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What changed in Xtant Medical Holdings, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Xtant Medical Holdings, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+457 added−592 removedSource: 10-K (2026-03-31) vs 10-K (2025-03-06)

Top changes in Xtant Medical Holdings, Inc.'s 2025 10-K

457 paragraphs added · 592 removed · 314 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

88 edited+34 added−42 removed68 unchanged
Biggest changeOur strategic focus is currently on digesting and growing the products and businesses we have acquired, producing our own stem cells, growth factor, amnio and synthetics biologics products, and continuing to focus on the following four key growth initiatives: (1) introduce new biologics products, including our Cortera ® Spinal Fixation System, viable bone matrix, OsteoVive ® Plus, and amniotic membrane allografts, SimpliGraft ® and SimpliMax™; (2) leverage our distribution network; (3) penetrate adjacent markets; and (4) leverage our growth platform with technology and strategic acquisitions.
Biggest changeWe have focused and intend to continue to focus primarily on four key growth initiatives: (1) introduce new products, including our recently launched nanOss Strata™, an advanced synthetic bone graft designed to closely resemble natural bone; CollagenX™, a bovine collagen particulate product for surgical wound closure; OsteoFactor Pro TM , an allogenic growth factor solution; and Trivium™, a next-generation demineralized bone matrix, in addition to our introductions in 2024: Cortera ® Posterior Fixation System, viable bone matrix; OsteoVive ® Plus, and amniotic membrane allografts, SimpliGraft ™ and SimpliMax ™; (2) expand our distribution network; (3) penetrate adjacent markets; and (4) leverage our growth platform with technology and strategic acquisitions.
The device sponsor must then fulfill more rigorous PMA requirements or can request a risk-based classification determination for the device in accordance with the de novo process, which is a route to market for novel medical devices that are low to moderate risk and are not substantially equivalent to a predicate device. 10 The advantage of the de novo classification is that it generally requires less data than a PMA.
The device sponsor must then fulfill more rigorous PMA requirements or can request a risk-based classification determination for the device in accordance with the de novo process, which is a route to market for novel medical devices that are low to moderate risk and are not substantially equivalent to a predicate device. 10 The advantage of the de novo classification process is that it generally requires less data than a PMA.
We aim to improve the quality of life for our patients by designing, manufacturing and distributing medical devices and human tissues for transplant that are safe, effective and meet the needs of our customers. We honor the gift of donation by enhancing our core competencies and maximizing utilization of the gift.
We aim to improve the quality of life for our patients by designing, manufacturing and distributing human tissues for transplant and medical devices that are safe, effective and meet the needs of our customers. We honor the gift of donation by enhancing our core competencies and maximizing utilization of the gift.
Some countries accept MDSAP Certificates, CE Marking, and/or FDA clearances as part of their medical device marketing approval process, 11 Healthcare Fraud and Abuse Healthcare fraud and abuse laws apply to Xtant’s business when a customer submits a claim for an item or service that is reimbursed under Medicare, Medicaid or most other federally-funded healthcare programs.
Some countries accept MDSAP Certificates, CE Marking, and/or FDA clearances as part of their medical device marketing approval process, Healthcare Fraud and Abuse Healthcare fraud and abuse laws apply to Xtant’s business when a customer submits a claim for an item or service that is reimbursed under Medicare, Medicaid or most other federally-funded healthcare programs.
Third, the government does not want purchasing, prescription or referral decisions for medical devices biased by economics unrelated to the best choices for a patient. The Federal Anti-Kickback Statute is subject to evolving interpretations and has been applied by government enforcement officials to a number of common business arrangements in the medical device industry.
Third, the government does not want purchasing, prescription or referral decisions for medical devices biased by economics unrelated to the best choices for a patient. 11 The Federal Anti-Kickback Statute is subject to evolving interpretations and has been applied by government enforcement officials to a number of common business arrangements in the medical device industry.
It is intended for spinal fusion procedures at one level (C3 − T1 inclusive) in skeletally mature patients for the treatment of degenerative disc disease. 5 ● The Irix-A Lumbar Integrated Fusion System consists of an integrated titanium ring, surrounded by an outer PEEK ring and three screws.
It is intended for spinal fusion procedures at one level (C3 − T1 inclusive) in skeletally mature patients for the treatment of degenerative disc disease. ● The Irix-A Lumbar Integrated Fusion System consists of an integrated titanium ring, surrounded by an outer PEEK ring and three screws.
Certain states also mandate implementation of commercial compliance programs, impose restrictions on device manufacturer marketing practices and require tracking and reporting of gifts, compensation and other remuneration to healthcare professionals and entities. 12 Our operations are also subject to the U.S. Foreign Corrupt Practices Act (“FCPA”).
Certain states also mandate implementation of commercial compliance programs, impose restrictions on device manufacturer marketing practices and require tracking and reporting of gifts, compensation and other remuneration to healthcare professionals and entities. Our operations are also subject to the U.S. Foreign Corrupt Practices Act (“FCPA”).
Employee Unions, Collective Bargaining Agreements and Work Councils There are no unions representing our employees, and we believe that our relations with our employees are good. Code of Conduct Each employee agrees to follow our Code of Conduct, which is on our corporate website, and covers a wide range of business practices and procedures.
Employee Unions, Collective Bargaining Agreements and Work Councils There are no unions, collective bargaining agreements or work councils representing our employees, and we believe that our relations with our employees are good. Code of Conduct Each employee agrees to follow our Code of Conduct, which is on our corporate website, and covers a wide range of business practices and procedures.
These implants provide the ability to tailor treatment to a specific patient. ● The CervAlign System is a comprehensive anterior cervical plate system designed to meet the varying clinical needs of surgeons performing anterior cervical discectomy and fusion procedures. The system is able to accommodate semi-constrained, constrained and hybrid constructs.
These implants provide the ability to tailor treatment to a specific patient. ● The CervAlign System is a comprehensive anterior cervical plate system designed to meet the varying clinical needs of surgeons performing anterior cervical discectomy and fusion procedures. The system is designed to accommodate semi-constrained, constrained and hybrid constructs.
The system offers a broad range of implants and instruments, providing the ability to tailor treatment to a specific patient. ● The Streamline TL Spinal Fixation System allows a rigid construct to be created in the thoracolumbar spine using pedicle screws, set screws, rods and Streamline TL Crosslinks.
The system offers a broad range of implants and instruments, providing the ability to tailor treatment to a specific patient. 5 ● The Streamline TL Spinal Fixation System allows a rigid construct to be created in the thoracolumbar spine using pedicle screws, set screws, rods and Streamline TL Crosslinks.
Eligible employees may select between four medical plan options: two preferred provider organization plans and two health savings account compatible high deductible plans. We provide contributions to those participating in a health savings account compatible plans. Additionally, we offer employees traditional and limited purpose flex savings account options.
Eligible employees may select between four medical plan options: two preferred provider organization plans and two health savings account compatible high-deductible plans. We provide contributions to those participating in health savings account compatible plans. Additionally, we offer employees traditional and limited purpose flex savings account options.
The FDA can also require a manufacturer to cease marketing and/or recall the modified device until 510(k) clearance, de novo classification, or PMA approval is obtained. Another procedure for obtaining marketing authorization for a medical device is the “de novo classification” procedure.
The FDA can also require a manufacturer to cease marketing and/or recall the modified device until 510(k) clearance, de novo authorization, or PMA approval is obtained. Another procedure for obtaining marketing authorization for a medical device is the “de novo classification” procedure.
Reports filed with the SEC also may be viewed at www.sec.gov . We include our website throughout this report for reference only. The information contained on or connected to our website is not incorporated by reference into this report.
Reports filed with the SEC also may be viewed at www.sec.gov . We include our website throughout this report for reference only. The information contained on or connected to our website is not incorporated by reference into this report. 15
Device manufactures are also required to collect information on payments or transfers of value to physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, and certified nurse midwives for reporting to the Centers for Medicare & Medicaid Services (“CMS”).
Device manufactures are also required to collect information on payments or transfers of value to physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, and certified nurse midwives for reporting to the Centers for Medicare & Medicaid Services.
Pharmacy benefits as well as dental, vision, life, accidental death and disability, long and short-term disability, accident, critical illness, and hospital indemnity insurance plans are available to our employees. We also offer all full-time and part-time employees wellbeing benefits through LifeBalance, Calm, Burnalong, and our Employee Assistance Program.
Pharmacy benefits, as well as dental, vision, life, accidental death and disability, long and short-term disability, accident, critical illness, and hospital indemnity insurance plans are available to our employees. We also offer all full-time and part-time employees wellbeing benefits through LifeBalance and our Employee Assistance Program.
The FDA requires each manufacturer to make this determination in the first instance, but the FDA can review any such decision. If the FDA disagrees with a manufacturer’s decision not to seek a new 510(k) clearance, the agency may require the manufacturer to seek 510(k) clearance, de novo classification, or PMA approval.
The FDA requires each manufacturer to make this determination in the first instance, but the FDA can review any such decision. If the FDA disagrees with a manufacturer’s decision not to seek a new 510(k) clearance, the agency may require the manufacturer to seek 510(k) clearance, de novo authorization, or PMA approval.
Non-compliance with these requirements can result in administrative actions such as FDA refusal to approve pending PMAs, 510(k)s, issuance of warning letters, mandatory product recalls, import detentions, civil monetary penalties, and/or judicial sanctions, such as product seizures, injunctions, and criminal prosecution. 9 Under the FDCA, medical devices are classified into one of three classes based on the risk associated with the device and the level of control necessary to provide a reasonable assurance of safety and effectiveness.
Non-compliance with these requirements can result in administrative actions such as FDA refusal to approve pending Premarket Approvals (“PMAs”), 510(k)s, issuance of warning letters, mandatory product recalls, import detentions, civil monetary penalties, and/or judicial sanctions, such as product seizures, injunctions, and criminal prosecution. 9 Under the FDCA, medical devices are classified into one of three classes based on the risk associated with the device and the level of control necessary to provide a reasonable assurance of safety and effectiveness.
Current Good Tissue Practices (CGTP) requirements govern the methods used in, and the facilities and controls used for, the manufacture of HCT/Ps in a way that prevents the introduction, transmission, or spread of communicable diseases by HCT/Ps.
Current Good Tissue Practices (“CGTP”) requirements govern the methods used in, and the facilities and controls used for, the manufacture of HCT/Ps in a way that prevents the introduction, transmission, or spread of communicable diseases by HCT/Ps.
As of December 31, 2024, we had over 670 independent sales agents and stocking agents. We also maintain a national accounts program to enable our agents to gain access to IDN hospitals and through GPOs.
As of December 31, 2025, we had over 670 independent sales agents and stocking agents. We also maintain a national accounts program to enable our agents to gain access to IDN hospitals and through GPOs.
If the de novo application is denied, the device remains in Class III and PMA approval may be required before the device may be legally marketed in the United States.
If the de novo submission is denied, the device remains in Class III and PMA approval may be required before the device may be legally marketed in the United States.
The disadvantage is that it may require more data than a 510(k) and most often will include human clinical data. A request for de novo classification also has a longer review time.
The disadvantage is that it may require more data than a 510(k) and most often will include human clinical data. A request for de novo classification also has a longer review time as compared to a 510(k).
We have biologics contracts with major GPOs, including Vizient, Premier, and HealthTrust Purchasing Group, as well as extensive access to IDNs across the United States for both biologics and spine hardware systems. Our international footprint includes direct sales representatives and distribution partners in Canada, Mexico, South America, Australia, and certain Pacific region countries.
We have biologics contracts with major GPOs, including Vizient, Premier, and HealthTrust Purchasing Group, as well as extensive access to IDNs across the United States for both biologics and spine hardware systems. Our international footprint includes distribution partners in Europe, Canada, Mexico, South America, and certain Pacific region countries.
A predicate device may be a previously 510(k) cleared device, Class II de novo device, or a pre-amendment device (unless the FDA has issued a regulation calling for PMA applications for this device type).
A predicate device may be a previously 510(k) cleared device, a de novo-authorized device, or a pre-amendment device (unless the FDA has issued a regulation calling for PMA applications for this device type).
We protect our proprietary rights through a variety of methods. As a condition of employment, we generally require employees to execute an agreement relating to the confidential nature of and company ownership of proprietary information and assigning intellectual property rights to us. We generally require confidentiality agreements with vendors, consultants, and others who may have access to proprietary information.
As a condition of employment, we generally require employees to execute an agreement relating to the confidential nature of and company ownership of proprietary information and assigning intellectual property rights to us. We generally require confidentiality agreements with vendors, consultants, and others who may have access to proprietary information.
While our focus is primarily the United States market, we promote and sell our products internationally through direct sales representatives and stocking distribution partners in Europe, Canada, Mexico, South America, Australia, and certain Pacific region countries.
While our focus is the United States market, we promote and sell our products internationally through stocking distribution partners in Europe, Canada, Mexico, South America, and certain Pacific region countries.
As of December 31, 2024, our biologics patent portfolio included 50 issued patents that expire between 2028 and 2041, 26 of which are issued U.S. patents.
As of December 31, 2025, our biologics patent portfolio included 46 issued patents that expire between 2028 and 2041, 26 of which are issued U.S. patents.
Medical device manufacturers are subject to unannounced inspections by the FDA and other state, local and foreign regulatory authorities to assess compliance with the QMSR and other applicable regulations, and these inspections may include the manufacturing facilities of any suppliers.
Medical device manufacturers are subject to unannounced inspections by the FDA and other state, local and foreign regulatory authorities to assess compliance with the Quality Management System Regulation (“QMSR”) and other applicable regulations, and these inspections may include the manufacturing facilities of any suppliers.
Medical Devices The Center for Devices and Radiological Health oversees the clearance and approval of medical devices, including our stabilization and fusion products, as well as certain HCT/Ps regulated as medical devices, such as our OsteoSelect DBM putty.
Medical Devices The Center for Devices and Radiological Health oversees the clearance, authorization and approval of medical devices, including our stabilization and fusion products, as well as certain HCT/Ps regulated as medical devices.
A device not eligible for 510(k) clearance or de novo classification must follow the PMA approval pathway, which requires proof of the safety and effectiveness of the device to the FDA’s satisfaction.
A device not eligible for 510(k) clearance or de novo classification must follow the PMA approval pathway, which requires proof of the reasonable assurance of the device’s safety and effectiveness.
We publish a quarterly Safety Standard newsletter that reiterates our commitment to safety, highlights actions we have taken and intend to take to improve employee safety, and provides practical advice to employees to keep them and their families safe.
We publish a monthly newsletter which features a “Health & Safety Corner” that reiterates our commitment to safety, highlights actions we have taken and intend to take to improve employee safety, and provides practical advice to employees to keep them and their families safe.
Satisfaction of FDA PMA requirements typically take years, and the actual time required may vary substantially based upon the type, complexity, and novelty of the device or disease. We currently market Coflex Interlaminar Technology under the PMA approval pathway. After a medical device enters commercial distribution, General Controls for Medical Devices apply.
Satisfaction of FDA PMA requirements typically take years, and the actual time required may vary substantially based upon the type, complexity, and novelty of the device or disease. After a medical device enters commercial distribution, General Controls for Medical Devices apply.
The core CGTP requirements include requirements for: ● Facilities ● Environmental control ● Equipment ● Supplies and reagents ● Recovery ● Processing and process controls ● Labeling controls ● Storage ● Receipt, predistribution shipment, and distribution of an HCT/P ● Donor eligibility determinations, donor screening, and donor testing An HCT/P is regulated solely under section 361 of the Public Health Service Act (“PHSA”) and 21 CFR Part 1271 if it meets the following four criteria: 1) The HCT/P is minimally manipulated; 2) The HCT/P is intended for homologous use only; as reflected by the labeling, advertising, or other indications of the manufacturer’s objective intent; 3) The manufacture of the HCT/P does not involve the combination of the cells or tissues with another article (with limited exceptions); and 4) Either i) The HCT/P does not have a systemic effect and is not dependent upon the metabolic activity of living cells for its primary function; or ii) The HCT/P has a systemic effect or is dependent upon the metabolic activity of living cells for its primary function and: is for autologous use; is for allogeneic use in a first-degree or second-degree blood relative; or is for reproductive use.
An HCT/P is regulated solely under section 361 of the Public Health Service Act (“PHSA”) and 21 CFR Part 1271 if it meets the following four criteria: 1) The HCT/P is minimally manipulated; 2) The HCT/P is intended for homologous use only; as reflected by the labeling, advertising, or other indications of the manufacturer’s objective intent; 3) The manufacture of the HCT/P does not involve the combination of the cells or tissues with another article (with limited exceptions); and 4) Either i) The HCT/P does not have a systemic effect and is not dependent upon the metabolic activity of living cells for its primary function; or ii) The HCT/P has a systemic effect or is dependent upon the metabolic activity of living cells for its primary function and: is for autologous use; is for allogeneic use in a first-degree or second-degree blood relative; or is for reproductive use.
Available Information We make available, free of charge and through our Internet website, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to any such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (“SEC”).
On October 15, 2015, our common stock began trading on the NYSE MKT, now known as the NYSE American, under the ticker symbol “XTNT.” Available Information We make available, free of charge and through our Internet website, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to any such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (“SEC”).
This final rule does not go into effect until February 2026. International Regulation International distribution is governed by foreign government regulations, which can vary between countries. The time needed for approval in a foreign country may be longer or shorter than that required for FDA approval process, and the specific requirements may differ.
International Regulation International distribution is governed by foreign government regulations, which can vary between countries. The time needed for approval in a foreign country may be longer or shorter than that required for FDA approval process, and the specific requirements may differ.
The PMA approval pathway requires proof of the safety and effectiveness of the device to the FDA’s satisfaction. The 510(k)-clearance pathway is much less burdensome and time-consuming than the PMA approval pathway. The de novo pathway has an enhanced burden compared to the 510(k)-clearance pathway but is much less burdensome than a PMA approval process.
The 510(k)-clearance pathway is much less burdensome and time-consuming than the PMA approval pathway. The de novo pathway has an enhanced burden compared to the 510(k)-clearance pathway but is much less burdensome than a PMA approval process.
Recognizing that our Code of Conduct may not address every situation our employees may encounter, other resources exist to assist our employees in their decision-making, including our management team, training and a hotline pursuant to which employees can ask questions or report issues on an anonymous basis. 14 Employee Safety, Health and Wellness We are committed to maintaining a safe workplace and promoting the health and wellness of our employees.
