What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-25 compared with 2025-02-26 · 140 added, 127 removed, 122 unchanged (69% of the section changed)

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Executive Summary

During 2024, we delivered 8.5% growth in net sales, with broad-based contributions by customer type.

This growth was driven by a combination of commercial execution and demand for newer products, despite ongoing Medicare reimbursement uncertainty for the private office and associated care settings as well as a higher than normal level of customer and employee turnover in the middle of the year.

During 2025, we delivered 20.0% growth in net sales, with broad-based contributions across Wound and Surgical.

This growth was driven by a combination of demand for newer Wound products (CELERA™, EMERGE™ and EPIXPRESS®), increasing adoption of Surgical products across a growing number of use cases in the operating room and commercial execution.

Operating and financial highlights during the year include:

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• GAAP net income for the fourth quarter and full year 2025 of $15.2 million and $48.6 million, respectively.

• Announced improved capital structure with new credit facilities that provide substantial interest savings over the Company’s prior indebtedness and access to additional capital in support of the Company’s strategic priorities

• Introduced e-commerce and account management platform, MIMEDX Connect, designed to streamline ordering, payment processing, and reimbursement submissions for our customers,

• Entered into an exclusive agreement providing the Company with rights to commercialize HELIOGEN, a 510(k) cleared, bovine-derived collagen matrix particulate that is indicated for the management of exudating wounds, which launched commercially during the second half of 2024

• Announced publication focused on surgical applications using MIMEDX placental-based allografts in Nature - Scientific Reports.

The study adds to the Company’s growing body of evidence and expands the understanding of the regulatory capabilities of its DHACM and LHACM allografts on the fibrotic process

• Highlighted the publication of a feature article on placental allografts for patients with hard-to-heal, acute and chronic wounds, which was published in the New York Times:

“Her Face Was Unrecognizable After an Explosion.

A Placenta Restored It”

On April 13, 2025, new 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 DFUs and/or VLUs.

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 so there is no guarantee they will go into effect in April 2025

MIMEDX is a pioneer and leader in placental biologics focused on delivering innovative solutions to patients and the healthcare professionals who treat them.

With more than a decade of experience helping clinicians manage acute and chronic wounds, MIMEDX has been dedicated to providing a leading portfolio of products for applications in the wound care, burn, and surgical sectors of healthcare.

All of our products sold in the United States are regulated by the FDA.

• Featured the Company’s growing body of clinical and scientific evidence at Wound & Surgical-focused industry conferences, including MedStar Georgetown University Hospital’s Diabetic Limb Salvage Conference, Symposium on Advanced Wound Care Spring and Fall meetings, and Digestive Disease Week 2025, among others.

• Announced publication of health economics data in Mohs micrographic surgery

• Entered into a strategic collaboration with Vaporox, Inc., establishing the ability for the Company to co-promote and co-market its leading placental allograft portfolio alongside Vaporox’s Vaporous Hyperoxia Treatment device

• Launched EPIXPRESS® the Company’s next-generation, lyophilized human placental allograft, further expanding the Company’s broad portfolio of advanced wound care products

• Announced interim results of its EPIEFFECT® randomized clinical trial, which were published and presented, demonstrating clinical benefit associated with use of EPIEFFECT® when compared to Standard of Care.

• Announced publication in the Journal of Inflammation focused on the immunomodulatory effects of Purion® processed human amniotic membrane allografts in vitro.

The study, which investigated the influence of MIMEDX DHACM and LHACM products on inflammatory response, demonstrated support of the healing cascade and tissue repair.

• Entered into an exclusive U.S.

distribution agreement for RegenKit®-Wound Gel with Regen Lab USA, LLC, continuing to broaden the Company’s leading Wound product offering beyond placental allografts.

Additionally, at the end of 2025, CMS finalized sweeping changes related to the reimbursement of skin substitutes, which were implemented on January 1, 2026.

These changes include:

1) reimbursing skin substitute products uniformly across the HOPD and physician office and associated care settings and 2) capping the reimbursement rate for skin substitutes at $127.14 per square centimeter in these care settings, subject to geographic adjustments.

The specific policies were put into effect in the Physician Fee Schedule (“PFS”) and Hospital Outpatient Prospective Payment System (“OPPS”).

MIMEDX is a pioneer and leader focused on helping humans heal.

