Axogen, Inc.

Notes to Condensed Consolidated Financial Statements

1. Nature of Business

Axogen, Inc. (together with its wholly-owned subsidiaries, the “Company”) was incorporated in Minnesota. The Company’s business is focused on the science, development and commercialization of the technologies used for peripheral nerve regeneration and repair. The Company’s products include Avance® (acellular nerve allograft-arwx), Avance® Nerve Graft, Axoguard Nerve Connector®, Axoguard Nerve Protector®, Axoguard HA+ Nerve Protector™, Axoguard Nerve Cap®and Avive+ Soft Tissue Matrix™. The Company is headquartered in Florida. The Company has processing, warehousing and distribution facilities in Ohio and Texas.

The Company manages its operations as a single operating segment. Substantially all of the Company’s assets are maintained in the United States (“U.S.”). The Company derives substantially all of its revenues from sales to customers in the U.S.

2. Summary of Significant Accounting Policies

Please see Note 2 -Summary of Significant Accounting Policies to the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (“2025 Annual Report on Form 10-K”), filed with the SEC on February 24, 2026, for a description of all significant accounting policies.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company as of March 31, 2026 and December 31, 2025 and for the three months ended March 31, 2026 and 2025. The Company’s condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X and therefore do not include all information and footnotes necessary for a fair presentation of consolidated financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the U.S. (“U.S. GAAP”) and should be read in conjunction with the audited financial statements of the Company for the year ended December 31, 2025, which are included in the 2025 Annual Report on Form 10-K.

The interim condensed consolidated financial statements are unaudited, and in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation of results for the periods presented. The results of operations for the three months ended March 31, 2026 are not necessarily indicative of the results to be expected for the full year due primarily to the impact of the continued uncertainty of general economic conditions that may impact the Company’s markets for the remainder of fiscal year 2026. All intercompany accounts and transactions have been eliminated in consolidation.

Cash and Cash Equivalents and Concentration

Cash and cash equivalents consist of short-term, highly liquid investments with original maturities of three months or less from the date of acquisition. Certain of the Company’s cash and cash equivalents balances exceed Federal Deposit Insurance Corporation (“FDIC”) insured limits or are invested in money market accounts with investment banks that are not FDIC-insured. The Company places its cash and cash equivalents in what it believes to be credit-worthy financial institutions. As of March 31, 2026, $82,154 of the cash and cash equivalents balance were not FDIC-insured or were in excess of FDIC limits.

Restricted Cash

The following table provides a reconciliation of Cash and cash equivalents, and Restricted cash reported on the Condensed Consolidated Balance Sheets that sum to the total of the same amounts shown on the Condensed Consolidated Statements of Cash Flows as of the periods presented:

Amounts included in restricted cash represent collateral for an irrevocable standby letter of credit required to meet contractual terms of a lease agreement held by the Company. See Note 8 -Long-Term Debt, Net of Debt Discount and Financing Fees -Other Credit Facilities.

Shares Withheld to Satisfy Employee Tax Obligations

Upon vesting or settlement of certain share‑based awards, the Company may withhold a portion of the shares otherwise issuable to employees in order to satisfy statutory income and payroll tax withholding requirements. The shares withheld are not issued and therefore are not considered shares repurchased by the Company or reported as treasury stock. The Company records a liability for the amount of taxes to be remitted to tax authorities, and such cash payments are classified as financing activities within the Condensed Consolidated Statements of Cash Flows.

Recent Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03 —Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40)— Disaggregation of Income Statement Expenses (“ASU 2024-03”), and in January 2025, the FASB issued ASU 2025-01 —Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”). ASU 2024-03 requires additional disclosure of the nature of expenses included in the statement of operations as well as disclosures about specific types of expenses included in the expense captions presented in the statement of operations. ASU 2024-03, as clarified by ASU 2025-01, is effective for annual periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Both early adoption and retrospective application are permitted. Upon adoption, the Company expects to enhance expense disclosures based on the new requirements.

