Q2 2026 MiMedx Group Inc Earnings Call

July 29, 2026

Speaker #1: Location as a reminder: this conference is being recorded. I would now like to turn the conference over to your host, Mr. Matt Notarianni. Head of Investor Relations for MIMEDX.

Speaker #1: Thank you. You may begin.

Speaker #2: Thank you, Operator, and good afternoon, everyone. We are excited to welcome you to today's conference call, where we will discuss our recently announced plans to acquire Sonara MedTech, as well as MIMEDX's second-quarter 2026 operating and financial results.

Speaker #2: With me on today's call are Chief Executive Officer Joe Capper, and Chief Financial Officer Doug Rice. As part of today's webcast, we are simultaneously displaying slides that you can follow.

Speaker #2: You can access the slides from the Investor Relations website at mimedex.com. Joe will kick us off with some opening remarks about the Sonara transaction, before we continue with a summary of our second quarter 2026 operating and financial results highlights.

Speaker #1: Ladies and gentlemen, please stand by. The event will begin shortly. Good afternoon, and thank you for standing by. Welcome to today's MIMEDX Investor Conference call.

Operator: Ladies and gentlemen, please stand by. The event will begin shortly. Good afternoon, and thank you for standing by. Welcome to today's MiMedx investor conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Matt Notarianni, Head of Investor Relations for MiMedx. Thank you. You may begin.

Speaker #2: And Doug will provide a detailed review of our results for the quarter, and then we will conclude with some additional updates before we open the line for your questions.

Speaker #2: Before we begin, I would like to remind you that our comments today will include forward-looking statements, including statements regarding future sales, operating results, and cash balance growth, future margins and expenses, our product portfolios, expected market sizes for our products, and expectations regarding the Sonara acquisition, including expected benefits and financial performance of the combined company.

Speaker #2: These expectations are subject to risks and uncertainties and actual results may differ materially from those anticipated due to many factors, including competition, access to customers, the reimbursement environment, and unforeseen circumstances and delays.

Speaker #2: Additional factors that could impact outcomes and our results include those described in the risk factors section of our annual report on Form 10-K, and our quarterly report on Form 10-Q.

Speaker #2: Also, our comments today include non-GAAP financial measures, and we provide a reconciliation to the most comparable GAAP measures in our press release, which is available on our website at mimedex.com.

Speaker #2: With that, I'm now pleased to turn the call over to Joe Capper. Joe?

Speaker #3: Thanks, Matt, and good afternoon, everyone. Thank you for joining us on today's call. I am pleased to report that MIMEDX is back on track to deliver a dynamic growth as we announce our intent to combine forces with Sonara MedTech to augment our already successful surgical franchise.

Speaker #3: Importantly, we are also starting to see signs of stabilization on the wound care side of the business. As expected, MIMEDX was faced with an extremely challenging environment in the wound care market.

Speaker #3: We signaled on previous calls that the dramatic changes to the Medicare reimbursement system for wound care products would cause significant disruption and take some time to sort out among various constituencies.

Speaker #1: At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded.

Speaker #3: We believe the business would stabilize over time, as weaker players left the market, creating an opportunity to pick up share. So far, the early signs indicate that is exactly what is happening.

Speaker #1: I would now like to turn the conference over to your host, Mr. Matt Notariari. Head of Investor Relations for MIMEDX. Thank you. You may begin.

Speaker #3: Moreover, our surgical business continued to post excellent performance. Growing the top line 15% year over year. In aggregate, the company grew sequentially by 9% from Q1 to Q2.

Speaker #2: Thank you, operator, and good afternoon, everyone. We are excited to welcome you to today's conference call, where we will discuss our recently announced plans to acquire Sonara MedTech, as well as MIMEDX's second-quarter 2026 operating and financial results.

Matt Notarianni: Thank you, operator, and good afternoon, everyone. We are excited to welcome you to today's conference call, where we will discuss our recently announced plans to acquire Sanara MedTech, as well as MiMedx's Q2 2026 operating and financial results. With me on today's call are Chief Executive Officer, Joe Capper, and Chief Financial Officer, Doug Rice. As part of today's webcast, we are simultaneously displaying slides that you can follow. You can access the slides from the investor relations website at mimedx.com. Joe will kick us off with some opening remarks about the Sanara transaction before we continue with a summary of our Q2 2026 operating and financial results highlights. Doug will provide a detailed review of our results for the quarter, and we will conclude with some additional updates before we open the line for your questions.

Speaker #3: More on that in a few minutes. I want to first touch on the big news of the day. We are extremely excited to share the news that we have reached the definitive agreement to acquire all the outstanding shares of Sonara MedTech for a total consideration of $35 a share.

Speaker #3: This transformational combination will immediately create one of the largest regenerative medicine companies across numerous surgical subspecialties with an incredibly attractive financial profile. Post-closing, approximately 75% of MIMEDX revenue will come from surgical, and 25% from wound.

Speaker #2: And Doug will provide a detailed review of our results for the quarter, and then we will conclude with some additional updates before we open the line for your questions.

Speaker #3: When I joined the company 3 years ago, we clarified our strategic growth plan, which included focusing on opportunities to expand our surgical business. More specifically, the plan called for targeted investments in commercial resources.

Matt Notarianni: Before we begin, I would like to remind you that our comments today will include forward-looking statements, including statements regarding future sales, operating results, and cash balance growth, future margins and expenses, our product portfolios, expected market sizes for our products, and expectations regarding the Sanara acquisition, including expected benefits and financial performance of the combined company. These expectations are subject to risks and uncertainties. Actual results may differ materially from those anticipated due to many factors, including competition, access to customers, the reimbursement environment, and unforeseen circumstances and delays. Additional factors that could impact outcomes and our results include those described in the Risk Factors section of our Annual Report on Form 10-K and our Quarterly Report on Form 10-Q.

Speaker #3: New products, and robust clinical research to augment our surgical footprint and take advantage of what we consider an incredibly large growing and underserved market.

Speaker #3: As I mentioned on our last call, we have raised our surgical revenue by more than 50% over that timeframe. We've also spoken about our intent to deploy capital to accelerate our surgical growth plan if we could find assets that met our acquisition criteria.

Speaker #3: We have remained disciplined in that endeavor, making only a few small investments to date. Having made my share of acquisitions over the years, I know the importance of waiting for the right opportunity.

Matt Notarianni: Also, our comments today include non-GAAP financial measures. We provide a reconciliation to the most comparable GAAP measures in our press release, which is available on our website at mimedx.com. With that, I'm now pleased to turn the call over to Joe Capper. Joe?

Speaker #3: Our patience has been rewarded, as Sonara checks the critical boxes we were looking for in an acquisition. I would go so far as to say we believe this is a perfect strategic and cultural fit.

Speaker #2: With that, I'm now pleased to turn the call over to Joe Capper. Joe?

Speaker #3: 100% of Sonara's greater than $100 million revenue is in surgical procedures that are highly complementary to our business. They are a growth company that is profitable and immediately accretive, even before synergies.

Joseph H. Capper: Thanks, Matt, and good afternoon, everyone. Thank you for joining us on today's call. I am pleased to report that MiMedx is back on track to deliver dynamic growth as we announce our intent to combine forces with Sanara MedTech to augment our already successful surgical franchise. Importantly, we are also starting to see signs of stabilization on the wound care side of the business. As expected, MiMedx was faced with an extremely challenging environment in the wound care market. We signaled on previous calls that the dramatic changes to the Medicare reimbursement system for wound care products would cause significant disruption and take some time to sort out among various constituencies. We believe the business would stabilize over time as weaker players left the market, creating an opportunity to pick up share. The early signs indicate that is exactly what is happening.

Joe Capper: Thanks, Matt, and good afternoon, everyone. Thank you for joining us on today's call. I am pleased to report that MiMedx is back on track to deliver dynamic growth as we announce our intent to combine forces with Sanara MedTech to augment our already successful surgical franchise. Importantly, we are also starting to see signs of stabilization on the wound care side of the business. As expected, MiMedx was faced with an extremely challenging environment in the wound care market. We signaled on previous calls that the dramatic changes to the Medicare reimbursement system for wound care products would cause significant disruption and take some time to sort out among various constituencies. We believe the business would stabilize over time as weaker players left the market, creating an opportunity to pick up share. The early signs indicate that is exactly what is happening.

