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What changed in MIMEDX GROUP, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of MIMEDX GROUP, INC.'s 2023 and 2024 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 2024 report.

+316 added−335 removedSource: 10-K (2025-02-26) vs 10-K (2024-02-28)

Top changes in MIMEDX GROUP, INC.'s 2024 10-K

316 paragraphs added · 335 removed · 218 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

87 edited+38 added−52 removed83 unchanged
Biggest changeOur primary platform technologies include tissue allografts derived from human placental membrane (EPIFIX®, AMNIOFIX®, EPIEFFECT® and AMNIOEFFECT®), tissue allografts derived from human umbilical cord (EPICORD® and AMNIOCORD®), and a particulate extracellular matrix derived from human placental disc (AXIOFILL®). 7 GlobalData Tissue Engineered-Skin Sub Data Model Wound Management Year 2020 – retrieved Sept 2021 8 GlobalData Tissue Engineered-Skin Sub Data Model Wound Management Year 2020 – retrieved Sept 2021 9 EPIFIX, EPICORD and EPIEFFECT products are marketed for external use, such as in Advanced Wound Care applications, while our AMNIOFIX, AMNIOCORD and AMNIOEFFECT products are positioned for use in Surgical applications, including lower extremity repair, plastic surgery, vascular surgery and multiple orthopedic repairs and reconstruction, and our AXIOFILL product is positioned for use in the replacement or supplementation of damaged or inadequate integumental tissue.
Biggest changeOur Wound products, such as EPIFIX are marketed for external use, such as in Advanced Wound Care applications, while products such as AMNIOEFFECT are positioned for use in Surgical applications, including lower extremity repair, plastic surgery, vascular surgery and multiple orthopedic repairs and reconstruction, and our AXIOFILL product is positioned for use in the replacement or supplementation of damaged or inadequate integumental tissue.
Other Regulation Specific to Tissue Products National Organ Transplant Act Procurement of certain human organs and tissue for transplantation is subject to the restrictions of the National Organ Transplant Act (“ NOTA ”), which prohibits the transfer of certain human organs, including skin and related tissue, for valuable consideration, but permits the reimbursement of reasonable expenses associated with the removal, transportation, implantation, processing, preservation, quality control, and storage of human tissue and skin.
Other Regulation Specific to Tissue Products 15 National Organ Transplant Act Procurement of certain human organs and tissue for transplantation is subject to the restrictions of the National Organ Transplant Act (“ NOTA ”), which prohibits the transfer of certain human organs, including skin and related tissue, for valuable consideration, but permits the reimbursement of reasonable expenses associated with the removal, transportation, implantation, processing, preservation, quality control, and storage of human tissue and skin.
We conduct regular surveys of employees to monitor engagement levels and act on feedback received through this process. Our Diversity and Inclusion MIMEDX values the diversity of perspective, experience, and background within our Company. We have stated goals to promote diversity, inclusion, and equal opportunity regardless of race, gender, nationality, ethnic origin, religion, age, or sexual orientation.
We conduct regular surveys of employees to monitor engagement levels and act on feedback received through this process. Our Diversity and Inclusion 18 MIMEDX values the diversity of perspective, experience, and background within our Company. We have stated goals to promote diversity, inclusion, and equal opportunity regardless of race, gender, nationality, ethnic origin, religion, age, or sexual orientation.
Coverage and reimbursement 13 vary according to the patient’s health plan and related benefits. The majority of health plans currently provide coverage for EPIFIX and EPICORD for the treatment of DFUs, and many include treatment of VLUs. MIMEDX has secured payer coverage for over 300 million covered lives, allowing a significant number of patients access to our products.
Coverage and reimbursement vary according to the patient’s health plan and related benefits. The majority of health plans currently provide coverage for EPIFIX and EPICORD for the treatment of DFUs, and many include treatment of VLUs. MIMEDX has secured payer coverage for over 300 million covered lives, allowing a significant number of patients access to our products.
HCT/Ps that do not meet these criteria are subject to more extensive regulation as drugs, medical devices, biological products, or combination products. Products Regulated Solely as Section 361 HCT/Ps The FDA has specific regulations governing HCT/Ps, including some regulations specific to Section 361 HCT/Ps, which are set forth in 21 CFR Part 1271.
HCT/Ps that do not meet these criteria are subject to more extensive regulation as drugs, medical devices, biological products, or combination products. 14 Products Regulated Solely as Section 361 HCT/Ps The FDA has specific regulations governing HCT/Ps, including some regulations specific to Section 361 HCT/Ps, which are set forth in 21 CFR Part 1271.
There are numerous underlying causes of these wounds, with this patient population typically sharing some combination of comorbidities, including age, obesity, smoking history, diabetes and heart and vascular diseases. Due to the rising incidence of each of these factors, we expect the AWC market will continue to grow.
There are numerous underlying causes of these wounds, with this patient population typically sharing some combination of comorbidities, including age, obesity, smoking history, diabetes and underlying heart and vascular diseases. Due to the rising incidence of each of these factors, we expect the AWC market will continue to grow worldwide.
Each sheet allograft incorporates specialized visual markings that assist the health care practitioner with allograft placement and orientation. To ensure the safety of human tissue products, the FDA enforces CGTP manufacturing regulations. We believe that MIMEDX has developed robust systems to comply with, and is in compliance with, these regulations.
Each sheet allograft incorporates specialized visual markings that assist the health care practitioner with allograft placement and orientation. 10 To ensure the safety of human tissue products, the FDA enforces CGTP manufacturing regulations. We believe that MIMEDX has developed robust systems to comply with, and is in compliance with, these regulations.
These ESG objectives are informed by a combination of feedback from our stakeholders as well as leading ESG frameworks, such as the Sustainability Accounting Standards Board (SASB) Medical Equipment & Supplies standards, under the oversight of our Board of Directors. Environmental Matters Stewardship is a Core Value at MIMEDX.
These ESG objectives are informed by a combination of feedback from our stakeholders as well as leading ESG frameworks, such as the Sustainability Accounting Standards Board (SASB) Medical Equipment & Supplies standards, under the oversight of our Board of Directors. 17 Environmental Matters Stewardship is a core value at MIMEDX.
The FDA conducts periodic inspections of HCT/P manufacturing facilities, and contract manufacturers’ facilities, to assess compliance with CGTP. Such inspections can occur at any time, with or without written notice, at such frequency as determined 15 by the FDA in its sole discretion.
The FDA conducts periodic inspections of HCT/P manufacturing facilities, and contract manufacturers’ facilities, to assess compliance with CGTP. Such inspections can occur at any time, with or without written notice, at such frequency as determined by the FDA in its sole discretion.
After consent for donation is obtained, a blood sample from each donor is tested for communicable diseases, and the donor is screened for risk factors in order to determine eligibility in compliance with federal regulations and AATB standards.
After consent for donation is obtained, a blood sample from each donor is tested for communicable diseases, and the donor is screened for risk factors to determine eligibility in compliance with federal regulations and AATB standards.
For Medicare reimbursement purposes, our EPIFIX and EPICORD allografts are classified as “skin substitutes.” Current reimbursement methodology varies between the hospital outpatient department (“ HOPD ”) and ASC setting versus the physician office.
For Medicare reimbursement purposes, our EPIFIX, EPICORD and EPIEFFECT allografts are classified as “skin substitutes.” Current reimbursement methodology varies between the hospital outpatient department (“ HOPD ”) and ASC setting versus the physician office.
We also make these reports available free of charge on our website, www.mimedx.com, under the heading “ Investors–SEC Filings .” In addition, our Audit Committee, Compensation Committee, Ethics and Compliance Committee, and Nominating and Corporate Governance Committee Charters as well as our Code of Business Conduct and Ethics, are on our website under the heading “ Investors–Corporate Governance .” The reference to our website does not constitute incorporation by reference of any information contained on that site. 20
We also make these reports available free of charge on our website, www.mimedx.com, under the heading “ Investors–SEC Filings .” In addition, our Audit Committee, Compensation Committee, Ethics and Compliance Committee, and Nominating and Corporate Governance Committee Charters as well as our Code of Business Conduct and Ethics, are on our website under the heading “ Investors–Corporate Governance .” The reference to our website does not constitute incorporation by reference of any information contained on that site. 19
Under JMHLW guidelines, EPIFIX is classified as a Class IV Medical Device and “Specified Biological Product” and is approved for the treatment of refractory ulcers, such as DFUs and VLUs that do not respond to conventional therapy. As a condition of the final approval, MIMEDX will conduct post-market surveillance, consisting of a limited study of over 75 participants.
Under JMHLW guidelines, EPIFIX is classified as a Class IV Medical Device and “Specified Biological Product” and is approved for the treatment of refractory ulcers, such as DFUs and VLUs that do not respond to conventional therapy. As a condition of the final approval, MIMEDX is conducting post-market surveillance, consisting of a limited study of over 75 participants.
MIMEDX also secured reimbursement approval from JMHLW in September 2022 with an awarded rate of 35,100 Yen/cm 2 , and subsequently entered into an exclusive distribution agreement with Gunze Medical for sales of EPIFIX in Japan. Insurance coverage for EPIFIX will provide doctors and patients in Japan with new treatment options and optimal wound care.
MIMEDX also secured reimbursement approval from JMHLW in September 2022 with an awarded rate of 35,100 Yen/cm 2 , and subsequently entered into an exclusive distribution agreement with Gunze Medical for sales of EPIFIX in Japan. Insurance coverage for EPIFIX provides doctors and patients in Japan with new treatment options and optimal wound care.
Government Regulation and Compliance The products we sell are regulated by the FDA in the United States. The products currently manufactured and processed by the Company are derived from human tissue.
Government Regulation and Compliance The products we sell are regulated by the FDA in the United States. The majority of the products currently manufactured and processed by the Company are derived from human tissue.
Taken together, nearly 60% of the chronic wounds in the U.S. are categorized as chronic leg ulcers (which include DFUs and VLUs), with 47% treated with Advanced Wound Care dressings such as skin substitutes 2 .
Taken together, nearly 60% of the chronic wounds in the U.S. are categorized as chronic leg ulcers (which include DFUs and VLUs), with 47% of these wounds treated with Advanced Wound Care dressings such as skin substitutes 3 .
We have established and continue to grow a reimbursement support group to educate providers and patients with regard to accurate coverage and reimbursement information regarding our products, and plan to continue investing in clinical data supportive of coverage for our products in additional clinical areas of use.
We have established and continue to grow a reimbursement support group to provide providers and patients with accurate coverage and reimbursement information regarding our products, and plan to continue investing in clinical data supportive of coverage for our products in additional clinical areas of use.
As of the date of the filing of this Annual Report, in addition to international patents and patent applications, we own 74 U.S. patents related to our amniotic tissue technology and products, and 25 additional patent applications covering aspects of this technology are pending at the United States Patent and Trademark Office.
As of the date of the filing of this Annual Report, in addition to international patents and patent applications, we own 81 U.S. patents related to our amniotic tissue technology and products, and 12 additional patent applications covering aspects of this technology are pending at the United States Patent and Trademark Office.
We also sell our products through distributors. Distributors purchase products from us at wholesale prices and resell products to providers and end users. For example, in Japan, our distribution partner, Gunze Medical, purchases products from us and is responsible for sales to the end users for the approved indications of use and at the prevailing reimbursement rate for the product.
Distributors purchase products from us at wholesale prices and resell products to providers and end users. For example, in Japan, our distribution partner, Gunze Medical, purchases products from us and is responsible for sales to the end users for the approved indications of use and at the prevailing reimbursement rate for the product.
Item 1. Business Overview MIMEDX is a pioneer and leader in placental biologics focused on helping humans heal by addressing unmet clinical needs. With more than a decade of helping clinicians manage chronic and other hard-to-heal wounds, MIMEDX is dedicated to providing a leading portfolio of products for applications in the wound care, burn, and surgical sectors of healthcare.
Item 1. Business Overview MIMEDX is a pioneer and leader in placental biologics focused on helping humans heal. With more than a decade of helping clinicians manage chronic and other hard-to-heal wounds, MIMEDX is dedicated to providing a leading portfolio of products for applications in the wound care, burn, and surgical sectors of healthcare.
The manufacturing of our product offering begins with donated birth tissue, namely the placenta, umbilical cord and placental disc, which we source through a large donor network developed over multiple years with leading hospitals and clinician groups.
The manufacturing of our human derived product offering begins with donated birth tissue, namely the human placental membrane, umbilical cord and the placental disc, which we source through a large donor network developed over multiple years with leading hospitals and clinician groups.
Customer Concentration For the years ended December 31, 2023, 2022, and 2021, our top ten customers accounted for 20%, 19% and 19%, r espectively, of our net sales, and net sales to all U.S. government accounts comprised approximately 2%, 2% and 3%, respectively, of our net sales.
Customer Concentration For the years ended December 31, 2024, 2023, and 2022, our top ten customers accounted for 20%, 20% and 19%, r espectively, of our net sales, and net sales to all U.S. government accounts comprised approximately 1%, 2% and 2%, respectively, of our net sales.
While historically we have focused primarily on the U.S. market, we are in the process of expanding our footprint internationally, most notably with the recent launch of our EPIFIX product in Japan. EPIFIX is the first and currently the only amniotic tissue product approved in Japan for wound treatment across a broad range of conditions.
While historically we have focused primarily on the U.S. market, we are in the process of expanding our footprint internationally, most notably in Japan where EPIFIX is the first and currently the only amniotic tissue product approved in the country for wound treatment across a broad range of conditions.
Only 22 randomized, controlled trials (“ RCTs ”) met the inclusion criteria to be reviewed in the AHRQ analysis, and out of the 22 RCTs MIMEDX had six RCTs included in the final brief. Of the 22 studies reviewed, only 12 were assessed as low risk of bias, of which five were MIMEDX RCTs.
Only 22 RCTs met the inclusion criteria to be reviewed in the AHRQ analysis, and out of the 22 RCTs MIMEDX had six RCTs included in the final brief. Of the 22 studies reviewed, only 12 were assessed as low risk of bias, of which five were MIMEDX RCTs.
Environmental Management 18 We recently worked with a third-party to conduct an environmental, health, and safety gap assessment in order to accurately benchmark our environmental impact.
Environmental Management We have worked with a third-party to conduct an environmental, health, and safety gap assessment in order to accurately benchmark our environmental impact.
The AWC market is comprised of many product types, such as medical devices, advanced dressings, xenografts, biological products, and Human Cells, Tissues, and Cellular and Tissue - Based Products ( “HTC/Ps” ), which are used as skin substitutes to treat severe and chronic wounds.
The AWC market is comprised of many product types, such as medical devices, advanced dressings, xenografts, synthetically derived grafts, biological products, and Human Cells, Tissues, and Cellular and Tissue - Based Products ( “HCT/Ps” ), which are used as skin substitutes to treat severe and chronic wounds.
There is a risk that CMS or another government agency may take the position that our products are not human cell and tissue products regulated solely under Section 361, and thereby assert that we are currently subject to the Sunshine Act, which could subject us to civil penalties and the administrative burden of having to comply with the law. • Federal conflicts of interest laws, the Standards of Ethical Conduct for Employees of the Executive Branch, and local site policies for each federal institution we call upon govern our interactions with federal employees at our various government accounts ( e.g. , DoD, VA, etc .) and impose a number of limitations on such interactions. • There are state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, which may apply to items or services reimbursed by any third-party payer, including commercial insurers, many of which differ from each other in significant ways and often are not preempted by federal laws, thus complicating compliance efforts. 17 In addition, we may be subject to data privacy and security regulation by both the federal government and the states in which we conduct our business.
