Bioventus Inc.

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Unexpected increases in the volume of rebate claims we receive from payers we contract with due to the implementation of processing and billing system changes by the payers have in the past and may in the future negatively impact our business and financial results.

Previous report

As previously disclosed, our revenues are recorded at the transaction price, which is determined by the contracted price net of estimates of variable consideration relating to various items, including rebates paid pursuant to contracts relating to the sale of our products. A large private insurance payer recently informed us that it has made changes to its claims data management and billing systems and that, as a result, we expect that we may experience significantly larger rebate volumes for our HA viscosupplement products for future periods than the Company previously estimated or has experienced in prior periods. We were also informed that the impact of these changes is not limited to our products and that other manufacturers under contract with this payer may experience similar increases. In addition, another payer that we contract with also recently notified us that they are implementing similar changes to their claims and billing systems. We are working with these payers to assess the impact that these changes may have on our business and believe, based on the information presently available, that our current reserve estimates are adequate to cover these additional rebate volumes and that the changes are not expected to have a material impact on the Company’s existing accruals for the quarter. We are dependent on the payers we contract with to provide timely and accurate claims data and invoices to establish our rebates estimates. If this information is not received in a timely manner or is inaccurate or unexpectedly increases, our estimates may prove to be inadequate to cover any additional rebate volumes we may receive from payers in the future. If our rebate volumes increase or our estimates prove to be inadequate, our business, results of operation and financial condition may be adversely affected and our revenue may be lower than we forecasted.

Previous report

Various governmental reimbursement reform and other healthcare cost containment proposals may affect our ability to sell our products profitably and could adversely affect our business results and operations and financial conditions.

Previous report

Certain proposed legislative or other regulatory reforms may be adopted in the future that could result in reductions in Medicare and other governmental healthcare funding, more rigorous coverage criteria, new payment methodologies or other downward pressure on the pricing or reimbursement we or our customers receive for our products. For example, the Medicare Physician Fee Schedule (“PFS”) Proposed Rule (CMS-1832-P) (“Proposed Rule”) for calendar year 2026, issued by the Centers for Medicare and Medicaid Services (“CMS”), to be effective January 1, 2026, could impact government price reporting requirements for Medicare Part B. Specifically, the Proposed Rule includes significant proposed changes to CMS’s definition of bona fide service fees (“BFSFs”) for purposes of average sales price (“ASP”) calculations, which is the metric used to determine reimbursement under Medicare Part B. Although primarily aimed at pharmaceuticals, the changes included in the Proposed Rule would impact all products reimbursed under Medicare Part B, including the Company’s HA viscosupplementation products.

Previous report

The final rule was published by CMS on October 31, 2025 (“Final Rule”). Several of the proposed requirements related to BFSFs were either not adopted or were modified by CMS in the Final Rule. The Company is currently reviewing the Final Rule to determine the impact that these new requirements may have on our business. As initially proposed, the Proposed Rule would have significantly changed longstanding ASP calculation methodologies by, among other things, adding new requirements for supporting the fair market value of BFSFs and by requiring periodic recertifications of such fees by the Company as a condition of BFSF treatment. Long standing CMS regulations have permitted manufacturers to exclude BFSFs from ASP if the fee satisfied certain conditions. Compliance with these new requirements would mandate substantial updates to our existing government pricing compliance and reporting processes. Moreover, because many of our contracts with fees that may fall within the expanded definition of BFSFs proposed in the new rule are with customers, such as wholesalers and pharmacy benefit managers, which are significantly larger than we are, we may not be able to restructure our contracts to fit our service fee payments within the new standards. It is presently unclear the extent to which these requirements are included in the Final Rule and the impact that the new requirements, as adopted, may have on our business. If these and the other requirements of the Proposed Rule are implemented and we are not successful in our efforts to renegotiate the applicable contracts within the limited time frame mandated by the Proposed Rule or are otherwise required to include BFSF in our reported ASP for our HA products pursuant to the Proposed Rule, the ASP and CMS reimbursement for our HA products may be reduced, which may adversely affect our operating results and financial condition.

Previous report

Similarly, reimbursement for our HA products may also be affected by executive orders issued by the administration relating to drug pricing, specifically “Delivering Most-Favored Nation Prescription Drug Pricing to American Patients” and “Lowering Drug Prices by Once Again Putting Americans First” (the “Executive Orders”) that set forth the administration’s policy goal of lowering pricing. Although the Executive Orders outline broad policy objectives and currently lack specific mandates, their apparent aim is to lower prices paid in the United States to more closely align with reimbursement levels provided by government-run health systems in other developed countries. To the extent the administration seeks to implement specific mandates or other cost control initiatives through action by the Department of Health and Human Services or other federal agencies, the reimbursement for our HA products may be negatively impacted. We cannot predict the extent to which this proposal, or similar reimbursement reform proposals or other healthcare cost containment measures that might be enacted in the future, may impact the demand or commercial success of our HA viscosupplements or any of our other products we currently sell or plan to commercialize.