Recognizing that our Code of Conduct may not address every situation our employees may encounter, other resources exist to assist our employees in their decision-making, including our management team, training and a hotline pursuant to which employees can ask questions or report issues on an anonymous basis.
Our fixation portfolio is patent protected globally and includes 289 issued patents that expire between 2025 and 2043, 191 of which are issued U.S. patents, and 14 pending patent applications, 5 of which are U.S. patent applications.
Our fixation portfolio is patent protected globally and includes 201 issued patents that expire between 2026 and 2043, 150 of which are issued U.S. patents, and 5 pending patent applications, 2 of which are U.S. patent applications.
Sacroiliac Joint Products ● The Silex Sacroiliac Joint Fusion System is a sacroiliac fixation system which actively compresses across the SI joint. Sacroiliac dysfunction is increasingly recognized as a frequent contributor to chronic low back pain. Interbody Products ● Calix is a family of polyetheretherketone, or PEEK, interbody spacers and precision instruments for both cervical and thoracolumbar applications.
Sacroiliac dysfunction is increasingly recognized as a frequent contributor to chronic low back pain. Interbody Products ● Calix is a family of polyetheretherketone, or PEEK, interbody spacers and precision instruments for both cervical and thoracolumbar applications.
We currently own the following registered trademarks: OsteoSponge®, OsteoVive®, OsteoWrap®, BacFast®, OsteoSelect®, 3Demin®, Circle of Life®, Coflex®, CoFix®, ARANAX®, ASPECT®, ATRIX-C®, ATRIX-C UNION®, BACJAC®, BACFUSE®, BIGFOOT®, CLARITY®, CONTACT®, CROSS-FUSE®, INTERLAMINAR STABILIZATION®, INTICE®, LAT-FUSE®, NANOSS®, NUNEC®, PAC PLATE®, QUANTUM®, RELEASE®, SLIMFUSE®, STREAMLINE®, X-LINK®, XPRESS®, XSPAN®, ZYFIX®, ELEMAX®, UNISON®, FORTILINK®, TETRAFUSE®, CERVALIGN®, NANOSS 3D®, DCI®, DSS®, HPS®, PARADIGM SPINE®, the Paradigm Spine design logo, THE MOVEMENT IN SPINE CARE®, TIPLUS®, FIBREX®, MAXFUSE®, BIOMAX®, CORTERA®, ELEVATE YOUR BONE GRAFT®, and ELEVATED PROCEDURAL SOLUTIONS®.
We currently own the following registered trademarks: OsteoSponge®, OsteoVive®, OsteoWrap®, OsteoFactor®, OsteoFactor Pro®, BacFast®, OsteoSelect®, OsteoMax®, 3Demin®, Circle of Life®, ARANAX®, ASPECT®, ATRIX-C®, ATRIX-C UNION®, BACJAC®, BACFUSE®, BIGFOOT®, CLARITY®, CONTACT®, CROSS-FUSE®, INTICE®, LAT-FUSE®, MATRIFORM®, NANOSS®, NUNEC®, ORBITALWRAP®, PAC PLATE®, QUANTUM®, SLIMFUSE®, SimpliGraft®, SimpliMax®, SimpliMix®, STREAMLINE®, X-LINK®, XPRESS®, XSPAN®, ZYFIX®, ELEMAX®, UNISON®, FORTILINK®, TETRAFUSE®, CERVALIGN®, NANOSS 3D®, TIPLUS®, FIBREX®, MAXFUSE®, BIOMAX®, CORTERA®, ELEVATE YOUR BONE GRAFT®, and ELEVATED PROCEDURAL SOLUTIONS®.
A novel device is placed in Class III by default, but it may be eligible to be placed in Class I or Class II via “de novo” classification if it can be shown to pose only low to moderate risk with appropriate regulatory controls.
A novel device is placed in Class III by default, but it may be eligible to be placed in Class I or Class II via “de novo” classification if it can be shown to pose only low to moderate risk with appropriate regulatory controls. The PMA approval pathway requires proof that there is a reasonable assurance of safety and effectiveness.
After the FDA accepts the 510(k) premarket notification, it begins a substantive review. By statute, the FDA is required to complete its review within 90 days of receiving the 510(k) notification. As a practical matter, clearance often takes longer, typically ranging from three to nine months or more, and clearance is never assured.
By statute, the FDA is required to complete its review within 90 FDA days of receiving the 510(k) notification. As a practical matter, clearance often takes longer, typically ranging from three to nine months or more, and clearance is never assured. The FDA’s 510(k) review compares a proposed device to a predicate device with respect to intended use and technology.
General Controls are the basic provisions (authorities) of the May 28, 1976 Medical Device Amendments to the Federal Food, Drug, and Cosmetic Act, that provide the FDA with the means of regulating devices to ensure their safety and effectiveness. The General Controls in the Amendments apply to all medical devices.
General Controls are the basic provisions (authorities) that provide the FDA with the means of regulating devices to ensure their safety and effectiveness. The General Controls apply to all medical devices.
We have a robust learning management system platform that includes several modules for employee development and training. In addition, we have a professional development policy intended to promote professional development opportunities and provide support to employees who want to increase the effectiveness of their performance in their current position.
In addition, we have a professional development policy intended to promote professional development opportunities and provide support to employees who want to increase the effectiveness of their performance in their current position.
Intellectual Property We rely upon patents, trademarks, trade secrets and other proprietary rights to maintain and improve our competitive position. We review third-party proprietary rights, including patents and patent applications, as available, to develop an effective intellectual property strategy, avoid infringement of third-party proprietary rights, identify licensing opportunities and monitor the intellectual property owned by others.
We review third-party proprietary rights, including patents and patent applications, as available, to develop an effective intellectual property strategy, avoid infringement of third-party proprietary rights, identify licensing opportunities and monitor the intellectual property owned by others. We protect our proprietary rights through a variety of methods.
Bacterin’s common stock traded on the NYSE Amex, now known as the NYSE American, under the ticker symbol “BONE.” On July 31, 2015, we acquired all of the outstanding capital stock of X-spine Systems, Inc.
Through a series of transactions and corporate events, we eventually became Bacterin International Holdings, Inc., a Delaware corporation (“Bacterin”). Bacterin’s common stock traded on the NYSE Amex, now known as the NYSE American, under the ticker symbol “BONE.” On July 31, 2015, we acquired all of the outstanding capital stock of X-spine Systems, Inc.
We encourage employees to obtain skills, knowledge and abilities which may improve their opportunities for career advancement within our Company and the purpose of our professional development policy is to provide our employees with the requirements for approval, time off, and reimbursement for employee training and professional development activities. 15 Diversity and Inclusion We strive to create a diverse and inclusive workplace in which all employees feel respected, valued and empowered to reach their full potential.
We encourage employees to obtain skills, knowledge and abilities which may improve their opportunities for career development within our Company and the purpose of our professional development policy is to provide our employees with the requirements for approval, time off, and reimbursement for employee training and professional development activities.
During the first quarter of 2025, we entered into a manufacture and license agreement with a distributor pursuant to which we agreed to manufacture and supply to the distributor our SimpliGraft ® product under the distributor’s name and brand.
License Agreements During the first quarter of 2025, we entered into a manufacture and license agreement with a distributor pursuant to which we agreed to manufacture and supply to the distributor our SimpliGraft® product under the distributor’s name in exchange for a one-time $1.5 million cash payment and minimum SimpliGraft® product purchase obligations of the distributor.
Additionally, we believe that our ISO 13485:2016 certification may offer new markets and business opportunities for our products in the global marketplace. 13 Human Capital Mission, Quality Policy and Core Values Our Mission is to “honor the gift of donation, by allowing our patients to live as full, and complete a life as possible.” Through an effective quality system, we prioritize our commitment to our patients and donor families.
Human Capital Mission, Quality Policy and Core Values Our mission is to “honor the gift of donation, by allowing our patients to live as full, and complete a life as possible.” Through an effective quality system, we prioritize our commitment to our patients, our donors and donor families.
OsteoSelect PLUS is designed to deliver differentiated handling properties and ensure patient safety through validated, terminal sterilization. ● 3Demin is a family of allografts that maximizes osteoconductivity and the osteoinductive potential of human bone. They consist of 100% demineralized cortical bone with malleable handling characteristics and are distributed as a sterile allograft.
OsteoSelect PLUS is designed to deliver differentiated handling properties and ensure patient safety through validated, terminal sterilization. ● 3Demin is a line of allograft bone products composed of 100% demineralized cortical bone. These allografts are processed to enhance osteoconductivity and retain the osteoinductive potential of human bone.
We expect that additional patent applications will be filed and prosecuted as inventions are discovered, technological improvements and processes are developed, and specific applications are identified.
We expect that additional patent applications will be filed and prosecuted as inventions are discovered, technological improvements and processes are developed, and specific applications are identified. There can be no assurance that we will be able to obtain final approval of any patents.
These third-party payors may still deny reimbursement on covered technologies if they determine that a device used in a procedure was not used in accordance with the payor’s coverage policy. Particularly in the United States, third-party payors continue to carefully review, and increasingly challenge, the prices charged for procedures and medical products.
These third-party payors may still deny reimbursement on covered technologies if they determine that a device used in a procedure was not used in accordance with the payor’s coverage policy.
In the United States, a large percentage of insured individuals receive their medical care through managed care programs, which monitor and often require pre-approval of the services that a member will receive.
Particularly in the United States, third-party payors continue to carefully review, and increasingly challenge, the prices charged for procedures and medical products. 12 In the United States, a large percentage of insured individuals receive their medical care through managed care programs, which monitor and often require pre-approval of the services that a member will receive.
There can be no assurance that we will be able to obtain final approval of any patents. 7 Trademarks We have registered, and continue to seek registration, of trademarks and continuously monitor and aggressively pursue users of names and marks that potentially infringe upon our registered trademarks.
Trademarks We have registered, and continue to seek registration, of trademarks and continuously monitor and aggressively pursue users of names and marks that potentially infringe upon our registered trademarks.
Its unique formulation combines our PurLoc® Fiber Technology and superior handling properties and is designed to deliver dependable performance for reliable outcomes. 4 Our Spinal Implant Products We offer a comprehensive line of products that are used to treat a variety of spinal and sacroiliac conditions, including trauma, degeneration, deformity and tumor, including use of minimally invasive surgery techniques.
Our Spinal Implant Products We offer a comprehensive line of products that are used to treat a variety of spinal and sacroiliac conditions, including trauma, degeneration, deformity and tumor, including use of minimally invasive surgery techniques.
For example, the Centers for Medicare and Medicaid Services recently issued a Local Coverage Determination implementing significant changes to reimbursement for cellular and tissue-based products, which would impact our SimpliMax™ and SimpliGraft ® products upon effectiveness.
Effective January 1, 2026, the Centers for Medicare & Medicaid Services (“CMS”) implemented a Local Coverage Determination with significant changes to reimbursement for cellular and tissue-based products, which impacted our SimpliMax™ and SimpliGraft® products.
Fixation also can help hold the biomaterial in place in order to achieve a better outcome. Examples of fixation products can include, but are not limited to, plates, screws, pins, rods, spacers, and staples. Fixation products may be made from various metals and polymer materials.
Fixation provides the constructive support necessary for reestablishing stability, by immobilizing the regenerative site, and relieving stress. Fixation also can help hold the biomaterial in place in order to achieve a better outcome. Examples of fixation products can include, but are not limited to, plates, screws, pins, rods, spacers, and staples.
Featuring innovative implants and multi-functional instrumentation, Cortera provides surgeons with a safe and effective solution that is designed to improve surgical workflow and deliver value when navigating complex procedures. ● HPS™ 2.0 Hybrid Performance System is a universal system for the stabilization of the spine.
Featuring innovative implants and multi-functional instrumentation, Cortera provides surgeons with a safe and effective solution that is designed to improve surgical workflow and deliver value when navigating complex procedures. Sacroiliac Joint Products ● The Silex Sacroiliac Joint Fusion System is a sacroiliac fixation system which actively compresses across the SI joint.
Trade Secrets and Other Proprietary Rights To safeguard our proprietary knowledge and technology, we rely upon trade secret protection and non-disclosure/confidentiality agreements with employees, consultants and third-party collaboration partners with access to our confidential information.
Under the X-spine name, we own the following registered trademarks: SILEX®, IRIX®, CALIX®, H-GRAFT®, SPIDER®, X90®, BUTREX®, FORTEX®, AXLE®, FIXCET®, and XTANT®. 7 Trade Secrets and Other Proprietary Rights To safeguard our proprietary knowledge and technology, we rely upon trade secret protection and non-disclosure/confidentiality agreements with employees, consultants and third-party collaboration partners with access to our confidential information.
Donor Procurement Xtant’s mission with respect to donor procurement is: “Honoring the gift of donation, by helping our patients live as full, and complete a life as possible.” In furtherance of our mission, we have agreements with multiple recovery agencies, and we continue to explore options to expand our network for access to donor tissue in anticipation of increased demand for our biologics products.
Donor Procurement Our mission with respect to donor procurement is: “Honoring the gift of donation, by helping our patients live as full, and complete a life as possible.” In furtherance of our mission, we have agreements with multiple recovery agencies, and we continue to explore options to expand our network for access to donor tissue in anticipation of increased demand for our biologics products. 6 Competition There are various public and private organizations that offer both orthobiologics and fixation products to their customers, including our primary competitors Medtronic plc, Johnson and Johnson, Bioventus Inc., Globus Medical, Inc., OrthoFix Medical Inc., Alphatec Holdings, Inc., Highridge Inc., SI-Bone Inc., as well as dozens of privately-owned companies.
We have an employee Health & Safety Committee that is comprised of employees and recommends improvements in furtherance of employee health and safety. We also have implemented multiple safety programs and regularly perform safety hazard evaluations within our manufacturing facility.
We also have implemented multiple safety programs and regularly perform safety hazard evaluations within our manufacturing facility.
Xtant prides itself on offering employment arrangements that include competitive time off policies and flexibility. Our employees are eligible for paid holidays effective immediately upon hire. Paid time off is available to all corporate employees and accrue based on length of service, and sick time is available for all commercial-sales employees.
We pride ourself on offering employment arrangements that include competitive time off policies and flexibility. Our employees are eligible for paid holidays effective immediately upon hire.
This allows the applicant’s device to be commercially distributed in the United States. Otherwise, the applicant must fulfill the much more rigorous premarketing requirements of the PMA approval process or seek reclassification of the device through the de novo process.
If the device cannot proceed through the 510(k) pathway, the applicant must fulfill the much more rigorous premarketing requirements of the PMA approval process or seek reclassification of the device through the de novo process.
Corporate Information We began operations in 1998 as a spin out of the Center for Biofilm Engineering at Montana State University, or the CBE, and incorporated as “Bacterin, Inc.” in the state of Montana in January 2000. Through a series of transactions and corporate events, we eventually became Bacterin International Holdings, Inc., a Delaware corporation (“Bacterin”).
As a company, we work closely with the Donate Life Community to support our industry and promote the gift of donation. Corporate Information We began operations in 1998 as a spin out of the Center for Biofilm Engineering at Montana State University, or the CBE, and incorporated as “Bacterin, Inc.” in the state of Montana in January 2000.
We have biologics contracts with major GPOs, as well as extensive access to IDNs across the United States for both biologics and spine hardware systems.
We also maintain a national accounts program to enable our agents to gain access to integrated delivery network (“IDN”) hospitals and through group purchasing organizations (“GPOs”). We have biologics contracts with major GPOs, as well as extensive access to IDNs across the United States for both biologics and spine hardware systems.
Our stabilization and fusion products, along with our instrumentation systems, are classified as medical devices and are therefore subject to rigorous regulation by the FDA, as well as by other domestic and international regulatory authorities. These regulations apply to a wide range of activities carried out by Xtant and our suppliers, licensors and partners both now and in the future.
As our industry is highly regulated, we cannot predict the impact of future regulations on our operations or those of our customers. Our stabilization and fusion products, along with our instrumentation systems, are classified as medical devices and are therefore subject to rigorous regulation by the FDA, as well as by other domestic and international regulatory authorities.
These regulated activities include but are not limited to, product design and development, testing, manufacturing, labeling, storage, safety, premarket clearance, advertising and promotion, product marketing, sales and distribution, post-market surveillance and post-market adverse event reporting. All products currently marketed by Xtant are regulated as HCT/Ps and/or have received 510(k) clearances from the FDA.
These regulations apply to a wide range of activities carried out by Xtant and our suppliers, licensors and partners both now and in the future. These regulated activities include but are not limited to, product design and development, testing, manufacturing, labeling, storage, safety, premarket clearance, advertising and promotion, product marketing, sales and distribution, post-market surveillance and post-market adverse event reporting.
Our Coflex product is our only PMA approved product. Human Tissue The FDA defines HCT/Ps as articles containing or consisting of human cells or tissues that are intended for implantation, transplantation, infusion, or transfer into a human recipient.
All products currently marketed by Xtant are regulated as HCT/Ps and/or have received 510(k) clearances from the FDA, unless they are exempt. Human Tissue The FDA defines HCT/Ps as articles containing or consisting of human cells or tissues that are intended for implantation, transplantation, infusion, or transfer into a human recipient.
Of our U.S. workforce, 2% are veterans. Turnover Xtant continually monitors employee turnover rates as its success depends upon retaining highly trained personnel. The average tenure of our employees is approximately 4 years. The average tenure of the members of our management team is approximately 7 years.
In addition, we utilize various outsourced services to manage normal business cycles. Turnover We continually monitor employee turnover rates as our success depends upon retaining highly trained personnel. The average tenure of our employees is approximately 5 years. The average tenure of the members of our management team is approximately 7 years.
We have an extensive sales channel of independent commissioned agents and stocking distributors in the United States representing some or all of our products. We also maintain a national accounts program to enable our agents to gain access to integrated delivery network (“IDNs”) hospitals and through group purchasing organizations (“GPOs”).
We promote our products in the United States through independent distributors and stocking agents, supported by direct employees. We have an extensive sales channel of independent commissioned agents and stocking distributors in the United States representing some or all of our products.
In addition, we comply with all licensing requirement for distributing HCT/Ps in states with such regulations, including Florida, California, Delaware, Illinois, Louisiana, Maryland, Oregon, and New York. As our industry is highly regulated, we cannot predict the impact of future regulations on our operations or those of our customers.
We are an accredited member in good standing with the Association for Advancing Tissue and Biologics (“AATB”), formerly known as the American Association of Tissue Banks. In addition, we comply with all licensing requirements for distributing HCT/Ps in states with such regulations, including Florida, California, Delaware, Illinois, Louisiana, Maryland, Oregon, and New York.