There is a risk we do not report the information related to HELIOGEN accurately and that CMS or another government agency may take the position that our other products are not human cell and tissue products 16 regulated solely under Section 361, and thereby assert that we are currently subject to the Sunshine Act, which could subject us to civil penalties and the administrative burden of having to comply with the law. • Federal conflicts of interest laws, the Standards of Ethical Conduct for Employees of the Executive Branch, and local site policies for each federal institution we call upon govern our interactions with federal employees at our various government accounts ( e.g. , DoD, VA, etc .) and impose a number of limitations on such interactions. • There are state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, which may apply to items or services reimbursed by any third-party payer, including commercial insurers, many of which differ from each other in significant ways and often are not preempted by federal laws, thus complicating compliance efforts.
We devote significant research and development resources and expertise to the therapeutic potential of placental tissue in an effort to grow our product offering, develop innovative products that address a wide range of chronic and acute health conditions affecting large patient populations, and generate best-in-class clinical evidence and data to support the use of our products.
We devote significant research and development resources and expertise to the therapeutic potential of human derived, animal derived and synthetic tissues in an effort to grow our product offering, develop innovative products that address a wide range of chronic and acute health conditions affecting large patient populations, and generate best-in-class clinical evidence and data to support the use of our products.
Specifically, the FDA issued a Form 483 consisting of one (1) observation at our Marietta, Georgia, processing facility, and a Form 483 consisting of six (6) observations at our Kennesaw, Georgia, processing facility. All observations were related to our AXIOFILL product and 21 CFR 211. There were no observations relating to noncompliance with 21 CFR 1271.
Specifically, the FDA issued a Form 483 consisting of one (1) observation at our Marietta, Georgia, processing facility, and a Form 483 consisting of six (6) observations at our Kennesaw, Georgia, processing facility. All observations were related to our AXIOFILL product and 21 CFR 211.
Currently, within the HOPD and ASC places of service, skin substitutes are reimbursed under a “packaged” or “bundled” methodology that provides a single payment for both the application of the product as well as the product itself. CMS classifies skin substitutes into low cost or high cost groups, based on a geometric mean unit cost and per day cost.
Currently, within the HOPD and ASC places of service, skin substitutes are reimbursed under a “packaged” or “bundled” methodology that provides a single payment for both the application of the product as well as the product itself. CMS classifies skin substitutes into low cost or high cost groups.
Federal healthcare programs have prescribed coverage criteria and reimbursement rates for medical products, services, and procedures. Similarly, private, third-party payers have their own coverage criteria and negotiate reimbursement amounts for medical products, services, and procedures with providers.
Similarly, private, third-party payers have their own coverage criteria and negotiate reimbursement amounts for medical products, services, and procedures with providers.
We believe our placental-based allografts are ideally suited for these applications in a growing number of surgical specialties that we are targeting and expect the utilization of our products to continue to grow over time in this market.
We believe our product offering is ideally suited for applications in a growing number of surgical specialties that we are targeting and expect the utilization of our products to continue to grow over time in this market.
We are stewards of a precious, life-protecting and life-giving resource – human birth tissue – which currently represent the biological source material for all of our products. Without our placental donation and recovery program, this material would most likely be discarded as medical waste at the hospital. We do not produce a significant amount of emissions from our operations.
We are stewards of a precious, life-protecting and life-giving resource – human birth tissue – which currently represent the biological source material for many of our products. Without our placental donation and recovery program, this material would most likely be discarded as medical waste at the hospital.
Our wholly-owned subsidiary, MiMedx Tissue Services, LLC, is registered with the FDA as an establishment that manufactures human cells, tissues, and cellular and tissue- based products and is involved with the recovery and storage of donated human placental tissues.
Our wholly-owned subsidiary, MiMedx Tissue Services, LLC, is registered with the FDA as an establishment that manufactures human cells, tissues, and cellular and tissue- based products and is involved with the recovery and storage of donated human placental tissues. We reimburse tissue banks, hospitals, and physicians for their services associated with the recovery and storage of donated human tissue.
Market Overview Domestic sales currently account for substantially all of our revenue today. In the United States, our primary areas of clinical use include applications in surgical settings as well as for the treatment of wounds and burns. Additionally we are actively pursuing international expansion, primarily targeting Japan, as discussed below.
Market Overview Domestic sales currently account for the vast majority of our revenue today. In the United States, our primary areas of clinical use include applications in surgical settings as well as for the treatment of wounds and burns. Additionally we continue to pursue international expansion, primarily targeting Japan, as discussed below.
Employee Ethnic/Racial Diversity Black or African American: 25% Hispanic or Latino: 9% Other Non-White (including American Indian, Alaskan Native, Asian, Native Hawaiian, or Other Pacific Islander): 9% Recruiting, Retaining, and Engaging Talent 19 Talent is our greatest asset and we are dependent on being able to recruit, develop, and retain talent that share our Core Values.
Employee Ethnic/Racial Diversity Black or African American: 26% Hispanic or Latino: 9% Other Non-White (including American Indian, Alaskan Native, Asian, Native Hawaiian, or Other Pacific Islander): 4% Two or more races: 3% White: 57% Not specified: 1% Recruiting, Retaining, and Engaging Talent Talent is our greatest asset and we are dependent on being able to recruit, develop, and retain talent that share our core values.
J Wound Care. 2013;22(7):347-351. 3. Zelen CM, et al. Wound Medicine. 2014;4:1-4. 4. Zelen CM, et al. Int Wound J. 2014;11(2):122-128. 5. Zelen CM, et al. Int Wound J. 2015;12(6):724-732. 6. Zelen CM, et al. Int Wound J. 2016;13(2):272-282. 7. Tettelbach W,et al. Int Wound J. 2019;16(1):122-130. 8. Serena TE, et al. Wound Repair Regen. 2014;22(6):688-693. 9.
Wound Medicine. 2014;4:1-4. 4. Zelen CM, et al. Int Wound J. 2014;11(2):122-128. 5. Zelen CM, et al. Int Wound J. 2015;12(6):724-732. 6. Zelen CM, et al. Int Wound J. 2016;13(2):272-282. 7. Tettelbach W,et al. Int Wound J. 2019;16(1):122-130. 8. Serena TE, et al. Wound Repair Regen. 2014;22(6):688-693. 9. Bianchi C, et al. Int Wound J. 2018;15(1):114-122. 10.
The vast majority of our domestic patents covering our core amniotic tissue technology and products will not begin to expire until August 2027. Globally, the Company has over 200 issued and pending patents.
The vast majority of our domestic patents covering our core amniotic tissue technology and products will not begin to expire until August 2027. Globally, the Company has over 200 issued and pending patents, and from time to time seeks to enforce its intellectual property rights.
Int Wound J. 2019;16(3):761-767 8 In addition to our presence in the AWC settings, our products are also used in a variety of surgical settings, and our strategic goals include building a body of evidence and real-world use data for our products in a wide range of procedures.
Surgical In addition to our presence in the AWC settings, our products are also used in a variety of surgical settings, and our strategic goals include building a body of evidence and real-world use data for our products in a wide range of procedures.
Our direct sales force primarily focuses on the Wound and Surgical categories through multiple sites of service. We also maintain a network of independent sales agents that focus on Surgical applications leveraging the complementary products in their portfolios, and provide access to certain customers, as well as sales coverage for areas where we do not have a full-time sales representative.
We also maintain a network of independent sales agents that focus on Surgical applications leveraging the complementary products in their 11 portfolios, and provide access to certain customers, as well as sales coverage for areas where we do not have a full-time sales representative. We also sell our products through distributors.
We have focused our priorities on initiatives across our organization that position us to realize our commercial ambitions over the long-term while also generating a profitable, cash flow positive business capable of self-funding our future growth objectives. Our Product Portfolio & Pipeline We sell our placenta-based allograft products under our own brands.
We have focused our priorities on initiatives across our organization that position us to realize our commercial ambitions over the long-term while also generating a profitable, cash flow positive business capable of self-funding our future growth objectives.
With broad payor coverage, the largest body of Level 1 clinical evidence among placental allograft products and a dedicated sales team calling on each of the major sites-of-service, we expect to continue to expand our presence in the AWC market, driving future growth of our business 6 .
With broad commercial payor coverage, Medicare coverage under the Local Coverage Determinations (“ LCDs ”) scheduled for implementation in April 2025, the largest body of Level 1 clinical evidence among placental allograft products and a dedicated sales team calling on each of the major sites-of-service, we expect to continue to expand our presence in the AWC market, driving future growth of our business 7 .
Marketing and Sales Our direct sales team includes field sales representatives and field sales management, who call on hospitals, wound care clinics, physician offices, and federal health care facilities such as the Department of Veterans Affairs (the “ VA ”) and Department of Defense (“ DoD ”) hospitals.
Marketing and Sales Our direct sales team includes field sales representatives and field sales management, who call on hospitals, wound care clinics, physician offices, and federal health care facilities such as the VA and Department of Defense (“ DoD ”) hospitals. Our direct sales force primarily focuses on the Wound and Surgical categories through multiple sites of service.
The table below provides an overview of MIMEDX’s diversity as of December 31, 2023: Board of Directors Women and minorities hold one-third of the seats on our Board, including the Chair of the Board. Employee Gender Diversity Women represented 56% of our workforce. Women represented 55% of our new hires in 2023.
The table below provides an overview of MIMEDX’s diversity as of December 31, 2024: Board of Directors Women and minorities hold over 40% of the seats on our Board, including the Chair of the Board. Employee Gender Diversity Female: 57% Male: 43% Women represented 56% of our new hires in 2023.
Private Payers We have devoted considerable resources to clinical trials to support coverage and reimbursement of our products. An increasing number of private payers reimburse for EPIFIX and EPICORD in the physician office, the HOPD and the ASC settings, and we have complete national commercial coverage for the use of EPIFIX in the treatment of DFUs.
An increasing number of private payers reimburse for EPIFIX and EPICORD in the physician office, the HOPD and the ASC settings, and we have complete national commercial coverage for the use of EPIFIX in the treatment of DFUs.
We are registered with the FDA as a tissue establishment and are subject to the FDA’s CGTP quality program regulations, state regulations, and regulations promulgated by various regulatory authorities outside the United States. The FDA initiated inspections covering our Marietta, Georgia, and Kennesaw, Georgia, processing facilities from February 22, 2023, through March 2, 2023.
We are registered with the FDA as a tissue establishment and are subject to the FDA’s CGTP quality program regulations, state regulations, and regulations promulgated by various regulatory authorities outside the United States. The FDA most recently inspected our Marietta, Georgia, and Kennesaw, Georgia, processing facilities in 2023.
Competition Due to lower barriers to entry in the Section 361 HCT/P regulated market, competition in the placenta-based and allograft tissue field is intense and subject to new entrants and evolving market dynamics. Companies within the industry compete on the basis of price, ease of handling, logistics and efficacy.
Competition 13 Due to lower barriers to entry in the Section 361 HCT/P regulated market, competition is intense in the skin substitute market, particularly among human derived products and subject to new entrants and evolving market dynamics. Companies within the industry compete on the basis of price, ease of handling, logistics and efficacy.
We are focused on retaining our talented professionals who we believe are key to the Company’s success. Our human resource group continuously monitors and benchmarks employee turnover and other trends in our industry and on a regional level to ensure MIMEDX is competitive and responsive to changes in the broader marketplace.
Our human resource group continuously monitors and benchmarks employee turnover and other trends in our industry and on a regional level to ensure MIMEDX is competitive and responsive to changes in the broader marketplace.
Our Strategic Priorities We manage our business by focusing on the following strategic priorities, which we believe are paramount to the success of MIMEDX over the short- and long-term. Our first priority is to build our leadership position in Wound & Surgical.
Our Strategic Priorities We manage our business by focusing on the following strategic priorities, which we believe are paramount to the success of MIMEDX over the short- and long-term. Our first priority is to innovate and diversify our product portfolio to maximize growth.
Food & Drug Administration (“ FDA ”), and to the extent we sell our products outside the United States, by other regulatory agencies in such international markets.
All of our products sold in the United States are regulated by the FDA, and to the extent we sell our products outside the United States, by other regulatory agencies in such international markets.
We continue to research new opportunities for amniotic and other placental tissue, and we have additional offerings in various stages of conceptualization and development. Placenta Donation Program 10 In order to obtain the source material for our human birth tissue-based product portfolio, we partner with physicians and hospitals to recover donations of these materials at hospitals around the United States.
Placenta Donation Program In order to obtain the source material for our human birth tissue-based product portfolio, we partner with physicians and hospitals to recover donations of these materials at hospitals around the United States.
Our newest product, EPIEFFECT, has also started to receive private reimbursement in certain regions of the U.S. and we are focused on continuing to increase the number of covered lives eligible for this product in the future.
Additionally, EPIEFFECT has also started to receive private reimbursement in certain regions of the U.S. and we are focused on continuing to increase the number of covered lives eligible for this product in the future, most notably through the completion of a well designed and powered RCT that we are currently enrolling.
In addition, state laws govern 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. International Regulation (Japan) In 2021, MIMEDX received regulatory approval from the Japanese Ministry of Health, Labour and Welfare (JMHLW) to market EPIFIX in Japan.
In addition, state laws govern 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.
The national HOPD average packaged (“bundled”) rate for our EPIFIX and EPICORD allograft products was $1,549 in 2019, $1,623 in 2020, $1,715 in 2021, $1,749.26 in 2022, and $1,725 in 2023. The national HOPD average packaged (“bundled”) rate for our EPIFIX, EPICORD and EPIEFFECT products in 2024 is $1,738.
Our EPIFIX, EPICORD and EPIEFFECT products are all reimbursed under the high cost bundle in these settings. The national HOPD average packaged (“bundled”) rate for our EPIFIX and EPICORD allograft products was $1,715 in 2021, $1,749.26 in 2022, $1,725 in 2023, and $1,738 in 2024.
Each MAC also has its own standards and process for determining coverage and reimbursement for a procedure or product. Private payers often follow the lead of governmental payers in making coverage and reimbursement determinations.
Each MAC also has its own standards and process for determining coverage and reimbursement for a procedure or product. Private payers often follow the lead of governmental payers in making coverage and reimbursement determinations. Therefore, achieving favorable Medicare coverage and reimbursement is usually a significant gating factor for successful adoption of a new product or clinical application by private payers.
As a result of a modification made by the Fraud Enforcement and Recovery Act of 2009, a claim includes “any request or demand” for money or property presented to the U.S. government. • The federal Health Insurance Portability and Accountability Act of 1996 (“ HIPAA ”) fraud and abuse provisions prohibit executing a scheme to defraud any healthcare benefit program, willfully obstructing a criminal investigation of a health care offense, or making false statements or concealing a material fact relating to payment for healthcare benefits, items or services. • While manufacturers of human cell and tissue products regulated solely under Section 361 are not subject to the federal Physician Payments Sunshine Act and its implementing regulations (together with the Act, the “ Sunshine Act ”), in the future, if we expand our product portfolio beyond those regulated solely under Section 361, this law will require us (with certain exceptions) to report information to CMS related to certain payments or other transfers of value we make to U.S.-licensed physicians and teaching hospitals, and for reports submitted on or after January 1, 2022, physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists and certified nurse-midwives.
