Q4 2025 AxoGen Inc Earnings Call

February 24, 2026

Rachel Smith: Good morning, everyone. Joining me on today's call is Michael Dale, AxoGen's Chief Executive Officer and Director, and Lindsey Hartley, Chief Financial Officer. Michael will discuss Q4 and full year 2025 financial results and corporate highlights. Lindsey will provide details on financial performance, guidance, and overall outlook for the year. This will be followed by a question-and-answer session. Today's call and presentation is being broadcast live via webcast, which is available on the investor section of AxoGen's website. Following the end of the live call, a replay will be available in the investor section of the company's website at www.axogeninc.com. Before we begin, I'd like to remind you that during this conference call, management will be making forward-looking statements, which are statements that are not historical facts and are based on current expectations and assumptions regarding future conditions, events, and results.

Operator: Good morning, everyone. Joining me on today's call is Michael Dale, AxoGen's Chief Executive Officer and Director, and Lindsey Hartley, Chief Financial Officer. Michael will discuss Q4 and full year 2025 financial results and corporate highlights. Lindsey will provide details on financial performance, guidance, and overall outlook for the year. This will be followed by a question-and-answer session. Today's call and presentation is being broadcast live via webcast, which is available on the investor section of AxoGen's website. Following the end of the live call, a replay will be available in the investor section of the company's website at www.axogeninc.com. Before we begin, I'd like to remind you that during this conference call, management will be making forward-looking statements, which are statements that are not historical facts and are based on current expectations and assumptions regarding future conditions, events, and results.

Rachel Smith: Forward-looking statements include, among other things, statements regarding our financial guidance and outlook, clinical development activities and regulatory efforts, commercial growth initiatives, reimbursement and market access efforts, training and education initiatives, research and development activities, and our overall business strategy and operating performance. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially, including, without limitation, the risks and uncertainties reflected in our filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K, subsequent quarterly reports on Form 10-Q, and other filings we make with the Securities and Exchange Commission. Forward-looking statements speak only as of the date made, and we make no obligation to update any forward-looking statements except as required by law.

Operator: Forward-looking statements include, among other things, statements regarding our financial guidance and outlook, clinical development activities and regulatory efforts, commercial growth initiatives, reimbursement and market access efforts, training and education initiatives, research and development activities, and our overall business strategy and operating performance. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially, including, without limitation, the risks and uncertainties reflected in our filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K, subsequent quarterly reports on Form 10-Q, and other filings we make with the Securities and Exchange Commission. Forward-looking statements speak only as of the date made, and we make no obligation to update any forward-looking statements except as required by law.

Speaker #2: subject to risk and uncertainties that could cause actual results to differ materially including without limitation the risk and uncertainties reflected in our filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K, subsequent quarterly reports on Form 10-Q, and other filings we make with the Securities and Exchange Commission.

Rachel Smith: For reconciliation of non-GAAP measures, please refer to today's press release for a presentation with highlights from today's call and the corporate presentation on the investor section of the company's website. I'll turn the call over to Michael. Michael, please go ahead.

Operator: For reconciliation of non-GAAP measures, please refer to today's press release for a presentation with highlights from today's call and the corporate presentation on the investor section of the company's website. I'll turn the call over to Michael. Michael, please go ahead.

Michael Dale: Thank you, operator, and welcome to everyone joining us this morning. Today, I'll walk through our Q4 and full year 2025 performance through the lens of the six priority areas of our strategic plan, highlighting how we executed against each in 2025 and how they frame our objectives for 2026. I'll turn the call over to Lindsay to review the financials and outlook, after which we'll open the call for questions. 2025 was a year of significant achievement for AxoGen, both financially and strategically, and one that positions us well for durable growth in the years ahead. The first strategic plan priority I will speak about is our growth target of 15% to 20% and the related financial operating leverage we expected for the business.

Michael Dale: We delivered strong top and bottom-line performance in 2025, consistent with the upper end of the growth trajectory outlined in our strategic plan. Our Q4 revenue was $59.9 million, up 21.3% year-over-year, with double-digit growth across all three target markets. Our full year revenue increased 20.2% to $225.2 million. Our adjusted EBITDA grew 41% to $27.9 million. We increased our cash position by $6 million while fully funding our strategic initiatives. This performance reflects expanding adoption of AxoGen's nerve repair algorithm across traumatic, iatrogenic, and chronic peripheral nerve injuries, with Avance Nerve Graft remaining our primary growth driver, often complemented by our broader portfolio of repair, protection, connection, and termination solutions.

This performance reflects expanding, adoption of Oxygen's nerve repair algorithm across, dramatic, itrogen and chronic peripheral nerve injuries.

With Advanced nerve wrap, remaining our primary growth driver Often complemented by our broader portfolio of Repair Protection connection and termination Solutions.

Michael Dale: Importantly, we have now reached a financial inflection point, enabling greater concentration of our market development efforts while generating positive cash flow and improving profitability. Regarding capital structure and balance sheet strength, in January, we completed an upsized public offering, raising $133.3 million in net proceeds. We used $69.7 million to fully retire our term loan facility, leaving us with a clean capital structure and significantly enhanced financial flexibility. Eliminating the interest in revenue participation obligations improves our earnings quality over time, while the remaining proceeds provide capacity to fund continued execution of our strategic plan. As a result, we enter 2026 well capitalized and positioned to deliver disciplined, profitable growth.

Importantly, we have now reached a financial inflection point enabling greater concentration of our Market development efforts while generating positive cash flow and improving profitability.

Regarding capital structure and balance sheet strength in January. We completed an upsized public offering raising 133.3 million in net proceeds

We used 69.7 million to fully retire. Our Term Loan facility leaving us with a clean capital structure and significantly enhanced Financial flexibility.

Eliminating the interest and revenue participation obligations improves our earnings quality over time, while the remaining proceeds provide capacity to fund continued execution of our strategic plan.

Michael Dale: The second strategic plan priority I will speak about is our market development progress for elective and planned procedures in extremities, oral maxillofacial and head and neck, breast, and our prostate market development plans. Across our three core markets, momentum remains strong, as represented by continued double-digit growth in each market. In extremities, which continues to be our most mature market and where we are furthest along in achieving standard of care status, supported by solid growth in both traumatic and chronic procedures. For oral maxillofacial and head and neck, we delivered high double-digit growth, driven by a surgeon adoption of the AxoGen algorithm and increasing recognition of nerve repair's impact on quality of life. Breast remains one of our fastest-growing opportunities, with accelerated adoption of Resensation techniques and increased implant-based reconstruction volumes. In prostate, we made important foundational progress in 2025.

As a result, we enter 2026, well, capitalized, and positioned to deliver discipline profitable growth.

The second strategic plan priority, I will speak about is our Market development progress for elective and plan procedures. In extremity, oral Maxell facial, and head and neck breast and our prostate Market development plans,

Across our 3 core markets momentum remains strong as represented by continued double-digit growth in each market.

And extremities, we continue, which continues to be our most mature market and where we are furthest along in achieving standard-of-care status, supported by solid growth in both traumatic and chronic procedures.

For oral Maxell, facial and head and neck. We deliver High double digit growth driven by a surgeon adoption of the oxygen algorithm and increasing recognition of nerve repairs impact on quality of life.

Breast remains one of our fastest-growing opportunities, with accelerated adoption of re-sensation techniques.

And increased implant-based reconstruction volumes.

Michael Dale: More than 100 procedures were completed across 10 clinical sites, and in collaboration with our surgery partners, we established a standardized surgical technique. As we enter the second half of 2026, we expect to begin seeing meaningful clinical signals as nerve recovery data matures, an important step in what we believe is a highly underdeveloped and compelling market opportunity. The third strategic plan priority I will speak about is our commercial expansion progress in regards to infrastructure and sales force growth. In 2025, we significantly expanded our commercial organization across all markets. In breast, we added 10 sales representatives and two regional directors, ending the year with 21 sales representatives and two regional directors. In extremities, we added 12 sales representatives in high-potential geographies, ending with 117 reps and 15 regional directors.

In prostate, we made important foundational progress in 2025.

More than 100 pro or completed across 10 clinical sites and in collaboration with our surgeon Partners, we established a standardized surgical technique.

As we enter the second half of 2026, we expect to begin seeing meaningful clinical signals as nerve recovery data matures—an important step in what we believe is a highly underdeveloped and compelling market opportunity.

The third strategic plan priority. I will speak about is our commercial expansion. Progress. In regards to infrastructure and Salesforce growth.

In 2025, we significantly expanded our commercial organization across all markets.

In Breast, we added 10 sales representatives and 2 regional directors. And in the year, with 21 sales representatives and 2 regional directors,

An extremities we added 12 cells representatives in high potential geographies.

