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What changed in Organogenesis Holdings Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Organogenesis 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.

+281 added−269 removedSource: 10-K (2026-02-26) vs 10-K (2025-02-27)

Top changes in Organogenesis Holdings Inc.'s 2025 10-K

281 paragraphs added · 269 removed · 207 edited across 8 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

117 edited+37 added−33 removed368 unchanged
Biggest changeUnited States federal and state laws that affect our ability to operate include, but are not limited to: • the federal Anti-Kickback Statute, which prohibits, among other things, persons or entities from knowingly and willfully soliciting, receiving, offering, or paying any remuneration (including any kickback, bribe, or rebate), directly or indirectly, overtly or covertly, in cash or in kind in return for, the purchase, recommendation, leasing or furnishing of an item or service reimbursable under a federal healthcare program, such as the Medicare and Medicaid programs; • the federal physician self-referral law, which prohibits a physician from referring a patient to an entity with which the physician (or an immediate family member) has a financial relationship, for the furnishing of certain designated health services for which payment may be made by Medicare or Medicaid, unless an exception applies; • federal civil and criminal false claims laws and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment or approval from Medicare, Medicaid, or other government payers that are false or fraudulent; • 18 U.S.C. § 1347, which created new federal criminal statutes that prohibit a person from knowingly and willfully executing a scheme or from making false or fraudulent statements to defraud any healthcare benefit program (i.e., public or private); • federal transparency laws, including the Physician Payments Sunshine Act which requires the tracking and disclosure to the federal government by pharmaceutical and medical device manufacturers of payments and other transfers of value to physicians and teaching hospitals as well as ownership and investment interests that are held by physicians and their immediate family members; and • state law equivalents of each of these federal laws, such as anti-kickback and false claims laws that may apply to items or services reimbursed by any third-party payer, including commercial insurers; state laws that require pharmaceutical and medical device companies to comply with their industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict certain payments that may be made to healthcare providers and other potential referral sources; state laws that require drug and medical device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; state laws that prohibit giving gifts to licensed healthcare professionals; and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts in certain circumstances, such as specific disease states.
Biggest changeSimilar to the federal Anti-Kickback Statute, a person or entity need not have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; • the federal Physician Payments Sunshine Act, enacted as part of the ACA, which imposes annual tracking and reporting requirements for, among others, certain manufacturers of drugs, devices, biologics, and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program, of certain payments and “transfers of value” provided to U.S.-licensed physicians (defined to include doctors, dentists, optometrists, podiatrists and licensed chiropractors), physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, anesthesiology assistants, certified nurse midwives, and teaching hospitals, as well as tracking and reporting of ownership and investment interests held by U.S.-licensed physicians and their immediate family members; and • state law equivalents of each of these federal laws, such as anti-kickback and false claims laws that may apply to items or services reimbursed by any third-party payer, including commercial insurers; state laws that require pharmaceutical and medical device companies to comply with their industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict certain payments that may be made to healthcare providers and other potential referral sources; state laws that require drug and medical device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; state laws that prohibit giving gifts to licensed healthcare professionals; and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts in certain circumstances, such as specific disease states. 30 Table of Contents Activities and arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, waste, and other abusive practices.
This expansion will place a significant strain on management, operational and financial resources. To manage the expected growth of 18 Table of Contents our operations, we must both modify our existing operational and financial systems, procedures and controls and implement new systems, procedures and controls. We must also expand our finance, administrative, and operations staff.
This expansion will place a significant strain on management, operational and financial resources. To manage the expected growth of our operations, we must both modify our existing operational and financial systems, procedures and controls and implement new 18 Table of Contents systems, procedures and controls. We must also expand our finance, administrative, and operations staff.
The size and complexity of our information technology and information 19 Table of Contents security systems, and those of our third-party vendors with whom we contract (and the large amounts of confidential information that is present on them), make such systems potentially vulnerable to service interruptions or to security breaches from inadvertent or intentional actions by our employees or vendors, or from malicious attacks by third parties.
The size and complexity of our information technology and information security systems, and those of our third-party vendors with whom we contract (and the large amounts of confidential information that 19 Table of Contents is present on them), make such systems potentially vulnerable to service interruptions or to security breaches from inadvertent or intentional actions by our employees or vendors, or from malicious attacks by third parties.
It is uncertain whether and to what extent applicable federal and state tax laws will limit the 21 Table of Contents deductibility of our operating loss and credit carryforwards, though we are already subject to limitations in net operating loss utilization in certain states.
It is uncertain whether and to what extent applicable federal and state tax laws will limit the deductibility of 21 Table of Contents our operating loss and credit carryforwards, though we are already subject to limitations in net operating loss utilization in certain states.
We are subject to the following factors, among others, that may negatively affect our operating results: • the announcement or introduction of new products by our competitors; • failure of government healthcare programs and private health plans to cover our products or to timely and adequately reimburse the users of our products; • the rate of reimbursement by government and private insurers for use of our products; • any change in Medicare payment policy which provides a competitive advantage to our competitor’s products; • any change in government healthcare programs’ and private health plans’ policies regarding sales and reimbursement of durable medical equipment (DME), including a prohibition on physician-owned DME supplier entities; • our ability to upgrade and develop our systems and infrastructure to accommodate growth; • our ability to attract and retain key personnel in a timely and cost-effective manner; • our ability to offer our wound care and surgical products and supplies using our existing sales force and distribution network; • the amount and timing of operating costs and capital expenditures relating to the expansion of our business, operations, and infrastructure; • changes in, or enactment of new laws or regulations promulgated by federal, state, or local governments; • cost containment initiatives or policies developed by government and commercial payers that create financial incentives not to use our products; • our inability to demonstrate that our products are cost-effective or superior to competing products; • our ability to develop new products; • discovery of product defects during the manufacturing process; • initiation of a government investigation into potential non-compliance with laws or regulations; • issuance of government advisory opinions or program bulletins that could negatively affect one or more of our sales models; • sanctions imposed by federal or state governments due to non-compliance with laws or regulations; • recall of one or more of our products by the FDA due to noncompliance with FDA requirements; and • general economic conditions as well as economic conditions specific to the healthcare industry.
We are subject to the following factors, among others, that may negatively affect our operating results: • the announcement or introduction of new products by our competitors; • failure of government healthcare programs and private health plans to cover our products or to timely and adequately reimburse the users of our products; • the rate of reimbursement by government and private insurers for use of our products; • any change in Medicare payment policy which provides a competitive advantage to our competitor’s products; • any change in government healthcare programs’ and private health plans’ policies regarding sales and reimbursement of durable medical equipment (“DME”), including a prohibition on physician-owned DME supplier entities; • our ability to upgrade and develop our systems and infrastructure to accommodate growth; • our ability to attract and retain key personnel in a timely and cost-effective manner; • our ability to offer our wound care and surgical products and supplies using our existing sales force and distribution network; • the amount and timing of operating costs and capital expenditures relating to the expansion of our business, operations, and infrastructure; • changes in, or enactment of new laws or regulations promulgated by federal, state, or local governments; • cost containment initiatives or policies developed by government and commercial payers that create financial incentives not to use our products; • our inability to demonstrate that our products are cost-effective or superior to competing products; • our ability to develop new products; • discovery of product defects during the manufacturing process; • initiation of a government investigation into potential non-compliance with laws or regulations; • issuance of government advisory opinions or program bulletins that could negatively affect one or more of our sales models; • sanctions imposed by federal or state governments due to non-compliance with laws or regulations; • recall of one or more of our products by the FDA due to noncompliance with FDA requirements; and • general economic conditions as well as economic conditions specific to the healthcare industry.
Additionally, if our securities are not listed on, or become delisted from, Nasdaq for any reason, trading our common stock could be conducted only in the over-the-counter (OTC) market or on an electronic bulletin board established for unlisted securities such as the OTC Bulletin Board, an inter-dealer automated quotation system for equity securities that is not a national securities exchange, the liquidity and price of our securities may be more limited than if we were quoted or listed on Nasdaq or another national securities exchange.
Additionally, if our securities are not listed on, or become delisted from, Nasdaq for any reason, trading our common stock could be conducted only in the over-the-counter (“OTC”) market or on an electronic bulletin board established for unlisted securities such as the OTC Bulletin Board, an inter-dealer automated quotation system for equity securities that is not a national securities exchange, the liquidity and price of our securities may be more limited than if we were quoted or listed on Nasdaq or another national securities exchange.
We completed our remediation efforts related to the material weakness by, among other things, implementing certain modules in a new company-wide enterprise resource planning (ERP) system to provide additional systematic controls and segregation of duties for our accounting processes; implementing additional controls to mitigate existing risks of proper segregation and change configurations; adding personnel to our accounting and finance team with the requisite accounting and internal controls knowledge and experience to sufficiently enhance our internal controls environment; designing and implementing new information technology general controls to ensure proper segregation of duties in our change management processes; engaging an outside firm to assist management with performing control design and operating effectiveness testing; reporting the results of control testing to the key stakeholders across our organization, including our Audit Committee, on testing progress and defined corrective actions; monitoring and reporting on the results of control remediation; and documenting and structuring the Company’s processes to meet SOX 404(b) requirements.
We completed our remediation efforts related to the material weakness by, among other things, implementing certain modules in a new company-wide enterprise resource planning (“ERP”) system to provide additional systematic controls and segregation of duties for our accounting processes; implementing additional controls to mitigate existing risks of proper segregation and change configurations; adding personnel to our accounting and finance team with the requisite accounting and internal controls knowledge and experience to sufficiently enhance our internal controls environment; designing and implementing new information technology general controls to ensure proper segregation of duties in our change management processes; engaging an outside firm to assist management with performing control design and operating effectiveness testing; reporting the results of control testing to the key stakeholders across our organization, including our Audit Committee, on testing progress and defined corrective actions; monitoring and reporting on the results of control remediation; and documenting and structuring the Company’s processes to meet SOX 404(b) requirements.
While we have invested significantly in the protection of data and information technology, there can be no assurance that our efforts will prevent service interruptions or security breaches. For example, in August 2020, our information technology (IT) systems were exposed to a ransomware attack, which partially impaired certain IT systems for a short period of time.
While we have invested significantly in the protection of data and information technology, there can be no assurance that our efforts will prevent service interruptions or security breaches. For example, in August 2020, our information technology (“IT”) systems were exposed to a ransomware attack, which partially impaired certain IT systems for a short period of time.
These changes may negatively affect the sales of our existing or development of future products, increase the cost, and decrease the availability of financing, or increase costs associated with producing and distributing our products and potential product candidates. Moreover, there has been recent turmoil in the global banking system over the past few years.
These changes may negatively affect the sales of our existing or development of future products, increase the cost, and decrease the availability of financing, or increase costs associated with producing and distributing our products and potential product candidates. Moreover, there has been turmoil in the global banking system over the past few years.
As a result, we continue to invest in sales and marketing resources for our products to allow us to reach new customers and potentially increase sales. These expenses impact our operating results, and there can be no assurance that we will continue to be successful in significantly increasing the sales of our products.
As a result, we may invest in sales and marketing resources for our products to allow us to reach new customers and potentially increase sales. These expenses impact our operating results, and there can be no assurance that we will continue to be successful in significantly increasing the sales of our products.
We may be required in the future to record additional charges to earnings if our goodwill, amortizable intangible assets, or other investments become impaired. Any such charge would adversely impact our financial results. Our ability to use our net operating loss carryforwards may be subject to certain limitations.
We may be required in the future to record additional charges to earnings if our goodwill, other intangible assets, or other investments become impaired. Any such charge would adversely impact our financial results. Our ability to use our net operating loss carryforwards may be subject to certain limitations.
As of the closing of our Series A Convertible Preferred Stock offering in November 2024, there were approximately 34,285,653 shares of Class A common stock issuable upon conversion of outstanding Convertible Preferred Stock, subject to applicable limitations under Nasdaq rules prior to stockholder approval.
As of the closing of our Series A Convertible Preferred Stock offering in November 2024, there were approximately 34,285,653 shares of Class A common stock issuable upon conversion of outstanding Convertible Preferred Stock, subject to the then applicable limitations under Nasdaq rules prior to stockholder approval.
The failure by us or one of our suppliers to comply with applicable regulatory requirements could result in, among other things, the FDA or other governmental authorities: • imposing fines and penalties on us; • preventing us from manufacturing or selling our products; • delaying or denying pending applications for approval or clearance of our products or of new uses or modifications to our existing products, or withdrawing or suspending current approvals or clearances; • ordering or requesting a recall of our products; • issuing warning letters or untitled letters; • imposing operating restrictions, including a partial or total shutdown of production or investigation of any or all of our products; • refusing to permit to import or export of our products; • detaining or seizing our products; • obtaining injunctions preventing us from manufacturing or distributing any or all of our products; • commencing criminal prosecutions or seeking civil penalties; and • requiring changes in our advertising and promotion practices.
The failure by us or one of our suppliers to comply with applicable regulatory requirements could result in, among other things, the FDA or other governmental authorities: • imposing fines and penalties on us; • preventing us from manufacturing or selling our products; • delaying or denying pending applications for approval or clearance of our products or of new uses or modifications to our existing products, or withdrawing or suspending current approvals or clearances; 43 Table of Contents • ordering or requesting a recall of our products; • issuing warning letters or untitled letters; • imposing operating restrictions, including a partial or total shutdown of production or investigation of any or all of our products; • refusing to permit to import or export of our products; • detaining or seizing our products; • obtaining injunctions preventing us from manufacturing or distributing any or all of our products; • commencing criminal prosecutions or seeking civil penalties; and • requiring changes in our advertising and promotion practices.
We incurred non-cash impairment and write down charges during 2024 which adversely affected our fiscal year 2024 operating results and we may be required to incur additional future impairment and write down charges, which could adversely affect our operating results.