Speaker #3: Their products are 510K cleared and unlock $4 billion of new addressable market for us. We expect the transaction to close by year-end. In the meantime, we will solidify the integration plan in preparation for a fast start post-close.

Speaker #3: In 2027, we would expect a newly combined company to generate revenue well in excess of $400 million. With growth in the double digits, and with over $20 million of expected cost synergies, we would anticipate an adjusted EBITDA margin of over 20%, generating a meaningful amount of free cash flow.

Speaker #3: We believe the business would stabilize over time as weaker players left the market, creating an opportunity to pick up share. So far, the early signs indicate that is exactly what is happening.

Speaker #3: These metrics illustrate why we are calling this a transformational combination. The MIMEDX surgical franchise, which is primarily soft tissue focused, combined with Sonara, which is roughly two-thirds musculoskeletal focused, creates a business approaching $300 million in annual surgical revenue across a wide range of subspecialties.

Speaker #3: Moreover, our surgical business continued to post excellent performance. Growing to top line 15% year over year. In aggregate, the company grew sequentially by 9% from Q1 to Q2.

Joseph H. Capper: Our surgical business continued to post excellent performance, growing the top line 15% year-over-year. In aggregate, the company grew sequentially by 9% from Q1 to Q2. More on that in a few minutes. I want to first touch on the big news of the day. We are extremely excited to share the news that we have reached the definitive agreement to acquire all the outstanding shares of Sanara MedTech for a total consideration of $35 a share. This transformational combination will immediately create one of the largest regenerative medicine companies across numerous surgical subspecialties with an incredibly attractive financial profile. Post-closing, approximately 75% of MiMedx revenue will come from surgical and 25% from wound. When I joined the company three years ago, we clarified our strategic growth plan, which included focusing on opportunities to expand our surgical business.

Joe Capper: Our surgical business continued to post excellent performance, growing the top line 15% year-over-year. In aggregate, the company grew sequentially by 9% from Q1 to Q2. More on that in a few minutes. I want to first touch on the big news of the day. We are extremely excited to share the news that we have reached the definitive agreement to acquire all the outstanding shares of Sanara MedTech for a total consideration of $35 a share. This transformational combination will immediately create one of the largest regenerative medicine companies across numerous surgical subspecialties with an incredibly attractive financial profile. Post-closing, approximately 75% of MiMedx revenue will come from surgical and 25% from wound. When I joined the company three years ago, we clarified our strategic growth plan, which included focusing on opportunities to expand our surgical business.

Speaker #3: And this, before factoring in the cross-selling opportunities. Sonara currently generates most of its revenue from two product lines. Their seller rate RX product is a bovine particulate which accounted for approximately $80 million of LTM revenue.

Speaker #3: It is indicated for the management of surgical, traumatic, and partial and full-thickness wounds, as well as first and second-degree burns. It is supported by over 20 published clinical studies and has approved and/or contracted in over 4,000 hospitals.

Speaker #3: When I joined the company three years ago, we clarified our strategic growth plan, which included focusing on opportunities to expand our surgical business. More specifically, the plan called for targeted investments in commercial resources.

Speaker #3: Market data indicates that particulates are the fastest growing subsegment in the surgical soft tissue repair category. Sonara's BioSurge is a no-risk irrigation solution containing an antimicrobial preservative highly effective against a broad spectrum of pathogenic microorganisms.

Joseph H. Capper: More specifically, the plan called for targeted investments in commercial resources, new products, and robust clinical research to augment our surgical footprint and take advantage of what we consider an incredibly large, growing, and underserved market. As I mentioned on our last call, we have raised our surgical revenue by more than 50% over that timeframe. We've also spoken about our intent to deploy capital to accelerate our surgical growth plan if we could find assets that met our acquisition criteria. We have remained disciplined in that endeavor, making only a few small investments to date. Having made my share of acquisitions over the years, I know the importance of waiting for the right opportunity. Our patience has been rewarded, as Sanara checks the critical boxes we were looking for in an acquisition.

Joe Capper: More specifically, the plan called for targeted investments in commercial resources, new products, and robust clinical research to augment our surgical footprint and take advantage of what we consider an incredibly large, growing, and underserved market. As I mentioned on our last call, we have raised our surgical revenue by more than 50% over that timeframe. We've also spoken about our intent to deploy capital to accelerate our surgical growth plan if we could find assets that met our acquisition criteria. We have remained disciplined in that endeavor, making only a few small investments to date. Having made my share of acquisitions over the years, I know the importance of waiting for the right opportunity. Our patience has been rewarded, as Sanara checks the critical boxes we were looking for in an acquisition.

Speaker #3: New products, and robust clinical research to augment our surgical footprint and take advantage of what we consider an incredibly large growing and underserved market.

Speaker #3: It is indicated for use in the mechanical cleansing and removal of debris from surgical wounds and requires no secondary rinsing. The Sonara team is also excited to get OSTIC approved and into the market, hopefully during Q1 of 2027.

Speaker #3: Granted, breakthrough device designation by the FDA OSTIC is a synthetic injectable bone bioadhesive that we believe is a one-of-a-kind product. The initial indication being pursued is for periarticular fractures which occur at or near the joint.

Speaker #3: Periarticular fractures have post-operative complication rates of over 35%, with an average failure rate of 10 to 20% per patients with lower extremity fractures. In preclinical mechanical testing, OSTIC demonstrated bonding to bone that was 40 times stronger than traditional bone cement.

Joseph H. Capper: I would go so far as to say we believe this is a perfect strategic and cultural fit. 100% of Sanara is greater than $100 million of revenue is in surgical procedures that are highly complementary to our business. They are a growth company that is profitable and immediately accretive even before synergies. Their products are 510(k) cleared and unlock $4 billion of new addressable market for us. We expect the transaction to close by year-end. In the meantime, we will solidify the integration plan in preparation for a fast start post-close. In 2027, we would expect the newly combined company to generate revenue well in excess of $400 million, with growth in the double digits. With over $20 million of expected cost synergies, we would anticipate an adjusted EBITDA margin of over 20%, generating a meaningful amount of free cash flow.

Joe Capper: I would go so far as to say we believe this is a perfect strategic and cultural fit. 100% of Sanara is greater than $100 million of revenue is in surgical procedures that are highly complementary to our business. They are a growth company that is profitable and immediately accretive even before synergies. Their products are 510(k) cleared and unlock $4 billion of new addressable market for us. We expect the transaction to close by year-end. In the meantime, we will solidify the integration plan in preparation for a fast start post-close. In 2027, we would expect the newly combined company to generate revenue well in excess of $400 million, with growth in the double digits. With over $20 million of expected cost synergies, we would anticipate an adjusted EBITDA margin of over 20%, generating a meaningful amount of free cash flow.

Speaker #3: 100% of Sonara's greater than $100 million revenue is in surgical business. They are a growth company that is profitable and immediately accretive, even before synergies.

Speaker #3: Unlike other bone graft products, OSTIC provides immediate bone adhesion and stability when traditional fixation is limited. Enabling surgeons to reconstruct joints that were previously considered nonrepairable.

Speaker #3: Not only are we excited about these products and the rest of the existing portfolio and pipeline, during the diligence process we became extremely impressed with the Sonara team, their creativity, desire to win, and passion for patient care.

Speaker #3: In 2027, we would expect the newly combined company to generate revenue well in excess of $400 million. With growth in the double digits, and with over $20 million of expected cost synergies, we would anticipate an adjusted EBITDA margin of over 20%, generating a meaningful amount of free cash flow.

Speaker #3: Qualities that are shared by our organization. The importance of a cultural alignment cannot be overstated. We think these teams are ideally suited to combine and grow together.

Speaker #3: We will discuss more about the acquisition in Q&A, so I'll now move on to summarize the excellent progress we made in Q2. The headline is we experienced sequential recovery in wound and continued strong momentum in surgical.

