Axogen, Inc.

Previous wording

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (“OBBBA”). The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act of 2017, including 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation. We are currently evaluating the impact of the OBBBA.

Current wording

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (“OBBBA”). The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act of 2017, including 100% bonus depreciation, domestic research and development cost expensing, and the business interest expense limitation. The new legislation did not have a material impact on our effective tax rate in 2025.

Previous wording

•Revenues were $56,662 for the quarter ended June 30, 2025, an increase of $8,750 or 18.3% compared to the quarter ended June 30, 2024.

Current wording

•Revenues were $60,082 for the quarter ended September 30, 2025, an increase of $11,438 or 23.5% compared to the quarter ended September 30, 2024.

Previous wording

•Gross profit was $42,018 for the quarter ended June 30, 2025, an increase of $6,673 or 18.9% compared to the quarter ended June 30, 2024.

Current wording

•Gross profit was $45,993 for the quarter ended September 30, 2025, an increase of $9,555 or 26.2% compared to the quarter ended September 30, 2024.

Previous wording

•Expanded coverage and reimbursement for nerve repair for peripheral nerve injuries using synthetic conduits or allografts by an estimated approximately 10 million new covered lives during 2025; bringing the total new lives covered in 2025 to an estimated approximately 17 million which brings coverage amongst private payers to more than 55%.

Current wording

•Expanded coverage and reimbursement for nerve repair for peripheral nerve injuries using synthetic conduits or allografts, increasing the total number of new lives covered in 2025 to approximately 18.1 million and bringing coverage amongst commercial payers to more than 64%.

Previous wording

Revenues for the three months ended June 30, 2025 increased $8,750, or 18.3%, to $56,662, as compared to $47,912 for the three months ended June 30, 2024. The increase in revenues was driven by an increase in unit volume of approximately 12.2%, as well as the net impact of changes in price and product mix of approximately 3.1% and 3.0%, respectively.

Current wording

Revenues for the three months ended September 30, 2025 increased $11,438, or 23.5%, to $60,082, as compared to $48,644 for the three months ended September 30, 2024. The increase in revenues was primarily driven by an increase in unit volume and mix, as well as the impact of changes in price.

Previous wording

Gross profit for the three months ended June 30, 2025 increased $6,673, or 18.9%, to $42,018, as compared to $35,345 for the three months ended June 30, 2024. Gross margin as a percentage of revenues was 74.2% and 73.8% for the three months ended June 30, 2025 and 2024, respectively. Higher margins, driven by lower inventory write-offs and shipping costs on products sold, increased gross margin by 0.9%, partially offset by higher product costs that lowered gross margin by 0.5%.

Current wording

Gross profit for the three months ended September 30, 2025 increased $9,555, or 26.2%, to $45,993, as compared to $36,438 for the three months ended September 30, 2024. Gross margin as a percentage of revenues was 76.6% and 74.9% for the three months ended September 30, 2025 and 2024, respectively. Higher margins, driven by lower inventory write-offs and shipping costs on products sold, increased gross margin by 1.7%, partially offset by higher product costs that lowered gross margin by 0.4%.

Previous wording

Other expense, net for the three months ended June 30, 2025 decreased $400, or 26.8%, to $1,093, as compared to $1,493 for the three months ended June 30, 2024. The decrease in other expense, net was primarily due to increases of (i) $178 in other income and (ii) $16 in the change in fair value of the debt derivative liabilities and a decrease of $208 in interest expense.

Current wording

Other expense, net for the three months ended September 30, 2025 decreased $338, or 21.9%, to $1,204, as compared to $1,542 for the three months ended September 30, 2024. The decrease in total other expense, net was primarily due to increases of (i) $196 in the change in fair value of the debt derivative liabilities and (ii) $73 in other income and a decrease of $136 in interest expense. These decreases were partially offset by a decrease of $90 in rental income.