We incurred non-cash impairment and write-down charges during 2025 and 2024 which adversely affected our fiscal year 2025 and 2024 operating results and we may be required to incur additional future impairment and write-down charges, which could adversely affect our operating results.
However, the FDA could disagree with our conclusion and require premarket approval or clearance for Affinity, NuShield, or any placental-based sheet product we market, which would disrupt the marketing of these products, potentially expose us to regulatory sanctions, and have a material adverse effect on our business, financial condition and results of operations.
However, the FDA could disagree with our conclusion and require changes to our labeling and marketing and/or premarket approval or clearance for Affinity, NuShield, or any placental-based sheet product we market, which would disrupt the marketing of these products, potentially expose us to regulatory sanctions, and have a material adverse effect on our business, financial condition and results of operations.
Misconduct by these parties could include, but is not limited to, intentional, reckless and/or negligent failures to comply with: • the laws and regulations of the FDA and its foreign counterparts requiring the reporting of true, complete and accurate information to such regulatory bodies, including but not limited to safety problems associated with the use of our products; 44 Table of Contents • laws and regulations of the FDA and its foreign counterparts concerning the conduct of clinical trials and the protection of human research subjects; • other laws and regulations of the FDA and its foreign counterparts relating to the manufacture, processing, packing, holding, investigating or distributing in commerce of medical devices, biological products and/or HCT/Ps; or • manufacturing standards we have established.
Misconduct by these parties could include, but is not limited to, intentional, reckless and/or negligent failures to comply with: • the laws and regulations of the FDA and its foreign counterparts requiring the reporting of true, complete and accurate information to such regulatory bodies, including but not limited to safety problems associated with the use of our products; • laws and regulations of the FDA and its foreign counterparts concerning the conduct of clinical trials and the protection of human research subjects; • other laws and regulations of the FDA and its foreign counterparts relating to the manufacture, processing, packing, holding, investigating or distributing in commerce of medical devices, biological products and/or HCT/Ps; or • manufacturing standards we have established.
In addition, most of our products are subject to continuing obligations to comply with other substantial regulatory requirements, including the FDA’s cGTP regulations, the FDA’s Current Good Manufacturing Practices (cGMP) regulations, adverse event reporting, FDA inspections, and the FDA’s QSR, and the regulatory expectations for these types of regulatory obligations may evolve over time.
In addition, most of our products are subject to continuing obligations to comply with other substantial regulatory requirements, including the FDA’s cGTP regulations, the FDA’s Current Good Manufacturing Practices (“cGMP”) regulations, adverse event reporting, FDA inspections, and the FDA’s QSR, and the regulatory expectations for these types of regulatory obligations may evolve over time.
Effective internal controls are necessary for us to provide reliable financial reports and operate successfully as a public company. Section 404 of the Sarbanes-Oxley Act of 2002 (SOX) requires that companies evaluate and report on their systems of internal control over financial reporting.
Effective internal controls are necessary for us to provide reliable financial reports and operate successfully as a public company. Section 404 of the Sarbanes-Oxley Act of 2002 (“SOX”) requires that companies evaluate and report on their systems of internal control over financial reporting.
The new framework is likely to increase both the frequency of such challenges and their odds of success by eliminating one way in which the government previously prevailed in such cases. As a result, significant regulatory policies may be subject to increased litigation and judicial scrutiny.
The new framework is likely to increase both the frequency of such challenges and their odds of success by eliminating one way in which the government previously prevailed in such cases. As a result, significant regulatory policies will be subject to increased litigation and judicial scrutiny.
To the extent that the FDA may determine that certain of our products that are, or are derived from, human cells or tissues do not qualify for regulation solely under Section 361 of the PHSA, the introduction of new tissue products would become more expensive, expansion of our tissue product offerings could be significantly delayed, and we could be subject to additional post-market regulatory requirements or suspension of product sales until FDA approval is obtained.
To the extent that the FDA may determine that certain of our products that are, or are derived from, human cells or tissues do not qualify for regulation solely under Section 361 of the PHSA, the introduction of new tissue products would become more 26 Table of Contents expensive, expansion of our tissue product offerings could be significantly delayed, and we could be subject to additional post-market regulatory requirements or suspension of product sales until FDA approval is obtained.
The Company’s quarterly operating results may fluctuate significantly because of several factors, including: • labor availability and costs for hourly and management personnel; • profitability of the Company’s products, especially in new markets and due to seasonal fluctuations; • changes in interest or exchange rates; • impairment of long-lived assets; • macroeconomic conditions, both nationally and locally, including changes in regulatory coverage and pricing of our products; • negative publicity relating to our products; • changes in consumer preferences and competitive conditions; and • expansion to new markets.
The Company’s quarterly operating results may fluctuate significantly because of several factors, including: 45 Table of Contents • labor availability and costs for hourly and management personnel; • profitability of the Company’s products, especially in new markets and due to seasonal fluctuations; • changes in interest or exchange rates; • impairment of long-lived assets; • macroeconomic conditions, both nationally and locally, including changes in regulatory coverage and pricing of our products; • negative publicity relating to our products; • changes in consumer preferences and competitive conditions; and • expansion to new markets.
The Company’s future effective tax rates could be subject to volatility or adversely affected by a number of factors, including: • changes in the valuation of the Company’s deferred tax assets and liabilities; • expected timing and amount of the release of any tax valuation allowances; • tax effects of stock-based compensation; • costs related to intercompany restructurings; 45 Table of Contents • changes in tax laws, regulations or interpretations thereof; and • lower than anticipated future earnings in jurisdictions where the Company has lower statutory tax rates and higher than anticipated future earnings in jurisdictions where the Company has higher statutory tax rates.
The Company’s future effective tax rates could be subject to volatility or adversely affected by a number of factors, including: • changes in the valuation of the Company’s deferred tax assets and liabilities; • expected timing and amount of the release of any tax valuation allowances; • tax effects of stock-based compensation; • costs related to intercompany restructurings; • changes in tax laws, regulations or interpretations thereof; and • lower than anticipated future earnings in jurisdictions where the Company has lower statutory tax rates and higher than anticipated future earnings in jurisdictions where the Company has higher statutory tax rates.
Events that may prevent successful or timely completion of clinical development include: • the FDA may require additional clinical trials in connection with the premarket review of product candidates; • delays in reaching a consensus with the FDA or other regulatory authorities on trial design; • delays in reaching agreement on acceptable terms with prospective contract research organizations, or CROs, and clinical trial sites; • delays in opening clinical trial sites or obtaining required IRB or independent ethics committee approval at each clinical trial site; • our decision or the requirement of regulators or IRBs to suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements, a finding that the participants are being exposed to unacceptable health risks, or the imposition of a clinical hold as a result of a serious adverse event or after an inspection of our clinical trial operations or clinical trial sites; • failure by us, any CROs we engage or any other third parties to adhere to clinical trial or regulatory requirements; • failure by us, any CROs we engage or any other third parties to perform in accordance with Good Clinical Practice, or GCP, cGMPs, or applicable regulatory guidelines in the United States and other international markets; • failure by physicians to adhere to delivery protocols leading to variable results; • delays in the testing, validation, manufacturing and delivery of our product candidates to the clinical trial sites, including delays by third parties with whom we have contracted to perform certain of those functions; • insufficient or inadequate supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates; • delays in having patients complete participation in a clinical trial or return for post-treatment follow-up; • clinical trial sites or patients dropping out of a clinical trial at a rate higher than we anticipate; • enrollment of clinical trial participants that are not representative of the intended user population; • selection of clinical endpoints that require prolonged periods of clinical observation or analysis of the resulting data; • receipt of negative or inconclusive clinical trial results; • occurrence of serious adverse events associated with the product candidate that are viewed to outweigh its potential benefits; • occurrence of serious adverse events in clinical trials of the same class of agents conducted by other sponsors; and • changes in regulatory requirements and guidance that require amending or submitting new clinical protocols. 23 Table of Contents ReNu is in Phase 3 clinical development for the management of symptoms associated with knee OA.
Events that may prevent successful or timely completion of clinical development include: • the FDA may require additional clinical trials in connection with the premarket review of product candidates; • delays in reaching a consensus with the FDA or other regulatory authorities on trial design; • delays in reaching agreement on acceptable terms with prospective contract research organizations, or CROs, and clinical trial sites; 22 Table of Contents • delays in opening clinical trial sites or obtaining required IRB or independent ethics committee approval at each clinical trial site; • our decision or the requirement of regulators or IRBs to suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements, a finding that the participants are being exposed to unacceptable health risks, or the imposition of a clinical hold as a result of a serious adverse event or after an inspection of our clinical trial operations or clinical trial sites; • failure by us, any CROs we engage or any other third parties to adhere to clinical trial or regulatory requirements; • failure by us, any CROs we engage or any other third parties to perform in accordance with Good Clinical Practice, or GCP, cGMPs, or applicable regulatory guidelines in the United States and other international markets; • failure by physicians to adhere to delivery protocols leading to variable results; • delays in the testing, validation, manufacturing and delivery of our product candidates to the clinical trial sites, including delays by third parties with whom we have contracted to perform certain of those functions; • insufficient or inadequate supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates; • delays in having patients complete participation in a clinical trial or return for post-treatment follow-up; • clinical trial sites or patients dropping out of a clinical trial at a rate higher than we anticipate; • enrollment of clinical trial participants that are not representative of the intended user population; • selection of clinical endpoints that require prolonged periods of clinical observation or analysis of the resulting data; • receipt of negative or inconclusive clinical trial results; • occurrence of serious adverse events associated with the product candidate that are viewed to outweigh its potential benefits; • occurrence of serious adverse events in clinical trials of the same class of agents conducted by other sponsors; and • changes in regulatory requirements and guidance that require amending or submitting new clinical protocols.
Additionally, in future years, it is possible that an up-to 4% Medicare sequestration could be ordered under Statutory Pay-As-You-GO Act of 2010 (PAYGO), which requires deficit neutrality in most laws passed by Congress.
Additionally, in future years, it is possible that an up-to 4% Medicare sequestration could be ordered under Statutory Pay-As-You-GO Act of 2010 (“PAYGO”), which requires deficit neutrality in most laws passed by Congress.
In addition, the terms of the Convertible Preferred Stock grant the Investors consent rights with respect to certain actions by us, including: • any amendment, modification, repeal or waiver of any provision of our Certificate of Incorporation, as amended, bylaws or of the Certificate of Designation that would amend, modify or otherwise fail to give effect to the rights of the Preferred Stockholders pursuant to the Certificate of Designation; • any increase or decrease in the number of authorized shares of Convertible Preferred Stock, except as permitted in the Certificate of Designation; 38 Table of Contents • the creation of any new class or series of equity securities (including any additional class or series of preferred stock or any debt that is convertible into equity securities of the company or equity-linked securities) that would be senior or pari passu to the Convertible Preferred Stock in respect of liquidation preference or dividend rights or that would provide any unique governance rights to holders of such securities that are not existing rights of the holders of Class A common stock; • the declaration or payment of any dividend to holders of Class A common stock; • any increase to the size of the Board above 12 directors prior to our 2025 annual meeting and 11 directors after such meeting; • incurrence by us (including our subsidiaries) of aggregate indebtedness in one or a series of transactions that would result in a consolidated total net leverage ratio (as defined in the Certificate of Designation) in excess of 3.5 to 1; or • the entry into, or amendment or waiver of, any agreement by us (including our subsidiaries) that would prevent or delay us from complying, or impair our ability to comply, with our obligations to make the Cash-in-Lieu Payments.
In addition, the terms of the Convertible Preferred Stock grant the Investors consent rights with respect to certain actions by us, including: 38 Table of Contents • any amendment, modification, repeal or waiver of any provision of our Certificate of Incorporation, as amended, bylaws or of the Certificate of Designation that would amend, modify or otherwise fail to give effect to the rights of the Preferred Stockholders pursuant to the Certificate of Designation; • any increase or decrease in the number of authorized shares of Convertible Preferred Stock, except as permitted in the Certificate of Designation; • the creation of any new class or series of equity securities (including any additional class or series of preferred stock or any debt that is convertible into equity securities of the company or equity-linked securities) that would be senior or pari passu to the Convertible Preferred Stock in respect of liquidation preference or dividend rights or that would provide any unique governance rights to holders of such securities that are not existing rights of the holders of Class A common stock; • the declaration or payment of any dividend to holders of Class A common stock; • any increase to the size of the Board above 11 directors; • incurrence by us (including our subsidiaries) of aggregate indebtedness in one or a series of transactions that would result in a consolidated total net leverage ratio (as defined in the Certificate of Designation) in excess of 3.5 to 1; or • the entry into, or amendment or waiver of, any agreement by us (including our subsidiaries) that would prevent or delay us from complying, or impair our ability to comply, with our obligations to make the Cash-in-Lieu Payments.
The sale and shipment of our products across international borders, as well as the purchase of components and products from international sources, subject us to extensive United States and foreign governmental trade, import and export and customs regulations and laws, including but not limited to, the Export Administration Regulations and trade sanctions against 32 Table of Contents embargoed countries, which are administered by the Office of Foreign Assets Control within the Department of the Treasury, as well as the laws and regulations administered by the Department of Commerce.
The sale and shipment of our products across international borders, as well as the purchase of components and products from international sources, subject us to extensive United States and foreign governmental trade, import and export and customs regulations and laws, including but not limited to, the Export Administration Regulations and trade sanctions against embargoed countries, which are administered by the Office of Foreign Assets Control within the Department of the Treasury, as well as the laws and regulations administered by the Department of Commerce.
In addition, negative publicity, including regarding a quality or safety issue, could damage our reputation, reduce market acceptance of our products, cause us to lose customers, and decrease demand for our products. Any actual or perceived quality issues may also result in issuances of physician’s advisories against our products or cause us to conduct voluntary recalls.
In addition, negative publicity, including regarding a quality or safety issue, could damage our reputation, reduce market acceptance of our products, cause us to lose customers, and decrease demand for our products. Any actual or perceived quality issues may also result in issuances of physician’s advisories against our products or 28 Table of Contents cause us to conduct voluntary recalls.