The discussion of what data is needed is sometimes conducted in a voluntary process called the pre-submission process whereby companies meet with the FDA to discuss the data needed for clearance. If the FDA finds the applicant’s device is substantially equivalent to the predicate device, it will send a letter to the applicant stating that fact.
The information necessary to show substantial equivalence will depend on the differences between the proposed device and the predicate device, which may include bench, animal, and/or clinical studies. The discussion of what data is needed is sometimes conducted in a voluntary process called the pre-submission process whereby companies meet with the FDA to discuss the data needed for clearance.
We create opportunities for connection to the Company mission through events, communications, and programs, highlighting the significance of the work being done, fostering stronger employee relationships, and showing appreciation through employee recognition. Employee Development and Training We recognize that successful execution of our strategy is dependent on attracting, developing and retaining top talent in all areas of the business.
Submissions are analyzed to enhance the employee experience, promote retention, drive change, and leverage the overall success of our organization. We create opportunities for connection to the Company mission through events, communications, and programs, highlighting the significance of the work being done, fostering stronger employee relationships, and showing appreciation through employee recognition.
Recent Developments During the fourth quarter of 2024, we entered into a license agreement with a distributor granting an exclusive, nontransferable, non-sublicensable, royalty-bearing right and license to manufacture and commercialize in the United States our SimpliMax™ product and the trademarks associated therewith during the term of the agreement and subject to certain limitations as set forth therein.
During the fourth quarter of 2024, we entered into a license agreement with a distributor granting an exclusive right and license to manufacture and commercialize in the United States our SimpliMax™ product in exchange for a one-time $1.5 million cash payment and minimum quarterly royalty payments based on the volume of product sold by the distributor.
Derived from trabecular (cancellous) bone, OsteoSponge is designed to provide a natural scaffold for cellular in-growth and expose bone-forming proteins to the healing environment. The malleable properties of OsteoSponge are intended to enable it to conform to, and fill, most defects.
It provides a natural scaffold for cellular in-growth and exposes bone-forming proteins to support the healing process. Its malleable structure allows it to conform to and fill defects.
Medical Device Single Audit Program (“MDSAP”) is a program that allows third-party auditors to evaluate a medical device manufacturer’s quality management system. The program is based on ISO 13485, and participating regulatory authorities include: Australia, Brazil, Canada, Japan and the United States of America. We are an accredited member in good standing of the American Association of Tissue Banks (“AATB”).
Medical Device Single Audit Program (“MDSAP”) is a program that allows a third-party auditor to evaluate a medical device manufacturer’s quality management system to satisfy the requirements of multiple regulatory jurisdictions simultaneously. The program is based on ISO 13485.
We also process and distribute (i) sports allografts which are processed specifically for anterior and posterior cruciate ligament repairs, anterior cruciate ligament reconstruction, and meniscal repair, (ii) milled spinal allografts which are comprised of cortical bone milled to desired shapes and dimensions, and (iii) traditional allografts for multi-disciplinary applications including orthopedics, neurology, podiatry, oral/maxillofacial, genitourinary, and plastic/reconstructive.
We also process and distribute sports allografts prepared for soft-tissue reconstruction applications, milled spinal allografts composed of cortical bone shaped to defined specifications, and traditional allografts used across multiple clinical specialties, including orthopedics, neurology, podiatry, oral and maxillofacial care, genitourinary care, chronic wound care, surgical repair, plastic and reconstructive medicine.
Employee Engagement We provide all employees with the opportunity to anonymously share their opinions and feedback directly with senior management and human resources. Submissions are analyzed to enhance the employee experience, promote retention, drive change, and leverage the overall success of our organization.
Paid time off is available to all corporate employees and accrue based on length of service, and sick time is available for all commercial-sales employees. 14 Employee Engagement We provide all employees with the opportunity to anonymously share their opinions and feedback directly with senior management and human resources.
Our products are used by orthopedic spine surgeons and neurosurgeons to treat a variety of spinal disorders in the cervical, thoracolumbar, and interbody spine. We promote our products in the United States through independent distributors and stocking agents, supported by direct employees.
Our products are used by orthopedic spine surgeons and neurosurgeons to treat a variety of spinal disorders in the cervical, thoracolumbar, and interbody spine. In addition, Xtant’s biologics are utilized in trauma, foot and ankle, sports medicine, total joint, along with several surgical repair and wound care applications.
Government Regulation We are ISO 13485 and MDSAP Certified and registered with the FDA as a manufacturer of human cellular and tissue products (“HCT/Ps”) as well as medical devices. ISO 13485 is a global standard that establishes quality management systems (“QMS”) for medical devices.
Food and Drug Administration (“FDA”) as a manufacturer of human cells, tissues, and cellular and tissue-based products (“HCT/Ps”), as well as medical devices. ISO 13485 is the internationally recognized quality management systems (“QMS”) standard specifically designed for organizations involved in the life cycle of medical devices, including design, production, installation, servicing and distribution.
These materials are often used as substitutes to autograft materials, which are taken from a harvest site in the patient to patch or repair the wounded or unhealthy site. Fixation is often instrumental in allowing the body to heal and regenerate tissue. Fixation provides the constructive support necessary for reestablishing stability, by immobilizing the regenerative site, and relieving stress.
These materials are used to facilitate bone growth, augment areas with insufficient bone tissue, and provide structural support during the repair process. Orthopedic biomaterials are commonly used as alternatives to autograft tissue, reducing the need for harvesting bone from a secondary site in the patient. Fixation is often instrumental in allowing the body to heal and regenerate tissue.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe have experienced and could continue to experience manufacturing issues, which could negatively impact our business and results of operations. ● Prolonged inflation, tariffs and supply chain disruptions could result in delayed product launches, lost revenue, higher costs and decreased profit margins. ● We may not be able to compete successfully because we are smaller and have fewer financial resources and less ability to invest in the development of new products. ● Our efforts to integrate acquired products with our existing product line may not be favorably received, which could negatively impact our results of operations and financial condition. ● If we are unable to innovate, develop, introduce, market and license new products and technologies, our business and operating results would suffer. ● Our private label and OEM business involves risks and may be subject to significant fluctuation. ● Our growth initiatives designed to increase our revenue and scale may not be successful and involve risks. ● Our biologics business is highly dependent on the availability of human donors and negative publicity could reduce demand for our biologics products and impact the supply of available donor tissue. ● Substantially all of our revenue is conducted through independent sales agents and distributors who we do not control. ● We depend on a limited number of third-party suppliers for products, components and raw materials. ● We are highly dependent on the continued availability of our facilities. ● We may be party to product liability litigation that could be expensive. ● Our quarterly operating results are subject to substantial fluctuations. ● We may be required to incur impairment and other charges resulting from the impairment of goodwill or other intangible assets recorded in connection with acquisitions. 17 Risks Related to Governmental Regulation ● Our business is subject to extensive governmental regulation, including product approvals and clearances and healthcare fraud and abuse laws, false claims laws, and physician payment transparency laws. ● Our clinical trials involve risk and expense. ● Governmental regulation could restrict the use of our tissue products or our procurement of tissue. ● Outside of the United States, our medical devices must comply with the laws and regulations of the foreign countries in which they are marketed, and compliance may be costly and time-consuming. ● Modifications to our products may require new regulatory clearances or approvals or may require us to recall or cease marketing our products until clearances or approvals are obtained. ● Our manufacturing operations are required to comply with the FDA’s and other governmental authorities’ laws and regulations regarding the manufacture and production of medical devices. ● Even if our products are cleared or approved by regulatory authorities, they could be subject to restrictions or withdrawal from the market. ● The use, misuse or off-label use of our products may harm our image in the marketplace or result in injuries that lead to product liability suits. ● If our products cause or contribute to a death or serious injury, or malfunction in certain ways, we will be subject to medical device reporting regulations and likely litigation. ● Any future product recall or voluntary market withdrawal of a product due to defects, enhancements and modifications or other reasons would significantly increase our costs. ● If we or our suppliers fail to comply with regulations pertaining to human cells, tissues, and cellular and tissue-based products or are deemed to be biological products requiring approval of a BLA prior to being marketed, these products could be subject to withdrawal from the market or other enforcement action. ● Loss of AATB accreditation would have a material adverse effect on us. ● Federal regulatory reforms may adversely affect our business and our ability to sell our products. ● Our revenues depend upon prompt and adequate coverage and reimbursement from public and private insurers and national health systems. ● Our business is subject to complex and evolving laws and regulation regarding privacy and data protection.
Biggest changeRisks Related to Governmental Regulation ● If we or our suppliers fail to comply with regulations pertaining to human cells, tissues, and cellular and tissue-based products or are deemed to be biological products requiring approval of a BLA prior to being marketed, these products could be subject to withdrawal from the market or other enforcement action. ● Loss of AATB accreditation would have a material adverse effect on us. ● Governmental regulation could restrict the use of our tissue products or our procurement of tissue. ● Our manufacturing operations are required to comply with the FDA’s and other governmental authorities’ laws and regulations regarding the manufacture and production of medical devices. ● Our business is subject to extensive governmental regulation, including certain product approvals and clearances and healthcare fraud and abuse laws, false claims laws, and physician payment transparency laws. 16 ● Modifications to our products may require new regulatory clearances or approvals or may require us to recall or cease marketing our products until clearances or approvals are obtained. ● Even if our products are cleared or approved by regulatory authorities, they could be subject to restrictions or withdrawal from the market. ● The use, misuse or off-label use of our products may harm our image in the marketplace or result in injuries that lead to product liability suits. ● If our products cause or contribute to a death or serious injury, or malfunction in certain ways, we will be subject to reporting regulations and likely litigation. ● Any future product recall or voluntary market withdrawal of a product due to defects, enhancements and modifications or other reasons would significantly increase our costs. ● Federal regulatory reforms may adversely affect our business and our ability to sell our products. ● Our revenues depend upon prompt and adequate coverage and reimbursement from public and private insurers and national health systems.
Risks Related to Human Capital Management ● Our business is dependent on a sufficient number of qualified workers, and competition for such talent is intense. ● We have limited staffing and are dependent upon key employees.
Risks Related to Human Capital Management ● We have limited staffing and are dependent upon key employees. ● Our business is dependent on a sufficient number of qualified workers, and competition for such talent is intense.
These biologic, device or drug HCT/Ps must comply with the requirements exclusively applicable to 361 HCT/Ps and, in addition, with requirements applicable to biologics under the PHSA, or devices or drugs under the FDCA, including licensure, clearance or approval, as the case may be.
These biologic, device or drug HCT/Ps must comply with the requirements exclusively applicable to 361 HCT/Ps and, in addition, with requirements applicable to biologics under the PHSA and FDCA, or devices or drugs under the FDCA, including licensure, clearance or approval, as the case may be.
This concentration of voting control could deprive our other stockholders of an opportunity to receive a premium for their shares of common stock as part of a sale of our Company and ultimately might affect the market price of our common stock.
This concentration of voting control could deprive our other stockholders of an opportunity to receive a premium for their shares of our common stock as part of a sale of our Company and ultimately might affect the market price of our common stock.
These factors include, among others: ● demand for our products; ● the effect of inflation, increased interest rates and other recessionary indicators and supply chain disruptions; ● the level of competition; ● the number, timing, and significance of new products and product introductions and enhancements by us and our competitors; ● our ability to develop, introduce, and market new and enhanced versions of our products on a timely basis; ● the timing of or failure to obtain regulatory clearances or approvals for our products; ● changes in pricing policies by us and our competitors; ● changes in the treatment practices of our customers; ● changes in independent sales representative or distributor relationships and sales force size and composition; ● the timing of material expense- or income-generating events and the related recognition of their associated financial impact; ● the number and mix of products sold in the quarter and the geographies in which they are sold; ● the number of selling days; ● the availability and cost of components and materials; ● the timing of orders and shipments; ● ability to obtain reimbursement for our products and the timing of patients’ use of their calendar year medical insurance deductibles; ● work stoppages or strikes in our industry; ● the effect of labor and staffing shortages at hospitals and other medical facilities on the number of elective procedures in which our products are used as well as global and local labor shortages and loss of personnel; ● the impact of acquisitions, dispositions, business combinations and license agreements; ● changes in FDA and foreign governmental regulatory policies, requirements, and enforcement practices; ● changes in accounting standards, policies, estimates, and treatments; ● restructuring, impairment, and other special charges; ● costs associated with pending and any future litigation; ● variations in cost of sales due to the amount and timing of excess and obsolete inventory charges and manufacturing variances; ● income tax fluctuations and changes in tax rules; ● general economic, social and other external factors; and ● increases of interest rates, which can increase the cost of borrowings under our credit agreements and generally affect the level of economic activity.
These factors include, among others: ● demand for our products; ● the effect of inflation, increased interest rates and other recessionary indicators and supply chain disruptions; ● the level of competition; ● the number, timing, and significance of new products and product introductions and enhancements by us and our competitors; ● our ability to develop, introduce, and market new and enhanced versions of our products on a timely basis; ● the timing of or failure to obtain regulatory clearances or approvals for our products; ● changes in pricing policies by us and our competitors; ● changes in the treatment practices of our customers; ● changes in independent sales representative or distributor relationships and sales force size and composition; ● the timing of material expense- or income-generating events and the related recognition of their associated financial impact; ● the number and mix of products sold in the quarter and the geographies in which they are sold; ● the number of selling days; ● the availability and cost of components and materials; ● the timing of orders and shipments; ● ability to obtain reimbursement for our products and the timing of patients’ use of their calendar year medical insurance deductibles; ● work stoppages or strikes in our industry; ● the effect of labor and staffing shortages at hospitals and other medical facilities on the number of elective procedures in which our products are used as well as global and local labor shortages and loss of personnel; ● the impact of acquisitions, dispositions, business combinations and license agreements; 23 ● changes in FDA and foreign governmental regulatory policies, requirements, and enforcement practices; ● changes in accounting standards, policies, estimates, and treatments; ● restructuring, impairment, and other special charges; ● costs associated with pending and any future litigation; ● variations in cost of sales due to the amount and timing of excess and obsolete inventory charges and manufacturing variances; ● income tax fluctuations and changes in tax rules; ● general economic, social and other external factors; and ● increases of interest rates, which can increase the cost of borrowings under our credit agreements and generally affect the level of economic activity.
We are also required to collect information on payments or transfers of value to physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, and certified nurse-midwives for reporting to CMS; ● analogous state and foreign law equivalents of each of the above federal laws, such as state anti-kickback prohibitions and false claims prohibitions which may apply to items or services reimbursed by any third-party payor, including commercial insurers; state laws that require device companies to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other and federal law in significant ways and may not have the same effect, thus complicating compliance efforts; and ● the Federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), and its implementing regulations, which created federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters and which also imposes certain regulatory and contractual requirements regarding the privacy, security and transmission of individually identifiable health information.
We are also required to collect information on payments or transfers of value to physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, and certified nurse-midwives for reporting to CMS; 29 ● analogous state and foreign law equivalents of each of the above federal laws, such as state anti-kickback prohibitions and false claims prohibitions which may apply to items or services reimbursed by any third-party payor, including commercial insurers; state laws that require device companies to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other and federal law in significant ways and may not have the same effect, thus complicating compliance efforts; and ● the Federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), and its implementing regulations, which created federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters and which also imposes certain regulatory and contractual requirements regarding the privacy, security and transmission of individually identifiable health information.
Federal False Claims Act) which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims seeking payment from Medicare, Medicaid or other federal-funded third-party payors that are false or fraudulent; this may impact the reimbursement advice we give to our customers as it cannot be inaccurate and must relate to on-label uses of our products; ● federal criminal laws that prohibit executing a scheme to defraud any federal healthcare benefit program or making false statements relating to healthcare matters; 35 ● the Federal Physician Payments Sunshine Act, which requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to CMS, information related to payments or other “transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, and requires applicable manufacturers and group purchasing organizations to report annually to CMS ownership and investment interests held by the physicians described above and their immediate family members and payments or other “transfers of value” to such physician owners.
Federal False Claims Act) which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims seeking payment from Medicare, Medicaid or other federal-funded third-party payors that are false or fraudulent; this may impact the reimbursement advice we give to our customers as it cannot be inaccurate and must relate to on-label uses of our products; ● federal criminal laws that prohibit executing a scheme to defraud any federal healthcare benefit program or making false statements relating to healthcare matters; ● the Federal Physician Payments Sunshine Act, which requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to CMS, information related to payments or other “transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, and requires applicable manufacturers and group purchasing organizations to report annually to CMS ownership and investment interests held by the physicians described above and their immediate family members and payments or other “transfers of value” to such physician owners.
For example, it could: ● make us more vulnerable to adverse changes in general U.S. and worldwide economic, industry, and competitive conditions and adverse changes in government regulation; 20 ● limit our flexibility in planning for, or reacting to, changes in our business and our industry; ● restrict our ability to make strategic acquisitions, business combinations or dispositions or to exploit business opportunities; ● place us at a competitive disadvantage compared to our competitors who have less debt; and ● limit our ability to borrow additional amounts or raise financing for working capital, capital expenditures, contractual obligations, research and development efforts, acquisitions or business combinations, debt service requirements, execution of our business strategy, or other purposes.
For example, it could: ● make us more vulnerable to adverse changes in general U.S. and worldwide economic, industry, and competitive conditions and adverse changes in government regulation; ● limit our flexibility in planning for, or reacting to, changes in our business and our industry; ● restrict our ability to make strategic acquisitions, business combinations or dispositions or to exploit business opportunities; ● place us at a competitive disadvantage compared to our competitors who have less debt; and ● limit our ability to borrow additional amounts or raise financing for working capital, capital expenditures, contractual obligations, research and development efforts, acquisitions or business combinations, debt service requirements, execution of our business strategy, or other purposes.
If we fail to plan our procurement accordingly or are unable to obtain sufficient quantities of raw materials and components used in manufacturing our orthobiologics and spinal implant products that meet our quality and other requirements on a timely basis for any reason, we may not produce sufficient quantities of our products to meet market demand until a new or alternative supply source is identified and qualified and, as a result, we could lose customers, our reputation could be harmed, and our business could suffer.
If we fail to plan our procurement accordingly or are unable to obtain sufficient quantities of raw materials and components used in manufacturing our orthobiologics and spinal implant products that meet our quality and other requirements on a timely basis for any reason, we may not produce sufficient quantities of our products to meet market demand until a new or alternative supply source is identified and qualified and, as a result, we could lose sales and customers, our reputation could be harmed, and our business could suffer.