In September 2025, the FASB issued ASU 2025-06 —Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). ASU 2025-06 was issued to modernize the accounting for software costs that are accounted for under Subtopic 350-40, including removing reference to “project stages” and adding the “probable-to-complete recognition threshold.” ASU 2025-06 is effective for annual periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating these new requirements.

In December 2025, the FASB issued ASU 2025-11 —Interim Reporting (Topic 270): Narrow-Scope Improvements (“ASU 2025-11”). ASU 2025-11 clarifies the interim reporting guidance in the Accounting Standards Codification (“ASC”), adding a comprehensive list of required interim disclosures and a principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for interim periods within annual periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating these new disclosure requirements.

All other ASUs issued and not yet effective as of March 31, 2026 and through the date of this report, were assessed and determined to be either not applicable or are expected to have minimal impact on the Company’s current or future financial position or results of operations.

3. Inventory

Inventory consists of the following as of the periods presented:

4. Property and Equipment, Net

Property and equipment, net consists of the following as of the periods presented:

Depreciation expense is as follows for the periods presented:

5. Intangible Assets, Net

Intangible assets, net consist of the following as of the periods presented:

Amortization expense is as follows for the periods presented:

As of March 31, 2026, future amortization of patents is as follows:

6. Fair Value Measurements

The following tables present the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of the periods presented:

The changes in Level 3 liabilities measured at fair value on a recurring basis for the periods indicated were as follows:

There were no changes in the levels or methodology of the measurement of financial assets or liabilities during the three months ended March 31, 2026 and 2025.

The fair values of cash, restricted cash, accounts receivable, accounts payable and accrued expenses approximate the carrying values because of the short-term nature of these instruments.

7. Leases

The Company leases administrative, manufacturing, research, and distribution facilities through operating leases. Several leases include fixed payments, including rent and non-lease components such as common area or other maintenance costs.

The components of total operating lease expense and sublease income are as follows for the periods indicated:

Supplemental balance sheet information related to the operating and financing leases is as follows as of the periods indicated:

(1)Financing leases are included in Property and equipment, net on the Condensed Consolidated Balance Sheets.

Future minimum lease payments under operating and financing leases as of March 31, 2026 are as follows:

Lease Modifications

The Company accounts for lease revisions as a lease modification in accordance with FASBASC 842, Leases, when the modification effectively terminates the existing lease and creates a new lease.

The Company and Progress Park Buildings Alachua, LLC, a Florida limited liability company (as successor in interest to Alachua Copeland Park Investments, LLC, a Florida limited liability company, who was successor in interest to Ology Bioservices Holdings, LLC, a Delaware limited liability company, who was successor in interest to SNH Medical Office Properties Trust), are parties to a lease dated February 6, 2007, as amended (the “Primary Lease”). Pursuant to the Primary Lease, the Company leases an approximately 19,000 square foot corporate headquarters facility in Alachua, Florida. On February 24, 2026, the Company entered into a seventh amendment to the Primary Lease to extend the term of the Primary Lease to December 31, 2031. The Company recorded a right-of-use asset and lease liability of $1,967 related to this extension.

8. Long-Term Debt, Net of Debt Discount and Financing Fees

Credit Facility

In June 2020, the Company entered into a credit facility (the “Credit Facility”) with Oberland Capital and its affiliates, TPC Investments II LP and Argo LLC (collectively, the “Lender”). The Company obtained the first tranche of the Credit Facility of $35,000 at closing on June 30, 2020. On June 30, 2021, the second tranche of the Credit Facility of $15,000 was drawn down by the Company. Each tranche of the Credit Facility had a term ofseven years from the date of issuance.

During the three months ended March 31, 2026 and 2025, the Company paid Credit Facility debt interest of $438 and $1,489, respectively, to the Lender.