Even if we do succeed in obtaining widespread reimbursement for our products, future changes in reimbursement policies could have a negative impact on our business, financial condition and results of operations. Cost-containment efforts of our customers, purchasing groups, third-party payers, and governmental organizations could adversely affect our business, results of operations, and financial condition.
Even if we do succeed in obtaining widespread reimbursement for our products, future changes in reimbursement policies could have a negative impact on our business, financial condition and results of operations. 34 Table of Contents Cost-containment efforts of our customers, purchasing groups, third-party payers, and governmental organizations could adversely affect our business, results of operations, and financial condition.
Our obligations to the holders of Convertible Preferred Stock could also limit our ability to obtain additional financing or increase our borrowing costs, which could have an adverse effect on our financial condition. The preferential rights could also result in divergent interests between the Investors and holders of shares of our Class A common stock.
Our obligations to the holders of Convertible Preferred Stock could also limit our ability to obtain additional financing or increase our borrowing costs, which could 39 Table of Contents have an adverse effect on our financial condition. The preferential rights could also result in divergent interests between the Investors and holders of shares of our Class A common stock.
As the frequency of cyberattacks and resulting breaches reported by other businesses and governments increases, we expect to continue to devote significant resources to improve and maintain our information technology (IT) infrastructure.
As the frequency of cyberattacks and resulting breaches reported by other businesses and governments increases, we expect to continue to devote significant resources to improve and maintain our information technology (“IT”) infrastructure.
On March 10, 2023, Silicon Valley Bank (SVB), was closed, followed on March 11, 2023 and May 1, 2023, by Signature Bank and First Republic Bank, respectively, and the FDIC was appointed as receiver for those banks.
On March 10, 2023, Silicon Valley Bank (“SVB”), was closed, followed on March 11, 2023 and May 1, 2023, by Signature Bank and First Republic Bank, respectively, and the FDIC was appointed as receiver for those banks.
The FDA or another regulatory body could disagree with our conclusion and require such premarket approval or clearance, which would disrupt the marketing of these products, potentially expose us to regulatory sanctions, and have a material adverse effect on our business, financial condition and results of operations.
The FDA or another regulatory body could disagree with our conclusion and 25 Table of Contents require such premarket approval or clearance, which would disrupt the marketing of these products, potentially expose us to regulatory sanctions, and have a material adverse effect on our business, financial condition and results of operations.
The amount of time that is required to resolve these lawsuits is unpredictable and any litigation or claims against us, even those without merit, may cause us to 41 Table of Contents incur substantial costs, divert management’s attention from the day-to-day operation of our business, and materially harm our reputation.
The amount of time that is required to resolve these lawsuits is unpredictable and any litigation or claims against us, even those without merit, may cause us to incur substantial costs, divert management’s attention from the day-to-day operation of our business, and materially harm our reputation.
Any of these events could adversely affect our ability to achieve our development and commercialization goals, which could have a material adverse effect on our business, results of operations, and financial condition. 42 Table of Contents Our future success depends on our ability to retain key employees, consultants and advisors, and to attract, retain and motivate qualified personnel.
Any of these events could adversely affect our ability to achieve our development and commercialization goals, which could have a material adverse effect on our business, results of operations, and financial condition. Our future success depends on our ability to retain key employees, consultants and advisors, and to attract, retain and motivate qualified personnel.
If any of our products are implicated in the transmission of any communicable disease, our officers, employees and we could be subject to government sanctions including but not limited to recalls, and civil and criminal liability, with sanctions that include exclusion from doing business with the federal 28 Table of Contents government.
If any of our products are implicated in the transmission of any communicable disease, our officers, employees and we could be subject to government sanctions including but not limited to recalls, and civil and criminal liability, with sanctions that include exclusion from doing business with the federal government.
Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms. Our defense of litigation or interference proceedings may fail and, even if successful, may result in substantial costs and distract our management and other employees.
Our business could be harmed if the prevailing party does not 36 Table of Contents offer us a license on commercially reasonable terms. Our defense of litigation or interference proceedings may fail and, even if successful, may result in substantial costs and distract our management and other employees.
For product candidates that have been designated as breakthrough therapies, interaction and communication between the FDA and the sponsor of the trial can help to identify the most efficient path for clinical development while minimizing the number of 25 Table of Contents patients placed in ineffective control regimens.
For product candidates that have been designated as breakthrough therapies, interaction and communication between the FDA and the sponsor of the trial can help to identify the most efficient path for clinical development while minimizing the number of patients placed in ineffective control regimens.
If any of our trade secrets were to be disclosed to or independently developed by a competitor, our competitive position would be harmed. 36 Table of Contents We may be subject to claims challenging the inventorship or ownership of the patents and other intellectual property that we own or license.
If any of our trade secrets were to be disclosed to or independently developed by a competitor, our competitive position would be harmed. We may be subject to claims challenging the inventorship or ownership of the patents and other intellectual property that we own or license.
We believe that we have all required state licenses or permits applicable to the distribution of HCT/Ps, but there is a risk that there may be state or local license or permit requirements of which we are unaware or with which we have not complied.
We believe that we have all required state licenses or permits applicable to the distribution of HCT/Ps, but there is a 27 Table of Contents risk that there may be state or local license or permit requirements of which we are unaware or with which we have not complied.
The United States Patent and Trademark Office developed new regulations and procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, including the first to file provisions, only became effective in March 2013.
The 37 Table of Contents United States Patent and Trademark Office developed new regulations and procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, including the first to file provisions, only became effective in March 2013.
Since its enactment, there have been several efforts to modify or repeal all or part of ACA. Additionally, tax reform legislation was passed that includes provisions that impact healthcare insurance coverage and payment such as the elimination of the tax penalty for individuals who do not maintain health insurance coverage (the so-called "individual mandate").
Since its enactment, there have been several efforts to modify or repeal all or part of ACA. Additionally, tax reform legislation was passed that includes provisions that impact healthcare insurance coverage and payment such as the elimination of the tax penalty for individuals who do not maintain health insurance coverage (the so-called “individual mandate”).
Such licenses may not be available on commercially reasonable terms, if at all. We 35 Table of Contents have in the past and may in the future choose to settle disputes involving third-party intellectual property by taking a license. Such licenses or other settlements may involve, for example, upfront payments, yearly maintenance fees and royalties.
Such licenses may not be available on commercially reasonable terms, if at all. We have in the past and may in the future choose to settle disputes involving third-party intellectual property by taking a license. Such licenses or other settlements may involve, for example, upfront payments, yearly maintenance fees and royalties.
We could be subject to legal exposure if we do not comply with our reporting and payment obligations under Medicare, the Medicaid Drug Rebate Program, or any other governmental pricing programs in which our products or product candidates may participate, including through additional rebate or discount requirements, fines, sanctions, and litigation.
We could be subject to legal exposure if we do not comply with our reporting and payment obligations under Medicare or any other governmental pricing programs in which our products or product candidates may participate, including through additional rebate or discount requirements, fines, sanctions, and litigation.
Bribery Act of 2010, and similar anti-bribery laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments for the purpose of obtaining or retaining business. Our policies mandate compliance with these anti-bribery laws, including the requirements to maintain accurate information and internal controls.
Bribery Act of 2010, and similar anti-bribery laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments to government officials, including government-employed physicians, for the purpose of obtaining or retaining business. Our policies mandate compliance with these anti-bribery laws, including the requirements to maintain accurate information and internal controls.
Factors that could lead to impairment of goodwill, amortizable intangible assets, and other assets acquired via acquisitions include significant adverse changes in the business climate and actual or projected operating results (affecting our company as a whole or affecting any particular segment) and declines in the financial condition of our business.
Factors that could lead to impairment of goodwill, other intangible assets, and other assets include significant adverse changes in the business climate and actual or projected operating results (affecting our company as a whole or affecting any particular segment) and declines in the financial condition of our business.
Furthermore, GPO and IDN contracts typically are terminable without cause upon 60 to 90 days’ notice. The healthcare industry has been consolidating, and the consolidation among third-party payers into larger purchasing groups will increase their negotiating and 34 Table of Contents purchasing power.
Furthermore, GPO and IDN contracts typically are terminable without cause upon 60 to 90 days’ notice. The healthcare industry has been consolidating, and the consolidation among third-party payers into larger purchasing groups will increase their negotiating and purchasing power.
Preliminary, initial or interim data also remain subject to audit and verification procedures that may result in the final data being materially different from such preliminary, initial or interim data. As a result, preliminary, initial or interim data should be considered carefully and with caution until the final data are available.
Preliminary, initial or interim data also remain subject to audit and 23 Table of Contents verification procedures that may result in the final data being materially different from such preliminary, initial or interim data. As a result, preliminary, initial or interim data should be considered carefully and with caution until the final data are available.
These dividend and Cash-in-Lieu Payment obligations could adversely affect our liquidity and reduce the amount of cash available for working capital, capital expenditures, growth opportunities, acquisitions, and other general corporate purposes.
These dividend obligations could adversely affect our liquidity and reduce the amount of cash available for working capital, capital expenditures, growth opportunities, acquisitions, and other general corporate purposes.
If we are unable to continue to attract and retain high-quality personnel, the rate and success at which we can discover, develop and commercialize product candidates will be limited. Uncertainty and adverse changes in the general economic conditions, including recent turmoil in the global banking system, may negatively affect our business.
If we are 42 Table of Contents unable to continue to attract and retain high-quality personnel, the rate and success at which we can discover, develop and commercialize product candidates will be limited. Uncertainty and adverse changes in the general economic conditions, including turmoil in the global banking system, may negatively affect our business.
In addition, California has enacted the California Consumer Privacy Act (CCPA), which came into effect on January 1, 2020.
In addition, California has enacted the California Consumer Privacy Act (“CCPA”), which came into effect on January 1, 2020.
Regenerative medicine therapies that qualify for RMAT designation may also qualify for other FDA expedited programs, including fast track designation, breakthrough therapy designation, accelerated approval and priority review designation, if they meet the criteria for such programs.
Regenerative 24 Table of Contents medicine therapies that qualify for RMAT designation may also qualify for other FDA expedited programs, including fast track designation, breakthrough therapy designation, accelerated approval and priority review designation, if they meet the criteria for such programs.
Product candidates designated as breakthrough therapies by the FDA are also eligible for priority review if supported by clinical data at the time of the submission of the new drug application. Designation as a breakthrough therapy is within the discretion of the FDA.
Product candidates designated as breakthrough therapies by the FDA are also eligible for priority review if supported by clinical data at the time of the submission of the BLA. Designation as a breakthrough therapy is within the discretion of the FDA.
Failure or delay can occur at any time during the clinical trial process. Success in preclinical testing and early clinical trials 24 Table of Contents does not ensure that later clinical trials will be successful.
Failure or delay can occur at any time during the clinical trial process. Success in preclinical testing and early clinical trials does not ensure that later clinical trials will be successful.
In May 2024, we announced that our Phase 3 RCT evaluating the safety and efficacy of ReNu, a cryopreserved ASA for the management of symptoms associated with knee OA, achieved its primary endpoint upon the analysis of positive top line data.
In May 2024, we announced that our Phase 3 RCT evaluating the safety and efficacy of ReNu, a cryopreserved ASA for the management of symptoms associated with knee OA, achieved its primary endpoint upon the analysis of positive top line data. In September 2025, we announced an update on our second Phase 3 RCT of ReNu.
We engage in various types of activities, including the 30 Table of Contents conduct of speaker programs to educate physicians, the provision of reimbursement advice and support to customers, and the provision of customer and patient support services, that have been the subject of government scrutiny and enforcement action within the medical device industry.
We engage in various types of activities, including the conduct of speaker programs to educate physicians, the provision of reimbursement advice and support to customers, and the provision of customer and patient support services, that have been the subject of government scrutiny and enforcement action within the healthcare industry.
As biological products and medical devices, many of the products that we market require regulatory approvals or clearances from the FDA, or from similar regulatory authorities outside of the United States, before they may legally be distributed in commerce.
Many of the products that we market require regulatory approvals or clearances from the FDA, or from similar regulatory authorities outside of the United States, before they may legally be distributed in commerce.
On November 16, 2017, the FDA issued a final guidance document entitled, "Regulatory Considerations for Human Cells, Tissues, and Cellular and Tissue-Based Products: Minimal Manipulation and Homologous Use", or 361 HCT/P Guidance, which provides FDA’s current thinking on how to apply the existing regulatory criteria for regulation as a Section 361 HCT/P.
A final guidance document entitled, "Regulatory Considerations for Human Cells, Tissues, and Cellular and Tissue-Based Products: Minimal Manipulation and Homologous Use", or 361 HCT/P Guidance, originally issued on November 16, 2017, and last revised on July 20, 2020, provides FDA’s current thinking on how to apply the existing regulatory criteria for regulation as a Section 361 HCT/P.
For example, the Affordable 31 Table of Contents Care Act of 2010 (ACA) and the Medicare Access and CHIP Reauthorization Act of 2015 substantially changed the way healthcare is delivered and financed by both governmental and private insurers.
For example, the Affordable Care Act of 2010 (“ACA”) and the Medicare Access and CHIP Reauthorization Act of 2015 substantially changed the way healthcare is delivered and financed by both governmental and private insurers.
Adverse changes may occur as a result of adverse economic conditions, fluctuating oil prices, supply chain problems, inflation, political instability, declining consumer confidence, a continuation or worsening of the COVID-19 pandemic or another pandemic, unemployment, fluctuations in stock markets, contraction of credit availability, or other factors affecting economic conditions generally.
Adverse changes may occur as a result of adverse economic conditions, fluctuating oil prices, supply chain problems, inflation, political instability, declining consumer confidence, occurrence of a pandemic, unemployment, fluctuations in stock markets, contraction of credit availability, or other factors affecting economic conditions generally.