Michael Dale: In oral maxillofacial and head and neck, we ended the year with 3 field-based market development managers. In prostate development, we added 3 clinical development managers and 1 director. Early productivity trends are tracking well with our assumptions. Across markets, new hires typically reach independence and breakeven within 6 to 9 months, after which they become accretive. In 2026, we plan to continue this expansion. We will grow the breast team to approximately 30 sales representatives, we will grow extremities to approximately 130 representatives, we will continue to evaluate further commercial investment to support prostate market development in the second half of the year. The 4th strategic plan priority I will speak about is our commercial excellence performance, specific to our high-potential accounts, productivity in general, and education. Our high-potential account strategy remains a cornerstone of our commercial model.

Ending with 117 reps and 15 regional directors.

In oral, maxillofacial, and head and neck, we ended the year with three build-based market development managers.

And in prostate development, we added three clinical development managers and one director.

Early productivity trends are tracking well with our assumptions.

Across markets, new hires typically reach Independents and break even within six to nine months, after which they become a Creative.

In 2026. We plan to continue this expansion.

We will grow the breast team to approximately 30 sales representatives. We will grow extremities to approximately 130 Representatives.

And we will continue to evaluate further commercial investment to support prostate market development in the second half of the year.

The fourth strategic plan priority. I will speak about is our commercial Excellence performance specific to our high potential accounts.

Education.

Michael Dale: In 2025, 61% of total revenue growth came from high-potential accounts. Average high-potential account productivity increased 21%, and active surgeons in high-potential accounts increased by 131. We ended the year with 679 active high-potential accounts out of an approximately 780 universe. While slightly below certain internal targets, fundamentals across both high-potential and non-high-potential accounts remain strong, with double-digit growth and improving productivity across the broader base. For 2026, our high-potential objectives include 60% of revenue growth from high-potential accounts, 18% productivity growth in these accounts, and activation of at least 100 surgeons. Surgeon education continues to be one of AxoGen's core competencies and a critical driver of algorithm adoption.

Our high potential account strategy, remains a Cornerstone of our commercial models.

In 2025 61% of total revenue, growth came from high potential accounts.

Average high potential account productivity increased 21%.

And active surgeons in high-potential accounts increased by 131.

We ended the year with 679, active high potential accounts at an approximately 780 universe.

While slightly below certain internal targets, fundamentals across both high potential and non-human counts, remain strong with double-digit growth and improving productivity across the broader base.

for 2026, our high potential objectives include

60% of Revenue growth from high potential accounts.

And 18% productivity growth in these accounts, and activation of at least 100 surgeons,

Michael Dale: In 2025, we exceeded training targets across all markets. In 2026, we plan to further expand education programs across breast, extremities, and oral and maxillofacial, head and neck. In 2025, extremities held 9 professional education programs and trained 170 surgeons. In oral and maxillofacial and head and neck, we held 3 programs and trained 59 surgeons. In breast, we held 5 professional education programs and trained 79 surgeon pairs. For 2026, our training objectives include holding and conducting 10 extremities professional education programs and training 200 surgeons. In oral and maxillofacial and head and neck, we will conduct 6 professional education programs and train 100 surgeons. In breast, we will conduct 5 professional education programs and train 75 surgeon pairs.

Surgeon education continues to be 1 of action's core competencies, and a critical driver of algorithm adoption.

In 2025, we exceeded training targets, across all markets and in 2026. We've planned to further. Expand education, programs across breast extremities and oral Maxell. Facial head, and neck.

And in 2025, Extremities held 9 professional education programs and trained 170 surgeons.

In oral, Maxell facial and head and neck, we held 3 programs and trained 59 surgeons.

In breast, we held 5, professional education programs and trained 79 surgeon pairs.

For 2026. Our training objectives include.

Helding in conducting 10 extremes, professional education, programs and training 200. Surgeons in oral Maxell facial and head neck, we will conduct 6, professional education programs, and Train, 100 surgeons and then breast, we will conduct 5, professional education programs, and train 75 surgeon pairs.

Michael Dale: The fifth strategic plan priority I will speak about is progress related to our standard of care objectives as related to evidence coverage and the FDA biological license approval of ADVANCE. In December, we achieved the most significant milestone in AxoGen's history, which was the FDA approval of the Biologics License Application for ADVANCE. ADVANCE is now the first and only FDA-approved biologic therapeutic for treating peripheral nerve discontinuities, with 12 years of market exclusivity. This establishes ADVANCE as the standard of reference in nerve repair. We are acting on this milestone across four fronts: customer engagement to reinforce confidence in ADVANCE's safety, efficacy, and regulatory status, payer engagement to drive near universal US coverage, clinical advancement by enabling prioritized studies under an approved regulatory framework, and lastly, manufacturing investments to support scalability and margin expansion by our ability now to manage our manufacturing operations under one quality system.

The fifth strategic plan priority. I will speak about is progress related to our standard of care objectives as related to evidence coverage and the FDA biological license approval of events.

And in December, we achieved the most significant milestone in Axogen history, which was the FDA approval of the Biologics License Application for Avance.

Vance is now the first and only FDA approved biologic therapeutic for treating for a full nerve discontinuities with 12 years of Market exclusivity.

This establishes Advanced as the standard of reference in nerve repair.

We are acting on this Milestone across 4S.

Customer engagement to reinforce confidence, in advances, safety efficacy, and Regulatory status.

Payer engagement to drive near-universal U.S. coverage.

Clinical advancement by enabling prioritized studies under an approved regulatory framework.

And lastly, manufacturing investments to support scalability and margin expansion by our ability. Now, to manage our manufacturing operations under one quality system.

Michael Dale: In 2025, we also received strong validation of Avance from leading medical societies. The American Association of Hand Surgery and the American Society for Reconstructive Microsurgery issued position statements recognizing nerve allograft as a non-experimental, medically necessary standard of care for peripheral nerve defects, building on prior guidelines from the American Association of Oral and Maxillofacial Surgeons. Together, these endorsements represent an important step toward broader recognition of allograft nerve repair as a standard of care and support our efforts to expand coverage and payment in the future. On reimbursement, approximately 19.8 million additional lives gained coverage in 2025, bringing commercial coverage above 65%. With Biologic License approval, we believe we are well positioned to address the remaining payer objections.

In 2025, we also received strong validation of events from leading medical societies.

The American Association of Hand Surgery and the American Society for Reconstructive Microsurgery,

Issued position statements recognizing nerve, Allegra. As a non-experimental medically necessary, standard of care for peripheral nerve defects

Building on prior guidelines from the American Association of oral. Maxell facial surgeons.

Together, these endorsements represent an important step toward a broader recognition of Allegra Nerve Repair as a standard of care and support our efforts to expand coverage and payment in the future.

On reimbursement, approximately 19.8 million additional lives gained coverage in 2025, bringing commercial coverage above 65%.

Michael Dale: Additionally, CMS implemented a new outpatient payment classification for nerve procedures in January, improving the economic profile for outpatient settings and potentially expanding site of care flexibility over time. The sixth and last strategic plan priority I will speak about is our innovation progress. Our R&D investments, which are focused on improving benefit versus risk profiles for the treatment of nerve care, are focused on three strategic priorities. Firstly, making nerve coaptation faster and easier and more consistent. Second, is advancing solutions for non-transected and chronic nerve injuries through better protection. Thirdly, developing therapeutic reconstruction technologies to improve the fundamental ability for nerve regeneration. With the Biologics License approval in place, we are moving forward also with prioritized clinical studies, including in breast and mixed and motor nerve indications. We expect to provide more detailed updates on individual programs later this year.

With biologic license approval, we believe we are well positioned to address the remaining payer objections.

Additionally, CMS.

Implemented a new outpatient payment classification for nerve procedures in January, improving the economic profile for outpatient settings and potentially expanding site-of-care flexibility over time.

Our Innovation progress.

Our R&D Investments which are focused on improving benefit versus risk profiles.

For the treatment of nerve care. Our focused on 3, strategic priorities, firstly, making nerve coaptation faster and easier and more consistent.

Second is advancing solutions for non-transected and chronic nerve injuries through better protection.

And thirdly developing therapeutic reconstruction Technologies to improve the fundamental ability for nerve regeneration.

With the biologic license approval in place, we are moving forward. Also, with prioritized clinical studies, including in breast and mixed and motor nerve indications.

Michael Dale: In each instance, these programs are progressing well, and we plan to provide more detail on each of these programs in the second half of the year. In summary, 2025 was a year of execution and validation for AxoGen. We delivered strong financial results, achieved a historic regulatory milestone, and continued building momentum across our markets, all while executing against the six priorities of our strategic plan. I am proud of the AxoGen team and confident in our ability to deliver disciplined growth consistent with our guidance and long-term strategy. I'll now turn the call over to Lindsay to review the quarter's financials and our outlook for 2026.

We expect to provide more detailed updates on individual programs later this year.

And each instance, these programs are progressing well, and we plan to provide more detail on each of these programs in the second half of the year.