In connection with the Credit Facility, the Company entered into a revenue participation agreement (the “Revenue Participation Agreement”) with the Lender, which provided a quarterly royalty payment as a percentage of the Company’s net revenues, up to $70,000 in any given year. The Company recorded $186 and $524 as interest expense for this Revenue Participation Agreement for the three months ended March 31, 2026 and 2025, respectively.

Upon repayment of the Credit Facility, the Company was required to 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 royalty payments previously paid to the Lender (the “Make-Whole Payment”).

On January 20, 2026, the Company entered into a payoff letter with the Lender (the “Payoff Letter”). Pursuant to the Payoff Letter, the final payoff amount was $69,707 (the “Payoff Amount”). Upon payment of the Payoff Amount on January 28, 2026 and satisfaction of the other conditions specified in the Payoff Letter, all obligations under the Credit Facility, including the Make-Whole Payment, were paid in full, all liens and security interests securing such obligations were released, and the Credit Facility and related loan documents were terminated, subject to certain customary surviving provisions. Payment of the Payoff Amount was funded by proceeds from an underwritten public offering of an aggregate of 4,600,000 shares of the Company’s common stock, $0.01 par value per share, at a public offering price of $31.00 per share (the “Offering”) completed by the Company on January 23, 2026. See Note 9 -Stockholders’ Equity for additional details regarding the Offering.

In connection with the repayment of the Credit Facility, the Company recorded a loss on extinguishment of debt of $16,849 during the three months ended March 31, 2026.

Other Credit Facilities

The Company had restricted cash of $2,000 and $4,000 at March 31, 2026 and December 31, 2025, respectively which represents collateral for an irrevocable standby letter of credit required to meet contractual terms of a lease agreement held by the Company.

9. Stockholders’ Equity

On January 21, 2026, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Wells Fargo Securities, LLC and Mizuho Securities USA LLC, as representatives of the underwriters (the “Underwriters”). Pursuant to the terms and conditions of the Underwriting Agreement, the Company agreed to sell 4,000,000 shares of its common stock, $0.01 par value per share, at a public offering price of $31.00 per share, plus an additional 600,000 shares pursuant to the Underwriters’ option to purchase additional shares. The Offering closed on January 23, 2026 with a sale of 4,600,000 shares.

The Company received net proceeds from the Offering of $133,252, after deducting the underwriting discounts and commissions, and expenses in connection with the Offering. Net proceeds from the Offering were used for the early payoff and termination of the Credit Facility for a final repayment amount of $69,707. The remaining net proceeds will be used for working capital, capital expenditures and other general corporate purposes. See Note 8 -Long-Term Debt, Net of Debt Discount and Financing Fees for details regarding the termination of the Credit Facility.

10. Stock-Based Compensation

The Company’s stock-based compensation plans are described in Note 11 -Stock-Based Compensation to its consolidated financial statements included in the 2025 Annual Report on Form 10-K.

During the three months ended March 31, 2026, the following stock-based awards were granted to officers and employees. All awards were granted under the 2019 Amended and Restated Long-Term Incentive Plan.

(1)Restricted Stock Units (“RSUs”) awarded to certain officers and employees during the first quarter of 2026 vest 50% after 24 months and an additional 25% on the third and fourth anniversaries of the grant date.

(2)Performance Stock Units (“PSUs”) were awarded to certain executive officers and other employees during the first quarter of 2026 with a target of 381,000 shares and performance metrics tied to the Company’s revenue compounded annual growth rate (“CAGR”) from 2026 through 2028 and total shareholder return (“TSR”) relative to its peers (“2026 CAGR TSR PSUs”) with a payout ranging from 0% to 200% upon achievement of specific revenue CAGR and relative TSR goals. The 2026 CAGR TSR PSUs vest at the end of thethree-year period upon determination of the results at the end of the performance period. PSUs were awarded to certain employees during the first quarter of 2026 with a target of 46,452 shares and performance metrics tied to the achievement of sales quota goals.