As a result of a modification made by the Fraud Enforcement and Recovery Act of 2009, a claim includes “any request or demand” for money or property presented to the U.S. government. • The federal Health Insurance Portability and Accountability Act of 1996 (“ HIPAA ”) fraud and abuse provisions prohibit executing a scheme to defraud any healthcare benefit program, willfully obstructing a criminal investigation of a health care offense, or making false statements or concealing a material fact relating to payment for healthcare benefits, items or services. • While manufacturers of human cell and tissue products regulated solely under Section 361 are not subject to the federal Physician Payments Sunshine Act and its implementing regulations (together with the Act, the “ Sunshine Act ”), manufacturers of 510(k) products are required to comply with the Sunshine Act.
The review looked at several areas including: • Air Pollution Control Management • Battery Handling and Disposal • Community Right-to-Know (Hazardous Material Reporting) • Hazardous Waste Management • SARA Title III (Release Reporting) • Solid Waste Management • Spill, Prevention, Control and Countermeasure • State Pollutant Discharge Elimination System (SPDES) • Storm Water Management • Universal Waste Management • Waste Oil Management We are evaluating the results of this exercise in order to consider implementation of measures in support of our Environmental Management program.
The review looked at several areas including: • Air Pollution Control Management • Battery Handling and Disposal • Community Right-to-Know (Hazardous Material Reporting) • Hazardous Waste Management • SARA Title III (Release Reporting) • Solid Waste Management • Spill, Prevention, Control and Countermeasure • State Pollutant Discharge Elimination System (SPDES) • Storm Water Management • Universal Waste Management • Waste Oil Management Waste Management We work with waste removal providers to responsibly dispose of medical waste and biohazardous waste and have a program in place for the management of all medical and biohazardous waste processed in our facilities.
Our main competitors in the skin substitute market include Integra LifeSciences Holdings Corporation, Organogenesis, Inc., and Smith & Nephew plc, which sell a variety of AWC products, including skin substitutes and placental tissue allografts. In addition, the overall market is competitive, with a large number of other, smaller and oftentimes privately-held competitors that compete regionally and nationally.
Our main publicly-traded competitors in the skin substitute market include Integra LifeSciences Holdings Corporation, Organogenesis, Inc., and Smith & Nephew plc, which sell a variety of AWC products, including skin substitutes and placental tissue allografts.
Surgical 3 Chronic Wounds: Economic Impact & Costs to Medicare, https://www.woundcarestakeholders.org/news/studies-and-publications/chronic-wounds-economic-impact-costs-to-medicare 4 Five year mortality and direct costs of care for people with diabetic foot complications are comparable to cancer, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7092527/#CR1 5 Epidemiology and Risk of Amputation in Patients With Diabetes Mellitus and Peripheral Artery Disease, https://www.ahajournals.org/doi/10.1161/ATVBAHA.120.314595 6 Zelen CM, et al. Int Wound J. 2013;10(5):502-507. 2. Zelen CM.
Updated May 2022 4 Chronic Wounds: Economic Impact & Costs to Medicare, https://www.woundcarestakeholders.org/news/studies-and-publications/chronic-wounds-economic-impact-costs-to-medicare 5 Five year mortality and direct costs of care for people with diabetic foot complications are comparable to cancer, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7092527/#CR1 6 Epidemiology and Risk of Amputation in Patients With Diabetes Mellitus and Peripheral Artery Disease, https://www.ahajournals.org/doi/10.1161/ATVBAHA.120.314595 8 Traditional dressings such as bandages, gauzes and ointments, along with treatment of active infection and debridement, currently represent the “standard of care” for treating chronic wounds such as DFUs and VLUs.
In 2022, CMS announced plans to potentially change the reimbursement mechanism for skin substitutes in the physician office setting but did not propose or enact any national changes to the rules for these products.
We expect additional reimbursement changes over the course of 2025 associated with skin substitutes. Beginning in 2022, CMS announced plans to potentially change the reimbursement mechanism for skin substitutes in the physician office setting but has not proposed or enacted any national changes to the rules for these products to date.
Therefore, achieving favorable Medicare coverage and reimbursement is usually a significant gating factor for successful adoption of a new product or clinical application by private payers. 12 The coverage and reimbursement framework for products under Medicare is determined in accordance with the Social Security Act and pursuant to regulations promulgated by CMS, as well as the agency’s coverage and reimbursement guidance.
The coverage and reimbursement framework for products under Medicare is determined in accordance with the Social Security Act and pursuant to regulations promulgated by CMS, as well as the agency’s coverage and reimbursement guidance.
MIMEDX engaged with the FDA regarding the inspections’ observations and the appropriate classification of AXIOFILL. MIMEDX received a Warning Letter on December 21, 2023, relating to the inspections and classification of AXIOFILL. MIMEDX continues to engage with the FDA on this matter, working through the process outlined by the FDA to obtain a formal determination of AXIOFILL’s classification.
While the Company was engaged with FDA through the formal RFD process regarding AXIOFILL, MIMEDX received a Warning Letter on December 21, 2023, relating to the inspections and classification of AXIOFILL.
Compensation and Benefits We offer all full-time employees a comprehensive benefits package, including: • Health coverage, including Medical, Dental, Vision insurance, a wellness incentive program and virtual and text-based healthcare • Paid Parental and Caregiver leave • Employee Assistance Program • Paid company holidays • 401(k) plan, including Employer match • Employee Stock Purchase Plan opportunity.
Compensation and Benefits We offer all of our full-time employees a comprehensive benefits package and market competitive compensation programs, including: • Health coverage, including Medical, Dental, Vision insurance, a wellness incentive program and virtual and text-based healthcare • Life insurance options (employer paid and supplemental plans) • Paid Parental and Caregiver leave • Employee Assistance Program • Paid company holidays • 401(k) plan, including employer match • Employee Stock Purchase Plan Available Information We are required to file proxy statements, annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K with the SEC.
Our products help clinicians treat patients suffering from chronic and other hard-to-heal wounds. These wounds can be slow to respond or unresponsive to conventional treatments and may benefit from advanced treatments, such as through the use of our products, in order to support the healing process.
These wounds can be slow to respond or unresponsive to conventional treatments and may benefit from advanced treatments, such as through the use of our products, in order to support the healing process. Our placental allografts are human tissues that are derived from one person (the donor) and used to process products that treat multiple people (the recipients).
The Company’s vision is to be the leading global provider of healing solutions through relentless innovation to restore quality of life. With deep expertise and real-world data in the field of placental biologics, MIMEDX develops and distributes placental tissue allografts that are manufactured using patent-protected, proprietary processes for multiple sectors of healthcare.
With deep expertise, leading peer-reviewed data and an expansive library of additional scientific and real-world evidence in the field of placental biologics, MIMEDX develops and distributes placental tissue allografts that are manufactured using patent-protected, proprietary processes for multiple sectors of healthcare.
The primary competitive products in the skin substitutes category include, among others, placental-tissue allografts, tissue-engineered living skin equivalents, porcine-, bovine- and fish skin-derived xenografts and collagen matrix products. Xenografts, or tissue transplants from non-human species, serve mainly as an extracellular matrix and have to undergo aggressive processing to remove immunogenic animal products from the tissue.
The primary competitive products in the skin substitutes category include, among others, placental-tissue allografts, tissue-engineered living skin equivalents, porcine-, bovine- and fish skin-derived xenografts and collagen matrix products.
Third-party payers are sensitive to the cost of products and services and are increasingly seeking to implement cost containment measures to control, restrict access to, or influence the purchase of health care products and services. In the U.S., such payers include U.S. federal healthcare programs (e.g., Medicare and Medicaid), private insurance plans, managed care programs, and workers’ compensation plans.
Third-party payers have historically been sensitive to the cost of products and services and are increasingly seeking to implement cost containment measures to control, restrict access to, or influence the purchase of health care products and services.
We are licensed, registered, or permitted as a tissue bank in California, New York, Delaware, Illinois, Oregon, and Maryland. Additionally, we received and actively maintain AATB accreditation. The AATB has issued operating standards for tissue banking. Compliance with these standards is required in order to become an AATB-accredited tissue establishment.
Tissue Bank Laws, Regulations, and Related Accreditation As discussed above, we are required to register with the FDA as an establishment that manufactures human cells, tissues, and cellular and tissue-based products. We are licensed, registered, or permitted as a tissue bank in California, New York, Delaware, Illinois, Oregon, and Maryland. Additionally, we received and actively maintain AATB accreditation.
CMS assigns lower national rates to the ASC to reflect a less resource-intensive place of service. Revenue in the ASC setting constitutes less than 1% of the Company’s annual net sales. Medicare payments for most items and services, including EPIFIX and EPICORD sheet products, have been subject to sequestration reductions of approximately 2% periodically from 2013.
The national HOPD average packaged (“bundled”) rate for our EPIFIX, EPICORD and EPIEFFECT products in 2025 is $1,829.23. CMS assigns lower national rates to the ASC to reflect a less resource-intensive place of service. Revenue in the ASC setting constitutes less than 1% of the Company’s annual net sales.
The FDA requires each HCT/P establishment to register and establish that its product meets the requirements to qualify for regulation solely under Section 361.
As a result, MIMEDX assumes FDA regulatory responsibilities associated with medical device distribution including complaint handling and medical device reporting as well as certain state requirements for medical device distribution. Tissue Products The FDA requires each HCT/P establishment to register and establish that its product meets the requirements to qualify for regulation solely under Section 361.
Ineffective wound management is linked to numerous poor outcomes for patients, up to and including the potential for amputation of the extremity where the wound is present. Amputation is a catastrophic event for patients, with significant impacts to their quality of life, the lives of their caretakers and the expense burden on the healthcare system.
Amputation is a catastrophic event for patients, with significant impacts to their quality of life, the lives of their caretakers and the expense burden on the healthcare system. Today, up to one-fifth of diabetic patients who develop a DFU will require some form of amputation.
The packaging of our product cartons is recyclable and, since 2015, has been reduced in size by 50%. Human Capital As of December 31, 2023, we had 895 full time employees. Generally, we consider our relationships with our employees to be good, and none of our employees are covered by a collective bargaining agreement.
Our Global EHS Policy can be found on our Sustainability webpage. Human Capital As of December 31, 2024, we had 837 full time employees. Generally, we consider our relationships with our employees to be good, and none of our employees are covered by a collective bargaining agreement.
We use tools, such as an interview guide and a process reviewed by our Inclusion and Diversity Council, designed to prevent us from bias in our hiring decisions. We are currently in compliance with affirmative action reporting. As part of our Affirmative Action Plan, we leverage targeted outreach in our hiring process to ensure our postings reach underrepresented groups.
We use tools, such as an interview guide, designed to prevent us from bias in our hiring decisions. We leverage targeted outreach in our hiring process to ensure our postings reach underrepresented groups. We are focused on retaining our talented professionals who we believe are key to the Company’s success.
AATB standards include specific requirements for recovery, screening, testing, labeling, processing, and storing of birth tissue. We maintain compliance with AATB standards and our state licensure requirements. To the extent we sell our products outside of the United States, we also are subject to laws and regulations of foreign countries.
To the extent we sell our products outside of the United States, we also are subject to laws and regulations of foreign countries.
Today, up to one-fifth of diabetic patients who develop a DFU will require some form of amputation. Further, patients who undergo a major lower extremity amputation have an increased five-year mortality rate that is comparable to, and in some cases higher than, patients with many forms of cancer 5 .
Further, patients who undergo a major lower extremity amputation have an increased five-year mortality rate that is comparable to, and in some cases higher than, patients with many forms of cancer 6 . Advances in managing chronic and hard-to-heal wounds with solutions such as our EPIFIX® product have been shown to help contribute to improved outcomes for these patients.
In order for our employees to do their best work, and for us to achieve our mission, everyone at MIMEDX must feel respected, valued, and included.
In order for our employees to do their best work, and for us to achieve our mission, everyone at MIMEDX must feel respected, valued, and included. That’s why we remain focused on cultivating a work environment that encourages healthy growth, development, and promotion of all employees while embracing and valuing everyone’s dimensions of diversity.
Section 351 HCT/Ps are regulated as biological products, and, in order to be lawfully marketed in the United States, require FDA pre-market approval. Tissue Products In 1997, the FDA proposed a regulatory framework for cells and tissues.
Section 351 HCT/Ps are regulated as biological products, and, in order to be lawfully marketed in the United States, require FDA pre-market approval. Beginning in 2024, we began commercializing a xenograft product, HELIOGEN, which is a 510(k) cleared product manufactured by Regenity Biosciences, a contract manufacturer.
Available Information We are required to file proxy statements, annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K with the SEC. The SEC maintains an internet site, www.sec.gov, where these reports are available free of charge.
The SEC maintains an internet site, www.sec.gov, where these reports are available free of charge.
Advances in managing chronic and hard-to-heal wounds with solutions such as our EPIFIX® product have been shown to help contribute to improved outcomes for these patients. It is estimated that up to 85% of amputations are avoidable with a holistic, multispecialty team approach that incorporates innovative treatments, such as MIMEDX’s products, and adherence to treatment parameters.
It is estimated that up to 85% of amputations are avoidable with a holistic, multispecialty team approach that incorporates innovative treatments, such as MIMEDX’s products, and adherence to treatment parameters. MIMEDX is a leader in the cellular tissue products/skin substitute segment of the AWC category and the amniotic tissue allograft sub-category.
The costs associated with treatment and management of patients with acute and chronic wounds is also high, with some estimates of the Medicare spend associated with such wounds approaching $100 billion annually. The large and increasing number of patients requiring advanced treatment represents a significant cost burden on the healthcare system.
These wounds require intervention and active management by clinicians and are treated in a variety of sites-of-service, with numerous products aimed at achieving healing for the patient. The costs associated with treatment and management of patients with acute and chronic wounds is also high, with some estimates of the Medicare spend associated with such wounds approaching $100 billion annually.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn connection with one or more of those transactions, we may, subject to the requirements and limitations set forth in our Citizens Credit Agreement (as defined below in Management’s Discussion and Analysis of Financial Condition and Results of Operations (“ MD&A ”), Liquidity and Capital Resources): • divest or license existing products or technology; • use cash that we may need in the future to operate our business; • incur debt that could have terms unfavorable to us or that we might be unable to repay; • structure the transaction in a manner that has unfavorable tax consequences, such as a stock purchase that does not permit a step-up in the tax basis for the assets acquired; • be unable to realize the anticipated benefits, such as increased revenues, cost savings, or synergies from additional sales; and • be unable to secure the services of key employees related to the transaction(s).
Biggest changeIn connection with one or more of those transactions, we may, subject to the requirements and limitations set forth in our Citizens Credit Agreement (as defined below in Management’s Discussion and Analysis of Financial Condition and Results of Operations (“ MD&A ”), Liquidity and Capital Resources): • divest or license existing products or technology; • use cash that we may need in the future to operate our business; • incur debt that could have terms unfavorable to us or that we might be unable to repay; • structure the transaction in a manner that has unfavorable tax consequences, such as a stock purchase that does not permit a step-up in the tax basis for the assets acquired; • be unable to realize the anticipated benefits, such as increased revenues, cost savings, or synergies from additional sales; • be unable to successfully integrate, operate, maintain, and manage our newly acquired operations; • divert management’s attention from the existing business; • acquire unknown liabilities that could subject us to government investigations and/or litigation or other actions that make it impossible to realize the anticipated benefits of the transaction; and • be unable to secure the services of key employees related to the transaction(s).