Previous wording

Revenues for the six months ended June 30, 2025 increased $15,933, or 17.8%, to $105,222, as compared to $89,289 for the six months ended June 30, 2024. The increase in revenues was primarily driven by an increase in unit volume of approximately 11.8%, as well as the net impact of changes in price and product mix of approximately 3.0% and 2.5%, respectively.

Current wording

Revenues for the nine months ended September 30, 2025 increased $27,371, or 19.8%, to $165,304, as compared to $137,933 for the nine months ended September 30, 2024. The increase in revenues was primarily driven by an increase in unit volume and mix, as well as the impact of changes in price.

Previous wording

Gross profit for the six months ended June 30, 2025 increased $8,987, or 13.2%, to $76,951, as compared to $67,964 for the six months ended June 30, 2024. Gross margin as a percentage of revenues was 73.1% and 76.1% for the six months ended June 30, 2025 and 2024, respectively. Lower margins on products sold, driven by higher product costs, lowered gross margin by 2.8% and an increase in inventory write-offs lowered gross margin by 0.5%. These decreases were partially offset by an increase of 0.4% from lower shipping costs on products sold.

Current wording

Gross profit for the nine months ended September 30, 2025 increased $18,542, or 17.8%, to $122,944, as compared to $104,402 for the nine months ended September 30, 2024. Gross margin as a percentage of revenues was 74.4% and 75.7% for the nine months ended September 30, 2025 and 2024, respectively. Lower margins on products sold, driven by higher product costs, lowered gross margin by 1.9%. This decrease was partially offset by increases of 0.4% from lower shipping costs on products sold and 0.2% from lower inventory write-offs.

Previous wording

Following is a summary of the change in costs and expenses for the six months ended June 30, 2025:

Current wording

Following is a summary of the change in costs and expenses for the nine months ended September 30, 2025:

Previous wording

(1)The decrease in research and development costs and expenses was primarily due to product development and clinical expenses. Product development costs include spending for a number of specific programs, including the non-clinical expenses related to the BLA for Avance Nerve Graft. Product development costs and expenses represented approximately 56% and 57% of total research and development costs and expenses for the six months ended June 30, 2025 and 2024, respectively. Clinical trial costs and expenses represented approximately 44% and 43% of total research and development costs and expenses for the six months ended June 30, 2025 and 2024, respectively.

Current wording

(2)The decrease in research and development costs and expenses was primarily due to product development and clinical expenses. Product development costs include spending for a number of specific programs, including the non-clinical expenses related to the BLA for Avance® Nerve Graft. Product development costs and expenses represented approximately 42% and 54% of total research and development costs and expenses for the nine months ended September 30, 2025 and 2024, respectively. Clinical trial costs and expenses represented approximately 46% of total research and development costs and expenses for the nine months ended September 30, 2025 and 2024.

Previous wording

Other expense, net for the six months ended June 30, 2025 decreased $302, or 8.5%, to $3,266, as compared to $3,568 for the six months ended June 30, 2024. The decrease in other expense, net was primarily due to decreases of (i) $285 in interest expense and (ii) $247 in other expense. These decreases were partially offset by decreases of (i) $207 in the change in fair value of the debt derivative liabilities and (ii) $23 in investment income.

Current wording

Other expense, net for the nine months ended September 30, 2025 decreased $640, or 12.5%, to $4,470, as compared to $5,110 for the nine months ended September 30, 2024. The decrease in total other expense, net was primarily due to a decrease of $421 in interest expense and $167 of Other income, net during the nine months ended September 30, 2025 as compared to $153 of Other expense, net during the nine months ended September 30, 2024. These decreases were partially offset by decreases of $90 in rental income and $11 in the change in fair value of the debt derivative liabilities.

Previous wording

We had no income tax expense or benefit during the six months ended June 30, 2025 and 2024 due to the incurrence of net operating losses in both periods, the benefits of which have a full valuation allowance. From time to time, we receive notices of examination of prior tax filings from federal and state authorities. The Internal Revenue Service is currently examining our 2021 federal income tax return. We do not believe that there are any material additional tax expenses or benefits.