In summary, 2025 was a year of execution and validation for Axogen.

We delivered strong financial results, achieved a historic regulatory milestone, and continued building momentum across our markets, all while executing against the six-priority plan.

I am proud of the action team and confident in our ability to deliver disciplined growth consistent with our guidance and long-term strategy.

Lindsey Hartley: Thanks, Mike. I am pleased to report our 2025 financial results and provide 2026 guidance. We are excited about our results for Q4 and the full year. Our focus on commercial execution and resource allocation have yielded top-line growth and positive cash flows. For Q4, we reported strong growth, with revenue of $59.9 million, reflecting 21.3% growth compared to Q4 2024. For the full year, we reported revenue of $225.2 million, reflecting growth of 20.2% compared to 2024. As mentioned during our last earnings call, we estimated that our revenue was positively impacted by the discontinuation of the case stock sales program for Avance. We believe the pull-forward impact on our full year results to be minimal.

I'll now turn the call over to Lindsay to review the quarter's financials and our outlook for 2026.

Thanks, Mike. I'm pleased to report our 2025 financial results and provide 2026 guidance.

We are excited about our results for the fourth quarter and the full year. Our focus on Commercial execution and resource allocation have yielded, Topline growth, and positive, cash flows.

For the fourth quarter, we reported strong growth with revenue of 59.9 million reflecting 21.3% growth compared to the fourth quarter of 2024.

For the full year, we reported revenue of 225.2 million, reflecting growth of 20.2% compared to 2024.

As mentioned during our last earnings call, we estimated that our Revenue was positively impacted by the discontinuation. Of the case, stock sales program for advanced

Lindsey Hartley: Revenue growth continues to be fueled by strong sales of Avance and adoption of our comprehensive AxoGen algorithm across our target market, with unit volume and mix serving as the primary driver of our revenue performance in addition to price. Our gross profit for Q4 came in at $44.4 million, up from $37.6 million in Q4 2024. This represents a gross margin of 74.1%, down from 76.1% in the same period last year. Gross profit for the full year came in at $167.4 million, up from $142 million in 2024. This represents a gross margin of 74.3%, 1.5 percentage points less than 75.8% in 2024.

We believe the pull-forward impact on our full-year results to be minimal.

Revenue growth continues to be fueled by strong sales of advanced and Adoption of our comprehensive product algorithm across our target market.

with unit volume and mix serving as the primary driver of our revenue performance, in addition to price,

Our gross profit for the fourth quarter came in at 44.496%, with a gross margin of 74.1%, down from 76.1% in the same period last year.

Gross profit for the full year. Came in at 167.424%, a gross margin of 74.3%.

Lindsey Hartley: Gross profit was negatively impacted by $1.9 million, or 3.3% for Q4 and 0.9% for the full year, from one-time costs related to the FDA BLA approval of Avance. Two-thirds of these costs, or $1.3 million, were non-cash and related to the vesting of certain stock-based compensation awards containing milestones tied to this event. Excluding these one-time costs, the year-over-year decreases of gross margin were primarily driven by approximately 2% higher product cost, offset by a reduction of inventory write-offs and reduced shipping costs on products sold. Product cost increased as a result of costs related to additional steps and tests required as we transitioned to and began processing Avance as a biologic.

1.5 percentage points less than 75.8% in 2024.

Gross profit was negatively impacted by $1.9 million, or 3.3%, for the fourth quarter, and 0.9% for the full year, from one-time costs related to the FDA BLA approval of Avance.

2/3 of these cost or 1.3 million for non-cash and related to the vesting of certain stock based compensation Awards, containing Milestones tied to this event

Excluding these one-time costs, the year-over-year decreases of gross margin were primarily driven by approximately 2% higher product cost.

Offset by a reduction of inventory, write-offs, and reduced shipping costs on products sold.

Lindsey Hartley: The reduction in inventory write-offs and shipping costs resulted from the discontinuation of the case stock sales program for Avance and process improvements implemented throughout the year. Operating expenses increased to $54.2 million in Q4, up from $35.6 million in Q4 of 2024, and increased 18.3% as a percentage of revenue. Full year operating expenses increased to $175.2 million from $145.3 million in 2024, and increased 0.3% as a percentage of revenue. Included in operating expenses for Q4 and full year was $7.2 million of non-cash, one-time stock-based compensation expense related to the vesting of equity awards tied to the FDA BLA approval of Avance.

Product cost increased as a result of costs related to additional text steps and tests required as the transition to and began processing Advanced as a biologic.

The reduction in inventory, write-offs, and shipping costs resulted from the discontinuation of the case stock sales program and from advanced and process improvements implemented throughout the year.

Creating expenses increased to 54.2 million in the fourth quarter.

Up from 35.26 million in the fourth quarter of 2024 and increased 18.3% as a percentage of Revenue.

For the full year, operating expenses increased to $175.2 million from $145.3 million in 2022, and increased 0.3% as a percentage of revenue.

Lindsey Hartley: This expense is reflected across operating expense categories, including $700,000 in sales and marketing, $4.6 million in research and development, and $1.9 million in general and administrative expenses. As a result, operating margin was negatively impacted by approximately 12.1% in Q4 and 3.2% for the full year. Excluding this one-time cost, operating leverage improved by 3% as a result of top-line growth and financial discipline year-over-year. Sales and marketing expenses as a percentage of total revenue increased nearly 5 percentage points to 45.4% in Q4, compared to 40.6% in Q4 of 2024.

included an operating expenses for the fourth quarter and full year was 7.2 million of non-cash 1-time, stock-based compensation expense related to the vesting of equity Wards tied to the FDA bla approval of advanced

This expense is operating expense categories, including 700,000 in sales and marketing, 4.6 million in research and development, and 1.9 million in general and administrative expenses. As a result. Operating margin was negatively impacted by approximately 12.1% in the fourth quarter and 3.2% for the full year. Excluding this 1-time cost, operating, leverage and improved by 3% as a result of Topline growth and financial discipline year-over-year,

Lindsey Hartley: For the full year, sales and marketing expenses as a percentage of total revenue increased 1.5 percentage points to 43.4% from 41.9% in 2024. Research and development expenses increased 83.9% to $12.4 million in Q4, compared to $6.7 million in Q4 of 2024, and as a percentage of total revenue, increased by approximately 7 percentage points to 20.7% from 13.6%. Full year research and development expenses increased 18.4% to $32.9 million from $27.8 million in 2024, and was flat at approximately 15% as a percentage of revenue.

sales and marketing expenses, as a percentage of total revenue, increase, nearly 5 percentage points to 45.4% in the fourth quarter, compared to 40.6%, in the fourth quarter of 2024, for the full year, sales and marketing expenses, as a percentage of total revenue, increased 1.5 percentage points to 43.4% from 41.9% in 2024,

Lindsey Hartley: General and administrative expenses increased 64.6% to $14.6 million in Q4, compared to $8.9 million in Q4 of 2024, and as a percentage of total revenue, increased 6.5 percentage points to 24.4% from 17.9%. Full year general and administrative expenses increased 14.2% to $44.6 million from $39 million in 2024, and as a percentage of revenue, decreased 1 percentage point. Net loss for Q4 was $13.2 million, or $0.28 per share, compared to net income of $500,000, or $0.01 per share, in Q4 of 2024. Full year net loss was $15.7 million, or $0.34 per share, compared to $10 million, or $0.23 per share in 2024.

Research and development expenses increased 83.9% to 12.4 million in the fourth quarter, compared to 6.7 million in the fourth quarter of 2024. And as a percentage of total revenue increased by approximately 7 percentage points to 20.7% from 13.6% full year research and development expenses, increased 18.4% to 32.9 million from 27.8 million in 2024 and was flat at approximately, 15% as a percentage of Revenue.

General and administrative expenses, increased 64.6% to 14.6 million in the fourth quarter compared to 8.9 million in the fourth quarter of 2024. And as a percentage of total revenue increased 6.5 percentage points to 24.4% from 17.9%,

Full year General and administrative expenses increased 14.2% to 44.6 million from 39 million in 2024. And as a percentage of Revenue decreased 1, percentage point,

Net loss for the fourth quarter was $13.2 million, or $0.28 per share, compared to net income of $500,000, or $0.01 per share, in the fourth quarter of 2024.

Lindsey Hartley: Adjusted net income was $3.5 million, or $0.07 per share, for Q4 2025 and 2024. Full year adjusted net income was $14.4 million or $0.29 per share, compared to the $5.9 million or $0.13 per share in 2024. Adjusted EBITDA for Q4 was $6.5 million, compared to an adjusted EBITDA of $6.7 million in the same period last year. Q4 adjusted EBITDA margin decreased 270 basis points to 10.9% from 13.6% in the same period last year. Full year adjusted EBITDA was $27.9 million, compared to an adjusted EBITDA of $19.8 million in 2024.

full year, net loss was 15.7 million or 34 cents per share compared to 10 million or 23 cents per share in 2024

Adjusted, net income was 3.5 million or 7 cents per share for the fourth quarter of 2025 and 2024.