See “ We and our sales representatives, whether employees or independent contractors, must comply with various federal and state anti-kickback, self-referral, false claims and similar laws, any breach of which could cause an adverse effect on our business, results of operations and financial condition.” 28 We may be subject to fines, penalties, injunctions and other sanctions if we are deemed to be promoting the use of our products for unapproved, or off-label, uses.
See “ We and our sales representatives, whether employees or independent contractors, must comply with various federal and state anti-kickback, self-referral, false claims and similar laws, any breach of which could cause an adverse effect on our business, results of operations and financial condition.” We may be subject to fines, penalties, injunctions and other sanctions if we are deemed to be promoting the use of our products for unapproved, or off-label, uses.
Attacks are made by individuals or groups that have varying levels of expertise, some of which are technologically advanced and well-funded including, without limitation, nation states, organized criminal groups and hacktivists organizations. To ensure protection of our information, we have invested in cybersecurity and have implemented processes and procedural controls to maintain the confidentiality and integrity of such information.
Attacks are made by individuals or groups that have varying levels of expertise, some of which are technologically advanced and well-funded including, without limitation, nation states, organized criminal groups and hacktivists organizations. 24 To ensure protection of our information, we have invested in cybersecurity and have implemented processes and procedural controls to maintain the confidentiality and integrity of such information.
There also may be existing patents or pending patent applications of which we are unaware that our products or processes may inadvertently infringe. Any infringement claim could cause us to incur significant costs, place significant strain on our financial resources, divert management’s attention from our business and harm our reputation.
There also may be existing patents or pending patent applications of which we are unaware that our products or processes may inadvertently infringe. 32 Any infringement claim could cause us to incur significant costs, place significant strain on our financial resources, divert management’s attention from our business and harm our reputation.
The success of any new product offering or enhancement to an existing product will depend on numerous factors, including our ability to: • properly identify and anticipate physician and patient needs; • acquire, through licensing, co-development or outright purchase, new technology developed outside of MIMEDX; • develop and introduce new products or product enhancements in a timely manner; • adequately protect our intellectual property and avoid infringing upon the intellectual property rights of third parties; • demonstrate the safety and efficacy of new products; and • obtain the necessary regulatory clearances or approvals for new products or product enhancements. 21 If we do not develop and, when necessary, obtain regulatory clearance or approval for new products or product enhancements in time to meet market demand, or if there is insufficient demand for these products or enhancements, our results of operations and financial condition will suffer.
The success of any new product offering or enhancement to an existing product will depend on numerous factors, including our ability to: • properly identify and anticipate physician and patient needs; • acquire, through licensing, co-development or outright purchase, new technology developed outside of MIMEDX; • develop and introduce new products or product enhancements in a timely manner; • adequately protect our intellectual property and avoid infringing upon the intellectual property rights of third parties; • demonstrate the safety and efficacy of new products; and • obtain the necessary regulatory clearances or approvals for new products or product enhancements. 20 If we do not develop and, when necessary, obtain regulatory clearance or approval for new products or product enhancements in time to meet market demand, or if there is insufficient demand for these products or enhancements, our results of operations and financial condition will suffer.
Also, the failure to comply with applicable legal and regulatory obligations could result in the disruption of our distribution and sales activities. 26 These risks may limit or disrupt our expansion, restrict the movement of funds or result in the deprivation of contractual rights or the taking of property by nationalization or expropriation without fair compensation.
Also, the failure to comply with applicable legal and regulatory obligations could result in the disruption of our distribution and sales activities. These risks may limit or disrupt our expansion, restrict the movement of funds or result in the deprivation of contractual rights or the taking of property by nationalization or expropriation without fair compensation.
Compliance with such covenants may restrict our operating flexibility, and in the event that we were unable to comply with such covenants, leading to default and acceleration, this could adversely affect our business, results of operations and financial condition. 34 EW Healthcare Partners and its interests may conflict with those of our other shareholders.
Compliance with such covenants may restrict our operating flexibility, and in the event that we were unable to comply with such covenants, leading to default and acceleration, this could adversely affect our business, results of operations and financial condition. EW Healthcare Partners and its interests may conflict with those of our other shareholders.
Additionally, we cannot predict the impact of any changes in these laws, whether these changes are retroactive or will have effect on a going-forward basis only. 30 Our results of operations may be adversely affected by current and potential future healthcare reforms.
Additionally, we cannot predict the impact of any changes in these laws, whether these changes are retroactive or will have effect on a going-forward basis only. Our results of operations may be adversely affected by current and potential future healthcare reforms.
If we are unable to establish new independent sales representative and distribution relationships or renew current sales agency and distribution agreements on commercially acceptable terms, our business, financial condition, and results of operations could be materially and adversely affected. Disruption of our processing facilities could adversely affect our business, financial condition and results of operations.
If we are unable to establish new independent sales representative and distribution relationships or renew current sales agency and distribution agreements on commercially acceptable terms, our business, financial condition, and results of operations could be materially and adversely affected. 22 Disruption of our processing facilities could adversely affect our business, financial condition and results of operations.
We may also hire additional employees who are currently employed at other medical device, pharmaceutical or tissue companies, including our competitors. Additionally, consultants or other independent agents with which we may contract may be or have been in a 33 contractual arrangement with one or more of our competitors.
We may also hire additional employees who are currently employed at other medical device, pharmaceutical or tissue companies, including our competitors. Additionally, consultants or other independent agents with which we may contract may be or have been in a contractual arrangement with one or more of our competitors.
A finding of a violation of one or more of these laws, or even a government investigation or inquiry into the same, would likely result in a material adverse effect on the market price of our Common Stock, as well as on our business, results of operations, and financial condition.
A finding of a violation of one or more 28 of these laws, or even a government investigation or inquiry into the same, would likely result in a material adverse effect on the market price of our Common Stock, as well as on our business, results of operations, and financial condition.
In addition, some of these physicians own our stock, which 29 they purchased in arm’s-length transactions on terms identical to those offered to non-physicians, or received stock awards from us in the past as consideration for services performed by them.
In addition, some of these physicians own our stock, which they purchased in arm’s-length transactions on terms identical to those offered to non-physicians, or received stock awards from us in the past as consideration for services performed by them.
Physicians may be hesitant to change their existing medical treatment practices for the following reasons, among others: • their lack of experience with advanced therapeutics, such as our placenta-based allografts; • lack of evidence supporting additional patient benefits of advanced therapeutics, such as our placenta-based allografts, over conventional methods in certain therapeutic applications; • perceived liability risks generally associated with the use of new products and procedures; • limited availability of reimbursement from third-party payers; • more favorable reimbursement for other market-available products; and • the time that must be dedicated to physician training in the use of our products.
Physicians may be hesitant to change their existing medical treatment practices for the following reasons, among others: • their lack of experience with advanced therapeutics, such as our placenta-based allografts or xenografts; • lack of evidence supporting additional patient benefits of advanced therapeutics, such as our placenta-based allografts or xenografts, over conventional methods in certain therapeutic applications; • perceived liability risks generally associated with the use of new products and procedures; • limited availability of reimbursement from third-party payers; • more favorable reimbursement for other market-available products; and • the time that must be dedicated to physician training in the use of our products.
Whether a patent claim is valid is a complex matter of science, facts and law, and therefore we cannot be certain that, if challenged in a court of law, or through an administrative proceeding, our 32 patent claims would be upheld.
Whether a patent claim is valid is a complex matter of science, facts and law, and therefore we cannot be certain that, if challenged in a court of law, or through an administrative proceeding, our patent claims would be upheld.
Government and other third-party payers attempt to contain healthcare costs by limiting both coverage and the level of reimbursement of medical products, particularly new products. Therefore, significant uncertainty may exist as to the reimbursement status of new healthcare products by third-party payers.
Government and other third-party payers attempt to contain healthcare costs by limiting both coverage and the level of reimbursement of medical products, particularly new products. Therefore, significant 21 uncertainty may exist as to the reimbursement status of new healthcare products by third-party payers.
We may be subject to such claims if our products cause, or appear to have caused, an injury. Claims may be made by patients, healthcare providers or others selling our products.
We may be subject 23 to such claims if our products cause, or appear to have caused, an injury. Claims may be made by patients, healthcare providers or others selling our products.
Moreover, the existing coverage of our insurance or any rights of indemnification and contribution that we 24 may have may not be sufficient to offset existing or future claims.
Moreover, the existing coverage of our insurance or any rights of indemnification and contribution that we may have may not be sufficient to offset existing or future claims.
These provisions of Florida law and our articles of incorporation and bylaws could negatively affect our share price, prevent attempts by shareholders to remove current management, prohibit or delay mergers or other takeovers or changes of control of the Company and discourage attempts by other companies to acquire us, even if such a transaction would be beneficial to our shareholders. 36 Item 1B.
These provisions of Florida law and our articles of incorporation and bylaws could negatively affect our share price, prevent attempts by shareholders to remove current management, prohibit or delay mergers or other takeovers or changes of control of the Company and discourage attempts by other companies to acquire us, even if such a transaction would be beneficial to our shareholders. 35 Item 1B.
In 2023, approximately 24% of our sales were through our relationships with independent agents, and we also use a small number of distributors, primarily outside the United States, and may use more in the future. Sales agents act directly on behalf of MIMEDX to arrange sales, while distributors take title to product and may set their own prices.
In 2024, approximately 24% of our sales were through our relationships with independent agents, and we also use a small number of distributors, primarily outside the United States, and may use more in the future. Sales agents act directly on behalf of MIMEDX to arrange sales, while distributors take title to product and may set their own prices.
We believe that substantial uncertainty remains regarding the net effect of the PPACA, or its repeal and potential replacement, on our business, including uncertainty over how benefit plans purchased on exchanges will cover our products, how the expansion or contraction of the Medicaid program will affect access to our products, the effect of risk-sharing payment models such as Accountable Care Organizations and other value-based purchasing programs on coverage for our product, and the effect of the general increase or decrease in federal oversight of healthcare payers.
Furthermore, we believe that substantial uncertainty remains regarding the net effect of the PPACA, or its repeal and potential replacement, on our business, including uncertainty over how benefit plans purchased on exchanges will cover our products, how the expansion or contraction of the Medicaid program will affect access to our products, the effect of risk-sharing payment models such as Accountable Care Organizations and other value-based purchasing programs on coverage for our 30 products, and the effect of the general increase or decrease in federal oversight of healthcare payers.
We are required to comply with federal and state regulations intended to prevent communicable disease transmission. We maintain strict quality controls designed in accordance wit h CGTP to ensure the safe procurement and processing of our tissue, including terminal sterilization of our products. These controls are intended to prevent the transmission of communicable disease.
We and our contract manufacturers are required to comply with federal and state regulations intended to prevent communicable disease transmission. We maintain strict quality controls designed in accordance wit h CGTP to ensure the safe procurement and processing of our tissue, including terminal sterilization of our products. These controls are intended to prevent the transmission of communicable disease.
As of December 31, 2023, EW Healthcare Partners and their affiliates owned approximately 19.3% of our Common Stock (calculated on the basis described in Item 12, “ Security Ownership Of Certain Beneficial Owners And Management” below).
As of December 31, 2024, EW Healthcare Partners and their affiliates owned approximately 19.3% of our Common Stock (calculated on the basis described in Item 12, “ Security Ownership Of Certain Beneficial Owners And Management” below).
The market price of our Common Stock could be impacted by a variety of factors, including: • Fluctuations in stock market prices and trading volumes of similar companies or of the markets generally; • Our ability to successfully launch, market and earn significant revenue from our products; • Our ability to obtain additional financing to support our continuing operations; • Disclosure of the details and results of our clinical trials and our regulatory applications and proceedings; • Developments in and disclosure or publicity regarding existing or new litigation or contingent liabilities; • Changes in government regulations or our failure to comply with any such regulations; • Additions or departures of key personnel; • Our investments in research and development or other corporate resources; • Announcements of technological innovations or new commercial products by us or our competitors; • Developments in the patents or other proprietary rights owned or licensed by us or our competitors; • The timing of new product introductions; • Actual or anticipated fluctuations in our operating results, including as a result of seasonality in our business, as well as any restatements of previously reported results; • Our ability to effectively and consistently process or manufacture our products and avoid costs associated with the recall of defective or potentially defective products; • Our ability and the ability of our distribution partners to market and sell our products; • Changes in reimbursement for our products or the price for our products to our customers; • Removal of our products from the FSS, or changes in how government accounts purchase products such as ours or in the price for our products to government accounts; • Activities of market participants and investors, including analysts and MIMEDX shareholders; • Material amounts of short-selling of our Common Stock; and • The other risks detailed in this Item 1A.
The market price of our Common Stock could be impacted by a variety of factors, including: • Fluctuations in stock market prices and trading volumes of similar companies or of the markets generally; • Our ability to successfully launch, market and earn significant revenue from our products; • Our ability to obtain additional financing to support our continuing operations; • Disclosure of the details and results of our clinical trials and our regulatory applications and proceedings; • Developments in and disclosure or publicity regarding existing or new litigation or contingent liabilities; • Changes in government regulations or our failure to comply with any such regulations; • Additions or departures of key personnel; • Our investments in research and development or other corporate resources; • Announcements of technological innovations or new commercial products by us or our competitors; • Developments in the patents or other proprietary rights owned or licensed by us or our competitors; • The timing of new product introductions; • Actual or anticipated fluctuations in our operating results, including as a result of seasonality in our business, as well as any restatements of previously reported results; • Our ability to effectively and consistently process or manufacture our products and avoid costs associated with the recall of defective or potentially defective products; • Our ability and the ability of our distribution partners to market and sell our products; • Changes in reimbursement for our products or the price for our products to our customers; • Removal of our products from the FSS, or changes in how government accounts purchase products such as ours or in the price for our products to government accounts; • Activities of market participants and investors, including analysts and MIMEDX shareholders; • Material amounts of short-selling of our Common Stock; and • The other risks detailed in this Item 1A. 34 Any unanticipated shortfall in our revenue in any fiscal quarter could have an adverse effect on our results of operations in that quarter.
There are federal and state laws requiring detailed reporting of manufacturer interactions with and payments to healthcare providers, such as the federal Physician Payments Sunshine Act (“ Sunshine Act ”).
There are federal and state laws requiring detailed reporting of manufacturer interactions with and payments to healthcare providers, such as the Sunshine Act.
The products we process are derived from human tissue and therefore have the potential for disease transmission. The utilization of human tissue creates the potential for transmission of communicable disease, including, without limitation, human immunodeficiency virus, viral hepatitis, syphilis and other viral, fungal or bacterial pathogens.
The products we offer are derived from human and animal tissue and therefore have the potential for disease transmission. The utilization of human tissue creates the potential for transmission of communicable disease, including, without limitation, human immunodeficiency virus, viral hepatitis, syphilis and other viral, fungal or bacterial pathogens.
Risks Related to Regulatory Approval of Our Products and Other Government Regulations The FDA has in the past determined, and may in the future 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 Public Health Service Act (“Section 361”), and may require that we revise our labeling and marketing claims for these products or that we suspend sales of such products until FDA pre-market clearance or approval is obtained, which could adversely affect our business, results of operations, and financial condition.