We are currently subject to certain product liability litigation, which could harm our business, financial condition or results of operations, especially if this litigation requires payments in amounts that exceed our product liability insurance coverage. 41 Any future product recall or voluntary market withdrawal of a product due to defects, enhancements and modifications or other reasons would significantly increase our costs.
We are currently subject to certain product liability litigation, which could harm our business, financial condition or results of operations, especially if this litigation requires payments in amounts that exceed our product liability insurance coverage. Any future product recall or voluntary market withdrawal of a product due to defects, enhancements and modifications or other reasons would significantly increase our costs.
Later discovery of previously unknown problems with our products, including unanticipated adverse events or adverse events of unanticipated severity or frequency, manufacturing problems, or failure to comply with regulatory requirements such as QSR or QMSR, may result in, among other things, changes to labeling, restrictions on such products or manufacturing processes, product corrections, removal of the products from the market, voluntary or mandatory recalls, a requirement to repair, replace or refund the cost of any medical device we manufacture or distribute, fines, withdrawal of regulatory clearance or approvals, delays in or refusals of new 510(k)s, de novo requests or PMA applications, untitled letters, warning letters, refusal to grant export certificates for our products, product seizures, injunctions or the imposition of civil or criminal penalties which would adversely affect our business, operating results and prospects.
Later discovery of previously unknown problems with our products, including unanticipated adverse events or adverse events of unanticipated severity or frequency, manufacturing problems, or failure to comply with regulatory requirements such as QMSR, may result in, among other things, changes to labeling, restrictions on such products or manufacturing processes, product corrections, removal of the products from the market, voluntary or mandatory recalls, a requirement to repair, replace or refund the cost of any medical device we manufacture or distribute, fines, withdrawal of regulatory clearance, authorization or approvals, delays in or refusals of new 510(k)s, de novo requests or PMA applications, untitled letters, warning letters, refusal to grant export certificates for our products, product seizures, injunctions or the imposition of civil or criminal penalties which would adversely affect our business, operating results and prospects.
For example, the government may take the position that off-label promotion resulted in inappropriate reimbursement for an off-label use in violation of the Federal False Claims Act for which it might impose a civil fine and even pursue criminal action. In those possible events, our reputation could be damaged, and adoption of the products would be impaired.
For example, the government may take the position that off-label promotion resulted in inappropriate reimbursement for off-label use in violation of the Federal False Claims Act for which it might impose a civil fine and even pursue criminal action. In those possible events, our reputation could be damaged, and adoption of the products would be impaired.
Demand for our products also could change in ways we may not anticipate due to, among other factors, evolving customer needs, changes in customer health insurance coverage and reimbursement policies, changing demographics, slow industry growth rates, declines in our markets, the introduction of new products and technologies, evolving surgical philosophies, and evolving industry standards.
Demand for our products also could change in ways we may not anticipate due to, among other factors, evolving customer needs, changes in customer health insurance coverage and reimbursement policies, changing demographics, slow industry growth rates, declines in our markets, the introduction of new competing products and technologies, evolving surgical philosophies, and evolving industry standards.
We may not be successful, however, in retaining or expanding our private label and OEM business. Our private label and OEM business, although not subject to commissions, involves lower gross margins relative to comparable products sold through our independent agent channel which, if this business increases as a percentage of our revenue, will reduce our future gross margins.
We may not be successful, however, in retaining or expanding our private label and OEM channel. Our private label and OEM channel, although not subject to commissions, generally involves lower gross margins relative to comparable products sold through our independent agent channel which, if this business increases as a percentage of our revenue, will reduce our future gross margins.
Our competitors may develop and patent processes or products earlier than us, obtain regulatory clearances or approvals for competing products more rapidly than we do, develop more effective or less expensive products or technologies that render our technology or products obsolete or non-competitive or acquire technologies and technology licenses complementary to our products or advantageous to our business, which could adversely affect our business and operating results.
Our competitors may develop and patent processes or products earlier than we do, obtain regulatory clearances or approvals for competing products more rapidly than we do, develop more effective or less expensive products or technologies that render our technology or products obsolete or non-competitive, or acquire technologies and technology licenses complementary to our products or advantageous to our business, which could adversely affect our business and operating results.
Further, the FDA or some other regulatory agency could identify deficiencies in future inspections of our facilities or our supplies that could disrupt our business and harm our operating results. We may be party to product liability litigation that could be expensive, and our insurance coverage may not be adequate in a catastrophic situation.
Further, the FDA or some other regulatory agency could identify deficiencies in future inspections of our facilities or our supplies that could disrupt our business and harm our operating results. 22 We may be party to product liability litigation that could be expensive, and our insurance coverage may not be adequate in a catastrophic situation.
Modifications to our products that were implemented without obtaining clearance or approval and for which FDA subsequently concludes that clearance or approval was required, may require us to recall or cease marketing the modified devices until clearance or approval is obtained, and we may be subject to significant regulatory fines or penalties.
Modifications to our products that were implemented without obtaining clearance, authorization or approval and for which FDA subsequently concludes that clearance, authorization or approval was required, may require us to recall or cease marketing the modified devices until clearance, authorization or approval is obtained, and we may be subject to significant regulatory fines or penalties.
If key individuals were to leave Xtant, our business could be affected adversely if suitable replacement personnel are not recruited quickly. Our business is dependent upon a sufficient number of qualified workers, and competition for such talent is intense, especially around Belgrade, Montana.
If key individuals were to leave Xtant, our business could be affected adversely if suitable replacement personnel are not recruited quickly. 33 Our business is dependent upon a sufficient number of qualified workers, and competition for such talent is intense, especially around Belgrade, Montana.
Use of a device outside of its cleared or approved indication is known as “off-label” use. We cannot prevent a surgeon from using our products for off-label use, as the FDA does not restrict or regulate a physician’s choice of treatment within the practice of medicine.
Use of a device outside of its cleared, authorized or approved indication is known as “off-label” use. We cannot prevent a surgeon from using our products for off-label use, as the FDA does not restrict or regulate a physician’s choice of treatment within the practice of medicine.
The ability of healthcare providers to purchase our products depends in part on the extent to which reimbursement for the costs of such materials and related treatments is and will continue to be available from governmental health administration authorities, private health coverage insurers and other organizations.
The ability of healthcare providers to purchase our products depends in part on the extent to which reimbursement of the costs of such materials and related treatments is and will continue to be available from governmental health administration authorities, private health coverage insurers and other organizations.
If adequate funds are not otherwise available, we could be required to curtail operations significantly, including reducing our sales and marketing expenses, which could negatively impact product sales, delaying new product initiatives, and we could even be required to cease operations, liquidate our assets and possibly seek bankruptcy protection. 19 To the extent we raise additional financing through the sale of equity or convertible debt securities or the restructuring or refinancing of our outstanding debt, the interests of our current stockholders may be diluted, and the terms may include discounted equity purchase prices, warrant coverage, or liquidation or other preferences that adversely affect the rights of our current stockholders.
If adequate funds are not otherwise available, we could be required to curtail operations significantly, including reducing our sales and marketing expenses, which could negatively impact product sales, delaying new product initiatives, and we could even be required to cease operations, liquidate our assets and possibly seek bankruptcy protection. 38 To the extent we raise additional financing through the sale of equity or convertible debt securities or the restructuring or refinancing of our outstanding debt, the interests of our current stockholders may be diluted, and the terms may include discounted equity purchase prices, warrant coverage, or liquidation or other preferences that adversely affect the rights of our current stockholders.
The issue of whether a product modification requires clearance or approval, as opposed to a “letter-to-file” documenting the change, is not always clear and companies rely on FDA guidance to assist in making such decisions.
The issue of whether a product modification requires clearance, authorization or approval, as opposed to a “letter-to-file” documenting the change, is not always clear and companies rely on FDA guidance to assist in making such decisions.
Even if regulatory clearance or approval of a product is granted, such clearance or approval may be subject to limitations on the intended uses for which the product may be marketed and reduce our potential to successfully commercialize the product and generate revenue from the product.
Even if regulatory clearance, authorization or approval of a product is granted, such clearance, authorization or approval may be subject to limitations on the intended uses for which the product may be marketed and reduce our potential to successfully commercialize the product and generate revenue from the product.
We may need additional financing to satisfy our anticipated future liquidity requirements, which financing may not be available on favorable terms, or at all, at the time it is needed and which could reduce our operational and strategic flexibility.
We may need additional financing to satisfy our future liquidity requirements, which financing may not be available on favorable terms, or at all, at the time it is needed and which could reduce our operational and strategic flexibility.
If we fail to maintain regulatory clearances and approvals, or are unable to obtain, or experience significant delays in obtaining, FDA clearances or approvals for our future products or product enhancements, our ability to commercially distribute and market these products could suffer.
If we fail to maintain regulatory clearances, authorizations, and approvals, or are unable to obtain, or experience significant delays in obtaining, FDA clearances, authorizations, or approvals for our future products or product enhancements, our ability to commercially distribute and market these products could suffer.
Our ability to achieve profitability will be influenced by many factors, including, among others, the level and timing of future revenues and expenditures; development, commercialization, market acceptance and availability and supply of our products; the impact of competing technologies and market developments; our ability to develop and introduce new products; the impact of regulatory requirements and delays; the strength of our relationships with and the success of our independent sales agents and distributors; our ability to increase our OEM sales; and our ability to attract and retain key personnel.
Our ability to maintain and achieve sustained profitability will be influenced by many factors, including, among others, the level and timing of future revenues and expenditures; development, commercialization, market acceptance and availability and supply of our products; the impact of competing technologies and market developments; our ability to develop and introduce new products; the impact of regulatory requirements and delays; the strength of our relationships with and the success of our independent sales agents and distributors; our ability to increase our OEM sales; and our ability to attract and retain key personnel.
The process of obtaining regulatory clearances or approvals to market a medical device can be costly and time-consuming, and we may not be able to obtain these clearances or approvals on a timely basis, if at all. Most of our currently commercialized products have received premarket clearances under Section 510(k) of the FDCA.
The process of obtaining regulatory clearances, authorizations, or approvals to market a medical device can be costly and time-consuming, and we may not be able to obtain these clearances, authorizations or approvals on a timely basis, if at all. Most of our currently commercialized hardware products have received premarket clearances under Section 510(k) of the FDCA.
Manufacturers may, under their own initiative, recall a product if any material deficiency in a device is found or for other reasons. A government-mandated or voluntary recall by us or one of our distributors could occur as a result of component failures, manufacturing errors, design or labeling defects or other deficiencies and issues.
Manufacturers may, under their own initiative, recall a product if any material deficiency in a device is found or for other reasons. A government-mandated or voluntary recall by us or one of our distributors could occur as a result of, among other things, component failures, manufacturing errors, design or labeling defects or other deficiencies and issues.
We may require or we may seek additional funds to fund our future operations and business strategy prior to March 2026. Accordingly, there is no assurance that we will not need or seek additional funding at any time. We may elect to raise additional funds even before we need them if market conditions for raising additional capital are favorable.
We may require or we may seek additional funds to fund our future operations and business strategy prior to March 2027. Accordingly, there is no assurance that we will not need or seek additional funding at any time. We may elect to raise additional funds even before we need them if market conditions for raising additional capital are favorable.
Any modification to a 510(k)-cleared device that could significantly affect its safety or effectiveness, including significant changes to a device’s design, materials, chemical composition, energy source, or manufacturing process, or that would constitute a major change in its intended use, may require a new 510(k) clearance, a de novo classification, or possibly a PMA.
Any modification to a 510(k)-cleared device that could significantly affect its safety or effectiveness, including significant changes to a device’s design, materials, chemical composition, energy source, or manufacturing process, or that would constitute a major change in its intended use, may require a new 510(k) clearance, a de novo authorization, or possibly a PMA.
Such an action by the FDA could cause negative publicity, decreased or discontinued product sales, and significant expense in obtaining required marketing licensure, approval or clearance. Other regulatory entities with authority over our products and operations include state agencies enforcing statutes and regulations covering tissue banking.
Such an action by the FDA could cause negative publicity, decreased or discontinued product sales, and significant expense in obtaining required marketing licensure, approval, authorization, or clearance. 25 Other regulatory entities with authority over our products and operations include state agencies enforcing statutes and regulations covering tissue banking.
The FDA requires device manufacturers to initially make and document a determination of whether or not a modification requires a new approval, supplement or clearance.
The FDA requires device manufacturers to initially make and document a determination of whether or not a modification requires a new approval, supplement, authorization, or clearance.
In such a review the FDA may determine that a new clearance or approval was required before the device was put into commercial distribution.
In such a review the FDA may determine that a new clearance, authorization or approval was required before the device was put into commercial distribution.
We believe that the specific surgical procedures for which our products are marketed fall within the general intended use of the surgical applications that have been cleared by the FDA. However, the FDA could disagree and require us to stop promoting our products for those specific indications/procedures until we obtain FDA clearance or approval for them.
We believe that the specific surgical procedures for which our devices are marketed fall within the general intended use of the surgical applications that have been cleared by the FDA. However, the FDA could disagree and require us to stop promoting our products for those specific indications/procedures until we obtain FDA clearance, authorization or approval for them.
The failure by us or one of our third-party manufacturers or suppliers to comply with applicable statutes and regulations administered by the FDA and other regulatory bodies, or the failure to timely and adequately respond to any adverse inspectional observations or product safety issues, could result in, among other things, any of the following enforcement actions: ● untitled letters, warning letters, fines, injunctions, consent decrees, disgorgement of profits, criminal and civil penalties; 39 ● customer notifications or repair, replacement, refunds, recall, detention or seizure of our products; ● operating restrictions or partial suspension or total shutdown of production; ● refusing or delaying our requests for 510(k) clearance, de novo classification, or PMA approval of new products or modified products; ● withdrawing 510(k) clearances, de novo classifications, or PMAs that have already been granted; ● refusal to grant export certificates for our products; or ● criminal prosecution.
The failure by us or one of our third-party manufacturers or suppliers to comply with applicable statutes and regulations administered by the FDA and other regulatory bodies, or the failure to timely and adequately respond to any adverse inspectional observations or product safety issues, could result in, among other things, any of the following enforcement actions: ● untitled letters, warning letters, fines, injunctions, consent decrees, disgorgement of profits, criminal and civil penalties; ● customer notifications or repair, replacement, refunds, recall, detention or seizure of our products; ● operating restrictions or partial suspension or total shutdown of production; ● refusing or delaying our requests for 510(k) clearance, de novo authorization, or PMA approval of new products or modified products; ● withdrawing 510(k) clearances, de novo authorizations, or PMAs that have already been granted; ● refusal to grant export certificates for our products; or ● criminal prosecution.
If the FDA requires us to cease marketing and recall a modified device until we obtain a new 510(k) clearance, de novo classification, or PMA, our business, financial condition, operating results and future growth prospects could be materially and adversely affected.
If the FDA requires us to cease marketing and recall a modified device until we obtain a new 510(k) clearance, de novo authorization, or PMA, our business, financial condition, operating results and future growth prospects could be materially and adversely affected.
Additionally, patents and certain other intellectual property rights are not perpetual, and third parties will be able to utilize the subject rights upon expiration. 46 In addition, we hold licenses from third parties that are necessary to utilize certain technologies used in the design and manufacturing of some of our products.
Additionally, patents and certain other intellectual property rights are not perpetual, and third parties will be able to utilize the subject rights upon expiration. 34 In addition, we hold licenses from third parties that are necessary to utilize certain technologies used in the design and manufacturing of some of our products.
We and certain of our suppliers also are subject to the regulations of foreign jurisdictions regarding the manufacturing process for our products marketed outside of the United States. The FDA enforces the QSR through periodic announced (routine) and unannounced (for cause or directed) inspections of manufacturing facilities.
We and certain of our suppliers also are subject to the regulations of foreign jurisdictions regarding the manufacturing process for our products marketed outside of the United States. The FDA enforces the QMSR through periodic announced (routine) and unannounced (for cause or directed) inspections of manufacturing facilities.
Due to limited funding, our research and development efforts and ability to develop new products have been constrained for several years, although we have increased our development of new products over the last year, including in particular our amnio and other new biologics products.
Due to limited funding, our research and development efforts and ability to develop new products have been constrained for several years, although we have increased our development of new products over the last couple of years, including in particular our amnio and other new biologics products.
The success of our private label and OEM business is dependent upon the success of our private label and OEM customers in creating demand for and selling the products that we manufacture for them. If our private label and OEM business significantly increases, we may experience difficulties in staffing our manufacturing facility and meeting demand.
The success of our private label and OEM channel is dependent upon the success of our private label and OEM customers in creating demand for and selling the products that we manufacture for them. If our private label and OEM channel significantly increases, we may experience difficulties in staffing our manufacturing facility and meeting demand.
If our products cause or contribute to a death or serious injury, or malfunction in certain ways, we will be subject to medical device reporting regulations, which can result in voluntary corrective actions or agency or other governmental enforcement actions.
If our products cause or contribute to a death or serious injury, or malfunction in certain ways, we will be subject to reporting regulations, which can result in voluntary corrective actions or agency or other governmental enforcement actions.
Sales of substantial amounts of our common stock or a preferred stock in the public market, or the perception that these sales could occur, could adversely affect the market price of our common stock and could materially impair our ability to raise capital through equity offerings in the future.
Sales of substantial amounts of our common stock in the public market, or the perception that these sales could occur, could adversely affect the market price of our common stock and could materially impair our ability to raise capital through equity offerings in the future.
We have made modifications to our products in the past that we concluded did not require a new clearance or approval, and we may make additional modifications in the future that we believe do not or will not require additional clearances or approvals.
We have made modifications to our products in the past that we concluded did not require a new clearance, authorization or approval, and we may make additional modifications in the future that we believe do not or will not require additional clearances, authorizations or approvals.
Additionally, we have experienced shortages in certain raw materials, suppliers have been unable to meet delivery schedules due to excess demand and labor shortages, and lead times have lengthened throughout our supply chain.
Additionally, from time to time we have experienced shortages in certain raw materials, suppliers have been unable to meet delivery schedules due to excess demand and labor shortages, and lead times have lengthened throughout our supply chain.
No assurance can be given that the FDA would agree with any of our decisions not to seek 510(k) clearance, de novo classification, or PMA approval.
No assurance can be given that the FDA would agree with any of our decisions not to seek 510(k) clearance, de novo authorizations, or PMA approval.