Our long-term assets include property and equipment of $89.1 million and $116.2 million, of which $63.3 million and $60.8 million represents the value of improvements to our leased assets, and of which $21.9 million and $59.1 million represents construction in progress (each as described more fully in Note 8, Property and Equipment, Net , to our audited consolidated financial statements included in this Annual Report on Form 10-K), as of December 31, 2024 and 2023, respectively.
Our long-term assets include property and equipment of $103.7 million and $89.1 million, of which $67.9 million and $63.3 million represents the value of improvements to our leased assets, and of which $26.7 million and $21.9 million represents construction in progress (each as described more fully in Note 8, Property and Equipment, Net , to our audited consolidated financial statements included in this Annual Report on Form 10-K), as of December 31, 2025 and 2024, respectively.
Under the Company bylaws, unless the Company consents in writing to the selection of an alternative forum, the sole and exclusive forum will be the Court of Chancery of the State of Delaware for: • any derivative action or proceeding brought on behalf of the Company; • any action asserting a claim of breach of a fiduciary duty owed by, or any wrongdoing by, any director, officer or employee of the Company to the Company or the Company’s stockholders; • any action asserting a claim arising pursuant to any provision of the DGCL, the certificate of incorporation (including as it may be amended from time to time), or the bylaws; • any action to interpret, apply, enforce or determine the validity of the certificate of incorporation or the bylaws; or • any action asserting a claim governed by the internal affairs doctrine, in each case, except for, (1) any action as to which the Court of Chancery determines that there is an indispensable party not subject to the personal jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten (10) days following such determination) and (2) any action asserted under the Securities Exchange Act of 1934, as amended, or the rules and regulations promulgated thereunder, for which federal courts have exclusive jurisdiction.
Under the Company bylaws, unless the Company consents in writing to the selection of an alternative forum, the sole and exclusive forum will be the Court of Chancery of the State of Delaware for: • any derivative action or proceeding brought on behalf of the Company; • any action asserting a claim of breach of a fiduciary duty owed by, or any wrongdoing by, any director, officer or employee of the Company to the Company or the Company’s stockholders; • any action asserting a claim arising pursuant to any provision of the DGCL, the certificate of incorporation (including as it may be amended from time to time), or the bylaws; • any action to interpret, apply, enforce or determine the validity of the certificate of incorporation or the bylaws; or • any action asserting a claim governed by the internal affairs doctrine, in each case, except for, (1) any action as to which the Court of Chancery determines that there is an indispensable party not subject to the personal jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten (10) days following such determination) and (2) any action asserted under the Securities Exchange Act of 1934, as amended, or the rules and regulations promulgated thereunder, for which federal courts have exclusive jurisdiction. 40 Table of Contents These provisions of the Company’s certificate of incorporation and bylaws could limit the ability of the Company stockholders to obtain a favorable judicial forum for certain disputes with the Company or with its directors, officers or other employees, which may discourage such lawsuits against the Company and its directors, officers, and employees.
We are required under generally accepted accounting principles in the United States (GAAP) to test goodwill for impairment at least annually and to review our goodwill, amortizable intangible assets, and other assets acquired through merger and acquisition activity, for impairment when events or changes in circumstance indicate the carrying value may not be recoverable.
We are required under generally accepted accounting principles in the United States (“GAAP”) to test goodwill for impairment at least annually and to review our goodwill, other intangible assets, and other assets for impairment when events or changes in circumstance indicate the carrying value may not be recoverable.
We also could incur significant costs associated with civil or criminal fines and penalties. Although we maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous materials or other work-related injuries, this insurance may not provide adequate coverage against potential liabilities.
Although we maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous materials or other work-related injuries, this insurance may not provide adequate coverage against potential liabilities.
The Company is subject to laws, regulations and rules enacted by national, regional and local governments and Nasdaq. In particular, the Company is required to comply with certain SEC, Nasdaq and other legal or regulatory requirements. Compliance with, and monitoring of, applicable laws, regulations and rules is difficult, time-consuming and costly.
In particular, the Company is required to comply with certain SEC, Nasdaq and other legal or regulatory requirements. Compliance with, and monitoring of, applicable laws, regulations and rules is difficult, time-consuming and costly.
As disclosed in Item 9A of this Annual Report on Form 10-K, we previously identified a material weakness in our internal controls over financial reporting relating to the design and maintenance of effective controls over information technology general controls and proper segregation of duties to support the initiation and recording of transactions and the resulting impact on business process controls and applications that rely on such data.
We previously identified a material weakness in our internal controls over financial reporting relating to the design and maintenance of effective controls over information technology general controls and proper segregation of duties to support the initiation and recording of transactions and the resulting impact on business process controls and applications that rely on such data.
In addition, on June 28, 2024, the United States Supreme Court issued an opinion holding that courts reviewing agency action pursuant to the Administrative Procedure Act (APA) “must exercise their independent judgment” and “may not defer to an agency interpretation of the law simply because a statute is ambiguous.” The decision will have a significant impact on how lower courts evaluate challenges to agency interpretations of law, including those by CMS and other agencies with significant oversight of the healthcare industry.
Supreme Court issued an opinion holding that courts reviewing agency action pursuant to the Administrative Procedure Act (“APA”) “must exercise their independent judgment” and “may not defer to an agency interpretation of the law simply because a statute is ambiguous.” The decision will have a significant impact on how lower courts evaluate challenges to agency interpretations of law, including those by HHS, FDA, CMS and other agencies with significant oversight of the medical device industry.
Our quarterly operating results have varied substantially in the past and may vary substantially in the future. 40 Table of Contents The Company bylaws designate the Court of Chancery of the State of Delaware, to the fullest extent permitted by law, as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by the Company stockholders, which could limit the ability of the Company stockholders to obtain a favorable judicial forum for disputes with the Company or with directors, officers or employees of the Company and may discourage stockholders from bringing such claims.
The Company bylaws designate the Court of Chancery of the State of Delaware, to the fullest extent permitted by law, as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by the Company stockholders, which could limit the ability of the Company stockholders to obtain a favorable judicial forum for disputes with the Company or with directors, officers or employees of the Company and may discourage stockholders from bringing such claims.
We continue to invest significant capital to maximize our sales and marketing infrastructure, and there can be no assurance that these efforts will result in significant increases in sales.
We may invest significant capital to maximize our sales and marketing infrastructure, and there can be no assurance that these efforts will result in significant increases in sales. We are committed to maximizing our internal sales and marketing capabilities.
Any such impairment could result in a non-cash charge equal to the full carrying value of the associated assets. Changes in our assumptions with respect to our expected use of our long-lived assets may result in additional impairment and write down charges in the future, which could adversely affect our business, results of operations, and financial condition.
Changes in our assumptions with respect to our expected use of our long-lived assets may result in additional impairment and write-down charges in the future, which could adversely affect our business, results of operations, and financial condition.
Obtaining the necessary regulatory approvals or clearances for certain of our products will be expensive and time-consuming and may impede our ability to fully exploit our technologies or otherwise limit our ability to meet other business objectives.
Any such setbacks could adversely affect our business, financial condition, results of operations and prospects. Obtaining the necessary regulatory approvals or clearances for certain of our products will be expensive and time-consuming and may impede our ability to fully exploit our technologies or otherwise limit our ability to meet other business objectives.
The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, the ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory and policy changes. Average review times at the agency have fluctuated in recent years as a result.
The ability of the FDA to review and approve new products or modifications to products can be affected by a variety of factors, including government budget and funding levels, the ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory and policy changes.
In addition, government funding of CMS and other government agencies on which our operations may rely, including those that fund research and development activities, is subject to the political process, which is inherently fluid and unpredictable.
Average review times at the agency have fluctuated in recent years as a result. In addition, government funding of CMS and other government agencies on which our operations may rely, including those that fund research and development activities, is subject to the political process, which is inherently fluid and unpredictable.
Additionally, our products or the technologies or processes used to formulate or manufacture our products may now, or in the future, infringe the patent rights of third parties. It is also possible that third parties will obtain patent or other proprietary rights that might be necessary or useful for the development, manufacture, or sale of our products.
It is also possible that third parties will obtain patent or other proprietary rights that might be necessary or useful for the development, manufacture, or sale of our products.
Moreover, patents may not issue from any of our pending patent applications. Even if we obtain or in-license issued patents, such patent rights may not provide valid patent protection sufficiently broad to prevent any third party from developing, using, or commercializing products that are similar or functionally equivalent to our products or technologies, or otherwise provide any competitive advantage.
Even if we obtain or in-license issued patents, such patent rights may not provide valid patent protection sufficiently broad to prevent any third party from developing, using, or commercializing products that are similar or functionally equivalent to our products or technologies, or otherwise provide any competitive advantage. 35 Table of Contents In addition, these patent rights may be challenged, revoked, invalidated, infringed, or circumvented by third parties.
We cannot guarantee that any clinical trials will be conducted as planned or completed on schedule, if at all. A failure of one or more clinical trials can occur at any stage of testing.
Clinical testing is expensive, time-consuming and uncertain as to the outcome. We have limited experience with clinical trials. We cannot guarantee that any clinical trials will be conducted as planned or completed on schedule, if at all. A failure of one or more clinical trials can occur at any stage of testing.
Changes in United States or international social, political, regulatory and economic conditions or in laws and policies governing trade, manufacturing, development and investment in the countries where we currently conduct our business or may conduct our business in the future could adversely affect our business, reputation, financial condition and results of operations.
Changes to trade policy, including tariff and customs regulations, or failure to comply with such regulations may have an adverse effect on our reputation, business, financial condition and results of operations. 46 Table of Contents Changes in United States or international social, political, regulatory and economic conditions or in laws and policies governing trade, manufacturing, development and investment in the countries where we currently conduct our business or may conduct our business in the future could adversely affect our business, reputation, financial condition and results of operations.
There is currently a shortage of skilled executives and scientific personnel in our industry, which is likely to continue. As a result, competition for skilled personnel is intense and the turnover rate can be high.
Recruiting and retaining other qualified employees, consultants and advisors for our business, including scientific and technical personnel, will also be critical to our success. There is currently a shortage of skilled executives and scientific personnel in our industry, which is likely to continue. As a result, competition for skilled personnel is intense and the turnover rate can be high.
Responding to current and future changes may increase our costs, and the complexity of compliance will be time consuming. We are liable for errors associated with our submission of pricing data and for any overcharging of government payers.
The requirements of these programs, including, by way of example, their respective terms and scope, change frequently. 31 Table of Contents Responding to current and future changes may increase our costs, and the complexity of compliance will be time consuming. We are liable for errors associated with our submission of pricing data and for any overcharging of government payers.
If the rule is finalized, we will be required to update the labeling and promotional material for many of our wound dressings which may make it more difficult to distinguish our wound dressings from competing wound care products. 29 Table of Contents In addition, a number of enforcement actions have been taken against manufacturers that promote products for off-label uses (i.e., uses that are not described in the approved or cleared labeling), including actions alleging that claims submitted to government healthcare programs for reimbursement of products that were promoted for off-label uses are fraudulent in violation of the Federal False Claims Act or other federal and state statutes and that the submission of those claims was caused by off-label promotion.
In addition, a number of enforcement actions have been taken against manufacturers that promote products for off-label uses (i.e., uses that are not described in the approved or cleared labeling), including actions alleging that claims submitted to government healthcare programs for reimbursement of products that were promoted for off-label uses are fraudulent in violation of the Federal False Claims Act or other federal and state statutes and that the submission of those claims was caused by off-label promotion.
For example, the ACA, enacted in 2010, contains provisions for Medicare demonstration programs that create financial incentives to treat patients with chronic wounds conservatively and could result in decreased utilization of our products.
The implementation of cost containment measures or other healthcare reforms may have an adverse effect on our business operations. For example, the ACA, enacted in 2010, contains provisions for Medicare demonstration programs that create financial incentives to treat patients with chronic wounds conservatively and could result in decreased utilization of our products.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe may also from time to time engage partners for periodic penetration testing and vulnerability assessments. Our third-party service providers, suppliers, and vendors face their own risks from cybersecurity threats that could potentially impact Organogenesis. We are developing and implementing processes for overseeing and managing these risks and are committed to maintaining robust governance and oversight of these risks.
Biggest changeWe may also from time to time engage partners for periodic penetration testing and vulnerability assessments. Our third-party service providers, suppliers, and vendors face their own risks from cybersecurity threats that could potentially impact Organogenesis. We implemented processes for overseeing and managing these risks and are committed to maintaining robust governance and oversight of these risks.
We have also identified the potential for cybersecurity risks stemming from the use of artificial intelligence (AI) tools developed by third parties. We have implemented policies and training programs to govern the use of AI by our employees. Additionally, the Company’s Audit Committee regularly reviews our uses of AI as part of its ongoing risk oversight responsibility.
We have also identified the potential for cybersecurity risks stemming from the use of artificial intelligence (“AI”) tools developed by third parties. We have implemented policies and training programs to govern the use of AI by our employees. Additionally, the Company’s Audit Committee will regularly review our uses of AI as part of its ongoing risk oversight responsibility.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe lease of the office space commenced at the time of the lease signing, and we expect lease commencement of the manufacturing space in 2027, upon completion of the build out of the space for commercial manufacturing purposes. The initial term of the lease expires in May 2041, with two ten-year renewal options.
Biggest changeThe initial term of the lease expires in May 2041, with two ten-year renewal options and the lease also affords us a one-time right of first offer to purchase the Smithfield Facility.
ITEM 2. PR OPERTIES Our corporate headquarters is located on our four-building campus in Canton, Massachusetts, comprising approximately 300,000 square feet of leased and purchased space devoted to manufacturing, shipping, operations, and research and development. Three of the buildings are leased.
ITEM 2. PR OPERTIES Our corporate headquarters is located on our four-building campus in Canton, Massachusetts, comprising approximately 300,000 square feet of leased and purchased space devoted to manufacturing, shipping, operations, and research and development. Three of the buildings are leased. These leases were initially set to expire on December 31, 2022.
