Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board issued Accounting Standards Update (“ ASU ”) 2020-04, “ Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

” ASU 2020-04 provides temporary expedients to accounting guidance for certain contract modifications and hedging arrangements to ease financial reporting burdens as a result of market transitions from certain reference rates, including the London Interbank Offered Rate (“ LIBOR ”).

In June 2023, the Company entered into Amendment No.

2 (the “ Amendment No.

2 ”) to the loan agreement, dated as of June 30, 2020, by and among the Company, Hayfin Services, LLP (“ Hayfin ”), an affiliate of Hayfin Capital Management LLP, and certain other parties, (as amended, the “ Hayfin Loan Agreement ”), pursuant to which the reference rate used to determine the interest rate was changed from the LIBOR to the Secured Overnight Financing Rate (“ SOFR ”).

Because the only terms of Amendment No.

2 that affected the Company’s contractual cash flows were related to the changes in the reference rate, the Company adopted the optional guidance prescribed by Topic 848 to this transaction.

The adoption of ASU 2020-04 and its application to the Second Amendment did not materially impact the Company’s audited consolidated financial statements for the year ended December 31, 2023.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued ASU 2023-07, “ Segment Reporting:

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ASU 2023-07 is effective for annual reporting periods beginning after December 15, 2023, and interim periods in fiscal years beginning after December 15, 2024.

As of December 31, 2023, the Company is evaluating the impact of this standard on its consolidated financial statements.

As of December 31, 2024, the Company adopted this standard.

Refer to Note 13, Segment Information, for further discussion.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, “ Improvement to Income Tax Disclosures (Topic 740) ”, which requires additional disclosures for income tax rate reconciliations, income taxes paid, and certain other tax disclosures.

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Adoption is required for annual periods beginning after December 15, 2024.

The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

All other ASUs issued and not yet effective as of December 31, 2023, and through the date of this report, were assessed and determined to be either not applicable or are expected to have minimal impact on the Company’s current and future financial position or results of operations.

The Company is currently evaluating the impact of this standard on its consolidated financial statements..

In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40)” , which requires disclosure of specified information about certain costs and expenses.

The amendments in ASU 2024-03 are intended to improve financial reporting by requiring that public business entities disclose additional information about specific expense categories in the notes to the financial statements.

ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual periods beginning after December 15, 2027.

Early adoption is permitted.

The Company is currently evaluating the impact of this standard on its consolidated financial statements.

ASUs issued and not yet effective as of December 31, 2024, and through the date of this report, were assessed and determined to be either not applicable or are expected to have minimal impact on the Company’s current and future financial position or results of operations.

Accounts Receivable, Net

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Total $ 2,279 $ 2,665 $ 3,345

The Company has leases for corporate offices, manufacturing facilities, vehicles, and certain equipment.

Such leases do not require any contingent rental payments, impose any financial restrictions, or contain any residual value guarantees.

The Company has leases for corporate offices and manufacturing facilities.

None of the Company’s leases require any contingent rental payments, impose any financial restrictions, or contain any residual value guarantees.

Supplemental balance sheet information related to the Company’s leases, including the financial statement caption in which the amounts are presented, is as follows (amounts in thousands, except lease term and discount rate):

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Weighted-average discount rate 6.9 % 8.3 % 8.3 %

The Company had no finance lease obligations or associated right of use assets outstanding as of December 31, 2024.

Information related to lease costs are as follows (amounts in thousands):

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Maturities of lease liabilities are as follows (amounts in thousands):

Year Ending December 31, Operating Leases Finance Leases Total

2024 $ 1,623 $ 55 $ 1,678

2025 506 5 511

2026 419 — 419

Thereafter — — —

Year Ending December 31, Operating Leases

Total lease payments 6,891

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Certain lease agreements require the Company to return designated areas of leased space to its original condition upon termination of the lease agreement, for which the Company records an asset retirement obligation and a corresponding capital asset in an amount equal to the estimated fair value of the obligation.

In subsequent periods, the asset retirement obligation is accreted for the change in its present value and the capitalized asset is depreciated, both over the term of the associated lease

In subsequent periods, the asset retirement obligation is

accreted for the change in its present value and the capitalized asset is depreciated, both over the term of the associated lease agreement.

Asset retirement obligations of $ 1.2 million are included in other liabilities in the consolidated balance sheets as of both December 31, 2024 and 2023.

Goodwill and Intangible Assets, Net

In concert with the disbanding of its Regenerative Medicine business unit, management concluded that the Company operated as a single operating segment.

In concert with the disbanding of its Regenerative Medicine business unit during the fourth quarter of 2023, management concluded that the Company operated as a single operating segment beginning at that time.

This operating segment reflected its sole reporting unit for goodwill impairment testing purposes.

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Patents and know-how $ 10,320 $ ( 8,488 ) $ 1,832 $ 10,039 $ ( 7,818 ) $ 2,221

Customer and supplier relationships 7,659 ( 1,147 ) 6,512 — — —

Tradenames and trademarks 2,937 ( 1,850 ) 1,087 — — —

Licenses 1,000 ( 104 ) 896 1,000 ( 54 ) 946

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Amortization of intangible assets

Cost of sales

$ 2,997 $ — $ —

Operating expense

Total amortization of intangible assets

$ 3,762 $ 762 $ 701

Impairment of intangible assets $ 446 $ — $ —

Impairment of intangible assets in 2021 related to supplier relationship assets that were determined to be unrecoverable due to attrition.

There was no impairment of intangible assets in 2023 or 2022.

The impairment of intangible assets in 2024 related to patents which were abandoned.

Expected future amortization of intangible assets as of December 31, 2024, is as follows (in thousands):

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Accrued rebates 1,223 745

Accrued travel 433 566

Accrued inventory receipts 871 174

Other 215 1,038

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Long Term Debt

Citizens Credit Agreement

On January 19, 2024 (the “ Closing Date ”), the Company entered into a Credit Agreement (the “ Citizens Credit Agreement ”) with certain lenders party thereto, and Citizens Bank, N.A.

as administrative agent (the “ Agent ”).

The Citizens Credit Agreement provides for senior secured credit facilities in an aggregate principal amount of up to $ 95.0 million consisting of:

(i) a $ 75.0 million senior secured revolving credit facility (the “ Revolving Credit Facility ”) with a $ 10.0 million letter of credit sublimit and a $ 10.0 million swingline loan sublimit, and (ii) a $ 20.0 million senior secured term loan facility (the “ Term Loan Facility ” and, together with the Revolving Credit Facility, the “ Credit Facilities ”).

All obligations are required to be paid in full on January 19, 2029 (the “ Maturity Date ”).

The Company has the option to obtain one or more incremental Term Loan Facilities and/or increase the commitments under the Revolving Credit Facility in an aggregate principal amount equal to the greater of (i) $ 50.0 million and (ii) 1.00 times the Company’s Consolidated EBITDA (as defined therein), each subject to the existing or any new lenders’ election to extend additional term loans or revolving commitments.

At the Company’s option, borrowings under the Citizens Credit Agreement (other than any swingline loan) will bear interest at a rate per annum equal to (i) the Alternate Base Rate, as defined therein, or (ii) a Term Secured Overnight Financing Rates (“ SOFR ”), as defined therein, in each case plus an applicable margin ranging from 1.25 % and 2.50 % with respect to Alternate Base Rate borrowings and 2.25 % and 3.50 % for Term SOFR borrowings, plus a fallback provision of 0.1 %.

Swingline loans will bear interest at a rate per annum equal to one-month Term SOFR plus the applicable margin.