With nearly two decades of experience helping clinicians manage chronic and other hard-to-heal wounds, MIMEDX provides a leading portfolio of products for applications in the wound care, burn, and surgical sectors of healthcare.

All of our products sold in the United States are regulated by the U.S.

Food and Drug Administration (“ FDA ”).

We apply Current Good Tissue Practices (“ CGTP ”) and other applicable quality standards in addition to terminal sterilization to produce our allografts.

Our product portfolio is divided into two categories (1) Wound Care Products and (2) Surgical and Other Products.

The Wound Care products we manufacture include EPIFIX and EPIEFFECT, which are marketed for external use, such as in Advanced Wound Care applications.

Within Surgical and Other, our product offering includes AMNIOFIX and AMNIOEFFECT, which are positioned for use in a variety of applications and surgical settings, including lower extremity repair, plastic surgery, vascular surgery and multiple orthopedic repairs and reconstructions.

From time to time, we will also acquire, manufacture and market other products in the wound care, surgical or other products in response to market demands or to maintain our competitive position.

In 2024, we also launched HELIOGEN, a particulate xenograft product aimed at addressing complex wounds primarily in the surgical setting.

HELIOGEN is a shelf-stable offering that contains Type I and Type III collagen and mimics the native composition of structural connective tissue, HELIOGEN is manufactured by Regenity Biosciences.

Recent Developments

On October 31, 2025, CMS issued the final update to Medicare reimbursement for skin substitutes, which was broadly in line with the initial proposed rate (the “ 2026 Rules ”).

Effective January 1, 2026, the 2026 Rules revolutionize skin substitute reimbursement by moving away from “Average Sales Price (ASP) +6%” model to a flat, standardized rate of $127.14 per square centimeter, cutting costs by nearly 90%.

The change in policy to a flat rate is primarily driven to address skyrocketing expenditures – rising from ~$500 million in 2020 to ~$15 billion in 2025 (a nearly 40-fold increase) and to combat potential fraudulent billing, such as using larger-than-necessary grafts to maximize reimbursement.

The increased spending, proliferation of Q-coded skin substitute products, and higher ASPs for these products have been under increased regulatory scrutiny over the last couple of years.

In response to these market dynamics, CMS announced the 2026 Rules related to the reimbursement of skin substitutes.

The changes under the 2026 Rules include:

1) reimbursing skin

substitute products uniformly across the HOPD and physician office and associated care settings, 2) moving the reimbursement rate for skin substitutes from the “ASP+6%” methodology to a flat rate at $127.14 per square centimeter in these care settings, subject to geographic adjustments, and 3) reclassifying some products as “incident-to” supplies under the physician fee schedule and subject to a flat payment rate.

This change applies to skin substitutes in three regulatory categories:

(1) devices subject to premarket approval (PMA);

(2) devices subject to 510(k) clearance;

and (3) human cells, tissues and cellular and tissue-based products (HCT/Ps) regulated under Section 361 of the Public Health Service Act (the “PHS Act”).

The 2026 Rules were put into effect in the Physician Fee Schedule (“PFS”) and Hospital Outpatient Prospective Payment System (“OPPS”).

While there are many unknowns of the 2026 Rules, we may need to tighten inventory management, to minimize losses from expired or unused products and also revisit pricing strategies in light of the new reimbursement model.

As to how the 2026 Rules impact clinical practice and physician behavior, it will only become clear as implementation progresses.

We anticipate that the 2026 Rules will be a headwind to both Advanced Wound Management sales and profitability in 2026, before any mitigating actions.

Our product portfolio is divided into two categories (1) Wound and (2) Surgical.

Our Wound portfolio includes EPIFIX®, EPICORD®, EPIEFFECT®, EPIXPRESS®, CHORIOFIX™, EMERGE™, CELERA™, and RegenKit®-Wound Gel which are marketed for external use across a range of advanced wound applications.

EMERGE™, CELERA™, and RegenKit®-Wound Gel are manufactured by third-party suppliers.

Our Surgical portfolio includes AMNIOFIX®, AMNIOEFFECT®, AMNIOBURN®, AMNIOCORD®, AXIOFILL®, and HELIOGEN™, which are marketed for use in diverse surgical applications, including lower extremity repair, plastic and reconstructive surgery, vascular procedures, and multiple orthopedic repairs.