Current wording

We had no income tax expense or benefit during the nine months ended September 30, 2025 and 2024 due to the incurrence of net operating losses in both periods, the benefits of which have a full valuation allowance. From time to time, we receive notices of examination of prior tax filings from federal and state authorities. The Internal Revenue Service is currently examining our 2021 federal income tax return. We do not believe that there are any material additional tax expenses or benefits.

Previous wording

In preparing our financial statements in accordance with generally accepted accounting principles, there are certain accounting policies, which may require substantial judgment or estimation in their application. We believe our accounting policies for Inventories, Derivative Instruments and Stock-based Compensation, as well as the others set forth in Note 2 -Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements in our 2024 Annual Report on Form 10-K, are critical to understanding our results of operations and financial condition. See Critical Accounting Estimates in our 2024 Annual Report on Form 10-K. Actual results could differ from our estimates and assumptions, and any such differences could be material to our results of operations and financial cond ition. During the quarter covered by this report, there have been no material changes to the accounting estimates and assumptions previously disclosed.

Current wording

In preparing our financial statements in accordance with generally accepted accounting principles, there are certain accounting policies, which may require substantial judgment or estimation in their application. We believe our accounting policies for Inventories, Derivative Instruments and Stock-based Compensation, as well as the others set forth in Note 2 -Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements in our 2024 Annual Report on Form 10-K, are critical to understanding our results of operations and financial condition. See Critical Accounting Estimates in our 2024 Annual Report on Form 10-K. Actual results could differ from our estimates and assumptions, and any such differences could be material to our results of operations and financial condition. During the quarter covered by this report, there have been no material changes to the accounting estimates and assumptions previously disclosed.

Previous wording

As of June 30, 2025, our principal sources of liquidity were our cash and cash equivalents and investments totaling $29,922. Our cash equivalent is comprised of a money market mutual fund and our investments consist of U.S. Treasuries. Our cash and cash equivalents and investments decreased $3,560 to $29,922 from $33,482 at December 31, 2024, primarily as a result of paying annual bonuses and the expenses incurred in connection with conducting our national sales meeting in the first quarter of 2025, partially offset by collections of receivables and proceeds from the exercise of stock options.

Current wording

As of September 30, 2025, our principal sources of liquidity were our cash and cash equivalents and investments totaling $35,791. Our cash equivalent is comprised of a money market mutual fund and our investments consist of U.S. Treasuries. Our cash and cash equivalents and investments increased $2,309 to $35,791 from $33,482 at December 31, 2024, primarily as a result of an increase in proceeds from the exercise of stock options and the release of $2,000 of restricted cash under the contractual terms of a lease agreement, partially offset by cash used for the payment of annual bonuses and expenses incurred in connection with conducting our national sales meeting during the first quarter of 2025.

Previous wording

On June 30, 2025 and December 31, 2024, our current assets exceeded our current liabilities by $78,439 and $68,607, respectively, and we had a current ratio of 4.1x and 3.2x, respectively. Based on current estimates, we believe that our existing cash and cash equivalents and investments, as well as cash provided by sales of our products, will allow us to fund our operations through at least the next twelve months from the date of issuance of the accompanying financial statements.

Current wording

On September 30, 2025 and December 31, 2024, our current assets exceeded our current liabilities by $86,448 and $68,607, respectively, and we had a current ratio of 4.1x and 3.2x, respectively. Based on current estimates, we believe that our existing cash and cash equivalents and investments, as well as cash provided by sales of our products, will allow us to fund our operations through at least the next twelve months from the date of issuance of the accompanying financial statements.

Previous wording

Net cash used in operating activities was $5,449 and $8,101 during the six months ended June 30, 2025 and 2024, respectively. The decrease in net cash used in operating activities of $2,652, or 32.7%, was due a decrease in net loss of $5,301, partially offset by the net unfavorable change of $2,588 in working capital accounts and noncash charges of $29.