Non-cash stock-based compensation expense is included in the following line items on the Condensed Consolidated Statements of Operations as follows for the periods indicated:

11. Net Loss Per Common Share

The following reflects the net loss attributable to common shareholders and share data used in the basic and diluted net loss per common share computations using the two-class method for the periods indicated:

(1)These common equivalent shares are not included in the diluted per share calculations as they would be dilutive if the Company was in a net income position.

12. Income Taxes

The Company hasnot recorded material income tax expense or income tax benefit for the three months ended March 31, 2026 and 2025 due to the generation of fiscal year net operating losses, the benefits of which have been fully reserved.

Deferred income taxes are accounted for using the balance sheet approach, which requires recognition of deferred tax assets and liabilities for the expected future consequences of temporary differences between the financial reporting basis and the tax basis of assets and liabilities as measured by enacted state and federal tax rates. A valuation allowance is provided to reduce the deferred tax assets reported if, based on the weight of the evidence, it is more-likely-than-not that a portion or none of the deferred tax assets will be realized. As of March 31, 2026 and December 31, 2025, management assessed the realizability of deferred tax assets. After consideration of all the evidence, including reversal of deferred tax liabilities, future taxable income and other factors, management determined that a full valuation allowance was necessary as of March 31, 2026 and December 31, 2025. A portion of the net operating loss carryforwards may expire due to limitations imposed by Section 382 of the Internal Revenue Code (“IRC”). In addition, future utilization of the available net operating loss carryforwards may be limited under IRC Section 382 as a result of changes in ownership.

In the normal course of business, the Company is subject to examination by taxing authorities throughout the U.S. The Company’s remaining open tax years subject to examination by federal tax authorities include the years ended December 31, 2022 through 2025. During the three months ended March 31, 2026, the Internal Revenue Service (“IRS”) completed examining the Company’s 2021 federal income tax return with no material findings. The Company’s remaining open tax years subject to examination by state and foreign tax authorities include the years ended December 31, 2020 through 2025. However, for tax years 2004 through 2021, federal and state taxing authorities may examine and adjust loss carryforwards in the years in which those loss carryforwards are ultimately utilized.

13. Segments

The Company determines its operating segments in accordance with FASB ASC 280, Segment Reporting (“ASC 280”). ASC 280 defines operating segments as components where discrete financial information is regularly reviewed by the chief operating decision maker (“CODM”), which for the Company is the Chief Executive Officer, to determine resource allocation and assess performance. As such, based on the way the CODM monitors and makes decisions affecting operations, the Company has concluded that it hasone operating and reportable segment. The CODM is regularly provided with only the consolidated expenses as noted on the face of the Condensed Consolidated Statements of Operations. As the Company has onlyone operating segment and is managed on a consolidated basis, the measure of profit or loss is consolidated net income or loss. The metrics are used to review operating trends, to perform analytical comparisons between periods and to monitor budget to actual variances.

Geographic Areas

International revenues are defined as revenues generated from sales to customers outside of the U.S. The following table details total revenues by major geographic area for the periods indicated:

As of March 31, 2026 and December 31, 2025, all of the Company’s long-lived assets were held within the U.S.

14. Commitments and Contingencies

Service Agreements

The Company pays a third party a facility fee for the use of cleanrooms, manufacturing, storage, and office space and for services in support of its tissue processing including for routine sterilization of daily supplies, providing disposable supplies and microbial services, and office support pursuant to a License and Services Agreement, as amended (the “License and Services Agreement”). Pursuant to the License and Services Agreement, the Company recorded expenses of $182 and $240 for the three months ended March 31, 2026 and 2025, respectively, within Cost of goods sold in the Company’s Condensed Consolidated Statements of Operations. The License and Services Agreement was amended on December 31, 2023 extending the term through December 31, 2026. The License and Services Agreement maybe terminated by either party by providing aneighteen-month written notice. The Company utilizes the same third-party vendor for processing and packaging of Avive+ Soft Tissue Matrix™.