HELIOGEN™ is manufactured by third-party supplier Regenity Biosciences, Inc.

Additionally, in early 2026 we began distributing three additional Surgical Products:

G4Derm Plus, NovaForm and Hydrelix to further expand our Surgical product offering.

From time to time, we may acquire, manufacture, or market additional Wound or Surgical products in response to market demand or to maintain our competitive position.

This discussion, which presents our results for the fiscal years ended December 31, 2025 and 2024, should be read in conjunction with our Consolidated Financial Statements and the accompanying notes.

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We believe the items discussed below provide insight into the factors that affect these key measures.

Our net sales are derived from selling to a wide range of customers, including hospitals, wound care centers and private physician offices that have clinicians using our suite of products to aid in the management of patients with chronic or hard-to-heal wounds.

These customers choose products like ours based upon a variety of factors, including clinical efficacy, availability, handling characteristics, and reimbursement coverage and payer sources.

Net sales are recognized based on the consideration we expect to receive from the sale at the point in time when control of the goods is transferred to the customer, which generally occurs upon our delivery to a third-party carrier or implantation for consignment arrangements.

Net sales consists of the gross selling price of the product, less any discounts, rebates and other customer incentives, fees paid to GPOs, and returns.

Our net sales are derived from selling our Wound and Surgical products to a wide range of customers, including hospitals, wound care centers and private physician offices that have clinicians using our suite of products to aid in the management of patients with chronic or hard-to-heal wounds.

These customers choose products like ours based upon a variety of factors, including clinical efficacy, customer engagement programs, availability, handling characteristics, reimbursement coverage and payer sources.

Net sales are recognized based on the consideration we expect to receive from the sale at the point in time when control of the goods is transferred to the customer.

For ship-and-bill sales, this occurs upon transfer of title to the customer.

For consignment arrangements, this occurs upon implantation of the product on the end user .

Net sales consists of the gross selling price of the product less any discounts, rebates and other customer incentives, fees paid to GPOs, and estimates for sales returns.

Cost of goods sold and gross profit

Cost of goods sold includes product testing costs, quality assurance costs, personnel costs, manufacturing costs, raw materials and product costs, depreciation and facility costs associated with our manufacturing and warehouse facilities.

Cost of goods sold includes product testing costs, quality assurance costs, personnel costs, manufacturing costs, raw materials and product costs, depreciation, amortization of certain purchased assets and facility costs associated with our manufacturing and warehouse facilities.

Fluctuations in our cost of goods sold correspond with the fluctuations in these costs as well as sales volume.

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Selling, general and administrative expense consists of both selling and marketing (“ S&M ”) and general and administrative (“ G&A ”) expenses.

S&M includes costs to execute our sales strategy, which includes personnel costs pertaining to our sales force and sales support functions, including salaries, commissions and other incentive compensation, commissions to sales agents, customer support, travel expenses, and bad debt expense.

G&A expense reflects costs related to functions which support our business, such as legal, finance, human resources, and other such functions, including personnel costs associated with these functions, insurance, and certain professional fees.

S&M expense includes costs to execute our sales strategy, which includes personnel costs pertaining to our sales force and sales support functions, including salaries, commissions and other incentive compensation, commissions to sales agents, customer support, travel expenses, and bad debt expense.

We expect our S&M expense to fluctuate based on revenue fluctuations, geographic changes, and any changes to the size of our headcount, particularly that of our sales and marketing forces.

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For example, we pay sales agents a greater commission than our internal sales force, meaning that we could incur greater commission expenses if a greater proportion of our sales are through sales agents.

G&A expense reflects costs related to functions which support our business, such as legal, finance, human resources, and other such functions.

This includes personnel costs associated with these functions, insurance, and certain professional fees.

We expect our G&A expense to fluctuate based on headcount.

Research and development expense

Research and development expense relates to our investments to expand our product pipeline and platforms, including historically through clinical trials, as well as expenditures in improvements to our manufacturing process and the enhancement of existing products.

Our research and development costs also include expenses such as salaries and benefits related to our research department, consulting costs and advisory costs, and regulatory costs.

Research and development expense relates to our investments to expand our product pipeline and platforms, including clinical trials as well as improvements to our manufacturing process and the enhancement of existing products.

Our research and development costs also include expenses such as salaries and benefits related to our research departments, consulting costs, advisory costs, and regulatory costs.