The applicable margin will be determined based on the Company’s consolidated total net leverage ratio.

The Company is required to pay a quarterly commitment fee on any unused portion of the Revolving Credit Facility, letter of credit fees, and other customary fees to the Agent and the Lenders.

The Term Loan Facility will amortize on a quarterly basis at 1.25 % (for year one and two), 1.88 % (for year three and four), and 2.5 % (for year five) based on the aggregate principal amount outstanding under the Term Loan Facility on the Closing Date, with the remainder due on the Maturity Date.

The Company must make mandatory prepayments in connection with certain asset dispositions and casualty events, subject in each case to customary reinvestment rights.

The Company may prepay borrowings under the Credit Facilities at any time, without premium or penalty, and may, at its option, reduce the aggregate unused commitments under the Revolving Credit Facility in whole or in part, in each case subject to the terms of the Credit Agreement.

The Company must also comply with certain financial covenants, including a maximum total net leverage ratio and a minimum consolidated fixed charge coverage ratio, as well as other customary restrictive covenants.

As of December 31, 2024, the Company is in compliance with all financial covenants under the Citizens Credit Agreement.

Original issue discount and deferred financing costs incurred as part of the Credit Facilities were allocated between the Term Loan Facility and the Revolving Credit Facility on the basis of the maximum potential principal outstanding permitted under the Citizens Credit Agreement.

The allocation of the deferred financing costs and original issue discount between the Term Loan Facility and the Revolving Credit Facility were as follows (in thousands):

January 19, 2024

Term Loan Facility

Revolving Credit Facility

Long term debt, net Other assets

Original issue discount

$ 224 $ 839 $ 1,063

Deferred financing costs 54 202 256

On the Closing Date, the Company borrowed $ 30.0 million under the Revolving Credit Facility and $ 20.0 million under the Term Loan Facility.

Proceeds from the initial drawings under the Credit Facilities together with cash on hand were used to repay in full the $ 50.0 million principal amount and other outstanding obligations under the Hayfin Term Loan, as defined below, and to pay related fees, premiums, costs and expenses (collectively with the entry into the Citizens Credit Agreement and the initial borrowings thereunder, the “ Debt Refinancing Transactions ”) .

The Company recorded a loss on extinguishment of debt of $ 1.4 million.

This amount is reflected as a part of interest expense, net on the consolidated statement of operations for the year ended December 31, 2024.

The composition of the loss on extinguishment of debt was as follows (amounts in thousands):

January 19, 2024

Unamortized deferred financing costs

Unamortized original issue discount

Prepayment premium

Loss on extinguishment of debt

During February 2024, the Company repaid the initial $ 30.0 million drawing under the Revolving Credit Facility and had no outstanding borrowings under this facility as of December 31, 2024.

Deferred financing costs and original issue discount allocated to the Revolving Credit Facility are amortized straight-line through the expiration of the commitment term.

The Revolving Credit Facility is currently subject to a commitment fee of 0.25 % per annum of the amount undrawn, which is recognized as interest expense.

Hayfin Loan Agreement

In June 2020, the Company entered into the Hayfin Loan Agreement, under which Hayfin provided the Company with a senior secured term loan of $ 50 million (the “ Hayfin Term Loan ”).

In June 2020, the Company entered into a Loan Agreement with, among others, Hayfin Services, LLP, and affiliate of Hayfin Capital Management, LLP (as amended from time to time, the “ Hayfin Loan Agreement ”), under which Hayfin provided the Company with a senior secured term loan of $ 50.0 million (the “ Hayfin Term Loan ”).

The Hayfin Term Loan was to mature on June 30, 2025 (the “ Hayfin Maturity Date ”).

Interest on the Hayfin Term Loan was based on SOFR, plus a fallback provision of 0.15 %, subject to the Floor, plus the Margin.

As of December 31, 2023, the Hayfin Term Loan carried an interest rate of 12.3 %.

As noted below in Note 19.

Subsequent Events , in January 2024, the Company repaid in full the Hayfin Term Loan and terminated the Hayfin Loan Agreement as part of the Debt Refinancing Transactions.

As of December 31, 2023, the Company was in compliance with all applicable financial covenants under the Hayfin Loan Agreement.

Annually, the Company was required to prepay the outstanding loans based on a percentage of Excess Cash Flow (as defined in the Hayfin Loan Agreement), if such were generated.

Had the Company not executed the Debt Refinancing Transactions (as defined in Note 19), the Company would have been required to prepay a portion of the outstanding principal pursuant to the Excess Cash Flow provision under the Hayfin Loan Agreement for the year ended December 31, 2023.

The Company refinanced this short-term obligation prior to issuance of these consolidated financial statements.

The $ 1.0 million of principal repayments for the year ending December 31, 2024 reflects the scheduled principal payments pursuant to the Citizens Credit Agreement (as defined in Note 19) during that period, therefore representing the current obligation that was not refinanced on a long-term basis.

This amount is classified in other current liabilities in the Company’s consolidated balance sheets.

The Hayfin Loan Agreement also specified that a prepayment of the loan, voluntary or mandatory, would subject the Company to a prepayment premium after July 2, 2023, but on or before July 2, 2024, of 1 % of the principal balance repaid.

Deferred financing costs and original issue discount allocated to the Hayfin Term Loan were amortized using the effective interest method through the Hayfin Maturity Date.

The amortization of such amounts is presented as part of interest expense, net on the consolidated statement of operations for the years ended December 31, 2023, 2022, and 2021.

The balances of the Hayfin Term Loan as of December 31, 2023 and 2022 were as follows (amounts in thousands):

Had the Company not executed the Debt Refinancing Transactions, the Company would have been required to prepay a portion of the outstanding principal pursuant to the Excess Cash Flow provision under the Hayfin Loan Agreement for the year ended December 31, 2023.

The $ 1.0 million of principal repayments for the year ending December 31, 2024 reflects the scheduled principal payments pursuant to the Citizens Credit Agreement (as defined above) during that period, therefore representing the current obligation that was not refinanced on a long-term basis.

This amount is classified as current portion of long term debt in the Company’s consolidated balance sheets.

As noted above, the Hayfin Loan Agreement was terminated as a result of the Debt Refinancing Transactions.

There were no continuing obligations as part of the Hayfin Loan Agreement as of December 31, 2024.

The balances of the Term Loan Facility as of December 31, 2024 and the Hayfin Term Loan as of December 31, 2023 were as follows (amounts in thousands):

December 31, 2024 December 31, 2023

Other current liabilities

Long term debt, net

Current portion of long term debt Long term debt, net

Outstanding principal $ 1,000 $ 18,000 $ 1,000 $ 49,000

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Original issue discount — ( 137 ) — ( 120 )

Net principal

$ 1,000 $ 17,830 $ 1,000 $ 48,099

Interest expense related to the Hayfin Term Loan, included in interest expense, net in the consolidated statements of operations, was as follows (amounts in thousands):

Interest expense related to the Term Loan Facility and the Hayfin Term Loan included in interest expense, net in the consolidated statements of operations, was as follows (amounts in thousands):

Year Ended December 31,

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Interest expense $ 1,935 $ 6,583 $ 5,026

Scheduled principal payments on the Hayfin Term Loan as of December 31, 2023 were as follows:

Interest expense related to the Revolving Credit Facility included in interest expense, net in the consolidated statements of operations, was as follows (amounts in thousands):

Year Ended December 31,

Commitment fee

Amortization of deferred financing costs 63

Accretion of original issue discount 168

Interest expense $ 409

Scheduled principal payments due on the Term Loan Facility, by year, as of December 31, 2024 through maturity are as follows (in thousands):

Year ending December 31, Principal

Outstanding principal $ 50,000

As of December 31, 2023, the fair value of the Hayfin Term Loan was $ 46.7 million.