Risks Related to Regulatory Approval of Our Products and Other Government Regulations The FDA has in the past determined, and may in the future 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, and may require that we revise our labeling and marketing claims for these products or that we suspend sales of such products until FDA pre-market clearance or approval is obtained, which could adversely affect our business, results of operations, and financial condition.
The FDA may take the position that some of the products that we currently market require a BLA. Some of the future products and enhancements to our current products that we expect to develop or may acquire and market may require marketing clearance or approval from the FDA.
The FDA may take the position that some of the products that we currently market require FDA regulatory clearance or approval. Some of the future products and enhancements to our current products that we expect to develop or may acquire and market may require marketing clearance or approval from the FDA.
Finally, we and other manufacturers of skin substitutes are required to provide average ASP information to CMS on a quarterly basis. The Medicare payment rates are updated quarterly based on this ASP information.
Finally, we and other manufacturers of skin substitutes are required to provide average sales price (“ ASP ”) information to CMS on a quarterly basis. The Medicare payment rates are updated quarterly based on this ASP information.
Such limitations present a risk that the FDA or other federal or state law enforcement authorities could determine that the nature and scope of our sales, marketing and support activities, though designed to comply with all FDA requirements, constitute the promotion of our products for an unapproved use in violation of the federal FD&C Act.
Such limitations present a risk that the FDA or other federal or state law enforcement authorities could determine that the nature and scope of our sales, marketing and support activities, though designed to comply with all FDA requirements, constitute the promotion of our products for an unapproved use in violation of the Federal Food Drug & Cosmetic Act.
Our revenues could be adversely 27 affected if we fail to obtain BLA approvals on a timely basis or at all, or if the FDA limited the indications for use or required other conditions that restrict the commercial application of our products.
Our revenues could be adversely affected if we fail to obtain approvals and clearances on a timely basis or at all, or if the FDA limited the indications for use or required other conditions that restrict the commercial application of our products.
If we fail to comply with the FDA regulations regarding our tissue products, the FDA could take enforcement action, including, without limitation, any of the following sanctions and the manufacture of our products or processing of our tissue could be delayed or terminated: • untitled letters, warning letters, cease and desist orders, fines, injunctions, and civil penalties; • recall or seizure of our products; • operating restrictions, partial suspension or total shutdown of production; • refusing our requests for clearance or approval of new products; • withdrawing or suspending current applications for approval or approvals already granted; • refusal to grant export approval for our products; and • criminal prosecution.
If we fail to comply with the FDA regulations regarding our tissue products, the FDA could take enforcement action, including, without limitation, any of the following sanctions and the manufacture of our products or processing of our tissue could be delayed or terminated: • untitled letters, warning letters, cease and desist orders, fines, injunctions, and civil penalties; • recall or seizure of our products; • operating restrictions, partial suspension or total shutdown of production; • refusing our requests for clearance or approval of new products; • withdrawing or suspending current applications for approval or approvals already granted; • refusal to grant export approval for our products; and • criminal prosecution. 27 The FDA’s regulation of HCT/Ps may continue to evolve.
The fee for filing a BLA and program fees payable with respect to any establishment that manufactures biologics are substantial. The FDA may not grant approval on a timely basis, or at all, or we may decide not to pursue a BLA for certain products or indications, or need to conduct additional trials for a given indication.
The fee for filing such submissions and program fees payable with respect to any establishment that manufactures biologics are substantial. The FDA may not grant approval on a timely basis, or at all, or we may decide not to pursue this pathway for certain products or indications, or need to conduct additional trials for a given indication.
Approximately 79% of our sales in the year ended December 31, 2023 came from customers that are members of our primary GPOs or IDNs. Our agreements with GPOs and IDNs allow us to sell our products efficiently to large groups of customers.
Approximately 76% of our sales in the year ended December 31, 2024 came from customers that are members of our primary GPOs or IDNs. Our agreements with GPOs and IDNs allow us to sell our products efficiently to large groups of customers.
The products we manufacture and process are derived from human tissue.
Many of the products we manufacture and process are derived from human tissue.
As of January 2024, the Company had aggregate borrowings outstanding of $30.0 million under its Revolving Credit Facility and $20.0 million under its Term Loan Facility, all pursuant to its Citizens Credit Agreement (as defined below in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations ).
As of December 2024, the Company had aggregate borrowings outstanding of $19.0 million under its Term Loan Facility, pursuant to its Citizens Credit Agreement (as defined below in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations ).
If one or more of these analysts cease coverage of us, we could lose visibility in the market, which in turn could cause our stock price to decline.
If one or more of these analysts cease coverage of us, we could lose visibility in the market, which in turn could cause our stock price to decline. Fluctuations in revenue or results of operations could cause additional volatility in our stock price.
Risks Related to Our Consolidated Financial Statements, Internal Controls and Related Matters If we fail to maintain adequate internal control over financial reporting in the future, this could adversely affect our business, financial condition and operating results. We have in the past reported material weaknesses in our internal control over financial reporting which we have since remediated.
Risks Related to Our Consolidated Financial Statements, Internal Controls and Related Matters If we fail to maintain adequate internal control over financial reporting in the future, this could adversely affect our business, financial condition and operating results.
The Company must comply with certain financial covenants, including, a maximum total net leverage ratio and a minimum consolidated fixed charge coverage ratio.
The Citizens Credit Agreement imposes operating and financial restrictions and covenants. The Company must comply with certain financial covenants, including, a maximum total net leverage ratio and a minimum consolidated fixed charge coverage ratio.
If we fail to attract the coverage of securities analysts, or if securities analysts discontinue covering our common stock, the lack of research coverage may adversely affect the actual and potential market price of our common stock.
Securities analysts may elect not to report on our common stock or may issue negative reports that adversely affect the stock price. If we fail to attract the coverage of securities analysts, or if securities analysts discontinue covering our common stock, the lack of research coverage may adversely affect the actual and potential market price of our common stock.
The process of obtaining an approved BLA, including clinical trial development and execution as well as manufacturing processes, requires the expenditure of substantial time, effort and financial resources and may take years to complete, including costs incurred on top of those fees incurred as part of conducting various clinical studies.
The process of obtaining formal FDA clearance or approval, such as a 510(k), BLA, or equivalent, including clinical trial development and execution as well as manufacturing processes, requires the expenditure of substantial time, effort and financial resources and may take years to complete, including costs incurred on top of those fees incurred as part of conducting various clinical studies.
Our business depends upon the continued operation of our processing facilities in Marietta, Georgia and Kennesaw, Georgia. Risks that could impact our ability to use these facilities include the occurrence of natural and other disasters, the outbreak of pandemics, and the need to comply with the requirements of directives from government agencies, including the FDA.
Risks that could impact our ability to use these facilities include the occurrence of natural and other disasters, the outbreak of pandemics, and the need to comply with the requirements of directives from government agencies, including the FDA.
Failure to successfully manage these risks in the development and implementation of new lines of business or new products or services could have an adverse effect on our business, results of operations and financial condition. Our international expansion and operations outside the U.S. expose us to risks associated with international sales and operations.
Failure to successfully manage these risks in the development and implementation of new lines of business or new products or services could have an adverse effect on our business, results of operations and financial condition.
Our quarterly operating results have varied substantially in the past and may vary substantially in the future. We do not intend to pay cash dividends on our Common Stock. We have never declared or paid cash dividends on our Common Stock.
These fluctuations could cause the trading price of our stock to be negatively affected. Our quarterly operating results have varied substantially in the past and may vary substantially in the future. We do not intend to pay cash dividends on our Common Stock. We have never declared or paid cash dividends on our Common Stock.
We periodically evaluate opportunities to acquire companies or divest divisions, technologies, products, and rights through licenses, distribution agreements, investments, and outright acquisitions to grow our business.
We periodically evaluate opportunities to acquire companies or divest divisions, technologies, products, and rights through licenses, distribution agreements, investments, and outright acquisitions to grow our business, although we may not successfully identify or negotiate any such transaction.
FCA liability is potentially significant in the healthcare industry because the statute provides for treble damages and mandatory penalties of between $11,181 and $22,363 per false claim or statement for penalties assessed after January 29, 2018, with respect to violations occurring after November 2, 2015.
FCA liability is potentially significant in the healthcare industry because the statute provides for treble damages and mandatory penalties of between $13,946 and $27,894 per false claim or statement for penalties assessed after February 12, 2024, with respect to violations occurring after November 2, 2015.
Consequently, the effects of a default under other debt may be amplified by the lenders exercising the remedies available to it in the Citizens Credit Agreement for events of default, including foreclosure on the collateral securing our obligations and the declaration that all amounts outstanding under the Citizens Credit Agreement are immediately due and payable.
Consequently, the effects of a default under other debt may be amplified by the lenders exercising the remedies available to it in the Citizens Credit Agreement for events of default, including foreclosure on the collateral securing our obligations and the declaration that all amounts outstanding under the Citizens Credit Agreement are immediately due and payable. 33 The restrictive covenants in the Citizens Credit Agreement, and the Company’s obligation to make payments under the Citizens Credit Agreement, limit our operating and financial flexibility and may adversely affect our business, results of operations and financial condition.
We depend on our senior leadership team and may not be able to retain or replace these employees or recruit additional qualified personnel, which would harm our business, results of operations and financial condition. Our business and success are materially dependent on attracting and retaining members of our senior leadership team to formulate and execute the Company’s business plans.
We depend on our senior leadership team and key employees and may not be able to retain or replace these employees or recruit additional qualified personnel, which would harm our business, results of operations and financial condition.
The FDA’s regulation of HCT/Ps may continue to evolve. Complying with any such new regulatory requirements may entail significant time delays and expense, which could have an adverse effect on our business, results of operations and financial condition. The AATB has issued operating standards for tissue banking.
Complying with any such new regulatory requirements may entail significant time delays and expense, which could have an adverse effect on our business, results of operations and financial condition. The AATB has issued operating standards for tissue banking. Compliance with these standards is a requirement in order to become an accredited tissue bank.
Further, governmental authorities outside the U.S. have become increasingly stringent in their regulation of medical devices, and our products may become subject to more rigorous regulation by non-U.S. governmental authorities in the future.
Further, governmental authorities outside the U.S. have become increasingly stringent in their regulation of medical devices, and our products may become subject to more rigorous regulation by non-U.S. governmental authorities in the future. U.S. or non-U.S. government regulations may be imposed in the future that may have a material adverse effect on our business and operations.
We are pursuing further expansion outside the U.S., including in Japan. Managing a global organization is difficult, time consuming and expensive.
Our international expansion and operations outside the U.S. expose us to risks associated with international sales and operations. 25 We are pursuing further expansion outside the U.S., including in Japan. Managing a global organization is difficult, time consuming and expensive.
Changes in senior management could also lead to an environment that presents additional challenges in recruiting and retaining employees, which could have an adverse effect on our business, results of operations and financial condition. Our future success will also depend, in part, upon our ability to attract and retain skilled personnel, including sales, managerial and technical personnel.
Changes in senior management could also lead to an environment that presents additional challenges in recruiting and retaining employees, which could have an adverse effect on our business, results of operations and financial condition. Recruiting and retaining qualified scientific, clinical, and sales and marketing personnel are critical to our success.
U.S. or non-U.S. government regulations may be imposed in the future that may have a material adverse effect on our business and operations. 31 Federal and state laws that protect the privacy and security of personal information may increase our costs and limit our ability to collect and use that information and subject us to liability if we are unable to fully comply with such laws.
Federal and state laws that protect the privacy and security of personal information may increase our costs and limit our ability to collect and use that information and subject us to liability if we are unable to fully comply with such laws.
A conviction for violation of the AKS results in criminal fines and requires mandatory exclusion from participation in federal health care programs.
We are subject to the AKS as amended by the Patient Protection and Affordable Care Act (the “ PPACA ”). A conviction for violation of the AKS results in criminal fines and requires mandatory exclusion from participation in federal health care programs.
Administration, the executive order, and the attempted legislation may have, if any, and any changes will likely take time to unfold and could have an impact on coverage and reimbursement for healthcare items and services, including our products.
We believe that substantial uncertainty remains regarding the specific reform measures and proposed legislation that could impact our industry. Any changes will likely take time to unfold and could have an impact on coverage and reimbursement for healthcare items and services, including our products.
Price volatility or a decrease in the market price of our Common Stock could have an adverse effect on our ability to raise capital, liquidity, business, financial condition and results of operations. Securities analysts may elect not to report on our common stock or may issue negative reports that adversely affect the stock price.
Our quarterly operating results have varied substantially in the past and may vary substantially in the future, including as a result of seasonality in our business. Price volatility or a decrease in the market price of our Common Stock could have an adverse effect on our ability to raise capital, liquidity, business, financial condition and results of operations.
However, this insurance may not be sufficient to cover the financial, legal or reputational losses that may result from an interruption or breach of our systems. 25 We may expand or contract our business through acquisitions, divestitures, licenses, investments, and other commercial arrangements with other companies or technologies, which may adversely affect our business, results of operations and financial condition.
We may expand or contract our business through acquisitions, divestitures, licenses, investments, and other commercial arrangements with other companies or technologies, which may adversely affect our business, results of operations and financial condition.
A portion of our revenues and accounts receivable come from government accounts. Some of our revenues are derived from sales, both direct and through a distributor, to the government.
In addition, if the benefits of any proposed acquisition do not meet the expectations of investors and analysts, our stock price may decline. A portion of our revenues and accounts receivable come from government accounts. Some of our revenues are derived from sales, both direct and through a distributor, to the government.
If we are alleged to have not complied with existing or new laws, rules and regulations related to personal information, we could be subject to litigation and to sanctions that include monetary fines, civil or administrative penalties, civil damage awards or criminal penalties.
If we are alleged to have not complied with existing or new laws, rules and regulations related to personal information, we could be subject to litigation and to sanctions that include monetary fines, civil or administrative penalties, civil damage awards or criminal penalties. 31 Risks Related to Our Intellectual Property Our ability to protect our intellectual property and proprietary technology through patents and other means is uncertain and may be inadequate, which could have an adverse effect on our business, results of operations and financial condition.
The loss of our ability to market and sell these products would have an adverse impact on our revenues, business, financial condition and results of operations.
Depending on the outcome of this legal proceeding, we may no longer be able to market AXIOFILL. The loss of our ability to market and sell this or any other product in our portfolio would have an adverse impact on our revenues, business, financial condition and results of operations.
Obtaining and maintaining the necessary regulatory approvals, including conducting clinical trials, for certain of our products or potential products could be expensive and time consuming .
If we are unable to obtain required FDA clearance or approval for a product or are unduly delayed in doing so, or the uses of that product were limited, our business could suffer. Obtaining and maintaining the necessary regulatory approvals, including conducting clinical trials, for certain of our products or potential products could be expensive and time consuming .
However, if our processing facilities were to become unavailable, this could have a material adverse effect on our business, financial condition and results of operations during the period of such unavailability. 23 To be commercially successful, we must educate physicians, where appropriate, how and when our products are proper alternatives to existing treatments and that our products should be used in their procedures.
To be commercially successful, we must educate physicians, where appropriate, how and when our products are proper alternatives to existing treatments and that our products should be used in their procedures.
Either of our two processing facilities can serve as a redundant processing facility for most of our products in the event the other facility experiences a disaster event.