Our outstanding indebtedness under the Credit Agreements bears interest at variable rates, which subjects us to interest rate risk and could increase the cost of servicing our indebtedness.
In addition, our outstanding indebtedness under the Credit Agreements bears interest at variable rates, which subjects us to interest rate risk and could increase the cost of servicing our indebtedness.
The FDA will normally review a decision made by a manufacturer in a letter-to-file during a routine plant inspection, which FDA targets to conduct every two years for high-risk (Class III) device manufacturers and certain low and moderate risk (Class I and II) device manufacturers.
The FDA will normally review a decision made by a manufacturer in a letter-to-file during a routine plant inspection, which FDA targets to conduct every two years for high-risk (Class III) device manufacturers and less frequently for low and moderate risk (Class I and II) device manufacturers.
The health of the global economy, and the credit markets and the financial services industry in particular, as well as the stability of the social fabric of our society, affects our business and operating results.
The health of the global economy, and the credit markets and the financial services industry in particular, as well as global wars and conflicts and the stability of the social fabric of our society, affects our business and operating results.
The existence of unissued and unreserved common stock and preferred stock may enable the Board of Directors to issue shares to persons friendly to current management or to issue preferred stock with terms that could render more difficult or discourage a third-party attempt to obtain control of us by means of a merger, tender offer, proxy contest or otherwise, thereby protecting the continuity of our management. ● Shares of our common stock do not have cumulative voting rights in the election of directors, so our stockholders holding a majority of the shares of common stock outstanding will be able to elect all of our directors. ● Special meetings of the stockholders may be called only by the Board of Directors, the chair of the Board of Directors or the chief executive officer. ● The Board of Directors may adopt, alter, amend or repeal our Bylaws without stockholder approval. ● Unless otherwise provided by law, any newly created directorship or any vacancy occurring on the Board of Directors for any cause may be filled by the affirmative vote of a majority of the remaining members of the Board of Directors even if such majority is less than a quorum, and any director so elected shall hold office until the expiration of the term of office of the director whom he or she has replaced or until his or her successor is elected and qualified. ● Prior to July 26, 2030, fixing the number of directors at more than seven directors requires the approval of at least 75% of our directors then holding office. ● The affirmative vote of the holders of at least two-thirds of the voting power of the then outstanding shares of our capital stock entitled to vote generally in the election of directors, voting together as a single class, is required to amend or repeal the provisions of our Charter related to the amendment of our Bylaws, the Board of Directors and our stockholders as well as the general provisions of our Charter. ● Stockholders must follow advance notice procedures to submit nominations of candidates for election to the Board of Directors at an annual or special meeting of our stockholders, including director election contests subject to the SEC’s universal proxy rules, and must follow advance notice procedures to submit other proposals for business to be brought before an annual meeting of our stockholders. 53 ● Unless we consent in writing to an alternative forum, the Court of Chancery of the State of Delaware, (or, if the Court of Chancery of the State of Delaware does not have subject matter jurisdiction, a state court located within the State of Delaware or, if no state court located within the State of Delaware has subject matter jurisdiction, the federal district court for the District of Delaware), will be the exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee to us or our stockholders, (iii) any action asserting a claim arising under any provision of the General Corporation Law of the State of Delaware (“DGCL”), our Charter or our Bylaws, or (iv) any action asserting a claim governed by the internal-affairs doctrine; provided, however, that unless we consent in writing to an alternative forum, the federal district courts of the United States of America shall be, to the fullest extent permitted by applicable law, the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended. ● The Investor Rights Agreement includes director nomination rights, which provide that so long as the Ownership Threshold (as defined in the Investor Rights Agreement) is met, Royalty Opportunities and ROS are entitled to nominate such individuals to the Board of Directors constituting a majority of the directors.
The existence of unissued and unreserved common stock and preferred stock may enable the Board of Directors to issue shares to persons friendly to current management or to issue preferred stock with terms that could render more difficult or discourage a third-party attempt to obtain control of us by means of a merger, tender offer, proxy contest or otherwise, thereby protecting the continuity of our management. ● Shares of our common stock do not have cumulative voting rights in the election of directors, so our stockholders holding a majority of the shares of common stock outstanding will be able to elect all of our directors. ● Special meetings of the stockholders may be called only by the Board of Directors, the chair of the Board of Directors or the chief executive officer. ● The Board of Directors may adopt, alter, amend or repeal our Bylaws without stockholder approval. ● Unless otherwise provided by law, any newly created directorship or any vacancy occurring on the Board of Directors for any cause may be filled by the affirmative vote of a majority of the remaining members of the Board of Directors even if such majority is less than a quorum, and any director so elected shall hold office until the expiration of the term of office of the director whom he or she has replaced or until his or her successor is elected and qualified. ● Prior to July 26, 2030, fixing the number of directors at more than seven directors requires the approval of at least 75% of our directors then holding office. ● The affirmative vote of the holders of at least two-thirds of the voting power of the then outstanding shares of our capital stock entitled to vote generally in the election of directors, voting together as a single class, is required to amend or repeal the provisions of our Charter related to the amendment of our Bylaws, the Board of Directors and our stockholders as well as the general provisions of our Charter. ● Stockholders must follow advance notice procedures to submit nominations of candidates for election to the Board of Directors at an annual or special meeting of our stockholders, including director election contests subject to the SEC’s universal proxy rules, and must follow advance notice procedures to submit other proposals for business to be brought before an annual meeting of our stockholders. 41 ● Unless we consent in writing to an alternative forum, the Court of Chancery of the State of Delaware, (or, if the Court of Chancery of the State of Delaware does not have subject matter jurisdiction, a state court located within the State of Delaware or, if no state court located within the State of Delaware has subject matter jurisdiction, the federal district court for the District of Delaware), will be the exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee to us or our stockholders, (iii) any action asserting a claim arising under any provision of the General Corporation Law of the State of Delaware (“DGCL”), our Charter or our Bylaws, or (iv) any action asserting a claim governed by the internal-affairs doctrine; provided, however, that unless we consent in writing to an alternative forum, the federal district courts of the United States of America shall be, to the fullest extent permitted by applicable law, the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended.
Factors that may have a significant impact on the market price and marketability of our common stock include, among others: ● our observance of covenants under our Credit Agreements; ● our ability to make interest payments under our Credit Agreements; ● the terms of any potential future transaction(s) related to debt financing, debt restructuring or capital raising; ● announcements of technological innovations or new commercial products by us or our present or potential competitors; ● developments or disputes concerning patent or other proprietary rights; ● developments in our relationships with employees, suppliers, distributors, sales representatives and customers; ● acquisitions or divestitures; ● litigation and government proceedings; ● adverse legislation, including changes in governmental regulation; ● third-party reimbursement policies; ● additions or departures of key personnel; ● sales of our equity securities by our significant stockholders, including in the event ROS or Royalty Opportunities distributes shares of our common stock to its limited partners, or management or sales of additional equity securities by our Company; ● changes in securities analysts’ recommendations; ● short selling; ● changes in health care policies and practices or reimbursement affecting our products or technologies; ● the delisting of our common stock or halting or suspension of trading in our common stock by the NYSE American; ● economic, social and other external factors, such as epidemics or pandemics, supply chain disruptions, labor shortages and persistent inflation; and ● general market conditions.
Factors that may have a significant impact on the market price and marketability of our common stock include, among others: ● our observance of covenants under our Credit Agreements; ● our ability to make principal, interest and other payments under our Credit Agreements; ● the terms of any potential future transaction(s) related to debt financing, debt restructuring or capital raising; ● announcements of technological innovations or new commercial products by us or our present or potential competitors; ● developments or disputes concerning patent or other proprietary rights; ● developments in our relationships with employees, suppliers, distributors, sales representatives and customers; ● acquisitions or divestitures; 39 ● litigation and government proceedings; ● adverse legislation, including changes in governmental regulation; ● third-party reimbursement policies; ● additions or departures of key personnel; ● sales of our equity securities by our significant stockholders or management or sales of additional equity securities by our Company; ● changes in securities analysts’ recommendations; ● short selling; ● changes in health care policies and practices or reimbursement affecting our products or technologies; ● the delisting of our common stock or halting or suspension of trading in our common stock by the NYSE American; ● economic, social and other external factors, such as epidemics or pandemics, supply chain disruptions, labor shortages and persistent inflation; and ● general market conditions.
As a result, our access to credit under the Revolving Credit Agreement is subject to fluctuations to our accounts receivable and inventory. Our inability to borrow additional amounts under the Credit Agreements if and when we need them may adversely affect our liquidity, results of operations, and financial condition.
As a result, our access to credit under the Revolving Credit Agreement is subject to fluctuations to our accounts receivable and inventory. Our inability to borrow additional amounts under the Credit Agreements if and when we need them may adversely affect our liquidity and financial condition.
In addition, our private label and OEM business involves other additional risks. For example, we generally do not have long-term supply agreements covering this business so our customers could periodically decide to use other OEMs based on cost, quality, delivery time, production capacities, competitive and regulatory considerations or other factors.
In addition, our private label and OEM channel involves other additional risks. For example, we generally do not have long-term supply agreements covering our private label and OEM customers, so they could periodically decide to use other OEMs based on cost, quality, delivery time, production capacities, competitive and regulatory considerations, or other factors.
We are accredited with the American Association of Tissue Banks, a private non-profit organization that accredits tissue banks and sets industry standards. Although AATB accreditation is voluntary and not required by law, as a practical matter, many of our customers would not purchase our products if we failed to maintain our AATB accreditation.
We are accredited with the Association for Advancing Tissue and Biologics (formerly American Association of Tissue Banks), a private non-profit organization that accredits tissue banks and sets industry standards. Although AATB accreditation is voluntary and not required by law, as a practical matter, many of our customers would not purchase our products if we failed to maintain our AATB accreditation.
Similarly, certain modifications to a PMA-approved device may require approval of a new PMA or a PMA supplement, or alternatively a notification or other submission to the FDA. We may make modifications to our approved devices in the future that we believe do not require further approval.
Similarly, certain modifications to a PMA-approved device may require approval of a new PMA or a PMA supplement, or alternatively a notification or other submission to the FDA. We may make modifications to our cleared devices in the future that we believe do not require further clearance, authorization, or approval.
In addition, risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, operating results, prospects or stock price. 16 Risk Factors Summary This summary is not complete and should be read in conjunction with the risk factors set forth below.
In addition, risks and uncertainties not currently known to us or that we currently deem to be immaterial also may adversely affect our business, operating results, financial condition, prospectus, and/or stock price. Risk Factors Summary This summary is not complete and should be read in conjunction with the risk factors set forth below.
The complexity of these processes, as well as strict company and government standards for the manufacture and storage of our products, subjects us to production risks.
The complexity of these processes, as well as strict company and government standards for the manufacture and storage of our products, subject us to production risks.
Government regulation of medical devices is meant to assure their safety and effectiveness, and includes regulation of, among other things: ● design, development and manufacturing; ● testing, labeling, packaging, content and language of instructions for use, and storage; ● clinical trials; ● product safety; ● premarket clearance and approval; ● marketing, sales and distribution (including making product claims); ● advertising and promotion; ● product modifications; ● recordkeeping procedures; ● reports of corrections, removals, enhancements, recalls and field corrective actions; ● post-market surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to recur, could lead to death or serious injury; ● complying with the federal law and regulations requiring Unique Device Identifiers (“UDI”) on devices and their labeling and also requiring the submission of certain information about each device to FDA’s Global Unique Device Identification Database (“GUDID”); and ● product import and export.
Government regulation of our products is meant to ensure their safety and effectiveness, and may include regulation of, among other things: ● design, development and manufacturing; ● testing, labeling, packaging, content and language of instructions for use, and storage; ● clinical trials; ● product safety; ● premarket clearance, authorization and approval; ● marketing, sales and distribution (including making product claims); ● advertising and promotion; ● product modifications; ● recordkeeping procedures; ● reports of corrections, removals, enhancements, recalls and field corrective actions; ● post-market surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to recur, could lead to death or serious injury; ● complying with the federal law and regulations requiring Unique Device Identifiers (“UDI”) on devices and their labeling and also requiring the submission of certain information about each device to FDA’s Global Unique Device Identification Database (“GUDID”); and ● product import and export.
Prior to raising additional equity or debt financing, we must obtain the consent of MidCap and ROS and Royalty Opportunities, and no assurance can be provided that MidCap, ROS or Royalty Opportunities would provide such consent, which could limit our ability to raise additional financing.
Prior to raising additional equity or debt financing, we must obtain the consent of MidCap, and no assurance can be provided that MidCap would provide such consent, which could limit our ability to raise additional financing.
We are highly dependent on the continued availability of our facilities and would be harmed if they were unavailable for any prolonged period of time. Any failure in the physical infrastructure of our facilities or services could lead to significant costs and disruptions that could reduce our revenues and harm our business, reputation and financial results.
We are highly dependent on the continued availability of our facilities and would be harmed if they were unavailable for any prolonged period of time. Any failure in the physical infrastructure of our facilities could lead to significant costs and disruptions that could reduce our revenues and harm our business, operating results, and reputation.
Because the independent sales agent or distributor often controls the customer relationships within its territory (and, in certain countries outside the United States, the regulatory relationship), there is a risk that if our relationship with the independent sales agent or distributor ends, our relationship with the customer will be lost (and, in certain countries outside the United States, that we could experience delays in amending or transferring our product registrations).
In addition, because the independent sales agent or distributor often controls the customer relationships (and, in certain countries outside the United States, the regulatory relationship), there is a risk that if our relationship with the independent sales agent or distributor ends, our relationship with the customer will be lost (and, in certain countries outside the United States, that we could experience delays in amending or transferring our product registrations).
Our medical device products and operations are subject to extensive regulation by the FDA and various other federal, state and foreign governmental authorities.
Our products and operations are subject to extensive regulation by the FDA and various other federal, state and foreign governmental authorities.
Media reports or other negative publicity concerning both alleged improper methods of tissue recovery from donors and disease transmission from donated tissue could limit widespread acceptance of some of our biologics products.
Media reports or other negative publicity concerning both alleged improper methods of tissue recovery from donors and disease transmission from donated tissue could limit widespread acceptance of some of our biologics products and reduce demand for our biologics products.
As a result, appreciation, if any, in the market price of our common stock will be the sole source of gain for our stockholders for the foreseeable future. General Risk Factors Worldwide economic and market conditions, including with respect to financial institutions, and social unrest could adversely affect our revenue, liquidity, financial condition, or results of operations.
As a result, appreciation, if any, in the market price of our common stock will be the sole source of gain for our stockholders for the foreseeable future. General Risk Factors Worldwide economic and market conditions, including with respect to financial institutions, global wars and conflicts, and social unrest could adversely affect our revenue, operating results, liquidity, and/or financial condition.
Item 1A. Risk Factors Our business and an investment in our common stock are subject to a variety of risks. The following risk factors describe some of the material factors that could have a material adverse effect upon our business, financial condition, results of operations, prospectus, and the market price for our common stock.
Item 1A. Risk Factors Our business and an investment in our common stock are subject to a variety of risks. The following risk factors describe some of the material factors that could have a material adverse effect upon our business, operating results, financial condition, prospectus, and/or the market price of our common stock.
Federal regulatory reforms may adversely affect our business and our ability to sell our products. From time to time, legislation is drafted and introduced in Congress that could significantly change the statutory provisions governing the regulatory approval, manufacture and marketing of regulated products or the reimbursement thereof.
Federal regulatory reforms may adversely affect our business and our ability to sell our products. From time to time, legislation is introduced in Congress that could significantly change the statutory framework governing the regulatory approval, manufacture, marketing, or reimbursement of regulated products.
Our ability to complete acquisitions and business combinations will depend, in part, on the availability of suitable candidates at acceptable prices, terms, and conditions; our ability to compete effectively for acquisition candidates; and the availability of capital and personnel to complete such acquisitions and run the acquired business effectively.
Our ability to complete future acquisitions, dispositions and business combinations will depend, in part, on the availability of suitable acquisition candidates or buyers at acceptable prices, terms, and conditions; our ability to compete effectively for acquisition candidates or buyers; and the availability of capital and personnel to complete such acquisitions and run the acquired business effectively.
If the FDA were to draw these conclusions, it would likely require clinical studies conducted pursuant to an investigational new drug application (“IND”) and the submission and licensure, approval or clearance of a marketing application in order for us to continue to market the product.
If the FDA were to draw these conclusions, it would likely require clinical studies conducted pursuant to an investigational new drug application (“IND”) or Investigation Device Exemption (“IDE”) and the submission and licensure, approval, authorization, or clearance of a marketing application in order for us to continue to market the product.
Our mission is “to honor the gift of donation, by allowing our patients to live as full, and complete a life as possible.” Accordingly, our biologics business is highly dependent on our ability to obtain donor cadavers and placentas as the raw material for many of our biologics products.
Our mission is “to honor the gift of donation, by allowing our patients to live as full, and complete a life as possible.” Accordingly, our biologics business is highly dependent on our ability to obtain deceased human donors and placentas as the raw material for many of our biologics products.
Economic slowdowns, periods of high inflation, periods of rising interest rates and recessions, as well as disruptions in access to bank deposits or lending commitments due to bank failures, could materially and adversely affect our revenue, liquidity, financial condition and results of operations.
Economic slowdowns, periods of high inflation, periods of rising interest rates and recessions, as well as disruptions in access to bank deposits or lending commitments due to bank failures, among other factors, could materially and adversely affect our revenue, operating results, liquidity, and/or financial condition.
We cannot ensure that: ● we were the first to make the inventions covered by each of our patent applications; ● we were the first to file patent applications for these inventions; ● others will not independently develop similar or alternative technologies or duplicate any of our technologies; ● any of our pending patent applications will result in issued patents; ● any of our issued patents or those of our licensors will be valid and enforceable; ● any patents issued to us or our collaborators will provide a basis for commercially viable products or will provide us with any competitive advantages or will not be challenged by third parties; ● any of our patent or other intellectual property rights in the U.S. and the technologies embodied therein will provide or be subject to similar or any protection in foreign markets; ● we will develop additional proprietary technologies that are patentable; ● the patents of others will not have a material adverse effect on our business rights; or ● the measures we rely on to protect the intellectual property underlying our products will be adequate to prevent third parties from using our technology, all of which could harm our ability to compete in the market.