The leases were initially set to expire on December 31, 2022, and were subsequently extended to December 31, 2027 when we exercised an option to renew these leases for an additional five-year term in December 2021. We lease the buildings in Canton from entities that are controlled by Alan A. Ades, Albert Erani, Dennis Erani and Glenn H.
One of these leases was subsequently extended to December 31, 2027, and two of these leases were subsequently extended to December 31, 2032. We lease the buildings in Canton from entities that are controlled by Alan A. Ades, Albert Erani, Dennis Erani and Glenn H.
In November 2024, we entered into a lease for a facility in Smithfield, Rhode Island, comprising approximately 122,000 square feet of manufacturing and office space.
We have an option to extend the term for another ten years if exercised within 16-24 months from the end of the lease term. 48 Table of Contents In November 2024, we entered into a lease for a facility in Smithfield, Rhode Island, comprising approximately 122,000 square feet of manufacturing and office space.
We lease smaller facilities in Alabama, California, Florida, and Massachusetts, for manufacturing, warehouse, office, and laboratory space, under agreements with varying expiration dates through 2031.
Following the execution of definitive agreements related to certain state and local tax incentives for our Smithfield Facility in April 2025, we no longer have the unilateral right to terminate the lease. We lease smaller facilities in Alabama, California, Florida, and Massachusetts, for manufacturing, warehouse, office, and laboratory space, under agreements with varying expiration dates through 2031.
The rent commencement date was February 1, 2020. The initial lease 48 Table of Contents term is ten years from the rent commencement date and was extended for additional five years in December 2021. We have an option to extend the term for another ten years if exercised within 16-24 months from the end of the lease term.
The initial lease term is ten years from the rent commencement date and was extended for additional five years in December 2021.
Nussdorf, who are also our stockholders. In addition, Messrs. Ades, Erani and Nussdorf are members of the Significant Stockholder Group, which has the right to designate four members of our Board of Directors. In Norwood, Massachusetts, we have a leased facility of approximately 43,850 square feet for office, laboratory, and manufacturing use. The lease commenced on March 13, 2019.
Nussdorf, who are stockholders that own 5% or more of our outstanding Class A common stock and Mr. Nussdorf is also a director of the Company. In Norwood, Massachusetts, we have a leased facility of approximately 43,850 square feet for office, laboratory, and manufacturing use. The lease commenced on March 13, 2019. The rent commencement date was February 1, 2020.
Removed
We have a one-time right of first offer to purchase the Smithfield Facility and have a right to terminate the lease for a payment to the landlord of $1.3 million, if we have not secured certain anticipated state and local tax incentives by March 31, 2025.
Added
The lease of the office space commenced at the time of the lease signing. The build-out of the manufacturing space will be completed in two phases. Phase 1 of the build out was substantially completed and the associated lease commenced in December 2025. Phase 2 of the build out is expected to be completed in 2027.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe Company believes the claims are without merit and intends to vigorously contest them. We are not a party to any other material legal proceedings. From time to time, we may become involved in litigation or other legal proceedings relating to claims arising from the ordinary course of business. These matters may include intellectual property, employment and other general claims.
Biggest changeITEM 3. LE GAL PROCEEDINGS We are not a party to any material legal proceedings. From time to time, we may become involved in litigation or other legal proceedings relating to claims arising from the ordinary course of business. These matters may include intellectual property, employment and other general claims.
Removed
ITEM 3. LE GAL PROCEEDINGS On January 22, 2025, the Company was served with a complaint captioned United States of America, State of Texas, ex rel. John Doe vs. Organogenesis Holdings, Inc. , which was filed in the United States District Court for the Southern District of Texas. The complaint is being brought by an employee the Company terminated.
Removed
The United States and the State of Texas each declined to intervene in the case in September 2024. The complaint alleges claims pursuant to the United States False Claims Act and the Texas State Medicaid Fraud Prevention Act, seeking unquantified damages as well as fines, attorneys’ fees and other costs.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 49 PART II Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 50 Item 6. Reserved 51 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 52 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 64 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 49 PART II Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 50 Item 6. Reserved 51 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 52 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 63 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeCOMPARISON OF FIVE YEARS CUMULATIVE TOTAL RETURN Among Organogenesis Holdings Inc., the NASDAQ Composite Index, and the NASDAQ Biotechnology Index (1) This performance graph shall not be deemed to be "soliciting material" or to be "filed" with the SEC for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, or otherwise subject to the liabilities under that Section, and shall not be deemed incorporated by reference into any filing of Organogenesis Holdings Inc. under the Securities Act of 1933, as amended. 50 Table of Contents Issuer Purchases of Equity Securities The following table presents information with respect to purchases of Class A common stock we made during the three months ended December 31, 2024.
Biggest changeCOMPARISON OF FIVE YEARS CUMULATIVE TOTAL RETURN Among Organogenesis Holdings Inc., the NASDAQ Composite Index, and the NASDAQ Biotechnology Index (1) This performance graph shall not be deemed to be "soliciting material" or to be "filed" with the SEC for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, or otherwise subject to the liabilities under that Section, and shall not be deemed incorporated by reference into any filing of Organogenesis Holdings Inc. under the Securities Act of 1933, as amended. 50 Table of Contents Issuer Purchases of Equity Securities None.
Stock Performance Graph (1) The following graph shows a comparison from December 31, 2019 through December 31, 2024 of cumulative total return on assumed investments of $100.00 in cash in each of our Class A common stock, the NASDAQ Composite Index and the NASDAQ Biotechnology Index.
Stock Performance Graph (1) The following graph shows a comparison from December 31, 2020 through December 31, 2025 of cumulative total return on assumed investments of $100.00 in cash in each of our Class A common stock, the NASDAQ Composite Index and the NASDAQ Biotechnology Index.
In addition, the terms of our 2021 Credit Agreement, as amended by the 2024 Amendment, as well as the terms of our Convertible Preferred Stock, restrict our ability to pay cash dividends on our capital stock without the bank’s consent.
In addition, the terms of our 2021 Credit Agreement, as amended, as well as the terms of our Convertible Preferred Stock, restrict our ability to pay cash dividends on our capital stock.
As of February 24, 2025, a total of 126,828,092 shares of our Class A common stock were outstanding and we had 585 holders of record of our Class A common stock. This number does not include stockholders for whom shares are held in "nominee" or "street" name.
As of February 23, 2026, a total of 128,640,671 shares of our Class A common stock were outstanding and we had 512 holders of record of our Class A common stock. This number does not include stockholders for whom shares are held in "nominee" or "street" name.
Removed
As previously disclosed, in connection with our November 2024 offering of Convertible Preferred Stock, approximately $25.5 million of the net proceeds were used to fund the repurchase of an aggregate of 7,921,731 shares of Class A common stock from certain existing stockholders of the Company, including certain of its directors and their affiliates that are members of the Significant Stockholders Group.
Removed
Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs October 1, 2024 — $-- — — November 1, 2024 7,921,731 1 $ 3.2163 2 — — December 1, 2024 — $-- — — Total 7,921,731 N/A — — 1. 7,421,731 shares of Class A common stock were repurchased from certain existing stockholders of the Company, including certain of its directors and their affiliates, at a price per share equal to $3.1597, which represents the 10-day trailing volume weighted average price of the Common Stock as of market close on November 11, 2024, pursuant to stock repurchase agreements entered into on November 12, 2024 between the Company and the stockholders. 500,000 shares of Class A common stock were repurchased from an affiliate of a director of the Company at a price per share equal to $4.057, which represents the 10-day trailing volume weighted average price of the Common Stock as of market close on November 26, 2024, pursuant to a stock repurchase agreement entered into on November 27, 2024 between the Company and the stockholder. 2.

Item 7. Management's Discussion & Analysis

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

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Biggest changeResults of Operations The following table sets forth, for the periods indicated, our results of operations: 55 Table of Contents Year Ended December 31, 2024 2023 2022 Net revenue $ 482,043 $ 433,140 $ 450,893 Cost of goods sold 115,741 106,481 105,019 Gross profit 366,302 326,659 345,874 Operating expenses: Selling, general and administrative 294,513 269,754 283,808 Research and development 50,271 44,380 39,762 Impairment of property and construction 18,842 — — Write down of capitalized internal-use software costs 3,959 — — Total operating expenses 367,585 314,134 323,570 Income (loss) from operations (1,283 ) 12,525 22,304 Other expense, net: Interest expense, net (1,544 ) (2,190 ) (2,009 ) Other income (expense), net 20 57 (13 ) Total other expense, net (1,524 ) (2,133 ) (2,022 ) Net income (loss) before income taxes (2,807 ) 10,392 20,282 Income tax (expense) benefit 3,668 (5,447 ) (4,750 ) Net income and comprehensive income 861 4,945 15,532 EBITDA and Adjusted EBITDA The following table presents a reconciliation of GAAP net income to non-GAAP EBITDA and non-GAAP Adjusted EBITDA, for each of the periods presented: Year Ended December 31, 2024 2023 2022 (in thousands) Net income $ 861 $ 4,945 $ 15,532 Interest expense, net 1,544 2,190 2,009 Income tax expense (benefit) (3,668 ) 5,447 4,750 Depreciation and amortization 13,623 10,448 5,845 Amortization of intangible assets 3,403 4,918 4,883 EBITDA 15,763 27,948 33,019 Stock-based compensation expense 10,578 8,996 6,552 Restructuring charge (1) — 3,796 2,268 Write-off of certain assets (2) — — 4,200 Settlement fee (3) — — 2,600 Facility construction project pause (4) — — 632 Legal and consulting fees (5) — 1,182 — Sales retention (6) — 694 — Impairment of property and construction (7) 18,842 — — Write-down of capitalized software costs (8) 3,959 — — Disposal of construction in progress (9) 645 Adjusted EBITDA $ 49,787 $ 42,616 $ 49,271 (1) Amounts reflect employee retention and benefits as well as other exit costs associated with our restructuring activities.
Biggest changeResults of Operations The following table sets forth, for the periods indicated, our results of operations (amounts in thousands): Year Ended December 31, 2025 2024 2023 Revenue: Net product revenue $ 563,030 $ 482,043 $ 433,140 Grant income 1,139 — — Total revenue 564,169 482,043 433,140 Operating expenses: Cost of goods sold 137,522 115,741 106,481 Selling, general and administrative 326,236 294,513 269,754 Research and development 44,542 50,271 44,380 Write-down to fair value for asset held for sale 11,175 — — Impairment of property and construction — 18,842 — Write-down of capitalized internal-use software costs — 3,959 — Total operating expenses 519,475 483,326 420,615 Income (loss) from operations 44,694 (1,283 ) 12,525 Other income (expense), net: Interest income (expense), net 2,281 (1,544 ) (2,190 ) Other income (expense), net (5 ) 20 57 Total other income (expense), net 2,276 (1,524 ) (2,133 ) Net income (loss) before income taxes 46,970 (2,807 ) 10,392 Income tax benefit (expense) (9,938 ) 3,668 (5,447 ) Net income and comprehensive income 37,032 861 4,945 56 Table of Contents EBITDA and Adjusted EBITDA The following table presents a reconciliation of GAAP net income to Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA, for each of the periods presented: Year Ended December 31, 2025 2024 2023 (in thousands) Net income $ 37,032 $ 861 $ 4,945 Interest expense (income), net (2,281 ) 1,544 2,190 Income tax expense (benefit) 9,938 (3,668 ) 5,447 Depreciation and amortization 15,273 13,623 10,448 Amortization of intangible assets 3,323 3,403 4,918 EBITDA 63,285 15,763 27,948 Stock-based compensation expense 13,298 10,578 8,996 Write-down to fair value for asset held for sale (1) 11,175 — — Restructuring charge (2) 516 — 3,796 Legal and consulting fees (3) — — 1,182 Sales retention (4) — — 694 Impairment of property and construction (5) — 18,842 — Write-down of capitalized software costs (6) — 3,959 — Disposal of construction in progress (7) — 645 — FDA BLA fees for ReNu (8) 4,682 — — PFS regulation related charges (9) 3,723 — — Inventory write-downs (10) 1,458 — — Adjusted EBITDA $ 98,137 $ 49,787 $ 42,616 (1) Amount reflects the fair value adjustment of a purchased building classified as held for sale.
Several factors affect our reported revenue in any period, including product, payer and geographic sales mix, operational effectiveness, pricing realization, marketing and promotional efforts, the timing of orders and shipments, regulatory actions including healthcare reimbursement scenarios, competition and business acquisitions.
Several factors affect our reported product revenue in any period, including product, payer and geographic sales mix, operational effectiveness, pricing realization, marketing and promotional efforts, the timing of orders and shipments, regulatory actions including healthcare reimbursement scenarios, competition and business acquisitions.
In addition, we consider whether it is more likely than not that the tax position will be sustained on examination by taxing authorities based on the technical merits of the position. We believe that our net U.S. deferred tax assets did not require a valuation allowance as of December 31, 2024.
In addition, we consider whether it is more likely than not that a tax position will be sustained on examination by taxing authorities based on the technical merits of the position. We believe that our net U.S. deferred tax assets did not require a valuation allowance as of December 31, 2024.
In determining whether a valuation allowance for deferred tax assets is necessary, we analyze both positive and negative evidence related to the realization of deferred tax assets including projected future taxable income, recent financial results and estimates of future reversals of deferred tax assets and liabilities.
In determining whether a valuation allowance for deferred tax assets is necessary, we analyze both positive and negative evidence related to the realization of deferred tax assets including projected future taxable income, recent financial results and estimates of future reversals of deferred tax assets and liabilities.
See Note 8, Property and Equipment, Net to our audited consolidated financial statements included in this Annual Report on Form 10-K. (8) Amount reflects the write-down of costs previously capitalized as construction in progress in the development of internal-use software, that the Company determined have no future value.