Joseph H. Capper: These metrics illustrate why we are calling this a transformational combination. The MiMedx surgical franchise, which is primarily soft tissue focused, combined with Sanara, which is roughly two-thirds musculoskeletal focused, creates a business approaching $300 million in annual surgical revenue across a wide range of subspecialties. This before factoring in the cross-selling opportunities. Sanara currently generates most of its revenue from two product lines. Their CellerateRX product is a bovine particulate, which accounted for approximately $80 million of LTM revenue. It is indicated for the management of surgical, traumatic, and partial and full-thickness wounds, as well as first and second-degree burns. It is supported by over 20 published clinical studies and is approved and/or contracted in over 4,000 hospitals. Market data indicates that particulates are the fastest-growing sub-segment in the surgical soft tissue repair category.

Joe Capper: These metrics illustrate why we are calling this a transformational combination. The MiMedx surgical franchise, which is primarily soft tissue focused, combined with Sanara, which is roughly two-thirds musculoskeletal focused, creates a business approaching $300 million in annual surgical revenue across a wide range of subspecialties. This before factoring in the cross-selling opportunities. Sanara currently generates most of its revenue from two product lines. Their CellerateRX product is a bovine particulate, which accounted for approximately $80 million of LTM revenue. It is indicated for the management of surgical, traumatic, and partial and full-thickness wounds, as well as first and second-degree burns. It is supported by over 20 published clinical studies and is approved and/or contracted in over 4,000 hospitals. Market data indicates that particulates are the fastest-growing sub-segment in the surgical soft tissue repair category.

Speaker #3: For the second quarter, net sales were $64 million. As expected, this was a significant year-over-year drop due to the Medicare reimbursement changes. More relevant to the current circumstances, it represented a $5 million or 9% sequential improvement.

Speaker #3: And this, before factoring in the cross-selling opportunities. Sonara currently generates most of its revenue from two product lines. Their seller rate Rx product is a bovine particulate, which accounted for approximately $80 million of LTM revenue.

Speaker #3: We also experienced sequential revenue growth for each month during the quarter, with June being our highest net sales month for the calendar year at $24 million.

Speaker #3: Wound Care Center unit volume grew by double digits on both an annual and sequential basis, a very positive sign for MIMEDX amidst a struggling wound market.

Speaker #3: Our surgical revenue was up 15% year over year. Our adjusted gross profit margin was 74% in the quarter. We had an adjusted EBITDA loss of $8 million compared to a $12 million loss in Q1.

Joseph H. Capper: Sanara's BIASURGE is a no-rinse irrigation solution containing an antimicrobial preservative, highly effective against a broad spectrum of pathogenic microorganisms. It is indicated for use in the mechanical cleansing and removal of debris from surgical wounds and requires no secondary rinsing. The Sanara team is also excited to get OsStic approved and into the market, hopefully during Q1 of 2027. Granted breakthrough device designation by the FDA, OsStic is a synthetic injectable bone bioadhesive that we believe is a one-of-a-kind product. The initial indication being pursued is for periarticular fractures, which occur at or near the joint. Periarticular fractures have post-operative complication rates of over 35%, with an average failure rate of 10% to 20% for patients with lower extremity fractures. In pre-clinical mechanical testing, OsStic demonstrated bonding to bone that was 40 times stronger than traditional bone cement.

Joe Capper: Sanara's BIASURGE is a no-rinse irrigation solution containing an antimicrobial preservative, highly effective against a broad spectrum of pathogenic microorganisms. It is indicated for use in the mechanical cleansing and removal of debris from surgical wounds and requires no secondary rinsing. The Sanara team is also excited to get OsStic approved and into the market, hopefully during Q1 of 2027. Granted breakthrough device designation by the FDA, OsStic is a synthetic injectable bone bioadhesive that we believe is a one-of-a-kind product. The initial indication being pursued is for periarticular fractures, which occur at or near the joint. Periarticular fractures have post-operative complication rates of over 35%, with an average failure rate of 10% to 20% for patients with lower extremity fractures. In pre-clinical mechanical testing, OsStic demonstrated bonding to bone that was 40 times stronger than traditional bone cement.

Speaker #3: This loss includes $5 million of additional bad debt expenses above our historic reserve levels to account for collection challenges primarily among private office accounts resulting from the Medicare reimbursement change.

Speaker #3: We expect this additional expense to be transitory. For perspective, at bad debt expenses been consistent with our historic quarterly run rate of approximately $700,000 per quarter, adjusted EBITDA on the first two quarters of 2026 would have been significantly better.

Speaker #3: As a reminder, we began reducing our expense structure starting in April. And by June, we trended near break-even. A positive indicator for the second half of the year.

Speaker #3: We bought back $13 million of MIMEDX stock before terminating the program as discussions developed regarding the Sonara acquisition. We ended the quarter with $119 million in net cash.

Speaker #3: We moved into full market release of the newly licensed surgical products, including gel for derm plus, and we submitted our first two 510(k) applications, including one for a placental-derived product.

Joseph H. Capper: Unlike other bone graft products, OsStic provides immediate bone adhesion and stability when traditional fixation is limited, enabling surgeons to reconstruct joints that were previously considered non-repairable. Not only are we excited about these products and the rest of the existing portfolio and pipeline, during the diligence process, we became extremely impressed with the Sanara team, their creativity, desire to win, and passion for patient care, qualities that are shared by our organization. The importance of a cultural alignment cannot be overstated. We think these teams are ideally suited to combine and grow together. We will discuss more about the acquisition in Q&A, so I'll now move on to summarize the excellent progress we made in Q2. The headline is we experienced sequential recovery in wound and continued strong momentum in surgical. For the Q2, net sales were $64 million.

Joe Capper: Unlike other bone graft products, OsStic provides immediate bone adhesion and stability when traditional fixation is limited, enabling surgeons to reconstruct joints that were previously considered non-repairable. Not only are we excited about these products and the rest of the existing portfolio and pipeline, during the diligence process, we became extremely impressed with the Sanara team, their creativity, desire to win, and passion for patient care, qualities that are shared by our organization. The importance of a cultural alignment cannot be overstated. We think these teams are ideally suited to combine and grow together. We will discuss more about the acquisition in Q&A, so I'll now move on to summarize the excellent progress we made in Q2. The headline is we experienced sequential recovery in wound and continued strong momentum in surgical. For the Q2, net sales were $64 million.

Speaker #3: Both of which were accepted for review by the FDA. As we have articulated many times in the past, the company continues to pursue a long-term growth plan which prioritizes number one, innovation and diversification to support both our wound and surgical businesses.

Speaker #3: Not only are we excited about these products and the rest of the existing portfolio and pipeline, during the diligence process, we became extremely impressed with the Sonara team, their creativity, desire to win, and passion for patient care.

Speaker #3: And number two, targeted investments to expand our surgical franchise. We believe the Sonara acquisition accelerates this plan by several years. This strategy has been extremely effective and, as a result, we have continued to realize excellent growth in our surgical segment while quickly stabilizing our wound business.

Speaker #3: Qualities that are shared by our organization. The importance of a cultural alignment cannot be overstated. We think these teams are ideally suited to combine and grow together.

Speaker #3: During the second quarter, the wound care market continued to work through the implications of the new Medicare reimbursement framework. The distracting factors we discussed during last quarter's call remained largely the same in Q2.

Speaker #3: The max are disorganized and behind in processing claims. Extremely low priced products are being dumped on the market. Audits and callbacks are increasing, and the wiser model is a complete disaster.

Joseph H. Capper: As expected, this was a significant year-over-year drop due to the Medicare reimbursement changes. More relevant to the current circumstances, it represented a $5 million, or 9% sequential improvement. We also experienced sequential revenue growth for each month during the quarter, with June being our highest net sales month for the calendar year at $24 million. Wound care center unit volume grew by double digits on both an annual and sequential basis, a very positive sign for MiMedx amidst a struggling wound market. Our surgical revenue was up 15% year over year. Our adjusted gross profit margin was 74% in the quarter. We had an adjusted EBITDA loss of $8 million compared to a $12 million loss in Q1. This loss includes $5 million of additional bad debt expenses above our historic reserve levels to account for collection challenges, primarily among private office accounts, resulting from the Medicare reimbursement change.