Long term debt

As of December 31, 2024, the fair value of the Term Loan Facility was $ 18.7 million.

This valuation was calculated based on a series of Level 2 and Level 3 inputs, including a discount rate based on the credit risk spread of debt instruments of similar risk character in reference to U.S.

Treasury instruments with similar maturities, with an incremental risk premium for risk factors specific to the Company.

The remaining cash flows associated with the Hayfin Term Loan were discounted to December 31, 2023 using this discount rate to derive the fair value.

The remaining cash flows associated with the Term Loan Facility were discounted to December 31, 2024 using this discount rate to derive the fair value.

Basic and Diluted Net Loss Per Common Share

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$ 41,998 $ 67,439 $ ( 19,953 )

(Loss) income from discontinued operations, net of tax

Income (loss) from discontinued operations, net of tax

421 ( 9,211 ) ( 10,244 )

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Preferred share repurchase in excess of book value — 4,890 —

Accretion of increasing-rate dividend feature — — 926

Total adjustments — 11,643 6,580

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Net income (loss) available to common stockholders from continuing operations 41,998 62,262 ( 26,533 )

(Loss) income from discontinued operations, net of tax

Income (loss) from discontinued operations, net of tax

421 ( 9,211 ) ( 10,244 )

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Series B Preferred Stock

In December 2023, all 95,000 outstanding shares of the Company’s Series B Preferred Stock, together with accrued dividends, were mandatorily converted into shares of the Company’s Common Stock in accordance with the Series B Preferred Stock terms set forth in the Company’s Articles of Incorporation.

As a result of this conversion, the Company issued 29,761,650 shares of Common Stock.

The conversion of the shares ended the dividend accrual associated with the Series B Preferred Stock

Prior to the mandatory conversion, in October 2023, the Company repurchased 5,000 shares of the Company’s Series B Preferred Stock for $ 9.5 million (the “ Repurchase ”) pursuant to a Securities Purchase Agreement with certain entities managed by or affiliated with Hayfin Capital Management LLP (the “ Hayfin Shareholders ”).

In October 2023, the Company repurchased 5,000 shares of the Company’s Series B Preferred Stock for $ 9.5 million (the “ Repurchase ”) pursuant to a Securities Purchase Agreement with certain entities managed by or affiliated with Hayfin Capital Management LLP (the “ Hayfin Shareholders ”).

In connection with the Repurchase, the Hayfin Shareholders entered into customary lock-up provisions requiring them to retain the balance of their equity positions for a period of at least one year.

Management assessed whether the consideration paid could have reflected a non pro-rata distribution and reached the conclusion that it was not.

The below table illustrates changes in the Company’s balance of the Series B Preferred Stock for the years ended December 31, 2023, 2022, and 2021 (in thousands, except per share amounts):

Mandatory Conversion

In December 2023, the remaining 95,000 outstanding shares of the Company’s Series B Preferred Stock, together with accrued dividends, were mandatorily converted into shares of the Company’s Common Stock in accordance with the Series B Preferred Stock terms set forth in the Company’s Articles of Incorporation.

As a result of this conversion, the Company issued 29,761,650 shares of Common Stock to the holders of the Series B Preferred Stock.

The conversion of the shares ended the dividend accrual associated with the Series B Preferred Stock

The below table illustrates changes in the Company’s balance of the Series B Preferred Stock for the year ended December 31, 2023.

(in thousands, except per share amounts):

Series B Preferred Stock

2 unchanged sentences

100,000 $ 92,494

Deemed dividends — 926

Balance at December 31, 2021

100,000 $ 92,494

Balance at December 31, 2022

100,000 $ 92,494

Repurchase of Series B Preferred Stock

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Balance at December 31, 2023

There was no activity related to the Series B Preferred Stock during the year ended December 31, 2022.

As a result of their conversion in December 2023, there were no shares of Series B Preferred Stock outstanding at any point during the year ended December 31, 2024.

Stock-Based Compensation Awards

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Awards granted under the 2016 Plan are subject to a vesting schedule as set forth in each individual agreement.

A summary of share-based compensation expense recognized for each of the years ended December 31, 2024, 2023, and 2022 is as follows (in thousands):

Year Ended December 31,

2024 2023 2022

Cost of sales $ 1,546 $ 1,533 $ 1,213

Selling, general and administrative 14,646 14,776 9,578

Research and development 741 650 537

Total share-based compensation 16,933 16,959 11,328

Income tax benefit, before consideration of valuation allowance ( 4,233 ) ( 4,240 ) ( 2,832 )

Total share-based compensation, net of tax benefit $ 12,700 $ 12,719 $ 8,496

Stock Options

The Company grants stock options to certain of its employees.

Each stock option granted reflects the right to purchase one share of stock for a stipulated price.

Except for the CEO Performance Option (as defined below), all of the Company’s stock option grants outstanding as of December 31, 2024 vest exclusively based on continued service to the Company through each relevant vesting date.

All stock options outstanding vest in four equal annual tranches.

A summary of stock option activity for the year ended December 31, 2024 is presented below:

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Exercisable at December 31, 2024 341,000 $ 4.21 4.87 $ 1,851

With the exception of the CEO Performance Option (as defined and explained below), all options granted during the years ended December 31, 2024 and 2023 were valued using a Black-Scholes model.

The below table reflects the material inputs used to value the options granted during those periods (exclusive of the CEO Performance Option).

Year ended December 31,

Stock price on grant date $ 8.63 $ 6.44

Exercise price $ 8.63 $ 6.44

Expected term (years)

Risk-free interest rate 4.2 % 4.3 %

Expected volatility (annualized) 66 % 77 %

Dividend yield — % — %

Weighted average grant date fair value $ 4.93 $ 4.10

There were no options granted during the year ended December 31, 2022.

The intrinsic values of the options exercised during the years ended December 31, 2024, 2023, and 2022 were $ 0.2 million, $ 0.2 million, and $ 0.6 million, respectively.

Cash received from option exercise under all share-based payment arrangements for the

years ended December 31, 2023, 2022 and 2021 was $ 1.0 million, $ 0.7 million, and $ 1.4 million, respectively.

The actual tax benefit for the tax deductions from option exercise of the share-based payment arrangements totaled $ 0.2 million, $ 0.2 million, and $ 2.0 million, respectively, for the years ended December 31, 2023, 2022 and 2021.

The Company has a policy of using its available repurchased treasury stock to satisfy option exercises prior to the issuance of new shares of common stock.

No options vested during the years ended December 31, 2023, 2022 and 2021.

There was no unrecognized compensation expense at December 31, 2023.

Equity Incentive Awards

The Company has issued several classes of stock awards to employees:

restricted share awards (“ RSAs ”), restricted stock unit awards (“ RSUs ”), and performance stock unit awards (“ PSUs ”, collectively the “ Equity Incentive Awards ”).

The following is summary information for such awards for the year ended December 31, 2023.

Restricted stock and RSUs generally vest over a one - to three-year period in equal annual increments and require the recipient to provide continuous service through each vesting date.

PSUs vest based on the achievement of specific performance targets subject to agreements with employees and also require the recipient to provide continuous service through a specified date or event.

As of December 31, 2023, there was $ 21.4 million of total unrecognized stock-based compensation related to unvested Equity Incentive Awards.