We expense research and development costs as incurred.

Fluctuations in research and development expenses can be impacted by the timing and cadence of our clinical trials.

Fluctuations in research and development expenses are driven by the timing and cadence of our clinical trials.

Investigation, restatement and related (benefit) expense

Investigation, restatement and related expense primarily related to legal fees that were advanced to certain former officers and directors of the Company under certain indemnification agreements and our liability from legal proceedings that were taken against us.

These costs ceased during the year ended December 31, 2024 and are not expected to reoccur.

Interest expense, net

We incur interest expense primarily through stated interest on our outstanding term and revolving loans, to the extent that they are outstanding.

The interest on our term and revolving loans are currently tied to applicable Secured Overnight Financing Rates (“ SOFR ”).

Increases in SOFR could cause our interest expense to increase.

Other activity influencing interest expense relates to the amortization of deferred financing costs and original issue discount associated with credit facilities outstanding.

This amount is presented net of interest income, which we generate from our treasury management.

These costs ended during the year ended December 31, 2024.

Interest income (expense), net

We incur interest expense primarily from stated interest on our outstanding term loan and revolving credit facilities, to the extent such borrowings are outstanding.

Interest on these facilities is currently based on the applicable term Secured Overnight Financing Rate (“ SOFR ”), and fluctuations in SOFR may cause our interest expense to vary.

We generate interest income from amounts held in various money market accounts.

In addition, interest expense includes the amortization of deferred financing costs and original issue discounts associated with our credit facilities.

This amount is presented net of interest income earned through our treasury management activities.

Income tax provision

We generate tax liability primarily in the United States and in various states in which we have nexus.

Across these jurisdictions, we have net operating losses, research and development tax credit carryforwards, and other deferred tax assets which materially defray our liability.

Large fluctuations in our effective tax rate are generally driven by changes in our expectations of the realizability of our deferred tax assets.

See “ Critical Accounting Estimates ” for further details.

Our effective tax rate is also impacted by other permanent items, primarily executive compensation limitations and windfall or shortfall on the vesting of stock awards.

The basis for our effective tax rate will generally approximate the United States’ federal statutory corporate tax rate (21%) plus a blended state rate, net of any federal benefit.

Material deviations from this effective tax rate in each period is generally the result of the periodic effects

of certain permanent differences between the book and tax treatment of certain transactions, including windfall or shortfall on vestings of restricted stock awards and limitations on the deduction of executive compensation.

Historically, our effective tax rate was, and in the future may be, materially impacted by changes in our valuation allowance recorded against our deferred tax assets.

Results of Continuing Operations for 2025 Compared to 2024

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(in thousands)

2024 2023 $ Change % Change

Net sales $ 348,879 $ 321,477 $ 27,402 8.5 %

Cost of sales

Gross profit 288,806 266,843 21,963 8.2 %

73,013 60,073

345,617 288,806

Selling, general and administrative

266,194 225,087

Research and development

Investigation, restatement and related (8,698) 5,176 (13,874) nm

Investigation, restatement and related — (8,698) 8,698

Amortization of intangible assets

Impairment of intangible assets — 446 (446)

Interest expense, net (1,006) (6,457) 5,451 (84.4) %

Other expense, net (565) (26) (539) nm

Income tax provision benefit (expense)

(15,296) 36,806 (52,102) nm

Net income (loss) from continuing operations $ 41,998 $ 67,439 $ (25,441) (37.7) %

Interest income (expense), net

2,933 (1,006) 3,939

Other expense, net

Income tax provision expense

Net income from continuing operations

We recorded net sales for the year ended December 31, 2025 of $418.6 million, an increase of $69.8 million, or 20.0%, over net sales for the year ended December 31, 2024 net sales of $348.9 million.

Our sales by product category were as follows (amounts in thousands):

Year Ended December 31, % of net sales

2024 2023 2024 2023 $ %

Wound $ 231,004 $ 205,660 66 % 64 % $ 25,344 12.3 %

Year Ended December 31,

% of net sales

Surgical 142,304

$ 348,879 $ 321,477 100 % 100 % $ 27,402 8.5 %

Net sales in the Wound category were $276.3 million for the year ended December 31, 2025, a $45.3 million, or 19.6% increase, compared to $231.0 million for the year ended December 31, 2024.