Joe Capper: As expected, this was a significant year-over-year drop due to the Medicare reimbursement changes. More relevant to the current circumstances, it represented a $5 million, or 9% sequential improvement. We also experienced sequential revenue growth for each month during the quarter, with June being our highest net sales month for the calendar year at $24 million. Wound care center unit volume grew by double digits on both an annual and sequential basis, a very positive sign for MiMedx amidst a struggling wound market. Our surgical revenue was up 15% year over year. Our adjusted gross profit margin was 74% in the quarter. We had an adjusted EBITDA loss of $8 million compared to a $12 million loss in Q1. This loss includes $5 million of additional bad debt expenses above our historic reserve levels to account for collection challenges, primarily among private office accounts, resulting from the Medicare reimbursement change.

Speaker #3: At least in the case of wiser, there is some hope for relief. The prolonged prior authorization and ineffective implementation have been devastating for patients.

Speaker #3: The resulting high complaint rates and concern for beneficiary access led to legislative directives for CMS to address the issue and report back to Congress.

Speaker #3: We also experienced sequential revenue growth for each month during the quarter, with June being our highest net sales month for the calendar year at $24 million.

Speaker #3: Corrective action with wiser would be a welcome reprieve. Despite these headwinds, we have been making excellent progress. Given the magnitude of the Medicare reimbursement reduction from year to year, the only logical way to measure such progress is on a sequential basis.

Speaker #3: Wound Care Center unit volume grew by double digits on both an annual and sequential basis, a very positive sign for MIMEDX amidst a struggling wound market.

Speaker #3: For Q2, our wound care volume increased 22% compared to Q1. Within wound care centers, where we have been concentrating our efforts, we achieved 44% sequential volume growth.

Speaker #3: In both cases, we achieved sequential revenue growth as well. We are still in the early stages of this transition. However, we see this sequential growth as a positive sign for MIMEDX.

Speaker #3: We expect this additional expense to be transitory. For perspective, had bad debt expenses been consistent with our historic quarterly run rate, of approximately $700,000 per quarter, adjusted EBITDA in the first two quarters of 2026, would have been significantly better.

Joseph H. Capper: We expect this additional expense to be transitory. For perspective, had bad debt expenses been consistent with our historic quarterly run rate of approximately $700,000 per quarter, adjusted EBITDA in the first two quarters of 2026 would have been significantly better. As a reminder, we began reducing our expense structure starting in April, and by June, we trended near breakeven, a positive indicator for H2 of the year. We bought back $13 million of MiMedx stock before terminating the program as discussions developed regarding the Sanara acquisition. We ended the quarter with $119 million in net cash. We moved into full market release of the newly licensed surgical products, including G4Derm Plus, and we submitted our first two 510 applications, including one for a placental-derived product, both of which were accepted for review by the FDA.

Joe Capper: We expect this additional expense to be transitory. For perspective, had bad debt expenses been consistent with our historic quarterly run rate of approximately $700,000 per quarter, adjusted EBITDA in the first two quarters of 2026 would have been significantly better. As a reminder, we began reducing our expense structure starting in April, and by June, we trended near breakeven, a positive indicator for H2 of the year. We bought back $13 million of MiMedx stock before terminating the program as discussions developed regarding the Sanara acquisition. We ended the quarter with $119 million in net cash. We moved into full market release of the newly licensed surgical products, including G4Derm Plus, and we submitted our first two 510 applications, including one for a placental-derived product, both of which were accepted for review by the FDA.

Speaker #3: The proposed 2027 physician fee schedule, which was published earlier this month, indicates CMS has little interest in course-correcting at this time. The system and reimbursement level we have today will likely remain in place throughout next year as well.

Speaker #3: We believe that at some point CMS will set basic requirements for proof of product safety and efficacy to qualify for reimbursement. As such, we continue to fund RCTs on two of our most recent product introductions.

Speaker #3: As a reminder, we began reducing our expense structure starting in April. And by June, we trended near break-even. A positive indicator for the second half of the year.

Speaker #3: Proof of clinical effectiveness is a standard we would welcome and see as a competitive advantage for MIMEDX. In summary, we are making good progress as the wound care market works through this recovery phase.

Speaker #3: We moved into full market release of the newly licensed surgical products, including Gelfoor Derm Plus and we submitted our first two one for a placental-derived product.

Speaker #3: Once normalized, we believe our market-leading technology with its unmatched collection of clinical evidence will continue to set the standard. I want to be clear, we remain committed to the wound care market and will continue to persevere through the current market conditions.

Speaker #3: Both of which were accepted for review by the FDA. As we have articulated many times in the past, the company continues to pursue, a long-term growth plan, which prioritizes number one, innovation and diversification to support both our wound and surgical businesses.

Speaker #3: We never lose sight that people with chronic hard-to-heal wounds depend on our products. Turning to our surgical business, where we continue to experience excellent momentum with 15% year-over-year growth in Q2.

Joseph H. Capper: As we have articulated many times in the past, the company continues to pursue a long-term growth plan which prioritizes, number one, innovation and diversification to support both our wound and surgical businesses. Number two, targeted investments to expand our surgical franchise. We believe the Sanara acquisition accelerates this plan by several years. This strategy has been extremely effective, and as a result, we have continued to realize excellent growth in our surgical segment while quickly stabilizing our wound business. During Q2, the wound care market continued to work through the implications of the new Medicare reimbursement framework. The distracting factors we discussed during last quarter's call remained largely the same in Q2. The MACs are disorganized and behind in processing claims. Extremely low-priced products are being dumped on the market. Audits and callbacks are increasing, and the WISeR model is a complete disaster.

Joe Capper: As we have articulated many times in the past, the company continues to pursue a long-term growth plan which prioritizes, number one, innovation and diversification to support both our wound and surgical businesses. Number two, targeted investments to expand our surgical franchise. We believe the Sanara acquisition accelerates this plan by several years. This strategy has been extremely effective, and as a result, we have continued to realize excellent growth in our surgical segment while quickly stabilizing our wound business. During Q2, the wound care market continued to work through the implications of the new Medicare reimbursement framework. The distracting factors we discussed during last quarter's call remained largely the same in Q2. The MACs are disorganized and behind in processing claims. Extremely low-priced products are being dumped on the market. Audits and callbacks are increasing, and the WISeR model is a complete disaster.

Speaker #3: We saw contributions from the entire surgical portfolio. With the fastest growth in our domestic particulate subsegment, which grew 21%. At the outset of this year, we realigned our commercial team to dedicate more sales professionals to the surgical business.

Speaker #3: And number two, targeted investments to expand our surgical franchise. We believe the Sonara acquisition accelerates this plan by several years. This strategy has been extremely effective and as a result, we have continued to realize excellent growth in our surgical segment while quickly stabilizing our wound business.

Speaker #3: And we continue to look for opportunities to augment this team even further. As I mentioned in the past, we added a few new products to the bag this year.

Speaker #3: AmnioFix Thyroid Shields, a new variant of our AmnioFix product, which is used as a protective barrier during thyroidectomy surgery, is off and running. We also moved into full market release of the surgical products we license earlier in the year, including gel for derm plus.

Speaker #3: The max are disorganized and behind in processing claims. Extremely low priced products are being dumped on the market. Audits and callbacks are increasing and the wiser model is a complete disaster.

Speaker #3: In addition to deploying more direct selling resources and expanding our product portfolio, we consistently prioritize the generation of rigorous scientific and clinical evidence as a crucial part of our growth plan.

Speaker #3: At least in the case of wiser, there is some hope for relief. The prolonged prior authorization and ineffective implementation have been devastating for patients.

Joseph H. Capper: At least in the case of WISeR, there is some hope for relief. The prolonged prior authorization and ineffective implementation have been devastating for patients. The resulting high complaint rates and concern for beneficiary access led to legislative directives for CMS to address the issue and report back to Congress. Corrective action with WISeR would be a welcome reprieve. Despite these headwinds, we have been making excellent progress. Given the magnitude of the Medicare reimbursement reduction from year to year, the only logical way to measure such progress is on a sequential basis. For Q2, our wound care volume increased 22% compared to Q1. Within wound care centers, where we have been concentrating our efforts, we achieved 44% sequential volume growth. In both cases, we achieved sequential revenue growth as well. We are still in the early stages of this transition.