That expense is expected to be recognized over a weighted-average period of 2.26 years, which approximates the remaining vesting period of these grants.

RSAs are considered common shares issued and outstanding upon grant, while shares underlying the RSUs and PSUs are considered issued and outstanding only upon vesting.

Therefore, all RSAs noted below as unvested are considered issued and outstanding as of December 31, 2023, while shares underlying unvested RSUs and PSUs are not considered issued and outstanding as of December 31, 2023.

RSAs, RSUs, and PSUs are not reflected in weighted average common shares outstanding for purposes of calculating basic net loss per common share.

A summary of Equity Incentive Award activity, by class of award, for the year ended December 31, 2023 is presented below:

Shares Weighted-Average Grant Date

Fair Value Number of

Shares Weighted-Average Grant Date

Fair Value Number of

Cash received from option exercise under all share-based payment arrangements for the years ended December 31, 2024, 2023, and 2022 was $ 1.4 million, $ 1.0 million, and $ 0.7 million, respectively.

The actual tax benefit for the tax deductions from option exercise of the share-based payment arrangements totaled $ 0.1 million,

$ 0.2 million, and $ 0.2 million, respectively, for the years ended December 31, 2024, 2023, and 2022.

The Company has a policy of using its available repurchased treasury stock, if any, to satisfy option exercises prior to the issuance of new shares of common stock.

There was $ 3.4 million unrecognized compensation expense related to unvested stock options at December 31, 2024, which is expected to be recognized over 2.33 years.

Restricted Stock Units

The Company grants RSUs to certain employees and to its Board of Directors.

RSUs reflect contracts reflecting the right to receive on share of Common Stock on a specified date, provided the recipient continues to provide service to the Company through the relevant vesting date.

RSUs generally vest over a one - to three-year period.

Prior to 2024, the Company’s RSUs granted to its employees granted in three equal tranches on the first three anniversary dates of the date of grant.

Beginning in 2024, RSUs granted to employees generally vest in a single tranche on the third anniversary date of the date of grant.

Awards granted to the Company’s Board of Directors vest in a single tranche on the first anniversary date of the date of grant.

Historically, the Company also granted Restricted Stock Awards (“ RSAs ”) to employees.

RSAs conferred one share of common stock to the recipient which was returnable if the associated vesting conditions were not satisfied.

The RSAs had similar vesting conditions to RSUs.

The Company did not grant any RSAs during the year ended December 31, 2024, nor does it have any unvested RSAs outstanding as of December 31, 2024.

A summary of RSU activity for the year ended December 31, 2024 is presented below:

Shares Weighted-Average Grant Date

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Unvested at December 31, 2024 3,511,823 $ 6.46

The total fair value of equity incentive awards vested during the years ended December 31, 2023, 2022 and 2021, was $ 10.3 million, $ 10.9 million, and $ 20.1 million, respectively.

For the years ended December 31, 2023, 2022, and 2021 the Company recognized share-based compensation as follows (in thousands):

Year Ended December 31,

2023 2022 2021

Cost of sales $ 1,533 $ 1,213 $ 813

Selling, general and administrative expenses 14,776 9,578 13,108

Research and development expense 650 537 235

Total share-based compensation 16,959 11,328 14,156

Income tax benefit, before consideration of valuation allowance ( 4,240 ) ( 2,832 ) ( 3,539 )

Total share-based compensation, net of tax benefit $ 12,719 $ 8,496 $ 10,617

The total fair value of RSUs and RSAs vested during the years ended December 31, 2024, 2023 and 2022, was $ 10.9 million $ 10.3 million, and $ 10.9 million, respectively.

As of December 31, 2024, there was $ 15.0 million of stock-based compensation expense related to RSUs which is expected to be recognized over 1.90 years.

Performance Stock Units

The Company granted PSUs to certain executive officers during the years ended December 31, 2023 and 2022.

These PSUs vest based on and to the extent that stipulated cumulative net sales targets are achieved.

Achievement of the performance targets allow for vesting of 50 % to 150 % of the PSUs granted.

If performance is below 50 %, the PSUs do not vest.

To the extent that the vesting percentage in a subsequent period exceeds the vesting percentage achieved in a previous period, a recipient is eligible to receive the amount of shares from the previous period based on the vesting percentage in the subsequent period.

If total shareholder return (“ TSR ”) is negative, vesting is limited to 100 % of the award for all periods, regardless of actual achievement against the stipulated net sales targets.

Employee Stock Purchase Plan

On June 7, 2022, the Company adopted the Employee Stock Purchase Plan of MiMedx Group, Inc.

(the “ ESPP ”).

The ESPP qualifies as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code.

All regular full-time employees of the Company (including officers) and all other employees who meet the eligibility requirements of the plan may participate in the ESPP.

The ESPP provides eligible employees an opportunity to acquire the Company’s common stock on a semi-annual basis at a purchase price of 85 % of the lower of the closing price per share of the Company’s common stock on the first day and the last day of each six-month purchase period (the “ Purchase Period ”).

The aggregate number of shares which may be issued and sold under the ESPP is 3 million shares of common stock.

For the years ended December 31, 2023 and 2022, the Company recorded $ 0.5 million and $ 0.2 million, respectively, in stock-based compensation related to the ESPP.

As of December 31, 2023 and 2022, the Company had cumulative payroll deferrals under the ESPP for future share purchases of $ 0.7 million and $ 0.6 million, respectively.

This amount is included in accrued compensation in the consolidated balance sheet.

Unrecognized stock compensation for the period is less than $ 0.1 million to be recognized over a weighted average period of 0.08 years.

The Company grants PSUs to certain employees, primarily its Executive Leadership Team.

Like RSUs, PSUs reflect the right to receive one share of Common Stock based on the achievement of specified performance conditions.

As of December 31, 2024, all performance conditions associated with PSUs are associated with the achievement of specified net sales targets.

In each case, the PSU agreements allow for vesting in excess of the number of shares granted.

In all cases except for the CEO Performance PSUs (as defined and explained below), achievement of performance conditions alone can expand the award by up to 150 %.

Certain of these PSUs are subject to Total Shareholder Return provisions which can limit or expand the number of shares conferred upon the recipient.

PSUs also require the recipient to provide continuous service through a specified date or event.

A summary of PSU activity for the year ended December 31, 2024 is presented below:

Shares Weighted-Average Grant Date

Unvested at January 1, 2024 3,727,272 $ 3.84

Granted 450,532 9.41

Forfeited — —

Unvested at December 31, 2024 4,177,804 $ 4.44

No PSUs vested during the years ended December 31, 2024, 2023 and 2022.

As of December 31, 2024, there was $ 6.7 million of unrecognized stock-based compensation expense related to unvested PSUs, which is expected to be recognized over 2.08 years.

This amount reflects the level of vesting determined to be “probable” for all such awards.

Any subsequent adjustments to expense would be reflected as a cumulative catch-up adjustment in the period of the re-evaluation.

If all unvested PSUs were determined to be probable of vesting to their maximum extent, it would result in a cumulative catch-up adjustment of $ 7.8 million as of December 31, 2024.

Conversely, the determination that none of the unvested PSUs are probable of vesting would result in a benefit of $ 5.9 million.

CEO Performance Grant

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If specified share price goals are met at one level, one-third of the option may vest, at a second level, a further one-third may vest, and at a third level, the full amount of the option may vest.

Satisfaction of the share price goals is based on the average of the closing price of

the Company’s common stock during any 20 consecutive trading days through January 31, 2027 exceeding the stipulated share price goal.