We cannot ensure that: ● we were the first to make the inventions covered by each of our patent applications; ● we were the first to file patent applications for these inventions; ● others will not independently develop similar or alternative technologies or duplicate any of our technologies; ● any of our pending patent applications will result in issued patents; ● any of our issued patents or those of our licensors will be valid and enforceable; ● any patents issued to us or our collaborators will provide a basis for commercially viable products or will provide us with any competitive advantages or will not be challenged by third parties; ● any of our patent or other intellectual property rights in the U.S. and the technologies embodied therein will provide or be subject to similar or any protection in foreign markets; ● we will develop additional proprietary technologies that are patentable; ● the patents of others will not have a material adverse effect on our business rights; or ● the measures we rely on to protect the intellectual property underlying our products will be adequate to prevent third parties from using our technology, all of which could harm our ability to compete in the market. 35 Risks Related to Information Technology, Cybersecurity and Data Protection We are dependent on various information technology (“IT”) systems, and failures of, interruptions to, or unauthorized tampering with those systems could have a material adverse effect on our business.
Additionally, we cannot assure you that we will be able to obtain the required clearances with respect to future products.
Additionally, we cannot assure you that we will be able to obtain the required clearances, authorizations, or approvals with respect to future products.
For example, the Credit Agreements require us to maintain net product revenue at or above minimum levels and contain other provisions that restrict our ability, subject to specified exceptions, to, among other things: ● create, incur, assume, guarantee or otherwise become or remain directly or indirectly liable with respect to any debt, except for permitted debt; ● create, assume, incur or suffer to exist any contingent obligations, except for permitted contingent obligations; ● purchase, redeem, defease or prepay any principal of, premium, if any, interest or other amount payable in respect of any debt prior to its scheduled maturity; ● create, assume or suffer to exist any lien on our assets; ● declare, order, pay, make or set apart any sum for any distribution, except for permitted distributions; ● enter into or assume any agreement prohibiting the creation or assumption of any lien upon our properties or assets or create or otherwise cause or suffer to exist or become effective certain consensual encumbrances or restrictions of any kind; ● declare, pay, make or set aside any amount for payment in respect of subordinated debt; ● engage in mergers or consolidations; ● acquire, make, own, hold or otherwise consummate any investment, other than permitted investments; ● enter into certain transactions with affiliates; ● amend or otherwise modify any organizational documents; and ● make certain amendments or modifications to certain material contracts. 21 We may be unable to comply with these covenants, which could result in a default under the Credit Agreements if we are unable to obtain a waiver at such time.
For example, the Credit Agreements require us to maintain net product revenue at or above minimum levels and contain other provisions that restrict our ability, subject to specified exceptions, to, among other things: ● create, incur, assume, guarantee or otherwise become or remain directly or indirectly liable with respect to any debt, except for permitted debt; ● create, assume, incur or suffer to exist any contingent obligations, except for permitted contingent obligations; ● purchase, redeem, defease or prepay any principal of, premium, if any, interest or other amount payable in respect of any debt prior to its scheduled maturity; ● create, assume or suffer to exist any lien on our assets; ● declare, order, pay, make or set apart any sum for any distribution, except for permitted distributions; ● enter into or assume any agreement prohibiting the creation or assumption of any lien upon our properties or assets or create or otherwise cause or suffer to exist or become effective certain consensual encumbrances or restrictions of any kind; 37 ● declare, pay, make or set aside any amount for payment in respect of subordinated debt; ● engage in mergers or consolidations; ● acquire, make, own, hold or otherwise consummate any investment, other than permitted investments; ● enter into certain transactions with affiliates; ● amend or otherwise modify any organizational documents; and ● make certain amendments or modifications to certain material contracts.
If the FDA requires us to go through the PMA or de novo process for future more products or modifications to existing products than we had expected, our product introductions or modifications could be delayed or canceled, which could adversely affect our revenue.
If the FDA requires us to go through the PMA or de novo process for future products or modifications to existing products, our product introductions or modifications could be delayed or canceled, which could adversely affect our revenue.
Acquisitions and business combinations may involve a number of risks, the occurrence of which could adversely affect our business, reputation, operating results and financial condition, including: ● diversion of management’s attention; ● disruption to our existing operations and plans or the inability to effectively manage our expanded operations; ● failure, difficulties or delays in securing, integrating, developing and assimilating information, financial systems, internal controls, operations, manufacturing processes and products or the distribution channels for acquired product lines; ● potential loss of key employees, customers, distributors, or sales representatives of the acquired businesses or adverse effects on existing business relationships with suppliers, customers, distributors, and sales representatives; ● temporary adverse impact on overall profitability and growth if certain acquired products cannibalize existing product offerings; ● adverse impact on overall profitability if our expanded operations do not achieve the efficiencies, growth projections, net sales, earnings, cost or revenue synergies, or other financial results projected in our valuation models, delays in the realization thereof or costs or charges incurred to achieve any revenue or cost synergies; ● reallocation of amounts of capital from other operating initiatives and/or an increase in our leverage and debt service requirements to pay acquisition purchase prices or other business venture investment costs or fund acquired businesses, which could in turn restrict our ability to access additional capital when needed, pursue other important elements of our business strategy or remain in compliance with the covenants under our Credit Agreements; ● infringement by acquired businesses or other business ventures of intellectual property rights of others or violation of confidentiality, intellectual property and non-compete obligations or agreements by employees of an acquired business or lack of or inadequate formal intellectual property protection mechanisms in place at an acquired business; ● inaccurate assessment of additional post-acquisition investments, undisclosed, contingent, tax or other liabilities or problems, unanticipated costs associated with an acquisition, and an inability to recover or manage such liabilities and costs; ● incorrect estimates made in the accounting for acquisitions and incurrence of non-recurring charges, including restructuring charges in connection with efforts to reduce costs and streamline operations; and ● impacts as a result of accounting adjustments, incorrect estimates made in the accounting for the acquisitions or the potential write-off of significant amounts of goodwill or other assets as a result of deterioration in the performance of an acquired business or product line, adverse market conditions, changes in the competitive landscape, changes in laws or regulations that restrict activities of an acquired business or product line, or as a result of a variety of other circumstances, or other potential financial accounting or reporting impacts, including those resulting from the international subsidiaries we acquired from Surgalign Holdings.
Acquisitions, dispositions and business combinations may involve a number of risks, the occurrence of which could adversely affect our business, operating results and financial condition, including: ● diversion of management’s attention; ● disruption to our existing operations and plans or the inability to effectively manage our expanded or reduced operations; ● failure, difficulties or delays in securing, integrating, developing and assimilating information, financial systems, internal controls, operations, manufacturing processes and products or the distribution channels for acquired product lines; ● potential loss of key employees, customers, distributors, or sales representatives of the acquired businesses or adverse effects on existing business relationships with suppliers, customers, distributors, and sales representatives; ● adverse impact on overall profitability and growth, including if certain acquired products cannibalize existing product offerings or if certain disposed products or revenue reduce our ability to leverage our fixed operating costs or trigger adverse tax, accounting or other consequences; ● adverse impact on overall profitability if our operations as affected by our acquisitions and dispositions do not achieve the efficiencies, growth or other projections, net sales, earnings, cost or revenue synergies, or other financial results projected in our valuation models, delays in the realization thereof or costs or charges incurred to achieve any revenue or cost synergies; ● possibility of not receiving any earnout or milestone payments; ● reallocation of amounts of capital from other operating initiatives and/or an increase in our leverage and debt service requirements to pay acquisition purchase prices or other business venture investment costs or fund acquired businesses, which could in turn restrict our ability to access additional capital when needed, pursue other important elements of our business strategy or remain in compliance with the covenants under our credit agreements; ● infringement by acquired businesses or other business ventures of intellectual property rights of others or violation of confidentiality, intellectual property and non-compete obligations or agreements by employees of an acquired business or lack of or inadequate formal intellectual property protection mechanisms in place at an acquired business; ● inaccurate assessment of additional post-transaction investments, undisclosed, contingent, tax or other liabilities or problems, unanticipated costs associated with an acquisition or disposition, and an inability to recover or manage such liabilities and costs; ● incorrect estimates made in the accounting for acquisitions or disposition and incurrence of non-recurring charges, including restructuring charges in connection with efforts to reduce costs and streamline operations; and ● impacts as a result of accounting adjustments, incorrect estimates made in the accounting for the acquisitions or dispositions or the potential write-off of significant amounts of goodwill or other assets as a result of deterioration in the performance of an acquired business or product line, adverse market conditions, changes in the competitive landscape, changes in laws or regulations that restrict activities of an acquired business or product line, or as a result of a variety of other circumstances, or other potential financial accounting or reporting impacts, including those resulting from the international subsidiaries we acquired from Surgalign Holdings and then subsequently sold to Companion Spine in December 2025. 21 Also, some transactions may require the consent of the lenders under our credit agreements, and we cannot predict whether such consent would be forthcoming or the terms on which the lenders would approve future transactions.
This provision may limit the ability of our stockholders to obtain a favorable judicial forum for disputes with us. 54 We have never paid dividends and do not expect to do so in the foreseeable future. We have not declared or paid any cash dividends on our common stock.
In addition, the forum selection provision in our Charter could limit the ability of our stockholders to obtain a favorable judicial forum for disputes with us. We have never paid dividends and do not expect to do so in the foreseeable future. We have not declared or paid any cash dividends on our common stock.
Many of these events are outside of our control. If any of these risks actually occur, our business, financial condition or results of operations may be materially adversely affected. In such case, the market price of our common stock could decline and investors in our common stock could lose all or part of their investment.
If any of these risks actually occur, our business, operating results, and financial condition may be materially adversely affected. In such case, the market price of our common stock could decline and investors in our common stock could lose all or part of their investment.
In addition, FDA regulations and guidance are often revised or reinterpreted by the FDA in ways that may significantly affect our business and our products. For example, the FDA issued a final rule in February 2024 replacing the QSR with the QMSR, which incorporates by reference the quality management system requirements of ISO 13485:2016.
In addition, FDA regulations and guidance are frequently revised, updated, or reinterpreted in ways that may materially affect our business and our products. For example, in February 2024, the FDA issued a final rule replacing the QSR with the QMSR, which incorporates by reference the requirements of ISO 13485:2016.
The future implementation of inflationary policies, such as the tariffs implemented and proposed by the Trump administration may similarly contribute to increased fuel, raw material and other costs and also may contribute to higher overall inflation.
The future implementation of inflationary policies, such as tariffs, may similarly contribute to increased fuel, raw material and other costs and also may contribute to higher overall inflation.
We have experienced and could continue to experience manufacturing issues, which could negatively impact our business and results of operations. Biologics products are inherently difficult and time-consuming to manufacture. Our products are manufactured using technically complex processes requiring specialized equipment and facilities and highly specific raw materials.
Biologics products are inherently difficult and time-consuming to manufacture. In the past, we have experienced and in the future could experience manufacturing issues, which could negatively impact our business and operating results. Biologics products are inherently difficult and time-consuming to manufacture. Our products are manufactured using technically complex processes requiring specialized equipment and facilities and highly specific raw materials.
The FDA can delay, limit or deny clearance or approval of a device for many reasons, including: ● we may not be able to demonstrate to the FDA’s satisfaction that our products meet the standard of “substantial equivalence” for a 510(k) or meet the standard for the FDA to grant a petition for de novo classification; ● we may not be able to demonstrate to the FDA’s satisfaction that our products are safe and effective for their intended uses; ● the data from our pre-clinical studies (bench and/or animal) and clinical trials may be insufficient to support clearance or approval in general or for specific, commercially desirable indications, where required; ● the manufacturing process or facilities we use may not meet applicable requirements; and ● changes in FDA clearance or approval policies or the adoption of new regulations may require additional data. 33 In addition, even if we do obtain clearance or approval, the FDA may not approve or clear these products for the indications that are necessary or desirable for successful commercialization.
The FDA can delay, limit or deny clearance, authorization or approval of a device for many reasons, including: ● we may not be able to demonstrate to the FDA’s satisfaction that our products meet the standard of “substantial equivalence” for a 510(k) or meet the standard for the FDA to grant a request for de novo authorization; 28 ● we may not be able to demonstrate to the FDA’s satisfaction that our products are safe and effective for their intended uses; ● the data from our pre-clinical studies (bench and/or animal) and clinical trials may be insufficient to support clearance, authorization, or approval in general or for specific, commercially desirable indications, where required; ● the manufacturing process or facilities we use may not meet applicable requirements; and ● changes in FDA clearance, authorization, or approval policies or the adoption of new regulations may require additional data.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThese strategies include, among others, the application of cybersecurity policies and procedures, implementation of administrative, technical, and physical controls, and employee training, education, and awareness initiatives. 57 Role of Management Management has implemented risk management structures, policies and procedures and is responsible for our day-to-day cybersecurity risk management.
Biggest changeRisk mitigation strategies are developed and implemented based on the specific nature of each cybersecurity risk. These strategies include, among others, the application of cybersecurity policies and procedures, implementation of administrative, technical, and physical controls, and employee training, education, and awareness initiatives.
These processes include, among other things, system alerts of potential malicious cyber activity, access to real-time dashboards that monitor and assess our systems, status reports provided on a daily, weekly and monthly basis, and regular ongoing communications with service providers regarding potential new attack vectors and vulnerabilities. Mr.
These processes include, among other things, system alerts of potential malicious cyber activity, access to real-time dashboards that monitor and assess our systems, status reports provided on a daily, weekly and monthly basis, and regular ongoing communications with service providers regarding potential new attack vectors and vulnerabilities.
The management team and/or Audit Committee, in turn, regularly provide data protection and cybersecurity reports to the full Board of Directors . 58 Although none of the members of the Audit Committee has any work experience, degree, or certifications related to information security or cybersecurity, the Audit Committee works closely with members of our employee team with relevant expertise, and we have engaged third-party service providers to further enhance our cybersecurity efforts.
Although none of the members of the Audit Committee has any work experience, degree, or certifications related to information security or cybersecurity, the Audit Committee works closely with members of our employee team with relevant expertise, and we have engaged third-party service providers to further enhance our cybersecurity efforts .
Dennis and his team share such information with our management team and reports information about such risks to our Audit Committee.
Our Vice President of Information Systems and his team share such information with our management team and reports information about such risks to our Audit Committee.
We engage cybersecurity consultants, auditors, and other third parties to assess and enhance our cybersecurity practices, such as a third-party consulting firm to perform tabletop exercises and evaluate our cyber processes including an assessment of our incident response procedures.
We engage cybersecurity consultants, auditors, and other third parties to assess and enhance our cybersecurity practices, such as a third-party consulting firm to perform tabletop exercises and evaluate our cyber processes including an assessment of our incident response procedures. 43 Board Oversight The Board of Directors, both directly and through the delegation of responsibilities to the Audit Committee oversees the proper functioning of our cybersecurity risk management program.
Members of our management team often attend these discussions, and the Audit Committee has requested that Mr. Dennis provide updates at two of its meetings annually.
Members of our management team often attend these discussions, and the Audit Committee has requested that our Vice President of Information Systems provide updates at two of its meetings annually. The management team and/or Audit Committee, in turn, regularly provide data protection and cybersecurity reports to the full Board of Directors.
We have implemented a number of processes which allow Mr. Dennis and his team to be informed about and monitor the prevention, detection, mitigation, and remediation of cybersecurity incidents.
He is also the founder of a data privacy consulting company and has over 20 years of experience in the data management space. We have implemented a number of processes which allow our Vice President of Information Systems and his team to be informed about and monitor the prevention, detection, mitigation, and remediation of cybersecurity incidents.
Removed
Risk mitigation strategies are developed and implemented based on the specific nature of each cybersecurity risk.
Added
Role of Management Management has implemented risk management structures, policies and procedures and is responsible for our day-to-day cybersecurity risk management. Our Vice President of Information Systems, who has been with Xtant since June 2019, is responsible for our day-to-day assessment and management of cybersecurity risks.
Removed
Our Director of Information Technology, Chris Dennis, is responsible for our day-to-day assessment and management of cybersecurity risks. Mr. Dennis has served as our Director of Information Technology since June 2019. Mr. Dennis additionally is the founder of a data privacy consulting company and has over 20 years of experience in the data management space .
Removed
Board Oversight The Board of Directors, both directly and through the delegation of responsibilities to the Audit committee oversees the proper functioning of our cybersecurity risk management program.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAdditionally, all leases have the option to extend for either two five-year terms or a single ten-year term. The facility located at 664 Cruiser Lane is approximately 14,000 square feet of space. This building has an ISO 7 (Class 10,000) environmentally controlled area as well as diagnostic testing and research laboratories.
Biggest changeThe 664 Cruiser Lane lease has a five-year extension option and all other leases have the option to extend for an additional two five-year terms. The facility located at 664 Cruiser Lane is approximately 14,000 square feet of space. This building has an ISO 7 (Class 10,000) environmentally controlled area as well as diagnostic testing and research laboratories.
Item 2. Properties Our headquarters and manufacturing facility are located at 664 Cruiser Lane, Belgrade, Montana 59714. We also have two other facilities on the contiguous Belgrade campus, located at 600 Cruiser Lane, and at 732 Cruiser Lane. All our properties are leased and expire in October 2025.
Item 2. Properties Our headquarters and manufacturing facility are located at 664 Cruiser Lane, Belgrade, Montana 59714. We also have three other facilities on the contiguous Belgrade campus, located at 600 Cruiser Lane, 732 Cruiser Lane, and at 667 Glider Lane. All our properties are leased under leases that expire in October 2030.
Removed
In connection with our acquisition of certain assets of Surgalign Holdings and its subsidiaries, we acquired a lease for a 13,000 square foot facility in Wurmlingen, Germany, which is used for marketing, distribution, product development and general administrative functions of the international subsidiaries we acquired from Surgalign Holdings. The lease for our Wurmlingen, Germany, facility expires in February 2025.
Removed
In connection with our acquisition of the nanOss production operations from RTI, we acquired the lease for the approximately 15,000 square foot nanOss production facility located in Greenville, North Carolina. The lease expires in June 2025 and we do not intend to renew it as we are moving this production to Belgrade, Montana.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeHolders of Record As of February 28, 2025, we had 148 holders of record. A greater number of owners of our common stock are beneficial holders, whose shares of record are held by banks, brokers, and other financial institutions. Dividends We have not paid any cash dividends and do not expect to do so in the foreseeable future.
Biggest changeA greater number of owners of our common stock are beneficial holders, whose shares of record are held by banks, brokers, and other financial institutions. Dividends We have not paid any cash dividends and do not expect to do so in the foreseeable future. In addition, our Credit Agreements with MidCap preclude us from paying dividends.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers We did not purchase any shares of our common stock or other equity securities of our Company during the quarter ended December 31, 2024.