Joe Capper: At least in the case of WISeR, there is some hope for relief. The prolonged prior authorization and ineffective implementation have been devastating for patients. The resulting high complaint rates and concern for beneficiary access led to legislative directives for CMS to address the issue and report back to Congress. Corrective action with WISeR would be a welcome reprieve. Despite these headwinds, we have been making excellent progress. Given the magnitude of the Medicare reimbursement reduction from year to year, the only logical way to measure such progress is on a sequential basis. For Q2, our wound care volume increased 22% compared to Q1. Within wound care centers, where we have been concentrating our efforts, we achieved 44% sequential volume growth. In both cases, we achieved sequential revenue growth as well. We are still in the early stages of this transition.

Speaker #3: Some of which I highlighted during our last few calls. We've amassed a library of data that allows us to confidently state that we have the number one most studied amniotic tissue.

Speaker #3: The resulting high complaint rates and concern for beneficiary access led to legislative directives for CMS to address the issue and report back to Congress.

Speaker #3: As you know, we've also been advocating for placental allografts to be upregulated from a 361 designation to 510(k) clearance, like xenografts, and synthetic skin substitutes, which will allow us to articulate specific usage claims.

Speaker #3: To that end, during Q2, we submitted our first two 510(k) applications. One of which is a placental-derived particulate product. In summary, as you have just heard, we're making good progress working through the reimbursement-related disruptions in the wound care market.

Speaker #3: For Q2, our wound care volume increased 22% compared to Q1. Within wound care centers, where we have been concentrating our efforts, we achieved 44% sequential volume growth.

Speaker #3: We rightsize our cost structure to facilitate a return to profitability. Momentum in our surgical business remains strong. And with today's acquisition announcement, we will transform this company and position it for tremendous growth in 2027 and beyond.

Joseph H. Capper: However, we see this sequential growth as a positive sign for MiMedx. The proposed 2027 physician fee schedule, which was published earlier this month, indicates CMS has little interest in course-correcting at this time. The system and reimbursement level we have today will likely remain in place throughout next year as well. We believe that at some point, CMS will set basic requirements for proof of product safety and efficacy to qualify for reimbursement. As such, we continue to fund RCTs on two of our most recent product introductions. Proof of clinical effectiveness is a standard we would welcome and see as a competitive advantage for MiMedx. In summary, we are making good progress as the wound care market works through this recovery phase. Once normalized, we believe our market-leading technology with its unmatched collection of clinical evidence will continue to set the standard.

Joe Capper: However, we see this sequential growth as a positive sign for MiMedx. The proposed 2027 physician fee schedule, which was published earlier this month, indicates CMS has little interest in course-correcting at this time. The system and reimbursement level we have today will likely remain in place throughout next year as well. We believe that at some point, CMS will set basic requirements for proof of product safety and efficacy to qualify for reimbursement. As such, we continue to fund RCTs on two of our most recent product introductions. Proof of clinical effectiveness is a standard we would welcome and see as a competitive advantage for MiMedx. In summary, we are making good progress as the wound care market works through this recovery phase. Once normalized, we believe our market-leading technology with its unmatched collection of clinical evidence will continue to set the standard.

Speaker #3: Importantly, today we are also reiterating MIMEDX's full year standalone guidance for 2026. With that, I'll turn the call over to Doug. Doug?

Speaker #3: We believe that at some point, CMS will set basic requirements for proof of product safety and efficacy to qualify for reimbursement. As such, we continue to fund RCTs on two of our most recent product introductions.

Speaker #2: Thank you, Joe. And good afternoon to everyone. I would like to start by echoing Joe's enthusiasm around today's announcement. We believe that the combination of Sonara's innovative portfolio and commercial momentum together with MIMEDX's growing surgical footprint will create significant value.

Speaker #2: This is a great day for both companies, and I am excited for what this means for all of our stakeholders. Today, after my standalone second quarter comments, I'll be providing some additional color around the financing of the transaction, as well as our performance expectations from the combination.

Joseph H. Capper: I want to be clear, we remain committed to the wound care market and will continue to persevere through the current market conditions. We never lose sight that people with chronic hard-to-heal wounds depend on our products. Turning to our surgical business, where we continue to experience excellent momentum with 15% year-over-year growth in Q2. We saw contributions from the entire surgical portfolio, with the fastest growth in our domestic particulate sub-segment, which grew 21%. At the outset of this year, we realigned our commercial team to dedicate more sales professionals to the surgical business. We continue to look for opportunities to augment this team even further. As I mentioned in the past, we added a few new products to the bag this year. AMNIOFIX Thyroid Shields, a new variant of our AMNIOFIX product, which is used as a protective barrier during thyroidectomy surgery, is off and running.

Joe Capper: I want to be clear, we remain committed to the wound care market and will continue to persevere through the current market conditions. We never lose sight that people with chronic hard-to-heal wounds depend on our products. Turning to our surgical business, where we continue to experience excellent momentum with 15% year-over-year growth in Q2. We saw contributions from the entire surgical portfolio, with the fastest growth in our domestic particulate sub-segment, which grew 21%. At the outset of this year, we realigned our commercial team to dedicate more sales professionals to the surgical business. We continue to look for opportunities to augment this team even further. As I mentioned in the past, we added a few new products to the bag this year. AMNIOFIX Thyroid Shields, a new variant of our AMNIOFIX product, which is used as a protective barrier during thyroidectomy surgery, is off and running.

Speaker #2: Notwithstanding that we believe this acquisition will close by year-end, for clarity, my comments around our performance for the second quarter and guidance for the remainder of 2026 are on a standalone basis, and excludes any potential impact from the pending Sonara acquisition.

Speaker #2: Before we begin, as a reminder, many of the financial measures covered in today's call are presented on a non-GAAP basis, so please refer to our earnings release for further information regarding our non-GAAP reconciliations and disclosures including the reconciliation tables that provide more detail regarding the adjustments made to calculate our non-GAAP measures.

Speaker #3: And we continue to look for opportunities to augment this team even further. As I mentioned in the past, we added a few new products to the bag this year.

Speaker #2: Turning to our results, second quarter 2026 net sales were $64 million, a decrease of 35% compared to the prior year period, but sequential growth of 9% compared to the first quarter.

Speaker #3: AmnioFix thyroid shields, a new variant of our AmnioFix product, which is used as a protective barrier during thyroidectomy surgery, is often running. We also moved into full market release of the surgical products we license earlier in the year, including Gelfoor Derm Plus.

Speaker #2: By product category, surgical net sales were $39 million, increasing 15% year over year, while wound net sales were $25 million, declining 61%. This continued the trend established in the first quarter with strong surgical growth, partially offsetting the ongoing challenges facing the wound business.

Joseph H. Capper: We also moved into full market release of the surgical products we licensed earlier in the year, including G4Derm Plus. In addition to deploying more direct selling resources and expanding our product portfolio, we consistently prioritize the generation of rigorous scientific and clinical evidence as a crucial part of our growth plan. Some of which I highlighted during our last few calls. We've amassed a library of data that allows us to confidently state that we have the number one most studied amniotic tissue. As you know, we've also been advocating for placental allografts to be upregulated from a 361 designation to 510 clearance, like xenografts and synthetic skin substitutes, which will allow us to articulate specific usage claims. To that end, during Q2, we submitted our first two 510 applications, one of which is a placental-derived particulate product.

Joe Capper: We also moved into full market release of the surgical products we licensed earlier in the year, including G4Derm Plus. In addition to deploying more direct selling resources and expanding our product portfolio, we consistently prioritize the generation of rigorous scientific and clinical evidence as a crucial part of our growth plan. Some of which I highlighted during our last few calls. We've amassed a library of data that allows us to confidently state that we have the number one most studied amniotic tissue. As you know, we've also been advocating for placental allografts to be upregulated from a 361 designation to 510 clearance, like xenografts and synthetic skin substitutes, which will allow us to articulate specific usage claims. To that end, during Q2, we submitted our first two 510 applications, one of which is a placental-derived particulate product.

Speaker #2: As a result, MIMEDX's organic revenue mix has shifted meaningfully toward surgical and is likely to continue moving forward. Within surgical, growth remained broad-based across the portfolio.

Speaker #3: Some of which I highlighted during our last few calls. We've amassed a library of data that allows us to confidently state that we have the number one most studied amniotic tissue.