Full-year adjusted net income was $14.4 million, or $0.29 per share, compared to $5.9 million, or $0.13 per share, in 2024.

Adjusted EBITDA for the fourth quarter was $6.5 million, compared to adjusted EBITDA of $6.7 million in the same period last year.

Fourth quarter adjusted EVA margin decreased 270 basis points.

To 10.9% from 13.6% in the same period last year.

Lindsey Hartley: Full year adjusted EBITDA margin improved 180 basis points to 12.4% from 10.6% in 2024, driven by revenue growth and increased operating leverage, excluding stock-based compensation expense. I am pleased to report for the full year, our balance of cash equivalents, restricted cash and investments increased $6 million to $45.5 million, from $39.5 million as of 31 December 2024, demonstrating our ability to be cash flow positive for the year. Now turning to our full year financial guidance for 2026. We expect full year 2026 revenue growth to be at least 18%, or total revenue of at least $265.7 million. We anticipate full year 2026 gross margin to be in the range of 74% to 76%.

Full-year adjusted EBITDA was $27.9 million, compared to adjusted EBITDA of $19.8 million in 2024.

EVA margin improved 180 basis points to 12.4% from 10.6% in 2024, driven by revenue growth and increased operating leverage, excluding stock-based compensation expense.

I am pleased to report for the full year, our balance of cash, cash equivalents, restricted cash, and investments increased $6 million to $45.5 million from $39.5 million as of December 31, 2024, demonstrating our ability to be cash flow positive for the year.

Now, turning to our full year, Financial guidance for 2026.

We expect full-year 2026 revenue growth to be at least 18%, or total revenue of at least $265.7 million.

Lindsey Hartley: This range is consistent with 2025 and considers anticipated product cost pressure as we begin selling Avance biologic product in Q2 2026. In 2027, we expect to begin seeing improvement to gross margin as a result of implementing continuous improvement programs this year and increasing economies of scale. We expect to be free cash flow positive for the full year 2026. Similar to prior years, we anticipate higher cash burn in Q1. In summary, we are pleased with our Q4 and full year performance and entered 2026 with strong momentum. Looking ahead, we will continue to prioritize initiatives that strengthen our financial foundation, including targeted investments in innovation and commercial infrastructure. By maintaining a disciplined approach to expense management and leveraging economies of scale, we are confident in our ability to further enhance operating margins and deliver consistent profitability.

We anticipate full year 2026 gross margin to be in the range of 74 to 76%. This range is consistent with 2025 and considers anticipated product cost pressure. As we begin selling Advanced biologic products in the second quarter of 2026.

In 2027, we expect to begin seeing improvement to gross margin as a result of implementing continuous improvement programs this year and increasing economies of scale.

We expect to be free cash flow positive for the full year 2026 similar to Prior years. We anticipate higher cash burn in the first quarter.

Lindsey Hartley: With that, I will now open the line for questions. Operator?

Rachel Smith: Thank you. We'll now be conducting a question and answer session. If you'd like to be placed in the question queue, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star one. One moment please, while we poll for questions. Our first question today is coming from Michael Sarcone from Jefferies. Your line is now live.

Operator: Thank you. We'll now be conducting a question and answer session. If you'd like to be placed in the question queue, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star one. One moment please, while we poll for questions. Our first question today is coming from Michael Sarcone from Jefferies. Your line is now live.

In summary, we are pleased with our fourth quarter and full year performance and entered 2026 with strong momentum. Looking ahead. We will continue to prioritize initiatives that strengthen our financial Foundation, including targeted Investments, and Innovation and Commercial infrastructure by maintaining a disciplined approach to expense management and leveraging economies of scale. We are confident in our ability to further enhance operating margins and deliver consistent profitability with that. I will now open the line for questions, operator.

Thank you. And now, we will be conducting your question-and-answer session. If you would like to be placed in the question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

You may press star 2 if you'd like to move your question from the queue for participants using speaker equipment and may need to pick up your handset before pressing star 1.

One moment, please, while we pull up the questions.

Michael Sarcone: Hey, good morning, and thanks for taking the questions. I guess,

Our first question today is coming from Michael Cerrone from Jeffries. Shine is now live.

Lindsey Hartley: Hey, Mike.

Michael Dale: Hey, Mike.

Hey, good morning and and thanks for taking the questions.

Michael Sarcone: Hey, just to start, you know, on the guidance for the year, at least 18%, you exited 2025 at 21%, and maybe you could argue that's even higher when you adjust for the K-Stock discontinuation. You know, just, you know, wanted to get your take on how conservative or achievable you view the guidance and maybe, you know, talk about some of the key assumptions that you've got in there.

I guess just hey, uh, just to start, you know, on the guidance for the year at least 18%, uh, you exited 2025 at 21%. And maybe you could argue, that's even higher when you adjust for the case stock, uh, discontinuation. But, you know, just, you know, 1 to get your take on, uh, how conservative or achievable you view the guidance and maybe, you know, talk about some of the key assumptions that you've got in there.

Lindsey Hartley: Thanks, Mike. We would characterize it as prudent. We're building off of a larger base. We believe that our commercial customer creation models are elastic, but they still need to be managed, so each quarter is a new quarter, each year is a new year. We feel very confident in the guidance of 18%. Obviously, we aspire to growing the business as fast as possible. But hopefully that answers the question. It's a situation that we still believe that we need to prove out quarter to quarter, because the management of that, of those, of the, of the customer creation processes is one of diligence, and then we're expanding the footprint, and we still need to be careful about getting out ahead of ourselves.

Michael Dale: Thanks, Mike. We would characterize it as prudent. We're building off of a larger base. We believe that our commercial customer creation models are elastic, but they still need to be managed, so each quarter is a new quarter, each year is a new year. We feel very confident in the guidance of 18%. Obviously, we aspire to growing the business as fast as possible. But hopefully that answers the question. It's a situation that we still believe that we need to prove out quarter to quarter, because the management of that, of those, of the, of the customer creation processes is one of diligence, and then we're expanding the footprint, and we still need to be careful about getting out ahead of ourselves.

Michael Sarcone: Understood. That's helpful. Then maybe just, you know, you touched on the CMS reimbursement, healthy increase in the outpatient setting. Can you maybe just help us think about how you're thinking about pricing in that context? You know, Can you give us a rough sense of the split of the business between inpatient versus outpatient procedures?

Thanks Mike. Um, we we would characterize it as prudent. Uh, we're building off of a larger base. Uh, we believe that our commercial customer creation models are elastic, um, but they still need to be managed and so each quarter is a new quarter, each year is a new year, and we feel very confident in the guidance of 18%, obviously, we aspire to to Growing the business as fast as possible. Um, but hope that answers the question it's um, uh, uh, it's a situation that we still believe that we need to prove out a quarter to quarter, uh, because the management of that of those of the of the creation processes is is 1 of the diligence, and then we're expanding the footprint. And uh we still need to be um um careful about getting out ahead of ourselves.

Understood, that's that's helpful. And then, maybe just, you know, you you touched on the CMS reimbursement, um, healthy increase in the outpatient setting, can you maybe just help us? Uh, think about how you're thinking about pricing in that context and you know any help on

Can you give us a rough sense of the split of the business between inpatient versus outpatient procedures?

Lindsey Hartley: Sure. Why don't I ask my colleagues, Jens and Rick to weigh in on answering that question?

Michael Dale: Sure. Why don't I ask my colleagues, Jens and Rick to weigh in on answering that question?

[Company Representative] (AxoGen): Hey, Mike, thanks for the question. This is Rick. Just to start, we don't break out by care setting in terms of our revenue. I do think this is a good de-risking event. It's not a light switch, so it's not like all of a sudden, all these procedures are gonna move to the outpatient setting. I think it increases site of care flexibility over time, and it's something we'll continue to take a look at. One thing that's important to note is that facilities negotiate procedure payments with the commercial payers, and that happens every 1 to 2 years. You know, CMS makes this decision, and facilities will renegotiate their contracts accordingly.

Rick Ditto: Hey, Mike, thanks for the question. This is Rick. Just to start, we don't break out by care setting in terms of our revenue. I do think this is a good de-risking event. It's not a light switch, so it's not like all of a sudden, all these procedures are gonna move to the outpatient setting. I think it increases site of care flexibility over time, and it's something we'll continue to take a look at. One thing that's important to note is that facilities negotiate procedure payments with the commercial payers, and that happens every 1 to 2 years. You know, CMS makes this decision, and facilities will renegotiate their contracts accordingly.

Yeah. Why don't I, uh, ask my colleagues, uh, Jens and Victor Williams, to answer that question.

[Company Representative] (AxoGen): These things will just flow through the healthcare system over time, but it gives us a lot of belief in what we're doing. Jens, any color you wanna add?