See Note 8, Property and Equipment, Net to our audited consolidated financial statements included in this Annual Report on Form 10-K. (6) Amount reflects the write-down of costs previously capitalized as construction in progress in the development of internal-use software, that the Company determined have no future value.
Overview Organogenesis is a leading regenerative medicine and tissue innovations company focused on empowering healing through the development, manufacturing, and sale of products for the advanced wound care, and surgical and sports medicine markets. Our products have been shown through clinical and scientific studies to support and in some cases accelerate tissue healing and improve patient outcomes.
Overview Organogenesis is a leading regenerative medicine company focused on empowering healing through the development, manufacturing, and sale of products for the advanced wound care and surgical and sports medicine markets. Our products have been shown through clinical and scientific studies to support and in some cases accelerate tissue healing and improve patient outcomes.
The increase in Advanced Wound Care net revenue was primarily attributable to an increase in sales of certain products for new and existing customers. For the year ended December 31, 2024, net revenue from our Surgical & Sports Medicine products increased by $0.8 million, or 3%, as compared to the year ended December 31, 2023.
The increase in Advanced Wound Care net product revenue was primarily attributable to an increase in sales of certain products for new and existing customers. For the year ended December 31, 2024, net product revenue from our Surgical & Sports Medicine products increased by $0.8 million, or 3%, as compared to the year ended December 31, 2023.
Because of these limitations, we consider, and you should consider, Adjusted EBITDA together with other operating and financial performance measures presented in accordance with GAAP. A reconciliation of Adjusted EBITDA from net income (loss), the most directly comparable financial measure calculated in accordance with GAAP, has been included herein.
Because of these limitations, we consider, and you should consider, Adjusted EBITDA together with other operating and financial performance measures presented in accordance with GAAP. A reconciliation of Adjusted EBITDA from net income, the most directly comparable financial measure calculated in accordance with GAAP, has been included herein.
In November 2024, we and the Lenders amended the 2021 Credit Agreement to allow for the issuance of the Convertible Preferred Stock, and to require the repayment of the Term Loan Facility within one business day of such issuance, among other terms (the 2024 Amendment).
In November 2024, we and the Lenders amended the 2021 Credit Agreement to allow for the issuance of the Convertible Preferred Stock, and to require the repayment of the Term Loan Facility within one business day of such issuance, among other terms.
We define EBITDA as net income (loss) before depreciation and amortization, interest expense and income taxes. We define Adjusted EBITDA as EBITDA, further adjusted for the impact of certain items that we do not consider indicative of our core operating performance.
We define EBITDA as net income before depreciation and amortization, interest income (expense) and income taxes. We define Adjusted EBITDA as EBITDA, further adjusted for the impact of certain items that we do not consider indicative of our core operating performance.
There are a number of limitations related to the use of Adjusted EBITDA rather than net income (loss), which is the most directly comparable financial measure calculated and presented in accordance with GAAP.
There are a number of limitations related to the use of Adjusted EBITDA rather than net income, which is the most directly comparable financial measure calculated and presented in accordance with GAAP.
Indebtedness 2021 Credit Agreement In August 2021, we and our subsidiaries entered into a credit agreement with SVB and several other lenders (the Lenders), which we refer to as the 2021 Credit Agreement.
Indebtedness 2021 Credit Agreement In August 2021, we and our subsidiaries entered into a credit agreement with SVB and several other lenders (the “Lenders”), which we refer to as the 2021 Credit Agreement.
We record revenue net of a reserve for returns, discounts and GPO rebates, which represent a direct reduction to the revenue we recognize.
We record product revenue net of a reserve for returns, discounts and GPO rebates, which represent a direct reduction to the product revenue we recognize.
Our Sports Medicine products include NuShield for surgical applications in targeted soft tissue repairs; and Affinity, Novachor, PuraPly MZ, PuraPly AM, and PuraPly SX for management of open wounds in the surgical setting. We currently sell these products through independent agencies and our direct sales force.
Our Sports Medicine products include NuShield and Cygnus Matrix for surgical applications in targeted soft tissue repairs; and Affinity, Novachor, PuraPly MZ, PuraPly AM, and PuraPly SX for management of open wounds in the surgical setting. We currently sell these products through independent agencies and our direct sales force.
This consisted primarily of proceeds from issuance of our Series A Convertible Preferred Stock, net of issuance costs of $120.7 million, and net payments of $0.1 million in connection with stock awards activities; partially offset by repayment of our Term Loan Facility of $66.6 million, payments for repurchases of our Class A common stock of $25.5 million, and payments on our finance lease obligations of $1.1 million.
This consisted primarily of proceeds from issuance of our Series A Convertible Preferred Stock, net of issuance costs of $120.7 million, and net payments of 61 Table of Contents $0.1 million in connection with stock awards activities; partially offset by repayment of our Term Loan Facility of $66.6 million, payments for repurchases of our Class A common stock of $25.5 million, and payments on our finance lease obligations of $1.1 million.
Some of these limitations are: • Although depreciation and amortization are non-cash charges, the assets that we currently depreciate and amortize will likely have to be replaced in the future, and Adjusted EBITDA does not reflect the cash required to fund such replacements; • Adjusted EBITDA does not reflect interest expense or the cash requirements necessary to service payments on our debt; 53 Table of Contents • Adjusted EBITDA excludes stock-based compensation expense which has been, and will continue to be for the foreseeable future, a significant recurring non-cash expense for our business and an important part of our compensation strategy; • Adjusted EBITDA does not reflect the effect of earnings or charges resulting from matters that our management does not consider to be indicative of our ongoing operations.
Some of these limitations are: • Although depreciation and amortization are non-cash charges, the assets that we currently depreciate and amortize will likely have to be replaced in the future, and Adjusted EBITDA does not reflect the cash required to fund such replacements; • Adjusted EBITDA does not reflect income (expense) or the cash requirements necessary to service payments on our debt; • Adjusted EBITDA excludes stock-based compensation expense which has been, and will continue to be for the foreseeable future, a significant recurring non-cash expense for our business and an important part of our compensation strategy; • Adjusted EBITDA does not reflect the effect of earnings or charges resulting from matters that our management does not consider to be indicative of our ongoing operations.
Unless the context otherwise requires, for purposes of this section, the terms we," "us," "our," "the Company," "Organogenesis" and "ORGO" will refer to Organogenesis Holdings Inc. and its subsidiaries as they currently exist.
Unless the context otherwise requires, for purposes of this section, the terms “we," "us," "our," "the Company," "Organogenesis" and "ORGO" will refer to Organogenesis Holdings Inc. and its subsidiaries as they currently exist.
Impairment and Write Down Expenses During the year ended December 31, 2024, we recorded a $4.0 million write down of costs related to internal-use software and an $18.8 million impairment of a purchased building and associated unfinished construction work. There were no such costs recorded in the year ended December 31, 2023.
For the year ended December 31, 2024, we recorded a $4.0 million write-down of costs related to internal-use software and an $18.8 million impairment of a purchased building and associated unfinished construction work. There were no such costs recorded in the year ended December 31, 2023.
In addition, we are also required to make representations and warranties and comply with certain non-financial covenants that are 62 Table of Contents customary in loan agreements of this type, including restrictions on the payment of dividends, repurchase of stock, incurrence of indebtedness, dispositions and acquisitions.
In addition, we are also required to make representations and warranties and comply with certain non-financial covenants that are customary in loan agreements of this type, including restrictions on the payment of dividends, repurchase of stock, incurrence of indebtedness, dispositions and acquisitions.
The preparation of our consolidated financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, and the disclosure at the date of the consolidated financial statements, as well as revenue and expenses recorded during the reporting periods.
The preparation of our consolidated financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, and the disclosure at the date of the consolidated financial statements, as well as revenue and expenses recorded during the reporting 62 Table of Contents periods.
We prepaid the Term Loan Facility in November 2024, and amounts borrowed under the Term Loan Facility may not be re-borrowed. We must pay in arrears, on the first day of each quarter prior to August 6, 2026 (the Revolving Termination Date) and on the Revolving Termination Date, a fee for our non-use of available funds (the Commitment Fee).
We prepaid the Term Loan Facility in November 2024, and amounts borrowed under the Term Loan Facility may not be re-borrowed. We must pay in arrears, on the first day of each quarter prior to August 6, 2026 (the “Revolving Termination Date”) and on the Revolving Termination Date, a fee for our non-use of available funds (the “Commitment Fee”).
Liquidity and Capital Resources Since our inception, we have funded our operations and capital expenditures through cash flows from product sales, loans from affiliates and entities controlled by certain of our affiliates, third-party debt and proceeds from the sale of our capital stock.
Liquidity and Capital Resources Since our inception, we have funded our operations and capital expenditures through cash flows from product sales, loans from affiliates and entities controlled by certain of our affiliates, third-party debt and proceeds from the sale of our capital stock and Series A Convertible Preferred Stock.
The 2021 Credit Agreement, as amended, provides for a term loan facility not to exceed $75.0 million (the Term Loan Facility) and a revolving credit facility not to exceed $125.0 million (the Revolving Facility).
The 2021 Credit Agreement, as amended, provides for a term loan facility not to exceed $75.0 million (the “Term Loan Facility”) and a revolving credit facility not to exceed $125.0 million (the “Revolving Facility”).
As of December 31, 2024, we were in compliance with the covenants under the 2021 Credit Agreement, as amended by the 2024 Amendment. We did not have outstanding borrowings under our Term Loan Facility or our Revolving Facility, with $125 million available for future revolving borrowings. Critical Accounting Estimates Our consolidated financial statements have been prepared in accordance with GAAP.
As of December 31, 2025, we were in compliance with the covenants under the 2021 Credit Agreement, as amended. As of December 31, 2025 and 2024, we did not have outstanding borrowings under our Term Loan Facility or our Revolving Facility. Critical Accounting Estimates Our consolidated financial statements have been prepared in accordance with GAAP.
We expect that our cash on hand and other components of working capital as of December 31, 2024, availability under the 2021 Credit Agreement as amended by the 2024 Amendment, plus net cash flows from product sales, will be sufficient to fund our operating expenses, capital expenditure requirements and debt service payments for at least 12 months beyond the filing date of this Annual Report on Form 10-K.
We expect that our cash on hand and other components of working capital as of December 31, 2025, availability under the Revolving Facility through August 6, 2026, plus net cash flows from product sales will be sufficient to fund our operating expenses, capital expenditure requirements and debt service payments for at least 12 months beyond the filing date of this Annual Report on Form 10-K.
Under the 2021 Credit Agreement as amended by the 2024 Amendment, we are required to comply with certain financial covenants including the Consolidated Fixed Charge Coverage Ratio and Consolidated Total Net Leverage Ratio, tested quarterly.
Under the 2021 Credit Agreement, as amended, we are required to comply with certain financial covenants including the Consolidated Total Net Leverage Ratio, Consolidated Interest Coverage Ratio and Consolidated Capital Expenditures, tested quarterly.
Other expense, net Other expense, net comprises primarily interest expense on our indebtedness that was outstanding until November 2024, including amortization of debt discount and debt issuance costs, net of interest income recognized. Income taxes We account for income taxes using an asset and liability approach.
Other income (expense), net Other income (expense), net comprises primarily of interest income generated from our interest-bearing sweep accounts offset by interest expense on our indebtedness that was outstanding until November 2024, including amortization of debt discount and debt issuance costs. 55 Table of Contents Income taxes We account for income taxes using an asset and liability approach.
Our Advanced Wound Care products include Apligraf for the treatment of VLUs and DFUs; Dermagraft for the treatment of DFUs (manufacturing and distribution currently suspended pending transition to a new manufacturing facility or engagement of a third-party manufacturer); PuraPly AM and PuraPly XT as antimicrobial barriers and native, cross-linked ECM scaffold for a broad variety of wound types; CYGNUS Dual as a dual-layered amniotic membrane that promotes an optimal environment for wound healing; and VIA Matrix, Affinity, Novachor, and NuShield placental allografts to address a variety of wound sizes and types as a protective barrier and extracellular matrix scaffold.
Our Advanced Wound Care products include Apligraf for the treatment of VLUs and DFUs; Dermagraft for the treatment of DFUs (manufacturing and distribution currently suspended pending transition to our new manufacturing facility in Smithfield, RI); PuraPly AM and PuraPly XT as antimicrobial barriers and native, cross-linked extracellular matrix (“ECM”) scaffold for a broad variety of wound types; CYGNUS Dual as a dual-layered amniotic membrane that promotes an optimal environment for wound healing; CYGNUS Matrix as a dehydrated placental allograft that promotes an optimal environment for wound healing; VIA Matrix, Affinity, Novachor, and NuShield placental allografts to address a variety of wound sizes and types as a protective barrier and ECM scaffold, and SimpliMax as a dehydrated amnion allograft that provides a protective barrier and supports an optimal environment for inherent healing of a wide range of acute and chronic wounds.
Our primary uses of cash are working capital requirements and capital expenditure. Additionally, from time to time, we may use capital for acquisitions and other investing and financing activities, such as our recent repurchase of our Class A common stock. Working capital is used principally for our personnel as well as manufacturing costs related to the production of our products.
Our primary uses of cash are working capital requirements, capital expenditures and debt service payments. Additionally, from time to time, we may use capital for acquisitions and other investing and financing activities. Working capital is used principally for our personnel as well as manufacturing costs related to the production of our products.
Our capital expenditures consist primarily of building improvements, manufacturing equipment, and computer hardware and software. 60 Table of Contents To the extent additional funds are necessary to meet our long-term liquidity needs as we continue to execute on our business strategy, we anticipate that they will be obtained through additional equity or debt financings, other strategic transactions or a combination of these potential sources of funds.
To the extent additional funds are necessary to meet our long-term liquidity needs as we continue to execute on our business strategy, we anticipate that they will be obtained through additional equity or debt financings, other strategic transactions or a combination of these potential sources of funds.