Speaker #2: Our flagship placental sheet products, AmnioFix and Amniofact, and our particulate products all generated solid year-over-year growth. We also benefited from incremental revenue contributions from G4 Derm Plus, which we recently licensed, further demonstrating the strength and diversification of our surgical platform.

Speaker #2: Within wound, the business continues to be impacted by the Medicare reimbursement changes that took effect on January 1st, 2026. Which significantly reduced reimbursement levels across the category.

Joseph H. Capper: In summary, as you have just heard, we're making good progress working through the reimbursement-related disruptions in the wound care market. We rightsize our cost structure to facilitate a return to profitability. Momentum in our surgical business remains strong. With today's acquisition announcement, we will transform this company and position it for tremendous growth in 2027 and beyond. Importantly, today, we're also reiterating MiMedx's full-year standalone guidance for 2026. With that, I'll turn the call over to Doug. Doug?

Joe Capper: In summary, as you have just heard, we're making good progress working through the reimbursement-related disruptions in the wound care market. We rightsize our cost structure to facilitate a return to profitability. Momentum in our surgical business remains strong. With today's acquisition announcement, we will transform this company and position it for tremendous growth in 2027 and beyond. Importantly, today, we're also reiterating MiMedx's full-year standalone guidance for 2026. With that, I'll turn the call over to Doug. Doug?

Speaker #2: Many of the challenges we articulated during our first quarter call persisted in the second quarter. Despite these ongoing wound care reimbursement challenges, we are encouraged by improving activity levels in wound care centers and hospital outpatient settings as patient volume continues to migrate into those sites of care.

Speaker #2: As a result, wound revenue in the second quarter increased 11% sequentially while volume improved 22%, reflecting early signs of stabilization within the business. Gross profit for the second quarter was $44 million, compared to $80 million in the prior year period.

Speaker #3: Importantly, today, we are also reiterating MIMEDX's full year standalone guidance for 2026. With that, I'll turn the call over to Doug. Doug?

Speaker #1: Thank you, Joe. And good afternoon to everyone. I would like to start by echoing Joe's enthusiasm around today's announcement. We believe that the combination of Sonara's innovative portfolio and commercial momentum together with MIMEDX's growing surgical footprint will create significant value.

Doug Rice: Thank you, Joe, and good afternoon to everyone. I would like to start by echoing Joe's enthusiasm around today's announcement. We believe that the combination of Sanara's innovative portfolio and commercial momentum, together with MiMedx's growing surgical footprint, will create significant value. This is a great day for both companies, and I am excited for what this means for all of our stakeholders. Today, after my standalone second quarter comments, I'll be providing some additional color around the financing of the transaction, as well as our performance expectations from the combination. Notwithstanding that we believe this acquisition will close by year-end, for clarity, my comments around our performance for the second quarter and guidance for the remainder of 2026 are on a standalone basis and excludes any potential impact from the pending Sanara acquisition.

Speaker #2: While gross margin was $69% compared to $81% last year. The decline was primarily driven by lower pricing within wound following the Medicare reimbursement changes unfavorable product mix as well as certain higher costs.

Speaker #1: This is a great day for both companies, and I am excited for what this means for all of our stakeholders. Today, after my standalone second quarter comments, I'll be providing some additional color around the financing of the transaction, as well as our performance expectations from the combination.

Speaker #2: Looking ahead, we expect gross margin to improve into the mid-70s range beginning in the third quarter as we realize benefits from our cost reduction initiative and improved manufacturing throughput.

Speaker #2: Sales and marketing expense was $46 million or 72% of net sales compared to $48 million or 49% of net sales in the prior year period.

Speaker #1: Notwithstanding that we believe this acquisition will close by year-end, for clarity, my comments around our performance for the second quarter and guidance for the remainder of 2026 are on a standalone basis, and excludes any potential impact from the pending Sonara acquisition.

Speaker #2: The decrease was primarily driven by our cost reduction initiatives, which resulted in lower compensation, travel, and meeting expenses, we also incurred lower commission expenses due to lower sales.

Speaker #1: Before we begin, as a reminder, many of the financial measures covered in today's call are presented on a non-GAAP basis, so please refer to our earnings release for further information regarding our non-GAAP reconciliations and disclosures including the reconciliation tables that provide more detail regarding the adjustments made to calculate our non-GAAP measures.

Doug Rice: Before we begin, as a reminder, many of the financial measures covered in today's call are presented on a non-GAAP basis. Please refer to our earnings release for further information regarding our non-GAAP reconciliations and disclosures, including the reconciliation tables that provide more detail regarding the adjustments made to calculate our non-GAAP measures. Turning to our results, Q2 2026 net sales were $64 million, a decrease of 35% compared to the prior year period, but sequential growth of 9% compared to Q1. By product category, surgical net sales were $39 million, increasing 15% year-over-year, while wound net sales were $25 million, declining 61%. This continued the trend established in Q1, with strong surgical growth partially offsetting the ongoing challenges facing the wound business. As a result, MiMedx's organic revenue mix has shifted meaningfully towards surgical and is likely to continue moving forward.

Speaker #2: These savings were largely offset by bad debt expense, which increased $5 million year over year. This charge primarily reflects the credit deterioration of a limited number of legacy customer accounts and is not indicative of broader portfolio trends.

Speaker #2: While we continue to aggressively pursue all collections, we do not expect any further significant bad debt charges in the back half of 2026. For the full year, we expect sales and marketing expense to be between $62 and $64% of net sales, reflecting anticipated sequential revenue growth in the second half of the year, benefits from our cost reduction actions, partially offset by the bad debt expense we incurred during the second quarter.

Speaker #1: Turning to our results, second quarter 2026 net sales were $64 million, a decrease of 35% compared to the prior year period, but sequential growth of 9% compared to the first quarter.

Speaker #1: By product category, surgical net sales were $39 million, increasing 15% year over year, while wound net sales were $25 million, declining 61%. This continued the trend established in the first quarter with strong surgical growth, partially offsetting the ongoing challenges facing the wound business.

Speaker #2: Which we don't expect to recur, as we expect our accounts receivable collections to improve. General administrative expense was $13 million, compared to $16 million in the prior year period.

Speaker #1: As a result, MIMEDX's organic revenue mix has shifted meaningfully toward surgical and is likely to continue moving forward. Within surgical, growth remained broad-based across the portfolio.

Speaker #2: The decrease was primarily driven by lower compensation expense following our cost reduction initiatives. This was partially offset by increased legal expenses associated with ongoing legal matters.

Doug Rice: Within surgical, growth remained broad-based across the portfolio. Our flagship placental sheet products, AMNIOFIX and AMNIOEFFECT, and our particulate products all generated solid year-over-year growth. We also benefited from incremental revenue contributions from G4Derm Plus, which we recently licensed, further demonstrating the strength and diversification of our surgical platform. Within wound, the business continues to be impacted by the Medicare reimbursement changes that took effect on 1 January 2026, which significantly reduced reimbursement levels across the category. Many of the challenges we articulated during our Q1 call persisted in Q2. Despite these ongoing wound care reimbursement challenges, we are encouraged by improving activity levels in wound care centers and hospital outpatient settings as patient volume continues to migrate into those sites of care. As a result, wound revenue in Q2 increased 11% sequentially, while volume improved 22%, reflecting early signs of stabilization within the business.

Speaker #1: Our flagship placental sheet products, AmnioFix and AmnioFACT, and our particulate products all generated solid year-over-year growth. We also benefited from incremental revenue contributions from G4 Derm Plus, which we recently licensed, further demonstrating the strength and diversification of our surgical platform.

Speaker #2: In the back half of 2026, we expect the amount of GAAP G&A expense to be consistent with the second quarter. Research and development expense was $3 million, or 4% of net sales, representing a decrease of 16% compared to the prior year period.

Speaker #1: Within wound, the business continues to be impacted by the Medicare reimbursement changes that took effect on January 1st, 2026. Which significantly reduced reimbursement levels across the category.

Speaker #2: The reduction was primarily driven by lower personnel costs following our cost reduction initiatives. We expect R&D expense to remain relatively consistent throughout the remainder of 2026, averaging approximately $3 to $3.5 million per quarter.