Distribution and Supply Agreements

In August 2008, the Company entered into an exclusive distribution agreement with a third party (the “Distributor”) to distribute the Axoguard Nerve Connector® and Axoguard Nerve Protector™ products worldwide and the parties subsequently amended the agreement on August 4, 2023. The distribution agreement expires on December 31, 2030. The distribution agreement establishes a formula for the transfer cost of the Axoguard Nerve Connector® and Axoguard Nerve Protector™ products and requires certain minimum purchases by the Company, although, through mutual agreement, the parties have not established such minimums; and, to date, have not enforced such provision. Under the distribution agreement, the Company provides purchase orders to the Distributor, and the Distributor fulfills the purchase orders. The distribution agreement allows for termination provisions for both parties.

In June 2017, the Company entered into the Nerve End Cap Supply Agreement (the “Supply Agreement”) with the Distributor whereby the Distributor is the exclusive contract manufacturer of the Axoguard Nerve Cap®, and the parties subsequently amended the agreement on August 4, 2023. The Supply Agreement expires on December 31, 2030. The Supply Agreement establishes the terms and conditions in which the Distributor will manufacture the product for the Company. Under the Supply Agreement, the Company provides purchase orders to the Distributor and the Distributor fulfills the purchase orders. The Supply Agreement allows for termination provisions for both parties.

In May 2023, the Company entered into the Supply and Manufacturing Agreement (the “HA+ Supply Agreement”) with the Distributor whereby the Distributor is the exclusive contract manufacturer of the Axoguard HA+ Nerve Protector™. The HA+ Supply Agreement expires on July 1, 2030. The HA+ Supply Agreement establishes the terms and conditions in which the Distributor will manufacture, package, label and deliver the product to the Company. Under the HA+ Supply Agreement, the Company provides purchase orders to the Distributor, and the Distributor fulfills the purchase orders. The HA+ Supply Agreement allows for termination provisions for both parties.

The loss of the Company’s ability to sell the Axoguard Nerve Connector®, Axoguard Nerve Protector™, Axoguard Nerve Cap® and Axoguard HA+ Nerve Protector™ products could have a material adverse effect on the Company’s business until other replacement products would become available.

Processing Facilities

The Company is highly dependent on the continued availability of its processing facilities at its Axogen Processing Center (the “APC Facility”) in Vandalia, Ohio and the facility it leases in Dayton, Ohio and could be harmed if the physical infrastructure of these facilities is unavailable for any prolonged period of time.

Certain Economic Development Grants

The Company obtained certain economic development grants from state and local authorities totaling up to $2,685, including $1,250 of cash grants, to offset costs to acquire and develop the APC Facility. Certain of these economic development grants were subject to fixed asset investments and job creation milestones by December 31, 2024 and have clawback clauses if the Company does not meet the job creation milestones. In October 2025, the Company received notification from certain grant authorities that the Company is expected to satisfy its job creation milestone, assuming the Company continues to maintain its existing headcount and payroll amount thresholds through December 31, 2026. If the Company is unable to maintain minimum requirements under its grant agreements, the Company could be obligated to pay back up to approximately $950 as of March 31, 2026 related to these grants. As of March 31, 2026, the Company has received $1,250 in cash grants related to these economic development grants.

Other Commitments

Certain executive officers of the Company are parties to employment contracts. Such contracts have severance payments for certain conditions including change of control.

Legal Proceedings

The Company is and may be subject to various claims, lawsuits and proceedings in the ordinary course of the Company’s business. Such matters are subject to many uncertainties and outcomes are not predictable with assurance. While there can be no assurances as to the ultimate outcome of any legal proceeding or other loss contingency involving the Company, in the opinion of management, such claims are either adequately covered by insurance or otherwise indemnified, or are not expected individually or in the aggregate, to result in a material, adverse effect on the Company’s financial condition, results of operations or cash flows. However, it is possible that the Company’s results of operations, financial position and cash flows in a particular period could be materially affected by these contingencies.