Components of Our Consolidated Results of Operations In assessing the performance of our business, we consider a variety of performance and financial measures. We believe the items discussed below provide insight into the factors that affect these key measures. Revenue We derive our net revenue from our portfolio of Advanced Wound Care and Surgical & Sports Medicine products.
Components of Our Consolidated Results of Operations In assessing the performance of our business, we consider a variety of performance and financial measures. We believe the items discussed below provide insight into the factors that affect these key measures.
During the year ended December 31, 2023, we used $24.4 million of cash in investing activities solely consisting of capital expenditures. During the year ended December 31, 2022, we used $33.9 million of cash in investing activities solely consisting of capital expenditures. Financing Activities During the year ended December 31, 2024, net cash provided by financing activities was $27.6 million.
During the year ended December 31, 2023, we used $24.4 million of cash in investing activities solely consisting of capital expenditures. Financing Activities During the year ended December 31, 2025, net cash used in financing activities was $17.4 million.
We recognize revenue from sales of our Advanced Wound Care and Surgical & Sports Medicine products when the customer obtains control of our product, which occurs at a point in time and may be upon procedure date, shipment, or delivery, based on the contractual terms of a contract.
In addition to our owned products, in the ordinary course of business, we obtain the rights to license and distribute additional products, which contribute to our net product revenue. 54 Table of Contents We recognize product revenue from sales of our Advanced Wound Care and Surgical & Sports Medicine products when the customer obtains control of our product, which occurs at a point in time and may be upon procedure date, shipment, or delivery, based on the contractual terms.
During the year ended December 31, 2022, net cash provided by operating activities was $24.9 million, resulting from our net income of $15.5 million, non-cash charges of $43.4 million, partially offset by net cash used in connection with changes in our operating assets and liabilities of $34.1 million.
During the year ended December 31, 2024, net cash provided by operating activities was $14.2 million, resulting from our net income of $0.9 million, non-cash charges of $62.2 million, partially offset by net cash used in connection with changes in our operating assets and liabilities of $48.9 million.
Advances made under the 2021 Credit Agreement were either SOFR Loans or ABR Loans, at our option. For SOFR Loans, the interest rate was a per annum interest rate equal to the Adjusted Term SOFR plus an Applicable Margin between 2.00% to 3.25% based on the Total Net Leverage Ratio.
For SOFR Loans, the interest rate was a per annum interest rate equal to the Adjusted Term SOFR plus an Applicable Margin between 2.00% to 3.25% based on the Total Net Leverage Ratio.
Research and Development Expenses Years Ended December 31, Change 2024 2023 2022 2024 to 2023 2023 to 2022 (in thousands, except for percentages) Research and development $ 50,271 $ 44,380 $ 39,762 $ 5,891 13 % $ 4,618 12 % For the year ended December 31, 2024, research and development expenses increased by $5.9 million, or 13%, as compared to the year ended December 31, 2023.
Research and Development Expenses Years Ended December 31, Change 2025 2024 2023 2025 to 2024 2024 to 2023 (in thousands, except for percentages) Research and development $ 44,542 $ 50,271 $ 44,380 $ (5,729 ) -11 % $ 5,891 13 % For the year ended December 31, 2025, research and development expenses decreased by $5.7 million, or 11%, as compared to the year ended December 31, 2024.
The decrease in gross profit resulted primarily from a decrease in the pricing for certain of our products, as well as a shift in product mix. 58 Table of Contents Selling, General and Administrative Expenses Years Ended December 31, Change 2024 2023 2022 2024 to 2023 2023 to 2022 (in thousands, except for percentages) Selling, general and administrative $ 294,513 $ 269,754 $ 283,808 $ 24,759 9 % $ (14,054 ) -5 % For the year ended December 31, 2024, selling, general and administrative expenses increased by $24.8 million, or 9%, as compared to the year ended December 31, 2023.
The increase in gross profit resulted primarily from an increase in volume and a shift in product mix. 58 Table of Contents Selling, General and Administrative Expenses Years Ended December 31, Change 2025 2024 2023 2025 to 2024 2024 to 2023 (in thousands, except for percentages) Selling, general and administrative $ 326,236 $ 294,513 $ 269,754 $ 31,723 11 % $ 24,759 9 % For the year ended December 31, 2025, selling, general and administrative expenses increased by $31.7 million, or 11%, as compared to the year ended December 31, 2024.
(6) Amount reflects the compensation expenses related to retention for those sales employees impacted by the published and subsequently withdrawn 2023 LCDs. See Local Coverage Determinations above. (7) Amount reflects the impairment of a purchased building and associated unfinished construction work.
(3) Amount reflects the legal and consulting fees incurred related to the published and subsequently withdrawn 2023 LCDs. (4) Amount reflects the compensation expenses related to retention for those sales employees impacted by the published and subsequently withdrawn 2023 LCDs. (5) Amount reflects the impairment of a purchased building and associated unfinished construction work.
Cost of Goods Sold and Gross Profit Years Ended December 31, Change 2024 2023 2022 2024 to 2023 2023 to 2022 (in thousands, except for percentages) Cost of goods sold $ 115,741 $ 106,481 $ 105,019 $ 9,260 9 % $ 1,462 1 % Gross profit $ 366,302 $ 326,659 $ 345,874 $ 39,643 12 % $ (19,215 ) (6 %) For the year ended December 31, 2024, cost of goods sold increased by $9.3 million, or 9%, as compared to the year ended December 31, 2023.
Cost of Goods Sold and Gross Profit Years Ended December 31, Change 2025 2024 2023 2025 to 2024 2024 to 2023 (in thousands, except for percentages) Cost of goods sold $ 137,522 $ 115,741 $ 106,481 $ 21,781 19 % $ 9,260 9 % Gross profit $ 425,508 $ 366,302 $ 326,659 $ 59,206 16 % $ 39,643 12 % For the year ended December 31, 2025, cost of goods sold increased by $21.8 million, or 19%, as compared to the year ended December 31, 2024.
For the year ended December 31, 2023, gross profit decreased by $19.2 million, or 6%, as compared to the year ended December 31, 2022.
For the year ended December 31, 2024, gross profit increased by $39.6 million, or 12%, as compared to the year ended December 31, 2023.
Dermagraft As previously disclosed, manufacturing of Dermagraft was suspended in the fourth quarter of 2021 and sales of Dermagraft were suspended in the second quarter of 2022. We currently plan to transition our Dermagraft manufacturing to our newly-leased biomanufacturing facility in Smithfield, Rhode Island, which we expect will begin in 2027, and will result in substantial long-term cost savings.
We currently plan to transition our Dermagraft manufacturing to our newly-leased biomanufacturing facility in Smithfield, Rhode Island, which we expect will begin in 2027, and will result in significant capacity and substantial long-term cost savings. We plan to resume sales of Dermagraft by the end of 2027.
Our U.S. provision for income taxes relates to current tax expense associated with taxable income that could not be offset by net operating losses or research and development credits.
Our U.S. provision for income tax expense for the years ended December 31, 2025 and 2023 relates to income tax associated with taxable income that could not be offset by net operating losses or research and development credits. Our U.S. provision for income tax benefit for the year ended December 31, 2024 relates to tax benefit associated with pre-tax loss.
We primarily sell our Advanced Wound Care products through direct sales representatives who manage and maintain the sales relationships with hospitals, wound care centers, government facilities, ASCs, and physician offices. We primarily sell our Surgical & Sports Medicine products through third-party agencies. As of December 31, 2024, we had 256 direct sales representatives and approximately 160 independent agencies.
Net Product Revenue We derive our net product revenue from our portfolio of Advanced Wound Care and Surgical & Sports Medicine products. We primarily sell our Advanced Wound Care products through direct sales representatives who manage and maintain the sales relationships with hospitals, wound care centers, government facilities, ASCs, and physician offices.
We have a comprehensive portfolio of regenerative medicine products capable of supporting patients from early in the wound healing process through wound closure regardless of wound type.
In the Advanced Wound Care market, we focus on the development and commercialization of advanced wound care products for the treatment of chronic and acute wounds in various treatment settings. We have a comprehensive portfolio of regenerative medicine products capable of supporting patients from early in the wound healing process through wound closure regardless of wound type.
We offer a comprehensive portfolio of products in the markets we serve that address patient needs across the continuum of care. We have and intend to continue to generate data from clinical trials, real-world outcomes and health economics research that validate the clinical efficacy and value proposition offered by our products.
We have and intend to continue to generate data from clinical trials, real-world outcomes and health economics research that validate the clinical efficacy and value proposition offered by our products. Several of our existing and pipeline products in our portfolio have PMA, or 510(k) clearance from the FDA.
See Note 11, Restructuring , to our audited consolidated financial statements included in this Annual Report on Form 10-K. (2) Amount reflects the disposal of certain equipment related to construction in progress at one of our Canton, Massachusetts facilities.
See Note 8, Property and Equipment, Net to our audited consolidated financial statements included in this Annual Report on Form 10-K. (7) Amount reflects construction in progress terminated and disposed of at one of our Canton, Massachusetts facilities, resulting from the Company’s decision to move certain operations to the Smithfield Facility.
The increase in Surgical & Sports Medicine net revenue was primarily due to growth in new customers and product mix. For the year ended December 31, 2023, net revenue from our Advanced Wound Care products decreased by $16.7 million, or 4%, as compared to the year ended December 31, 2022.
The increase in Surgical & Sports Medicine net product revenue was primarily due to an increase in certain customer buying patterns. For the year ended December 31, 2024, net product revenue from our Advanced Wound Care products increased by $48.1 million, or 12%, as compared to the year ended December 31, 2023.
We also have $125.0 million available for future revolving borrowings under our Revolving Facility (see Note 12, Long-Term Debt Obligations , to our audited consolidated financial statements included in this Annual Report on Form 10-K).
As of December 31, 2025, we had working capital of $259.6 million, which included $93.7 million in cash and cash equivalents. We have $75.0 million available for future revolving borrowings under our Revolving Facility through August 6, 2026 (see Note 12, Long-Term Debt Obligations , to our audited consolidated financial statements included in this Annual Report on Form 10-K).
For the year ended December 31, 2023, income tax expense of $5.4 million included $3.4 million of current income taxes and $2.0 million of deferred income taxes.
For the year ended December 31, 2024, income tax benefit of $3.7 million included $7.1 million of current income taxes and ($10.7) million of deferred income taxes.
We offer our differentiated products and in-house customer support to a wide range of health care customers including hospitals, wound care centers, government facilities, ASCs and physician offices. Our mission is to provide an integrated portfolio of healing and tissue solutions that improve lives while lowering the overall cost of health care.
We offer our differentiated products and in-house customer support to a wide range of health care customers including hospitals, wound care centers, government facilities, ASCs and physician offices. Our mission is advancing healing and recovery beyond expectations. We offer a comprehensive portfolio of products in the markets we serve that address patient needs across the continuum of care.
We generally expect our selling, general and administrative expenses to continue to increase due to increased investments in market development and the geographic expansion of our sales forces as we drive for continued revenue growth. 54 Table of Contents Research and development expenses Research and development expenses include expenses for clinical trials, personnel costs for our research and development personnel, expenses related to improvements in our manufacturing processes, enhancements to our currently available products, and additional investments in our product and platform development pipeline.
We generally expect our selling, general and administrative expenses to continue to increase due to increased investments in market development and the geographic expansion of our sales forces as we drive for continued revenue growth.
For the year ended December 31, 2023, cost of goods sold increased by $1.5 million, or 1%, as compared to the year ended December 31, 2022. The increase in cost of goods sold was primarily due to product mix.
For the year ended December 31, 2024, cost of goods sold increased by $9.3 million, or 9%, as compared to the year ended December 31, 2023.
See Note 8, Property and Equipment, Net to our audited consolidated financial statements included in this Annual Report on Form 10-K.
See Note 8, Property and Equipment, Net. (2) Amounts reflect employee retention and benefits as well as other exit costs associated with our restructuring activities. See Note 11, Restructuring , to our audited consolidated financial statements included in this Annual Report on Form 10-K.
Cash Flows The following table summarizes our cash flows for each of the periods presented: Year Ended December 31, 2024 2023 2022 (in thousands) Net cash provided by operating activities $ 14,208 $ 30,917 $ 24,859 Net cash used in investing activities (10,032 ) (24,364 ) (33,898 ) Net cash provided by (used in) financing activities 27,637 (5,505 ) (2,199 ) Net increase (decrease) in cash, cash equivalents, and restricted cash $ 31,813 $ 1,048 $ (11,238 ) Operating Activities During the year ended December 31, 2024, net cash provided by operating activities was $14.2 million, resulting from our net income of $0.9 million, non-cash charges of $62.2 million, partially offset by net cash used in connection with changes in our operating assets and liabilities of $48.9 million.
The following table presents our cash and outstanding debt as of the dates indicated : December 31, 2025 2024 (in thousands) Cash and cash equivalents $ 93,679 $ 135,571 Finance lease obligations $ 22,223 $ 1,888 60 Table of Contents Cash Flows The following table summarizes our cash flows for each of the periods presented: Year Ended December 31, 2025 2024 2023 (in thousands) Net cash provided by (used in) operating activities $ (10,309 ) $ 14,208 $ 30,917 Net cash used in investing activities (14,151 ) (10,032 ) (24,364 ) Net cash provided by (used in) financing activities (17,360 ) 27,637 (5,505 ) Net change in cash, cash equivalents, and restricted cash $ (41,820 ) $ 31,813 $ 1,048 Operating Activities During the year ended December 31, 2025, net cash used in operating activities was $10.3 million, resulting from our net income of $37.0 million, non-cash charges of $85.0 million, offset by net cash used in connection with changes in our operating assets and liabilities of $132.4 million.
These increases in expenses were partially offset by a $1.0 million decrease in commissions, restructuring and other headcount-related expense; and a $1.5 million decrease in amortization expense. For the year ended December 31, 2023, selling, general and administrative expenses decreased by $14.1 million, or 5%, as compared to the year ended December 31, 2022.
