Bioventus Inc

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our President and Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K. Based on this evaluation, our President and Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2023.

Management’s Report on Internal Control over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as such term is defined in the Exchange Act Rule 13a-15(f)). The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In connection with the preparation and filing of this Annual Report, the Company’s management, including our President and Chief Executive Officer and our Chief Financial Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2023, based on the framework set forth in “Internal Control—Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on the Company’s evaluation, our President and Chief Executive Officer and Chief Financial Officer, concluded that, as of December 31, 2023, the Company’s internal controls over financial reporting were effective.

Material Weaknesses in Internal Control over Financial Reporting

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected and corrected on a timely basis.

Changes in Control Environment

As previously reported, we identified a material weakness in internal control related to an ineffective risk assessment in 2022 to identify and assess changes in our business processes and internal control environment related to newly acquired companies and multiple information technology (“IT”) system implementations that occurred. Further, there was a lack of adequate personnel resources in accounting, IT, and other support functions to support simultaneous system implementations and business process integrations for acquired companies, implement appropriate controls for acquired companies and maintain focus on compliance with internal controls for legacy Bioventus processes.

In addition, during 2022, the Company saw an unprecedented level of turnover in roles that drive execution of internal control activities. This turnover, paired with business changes, including those related to acquisitions, resulted in a disruption to the effective completion of control activities across a number of business processes. Further, management identified a gap in control design related to sufficient tracking of control performance to ensure controls operated effectively.

In considering these breakdowns in the control environment, Bioventus determined the associated COSO principles requiring further control and action by management were:

(a)Control environment - Establishes structure, authority, and responsibility (COSO Principle 3);

(b)Risk assessment – Identifies and analyzes significant change (COSO Principle 9); and

(c)Monitoring – Conducts ongoing and /or separate evaluations (COSO Principle 16).

These ongoing control deficiencies resulted in certain immaterial restatements of the Company’s financial statements as discussed in our Quarterly Reports on Form 10-Q for the periods ended April 1, 2023, July 1, 2023 and September 30, 2023.

Remediation Measures

During 2023, management implemented our previously disclosed remediation plans including:

(a)Ensuring adequate personnel were in place, taking steps to decrease turnover and driving additional accountability, including: (i) hiring personnel and temporary resources to backfill positions vacated due to employee turnover and adding additional headcount in accounting, finance and IT to expand capacity; (ii) making organizational changes to ensure proper governance and oversight; (iii) implementing certain retention programs to retain key resources; (iv) driving additional accountability for control owners by tying a portion of their performance objectives to successful completion of internal controls;

(b)Enhancing our risk assessment processes to (i) identify and assess changes for acquired companies and IT systems; (ii) prioritize key projects to ensure organizational capacity, with only essential IT projects occurring during 2023; (iii) update our internal control policy that further defines expectations for communication and approval of changes to financially relevant processes and internal controls.

(c)Enhancing tracking of control performance and reinforcing execution rigor by (i) establishing and monitoring monthly internal control metrics compared with target performance; (ii) establishing required quarterly internal control certifications; (iii) providing additional visibility of internal control performance to management and the Audit Committee; (iv) engaging third-party consultants to perform an Accounting Transformation & Integration Assessment (“Project Action”) that enhanced processes and use of existing systems for financially relevant processes which allow for more time for internal control execution; (vi) meeting weekly with leadership to discuss actions needed to successfully close internal control deficiencies identified; (v) updating and/or developing standard operating procedures to further document process and control performance for use in day-to-day execution and when training new employees.

During the fourth quarter of 2023, we completed our testing of the operating effectiveness of the implemented and remediated controls and found them to be effective. As a result, we have concluded the material weakness has been remediated as of December 31, 2023.

Rebates Accrual Material Weakness

As previously reported, we identified a material weakness related to the Company’s internal controls over financial reporting that were not performed at a sufficient level of precision to ensure that the third quarter 2022 rebates accrual was complete and accurate. The process undertaken to estimate the expected reduction in revenue from rebates was consistent with the Company’s historical practice. However, subsequent to the initial calculation of the third quarter 2022 rebates accrual, an unexpectedly large invoice was received and there were not processes in place to ensure it was reviewed timely in order to update the accrual.

The Company reassessed open rebates accruals and the approach for calculating the rebate accruals based on this invoice. The Company revised its estimation methodology resulting in a decrease of revenue of $8.4 million. This adjustment was recorded subsequent to the earnings release but prior to the filing of the Company’s Quarterly Report on Form 10-Q for the third quarter of 2022. Further, this change in revenue projection related to the rebates accrual adjustment for 2022 and cascading effect on future revenue projections materially impacted the Company’s evaluation of its ability to meet debt covenants in its Amended 2019 Credit Agreement, resulting in liquidity and going concern disclosures in the Company’s Quarterly Report on Form 10-Q for the third quarter of 2022.

Remediation Measures

We have designed and implemented new processes and enhanced controls to address the underlying causes of the material weakness related to the rebates accrual, including:

•Refining the estimation method for calculating the rebates accruals, including enhancing the precision of the controls;

•Implementing enhanced status tracking and introduced new controls to ensure that rebates invoices from third-party payers are received and reviewed timely; and

•Increasing rigor of documenting key conversations with payers.

The Company implemented and enhanced the precision of procedures to ensure the completeness and accuracy of key reports and information used in the rebates accrual and further enhanced supporting documentation for control performance.

During the fourth quarter of 2023, we completed our testing of the operating effectiveness of the enhanced controls and found them to be effective. As a result, we have concluded the material weakness has been remediated as of December 31, 2023.

We believe the implementations and continued operation of the actions described above with respect to our control environment and rebates accrual processes are sufficient to remediate our previously identified material weaknesses and strengthen our internal control over financial reporting.

When considered in the aggregate, the previously identified material weaknesses no longer create a reasonable possibility that a material misstatement to the consolidated financial statements would not be prevented or detected on a timely basis. Therefore, management concluded that the deficiencies no longer represent a material weakness in our internal control over financial reporting, and that disclosure controls and procedures were effective, at the reasonable assurance level, as of December 31, 2023.

The President and Chief Executive Officer and Chief Financial Officer believe that the financial statements and related financial information included in this Annual Report on Form 10-K fairly present, in all material respects, our balance sheets, statements of operations and comprehensive (loss) income, statement of changes in stockholders’ equity and statements of cash flows as of and for the periods presented.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the fourth quarter of 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting except for changes to controls resulting from the material weaknesses described above.

Attestation Report of Independent Registered Public Accounting Firm

This Annual Report does not include an attestation report on our internal control over financial reporting of our registered public accounting firm due to an exemption established by the JOBS Act for emerging growth companies.