Rick Ditto: These things will just flow through the healthcare system over time, but it gives us a lot of belief in what we're doing. Jens, any color you wanna add?

Jens: Yeah, I would say it's definitely positive that payments have increased, but the really important thing is coverage. As coverage expands, that also gives us more opportunities to expand the footprint into other care settings. It's really, there's two sides of the coin. You've got the payment, which is great, it's been increased, but we're still working hard to expand coverage as well.

Jens Kemp: Yeah, I would say it's definitely positive that payments have increased, but the really important thing is coverage. As coverage expands, that also gives us more opportunities to expand the footprint into other care settings. It's really, there's two sides of the coin. You've got the payment, which is great, it's been increased, but we're still working hard to expand coverage as well.

Over time and it's something we'll continue to take a look at 1 thing. That's important to note. Is that facilities? Negotiate, uh, procedure, uh, payments with the commercial payers, and that happens every 1 to 2 years. So, you know, CMS makes this decision and Facilities will renegotiate their contracts accordingly. And so these things will just flow through the healthcare system over time, but it gives us a lot of belief in what we're doing. Ends any color you want to add. Yeah, I I would say it's definitely positive that a payments have increased but the real really important thing is coverage. Uh and so as coverage expense

Michael Dale: Mike, give context of procedures that will likely move in the future, where it's advantageous for the provider to do so, are gonna be more of the upper extremities, the hand and the arm, and then follow-up outpatient procedure opportunities. The other major significant procedure, particularly head, neck, and breast, those are unlikely to move into that kind of setting. It's, it's all good for nerve care in the future, but it'll be one that takes time to socialize as each hospital understands their own situation and then decides whether or not to deploy more resources to the setting.

That also gives us more opportunities to expand the footprint into other care settings, but it's really, there's 2 sides of the coin. You've got the payment, which is great that has been increased. But we're still working hard to expand coverage as well. Mike, um, give context of of procedures that will likely move in the future where, where it's advantageous for the provider to do. So are going to be, um, more of the upper extremities the hands and the in the arm, uh, and then follow up outpatient. Uh, uh, uh procedure opportunities. The other major significant procedure, particularly head and neck, um, and breast those are unlikely to, uh, to move into that kind of setting. So it's it's all good for for nerve care in the future. Um, but it'll be 1, that takes time to socialize, uh, as each Hospital, uh, understands their own situation and then decides whether or not to deploy more resources to the setting,

Michael Sarcone: Super helpful. Thanks, all.

Super helpful. Thanks. All

Michael Dale: Thanks, Mike.

Operator: Thank you. Next question is coming from Larry Biegelsen from Wells Fargo. Your line is now live.

Thanks Mike.

Thank you. Next question is coming from Larry blessin from Wells Fargo. Your line is now live.

Simron: Hi, good morning. This is Simron on for Larry. Thanks for taking the questions here. Maybe just to start out, Mike, since the BLA in December 2025, can you talk about the reaction to it so far from physicians in each segment of the market and payers as well? How are you thinking about major coverage wins in 2026 as you move towards full coverage from above 65% today?

Simran Kaur: Hi, good morning. This is Simron on for Larry. Thanks for taking the questions here. Maybe just to start out, Mike, since the BLA in December 2025, can you talk about the reaction to it so far from physicians in each segment of the market and payers as well? How are you thinking about major coverage wins in 2026 as you move towards full coverage from above 65% today?

Michael Dale: Sure. The reception from physician community is varied. The product has been commercially available to the community for many years now. For a lot of individuals, they more or less took for granted this was the case and were in many instances, only modestly aware of the work going on behind the scenes to move from a device classification to a biologic. I think that context is important because it is an unusual circumstance. That said, what we have done is with the approval, it has allowed us to go back to two of the customers, the people we serve, and to affirm with them their trust and confidence in Avance. That, and that is very positive.

Hi, good morning. This is simran on for Larry. Um, thanks for taking the questions here. Uh, maybe just to start out Mike since the bla in. December 2025, can you talk about the reaction to it? So far from physicians in each segment of the market and payers as well. Um and then how are you thinking about major coverage wins in 2026 As you move towards full coverage from um, you know, above 65% today?

Sure, uh, the reception from, uh, The Physician Community is varied. Um, so the product has been commercially available to uh, the community for, uh, many years now. So, uh, for a lot of individuals, they more or less took for granted. The, the the, the case, and we're uh, and many uh instances only modestly aware of the work going on behind the scenes to move from a device classification to a biologic. So I think that context is is is important because it's an unusual circumstance. Um, uh that said, what we have done is with the with the approval, uh, as it's allowed us to go back to to the customers, the people we serve and to affirm with them.

Michael Dale: It gives us a chance to revisit the basic product characteristics of why it's a suitable solution for treating peripheral nerve discontinuities. All very positive in that regard. As you might appreciate, for those individuals who are sitting on the fence, who or who are not adopters, it's given us a new vehicle to go back and revisit the question with those individuals. In all regards, it's very positive. It's something that also is important to understand has been a product that's already been available to the community for quite a while.

Their trust and confidence in advance. So that and that that is very positive. Gives us a chance to revisit, um, uh, the basic, uh, uh, uh, product characteristics of of why it's a suitable, uh, solution for treating nerve discontinuities. So, all very positive in that regard.

Michael Dale: As for payers, it's a vehicle that allows us to go back and revisit any of the payers whereby their one of the primary objections was that the device was experimental and has allowed us to make clear that that is not the case. As to their response, it's a formal process. You make these submissions, you work through their various work streams that they require in order to even have a conversation. Periodically, on an annual basis, they then review that information that's new and then revisit their decisions.

And uh, uh, uh, as as you as you might appreciate for those individuals who are sitting on the fence, um, or who are not adopters, it's given us a new vehicle to go back. Uh, and uh, and revisit the, the, the question with, with those those individuals so, um, uh, in all regards, it's very positive. Um, but um, uh, it's something that also is important to understand is has been a product that's already been available to the community for, for quite a while. Now, as for payers, it's a vehicle that allows us to go back and revisit, um, any of the payers for where whereby their uh, 1 of their primary objections was that the device was experimental and has allowed us to make clear? Um, that is not the case, uh, as to their response. Uh, it's a formal process, you make, uh, um, uh, the submissions you work through their, their, their various, um, work streams that that they require in order to even have a conversation.

Michael Dale: There is not a schedule that we can point to that will guarantee us a feedback. Other than what we can say is that we hope and expect to see some sort of responses from these entities in 2026. We have no prediction per se, as to which one or exactly when they will respond.

And then periodically on an annual basis. Uh, uh, they then review that information that's new uh, and then revisit the, their decisions. So there is not a schedule that we can point to that. Will that will guarantee us a, a a feedback um, but, uh, other other than what we can say is that we we hope and expect to see some sort of the responses from these uh um, these entities, uh, in 2026. Um, but we we we have no prediction per se as to, which 1 or or exactly when, um, they will respond.

Simron: That's helpful. Maybe just to follow up. Yeah, go ahead.

Simran Kaur: That's helpful. Maybe just to follow up. Yeah, go ahead.

Michael Dale: One thing to add is that while we can't predict the timing, we have predicted timing in the context of the strategic plan. I do wanna be clear about that. It is our expectation that between now and 2028, we will overcome the negative coverage decisions that presently exist.

Okay, that that's helpful. Um and maybe just to follow up. Yeah, go ahead is, is it? Well, we can't predict the timing. We have predicted timing, the context of the Strategic plan. So I do want to be clear about that. Uh, it is our expectations between now and 2028. We will um, uh overcome uh, the negative coverage, decisions that presently exist.

Simron: Got it.

Simran Kaur: Got it.

Michael Dale: Which means

Simron: Thank you.

Simran Kaur: Thank you.

Michael Dale: Go ahead. Sorry.

Got it, which means thank you.

Go ahead. Sorry.

Simron: Sorry. Just to follow up, maybe just switching gears towards your sales force, kind of odds for the year. I think if I'm doing my math right, you added about 22 reps across the business in 2025, and you're guiding to, at least 12 rep additions in 2026. Maybe help me understand why is that the right number, especially as you're starting to sort of reach critical mass in, you know, some of your segments, like extremities? How are you thinking about the productivity ramp of the sales force today versus the historical ramp?

Simran Kaur: Sorry. Just to follow up, maybe just switching gears towards your sales force, kind of odds for the year. I think if I'm doing my math right, you added about 22 reps across the business in 2025, and you're guiding to, at least 12 rep additions in 2026. Maybe help me understand why is that the right number, especially as you're starting to sort of reach critical mass in, you know, some of your segments, like extremities? How are you thinking about the productivity ramp of the sales force today versus the historical ramp?