The increase was primarily driven by sales of EPIEFFECT, partially offset by commercial challenges associated with competitive behavior in the marketplace as well as headwinds relating to turnover of certain of our sales team and customers.

The increase was primarily driven by sales of the higher priced products EMERGE™, CELERA™, and EPIXPRESS®, partially offset by ongoing commercial challenges and regulatory pressures on pricing and reimbursement, which were consistent with those experienced in the prior year.

Net sales in the Surgical category grew by $24.4 million, or 20.7%, to $142.3 million for the year ended December 31, 2025, compared to $117.9 million for the year ended December 31, 2024.

The increase reflects growing sales volume contributions from AMNIOEFFECT, partially offset by lower AXIOFILL compared to the prior year due to regulatory headwinds.

In addition, Surgical sales for the year ended December 31, 2023 reflects $3.3 million of sales of our dental product which we have since discontinued.

The increase was primarily driven by sales of AMNIOFIX®, AMNIOEFFECT®, and HELIOGEN® across a range of surgical procedures.

Gross Margin and Cost of Sales

Gross margin in 2025 was 82.6%, compared to 82.8% in 2024.

The decrease in margin was driven by the amortization of various intangible assets acquired during 2024.

This effect was offset by a favorable product mix and our continued execution on scrap improvement projects, partially offset by throughput pressures.

The slight decline was driven by lower yield, and manufacturing inefficiencies.

These pressures were partially offset by a more favorable product mix, reflecting a greater proportion of higher-price products in the sales portfolio.

Cost of sales for the year ended December 31, 2025 was $73.0 million, an increase of $12.9 million, or 21.5%, compared to $60.1 million for the year ended December 31, 2024.

The increase in cost of sales was driven by the increase in sales volume and the changes in margins noted above.

The increase was driven by higher sales volume, and increased manufacturing inefficiencies.

Selling, General and Administrative Expense

SG&A expense increased $41.1 million, or 18.3%, to $266.2 million for December 31, 2025, compared to $225.1 million for December 31, 2024.

The following table shows the composition of this expense between selling and marketing (“ S&M ”) and general and administrative (“ G&A ”) components (amounts in thousands):

The following table shows the composition of this expense between S&M and general G&A components (amounts in thousands):

Year Ended December 31, Change

Selling and marketing $ 209,681 $ 175,562 $ 34,119 19.4 %

$ 175,562 $ 161,833 $ 13,729 8.5 %

General and administrative 56,513 49,525 6,988 14.1 %

49,525 49,291 234 0.5 %

Selling, general and administrative $ 266,194 $ 225,087 $ 41,107 18.3 %

$ 225,087 $ 211,124 $ 13,963 6.6 %

Sales and marketing expenses increased $13.7 million, or 8.5%, year over year, which was driven by increases in commissions due to higher sales and higher effective commission rates.

General and administrative expense increased $0.2 million, or 0.5%, year-over-year.

The increase was driven by general increases in salaries from merit increases, offset by reductions in severance expense and professional services.

Sales and marketing expenses increased $34.1 million, or 19.4%, year over year, primarily due to higher commissions driven by increased sales and elevated effective commission rates, along with higher bad debt expense.

General and administrative expense increased $7.0 million, or 14.1%, year-over-year, driven by ongoing legal and regulatory disputes, transaction-related costs, and severance costs.

Research and Development Expense

Our research and development (“ R&D ”) expense was $15.1 million for the year ended December 31, 2025, compared to $12.3 million for the year ended December 31, 2024.

The decrease in R&D expense related to the timing of our product development activities, which primarily related to EPIEFFECT in 2023.

The increase was driven by on-going clinical trials and research studies aimed at strengthening clinical and economic evidence.

Investigation, Restatement and Related Expense

Investigation, restatement, and related expenses for the year ended December 31, 2024 was a benefit of $8.7 million, compared to expense of $5.2 million for the year ended December 31, 2023.

The benefit was resulted from various settlements related to former officers and other related matters during 2024.

This was offset by the last material payment towards the resolution of matters stemming from the findings of our historical Audit Committee investigation during the year ended December 31, 2024.

We do not expect activity to be material in future periods.

Investigation, restatement, and related expenses for the year ended December 31, 2024 was a benefit of $8.7 million.

The benefit resulted from various settlements related to former officers and other related matters during 2024.

This was offset by the last material payment towards the resolution of matters stemming from the findings of our historical Audit Committee investigation.