Speaker #1: Many of the challenges we articulated during our first quarter call persisted in the second quarter. Despite these ongoing wound care reimbursement challenges, we are encouraged by improving activity levels in wound care centers and hospital outpatient settings as patient volume continues to migrate into those sites of care.

Speaker #2: Our effective income tax rate for the quarter was 17% compared to 26% in the prior year period. Our effective tax rate was impacted by the timing and deductibility of compensation-related expenses, as well as vestings of restricted stock.

Speaker #1: As a result, wound revenue in the second quarter increased 11% sequentially while volume improved 22%, reflecting early signs of stabilization within the business. Gross profit for the second quarter was $44 million, compared to $80 million in the prior year period.

Speaker #2: We continue to expect our long-term non-GAAP effective tax rate to be approximately 25%. GAAP net loss was $15 million, or 10 cents per share, compared to GAAP net income of $10 million, or 6 cents per share in the prior year period.

Doug Rice: Gross profit for Q2 was $44 million, compared to $80 million in the prior year period, while gross margin was 69% compared to 81% last year. The decline was primarily driven by lower pricing within wound following the Medicare reimbursement changes, unfavorable product mix, as well as certain higher costs. Looking ahead, we expect gross margin to improve into the mid-70s range beginning in Q3 as we realize benefits from our cost reduction initiative and improved manufacturing throughput. Sales and marketing expense was $46 million, or 72% of net sales, compared to $48 million or 49% of net sales in the prior year period. The decrease was primarily driven by our cost reduction initiatives, which resulted in lower compensation, travel, and meeting expenses. We also incurred lower commission expenses due to lower sales.

Speaker #2: Adjusted net loss for the second quarter was $7 million, or 5 cents per share, compared to adjusted net income of $15 million, or 10 cents per share in the prior year period.

Speaker #1: While gross margin was $69% compared to $81% last year. The decline was primarily driven by lower pricing within wound following the Medicare reimbursement changes unfavorable product mix as well as certain higher costs.

Speaker #2: The declined primarily reflects the impact of the lower wound profitability partially offset by savings realized from our restructuring and cost reduction initiatives. Adjusted EBITDA was negative $8 million, or negative 13% of net sales, compared to positive adjusted EBITDA of $24 million, or 25% of net sales, in the prior year period.

Speaker #1: Looking ahead, we expect gross margin to improve into the mid-70s range beginning in the third quarter as we realize benefits from our cost reduction initiative and improved manufacturing throughput.

Speaker #1: Sales and marketing expense was $46 million or 72% of net sales compared to $48 million or 49% of net sales in the prior year period.

Speaker #2: We remain focused on executing our operational initiatives and expect adjusted EBITDA to improve sequentially throughout the remainder of the year. While exiting the year in Q4 in the high single digits as a percent of revenue.

Speaker #1: The decrease was primarily driven by our cost reduction initiatives, which resulted in lower compensation, travel, and meeting expenses, we also incurred lower commission expenses due to lower sales.

Speaker #2: Turning to liquidity, we ended the quarter with $119 million in net cash and increase of $19 million compared to the prior year period. During the quarter, we deployed $13 million under our share repurchase plan and incurred $4 million of one-time severance costs related to our cost reduction initiatives.

Speaker #1: These savings were largely offset by bad debt expense, which increased $5 million year over year. This charge primarily reflects the credit deterioration of a limited number of legacy customer accounts and is not indicative of broader portfolio trends.

Doug Rice: These savings were largely offset by bad debt expense, which increased $5 million year-over-year. This charge primarily reflects the credit deterioration of a limited number of legacy customer accounts and is not indicative of broader portfolio trends. While we continue to aggressively pursue all collections, we do not expect any further significant bad debt charges in H2 2026. For the full year, we expect sales and marketing expense to be between 62% and 64% of net sales, reflecting anticipated sequential revenue growth in H2 of the year, benefits from our cost reduction actions partially offset by the bad debt expense we incurred during Q2, which we don't expect to recur as we expect our accounts receivable collections to improve. General administrative expense was $13 million compared to $16 million in the prior year period.

Speaker #1: While we continue to aggressively pursue all collections, we do not expect any further significant bad debt charges in the back half of 2026. For the full year, we expect sales and marketing expense to be between $62 and $64% of net sales, reflecting anticipated sequential revenue growth in the second half of the year, benefits from our cost reduction actions, partially offset by the bad debt expense we incurred during the second quarter.

Speaker #2: Even after these uses of cash, we continue to maintain a strong balance sheet and significant financial flexibility enabling us to more efficiently finance the transaction with Sonara.

Speaker #2: As Joe mentioned in his opening comments, today we are reiterating our standalone financial outlook for 2026, which calls for full-year net sales of between $260 and $290 million, and adjusted EBITDA approaching break-even on a full-year basis.

Speaker #1: Which we don't expect to recur as we expect our accounts receivable collections to improve. General administrative expense was $13 million compared to $16 million in the prior year period.

Speaker #2: Turning our attention back to our pending combination with Sonara, we have secured committed financing for the acquisition with a $300 million term loan from Hayfen Capital Management.

Speaker #1: The decrease was primarily driven by lower compensation expense following our cost reduction initiatives. This was partially offset by increased legal expenses associated with ongoing legal matters.

Doug Rice: The decrease was primarily driven by lower compensation expense following our cost reduction initiatives. This was partially offset by increased legal expenses associated with ongoing legal matters. In the back H2 of 2026, we expect the amount of GAAP G&A expense to be consistent with the Q2. Research and development expense was $3 million or 4% of net sales, representing a decrease of 16% compared to the prior year period. The reduction was primarily driven by lower personnel costs following our cost reduction initiatives. We expect R&D expense to remain relatively consistent throughout the remainder of 2026, averaging approximately $3 to $3.5 million per quarter. Our effective income tax rate for the quarter was 17% compared to 26% in the prior year period. Our effective tax rate was impacted by the timing and deductibility of compensation-related expenses, as well as vestings of restricted stock.

Speaker #2: The six-year note will carry interest at SOFR plus 6.25% and is subject to various covenants over the duration of the loan. As you may recall, Hayfen was previously a lender to the company and we appreciate our longstanding relationship with the team and look forward to working with them again.

Speaker #1: In the back half of 2026, we expect the amount of GAAP G&A expense to be consistent with the second quarter. Research and development expense was $3 million, or 4% of net sales, representing a decrease of 16% compared to the prior year period.

Speaker #2: On a related note, as we move toward the closing of this acquisition, we initiated this week the prepayment of our existing term loan with Citizens and Bank of America later this week.

Speaker #1: The reduction was primarily driven by lower personnel costs following our cost reduction initiatives. We expect R&D expense to remain relatively consistent throughout the remainder of 2026, averaging approximately $3 to $3.5 million per quarter.

Speaker #2: We could not be more appreciative of the partnership with both of these banks over the last several years. Regarding our anticipated 2027 financial performance following the Sonara acquisition, as Joe mentioned, and assuming a 2026 closing, we expect the combined company's top line to be well in excess of $400 million.

Speaker #1: Our effective income tax rate for the quarter was 17% compared to 26% in the prior year period. Our effective tax rate was impacted by the timing and deductibility of compensation-related expenses as well as vestings of restricted stock.

Speaker #2: Coupling strong top line growth with the realization of at least $20 million of annualized cost synergies we also expect an adjusted EBITDA margin of at least 20% in 2027.

Speaker #1: We continue to expect our long-term non-GAAP effective tax rate to be approximately 25%. GAAP net loss was $15 million, or 10 cents per share, compared to GAAP net income of $10 million or 6 cents per share in the prior year period.

Doug Rice: We continue to expect our long-term non-GAAP effective tax rate to be approximately 25%. GAAP net loss was $15 million or $0.10 per share, compared to GAAP net income of $10 million or $0.06 per share in the prior year period. Adjusted net loss for the Q2 was $7 million or $0.05 per share, compared to adjusted net income of $15 million or $0.10 per share in the prior year period. The decline primarily reflects the impact of the lower wound profitability, partially offset by savings realized from our restructuring and cost reduction initiatives. Adjusted EBITDA was -$8 million or -13% of net sales, compared to +$24 million or 25% of net sales in the prior year period.