Satisfaction of the share price goals is based on the average of the closing price of the Company’s common stock during any 20 consecutive trading days through January 31, 2027 exceeding the stipulated share price goal.

The CEO Performance Option expires on February 1, 2030.

Treasury Stock

Repurchases of shares of Common Stock in connection with the satisfaction of employee tax withholding obligations upon vesting of restricted stock and exercise of stock options for the years ended December 31, 2023, 2022, and 2021 were 0, 249,442 , and 469,239 , respectively, for an aggregate purchase price of $ 0 , $ 1.2 million, and $ 4.8 million, respectively.

The Company estimated the fair value of the awards using a Monte Carlo simulation using the following assumptions:

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The Company recognized $ 2.4 million of expense related to the CEO Performance Option during year ended December 31, 2024.

Employee Stock Purchase Plan

The Company’s ESPP qualifies as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code.

All regular full-time employees of the Company (including officers) and all other employees who meet the eligibility requirements of the plan may participate in the ESPP.

The aggregate number of shares which may be issued and sold under the ESPP is 3 million shares of common stock.

For the years ended December 31, 2024, 2023 and 2022, the Company recorded $ 0.6 million, $ 0.5 million, and $ 0.2 million, respectively, in stock-based compensation expense related to the ESPP.

As of December 31, 2024 and 2023, the Company had cumulative payroll deferrals under the ESPP for future share purchases of $ 0.6 million and $ 0.7 million, respectively.

This amount is included in accrued compensation in the consolidated balance sheet.

Unrecognized stock compensation for the period is less than $ 0.1 million to be recognized over a weighted average period of 0.08 years.

Share Withholding for Employee Taxes

Repurchases of shares of Common Stock in connection with the satisfaction of employee tax withholding obligations upon vesting of restricted stock and exercise of stock options for the years ended December 31, 2024, 2023, and 2022 were 354,263 , 0 , and 249,442 , respectively, for an aggregate purchase price of $ 2.6 million, $ 0 , and $ 1.2 million, respectively.

Net Sales By Product Category

MIMEDX has two product categories:

(1) Wound, which reflects products typically used in Advanced Wound Care settings, including the treatment of chronic, non-healing wounds, and (2) Surgical, which reflects products principally used in surgical settings, including the closure of acute wounds or the protect and reinforce tissues and/or regions of interest.

The Company manages its product portfolio and pipeline based upon opportunities in each of these settings.

Below is a summary of net sales by product line (in thousands):

Year Ended December 31,

2024 2023 2022

Wound $ 231,004 $ 205,660 $ 175,970

Surgical 117,875 115,817 91,871

$ 348,879 $ 321,477 $ 267,841

The Company did not have significant foreign operations or a single external customer from which 10% or more of revenues were derived during the years ended December 31, 2024, 2023, or 2022.

Net Sales By Care Setting

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$ 348,879 $ 321,477 $ 267,841

The Company did not have significant foreign operations or a single external customer from which 10% or more of revenues were derived during the years ended December 31, 2023, 2022, or 2021.

Reimbursement Changes

On April 13, 2025, new Local Coverage Determinations (“ LCDs ”) are currently scheduled to go into effect which will modify the reimbursement of skin substitutes in physician office settings.

Among other changes, many allografts that have been covered will no longer be reimbursed for Diabetic Foot Ulcers and/or Venous Leg Ulcers.

While EPIFIX and EPICORD continue to be covered under the new LCD, certain of our other products are not currently included.

In the past LCDs have been delayed or terminated.

The Company cannot be certain they will go into effect in April 2025 .

Sales Returns Allowance

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Balance at December 31, 2022 $ 659

Additions charged to expense or revenue

Additions 3,899

Deductions and write-offs

Balance at December 31, 2023

Additions charged to expense or revenue 3,899

Additions 4,314

Deductions and write-offs ( 3,420 )

Balance at December 31, 2024

The Company received a Warning Letter on December 21, 2023, relating to the inspections and classification of AXIOFILL.

The Company continues to engage with the FDA on this matter, working through the process outlined by the FDA to obtain a formal determination of AXIOFILL’s classification.

Segment Information

The Company determines its operating segment based on how the Chief Operating Decision Maker (“ CODM ”) reviews the business and makes resource allocation decisions.

The Company concluded that Joseph Capper, the Company’s Chief Executive Officer, is the CODM.

The Company has a single operating segment, which has not been aggregated with other operating segments.

The Company defines its segment on the basis in which internal reported financial information is regularly reviewed by the CODM to analyze financial performance and make capital allocation decisions.

The CODM uses several measures of profit or loss to assess Company performance and allocate resources.

Of these measures, net income (loss) is the measure that most aligns to GAAP.

Other measures used by the CODM includes adjusted earnings before interest, taxes, depreciation and amortization.

The CODM assesses actual results against budgets and forecasts, and uses this information to inform various strategic investments into the Company’s operations, including headcount and compensation.

Each financial statement caption included on the consolidated statements of operations reflects a significant segment expense evaluated by the CODM.

In addition to this, the CODM also evaluates selling and marketing expense and general and administrative expense, both of which are components of selling, general, and administrative expense on the consolidated statements of operations.

Selling and marketing expense reflects costs associated with the sale of the Company’s products, as well as the costs of functions that support these efforts.

This includes salaries and commissions associated with the Company’s direct sales force, commissions paid to sales agents, and expenses incurred by other sales support functions.

General and administrative expense reflects expenses incurred by the Company’s operating functions which do not directly advance the Company’s sales efforts, such as the Company’s finance, legal and human resource functions, among other departments.

The below table presents selling and marketing and general administrative expense for each of the years ended December 31, 2024, 2023, and 2022.

Year Ended December 31,

2024 2023 2022

Selling and marketing

$ 175,562 $ 161,833 $ 151,227

General and administrative

49,525 49,291 57,446

Selling, general and administrative

$ 225,087 $ 211,124 $ 208,673

Below is a breakout of interest expense and interest income for each of the years ended December 31, 2024, 2023, and 2022.

Year Ended December 31,

2024 2023 2022

Interest income

$ 2,932 $ 118 $ 32

Interest expense

( 3,938 ) ( 6,575 ) ( 5,048 )

Interest expense, net

$ ( 1,006 ) $ ( 6,457 ) $ ( 5,016 )

To see depreciation expense, amortization expense, income tax expense and significant noncash items for this segment please refer to Note 5, Property and Equipment, Net , Note 7, Goodwill and Intangible Assets, Net , Note 16, Income Taxes and Note 17, Supplemental Disclosure of Cash Flow and Non-Cash Investing and Financing Activities , respectively.

The CODM is not provided and does not review segment assets at a different asset level or category than the presentation on the consolidated balance sheet.

During 2024, the Company entered into various Asset Purchase Agreements (“ APAs ”) and associated Manufacturing and Supply Agreements (“ MSAs ”) in an effort to inorganically expand its product offering.

These transactions were accounted for as acquisitions of assets and the Company did not assume any liabilities associated with these activities.

Total consideration for these transactions during 2024 was $ 7.9 million.

Additional payments may be required in future periods in connection with these transactions.

TELA and Regenity Agreements

On March 15, 2024, the Company entered into an Asset Purchase Agreement (the “ TELA APA ”) with TELA Bio, Inc.

(“ TELA ”) to obtain exclusive rights to sell and market a 510(k)-cleared collagen particulate xenograft product in the United States.