Either of our two processing facilities can serve as a redundant processing facility for most of our products in the event the other facility experiences a disaster event. However, if our processing facilities were to become unavailable, this could have a material adverse effect on our business, financial condition and results of operations during the period of such unavailability.
Compliance with these standards is a requirement in order to become an accredited tissue bank. In addition, some states have their own tissue banking regulations.
In addition, some states have their own tissue banking regulations.
Since June 2018, we have made significant changes to our senior leadership team, and hired several new senior leaders, including our CEO and CFO in 2023. Leadership changes can be inherently difficult to manage and may cause material disruption to our business or management team.
Our business and success are materially dependent on attracting and retaining members of our senior leadership team to formulate and execute the Company’s business plans and our sales team to market our products. Leadership changes can be inherently difficult to manage and may cause material disruption to our business or management team.
Removed
There can be no assurance that we will be able to continue to find and attract additional qualified employees to support our expected growth or retain any such personnel.
Added
The loss of the services of our executive officers or other key employees could impede the achievement of our research, development and commercialization objectives and seriously harm our ability to successfully implement our business strategy.
Removed
At a regional level, three Medicare 22 Administrative Contractors (MACs) signaled their intent to change coverage guidance by moving Local Coverage Determinations (LCDs) through the process. While these were ultimately withdrawn, the same MACs signaled their intent to revisit the issue.
Added
Furthermore, replacing executive officers and key employees may be difficult and may take an extended period of time because of the limited number of individuals in our industry with the breadth of skills and experience required to successfully develop, gain regulatory approval for and commercialize our product candidates.
Removed
If the national reimbursement proposals were to be adopted, it would significantly change Medicare policies governing the reimbursement of skin substitute products principally when used for wound treatment in the private physician office setting. If MACs proceed to change coverage policies, this could significantly change guidance within the affected regions.
Added
Competition to hire qualified personnel in our industry is intense, and we may be unable to hire, train, retain or motivate these key personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for similar personnel.
Removed
Obtaining FDA pre-market clearance or approval involves significant time and investment by the Company.
Added
Furthermore, to the extent our executive officers or key personnel with access to our proprietary or confidential information are hired by our competitors, they may share such information with our competitors requiring us to initiate litigation to prevent any use of such information by our competitors.
Removed
In accordance with the FDA Guidance, as discussed above in “ Business – Government Regulation ,” after May 31, 2021, the Company no longer markets or sells its products that were impacted by enforcement discretion in the United States, has requested the return of unused consignment inventory as of that date, and does not intend to sell such products in the United States until the FDA grants pre-market approval.
Added
For example, in December 2024, MIMEDX filed a lawsuit against Surgenex, LLC in the United States District Court for the District of Arizona. The complaint asserts that several of Surgenex’s placental allograft products infringe the Company’s patents and seeks permanent injunctive relief and monetary damages.
Removed
Our sales of such products for all uses was $0.5 million, $2.4 million, and $17.6 million, respectively, in 2023, 2022, and 2021. Prior to May 31, 2021, these sales were primarily in the United States.
Added
On the other hand, if we hire personnel from competitors, we may be subject to allegations that they have been improperly solicited or that they have divulged proprietary or other confidential information, or that their former employers own their research output.
Removed
The loss of our ability to market and sell our micronized products previously had an adverse impact on our revenues, business, financial condition and results of operations. Also, we are engaged with the FDA regarding the classification of AXIOFILL and certain of our other products.
Added
Our business depends upon the continued operation of our processing facilities in Marietta, Georgia and Kennesaw, Georgia, located less than ten miles apart.
Removed
If the FDA makes a final determination that any of these products do not meet the requirements for regulation solely under Section 361, in order to continue to market the products, we would be required to obtain the appropriate FDA approval or clearance.
Added
We also maintain cyber liability insurance. However, this insurance may not be sufficient to cover the financial, legal or reputational losses that may result from an interruption or breach of our systems.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

2 edited+2 added−1 removed10 unchanged
Biggest changeCybersecurity reviews by the Audit Committee or the Board of Directors generally occur at least annually, or more frequently as determined to be necessary or advisable. Our cybersecurity program is run by the head of our information security department, who reports to our Chief Financial Officer.
Biggest changeThe Board of Directors is assisted by the Audit Committee, which regularly reviews our cybersecurity program with management and reports to the Board of Directors. Cybersecurity reviews by the Audit Committee or the Board of Directors generally occur at least annually, or more frequently as determined to be necessary or advisable.
That program is utilized in making decisions with respect to company priorities, resource allocations, and oversight structures. The Board of Directors is assisted by the Audit Committee, which regularly reviews our cybersecurity program with management and reports to the Board of Directors.
Our Board of Directors has ultimate oversight of cybersecurity risk, which it manages as part of our enterprise risk management program. That program is utilized in making decisions with respect to company priorities, resource allocations, and oversight structures.
Removed
We impose security requirements upon our suppliers, including: maintaining an effective security management program and abiding by information handling and asset management requirements. Our Board of Directors has ultimate oversight of cybersecurity risk, which it manages as part of our enterprise risk management program.
Added
We impose security requirements upon our suppliers, including: maintaining an effective security management program and abiding by information handling and asset management requirements. These processes and response mechanisms are continually assessed for effectiveness, and any new security mechanisms, including several in 2024, are integrated when business needs arise or industry best practices shift.
Added
Our cybersecurity program is run by the head of our information security department, who reports to our Chief Financial Officer.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+2 added−5 removed2 unchanged
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market for Common Stock Our Common Stock trades on The Nasdaq Stock Market under the trading symbol “MDXG”. Holders Based upon information supplied from our transfer agent, there were approximately 810 shareholders of record of our Common Stock as of February 23, 2024.
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market for Common Stock Our Common Stock trades on The Nasdaq Stock Market under the trading symbol “MDXG.” Holders Based upon information supplied from our transfer agent, there were approximately 770 shareholders of record of our Common Stock as of February 25, 2025.
Stock Performance Graph The following graph compares the cumulative total stockholder return on our Common Stock with the cumulative total s tockholder return of the Nasdaq Composite Index and the Russell 2000 Index, for the five year period that commenced on December 31, 2018 and ended December 31, 2023, assuming an investment of $100.00 on December 31, 2018.
Stock Performance Graph The following graph compares the cumulative total stockholder return on our Common Stock with the cumulative total s tockholder return of the Nasdaq Composite Index and the Russell 2000 Index, for the five year period that commenced on December 31, 2019 and ended December 31, 2024, assuming an investment of $100.00 on December 31, 2019.
ASSUMES $100 INVESTED ON DEC. 31, 2018 ASSUMES DIVIDEND REINVESTMENT; NO DIVIDENDS ISSUED BY MIMEDX FISCAL YEAR ENDED DEC. 31, 2023 38 Securities Authorized for Issuance Under Equity Compensation Plans Information about securities authorized for issuance under our equity compensation plans is incorporated herein by reference to Item 12 of Part III of this Annual Report.
ASSUMES $100 INVESTED ON DEC. 31, 2019 ASSUMES DIVIDEND REINVESTMENT; NO DIVIDENDS ISSUED BY MIMEDX FISCAL YEAR ENDED DEC. 31, 2024 37 Securities Authorized for Issuance Under Equity Compensation Plans Information about securities authorized for issuance under our equity compensation plans is incorporated herein by reference to Item 12 of Part III of this Annual Report.
Removed
Recent Sales of Unregistered Securities On December 22, 2023, all 95,000 outstanding shares of the Company’s Series B Convertible Preferred Stock (the “ Preferred Stock ”), together with accrued dividends, were mandatorily converted into shares of the Company’s Common Stock in accordance with the Preferred Stock terms set forth in the Company’s Articles of Incorporation, as amended.
Added
Recent Sales of Unregistered Securities None. Purchases of Equity Securities by the Issuer and Affiliated Purchasers The following table sets forth information regarding purchases of the Company’s equity securities made by or on behalf of the Company or any affiliated purchaser (as defined in Rule 10b-18 under the Exchange Act) during the three-month period ended December 31, 2024.
Removed
T he Preferred Stock conversion, triggered by the Company’s increased Common Stock share price and following the third anniversary of the Preferred Stock financing transaction in July of 2020.
Added
Total number of shares purchased Average price paid per share Total number of shares purchased under publicly announced plan Approximate dollar value of shares that may yet be purchased under plans or programs October 1 - October 31, 2024 13,349 $ 5.76 $ — November 1 - November 30, 2024 — — — — December 1 - December 31, 2024 722 9.53 — — Total for the quarter 14,071 $ 5.95 — $ — 38 Item 6. [Reserved]
Removed
As a result of this conversion, 29,761,650 new shares of Common Stock were issued by the Company to an affiliate of EW Healthcare Partners and to certain funds managed by Hayfin Capital Management LLP. The Company received no consideration upon the conversion.
Removed
The shares of Common Stock issued pursuant to the conversion of the Preferred Stock were issued in reliance upon exemptions pursuant to Section 3(a)(9) under the Securities Act of 1933, as amended, and pursuant to applicable state securities laws and regulations, in that the shares of Common Stock were issued by the Company to its existing security holders and no commission or other remuneration was paid or given directly or indirectly for soliciting such exchange.
Removed
Purchases of Equity Securities by the Issuer and Affiliated Purchasers There were no purchases of our Common Stock made by or on behalf of the Company during the year ended December 31, 2023. 39 Item 6. [Reserved]

Item 7. Management's Discussion & Analysis

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

60 edited+29 added−29 removed18 unchanged
Biggest changeResults of Continuing Operations for 2023 Compared to 2022 Year Ended December 31, (in thousands) 2023 2022 $ Change % Change Net sales $ 321,477 $ 267,841 $ 53,636 20.0 % Cost of sales 54,634 48,316 6,318 13.1 % Gross profit 266,843 219,525 47,318 21.6 % Selling, general and administrative 211,124 208,673 2,451 1.2 % Research and development 12,665 12,701 (36) (0.3) % Investigation, restatement and related 5,176 12,177 (7,001) (57.5) % Amortization of intangible assets 762 701 61 8.7 % Interest expense, net (6,457) (5,016) (1,441) 28.7 % Other expense, net (26) (4) (22) nm Income tax provision benefit (expense) 36,806 (206) 37,012 nm Net income (loss) from continuing operations $ 67,439 $ (19,953) $ 87,392 nm Net Sales We recorded net sales for the year ended December 31, 2023 of $321.5 million, an increase of $53.6 million, or 20.0%, over the year ended December 31, 2022 net sales of $267.8 million.
Biggest changeResults of Continuing Operations for 2024 Compared to 2023 Year Ended December 31, (in thousands) 2024 2023 $ Change % Change Net sales $ 348,879 $ 321,477 $ 27,402 8.5 % Cost of sales 60,073 54,634 5,439 10.0 % Gross profit 288,806 266,843 21,963 8.2 % Selling, general and administrative 225,087 211,124 13,963 6.6 % Research and development 12,341 12,665 (324) (2.6) % Investigation, restatement and related (8,698) 5,176 (13,874) nm Amortization of intangible assets 765 762 3 0.4 % Impairment of intangible assets 446 — 446 100.0 % Interest expense, net (1,006) (6,457) 5,451 (84.4) % Other expense, net (565) (26) (539) nm Income tax provision benefit (expense) (15,296) 36,806 (52,102) nm Net income (loss) from continuing operations $ 41,998 $ 67,439 $ (25,441) (37.7) % Net Sales We recorded net sales for the year ended December 31, 2024 of $348.9 million, an increase of $27.4 million, or 8.5%, over net sales for the year ended December 31, 2023 net sales of $321.5 million.
Share-Based Compensation 45 Description We measure the fair value of stock options and other stock-based awards granted to employees on the grant date and recognize the assessed fair value as share-based compensation expense, straight-line, over the requisite service period to achieve the award based on the vesting requirements, to the extent that the achievement of performance conditions associated with such awards, as applicable, are determined to be “probable.” Judgments and Uncertainties Share-based payment arrangements are measured at fair value on the grant date.
Share-Based Compensation Description We measure the fair value of stock options and other stock-based awards granted to employees on the grant date and recognize the assessed fair value as share-based compensation expense, straight-line, over the requisite service period to achieve the award based on the vesting requirements to the extent that the achievement of performance conditions associated with such awards, as applicable, are determined to be “probable.” Judgments and Uncertainties Share-based payment arrangements are measured at fair value on the grant date.
Net sales is recognized based on the consideration we expect to receive from the sale at the point in time when control of the goods is transferred to the customer, which generally occurs upon our delivery to a third-party carrier or implantation for consignment arrangements.
Net sales are recognized based on the consideration we expect to receive from the sale at the point in time when control of the goods is transferred to the customer, which generally occurs upon our delivery to a third-party carrier or implantation for consignment arrangements.
We generally fund our operating capital requirements through our operating activities and cash reserves. We expect to use capital to invest in the broadening of our 43 product portfolio, including through potential acquisitions, licensing agreements or other arrangements, the international expansion of our business and certain capital projects.
We generally fund our operating capital requirements through our operating activities and cash reserves. We expect to use capital to invest in the broadening of our product portfolio, including through potential acquisitions, licensing agreements or other arrangements, the international expansion of our business and certain capital projects.
The Term Loan Facility will amortize on a quarterly basis at 1.25% (for year one and two), 1.875% (for year three and four), and 2.5% (for year five) based on the aggregate principal amount outstanding under the Term Loan Facility, with the remainder due on the Maturity Date.
The Term Loan Facility will amortize on a quarterly basis at 1.25% (for year one and two), 1.875% (for year three and four), and 2.5% (for year five) based on the aggregate principal amount outstanding under the Term Loan Facility at inception, with the remainder due on the Maturity Date.
Our research and development costs also include expenses such as salaries and benefits related to our research department, consulting costs and advisory costs, and regulatory costs. We expense research and development costs as incurred. Fluctuations in research and development expenses can be impacted by the timing and cadence of our clinical trials.
Our research and development costs also include expenses such as salaries and benefits related to our research department, consulting costs and advisory costs, and regulatory costs. 40 We expense research and development costs as incurred. Fluctuations in research and development expenses can be impacted by the timing and cadence of our clinical trials.
Citizens Loan Facilities On January 19, 2024, we entered into a Credit Agreement (the “ Citizens Credit Agreement ”) with a syndicate of banks comprised of Citizens Bank, N.A. as administrative agent (the “ Agent ”), and Bank of America, N.A.
Citizens Loan Facilities 43 On January 19, 2024, we entered into a Credit Agreement (the “ Citizens Credit Agreement ”) with a syndicate of banks comprised of Citizens Bank, N.A. as administrative agent (the “ Agent ”), and Bank of America, N.A.
The Company must also comply with certain financial covenants, including a maximum total net leverage ratio and a minimum consolidated fixed charge coverage ratio, as well as other customary restrictive covenants. 44 In addition, on January 19, 2024, we borrowed $30.0 million under the Revolving Credit Facility and $20.0 million under the Term Loan Facility.
We must also comply with certain financial covenants, including a maximum total net leverage ratio and a minimum consolidated fixed charge coverage ratio, as well as other customary restrictive covenants. In addition, on January 19, 2024, we borrowed $30.0 million under the Revolving Credit Facility and $20.0 million under the Term Loan Facility.
All obligations are required to be paid in full on January 19, 2029 (the “ Maturity Date ”), and are guaranteed by certain of the Company’s subsidiaries, and secured by substantially all of the assets of the Company and the guarantors pursuant to a customary security agreement.