These increases in expenses were partially offset by a $9.6 million decrease in royalty expenses. For the year ended December 31, 2024, selling, general and administrative expenses increased by $24.8 million, or 9%, as compared to the year ended December 31, 2023.
Income Tax (Expense) Benefit Years Ended December 31, Change 2024 2023 2022 2024 to 2023 2023 to 2022 (in thousands, except for percentages) Income tax (expense) benefit $ 3,668 $ (5,447 ) $ (4,750 ) $ 9,115 (167 %) $ (697 ) 15 % For the year ended December 31, 2024, income tax benefit of $3.7 million included $7.1 million of current income taxes and ($10.7) million of deferred income taxes.
The decrease resulted primarily from a decrease in the balance of the Term Loan Facility, leading to lower interest expense in 202 4. 59 Table of Contents Income Tax Benefit (Expense) Years Ended December 31, Change 2025 2024 2023 2025 to 2024 2024 to 2023 (in thousands, except for percentages) Income tax benefit (expense) $ (9,938 ) $ 3,668 $ (5,447 ) $ (13,606 ) (371 %) $ 9,115 (167 %) For the year ended December 31, 2025, income tax expense of $9.9 million included $0.4 million of current income taxes and $9.5 million of deferred income taxes.
Our working capital requirements vary from period to period depending on manufacturing volumes, the timing of shipments and the payment cycles of our customers and payers.
Our working capital requirements vary from period to period depending on manufacturing volumes, the timing of shipments and the payment cycles of our customers and payers. Our capital expenditures consist primarily of building improvements (including costs related to the build-out of our Smithfield, Rhode Island facility), manufacturing equipment, and computer hardware and software.
If these estimates or their related assumptions change in the future, we may be required to record impairment charges against these assets in the reporting period in which the impairment is identified. 63 Table of Contents Off-Balance Sheet Arrangements We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.
If these estimates or their related assumptions change in the future, we may be required to record impairment charges against these assets in the reporting period in which the impairment is identified.
(9) Amount reflects construction in progress terminated and disposed of at one of our Canton, Massachusetts facilities, resulting from the Company’s decision to move certain operations to the Smithfield Facility. 57 Table of Contents Comparison of the Years Ended December 31, 2024, 2023, and 2022 Revenue Years Ended December 31, Change 2024 2023 2022 2024 to 2023 2023 to 2022 (in thousands, except for percentages) Advanced Wound Care $ 453,639 $ 405,514 $ 422,231 $ 48,125 12 % $ (16,717 ) (4 %) Surgical & Sports Medicine 28,404 27,626 28,662 778 3 % (1,036 ) (4 %) Net revenue $ 482,043 $ 433,140 $ 450,893 $ 48,903 11 % $ (17,753 ) (4 %) For the year ended December 31, 2024, net revenue from our Advanced Wound Care products increased by $48.1 million, or 12%, as compared to the year ended December 31, 2023.
(10) Amount reflects non-recurring inventory write-down adjustments for excess and obsolete inventory resulting from a one-time loss of key distributor in a certain international location. 57 Table of Contents Comparison of the Years Ended December 31, 2025, 2024, and 2023 Product Revenue Years Ended December 31, Change 2025 2024 2023 2025 to 2024 2024 to 2023 (in thousands, except for percentages) Advanced Wound Care $ 531,242 $ 453,639 $ 405,514 $ 77,603 17 % $ 48,125 12 % Surgical & Sports Medicine 31,788 28,404 27,626 3,384 12 % 778 3 % Net product revenue $ 563,030 $ 482,043 $ 433,140 $ 80,987 17 % $ 48,903 11 % For the year ended December 31, 2025, net product revenue from our Advanced Wound Care products increased by $77.6 million, or 17%, as compared to the year ended December 31, 2024.
Several of our existing and pipeline products in our portfolio have PMA, or 510(k) clearance from the FDA. Given the extensive time and cost required to conduct clinical trials and receive FDA approvals, we believe that our data and regulatory approvals provide us with a strong competitive advantage.
Given the extensive time and cost required to conduct clinical trials and receive FDA approvals, we believe that our data and regulatory approvals provide us with a strong competitive advantage. Our product development expertise and multiple technology platforms provide a robust product pipeline, which we believe will drive future growth.
Gross profit is calculated as net revenue less cost of goods sold and generally increases as revenue increases. Our gross profit is affected by product and geographic sales mix, realized pricing of our products, the efficiency of our manufacturing operations and the costs of materials used and fees charged by third-party manufacturers to produce our products.
Our gross profit is affected by product and geographic sales mix, realized pricing of our products, the efficiency of our manufacturing operations and the costs of materials used and fees charged by third-party manufacturers to produce our products. Regulatory actions, including healthcare reimbursement scenarios, which may require costly expenditures or result in pricing pressures, may decrease our gross profit.
For the year ended December 31, 2024, gross profit increased by $39.6 million, or 12%, as compared to the year ended December 31, 2023. The increase in gross profit resulted primarily from an increase in volume and a shift in product mix.
The increase in cost of goods sold was primarily driven by product mix, and non-recurring inventory write-down adjustments for excess and obsolete inventory. For the year ended December 31, 2025, gross profit increased by $59.2 million, or 16%, as compared to the year ended December 31, 2024. The increase in gross profit resulted primarily from a shift in product mix.
Cost of goods sold and gross profit Cost of goods sold includes personnel costs, product testing costs, quality assurance costs, raw materials and product costs, manufacturing costs, and the costs associated with our manufacturing and warehouse facilities. The changes in our cost of goods sold correspond with the changes in sales units and are also affected by product mix.
The changes in our cost of goods sold correspond with the changes in sales units and are also affected by product mix. Gross profit is calculated as net product revenue less cost of goods sold and generally increases as product revenue increases.
These LCDs were finalized by the MACs on November 14, 2024, and were originally set to become effective on February 12, 2025. However, on January 24, 2025, the MACs announced a delay in the implementation of the LCDs until April 13, 2025.
However, on January 24, 2025, the MACs announced a delay in the implementation of the LCDs until April 13, 2025, and on April 11, 2025, the MACs announced another delay in the implementation of the LCDs until January 1, 2026.
For the year ended December 31, 2024, we reported $482.0 million in net revenue, $0.9 million in net income and $14.2 million of cash inflows from operating activities.
For the year ended December 31, 2025, we reported $563.0 million in net product revenue and $37.0 million in net income.
Net cash used in changes in our operating assets and liabilities included an increase in accounts receivable of $8.8 million, an increase in inventory and prepaid expenses of $9.8 million, a decrease in operating lease liability of $7.0 million and a decrease of accrued expenses of $11.9 million, all of which were partially offset by an increase in accounts payable and other liabilities of $3.3 million. 61 Table of Contents Investing Activities During the year ended December 31, 2024, we used $10.0 million of cash in investing activities solely consisting of capital expenditures.
Net cash used in changes in our operating assets and liabilities included an increase in accounts receivable of $115.8 million, an increase in inventories of $17.9 million, an increase in prepaid expenses and other current and other assets of $0.2 million, a decrease in net operating lease liabilities of $8.5 million, and a decrease in accounts payable of $0.5 million, partially offset by an increase in accrued expenses and other current liabilities of $10.4 million, and an increase in other liabilities of $0.2 million.
For the year ended December 31, 2023, net revenue from our Surgical & Sports Medicine products decreased by $1.0 million, or 4%, as compared to the year ended December 31, 2022. The decrease in Surgical & Sports Medicine net revenue was primarily due to a shift in distributor focus.
The increase in Advanced Wound Care net product revenue was primarily attributable to introduction of newly licensed products. For the year ended December 31, 2025, net product revenue from our Surgical & Sports Medicine products increased by $3.4 million, or 12%, as compared to the year ended December 31, 2024.
See Note 8, Property and Equipment, Net , to our audited consolidated financial statements included in this Annual Report on Form 10-K. (3) Amounts reflect the fee we paid to a GPO to settle previously disputed GPO fees.
See Note 8, Property and Equipment, Net to our audited consolidated financial statements included in this Annual Report on Form 10-K. Other Income (Expense), Net Other income (expense), net, changed by $3.8 million to $2.3 million in income for the year ended December 31, 2025, from $1.5 million in expense for the year ended December 31, 2024.
The decrease resulted primarily from a decrease in the balance of the Term Loan Facility, leading to lower interest expense in 2024. For the year ended December 31, 2023, total other expense, net, increased by $0.1 million, or 5%, as compared to the year ended December 31, 2022. The increase resulted primarily from increases in interest rates in 2023.
For the year ended December 31, 2024, total other income (expense), net, decreased by $0.6 million in expense, or 29%, as compared to the year ended December 31, 2023.
For the year ended December 31, 2023, research and development expenses increased by $4.6 million, or 12%, as compared to the year ended December 31, 2022.
The decrease in research and development expenses was primarily driven by changes in timing of expenses associated with clinical research and trials, primarily related to ReNu . For the year ended December 31, 2024, research and development expenses increased by $5.9 million, or 13%, as compared to the year ended December 31, 2023.
If there are significant delays in the build out of the Smithfield Facility or in approval of the facility for manufacturing of Dermagraft, it could have an adverse effect on our consolidated net revenue and results of operations. 52 Table of Contents Local Coverage Determinations On April 25, 2024, seven Medicare Part A/B MACs published new proposed LCDs for skin substitute grafts/CTPs for the treatment of DFUs and VLUs in the Medicare population.
If there are significant delays in the build-out of the Smithfield Facility or in FDA approval of the facility for manufacturing of Dermagraft, it could have an adverse effect on our consolidated net product revenue and results of operations. 53 Table of Contents Management’s Use of Non-GAAP Measures Our management uses financial measures that are not in accordance with GAAP (“Non-GAAP”), in addition to financial measures in accordance with GAAP, to evaluate our operating results.
During the year ended December 31, 2022, net cash used in financing activities was $2.2 million. This consisted primarily of the payment of term loan and finance lease obligations of $3.0 million and the payment of $0.6 million related to the CPN deferred acquisition consideration, partially offset by the net receipts of $1.4 million in connection with stock awards activities.
This consisted of payments for construction of landlord assets, net of tenant allowance of $14.5 million, principal payments on finance lease obligations of $1.2 million, and net cash payments associated with our stock awards activities of $1.7 million. During the year ended December 31, 2024, net cash provided by financing activities was $27.6 million.
The effective tax rate for 2023 was 52.4% and was computed based on the statutory rate of 21% adjusted primarily for state and local income taxes, nondeductible officer compensation and certain meals and other expenses that were fully deductible in prior years pursuant to temporary relief provisions enacted as part of the Taxpayer Certainty and Disaster Tax Relief Act for tax years 2021 and 2022, but that are now subject to a deduction limitation.
The effective tax rate for 2025 was 21.2% and was computed based on the statutory rate of 21% adjusted primarily for tax benefits related to the generation of federal and state research and development tax credits, offset in part by state and local income taxes, executive compensation and other nondeductible expenses.
Removed
Our product development expertise and multiple technology platforms provide a robust product pipeline, which we believe will drive future growth. In the Advanced Wound Care market, we focus on the development and commercialization of advanced wound care products for the treatment of chronic and acute wounds in various treatment settings.
Added
Local Coverage Determinations and CMS Proposed and Final Rules On April 25, 2024, seven MACs published new proposed LCDs for skin substitute grafts/CTPs for the treatment of DFUs and VLUs in the Medicare population. These LCDs were finalized by the MACs on November 14, 2024, and were originally set to become effective on February 12, 2025.
Removed
Under the new LCDs finalized in November 2024, should they take effect as scheduled, eighteen products would remain covered, including our Apligraf and Dermagraft products for DFU and VLU, and our Affinity and NuShield products for DFU; however, more than 200 products would be classified as “non-covered,” including our PuraPly, PuraPly AM, PuraPly XT, Novachor, TransCyte, Dual and Matrix products for DFU and VLU.
Added
On December 15, 2025, CMS released a fact sheet stating that the MACs will issue updated LCDs that were to become effective January 1, 2026. The fact sheet included a new categorization of products as covered, non-covered, or those subject to a 12-month status quo period.
Removed
The LCDs as finalized apply only to DFU and VLU indications for skin substitute products; other indications would remain subject to case-by-case review of medical necessity by the MACs if the LCDs take effect. It is uncertain if there will be further delays in implementing the new LCDs and/or if the new LCDs will be revised or rescinded going forward.
Added
However, on December 24, 2025, CMS announced that the LCDs had been withdrawn by the MACs 52 Table of Contents and the most recent draft LCDs were removed from the Medicare Coverage Database. Any future changes or other developments related to these or other LCDs or coverage decisions could negatively affect utilization of our products, our business, and our revenue.
Removed
If implemented, the LCDs could materially impact utilization of these products, our business, and our revenue. Any future changes or other developments related to these or other LCDs also could affect utilization of our products, our business, and our revenue. License And Manufacturing Agreement We have a trademark license and manufacturing agreement with Vivex for Dual, Matrix, and VIA.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeITEM 7A. QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK We are exposed to various market risks, including variability in currency exchange rates. We have established policies, procedures and internal processes governing our management of market risk. Foreign Currency and Market Risk The majority of our employees and our major operations are currently located in the United States.
Biggest changeWe have established policies, procedures and internal processes governing our management of market risk. 63 Table of Contents Foreign Currency and Market Risk The majority of our employees and our major operations are currently located in the United States. The functional currency of our foreign subsidiary in Switzerland is the United States dollar.
The functional currency of our foreign subsidiary in Switzerland is the United States dollar. We have, in the normal course of business, engaged in contracts with contractors or other vendors in a currency other than the United States dollar.
We have, in the normal course of business, engaged in contracts with contractors or other vendors in a currency other than the United States dollar.
Added
ITEM 7A. QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK We are exposed to various market risks, including variability in currency exchange rates.

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