TELA held these rights pursuant to a Manufacturing and Supply Agreement (the “ TELA-Regenity Supply Agreement ”) between TELA and Regenity Biosciences, Inc.

(“ Regenity ”), which retains all intellectual property rights and regulatory clearances related to the product.

Pursuant to the TELA APA, the Company paid $ 5.0 million of initial consideration to TELA;

additionally, the Company paid $ 0.4 million to acquire TELA’s remaining product inventory, and will be required to make additional payments (the “ Profit Share Payments ”) of between a minimum of $ 3.0 million and a maximum of $ 7.0 million based on MIMEDX’s net sales of the product over the two years following its commercialization of the product, which occurred during the second quarter of 2024.

In connection with the execution of the TELA APA, the Company was able to renegotiate the terms of the TELA-Regenity Supply Agreement, ultimately replacing it with a new Manufacturing and Supply Agreement (the “ Supply Agreement ”) with Regenity.

The Supply Agreement maintains MIMEDX’s exclusive right to sell and market the product in the United States.

The transaction was accounted for as an acquisition of assets, as substantially all the fair value of the acquired assets was concentrated in the acquired exclusive distribution rights.

The cost to acquire the assets on the transaction date was $ 8.1 million, reflecting the $ 5.0 million of initial consideration, $ 0.4 million to acquire inventory, and $ 2.7 million, which represented the fair value of the minimum amount of the Profit Share Payments.

This amount reflected the anticipated timing of such Profit Share Payments, discounted to present value at a discount rate approximating the Company’s borrowing rate plus a risk premium, all of which reflect Level 3 inputs as of the acquisition date.

These costs were allocated amongst the assets acquired.

The Company assigned $ 7.6 million to the distribution rights acquired and $ 0.5 million to inventory.

The amount ascribed to the distribution rights will be amortized over five years , generally reflective of the period of time over which the distribution rights are anticipated to contribute to cash flow generation.

Any Profit Share Payments exceeding the $ 3.0 million minimum will be capitalized in the period incurred as a part of the acquired assets and amortized over the remaining life of such assets.

Discontinued Operations

Disbanding of Regenerative Medicine Business Unit

On June 20, 2023, the Company announced the disbanding of its Regenerative Medicine business unit and the suspension of its Knee Osteoarthritis clinical trial program.

During the fourth quarter of 2023, the Company completed the regulatory obligations associated with the clinical trial.

In the second quarter of 2023, the Company announced the disbanding of its Regenerative Medicine reportable segment and the suspension of its Knee Osteoarthritis clinical trial program.

The announcement reflected the abandonment of the Company’s efforts to pursue a Biological License Application for its micronized dehydrated amnion chorion membrane product and a major definitive strategic shift in the Company’s focus toward its continuing commercial pipeline as its primary source of value creation.

The Company completed the regulatory obligations associated with the clinical trial during the fourth quarter of 2023, at which time material run-off operations had ceased and Regenerative Medicine met the criteria for presentation as a discontinued operation.

Financial Statement Impact of Discontinued Operations

The income and expenses of the discontinued operation have been classified as loss (income) from discontinued operations in the consolidated statements of operations as of December 31, 2023, 2022, and 2021 as follows (in thousands):

The income and expenses of the discontinued operation have been classified as income (loss) from discontinued operations in the consolidated statements of operations as of December 31, 2024, 2023, and 2022 as follows (in thousands):

Year Ended December 31,

2024 2023 2022

$ — $ — $ 16,596

Cost of sales

Selling, general and administrative expense

$ ( 221 ) $ — $ 116

Research and development expense

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Income tax provision benefit

Net (loss) income from discontinued operations

— ( 2,974 ) —

Income (loss) from discontinued operations

$ 421 $ ( 9,211 ) $ ( 10,244 )

The assets and liabilities of the discontinued operations have been classified as discontinued operations in the consolidated balance sheet as of December 31, 2024 and 2023 as follows (in thousands):

Year Ended December 31,

Current assets:

Prepaid Expenses $ — $ 1,331

Current assets of discontinued operations

Noncurrent assets of discontinued operations

Total assets of discontinued operations

Current liabilities:

Accounts payable $ — $ 393

Accrued compensation

Accrued expenses — 1,041

Total liabilities of discontinued operations

$ 1,352 $ 1,479

Current liabilities of discontinued operations $ — $ 1,352

As a result of the announcement of the disbanding of Regenerative Medicine business unit, the Company evaluated goodwill associated with the Regenerative Medicine reporting unit for potential impairment.

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The goodwill impairment loss is included as a component of discontinued operations in the audited consolidated statement of operations for the year ended December 31, 2023.

Goodwill related to the Regenerative Medicine business unit of $ 0.5 million is included as a component of assets of discontinued operations in the consolidated balance sheet for the year ended December 31, 2022.

Impairment expense of $ 0.5 million was recorded as part of loss from discontinued operations for the year ended December 31, 2023.

Impairment of goodwill of $ 0.5 million was recorded as part of loss from discontinued operations for the year ended December 31, 2023.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

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Deferred Tax Assets:

Net operating loss $ 13,712 $ 23,719

Capitalized research and development expenditures $ 9,970 $ 10,843

Research and development and other tax credits 6,752 8,117

Accrued expenses 3,660 3,551

Share-based compensation 3,933 3,266

Interest limitation carry forward 1,873 4,898

Allowance for doubtful accounts 778 1,033

Net operating loss 3,713 13,712

Accrued expenses 3,038 3,660

Lease liabilities 1,456 600

Allowance for doubtful accounts 778 778

Intangible assets 580 —

Sales return and allowances 494 270

Property and equipment 295 84

Interest limitation carry forward — 1,873

Other 155 437

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Right of use asset ( 1,392 ) ( 571 )

Interest limitation carry forward ( 12 ) —

Intangible assets — ( 337 )

Property and equipment

Net Deferred Tax Assets 28,811 41,687

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Net Deferred Tax Assets after Valuation Allowance

$ 28,306 $ 40,777

The reconciliation of the federal statutory income tax rate of 21 % to the effective rate is as follows:

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Federal statutory rate 21.0 % 21.0 % 21.0 %

Share-based compensation 2.81 % ( 6.06 ) % 19.49 %

State taxes, net of federal benefit 4.1 % ( 21.8 ) % ( 0.8 ) %

Nondeductible compensation 1.1 % 1.8 % ( 3.2 ) %

Meals and entertainment 1.21 % ( 0.15 ) % ( 0.94 ) %

Deferred tax adjustments 0.9 % 1.3 % ( 4.4 ) %

Meals and entertainment 0.6 % 1.2 % ( 0.2 ) %

Uncertain tax positions — % 0.4 % ( 0.5 ) %

Employee retention credit — % — % 2.82 %

Tax credits ( 3.17 ) % 4.90 % 0.93 %

State taxes, net of federal benefit ( 21.77 ) % ( 0.83 ) % 3.79 %

Valuation allowance — % ( 123.5 ) % ( 12.5 ) %

Tax credits ( 0.7 ) % ( 3.2 ) % 4.9 %

Share-based compensation ( 1.0 ) % 2.8 % ( 6.1 ) %

Other 0.7 % ( 0.2 ) % 0.6 %

Effective tax rate 26.7 % ( 120.2 ) % ( 1.0 ) %

The effective tax rate for the year ended December 31, 2023 was significantly influenced by the reversal of a valuation allowance, reflecting a change in the determination of the likelihood of the realizability of certain of the Company’s deferred tax assets as of that date.