All obligations are required to be paid in full on January 19, 2029 (the “ Maturity Date ”), and are guaranteed by certain of our subsidiaries, and secured by substantially all of the assets of the Company and the guarantors pursuant to a customary security agreement.
Contractual Obligations Contractual obligations associated with ongoing business activities are expected to result in cash payments in future periods. See Item 8, Note 16, Commitments and Contingencies , in the Consolidated Financial Statements for more information regarding our contractual commitments.
Contractual Obligations Contractual obligations associated with ongoing business activities are expected to result in cash payments in future periods. See Item 8, Note 18, Commitments and Contingencies , in the Consolidated Financial Statements for more information regarding our contractual commitments.
Our Annual Report for the year ended December 31, 2022 (the “ 2022 Annual Report ”) includes a discussion and analysis of our total company financial condition and results of operations for 2022 compared to 2021 in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations .
Our Annual Report for the year ended December 31, 2023 (the “ 2023 Annual Report ”) includes a discussion and analysis of our total company financial condition and results of operations for 2023 compared to 2022 in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations .
If it is subsequently determined that the performance conditions associated with these awards are no longer probable of being met, or performance conditions which were determined to be probable of occurring do not actually occur, we could reverse up to this amount of expense in the period such determination is made.
If it is subsequently determined that the performance conditions associated with the performance stock unit awards are no longer probable of being met, or performance conditions which were determined to be probable of occurring do not actually occur, we could reverse up to this amount of expense in the period such determination is made.
Subject to the terms of the Citizens Credit Agreement, the Company has the option to obtain one or more incremental term loan facilities and/or increase the commitments under the Revolving Credit Facility in an aggregate principal amount equal to the greater of (i) $50.0 million and (ii) 1.00 times the Company’s Consolidated EBITDA as defined therein, each subject to the existing or any new lenders’ election to extend additional term loans or revolving commitments.
Subject to the terms of the Citizens Credit Agreement, we have the option to obtain one or more incremental term loan facilities and/or increase the commitments under the Revolving Credit Facility in an aggregate principal amount equal to the greater of (i) $50.0 million and (ii) 1.00 times the Company’s Consolidated EBITDA as defined therein, each subject to the existing or any new lenders’ election to extend additional term loans or revolving commitments.
We expect our SG&A expense to fluctuate based on revenue fluctuations, geographic changes, and any changes to the size of our headcount, particularly that of our sales and marketing forces. Certain of these costs scale with sales, but can fluctuate depending on sales mix.
We expect our S&M expense to fluctuate based on revenue fluctuations, geographic changes, and any changes to the size of our headcount, particularly that of our sales and marketing forces. Certain of these costs scale with sales, but can fluctuate depending on sales mix.
The Company may prepay borrowings under the Credit Facilities at any time, without premium or penalty, and may, at its option, reduce the aggregate unused commitments under the Revolving Credit Facility in whole or in part, in each case subject to the terms of the Credit Agreement.
We may prepay borrowings under the Credit Facilities at any time, without premium or penalty, and may, at our option, reduce the aggregate unused commitments under the Revolving Credit Facility in whole or in part, in each case subject to the terms of the Credit Agreement.
The Citizens Credit Agreement was designed to simultaneously improve our capital structure, providing the ability to refinance the $50 million Hayfin Term Loan at lower interest rates and have access to additional borrowing capacity that could be deployed in the future in support of our organic and potential inorganic growth objectives.
The Citizens Credit Agreement was designed to simultaneously improve our capital structure, providing the ability to refinance the $50 million senior secured term loan under the Hayfin Loan Agreement (as defined below) at lower interest rates and have access to additional borrowing capacity that could be deployed in the future in support of our organic and potential inorganic growth objectives.
The Company must make mandatory prepayments in connection with certain asset dispositions and casualty events, subject in each case to customary reinvestment rights.
We must make mandatory prepayments in connection with certain asset dispositions and casualty events, subject in each case to customary reinvestment rights.
With more than a decade of experience helping clinicians manage acute and chronic wounds, MIMEDX has been dedicated to providing a leading portfolio of products for applications in the wound care, burn, and surgical sectors of healthcare. All of our products sold in the United States are regulated by the U.S. Food & Drug Administration ( “FDA” ).
With more than a decade of experience helping clinicians manage acute and chronic wounds, MIMEDX has been dedicated to providing a leading portfolio of products for applications in the wound care, burn, and surgical sectors of healthcare. All of our products sold in the United States are regulated by the FDA.
The Company is required to pay a quarterly commitment fee on any unused portion of the Revolving Credit Facility, letter of credit fees, and other customary fees to the Agent and the Lenders.
We are required to pay a quarterly commitment fee on any unused portion of the Revolving Credit Facility, letter of credit fees, and other customary fees to the Agent and the Lenders.
The Company is currently paying its obligations in the ordinary course of business. We believe that our anticipated cash from operating activities, existing cash and cash equivalents, and available credit under the Citizens Credit Agreement, as defined below, will enable us to meet our operational liquidity needs for the twelve months following the filing date of this Annual Report.
We believe that our anticipated cash from operating activities, existing cash and cash equivalents, and available credit under the Citizens Credit Agreement, as defined below, will enable us to meet our operational liquidity needs for the twelve months following the filing date of this Annual Report.
We maintain a return policy that allows our customers to return product for any reason within 30 days of sale, and to return product that is damaged or non-conforming, ordered in error, or due to recall at any time. We anticipate increases in sales returns in light of potential or actual regulatory actions.
We maintain a return policy that allows our customers to return product for any reason within 30 days of sale, and to return product that is damaged or non-conforming, ordered in error, or due to recall at any time.
Within Surgical and Other, our product offering includes AMNIOFIX, AMNIOCORD and AMNIOEFFECT, which are positioned for use in a variety of applications and surgical settings, including lower extremity repair, plastic surgery, vascular surgery and multiple orthopedic repairs and reconstructions. Our AXIOFILL product has also seen the most uptake by clinicians for surgical applications.
Within Surgical and Other, our product offering includes AMNIOFIX and AMNIOEFFECT, which are positioned for use in a variety of applications and surgical settings, including lower extremity repair, plastic surgery, vascular surgery and multiple orthopedic repairs and reconstructions.
The increase in cost of sales was driven by the increase in sales volume and the changes in margins noted above. Selling, General and Administrative Expense SG&A expense increased $2.5 million, or 1.2%, to $211.1 million for December 31, 2023, compared to $208.7 million for December 31, 2022.
The increase in cost of sales was driven by the increase in sales volume and the changes in margins noted above. Selling, General and Administrative Expense SG&A expense increased $14.0 million, or 6.6%, to $225.1 million for December 31, 2024, compared to $211.1 million for December 31, 2023.
Our Wound Care Products include EPIFIX, EPICORD and EPIEFFECT, which are all marketed for external use, such as in Advanced Wound Care applications.
The Wound Care products we manufacture include EPIFIX and EPIEFFECT, which are marketed for external use, such as in Advanced Wound Care applications.
We believe the items discussed below provide insight into the factors that affect these key measures. Net sales Our net sales are derived from selling to a wide range of customers, including hospitals, wound care centers and private physician offices that have clinicians using our suite of products to aid in the management of patients with chronic or hard-to-heal wounds.
Net sales Our net sales are derived from selling to a wide range of customers, including hospitals, wound care centers and private physician offices that have clinicians using our suite of products to aid in the management of patients with chronic or hard-to-heal wounds.
For example, we pay sales agents a greater commission than our internal sales force, meaning that we could incur greater commission expenses if a greater proportion of our sales are through sales agents.
For example, we pay sales agents a greater commission than our internal sales force, meaning that we could incur greater commission expenses if a greater proportion of our sales are through sales agents. We expect our G&A expense to fluctuate based on headcount.
Sensitivity of Estimate to Change As of December 31, 2023, we had $0.9 million in valuation allowances recorded against our deferred tax assets balance of $41.7 million.
Sensitivity of Estimate to Change As of December 31, 2024, we had $0.5 million in valuation allowances recorded against our deferred tax assets balance of $28.8 million.
Discussion of Cash Flows for 2023 Compared to 2022 Operating Activities from Continuing Operations During the year ended December 31, 2023, net cash provided by operating activities of continuing operations increased $42.9 million to $34.9 million compared to cash used of $8.0 million for the year ended December 31, 2022.
Discussion of Cash Flows for 2024 Compared to 2023 Operating Activities from Continuing Operations During the year ended December 31, 2024, net cash provided by operating activities of continuing operations increased $32.2 million to $67.1 million compared to cash provided of $34.9 million for the year ended December 31, 2023.
As of December 31, 2023, we had $82.0 million of cash and cash equivalents. Our net working capital at December 31, 2023 was $118.3 million, an increase of $27.6 million from $90.6 million at December 31, 2022. Our current ratio was 3.6 to 1 as of December 31, 2023 and 3.1 to 1 as of December 31, 2022.
As of December 31, 2024, we had $104.4 million of cash and cash equivalents. Our net working capital at December 31, 2024 was $146.3 million, an increase of $28.0 million from $118.3 million at December 31, 2023. Our current ratio was 4.2 to 1 and 3.6 to 1 as of as of December 31, 2024 and 2023, respectively.
Selling, general and administrative expense Selling, general and administrative (“ SG&A ”) expense includes costs to execute our sales strategy. These include personnel costs pertaining to our sales force and sales support functions, including salaries, commissions and other incentive compensation, commissions to sales agents, customer support, travel expenses, and bad debt expense.
S&M includes costs to execute our sales strategy, which includes personnel costs pertaining to our sales force and sales support functions, including salaries, commissions and other incentive compensation, commissions to sales agents, customer support, travel expenses, and bad debt expense.
Critical Accounting Estimates This Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“ GAAP ”).
The increase was offset by the repurchase of our historical Series B Preferred Stock of $9.5 million during 2023. Critical Accounting Estimates This Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“ GAAP ”).
SG&A expense also includes costs related to functions which support our business, such as legal, finance, human resources, and other such functions that include costs such as personnel costs, insurance, and certain professional fees.
G&A expense reflects costs related to functions which support our business, such as legal, finance, human resources, and other such functions, including personnel costs associated with these functions, insurance, and certain professional fees.
Other activity influencing interest expense relates to the amortization of deferred financing costs and original issue discount associated with credit facilities outstanding. Income Taxes We generate tax liability primarily in the United States and have net operating losses, research and development tax credit carryforwards, and other deferred tax assets which defray our liability.
Other activity influencing interest expense relates to the amortization of deferred financing costs and original issue discount associated with credit facilities outstanding. This amount is presented net of interest income, which we generate from our treasury management. Income Tax Provision We generate tax liability primarily in the United States and in various states in which we have nexus.
Other activity includes amounts received from certain director and officer insurance providers. Interest expense We incur interest expense primarily through stated interest on our outstanding term and revolving loans. The interest on our term and revolving loans are currently tied to applicable Secured Overnight Financing Rates (“ SOFR ”). Increases in SOFR 41 could cause our interest expense to increase.
Interest expense, net We incur interest expense primarily through stated interest on our outstanding term and revolving loans, to the extent that they are outstanding. The interest on our term and revolving loans are currently tied to applicable Secured Overnight Financing Rates (“ SOFR ”). Increases in SOFR could cause our interest expense to increase.
The increase in cash provided by operating activities was primarily as a result of year-over-year increases in net sales, which drove increases in collections from customers, as well as year-over-year decreases in operating expenses during the year ended December 31, 2023.
The increase in cash provided by operating activities was primarily as a result of year-over-year increases in net sales, which drove increases in collections from customers. Investing Activities During the year ended December 31, 2024, net cash used in investing activities was $9.6 million, a increase of $7.4 million, compared to $2.2 million for the year ended December 31, 2023.
Net Sales Description We record estimates for returns and allowances as a reduction to net sales based on our expectation for such returns. Judgments and Uncertainties We sell our products to individual customer and independent distributors (collectively referred to as “ customers ”). Customers obtain and use products either through ship and bill sales or consignment arrangements.
Judgments and Uncertainties We sell our products to individual customers and independent distributors (collectively referred to as “ customers ”). Customers obtain and use products either through ship and bill sales or consignment arrangements.
Furthermore, if probable levels of achievement are later determined to be greater, or actual achievement exceeds the level 46 of achievement assessed as probable, we could record increases to expense to reflect this level of achievement. The amount of any incremental expense recognition or reversal will depend on the magnitude and timing of such change in estimate.
Furthermore, if probable levels of achievement are later determined to be greater, or actual achievement exceeds the level of achievement assessed as probable, we could record increases to expense to reflect this level of achievement.
Net sales consists of the gross selling price of the product, less any discounts, rebates, fees paid to GPOs, and returns. Cost of goods sold and gross profit Cost of goods sold includes product testing costs, quality assurance costs, personnel costs, manufacturing costs, raw materials and product costs, depreciation and facility costs associated with our manufacturing and warehouse facilities.
Cost of goods sold and gross profit Cost of goods sold includes product testing costs, quality assurance costs, personnel costs, manufacturing costs, raw materials and product costs, depreciation and facility costs associated with our manufacturing and warehouse facilities. Fluctuations in our cost of goods sold correspond with the fluctuations in these costs as well as sales volume.
Overview MIMEDX is a pioneer and leader in placental biologics focused on delivering innovative solutions to patients and the healthcare professionals who treat them.
In the past LCDs have been delayed or terminated so there is no guarantee they will go into effect in April 2025 Overview MIMEDX is a pioneer and leader in placental biologics focused on delivering innovative solutions to patients and the healthcare professionals who treat them.
In certain cases where the extent of vesting is based on the extent of achievement, we are required to determine the extent to which achievement is probable. We determine probable performance based on actual performance to date, internally-developed budgets and forecasts for periods covered by the relevant performance condition, and other evidence deemed relevant to this determination.
Subsequent to the determination of fair value, we recognize expense to the extent we evaluate that performance conditions associated with share-based payment arrangements are probable of occurring. We determine probable performance based on actual performance to date, internally-developed budgets and forecasts for periods covered by the relevant performance condition, and other evidence deemed relevant to this determination.
Investigation, restatement and related expense Investigation, restatement and related expense primarily relates to legal fees advanced to certain former officers and directors of the Company under certain indemnification agreements and our liability from legal proceedings taken against us. The timing and extent of these expenses depend on the stage and status of legal proceedings.
Investigation, restatement and related (benefit) expense Investigation, restatement and related expense primarily related to legal fees that were advanced to certain former officers and directors of the Company under certain indemnification agreements and our liability from legal proceedings that were taken against us. These costs ceased during the year ended December 31, 2024 and are not expected to reoccur.
Additions or reversals to our return allowance, as determined necessary, are accounted for prospectively and recorded as a decrease or increase to net sales, respectively. Actual returns are recorded against the recorded accrual. Sensitivity of Estimate to Change We have accrued $1.1 million for sales returns as of December 31, 2023.
Determinations involving other factors are based on our estimates for product at customer sites that are eligible for return. Additions or reversals to our return allowance, as determined necessary, are accounted for prospectively and recorded as a decrease or increase to net sales, respectively. Actual returns are recorded against the recorded accrual.
In addition, cumulative expense recognized for unvested performance stock unit awards was $1.7 million for the year ended December 31, 2023. This is based on determinations regarding probable resolution or the extent of probable resolution of relevant performance conditions to earn such awards.