Michael Dale: Thanks for the question. I think maybe to start with the one comment you made, that reaching critical mass. To put it in context, if you wanted to provide full coverage for extremities, you'd probably need somewhere between 400 to 600 sales representatives. There's a very, very large provider universe in extremities. And so, and point of fact, while 130 sounds like a lot, it does not provide full coverage of that particular patient presentation stream in terms of trauma and related injuries. We're a long way from full coverage in extremities. With regards to breast, the same thing.

Um sorry uh just to follow up. Um so um maybe just Switching gears um, towards your your sales force. Um, kind of odds uh for the year. Um, I I think if I'm doing my math, right? You added about 22 reps across the business and in 2025 and you're guiding to um at least 12 repetitions and and 2026. Um, maybe help me understand why is that the right number? Um, especially as you're starting to sort of reach critical mass in um, you know, some of your segments like extremities and how are you thinking about the productivity ramp of the Salesforce today versus the historical ramp

Thank you for the question. I I think maybe you start with the 1 comments, uh, uh, to put it in context. If you wanted to provide full coverage for extremities, you probably need somewhere between 4 to 6.

Michael Dale: There's about 1,200 sites of service for breast, and to that end, the current organization, while growing rapidly and doing good work, is a long way from full coverage. That's why we have made the strategic decision that we're not going to try to do all of this in a single year, but we're going to grow into it through incremental additions throughout the year and in the succeeding years through 2028.

600 sales representatives. So there's a very very large provider Universe uh in extremities and and so uh and point of fact, while 1:30 sounds like a lot. Um, it it is does not provide full coverage uh of of that particular patient presentation stream uh in terms of trauma and and related injuries. So we're a long way from full coverage and extremities um, with regards to breast U the same the same thing. Um, so we are, there's about 1,200 sites of service for breast and, uh, to that end, the current organization, um, while while growing rapidly and doing good work, uh, is a long way from full coverage. So, uh, that's why we have made the Strategic decision that we're not going to try to do all of this in in a single year. Um, but we're going to grow into it through incremental additions throughout the year and then the succeeding years through 2028.

Simron: Great. Thank you.

Simran Kaur: Great. Thank you.

Michael Dale: Sure. Thank you.

Great. Thank you.

Sure.

Operator: Thank you. Next question is coming from Chris Pasquale from Nephron Research. Your line is now live.

Chris Pasquale: Thanks. Lindsay, I wanted to start with just the cadence of gross margin throughout the year. Could you just level set us on how we should think about it here? Is Q2 the low point, and then you improve from there, and sort of magnitudes of the high and the low for the year would be helpful.

Thank you, thank you. Next question is coming from Chris Pasquale from nefron research, your line is now live.

Lindsey Hartley: Yes. As we progress through the year and we begin selling the new biologic Avance product, it will carry a heavier cost. Now, we will be selling both tissue and biologic product when we start selling biologics, we expect to see that pressure in Q2 and going into the remaining second half of the year.

Thanks. Um Lindsay. I wanted to start with just a Cadence of gross margin throughout the year. Could you just um get level set us on how we should think about it? Here is 2 cue the low point and then you improve from there and and sort of magnitude of the high and the low for the year would be helpful.

Yes. Um, so as we progress through the year and we begin selling the new biologic Advanced products, it will carry a heavier cost. Now, we will be selling both tissue and biologic products when we start selling biologics. So we expect to see that pressure and Q2 and going into the remaining second half of the year.

Chris Pasquale: Okay, it sounds like the pressure builds over time as that mix shifts, and then we start to see improvement in 2027. Is that fair?

Lindsey Hartley: That's correct.

Okay, so it sounds like the pressure builds over time as that mix shifts, and then we start to see improvement in '27, is that fair?

Chris Pasquale: Okay. Mike, you talked about how having the BLA out of the way now frees you up to focus on other clinical priorities, including breast, I would assume at some point, prostate as well. Can you give us any sense about how you're thinking about what's ultimately going to be required to establish the level of clinical evidence you want in those indications? Are we talking about randomized trials, or can you get what you need just from documenting, sort of a single-site registry-style study, in more detail? Thanks.

That's correct.

Okay. Um, Mike, and then you talked about how having the BLA out of the way now frees you up to focus on other clinical priorities, uh, including breast. I would assume at some point prostate as well. Can you give us any sense about how you're thinking about what's ultimately going to be required to establish the level of clinical evidence you want in those indications? Are we talking about randomized trials, or can you get what you need just from documenting, um, sort of a single site?

Michael Dale: Sure. It will be both. So in every instance, it does not need to be randomized, but it needs to fit the bill of what the FDA refers to. It's really not an FDA requirement, but needs to fit the clinical evidence expectations of what's considered adequate and controlled. There's a structural definition that accompanies that. With regards to mixed and motor, that's going to be randomized clinical trials. With regards to breast, unlikely to be randomized. There's great resistance to that, given the current belief that it's unethical to do such.

Registry style study. Um, in more detail, thanks.

Sure. Uh, it will be both. Um, so in every instance, it does not need to be, uh, randomized. Um, but it needs to fit the bill with what the FDA refers to—and it's really not an FDA requirement—but needs to fit the, uh, the clinical evidence. Uh,

Control.

Uh,

in infrastructural definition.

Michael Dale: Nonetheless, there's a desire for greater clarity in terms of patient fit and response rates, and so the adequate and controlled studies will run there. Those two, for example, are already planned. Those will all initiate this year. We will consider doing additional studies. Prostate, as you raised, will be certainly a significant effort. We are not in a position to describe what that study will be until really, well, the end of this year, once we see the clinical signals back from the 10 clinical sites that we initiated last year.

Michael Dale: Most important thing to understand is while evidence is significant insofar as individual single-center studies, in terms of randomized studies, to put it in context, RECON is the largest randomized clinical study ever done in nerve care. While we're very proud of that, it also speaks to the fact that there does need to be more evidence, we look at this as an opportunity. Our customers are actually very excited because we provide for those individuals an opportunity, essentially a vehicle by which to engage in nerve care, in a way that's very common, say, for example, cardiovascular or some other healthcare domains, but this is not historically the situation in nerve care.

Or greater Clarity, uh, in terms of, uh, um, uh, patient fit in, uh, and uh, and, and response rates. And so it would be adequate control studies will run there. So, those are those 2 for example, are already planned. Uh, those, those will all initiate this year. Um, uh, and then we will consider doing additional studies prostate as. As you as you raise will be, uh, certainly a significant effort, um, um, but we are not in a position to, uh, to describe what that study will be, uh, until really more, uh, the end of this this year. Once we see the clinical signals back from 10 clinical sites that we, uh, initiated last year. So, uh, most important thing to understand is is well, well evidence. Um, as, um, uh, significant and so far as individual single Center studies, uh, in terms, of randomized, studies to put it in context, our Recon is the largest randomized clinics that.

They ever done in nerve care. And while we're very proud of that, it also speaks to the fact that there does need to be more evidence. And so, we look at this as an opportunity. Our customers are actually very excited because we provide for those individuals, um, an opportunity essentially a vehicle by which, to engage in nerve care, um, in a way that's very common and say, for example, in cardiovascular, or or some other um, uh uh, Healthcare domains. Um, um, but this is not historically.

Uh, uh, the situation in in, in your care.

Chris Pasquale: Great. Thank you.

Michael Dale: Thanks, Chris.

Great. Thank you.

Operator: Thank you. Next question is coming from Jayson Bedford from Raymond James. Your line is now live.

Thanks Chris.

Thank you. Next question is coming from Jason Bedford from Raymond James. Your line is now live.

Simron: Good morning, and thanks on the congrats on the progress. Just as it relates to the BLA, it doesn't look like it based on the physician training metrics you provided, but are you assuming any step-up in growth directly related to the BLA?

Jayson Bedford: Good morning, and thanks on the congrats on the progress. Just as it relates to the BLA, it doesn't look like it based on the physician training metrics you provided, but are you assuming any step-up in growth directly related to the BLA?

Michael Dale: Not explicitly. It was always assumed as part of the strategic plan that we would achieve a biologic license approval. The growth that's implicit in our guidance is characterized based upon that assumption.

Uh, good morning and thanks on the that or congrats on the progress. Uh just as it relates to the bla, it doesn't look like it based on the physician training metrics, you provided. But are you assuming any Step Up in growth? Directly related to the bla

Not explicitly. Um, uh, it was always assumed as part of the Strategic plan that we would, um, achieve, uh, biologic license approval. Um, and, and so the growth that's implicit in our guidance. Um, uh, uh, uh,

Characterized based upon that assumption.

Anthony Petrone: Okay. Then just, you mentioned the active 679 high-potential accounts within a universe of, I think you said 780. My question is: do you see scenarios where the potential universe of high-potential accounts grows beyond the 780?

Jayson Bedford: Okay. Then just, you mentioned the active 679 high-potential accounts within a universe of, I think you said 780. My question is: do you see scenarios where the potential universe of high-potential accounts grows beyond the 780?