This re-evaluation was the result of the conclusion of that the Company’s disbanded Regenerative Medicine segment qualified as a discontinued operation, in concert with the Company’s operating results.

Current and deferred income tax (benefit) expense is as follows (in thousands):

The effective tax rate for the year ended December 31, 2023 was significantly impacted by the reversal of a valuation allowance.

In the period, the Company noted that it was no longer in a cumulative three-year loss on a continuing operations basis, after excluding the effects of permanent book-tax differences.

The absence of such negative evidence, coupled with the Company’s expectation for future taxable income generation, led to a change in our assessment of the realizability of our deferred tax assets.

Current and deferred income tax expense (benefit) is as follows (in thousands):

Year Ended December 31,

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Total deferred 12,472 ( 40,777 ) —

Income tax provision (benefit) expense

Income tax provision expense (benefit)

$ 15,296 $ ( 39,779 ) $ 206

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A valuation allowance of $ 0.5 million and $ 0.9 million was recorded against the deferred tax asset balance as of December 31, 2024 and 2023, respectively.

Valuation allowances are reflected against the Company’s deferred tax assets to reflect the extent to which the realization of those assets are not more likely than not to be realized based on all available positive and negative evidence.

In the event that the weight of the evidence changes in the future, any reduction in the valuation allowance would result in an income tax benefit.

In the event that the weight of the evidence changes in the future, any increase or decrease in the valuation allowance would result in a income tax expense or benefit, respectively.

At December 31, 2024 and 2023, the Company had income tax net operating loss (“ NOL ”) carryforwards for federal and state purposes of $ 0.7 million and $ 64.2 million and $ 43.5 million and $ 85.7 million, respectively.

A portion of the Company’s tax credits are subject to annual limitations due to ownership change limitations provided by Internal Revenue Code Section 382.

All of the Company’s federal NOL carryforwards have been generated since 2018 and will carry forward indefinitely.

The majority of the Company’s state NOL carryforwards will expire between 2027 and 2042;

the remainder of the Company’s state NOLs will carryforward indefinitely.

As of December 31, 2023, the Company has recorded $ 9.1 million and $ 4.6 million deferred tax asset for federal and state NOL carryforwards, respectively.

A portion of the Company’s NOLs and tax credits are subject to annual limitations due to ownership change limitations provided by Internal Revenue Code Section 382.

If not utilized, the federal and state tax NOL carryforwards will expire between 2028 and 2038.

As of December 31, 2024, the Company has recorded a deferred tax asset for both federal and state NOL carryforwards of approximately

$ 0.1 million and $ 3.6 million, respectively.

As of December 31, 2023, the Company has recorded a deferred tax asset for federal and state NOL carryforwards of $ 9.1 million and $ 4.6 million, respectively.

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Included in the balance of unrecognized tax benefits are tax benefits of $ 0.8 million and $ 0.8 million as of December 31, 2024 and 2023, respectively, that, if recognized, would affect the effective tax rate.

Of these amounts, $ 0.1 million and $ 0 , respectively, are recorded as other liabilities in the consolidated balance sheets as of those dates.

Of these amounts, $ 0.2 million and $ 0.1 million, respectively, are recorded as other liabilities in the consolidated balance sheets as of those dates.

The remaining balance is reflected as a reduction to the related deferred tax asset.

The Company recognizes accrued interest related to unrecognized tax benefits and penalties as income tax expense.

Related to the unrecognized tax benefits noted above, the Company accrued $ 0.0 million of interest during the years ended December 31, 2023 and 2022.

Related to the unrecognized tax benefits noted above, the Company accrued no interest during the years ended December 31, 2024 or 2023.

The Company is subject to taxation in the U.S.

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Cash paid for interest $ 2,698 $ 6,034 $ 4,569

Income taxes (refunded) paid ( 548 ) 181 169

Income taxes paid (refunded) 3,247 ( 548 ) 181

Cash paid for operating leases 1,618 1,635 1,567

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Conversion of Series B Preferred Stock — 87,870 —

Fair value of shares received in settlement of litigation 9,300 — —

Minimum Profit Share Payments pursuant to TELA APA 2,731 — —

Issuance of shares pursuant to employee stock purchase plan 1,582 1,367 —

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Lease right of use asset and liability 5,333 — ( 37 )

Deemed dividends of Series B Preferred Stock — — 926

Fair value of non-cash consideration received for option exercise — — 380

Note receivable for sale of property and equipment — — 75

Contingent consideration payable 441 — —

Commitments and Contingencies

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Year ending December 31, Meeting Space Commitments

Separation Agreement with Timothy R.

In 2022, the Company entered into a Separation Agreement and General Release with Timothy R.

Wright, the former Chief Executive Officer of the Company (the “ Separation Agreement ”).

Pursuant to the terms of the Separation Agreement and Mr.

Wright’s general release of all claims against the Company, the Company will pay Mr.

Wright a total of $ 3.1 million in cash in a series of installments through September 2024.

The terms of the severance benefits provided in the Separation Agreement were the same as those provided for in the original employment Letter Agreement between Mr.

Wright and the Company dated

April 8, 2019.

The $ 3.1 million was recorded as part of selling, general and administrative expense on the consolidated statement of operations for the year ended December 31, 2022.

Payments made to Mr.

Wright under the terms of the Separation Agreement during the year ended December 31, 2023 totaled $ 1.9 million.

A total of $ 1.2 million is reflected in accrued compensation in the consolidated balance sheet as of December 31, 2023.

Litigation and Regulatory Matters

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In view of the inherent difficulty of predicting the outcome of such matters, particularly where the plaintiffs or claimants seek very large or indeterminate damages or where the matters present novel legal theories or involve a large number of parties, the Company generally cannot predict what the eventual outcome of the pending matters will be, what the timing of the ultimate resolution of these matters will be, or what the eventual recovery, loss, fines or penalties related to each pending matter may be.

In accordance with applicable accounting guidance, the Company accrues a liability when those matters present loss contingencies that are both probable and estimable.

The Company's financial statements at December 31, 2023 reflect the Company's current best estimate of probable losses associated with these matters, including costs to comply with various settlement agreements, where applicable.

The Company had zero and $ 0.2 million accrued as of December 31, 2023 and December 31, 2022, respectively, related to expected settlement costs related to legal matters.

The actual costs of resolving these matters may be in excess of the amounts accrued.

In accordance with applicable accounting guidance, the Company accrues a liability when legal matters present loss contingencies that are both probable and estimable.

The Company's financial statements at December 31, 2024 reflect the Company's current best estimate of probable losses associated with pending matters, including costs to comply with various settlement agreements, where applicable.

The Company had zero accrued as of December 31, 2024 and December 31, 2023, respectively, related to expected settlement costs related to legal matters.

The actual costs of resolving pending litigation matters may be in excess of the amounts accrued.

The Company paid $ 0.6 million, $ 0.2 million, and $ 0.7 million toward the resolution of legal matters involving the Company during the years ended December 31, 2024, 2023, and 2022, respectively.

In addition, insurance providers paid $ 0.6 million and $ 1.1 million on the Company’s behalf to settle legal matters for the years ended December 31, 2022 and December 31, 2021, respectively.

In addition, during 2021, the Company received funds from certain director and officer insurance policies for previously-incurred legal expenses under the Company’s indemnification agreements.

These funds were recognized as a reduction to investigation, restatement and related expense on the consolidated statement of operations.

On November 4, 2022, Troy Welker and Min Turner, former option holders of the Company, brought a lawsuit in Fulton County State Court against the Company, former directors Terry Dewberry and Charles Evans, and former officers Parker H.