This was based on determinations regarding probable resolution or the extent of probable resolution of relevant performance conditions to earn such awards.
Our gross margin 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 to make our products. Regulatory actions, including with respect to reimbursement for our products, may require costly expenditures or result in pricing pressure, and may decrease our gross profit and gross margin.
Gross profit is calculated as net sales less cost of goods sold. Gross margin is calculated as gross profit divided by net sales. Our gross margin 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 to make our products.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Executive Summary During 2023, the Company delivered 20.0% growth in net sales, with broad-based contributions by customer type. This growth was driven by a combination of commercial execution, favorable end market demand and contributions from newer products to our portfolio.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Executive Summary During 2024, we delivered 8.5% growth in net sales, with broad-based contributions by customer type.
This discussion, which presents our results for the fiscal years ended December 31, 2023 and 2022, should be read in conjunction with our Consolidated Financial Statements and the accompanying notes.
HELIOGEN is a shelf-stable offering that contains Type I and Type III collagen and mimics the native composition of structural connective tissue, HELIOGEN is manufactured by Regenity Biosciences. 39 This discussion, which presents our results for the fiscal years ended December 31, 2024 and 2023, should be read in conjunction with our Consolidated Financial Statements and the accompanying notes.
Large fluctuations are generally due to changes in our expectations of the realizability of our deferred tax assets. See “ Critical Accounting Estimates ” for further details.
Across these jurisdictions, we have net operating losses, research and development tax credit carryforwards, and other deferred tax assets which materially defray our liability. Large fluctuations in our effective tax rate are generally driven by changes in our expectations of the realizability of our deferred tax assets. See “ Critical Accounting Estimates ” for further details.
Interest Expense, Net Interest expense increased $1.4 million to $6.5 million for the year ended December 31, 2023 from $5.0 million for the year ended December 31, 2022. The increase was the result of year-over-year increases in the reference market interest rates on our outstanding debt.
Interest Expense, Net Interest expense decreased $5.5 million to $1.0 million for the year ended December 31, 2024 from $6.5 million for the year ended December 31, 2023. The decrease was the result of a decrease in outstanding debt and lower rates under the Citizens Credit Facilities after the Debt Refinancing Transactions (as defined below) was completed in January 2024.
We derive an expectation for product returns based on historical return patterns and other factors, including shifts in our regulatory environment and product recalls. Determinations involving other factors are based on our estimates for product at customer sites that are eligible for return.
We derive an expectation for product returns based on historical return patterns and other discrete factors which influence return activity, such as changes in our regulatory environment, product recalls, changes in reimbursement rates, changes in reimbursement eligibility and rules, and other factors also impact return patterns.
Income Tax Provision The effective tax rate for 2023 and 2022 was (120.2)% and (1.0)%, respectively, on pre-tax book income from continuing operations of $30.6 million for 2023 and pre-tax book loss from continuing operations of $19.7 million for 2022.
Income Tax Provision Our effective tax rates for 2024 and 2023 was 26.7% and (120.2)%, respectively, on income from continuing operations before income tax provision of $57.3 million and $30.6 million for 2024 and 2023, respectively. Our effective tax rate in 2024 was favorably impacted by vestings of restricted stock, offset by executive compensation deduction limitations.
Research and Development Expense Our research and development (“ R&D ”) expense remained essentially flat at $12.7 million for the years ended December 31, 2023 and December 31, 2022.
Research and Development Expense Our research and development (“ R&D ”) expense was $12.3 million for the year ended December 31, 2024, compared to $12.7 million for the year ended December 31, 2023. The decrease in R&D expense related to the timing of our product development activities, which primarily related to EPIEFFECT in 2023.
Financing Activities During the year ended December 31, 2023, net cash used in financing activities was $8.6 million, an increase of $8.0 million compared to cash used in financing activities of $0.6 million for the year ended December 31, 2022. During 2023, we repurchased 5,000 shares of our Series B Preferred Stock for $9.5 million.
This was offset by a decrease in capital expenditures, year over year. 44 Financing Activities During the year ended December 31, 2024, net cash used in financing activities was $34.2 million, an increase of $25.6 million compared to $8.6 million for the year ended December 31, 2023. During 2024, we entered into the Citizens Credit Agreement, as described above.
For further details, please see Note 13, Discontinued Operations , to our consolidated financial statements included in Part II, Item 8 of this Annual Report. 40 Components of and Key Factors Influencing Our Results of Continuing Operations In assessing the performance of our business, we consider a variety of performance and financial measures.
Components of and Key Factors Influencing Our Results of Continuing 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.
Investigation, Restatement and Related Expense Investigation, restatement, and related expenses decreased $7.0 million to $5.2 million for the year ended December 31, 2023, compared to $12.2 million for the year ended December 31, 2022. The decrease was related to negotiated reductions in legal fees previously incurred under indemnification agreements with certain former members of management year-over-year.
Investigation, Restatement and Related Expense Investigation, restatement, and related expenses for the year ended December 31, 2024 was a benefit of $8.7 million, compared to expense of $5.2 million for the year ended December 31, 2023. The benefit was resulted from various settlements related to former officers and other related matters during 2024.
The fair value of equity incentive awards, which are usually shares of our common stock, are generally measured at the last trading price on the grant date. The fair value of stock options is calculated using an appropriate valuation technique.
The fair value of restricted stock units and performance stock units are generally measured at the last trading price on the grant date. Options are measured using an appropriate option pricing model using applicable inputs as of the grant date. In each case, the grant date fair value is adjusted for the presence of any market conditions.
Our effective tax rate for the year ended December 31, 2023 was significantly influenced by the reversal of a valuation allowance, reflecting a change in the determination of the likelihood of the realizability of certain of the Company’s deferred tax assets as of that date.
Our effective tax rate for the year ended December 31, 2023 was significantly impacted by the reversal of a valuation allowance. In the period, the Company noted that it was no longer in a cumulative three-year loss on a continuing operations basis, after excluding the effects of permanent book-tax differences.
On February 27, 2024, we repaid the initial $30.0 million drawing under the Revolving Credit Facility. Hayfin Term Loan In June 2020, we entered into the Hayfin Loan Agreement, under which Hayfin provided us with a senior secured term loan of $50 million (the “ Hayfin Term Loan ”).
In February 2024, we repaid the initial $30.0 million drawing under the Revolving Credit Facility. There were no borrowings on the Revolving Credit Facility outstanding as of December 31, 2024.
Amortization of Intangible Assets Amortization expense related to intangible assets increased $0.1 million from $0.7 million for the year ended December 31, 2022 to $0.8 million for the year ended December 31, 2023.
We do not expect activity to be material in future periods. 42 Amortization of Intangible Assets Amortization expense related to intangible assets were $0.8 million for each of the years ended December 31, 2024 and 2023. Impairment of Intangible Assets Impairment for the year ended December 31, 2024 was $0.4 million, which relates to abandoned patents.
Changes in return patterns or unforeseen changes in regulations or identified product recalls could cause returns significantly in excess of this estimate. Income Taxes Description We record a valuation allowance to offset our net deferred tax asset to the extent that realization is not likely.
Sensitivity of Estimate to Change We have accrued $2.0 million for sales returns as of December 31, 2024. Changes in return patterns or unforeseen changes in regulations or identified product recalls could cause returns significantly in excess of this estimate.
The increase in margin was driven by a higher proportion of sales with lower manufacturing costs as well as increased throughput efficiencies compared to 2022. Cost of sales for the year ended December 31, 2023 was $54.6 million, an increase of $6.3 million, or 13.1%, compared to $48.3 million for the year ended December 31, 2022.
This effect was offset by a favorable product mix and our continued execution on scrap improvement projects, partially offset by throughput pressures. Cost of sales for the year ended December 31, 2024 was $60.1 million, an increase of $5.4 million, or 10.0%, compared to $54.6 million for the year ended December 31, 2023.
Removed
Operating and financial highlights during the year include: • Fourth quarter and full year 2023 net sales of $86.8 million and $321.5 million, respectively, reflecting 16.7% and 20.0% growth over the fourth quarter and full year 2022, respectively. • Net income from continuing operations for the fourth quarter and full year 2023 of $51.3 million and $67.4 million, respectively. • Announced strategic realignment of the Company, increasing focus on Wound & Surgical business and significantly improving profitability; disbanded the Regenerative Medicine business unit and suspended knee osteoarthritis clinical trial program. • Launched EPIEFFECT, the latest addition to the Company’s broad portfolio of Advanced Wound Care products. • Announced conversion of outstanding Series B convertible preferred stock to common stock. • Appointed new members to the Company’s Executive Leadership Team, including a new CEO, CFO and Chief Operating Officer.
Added
This growth was driven by a combination of commercial execution and demand for newer products, despite ongoing Medicare reimbursement uncertainty for the private office and associated care settings as well as a higher than normal level of customer and employee turnover in the middle of the year.
Removed
By specific source material, our primary platform technologies include tissue allografts derived from human placental membrane (EPIFIX, AMNIOFIX, EPIEFFECT, and AMNIOEFFECT), tissue allografts derived from human umbilical cord (EPICORD and AMNIOCORD), and a particulate extracellular matrix derived from human placental disc (AXIOFILL).
Added
Operating and financial highlights during the year include: • Fourth quarter and full year 2024 net sales of $92.9 million and $348.9 million, respectively, reflecting 7.0% and 8.5% growth over the fourth quarter and full year 2023, respectively. • GAAP net income for the fourth quarter and full year 2024 of $7.4 million and $42.0 million, respectively. • Announced improved capital structure with new credit facilities that provide substantial interest savings over the Company’s prior indebtedness and access to additional capital in support of the Company’s strategic priorities • Introduced e-commerce and account management platform, MIMEDX Connect, designed to streamline ordering, payment processing, and reimbursement submissions for our customers, • Entered into an exclusive agreement providing the Company with rights to commercialize HELIOGEN, a 510(k) cleared, bovine-derived collagen matrix particulate that is indicated for the management of exudating wounds, which launched commercially during the second half of 2024 • Announced publication focused on surgical applications using MIMEDX placental-based allografts in Nature - Scientific Reports.
Removed
Please note that, subsequent to the publication of our 2022 Annual Report, we announced our plan to disband our Regenerative Medicine business unit, the results of which we believe are not material to an understanding of our financial condition, changes in financial condition and results of operation, is now classified as discontinued operations.
Added
The study adds to the Company’s growing body of evidence and expands the understanding of the regulatory capabilities of its DHACM and LHACM allografts on the fibrotic process • Highlighted the publication of a feature article on placental allografts for patients with hard-to-heal, acute and chronic wounds, which was published in the New York Times: “Her Face Was Unrecognizable After an Explosion.
Removed
Fluctuations in our cost of goods sold correspond with the fluctuations in these costs as well as sales volume. Gross profit is calculated as net sales less cost of goods sold. Gross margin is calculated as gross profit divided by net sales.
Added
A Placenta Restored It” On April 13, 2025, new LCDs are currently scheduled to go into effect which will modify the reimbursement of skin substitutes in physician office settings. Among other changes, many allografts that have been covered will no longer be reimbursed for DFUs and/or VLUs.
Removed
Our sales by care setting were as follows (amounts in thousands): Year Ended December 31, Change 2023 2022 $ % Hospital $ 187,000 $ 163,206 $ 23,794 14.6 % Private Office 95,789 77,158 $ 18,631 24.1 % Other 38,688 27,477 $ 11,211 40.8 % Total $ 321,477 $ 267,841 $ 53,636 20.0 % Net sales in the Hospital setting were $187.0 million for the year ended December 31, 2023, a $23.8 million, or 14.6% increase, compared to $163.2 million for the year ended December 31, 2022.
Added
While EPIFIX and EPICORD continue to be covered under the new LCD, certain of our other products are not currently included.
Removed
The increase was primarily driven by sales of our new products introduced since the third quarter of 2022, particularly AMNIOEFFECT. Net sales in the Private Office setting grew by $18.6 million, or 24.1%, to $95.8 million for the year ended December 31, 2023, compared to $77.2 million for the year ended December 31, 2022.
Added
From time to time, we will also acquire, manufacture and market other products in the wound care, surgical or other products in response to market demands or to maintain our competitive position. In 2024, we also launched HELIOGEN, a particulate xenograft product aimed at addressing complex wounds primarily in the surgical setting.
Removed
The increase reflects general increases in sales volume, driven by strong commercial execution, an evolving Medicare reimbursement landscape in this site of service and sales of our new products introduced since the fourth quarter of 2023.
Added
Net sales consists of the gross selling price of the product, less any discounts, rebates and other customer incentives, fees paid to GPOs, and returns.
Removed
Net sales in Other care settings increased by $11.2 million, or 40.8%, to $38.7 million for the year ended December 31, 2023 compared to $27.5 million for the year ended December 31, 2022.
Added
Regulatory actions, including with respect to reimbursement for our products, may require costly expenditures or result in pricing pressure, and may decrease our gross profit and gross margin. Selling, general and administrative expense Selling, general and administrative expense consists of both selling and marketing (“ S&M ”) and general and administrative (“ G&A ”) expenses.
Removed
The increase was primarily driven by the addition of new customers in certain other sites of service and, to a lesser extent, initial contributions related to our commercial efforts in Japan. 42 Gross Margin and Cost of Sales Gross margin in 2023 was 83.0%, compared to 82.0% in 2022.
Added
Our effective tax rate is also impacted by other permanent items, primarily executive compensation limitations and windfall or shortfall on the vesting of stock awards.
Removed
The increase was driven by higher levels of sales commissions due to higher sales volumes, as well as increases in stock-based compensation in 2023. These increases were partially offset by a decrease in certain administrative expenses, including severance expenses associated with the departure of our former CEO in 2022.
Added
Our sales by product category were as follows (amounts in thousands): 41 Year Ended December 31, % of net sales Change 2024 2023 2024 2023 $ % Wound $ 231,004 $ 205,660 66 % 64 % $ 25,344 12.3 % Surgical 117,875 115,817 34 % 36 % $ 2,058 1.8 % Net sales $ 348,879 $ 321,477 100 % 100 % $ 27,402 8.5 % Net sales in the Wound category were $231.0 million for the year ended December 31, 2024, a $25.3 million, or 12.3% increase, compared to $205.7 million for the year ended December 31, 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+0 added−1 removed0 unchanged
Biggest changeAs of December 31, 2023, after giving effect to the Debt Refinancing Transactions, the interest rate on our Term Loan Facility was 7.9%. A 100-basis point change in SOFR would change interest expense by $0.5 million on an annualized basis.
Biggest changeAs of December 31, 2024, the interest rate on our Term Loan Facility was 6.7%. A 100-basis point change in SOFR would change interest expense by $0.2 million on an annualized basis. 47
Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to risks associated with changes in interest rates that could adversely affect our results of operations and financial condition. We do not hedge against interest rate risk. The interest rate on our new Term Loan Facility is currently determined quarterly based on the 1-month SOFR.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to risks associated with changes in interest rates that could adversely affect our results of operations and financial condition. We do not hedge against interest rate risk. Interest Rate Risk The interest rate on our Term Loan Facility is currently determined quarterly based on the 1-month SOFR.
Removed
During the year ended December 31, 2023, we incurred $1.5 million in incremental interest expense as a result of increases in relevant reference rates during the year under the Hayfin Loan Agreement. 48

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