These expenses ceased in 2024.

Amortization of Intangible Assets

Amortization expense related to intangible assets were $0.8 million for each of the years ended December 31, 2024 and 2023.

Amortization expense related to intangible assets for the year ended December 31, 2025 was $0.4 million, compared to $0.8 million for the year ended December 31, 2024.

Impairment of Intangible Assets

Impairment for the year ended December 31, 2024 was $0.4 million, which relates to abandoned patents.

Interest Expense, Net

Interest expense decreased $5.5 million to $1.0 million for the year ended December 31, 2024 from $6.5 million for the year ended December 31, 2023.

The decrease was the result of a decrease in outstanding debt and lower rates under the Citizens Credit Facilities after the Debt Refinancing Transactions (as defined below) was completed in January 2024.

Improvements in our treasury management further aided the decrease.

This decrease was partially offset by a $1.4 million loss on extinguishment of debt due to repaying and terminating a previous loan agreement during the first quarter of 2024.

There was no impairment for the year ended December 31, 2025, compared to $0.4 million for the year ended December 31, 2024.

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

Interest Income (Expense), Net

Net interest income (expense) was $2.9 million for the year ended December 31, 2025, compared to $(1.0) million for the year ended December 31, 2024.

The favorable increase was primarily driven by improved treasury management.

a reduction in outstanding debt, and lower interest rates.

Additionally, we recorded a $1.4 million loss on extinguishment of debt in the first quarter of 2024 due to the repayment and termination of a previous loan agreement.

Income Tax Provision

Our effective tax rates for 2024 and 2023 was 26.7% and (120.2)%, respectively, on income from continuing operations before income tax provision of $57.3 million and $30.6 million for 2024 and 2023, respectively.

Our effective tax rate in 2024 was favorably impacted by vestings of restricted stock, offset by executive compensation deduction limitations.

Our 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 our expectation for future taxable income generation, led to a change in our assessment of the realizability of our deferred tax assets.

Our effective tax rates for 2025 and 2024 were 26.7% and 26.7%, respectively, on income from continuing operations before income tax provision of $66.3 million and $57.3 million for 2025 and 2024, respectively.

The effective tax rate in each period was favorably impacted by vestings of restricted stock, offset by executive compensation deduction limitations.

The income tax provision for the year ended December 31, 2025 reflects the provisions of the One Big Beautiful Bill Act (“ OB3 ”).

OB3 resulted in a current tax benefit resulting from the utilization of deferred tax assets, primarily relating to the utilization of capitalized research and development expenses, and did not affect our effective tax rate in the year ended December 31, 2025.

Liquidity and Capital Resources

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We had no borrowings outstanding and $75 million of availability under our Revolving Credit Facility (as defined below).

The Company is currently paying its obligations in the ordinary course of business.

We are currently paying our obligations in the ordinary course of business.

We believe that our anticipated cash from operating activities, existing cash and cash equivalents, and available credit under the Citizens Credit Agreement, as defined below, will enable us to meet our operational liquidity needs for the twelve months following the filing date of this Annual Report.

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as administrative agent (the “ Agent ”), and Bank of America, N.A.

The Citizens Credit Agreement was designed to simultaneously improve our capital structure, providing the ability to refinance the $50 million senior secured term loan under the Hayfin Loan Agreement (as defined below) at lower interest rates and have access to additional borrowing capacity that could be deployed in the future in support of our organic and potential inorganic growth objectives.

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 ”), and are guaranteed by certain of our subsidiaries, and secured by substantially all of the assets of the Company and the guarantors pursuant to a customary security agreement.

Subject to the terms of the Citizens Credit Agreement, we have 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 our 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.

We are 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 at inception, with the remainder due on the Maturity Date.

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

We may prepay borrowings under the Credit Facilities at any time, without premium or penalty, and may, at our 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.

We 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.

In addition, on January 19, 2024, we 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 obligations under that certain Loan Agreement, dated as of June 30, 2020 (as amended from time to time), by and among the Company, the guarantors party thereto, the lenders party thereto and Hayfin Services LLP, as administrative and collateral agent (as amended from time to time, 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 ”).

In February 2024, we repaid the initial $30.0 million drawing under the Revolving Credit Facility.

There were no borrowings on the Revolving Credit Facility outstanding as of December 31, 2024.