Okay, and then just uh you mentioned the active 679 high potential accounts within a universe of I think you said 780. So so my question is, do you see scenarios where the there's potential the potential Universe of high potential accounts grows beyond the 780?

[Company Representative] (AxoGen): Yes, definitely. As we increase our target indications and target procedures, that high potential algorithm will evolve. We do expect in the future that that universe of high-potential accounts will grow.

Rick Ditto: Yes, definitely. As we increase our target indications and target procedures, that high potential algorithm will evolve. We do expect in the future that that universe of high-potential accounts will grow.

Yes, definitely, uh as we uh, increase our Target uh, indications and Target procedures, uh that uh high potential algorithm will evolve. And so we do expect in the future that that Universe of hypertensive accounts will grow

Anthony Petrone: Okay. Thank you.

Jayson Bedford: Okay. Thank you.

Michael Dale: Thanks, Jason.

Okay, thank you.

Rachel Smith: Thank you. Next question today is coming from Caitlin Roberts from Canaccord Genuity. Your line is now live.

Operator: Thank you. Next question today is coming from Caitlin Roberts from Canaccord Genuity. Your line is now live.

Thanks Jason.

Thank you. Next question, today is coming from Caitlyn Roberts from Canada core. Genuity, your line is now live.

Caitlin Roberts: Hi, thanks so much for taking the questions.

Michael Dale: Hi, Caitlin.

Caitlin Roberts: Just starting off with guidance. Hi, you know, just starting off with guidance, if you could provide some more color on the cadence of revenues throughout the year.

Hi, thanks so much for taking the questions.

Just starting off with guidance it. Hi, um, you know just starting off with guidance if you could provide some more color on the Cadence of revenues throughout the year.

Michael Dale: From a calendarization standpoint, it should be very similar to what we've seen the last two years for AxoGen. To generalize, Q1 is typically the most modest quarter for the business. Then, the second and third quarter are stronger quarters based upon the dynamics that transpire across nerve care. Summertime is when you see very significant trauma. People are out and active. That's a pronouncement, but it just basically builds throughout the year. I would look to the last 24 months of history to give you a guide for the calendarization.

From a counter Sation standpoint, it should be very similar to what we we've seen last 2 years. Uh, for oxygen, uh, it's Jen to generalize. Uh, first quarter is typically the most modest quarter, uh, for the business. Uh, and then uh, the the the second and third quarter are are, are are are are stronger quarters based upon, uh, the Dynamics that transpire across nerve care. So, summertime is when you see a very significant trauma, uh, people are out and active, um, uh, uh, and so that, that, that's a pronouncement, but it is basically builds throughout the year. Um,

And I would, I would, I would look to uh the the last uh uh 24 months of History, to give you a guide for the calendar.

Caitlin Roberts: Awesome. Thanks. Just for breast, I think you've talked in the past about addressing only a certain part of the market, given the technique of the nerve size limitations. Are you working on expanding the technique to address further breast recon procedures?

Michael Dale: We are. We have ongoing R&D and regulatory work to understand what other permutations could be offered. That includes greater nerve length, greater, more different morphology representations on the nerve, all things that could make it easier. There's nothing expected this year that would be available. Certainly within the next 24 months, if we decide and determine that we can successfully develop such, we would be bringing those to the marketplace.

Awesome, thanks. And then just for breast, I think you've talked in the past about addressing only a certain part of the market given the technique or the nerve size limitations. Are you working on expanding the technique to address further breast reconstruction procedures?

um uh but certainly within the next 24 months, if we if we decide and determine uh that we can that we can successfully um uh develop such

Uh, we will be bringing those to the marketplace.

Caitlin Roberts: Great. Thanks for taking the questions.

Michael Dale: Thanks, Caitlin.

Great. Thanks for taking the questions.

Thanks Kayla.

Rachel Smith: Thank you. Next question today is coming from Mike Kratky, from Leerink Partners. Your line is now live.

Operator: Thank you. Next question today is coming from Mike Kratky, from Leerink Partners. Your line is now live.

Mike Kratky: Hey, everyone. Thanks for taking our questions, and congrats on all the progress.

Thank you. Next question today is coming from Mike Cracki from Craig-Hallum Capital Group. Your line is now live.

Michael Dale: Thanks, Mike.

Hey everyone. Thanks for taking our questions and congrats on all the progress.

Mike Kratky: Maybe just to jump in on prostate, you know, you highlighted some really exciting milestones, over 100 procedures and some of the clinical activity we should be expecting in the later part of this year. You know, how should we think about the potential revenue contribution and the commercial side ahead of that, progression throughout the year, and any color there would be helpful.

Thanks Mike.

So maybe just to jump in on prostate, um, you know, you highlighted some really exciting Milestones over 100 procedures and some of the clinical activity. We should be expecting in the later part of this year. But, you know, how should we think about the potential Revenue contribution and the commercial side ahead of that um progression throughout the year? Uh, and any color there would be helpful.

Michael Dale: Sure. We're trying to maintain discipline as we wait for the clinical signals from those 10 clinical sites. Prostate will not be a significant revenue contributor in 2026.

Sure. So we're trying to uh um maintain discipline as we wait for the clinical signals from those 10 clinical sites. So in so prostate will not be a significant Revenue contributor, uh, in 2026.

Mike Kratky: Got it. Understood. Just to clarify there, is there any then contribution in the first half, or is it really you know, that'll be kind of the gating factor for your ability to drive more commercial adoption there, just as you get more of that clinical signal?

Got it, understood it. And and just to clarify, there is there, is there any then contribution in the first half? Or is it really, you know, that'll be kind of the gating factor for your ability to to drive more commercial adoption there? Um

Michael Dale: Nothing that we haven't already forecasted implicit in the guidance which we just shared. Certainly there's spend, and there's things being planned for potential development, but that's all captured in the guidance at present. It'll be very unlikely, very unlikely that we would depart from the current plan. It really boils down to what we've been describing, is that we wanna see the clinical signals from those 100 patients in the various procedures that we conducted. Again, on the presumption that those are positive, then we'll have a lot more to talk about.

just as you get more of that clinical signal,

nothing that we haven't already forecasted implicit in the guidance which we just shared. So certainly there's been and there's a, a things being planned, um, uh, for potential development. But that's all captured in in the, in the guidance at present.

Mike Kratky: Okay. Yeah, appreciate the color there. Maybe just one last one, but, you know, so helpful color on the BLA expenses that you outlined in the Q4. I'm curious if there was any G&A impact there and then any BLA expenses that we should be building in for 2026?

And it'll be very unlikely, very unlikely, that we would depart, uh, from the current plan. That really boils down to what we've been describing, which is that we want to see the clinical signals from those 100 patients in the various procedures that we conducted. Uh, and again, on the presumption that those are positive, uh, they will have a lot more to talk about.

Okay, yeah, appreciate the color there and then maybe just 1 last 1 but um, you know, so helpful color on the bla expenses that yeah, outlined in the fourth quarter. Um, I'm curious if there was any GNA impact there and then any bla expenses that we should be building in for 2026?

[Company Representative] (AxoGen): Yes. As I mentioned on the call, there was the stock-based compensation expense directly tied to that event. In G&A, it was $1.9 million. Across all of OpEx, it was $7.2 million.

Lindsey Hartley: Yes. As I mentioned on the call, there was the stock-based compensation expense directly tied to that event. In G&A, it was $1.9 million. Across all of OpEx, it was $7.2 million.

Yes. Um as I mentioned I'll caller was the stock based compensation expense directly tied to that event. Um, in GNA, it was 1.9 million

Across all of OBEX. It was 7.2 million.

Mike Kratky: Okay. Thanks very much.

Michael Dale: Thanks, Mike.

Okay, thanks very much.

Thanks Mike.

Rachel Smith: Thank you. Next question today is coming from Anthony Petrone from Mizuho Group. Your line is now live.

Operator: Thank you. Next question today is coming from Anthony Petrone from Mizuho Group. Your line is now live.

Anthony Petrone: Thanks. Congratulations on a strong end to the year here. Maybe I'll start just on the BLA transition, just, you know, something we touched on, Mike, previously.

Thank you. Next question, today, is coming from Anthony Patrol. From ISO group. Your line is now live.

[Analyst] (Raymond James): ... you know, inventory or distributor channel shifts as you move from the tissue-based product to Avance BLA in Q2, anything we should be aware of over the next couple of months? Quick follow-up here would be on hospital outpatient, that new rate plus 40%. How does that play specifically on the breast side? Like, how many breast reconstructions are done outpatient, and is that a driver for that segment in 2026? If I can, I have one quick one on just patient economics after as well. Thanks.