Recent Sales of Unregistered Securities We did not sell any unregistered equity securities of our Company during the quarter ended December 31, 2025. Purchases of Equity Securities by the Issuer and Affiliated Purchasers We did not purchase any shares of our common stock or other equity securities of our Company during the quarter ended December 31, 2025.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is listed on the NYSE American under the ticker symbol “XTNT.” The closing sale price to our common stock on February 28, 2025 was $0.51 per share.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is listed on the NYSE American under the ticker symbol “XTNT.” Holders of Record As of February 28, 2026, we had 162 holders of record.
Removed
In addition, our credit agreements with MidCap preclude us from paying dividends. Recent Sales of Unregistered Securities We did not sell any unregistered equity securities of our Company during the quarter ended December 31, 2024.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeIf these changes are not further delayed or reversed, we may receive less revenue under the license agreements than anticipated. 62 Results of Operations Comparison of Years Ended December 31, 2024 and December 31, 2023 The following table sets forth our results of operations for 2024 and 2023 (dollars in thousands): Year Ended December 31, 2024 2023 % of % of Amount Revenue Amount Revenue Revenue Product revenue 115,765 98.7 % 91,303 100.0 % License revenue 1,502 1.3 % — — % Total Revenue 117,267 100.0 % 91,303 100.0 % Cost of Sales 49,051 41.8 % 35,836 39.2 % Gross Profit 68,216 58.2 % 55,467 60.8 % Operating Expenses General and administrative 28,691 24.5 % 25,850 28.3 % Sales and marketing 49,214 42.0 % 38,439 42.1 % Research and development 2,385 2.0 % 1,336 1.5 % Total Operating Expenses 80,290 68.5 % 65,625 71.9 % Loss from Operations (12,074 ) (10.3 )% (10,158 ) (11.1 )% Other (Expense) Income Interest expense (4,160 ) (3.5 )% (2,938 ) (3.2 )% Interest income — 0.2 % 149 0.2 % Unrealized foreign currency translation gain 5 0.0 % 265 0.3 % Bargain purchase gain — 0.0 % 11,694 12.8 % Other expense (33 ) (0.0 )% (49 ) (0.1 )% Total Other (Expense) Income (4,188 ) (3.6 )% 9,121 10.0 % Net Loss from Operations Before Provision for Income Taxes (16,262 ) (13.9 )% (1,037 ) (1.1 )% (Provision) Benefit for Income Taxes Current and Deferred (187 ) (0.2 )% 1,697 1.9 % Net (Loss) Income $ (16,449 ) (14.0 )% $ 660 0.7 % Revenue Total revenue for the year ended December 31, 2024 increased 28% to $117.3 million compared to $91.3 million for the prior year.
Biggest changeResults of Operations Comparison of Years Ended December 31, 2025 and December 31, 2024 The following table sets forth our results of operations for 2025 and 2024 (dollars in thousands): Year Ended December 31, 2025 2024 % of % of Amount Revenue Amount Revenue Revenue Product revenue 115,204 86.0 % 115,765 98.7 % License revenue 18,723 14.0 % 1,502 1.3 % Total Revenue 133,927 100.0 % 117,267 100.0 % Cost of Sales 49,654 37.1 % 49,051 41.8 % Gross Profit 84,273 62.9 % 68,216 58.2 % Operating Expenses General and administrative 29,375 21.9 % 28,691 24.5 % Sales and marketing 45,512 34.0 % 49,214 42.0 % Research and development 2,102 1.6 % 2,385 2.0 % Total Operating Expenses 76,989 57.5 % 80,290 68.5 % Income (Loss) from Operations 7,284 5.4 % (12,074 ) (10.3 )% Other (Expense) Income Interest expense (3,671 ) (2.7 )% (4,160 ) (3.5 )% Interest income 94 0.1 % — 0.0 % Unrealized foreign currency translation (loss) gain (60 ) 0.0 % 5 0.0 % Gain on divestiture 3,281 2.4 % — 0.0 % Other income (expense) 73 0.1 % (33 ) (0.0 )% Total Other (Expense) Income (283 ) (0.2 )% (4,188 ) (3.6 )% Net Income (Loss) from Operations Before Provision for Income Taxes 7,001 5.2 % (16,262 ) (13.9 )% (Provision) Benefit for Income Taxes Current and Deferred (2,028 ) (1.5 )% (187 ) (0.2 )% Net Income (Loss) $ 4,973 3.7 % $ (16,449 ) (14.0 )% 47 Revenue Total revenue for the year ended December 31, 2025 increased 14% to $133.9 million compared to $117.3 million for the prior year.
The Revolving Credit Agreement provides for a secured revolving credit facility (the “Revolving Facility,” and, together with the secured term credit facility under the Term Credit Agreement, the “Facilities”) under which the Borrowers may borrow up to $17.0 million at any one time, the availability of which is determined based on a borrowing base equal to percentages of certain accounts receivable and inventory of the Borrowers in accordance with a formula set forth in the Revolving Credit Agreement.
The Revolving Credit Agreement, as amended, provides for a secured revolving credit facility (the “Revolving Facility,” and, together with the secured term credit facility under the Term Credit Agreement, the “Facilities”) under which the Borrowers may borrow up to $17.0 million at any one time, the availability of which is determined based on a borrowing base equal to percentages of certain accounts receivable and inventory of the Borrowers in accordance with a formula set forth in the Revolving Credit Agreement.
In addition, the Amendments No. 1 re-set the date certain fees payable in connection with optional prepayments are determined to May 14, 2024 and consequently extend such fees’ original expiration. The exit fees were increased by 2.50% to 6.50% of the principal amount borrowed pursuant to the Term Credit Agreement.
In addition, the Amendments No. 1 re-set the date certain fees payable in connection with optional prepayments are determined to May 14, 2024 and consequently extended such fees’ original expiration. The exit fees were increased by 2.50% to 6.50% of the principal amount borrowed pursuant to the Term Credit Agreement.
However, we may require or seek additional capital to fund our future operations and business strategy prior to March 2026. Accordingly, there is no assurance that we will not need or seek additional financing prior to such time. We may elect to raise additional financing even before we need it if market conditions for raising additional capital are favorable.
However, we may require or seek additional capital to fund our future operations and business strategy prior to March 2027. Accordingly, there is no assurance that we will not need or seek additional financing prior to such time. We may elect to raise additional financing even before we need it if market conditions for raising additional capital are favorable.
Our estimates of anticipated future product demand may prove to be inaccurate in which case we may be required to incur charges for excess and obsolete inventory. Increases in our inventory reserves result in a corresponding expense, which is recorded to cost of sales. We believe the total reserve at December 31, 2024 is adequate.
Our estimates of anticipated future product demand may prove to be inaccurate in which case we may be required to incur charges for excess and obsolete inventory. Increases in our inventory reserves result in a corresponding expense, which is recorded to cost of sales. We believe the total reserve at December 31, 2025 is adequate.
Current and Prior Credit Facilities On March 7, 2024, the Company, as guarantor, and certain of our subsidiaries, as borrowers (collectively, the “Borrowers”), entered into an Amended and Restated Credit, Security and Guaranty Agreement (Term Loan) (as amended from time to time, the “Term Credit Agreement”) and an Amended and Restated Credit, Security and Guaranty Agreement (Revolving Loan) (as amended from time to time, the “Revolving Credit Agreement” and, together with the Term Credit Agreement, the “Credit Agreements”) with MidCap Financial Trust and MidCap Funding IV Trust, each in its respective capacity as agent, and lenders from time to time party thereto.
Credit Facilities On March 7, 2024, the Company, as guarantor, and certain of our subsidiaries, as borrowers (collectively, the “Borrowers”), entered into an Amended and Restated Credit, Security and Guaranty Agreement (Term Loan) (as amended from time to time, the “Term Credit Agreement”) and an Amended and Restated Credit, Security and Guaranty Agreement (Revolving Loan) (as amended from time to time, the “Revolving Credit Agreement” and, together with the Term Credit Agreement, the “Credit Agreements”) with MidCap Financial Trust and MidCap Funding IV Trust (collectively, “MidCap”), each in its respective capacity as agent, and lenders from time to time party thereto.
Cost of Sales Cost of sales consists primarily of manufacturing cost, product purchase costs, and depreciation of surgical instruments. Cost of sales also includes reserves for estimated excess inventory, inventory on consignment that may be missing and not returned, and reserves for estimated missing and damaged consigned surgical instruments.
Cost of Sales Cost of sales consists primarily of manufacturing cost, product purchase costs, and depreciation of surgical instruments. Cost of sales also includes reserves for estimated excess inventory and inventory on consignment that may be missing and not returned.
In addition, the Credit Agreements require the Borrowers and the Company to maintain net product revenue at or above minimum levels and to maintain a certain minimum liquidity level, in each case as specified in the Credit Agreements. As of December 31, 2024, we were in compliance with all covenants under the Credit Agreements.
In addition, the Credit Agreements require the Borrowers and the Company to maintain net product revenue at or above minimum levels and to maintain a certain minimum liquidity level, in each case as specified in the Credit Agreements. As of December 31, 2025, we were in compliance with all applicable covenants under the Credit Agreements.
While our primary focus is the United States market, we promote and sell our products internationally through direct sales representatives and stocking distribution partners in Europe, Canada, Mexico, South America, Australia, and certain Pacific region countries.
While our focus is the United States market, we promote and sell our products internationally through stocking distribution partners in Europe, Canada, Mexico, South America, and certain Pacific region countries.
Prior to raising additional equity or debt financing, we may be required to obtain the consent of MidCap Financial Trust and MidCap Funding IV Trust under our Credit Agreements and/or ROS and Royalty Opportunities under our Investor Rights Agreement with them, and no assurance can be provided that they would provide such consent, which could limit our ability to raise additional financing and the terms thereof.
Prior to raising additional equity or debt financing, we may be required to obtain the consent of MidCap Financial Trust and MidCap Funding IV Trust under our Credit Agreements, and no assurance can be provided that they would provide such consent, which could limit our ability to raise additional financing and the terms thereof.
The Term Amendment No. 1 increases the amount of term loans that may be borrowed by $5.0 million to a maximum of $22.0 million, which are fully drawn as of December 31, 2024.
The Term Amendment No. 1 increased the amount of term loans that may be borrowed by $5.0 million to a maximum of $22.0 million, which was fully drawn as of December 31, 2025.
We develop these judgments based on our historical experience, terms of existing contracts, our observance of trends in the industry, information provided by our customers, and information available from other outside sources, as appropriate. Actual results may differ from these estimates under different assumption conditions.
We develop these judgments based on our historical experience, terms of existing contracts, our observance of trends in the industry, information provided by our customers, and information available from other outside sources, as appropriate.
We believe that the following financial estimate is both important to the portrayal of our financial condition and results of operations and requires subjective or complex judgments. Further, we believe that the item discussed below is properly recorded in our consolidated financial statements for all periods presented.
Actual results may differ from these estimates under different assumption conditions. 51 We believe that the following financial estimate is both important to the portrayal of our financial condition and results of operations and requires subjective or complex judgments. Further, we believe that the item discussed below is properly recorded in our consolidated financial statements for all periods presented.
This is particularly true if economic and market conditions deteriorate or our business, financial performance or prospects deteriorate. 66 To the extent that we raise additional capital through the sale of equity or convertible debt securities or the restructuring or refinancing of our debt, the interests of our current stockholders may be diluted, and the terms may include discounted equity purchase prices, warrant coverage, liquidation or other preferences or rights that would adversely affect the rights of our current stockholders.
To the extent that we raise additional capital through the sale of equity or convertible debt securities or the restructuring or refinancing of our debt, the interests of our current stockholders may be diluted, and the terms may include discounted equity purchase prices, warrant coverage, liquidation or other preferences or rights that would adversely affect the rights of our current stockholders.
General and administrative expenses increased 11%, or $2.8 million, to $28.7 million for the year ended December 31, 2024 compared to $25.9 million for the year ended December 31, 2023.
General and administrative expenses increased 2%, or $0.7 million, to $29.4 million for the year ended December 31, 2025 compared to $28.7 million for the year ended December 31, 2024.
As of December 31, 2024, the effective rate of the Term Credit Agreement, inclusive of authorization of debt issuance costs and accretion of the final payment, was 15.23%, and the effective rate of the Revolving Credit Agreement was 9.96%.
As of December 31, 2025, the effective rate of the Term Credit Agreement, inclusive of authorization of debt issuance costs and accretion of the final payment, was 14.08%, and the effective rate of the Revolving Credit Agreement was 8.49%.
During the first quarter of 2025, we entered into a manufacture and license agreement with a distributor pursuant to which we agreed to manufacture and supply to the distributor our SimpliGraft ® product under the distributor’s name and brand.
During the first quarter of 2025, we entered into a manufacture and license agreement with a distributor pursuant to which we agreed to manufacture and supply to the distributor our SimpliGraft® product under the distributor’s name in exchange for a one-time $1.5 million cash payment and minimum SimpliGraft® product purchase obligations of the distributor.
Cash Requirements We believe that our $6.2 million of cash and cash equivalents as of December 31, 2024, together with our anticipated operating cash flows and amounts available under the Facilities, will be sufficient to meet our anticipated cash requirements through at least March 2026.
Cash Requirements We believe that our $17.3 million of cash and cash equivalents as of December 31, 2025, together with the $10.7 million in cash we received on February 27, 2026 from Companion Spine in connection with the Divestitures, our anticipated operating cash flows and amounts available under the Facilities, will be sufficient to meet our anticipated cash requirements through at least March 2027.
The terms of borrowing under the Credit Agreements otherwise remain materially unchanged.
The terms of borrowing under the Credit Agreements otherwise remained materially unchanged after the Amendments No. 1.
Sales and marketing expenses increased 28%, or $10.8 million, to $49.2 million for the year ended December 31, 2024 compared to $38.4 million for the year ended December 31, 2023.
Sales and marketing expenses decreased 8%, or $3.7 million, to $45.5 million for the year ended December 31, 2025 compared to $49.2 million for the year ended December 31, 2024.
The following table summarizes our working capital as of December 31, 2024 and December 31, 2023 (in thousands): December 31, 2024 2023 Cash and cash equivalents $ 6,221 $ 5,923 Accounts receivable, net 20,660 20,731 Inventories 38,634 36,885 Total current assets 67,116 64,899 Accounts payable 7,918 7,054 Accrued liabilities 7,771 10,419 Line of credit 12,120 4,622 Total current liabilities 28,581 22,990 Net working capital 38,535 41,879 Cash Flows Net cash used in operating activities for the year ended December 31, 2024 was $11.9 million compared to $9.5 million for the year ended December 31, 2023.
The following table summarizes our working capital as of December 31, 2025 and 2024 (in thousands): December 31, 2025 2024 Cash and cash equivalents $ 17,328 $ 6,221 Accounts receivable, net 17,803 20,660 Inventories 30,263 38,634 Note receivable 10,462 — Total current assets 78,245 67,116 Accounts payable 3,844 7,918 Accrued liabilities 10,626 7,771 Current portion of long-term debt 3,500 — Line of credit 10,857 12,120 Total current liabilities 29,484 28,581 Net working capital 48,761 38,535 Cash Flows Net cash provided by operating activities for the year ended December 31, 2025 was $12.5 million compared to net cash used in operating activities of $11.9 million for the year ended December 31, 2024.
As of December 31, 2024, we had $12.1 million outstanding and $4.2 million of availability under the Revolving Credit Facility.
As of December 31, 2025, we had $10.9 million outstanding and $3.8 million of availability under the Revolving Credit Facility.
While the intent of these four key growth initiatives is to increase our future revenues, no assurance can be provided that we will be successful in implementing these growth initiatives or increasing our future revenues. Acquisitions Coflex and CoFix Product Lines On February 28, 2023, we acquired all of the issued and outstanding capital stock of Surgalign SPV, Inc.
While the intent of these four key growth initiatives is to increase our future revenues, no assurance can be provided that we will be successful in implementing these growth initiatives or increasing our future revenues.
We have biologics contracts with major GPOs, as well as extensive access to IDNs across the United States for both biologics and spine hardware systems.
We also maintain a national accounts program to enable our agents to gain access to integrated delivery network hospitals and through group purchasing organizations. We have biologics contracts with major GPOs, as well as extensive access to IDNs across the United States for both biologics and spine hardware systems.
We have focused and intend to continue to focus primarily on four key growth initiatives: (1) introduce new products, including our Cortera ® Spinal Fixation System, viable bone matrix, OsteoVive ® Plus, and amniotic membrane allografts, SimpliGraft ® and SimpliMax TM ; (2) leverage our distribution network; (3) penetrate adjacent markets; and (4) leverage our growth platform with technology and strategic acquisitions.
We have focused and intend to continue to focus primarily on four key growth initiatives: (1) introduce new products, including our recently launched nanOss Strata™, an advanced synthetic bone graft designed to closely resemble natural bone; CollagenX™, a bovine collagen particulate product for surgical wound closure; OsteoFactor Pro TM , an allogenic growth factor solution; and Trivium™, a next-generation demineralized bone matrix, in addition to our introductions in 2024: Cortera ® Posterior Fixation System, a viable bone matrix; OsteoVive ® Plus and amniotic membrane allografts, SimpliGraft ™ and SimpliMax TM , (2) expand our distribution network; (3) penetrate adjacent markets; and (4) leverage our growth platform with technology and strategic acquisitions.
This increase in net cash used in operating activities relates primarily to the increase in inventory balance. Net cash used in investing activities for the years ended December 31, 2024 was $3.7 million compared to $24.8 million for the year ended December 31, 2023.
This change relates primarily to net income for the year ended December 31, 2025 compared to a net loss for the year ended December 31, 2024. 49 Net cash provided by investing activities for the year ended December 31, 2025 was $7.9 million compared to net cash used in investing activities of $3.7 million for the year ended December 31, 2024.
Net cash provided by financing activities for the year ended December 31, 2024 was $16.1 million compared to $19.7 million for the year ended December 31, 2023.
This change relates primarily to the proceeds from the Divestitures to Companion Spine . Net cash used in financing activities for the year ended December 31, 2025 was $9.6 million compared to net cash provided by financing activities of $16.1 million for the year ended December 31, 2024.
The loans and other obligations pursuant to the Credit Agreements will bear interest at a per annum rate equal to the sum of the SOFR Interest Rate, as such term is defined in the Credit Agreements, plus the applicable margin of 6.50% in the case of the Term Credit Agreement, and an applicable margin of 4.50% in the case of the Revolving Credit Agreement, subject in each case to a floor of 2.50%.