“Pete” Petit, William C.

Taylor, and Michael Senken alleging violations of the Georgia Racketeer Influenced and Corrupt Organizations (“ RICO ”) Act against all defendants, and conspiracy to violate the Georgia RICO Act and breach of fiduciary duty against the individual defendants.

On motion by the Company, the case has been moved to the Fulton County Business Court.

The Company and the individual defendants filed answers and motions to dismiss, which were denied on the RICO claims, but granted with respect to the breach of fiduciary duty claims against the individual defendants.

The Company is defending against the allegations and is obligated to indemnify certain of its current and former officers and directors who are party to this proceeding.

Former Employee Litigation and Related Matters

On January 12, 2021, the Company filed suit in the Circuit Court of the Eleventh Judicial District in and for Miami-Dade County, Florida (MiMedx Group, Inc.

al.) against its former CEO, Parker H.

“Pete” Petit, and its former COO, William C.

Taylor, seeking a determination of its rights and obligations under indemnification agreements with Petit and Taylor and seeking reimbursement of amounts previously advanced under the indemnification agreements following a federal jury’s guilty verdict against Petit for securities fraud and Taylor for conspiracy to commit securities fraud.

On April 22, 2021, Petit and Taylor filed an answer and asserted counterclaims against the Company alleging breach of their indemnification agreements, breach of the covenant of good faith and fair dealing with respect to their indemnification agreements, and seeking a declaration that the Company remains obligated to indemnify and advance fees in connection with certain cases.

Petit and Taylor simultaneously also filed a motion seeking to compel the Company to advance and reinstate its payments of Petit and Taylor’s legal expenses.

The Company opposed Petit and Taylor’s motion and a hearing was set for June 23, 2021.

At the joint request of the parties, the hearing was cancelled to allow the parties to attend a mediation to attempt a resolution of this matter;

such mediation was held on August 11, 2021.

Following the mediation, the Company and Mr.

Taylor reached an agreement to settle the matter between them.

Negotiations with Mr.

Petit are ongoing.

Other Matters

In addition to the matters described above, the Company is a party to a variety of other legal matters that arise in the ordinary course of the Company’s business, none of which are deemed to be individually material at this time.

In addition, insurance providers paid $ 0.6 million on the Company’s behalf to settle legal matters for the year ended December 31, 2022.

During the second quarter 2024, the Company received 1.2 million shares of its own common stock in the settlement of certain legal matters.

The Company accounted for the repayment of shares as a loss recovery, as the repayment related to the recoupment of legal fees previously incurred, but not in excess of the amount originally recorded.

The Company recorded $ 9.3 million, reflecting the fair value of the returned shares on the date of the prevailing agreement, as a reduction to investigation, restatement and related expense on the consolidated statements of operations, where the legal fees to which this recovery originally related were recorded as they were incurred, for the year ended December 31, 2024.

The Company is a party to a variety of legal matters that arise in the ordinary course of the Company’s business, none of which are deemed to be individually material at this time.

Due to the inherent uncertainty of litigation, there can be no assurance that the resolution of any particular claim or proceeding would not have a material adverse effect on the Company’s business, results of operations, financial position or liquidity.

The Company received a Warning Letter on December 21, 2023, relating to the inspections and classification of AXIOFILL.

The Company received a determination letter in March 2024 reaffirming the FDA’s position that AXIOFILL does not meet the regulatory classification requirements of a Human Cell, Tissue or Cellular or Tissue-based Product under Section 361 of the Public Health Service Act.

The Company strongly disagrees with this determination.

On March 25, 2024, MIMEDX filed suit in the U.S.

District Court for the Northern District of Georgia against the FDA, the U.S.

Department of Health and Human Services, Xavier Becerra, in his official capacity as Secretary of Health and Human Services, and Robert Califf, M.D.

in his official capacity as Commissioner of Food and Drugs at FDA alleging violations of the Administrative Procedure Act and asking the Court to vacate FDA’s designation, declare FDA’s designation as arbitrary, capricious, an abuse of discretion, and contrary to law, and declare that AXIOFILL meets the criteria to be regulated under Section 361 of the Public Health Services Act.

The parties have each filed motions for summary judgment in the case, which have been fully briefed.

The Company has a 401(k) plan (the “ 401(k) Plan ”) covering all employees who have completed one month of service.

8 unchanged sentences

The Company reflected the ERC as a reduction to the respective captions on the consolidated statements of operations associated with the employees to which the payroll tax benefit related.

For the year ended December 31, 2021, the Company recorded $ 1.6 million as a reduction to selling, general and administrative expense .

Of this amount, $ 1.0 million and $ 1.4 million were reflected as part of other current assets in the consolidated balance sheets as of December 31, 2023 and 2022, respectively.

During year ended December 31, 2023, the Company received $ 0.4 million relating to the ERC.

Subsequent Events

$ 95 Million Credit Agreement with Citizens and Bank of America

On January 19, 2024, the Company entered into a Credit Agreement (the “ Citizens Credit Agreement ”) with certain lenders party thereto, and Citizens Bank, N.A., as administrative agent (the “ Agent ”).

The Citizens Credit Agreement provides for senior secured credit facilities in an aggregate principal amount of up to $ 95.0 million consisting of:

All obligations are required to be paid in full on January 19, 2029 (the “ Maturity Date ”).

The Company has the option to obtain one or more incremental term loan facilities and/or increase the commitments under the Revolving Credit Facility in an aggregate principal amount equal to the greater of (i) $ 50.0 million and (ii) 1.00 times the Company’s Consolidated EBITDA as defined therein, each subject to the existing or any new lenders’ election to extend additional term loans or revolving commitments.

At the Company’s option, borrowings under the Citizens Credit Agreement (other than any swingline loan) will bear interest at a rate per annum equal to (i) the Alternate Base Rate, as defined therein, or (ii) a Term SOFR as defined therein, in each case plus an applicable margin ranging from 1.25 % and 2.50 % with respect to Alternate Base Rate borrowings and 2.25 % and 3.50 % for Term SOFR borrowings.

Swingline loans will bear interest at a rate per annum equal to one-month Term SOFR plus the applicable margin.

The applicable margin will be determined based on the Company’s consolidated total net leverage ratio.

The Company is required to pay a quarterly commitment fee on any unused portion of the Revolving Credit Facility, letter of credit fees, and other customary fees to the Agent and the Lenders.

The Term Loan Facility will amortize on a quarterly basis at 1.25 % (for year one and two), 1.875 % (for year three and four), and 2.5 % (for year five) based on the aggregate principal amount outstanding under the Term Loan Facility, with the remainder due on the Maturity Date.

The Company must make mandatory prepayments in connection with certain asset dispositions and casualty events, subject in each case to customary reinvestment rights.

In addition, on January 19, 2024, the Company borrowed $ 30.0 million under the Revolving Credit Facility and $ 20.0 million under the Term Loan Facility.

Proceeds from the initial drawings under the Credit Facilities together with cash on hand were

used to repay in full the $ 50.0 million principal amount and other outstanding obligations under the Hayfin Loan Agreement and to pay related fees, premiums, costs and expenses (collectively with the entry into the Citizens Credit Agreement and the initial borrowings thereunder, the “ Debt Refinancing Transactions ”).

On February 27, 2024, the Company repaid the initial $ 30.0 million drawing under the Revolving Credit Facility.

The Company has recorded $ 1.0 million as part of other current assets in the consolidated balance sheets as of December 31, 2024 and 2023, reflecting the amount of ERC outstanding as of those dates.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data