Jayson Bedford: ... you know, inventory or distributor channel shifts as you move from the tissue-based product to Avance BLA in Q2, anything we should be aware of over the next couple of months? Quick follow-up here would be on hospital outpatient, that new rate plus 40%. How does that play specifically on the breast side? Like, how many breast reconstructions are done outpatient, and is that a driver for that segment in 2026? If I can, I have one quick one on just patient economics after as well. Thanks.

Uh thanks and congratulations on the strong uh, end to the year here. Maybe I'll start just on the bla transition just, you know, something we touched on my previously just around.

Michael Dale: Sure. With regards to the transition from the tissue to the biologic, it will be invisible to the customer for the most part. There is no inventory obsolescence risk, so all the mechanics and logistics have been factored in and should be seamless at this point. Hopefully that answers that question. With regards to the outpatient dynamics, despite the changes in reimbursement, as we presently understand, the market opportunity in breast, it will not be a factor of any significance with regards to the outpatient setting. Most of those procedures will remain inpatient as we currently understand the situation.

[Analyst] (Raymond James): Got it.

Jayson Bedford: Got it.

Michael Dale: then-

Sure, with regards to the transition from the tissue to the, to the biologic, um, it will be invisible to the customer for the most part. Uh, there is no, uh, inventory obsolescence risk. Uh, so, uh, all the the mechanics and Logistics have been factored in and should be seamless at this point. So hopefully that answers that question, uh, with regards to the outpatient, uh, uh, Dynamics, uh, the spike that changes in reimbursement, as we presently understand, uh, the market opportunity of breast, uh, it will not be, uh, a factor of any significance with regards to the outpatient setting. Most of those procedures will remain inpatient as as as we currently understand. Um, the situation

[Analyst] (Raymond James): No. Yeah.

Jayson Bedford: No. Yeah.

Michael Dale: Go ahead.

[Analyst] (Raymond James): Yeah. A quick one would be just on patient economics. When you think of core extremity, oral and maxillofacial, you're bringing in breast now. You now have these 100 cases in prostate and in 2027, presumably that will grow. When you think about revenue per patient between core extremity and oral, how does that stack up to breast and prostate? By our math, I think you use quite a bit more Avance, you know, graft in the latter two surgeries. Just trying to get an idea of how the different patient categories stack up from a revenue capture standpoint. Thanks.

Jayson Bedford: Yeah. A quick one would be just on patient economics. When you think of core extremity, oral and maxillofacial, you're bringing in breast now. You now have these 100 cases in prostate and in 2027, presumably that will grow. When you think about revenue per patient between core extremity and oral, how does that stack up to breast and prostate? By our math, I think you use quite a bit more Avance, you know, graft in the latter two surgeries. Just trying to get an idea of how the different patient categories stack up from a revenue capture standpoint. Thanks.

Um, and then yeah.

More events, you know, grasped in in the latter 2 surgeries. Just trying to trying to get an idea of how the different patient category stack up from a revenue, capture standpoint. Thanks,

Michael Dale: Sure. In general, from a pure product standpoint, breast, because of the longer grafts, these are typically 1 to 2 mm diameter grafts, 7 mm in length. The number of those grafts that are used, those procedures will represent the highest average selling price. There are exceptions in extremities based upon the trauma situation where it can be similar, but on average, extremities will have a lower ASP point based upon the number of grafts and products utilized. Prostate, when we succeed there and move forward, we'll employ grafts that are typically 4 to 5 mm in diameter and about 50 in length.

Michael Dale: It will also have a relatively higher ASP, but breast will remain into the future, the highest ASP procedure.

Sure in general from a from a pure product standpoint breasts because of the longer graphs uh uh these are typically 1 to 2 millimeter diameter graphs 70, mm and and length. Uh and the number of those graphs that are used those will have the those procedures will represent the, uh, the highest, uh, average selling price. Um, uh, uh, uh, there are exceptions in extremities based on, uh, the trauma of the situation where it can be similar. But on average extremities will have a lower ASP Point based upon the number of grafts and products utilized, uh, prostate when it should, it should be should be succeeded there. Uh, and move forward. Uh, we'll employ graphs that are typically 4 to 5, um, millimeters in diameter and about 50. Um, um, uh, um, uh, and and late. Uh, and so, uh, it will it will also have a, a relatively higher as

[Analyst] (Raymond James): Thank you.

Jayson Bedford: Thank you.

P, uh, but uh, rest will remain into the into the future. Uh, the highest ASP procedure.

Michael Dale: Sure. Thanks, Anthony.

Thank you.

Rachel Smith: Thank you. Our final question today is coming from Frank Takkinen from Lake Street Capital Markets. Your line is now live.

Operator: Thank you. Our final question today is coming from Frank Takkinen from Lake Street Capital Markets. Your line is now live.

Sure. Thanks. Kathy.

Frank Takkinen: Great. Thank you for taking the questions. Was curious if I could follow up on breast. I think you outlined 1,200 potential accounts to target in that area. If you think about the 30 rep headcount, how much of that market can you pursue with that site set count?

Thank you. Our final question today is coming from Frank Techeun from Lake Street Capital Markets. Tina is not last.

Great. Thank you for taking the questions.

Um, was curious. If I could follow up on breast, I think you outlined 1,200, uh, potential accounts to Target in that area. If you think about the 30 rep. Headcount, how much of that market can you pursue with that side? Set, count?

Michael Dale: Only a portion of it. As I've mentioned in the past, we don't have a firm number yet, I think it should be expected that that organization could as much as double between now and 2028 and 2029 to ensure that we have full coverage based upon the number of accounts per representative to support the care pathway development. We're still watching that and evolving that. Still a little too early to put a stake in the ground. The bottom line is, we currently have plans to continue to grow the breast organization for the next several years.

Um, uh, only a portion of it. Uh uh. Uh. And so I as I mentioned in the past, we don't have a firm number yet yet. Um, but, uh, I think it should be, um, uh, expected that that organization. Uh, could as much as double between now and 2028 and 29. Um, to ensure that we have full coverage based upon the number of accounts per representative to support the care pathway development. Um, so we're still watching that and evolving that. So a little too early to put a stake in the ground, um, but uh, the bottom line is we currently have plans to continue to grow, uh, the breast Organization for the next several years.

Frank Takkinen: Got it. That's helpful. Just as my last one, curious if you could talk about any long-term gross margin targets once we get to a place where you're consistently manufacturing under the BLA and where that gross margin profile can go over a longer period of time.

Michael Dale: Our plan is to address that explicitly in the second half of the year. By then, we will have instituted many of the capital infrastructure investments and have those in place. That's what's allowing us to guide that we expect improvements in 2027. I know everyone's anxious to know, okay, what are we looking at? Until we really get that work behind us, we think it's appropriate that we hold off in terms of that guide. For this year, it's very similar to what we explained last year, that 74% to 76% range people should feel good about.

Got it, that's helpful. And then just as my, my last 1, uh, curious if you could talk about any long-term gross margin targets, once we get to a a place where you're consistently manufacturing under the the bla and where that gross margin profile, can go over a longer period of time.

Our plan is to address that explicitly, uh, in the second half of the year, uh, by then we will have instituted, um, uh, many of the capital infrastructure Investments, uh, and have those in place. Uh, and that's what's allowing us to guide that we expect improvements in 2027 uh, and I know everyone's anxious to know. Okay. What are we looking at? Um, but until we really get that that work behind us. Um we think it's appropriate that we um hold off in terms of that that guy for this year. Uh it's a very similar to what we uh explained last year uh that 74 to 76% range. Um people should feel good about

Frank Takkinen: Got it. Fair enough. Thanks for taking the questions.

Michael Dale: Thanks, Frank.

Got it. Fair enough. Thanks for taking the questions.

Rachel Smith: Thank you. We've reached the end of our question and answer session. Let's turn the floor back over to Mr. Dale for any further closing comments.

Operator: Thank you. We've reached the end of our question and answer session. Let's turn the floor back over to Mr. Dale for any further closing comments.

Thanks. Bye.

Thank you. We reached end of our question and answer session. I'd like to turn the floor back over to Mr. Dale for any further, closing comments,

Michael Dale: Thank you, Operator. On behalf of the AxoGen team, I want to thank everyone for their time and interest in our work to fulfill the promise and potential for all stakeholders and our business purpose to restore health and improve quality of life by making restoration of peripheral nerve function an expected standard of care. We look forward to updating you on our continued progress and our plans for the business on our earnings call next quarter. Thank you very much.

Rachel Smith: Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.

Operator: Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.

Thank you, operator, on behalf of the action team. I want to thank everyone for their time and interest in our work to fulfill the promise and potential for all stakeholders in our business purpose, to restore health, and improve Quality of Life, by making restoration of purple nerve function, and expected standard of care. We look forward to updating you on our continued progress and our plans for the business on our earnings call next quarter. So thank you very much.

Thank you. That does conclude today's teleconference and webcast. You can disconnect your line at this time and have a wonderful day. We thank you for your participation today.

Q4 2025 AxoGen Inc Earnings Call

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