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

The Citizens Credit Agreement requires that we 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, 2025 , we have $18.0 million of principal outstanding on the Term Loan Facility that bears interest at 6.1% and no borrowings outstanding under the Revolving Credit Facility.

Share Repurchase Plan

In February 2026, the Board authorized us to periodically repurchase up to $100.0 million of our outstanding common stock (the “ Share Repurchase Plan ”) through February 2028.

The timing and amount of repurchases, if any, will depend on a number of factors, including capital requirements for inorganic business development, market conditions, our financial condition, operating results, and other business considerations.

Notwithstanding the Share Repurchase Plan, management’s focus remains on executing on our strategic initiatives, including inorganic growth investments.

The share repurchase program does not obligate us to repurchase any shares.

In connection with the Share Repurchase Plan, we executed an amendment to the Citizens Credit Agreement (“ Amendment No.

1 ”) which allows us to repurchase shares during its term.

Amendment No.

1 did not contemplate any other changes to the Citizens Credit Facility.

See Item 8, Note 9, Long Term Debt, Net , in the Consolidated Financial Statements for further discussion of our Credit Facilities.

Discussion of Cash Flows for 2025 Compared to 2024

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Investing Activities

During the year ended December 31, 2024, net cash used in investing activities was $9.6 million, a increase of $7.4 million, compared to $2.2 million for the year ended December 31, 2023.

The primary reason for the increase was our investments to expand our product portfolio through various acquisitions during 2024.

This was offset by a decrease in capital expenditures, year over year.

During the year ended December 31, 2025, net cash used in investing activities was $6.9 million, a decrease of $2.7 million compared to $9.6 million for the year ended December 31, 2024.

The decline was primarily driven by lower product acquisition costs and reduced capital expenditures in 2025.

Financing Activities

During the year ended December 31, 2024, net cash used in financing activities was $34.2 million, an increase of $25.6 million compared to $8.6 million for the year ended December 31, 2023.

During 2024, we entered into the Citizens Credit Agreement, as described above.

The cash used during 2024 was due to the repayment of the initial $30.0 million drawing under the Revolving Credit Facility, deferred financing costs and other payments made as part of the Debt Refinancing Transactions, as described above.

Other activity contributing to the increase included stock repurchases for tax withholdings upon vesting of employee awards of $2.6 million, proceeds from exercise of stock options of $1.4 million, and scheduled payments on our Term Loan Facility under the Citizen’s Credit Agreement of $1.0 million.

The increase was offset by the repurchase of our historical Series B Preferred Stock of $9.5 million during 2023.

During the year ended December 31, 2025, net cash used in financing activities was $5.4 million, a decrease of $28.8 million compared to $34.2 million for the year ended December 31, 2024.

Cash used in 2025 was primarily driven by stock repurchases to satisfy tax withholding obligations upon vesting of employee equity awards, scheduled principal payments under the Citizens Credit Agreement, and profit-share payments to TELA Bio, Inc.

related to HELIOGEN® sales performance.

In 2024, cash usage was largely attributable to a $30.0 million repayment under the Revolving Credit Facility, which represented the majority of the financing activities for the year.

Critical Accounting Estimates

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Share-Based Compensation

We measure the fair value of stock options and other stock-based awards granted to employees on the grant date and recognize the assessed fair value as share-based compensation expense, straight-line, over the requisite service period to achieve the award based on the vesting requirements to the extent that the achievement of performance conditions associated with such awards, as applicable, are determined to be “probable.”

For awards that contain performance conditions, expense is recognized if, and to the extent that, achievement is considered “probable” of occurring.

Judgments and Uncertainties

Share-based payment arrangements are measured at fair value on the grant date.

The fair value of restricted stock units and performance stock units are generally measured at the last trading price on the grant date.

Options are measured using an appropriate option pricing model using applicable inputs as of the grant date.

The fair value of restricted stock units and performance stock units are generally measured using the last trading price on the grant date.

Options are measured using an appropriate option pricing model using inputs applicable as of the grant date.

In each case, the grant date fair value is adjusted for the presence of any market conditions.

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We re-evaluate our probability assessments at least quarterly, with any revisions reflected as a cumulative adjustment to expense.

Because of the cumulative nature of adjustments, during any period in which we re-evaluate probability, the adjustments could significantly impact our results of operations.