Current wording

Net cash used in operating activities was $2,226 and $4,200 during the nine months ended September 30, 2025 and 2024, respectively. The decrease in net cash used in operating activities of $1,974, or 47.0%, was due a decrease in net loss of $7,867, partially offset by the net unfavorable change of $5,666 in working capital accounts and noncash charges of $90.

Previous wording

Net cash used in investing activities for the six months ended June 30, 2025 was $5,608 compared to $4,484 for the six months ended June 30, 2024. The unfavorable change in net cash used in investing activities of $1,124 was primarily due to the purchase of $7,837 of investments, offset by the sale of $4,000 of investments during the six months ended June 30, 2025, compared to purchases of $1,911 of investments during the six months ended June 30, 2024, and the decrease in purchases of property and equipment of $856.

Current wording

Net cash used in investing activities for the nine months ended September 30, 2025 was $9,359 compared to $9,484 for the nine months ended September 30, 2024. The favorable change in net cash used in investing activities of $125 was primarily due to the sale of $8,000 of investments, offset by the purchase of $13,723 of investments during the nine months ended September 30, 2025, compared to purchases of $5,773 of investments during the nine months ended September 30, 2024, and a decrease in payments for intangible assets of $142, partially offset by an increase in purchases of property and equipment of $67.

Previous wording

Net cash provided by financing activities was $3,539 and $748 for the six months ended June 30, 2025 and 2024, respectively, an increase of $2,791 due primarily to the increase in proceeds from the exercise of stock options.

Current wording

Net cash provided by financing activities was $5,933 and $1,320 for the nine months ended September 30, 2025 and 2024, respectively, an increase of $4,613 primarily due to an increase in proceeds from the exercise of stock options.

Previous wording

As of June 30, 2025, we had $50,000 outstanding in indebtedness under the Credit Facility with $35,000 maturing on June 30, 2027 and $15,000 maturing on June 30, 2028. Quarterly interest only and revenue participation payments are due through each of the maturity dates. Interest is calculated as 7.5% plus the greater of the forward-looking term rate based on the secured overnight financing rate as set by the Federal Reserve Bank of New York plus 0.10% (“Adjusted SOFR”) or 2.0% (11.90% as of June 30, 2025). Revenue participation payments are calculated as a percentage of our net revenues, up to $70,000 in any given year, adding approximately 1.5% per year of additional interest payments on the outstanding indebtedness. Upon each maturity date or upon such date earlier repayment occurs, we will repay the principal balance and provide a make-whole payment calculated to generate an internal rate of return to the lender equal to 11.5%, less the total of all quarterly interest and revenue participation payments previously paid. See Note 8 -Long-Term Debt, Net of Debt Discount and Financing Fees and Note 13 -Commitments and Contingencies in the Notes to the Condensed Consolidated Financial Statements in this Form 10-Q.

Current wording

As of September 30, 2025, we had $50,000 outstanding in indebtedness under the Credit Facility with $35,000 maturing on June 30, 2027 and $15,000 maturing on June 30, 2028. Quarterly interest only and revenue participation payments are due through each of the maturity dates. Interest is calculated as 7.5% plus the greater of the forward-looking term rate based on the secured overnight financing rate as set by the Federal Reserve Bank of New York plus 0.10% (“Adjusted SOFR”) or 2.0% (11.89% as of September 30, 2025). Revenue participation payments are calculated as a percentage of our net revenues, up to $70,000 in any given year, adding approximately 1.5% per year of additional interest payments on the outstanding indebtedness. Upon each maturity date or upon such date earlier repayment occurs, we will repay the principal balance and provide a make-whole payment calculated to generate an internal rate of return to the lender equal to 11.5%, less the total of all quarterly interest and revenue participation payments previously paid. See Note 8 -Long-Term Debt, Net of Debt Discount and Financing Fees and Note 13 -Commitments and Contingencies in the Notes to the Condensed Consolidated Financial Statements in this Form 10-Q.