As mentioned above, on February 27, 2026, we received $10.7 million upon repayment of the Companion Spine Note and settlement of the net working capital and other purchase price adjustments, $2.8 million of which was used to repay a portion of our term debt, resulting in $11.2 million outstanding as of the date of the filing of this report. 50 The loans and other obligations pursuant to the Credit Agreements bear interest at a per annum rate equal to the sum of the SOFR Interest Rate, as such term is defined in the Credit Agreements, plus the applicable margin of 6.50% in the case of the Term Credit Agreement, and an applicable margin of 4.50% in the case of the Revolving Credit Agreement, subject in each case to a floor of 2.50%.
(Provision) Benefit for Income Taxes Current and Deferred Income tax provision for the year ended December 31, 2024 was $0.2 million compared to income tax benefit of $1.7 million for the year ended December 31, 2023.
Provision for Income Taxes Current and Deferred Income tax provision for the year ended December 31, 2025 was $2.0 million compared to $0.2 million for the year ended December 31, 2024. This change resulted primarily due to our net income position and an increase in cash federal and state taxes in 2025.
We have an extensive sales channel of independent commissioned agents and stocking distributors in the United States representing some or all of our products. We also maintain a national accounts program to enable our agents to gain access to integrated delivery network hospitals (“IDNs”) and through group purchasing organizations (“GPOs”).
We promote our products primarily in the United States through independent distributors and stocking agents, supported by direct employees. We have an extensive sales channel of independent commissioned agents and stocking distributors in the United States representing some or all of our products.
Recent Developments During the fourth quarter of 2024, we entered into a license agreement with a distributor granting an exclusive, nontransferable, non-sublicensable, royalty-bearing right and license to manufacture and commercialize in the United States our SimpliMax™ product and the trademarks associated therewith during the term of the agreement and subject to certain limitations as set forth therein.
During the fourth quarter of 2024, we entered into a license agreement with a distributor granting an exclusive right and license to manufacture and commercialize in the United States our SimpliMax™ product in exchange for a one-time $1.5 million cash payment and minimum quarterly royalty payments based on the volume of product sold by the distributor.
This increase was due primarily to additional independent agent commissions expense of $7.0 million resulting from higher independent agent sales, $2.4 million of additional expense associated with various compensation plans and $0.9 million of additional professional service fees. Research and Development Research and development expenses consist primarily of internal costs for the development of new product technologies.
This decrease is primarily due to reduced commission expense of $3.9 million resulting from revenue mix and $2.1 million of reduced compensation expense related to headcount, partially offset by $2.9 million of additional consulting fees. 48 Research and Development Research and development expenses consist primarily of internal costs for the development of new product technologies.
These Credit Agreements amend and restate the Credit, Security and Guaranty Agreement, dated as of May 6, 2021 (Term Loan), as amended (the “Prior Term Credit Agreement”), and the Credit, Security and Guaranty Agreement, dated as of May 6, 2021 (Revolving Loan), as amended (the “Prior Revolving Credit Agreement” and, together with the Prior Term Credit Agreement, the “Prior Credit Agreements”), in each case, by and among the Borrowers, the Company and MidCap Financial Trust and MidCap Funding IV Trust, as respective agents, and the lenders from time to time party thereto. 65 On May 14, 2024, we entered into Amendment No. 1 to Amended and Restated Credit, Security and Guarantee Agreement (Term Loan) (“Term Amendment No. 1”), which amends the Term Credit Agreement, and Amendment No. 1 to Amended and Restated Credit, Security and Guarantee Agreement (Revolving Loan) (“Revolving Amendment No. 1” and, together with Term Amendment No. 1, the “Amendments No. 1”), which amends the Revolving Credit Agreement.
On May 14, 2024, we entered into Amendment No. 1 to Amended and Restated Credit, Security and Guarantee Agreement (Term Loan) (“Term Amendment No. 1”), which amended the Term Credit Agreement, and Amendment No. 1 to Amended and Restated Credit, Security and Guarantee Agreement (Revolving Loan) (“Revolving Amendment No. 1” and, together with Term Amendment No. 1, the “Amendments No. 1”), which amended the Revolving Credit Agreement.
Net (Loss) Income We recognized a net loss of $16.4 million during the year ended December 31, 2024 as compared to net income of $660 thousand during the year ended December 31, 2023 primarily due to the $11.7 million gain on bargain purchase recognized in 2023 as a result of our acquisition of Surgalign Holdings’ hardware and biologics business in connection with a bankruptcy proceeding. 64 Liquidity and Capital Resources Working Capital Since our inception, we have financed our operations primarily through operating cash flows, private placements of equity securities and convertible debt, debt facilities, common stock rights offerings, and other debt transactions.
Liquidity and Capital Resources Working Capital Since our inception, we have financed our operations primarily through operating cash flows, private placements of equity securities and convertible debt, debt facilities, common stock rights offerings, and other debt transactions.
Our products serve the specialized needs of orthopedic and neurological surgeons, including orthobiologics for the promotion of bone healing, implants and instrumentation for the treatment of spinal disease. We promote our products in the United States through independent distributors and stocking agents, supported by direct employees.
Our products serve the specialized needs of orthopedic and neurological surgeons, as well as trauma, foot and ankle, sports medicine, wound care surgeons including orthobiologics for the promotion of bone healing, amniotic tissue and collagen for both surgical repair and chronic wound care, implants and instrumentation for the treatment of spinal disease.
This increase is primarily attributable to $1.4 million of additional stock-based compensation, $0.5 million of additional severance expense, $0.6 million of additional hardware and software expense, and $0.3 million of additional amortization expense, in each case in 2024 as compared to 2023. These increases were partially offset by reduced expense of $0.4 million related to various compensation plans.
This increase is primarily attributable to $2.2 million of additional expense related to various compensation plans, $0.7 million of additional bad debt expense, $0.7 million of additional legal fees associated primarily with the divestiture transactions with Companion Spine, partially offset by $1.2 million of reduced stock-based compensation expense.
Research and development expenses increased 79%, or $1.0 million, to $2.4 million for year ended December 31, 2024 compared to $1.3 million for the year end December 31, 2023. This increase resulted primarily from increased headcount due to additional personnel hired in connection with our acquisitions and increased expenses associated with new product development.
Research and development expenses decreased 12%, or $0.3 million, to $2.1 million for year ended December 31, 2025 compared to $2.4 million for the year ended December 31, 2024. Interest Expense Interest expense for the year ended December 31, 2025 decreased $0.5 million to $3.7 million as compared to $4.2 million for the year ended December 31, 2024.
The Centers for Medicare and Medicaid Services recently issued a Local Coverage Determination implementing significant changes to reimbursement for cellular and tissue-based products, which would impact our SimpliMax™ and SimpliGraft ® products and constitute a CMS Policy Change under our license agreements. These changes were initially intended to become effective in February 2025 but have been delayed to April 2025.
Effective January 1, 2026, the Centers for Medicare & Medicaid Services implemented a Local Coverage Determination with significant changes to reimbursement for cellular and tissue-based products, which impacted our SimpliMax™ and SimpliGraft® products. In addition, on July 14 and 15, 2025, CMS released the CY 2026 Physician Fee Schedule proposal and the CY 2026 Hospital Outpatient Prospective Payment System proposal.
Cost of sales increased by 37%, or $13.2 million, to $49.1 million for the year ended December 31, 2024 from $35.8 million for the year ended December 31, 2023.
Cost of sales increased by 1%, or $0.6 million, to $49.7 million for the year ended December 31, 2025 from $49.1 million for the year ended December 31, 2024. The increase was due primarily to increased charges for excess and obsolete inventory, partially offset by reduced product costs resulting from the transition to internal production in 2025 compared to 2024.
Interest Expense Interest expense for the year ended December 31, 2024 increased $1.2 million to $4.2 million as compared to $2.9 million for the year ended December 31, 2023. This increase resulted primarily from additional borrowings on our revolving line of credit and the additional borrowing of $5.0 million under our term credit agreement in May 2024.
This decrease resulted primarily from reduced borrowings on our revolving line of credit, as well as prepayments totaling $8.0 million on our term loan, during 2025 as compared to 2024.
Removed
(“Surgalign SPV”), a then indirect wholly owned subsidiary of Surgalign Holdings, Inc. (“Surgalign Holdings”), which held certain intellectual property, contractual rights and other assets related to the design, manufacture, sale and distribution of the Coflex and CoFix products in the United States, for an aggregate purchase price of $17.0 million in cash.
Added
We have recently made and intend to continue to make measured investments in the expansion of our commercial team to support our new products and maximize the reach of our broad portfolio of orthobiologics solutions.
Removed
The Coflex and CoFix products have been approved by the U.S. Food and Drug Administration (the “FDA”) for the treatment of moderate to severe lumbar spinal stenosis in conjunction with decompression and provide minimally invasive, motion preserving stabilization.
Added
Since one of our key growth initiatives is to leverage our growth platform with technology and strategic acquisitions and explore other strategic transactions with respect to our products and our company, including licenses, business collaborations and other business combinations or transactions with other companies, we, as a matter of course, often engage in discussions with third parties regarding such matters.
Removed
Surgalign Holdings’ Hardware and Biologics Business On August 10, 2023, we completed the acquisition of certain additional assets of Surgalign Holdings and its subsidiaries on an as-is, where-is basis, including specified inventory, intellectual property and intellectual property rights, contracts, equipment and other personal property, records, all outstanding equity securities of Surgalign Holdings’ international subsidiaries, and intangibles related to the business of designing, developing and manufacturing hardware medical technology and distributing biologics medical technology, as conducted by Surgalign Holdings and its subsidiaries, and certain specified liabilities of Surgalign Holdings and its subsidiaries pursuant to an Asset Purchase Agreement, dated June 18, 2023, between Surgalign Holdings and us (as amended, the “Surgalign Asset Purchase Agreement”).
Added
Under these rules, which were implemented on January 1, 2026, CMS instituted a consistent payment approach for skin substitutes across the private office and hospital outpatient departments settings with a fixed price of $127.14 per square centimeter.
Removed
Pursuant to the Surgalign Asset Purchase Agreement, we were able to acquire Surgalign Holdings’ broad portfolio of spinal hardware implants, including solutions for fusion procedures in the lumbar, thoracic, and cervical spine, motion preservation solutions for the lumbar spine, and a minimally invasive surgical implant system for fusion of the sacroiliac joint.
Added
Together with the Local Coverage Determination and a recently announced Wasteful and Inappropriate Service Reduction model, there are several significant potential changes to reimbursement of skin substitutes that have impacted and will likely continue to impact the industry and the sale of our SimpliMax™ and SimpliGraft® products.
Removed
Additionally, we were able to acquire Surgalign Holdings’ biomaterials portfolio of advanced and traditional orthobiologics. These offerings complement our portfolio of orthobiologics and spinal implant fixation systems. This transaction was conducted through a process supervised by the United States Bankruptcy Court in connection with Surgalign Holdings’ bankruptcy proceedings. We funded the purchase price of $5 million with cash on hand.
Added
Because of these regulatory changes, the SimpliGraft® manufacture and license agreement was terminated effective December 31, 2025 and it is possible that the SimpliMax™ license agreement may be terminated, adversely affecting our 2026 and future license revenue.
Removed
This transaction resulted in a gain on bargain purchase due to the estimated fair value of the identifiable net assets acquired exceeding the purchase consideration transferred by $11.7 million and is shown as a gain on bargain purchase on our consolidated statement of operations for the year ended December 31, 2024.
Added
During 2025, we recognized $18.7 million in license revenue and certain product revenue that likely will not repeat in 2026 due primarily to these reimbursement changes.
Removed
The bargain purchase was primarily attributable to the transaction occurring as part of bankruptcy proceedings. 61 RTI Surgical, Inc.’s nanOss Production Operations On October 23, 2023, we acquired the nanOss production operations from RTI Surgical, Inc. (“RTI”) pursuant to an Asset Purchase Agreement dated October 23, 2023 between us and RTI (the “RTI Asset Purchase Agreement”).
Added
The loss of this license and product revenue will have an adverse impact on our 2026 revenues and other operating results, including in particular, our gross margins. 46 Sale of Coflex/CoFix Assets and International Hardware Business On December 1, 2025, we completed the sale of certain assets relating to our Coflex and CoFix products to Companion Spine pursuant to an Asset Purchase Agreement dated July 7, 2025.
Removed
Under the terms of the RTI Asset Purchase Agreement, we acquired certain assets, including equipment and inventory, used in RTI’s synthetic bone graft business and assumed from RTI the lease for the nanOss production facility located in Greenville, North Carolina.
Added
The total purchase price of the Coflex/CoFix Divestiture was $17.5 million (subject to a closing inventory valuation adjustment set forth in the Coflex/CoFix Agreement).
Removed
The purchase price for the assets was $2 million in cash plus a low single digit royalty on sales prior to October 23, 2028 of next generation nanOss products. We previously acquired the nanOss distribution rights and nanOss intellectual property with the acquisition of assets related to the biologics and spinal fixation business of Surgalign Holdings, as described above.
Added
Of the total purchase price, an aggregate of $7.5 million was previously paid to us in cash as non-refundable deposits, $1.8 million was paid to us in cash at the closing, and $8.2 million was paid to us as an unsecured promissory note issued by Companion Spine to us the closing (the “Companion Spine Note”).
Removed
Under the terms of the agreement, we received a one-time, up front, non-refundable, non-creditable cash payment of $1.5 million. Beginning in 2025, we are entitled to quarterly royalty payments based on the volume of product sold by the distributor. These royalty payments include guaranteed minimums, which aggregate to $3.75 million during 2025.
Added
The outstanding principal balance of the Companion Spine Note, together with the related accrued interest, totaling $8.5 million was paid to us on February 27, 2026. Also, on December 1, 2025, we completed the sale of all of our shares of equity securities of Paradigm.
Removed
The agreement has an initial term of one year and is automatically renewable in one-year terms unless either party thereto provides written notice of non-renewal six months prior to the then-current term or earlier termination as provided under the agreement.
Added
The total purchase price of the Paradigm Divestiture was $3.9 million, $1.7 million of which was paid to us in cash at the closing and $2.2 million paid on February 27, 2026 in settlement of a net working capital and other purchase price adjustments. The aggregate purchase price associated with the two Divestitures was $21.4 million.
Removed
We appointed the distributor as the exclusive seller of our SimpliGraft ® product to end-users located in the United States during the term of the agreement and in accordance with the terms and conditions thereof and granted the distributor the right to use our related trademark in connection therewith.
Added
Of the $10.0 million in cash that we received as a result of the Divestitures prior to the end of 2025, $8.0 million was used to repay a portion of our term debt, resulting in $14.0 million in principal outstanding under our term debt as of December 31, 2025.
Removed
Under the terms of the agreement, we received a one-time, up-front, non-refundable, non-creditable cash payment of $1.5 million. Additionally, the distributor agreed to purchase our SimpliGraft ® product in accordance with certain specified minimum purchase obligations. The minimum purchase obligations aggregate to $3.9 million during 2025.
Added
On February 27, 2026, we subsequently received $10.7 million, $2.8 million of which was used to repay a portion of our term debt, resulting in $11.2 million outstanding as of the date of the filing of this report.
Removed
The agreement has an initial term of two years and is automatically renewable for six additional one-year terms unless the distributor provides written notice of non-renewal 90 days prior to the then-current term or earlier termination as provided under the agreement.
Added
In 2025, we recognized $20.3 million in revenue from sales of our Coflex and CoFix products and international hardware products which we sold to Companion Spine. The loss of this revenue will adversely affect our 2026 revenue.
Removed
The first license agreement may terminate, and the second license agreement may generate significantly less revenue than anticipated following a CMS Policy Change, as defined in the agreements.
Added
This increase is attributed primarily to $18.7 million of license revenue recognized for the year ended December 31, 2025 compared to $1.5 million for the year ended December 31, 2024, and an increase in volume of orthobiologics sales. These increases were partially offset by decreased hardware revenue in 2025.
Removed
This increase is attributed primarily to the contribution of additional sales resulting from the acquisition of the Surgalign Holdings’ hardware and biologics business, higher independent agent sales, and $1.5 million in upfront licensing revenue generated from a licensing agreement pursuant to which we granted a distributor an exclusive, nontransferable, non-sublicensable, royalty-bearing right and license to manufacture and commercialize in the United States our SimpliMax TM product and the trademarks associated therewith.
Added
Gross Profit Gross profit as a percentage of revenue increased to 62.9% for the year ended December 31, 2025 compared to 58.2% for the year ended December 31, 2024.
Removed
This increase is primarily due to greater revenue, as described above and the write-off of approximately $1.5 million of inventory acquired from Surgalign Holdings’ hardware and biologics business resulting from performance of verification procedures performed during the course of 2024. 63 Gross profit as a percentage of revenue decreased to 58.2% for the year ended December 31, 2024 compared to 60.8% for the year ended December 31, 2023.
Added
Of this increase, 530 basis points were due to sales mix and greater scale, partially offset by a decrease of 260 basis points due to increased charges for excess and obsolete inventory.
Removed
Of this decrease, 220 basis points were due to product mix, 200 basis points were due to reduced production throughput and 130 basis points were due to charges for the write-off of inventory associated with our acquisition of Surgalign Holdings’ hardware and biologics business. This decrease was partially offset by increased leverage on higher revenue.
Added
Interest Income We recognized $0.1 million of interest income during the year ended December 31, 2025 related to the Companion Spine Note receivable from the sale of assets related to our Coflex and CoFix products to Companion Spine.
Removed
This change resulted primarily from the non-recurring tax benefit in 2023 associated with the release of the valuation allowance resulting from recognition of deferred tax liabilities in purchase accounting.
Added
Gain on Divestiture We recognized a gain on divestiture of $3.3 million for the year ended December 31, 2025 as a result of the sale of assets related to our Coflex and CoFix products and international hardware business to Companion Spine during 2025. No similar gain was recognized during 2024.
Removed
This decrease relates primarily to the use of $23.5 million of cash for the acquisitions of Surgalign SPV, Inc., Surgalign Holdings’ hardware and biologics business and nanOss production operations from RTI Surgical, Inc. during the year ended December 31, 2023.
Added
This change relates primarily to $8.7 million of reduced revolver borrowings, net of repayments, during 2025 compared to 2024; an $8.0 million payment on long- term debt using a portion of the proceeds from the Divestitures in 2025; $5.0 million additional borrowings during 2024; and $4.5 million in proceeds from a private placement during 2024.

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