Because of the cumulative nature of adjustments, they could significantly impact our results of operations.

Sensitivity of Estimate to Change

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Cumulative expense recognized for unvested performance stock unit awards was $7.6 million as of December 31, 2025.

This was based on determinations regarding probable resolution or the extent of probable resolution of relevant performance conditions to earn such awards.

If it is subsequently determined that the performance conditions associated with the performance stock unit awards are no longer probable of being met, or performance conditions which were determined to be probable of occurring do not actually occur, we could reverse up to this amount of expense in the period such determination is made.

This was based on the grant-date fair value of each award, the portion of the relevant vesting period that has elapsed and our assessment of the extent to which the vesting conditions are considered probable for each award.

If it is subsequently determined that the performance conditions associated with the performance stock unit awards are no longer probable of being met, or performance conditions which were determined to be probable of occurring do not actually occur, we could reflect a benefit of up to this amount in the period such determination is made.

Furthermore, if probable levels of achievement are later determined to be greater, or actual achievement exceeds the level of achievement assessed as probable, we could record increases to expense to reflect this level of achievement.

As of December 31, 2025, a revision of expense to reflect the maximum hypothetical attainment of all unvested performance stock units would result in a $17.1 million increase to expense.

Conversely, a revision of expense to reflect that no shares are probable of vesting would result in a $5.9 million decrease to expense.

The amount of any incremental expense recognition or reversal will depend on the magnitude and timing of such change in estimate.

With the amount of units awarded, any change in the probability has the potential to be material to the financial statements.

We record estimates for returns and allowances as a reduction to net sales based on our expectation for such returns.

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We recognize revenue as performance obligations are fulfilled, which generally occurs upon the shipment of product to customers for ship and bill sales or upon implantation for consignment sales.

We recognize revenue based on consideration we expect to receive from the sale.

We recognize revenue based on net consideration we expect to receive from the sale.

This consists of the gross selling price of the product, less any discounts, rebates, fees paid to GPOs, and an expectation for sales returns.

We maintain a return policy that allows our customers to return product for any reason within 30 days of sale, and to return product that is damaged or non-conforming, ordered in error, or due to recall at any time.

We derive an expectation for product returns based on historical return patterns and other discrete factors which influence return activity, such as changes in our regulatory environment, product recalls, changes in reimbursement rates, changes in reimbursement eligibility and rules, and other factors also impact return patterns.

Determinations involving other factors are based on our estimates for product at customer sites that are eligible for return.

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We have accrued $2.4 million for sales returns as of December 31, 2025.

Changes in return patterns or unforeseen changes in regulations or identified product recalls could cause returns significantly in excess of this estimate.

We have $28.8 million of net deferred tax assets available to us to defray future tax liability, including net operating loss carryforwards, research and development tax credits, and other future deductions and credits.

We record a valuation allowance to offset our gross deferred tax asset to the extent that realization is not likely.

Changes in return patterns or unforeseen changes in reimbursement policy, regulations or product recalls could cause returns significantly in excess of this estimate.

We have $19.9 million of net deferred tax assets to defray future tax liability.

We record a valuation allowance to offset our gross deferred tax asset to the extent that realization of these assets is not “more likely than not.”

Judgments and Uncertainties

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Judgment is required to determine whether the totality of this evidence suggests that we can recover our deferred tax assets in the future.

Any changes to the valuation allowance are reflected in the period identified as a component of income tax provision expense.

Sensitivity of Estimate to Change

As of December 31, 2024, we had $0.5 million in valuation allowances recorded against our deferred tax assets balance of $28.8 million.

The amount and extent of the valuation allowance necessary to reflect the extent of realization of these deferred tax assets being more likely than not may change due to changes in tax law, a revision to our expectation regarding taxable income in the future, taxable income generated in a period in which we had not previously anticipated taxable income, a change in scheduled reversals of deferred tax liabilities, and other changes.

As of December 31, 2025, we had $0.3 million in valuation allowance recorded against our gross deferred tax assets balance of $19.9 million.

The amount and extent of the valuation allowance may change due to changes in tax law, a revision to our expectation regarding taxable income in the future, taxable income generated in a period in which we had not previously anticipated taxable income, a change in scheduled reversals of deferred tax liabilities, and other changes.

Recently Adopted Accounting Pronouncements

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

What changed 10-K

Item 7. Management’s Discussion and Analysis