Speaker #2: Generating strong cash flow and strengthening our balance sheet. This level of anticipated profitability will also enable us to rapidly delever to under three times adjusted EBITDA by the end of the first full year as a combined company.

Speaker #1: Adjusted net loss for the second quarter was $7 million, or 5 cents per share, compared to adjusted net income of $15 million or 10 cents per share in the prior year period.

Speaker #2: I will now turn the call back to Joe. Joe?

Speaker #1: Thanks, Doug. As you just heard, our wound business is recovering nicely. Surgical franchise continues to excel and we have just put the company in position to execute an extremely transformational merger.

Speaker #1: The declined primarily reflects the impact of the lower wound profitability partially offset by savings realized from our restructuring and cost reduction initiatives. Adjusted EBITDA was negative $8 million or negative 13% of net sales, compared to positive adjusted EBITDA of $24 million or 25% of net sales in the prior year period.

Speaker #1: Creating one of the most attractive regenerative medicine companies in the market. We have a lot of work to do over the next few months to bring the deal to a successful conclusion and welcome the Sonara team to the family.

Speaker #1: We remain focused on executing our operational initiatives and expect adjusted EBITDA to improve sequentially throughout the remainder of the year. While exiting the year in Q4 in the high single digits as a percent of revenue.

Doug Rice: We remain focused on executing our operational initiatives and expect adjusted EBITDA to improve sequentially throughout the remainder of the year while exiting the year in Q4 in the high single digits as a percent of revenue. Turning to liquidity, we ended the quarter with $119 million in net cash, an increase of $19 million compared to the prior year period. During the quarter, we deployed $13 million under our share repurchase plan and incurred $4 million of one-time severance costs related to our cost reduction initiatives. Even after these uses of cash, we continue to maintain a strong balance sheet and significant financial flexibility, enabling us to more efficiently finance the transaction with Sanara.

Speaker #1: In closing, I would like to once again thank the entire MIMEDX team for your persistence and focus as we navigate the profound changes and opportunities that face our company.

Speaker #1: Because of your dedication and never-quit mindset, we remain in a competitively strong position and believe our future is incredibly bright. Now let's shift over to Q&A and open the call to questions.

Speaker #1: Turning to liquidity, we ended the quarter with $119 million in net cash and increase of $19 million compared to the prior year period. During the quarter, we deployed $13 million under our share repurchase plan and incurred $4 million of one-time severance costs related to our cost reduction initiatives.

Speaker #1: Operator, we are ready for our first question. Please proceed.

Speaker #3: Thank you. We will now be conducting a question-and-answer session. If you'd like to ask a question, please press star 1 on your telephone keypad.

Speaker #1: Even after these uses of cash, we continue to maintain a strong balance sheet and significant financial flexibility enabling us to more efficiently finance the transaction with Sonara.

Speaker #3: A confirmation tonal indicate you're aligned as in the question queue. You may press star 2 if you'd like to remove your question from the queue.

Speaker #1: As Joe mentioned in his opening comments, today we are reiterating our standalone financial outlook for 2026, which calls for full-year net sales of between $260 and $290 million, and adjusted EBITDA approaching break-even on a full-year basis.

Doug Rice: As Joe mentioned in his opening comments, today we are reiterating our standalone financial outlook for 2026, which calls for full-year net sales of between $260 and $290 million and adjusted EBITDA approaching breakeven on a full year basis. Turning our attention back to our pending combination with Sanara, we have secured committed financing for the acquisition with a $300 million term loan from Hayfin Capital Management. The six-year note will carry interest at SOFR plus 6.25% and is subject to various covenants over the duration of the loan. As you may recall, Hayfin was previously a lender to the company. We appreciate our long-standing relationship with the team and look forward to working with them again.

Speaker #3: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We ask to please limit to one question and one follow-up.

Speaker #4: Thank you. Our first question comes from a line of Chase Knickerbocker with Craig Holland. Please go ahead.

Speaker #1: Turning our attention back to our pending combination with Sonara, we have secured committed financing for the acquisition with a $300 million term loan from Hayfen Capital Management.

Speaker #5: Good afternoon. Thanks for taking the questions. Maybe just to start from me, Joe, I just want to dig in a little bit further on kind of what makes this deal the right one.

Speaker #1: The six-year note will carry interest at SOFR plus 6.25% and is subject to various covenants over the duration of the loan. As you may recall, Hayfen was previously a lender to the company and we appreciate our longstanding relationship with the team and look forward to working with them again.

Speaker #5: A little bit more kind of specifically on the product side. So I'd imagine that Celerate was kind of central here, but maybe just take us through the three major Sonara products and your thoughts on kind of the synergies versus overlap and kind of kind of the specifics of the products as well as far as kind of what kind of drew this deal being the right one.

Speaker #1: On a related note, as we move toward the closing of this acquisition, we initiated this week the prepayment of our existing term loan with Citizens and Bank of America later this week.

Doug Rice: On a related note, as we move toward the closing of this acquisition, we initiated this week the prepayment of our existing term loan with Citizens and Bank of America later this week. We could not be more appreciative of the partnership with both of these banks over the last several years. Regarding our anticipated 2027 financial performance following the Sanara acquisition, as Joe mentioned, and assuming a 2026 closing, we expect the combined company's top line to be well in excess of $400 million. Coupling strong top-line growth with the realization of at least $20 million of annualized cost synergies, we also expect an adjusted EBITDA margin of at least 20% in 2027, generating strong cash flow and strengthening our balance sheet.

Speaker #1: Yeah, thanks, Chase. You know, before I jump into that, I don't want to lose sight on the fact that we had an outstanding quarter.

Speaker #1: We could not be more appreciative of the partnership with both of these banks over the last several years. Regarding our anticipated 2027 financial performance following the Sonara acquisition, as Joe mentioned, and assuming a 2026 closing, we expect the combined company's top line to be well in excess of $400 million.

Speaker #1: This is exciting deal, but it should not overshadow the fact that we made meaningful progress in Q2. Surgical revenues grew up 15% once again.

Speaker #1: We made great progress in the wound care market. We talked about our sequential volume growth in wound care centers of 22% or in wound care overall, in wound care centers.

Speaker #1: Coupling strong top line growth with the realization of at least $20 million of annualized cost synergies we also expect an adjusted EBITDA margin of at least 20% in 2027.

Speaker #1: Sequential volume growth was up 44%. And in wound care centers, we even had year-over-year volume growth. That is meaningful progress. Talked about taking out a fair amount of expense, get us back to profitability, which we saw towards the end of the quarter.

Speaker #1: Generating strong cash flow and strengthening our balance sheet. This level of anticipated profitability will also enable us to rapidly delever to under three times adjusted EBITDA by the end of the first full year as a combined company.

Doug Rice: This level of anticipated profitability will also enable us to rapidly de-lever to under 3x adjusted EBITDA by the end of the first full year as a combined company. I will now turn the call back to Joe. Joe?

Speaker #1: We had sequential revenue growth for the company in accurate 9%, which was $24 million. If you took that June revenue and just figured we did that on average, for the back half of the year on a monthly basis, you're already within range.

Speaker #1: I will now turn the call back to Joe. Joe?

Speaker #2: Thanks, Doug. As you just heard, our wound business is recovering nicely. Surgical franchise continues to excel and we have just put the company in position to execute an extremely transformational merger.

Joseph H. Capper: Thanks, Doug. As you just heard, our wound business is recovering nicely. Surgical franchise continues to excel, and we have just put the company in position to execute an extremely transformational merger, creating one of the most attractive regenerative medicine companies in the market. We have a lot of work to do over the next few months to bring the deal to a successful conclusion, and welcome the Sanara team to the family. In closing, I would like to once again thank the entire MiMedx team for your persistence and focus as we navigate the profound changes and opportunities that face our company. Because of your dedication and never-quit mindset, we remain in a competitively strong position and believe our future is incredibly bright. Now let's shift over to Q&A and open the call to questions. Operator, we are ready for our first question. Please proceed.

Joe Capper: Thanks, Doug. As you just heard, our wound business is recovering nicely. Surgical franchise continues to excel, and we have just put the company in position to execute an extremely transformational merger, creating one of the most attractive regenerative medicine companies in the market. We have a lot of work to do over the next few months to bring the deal to a successful conclusion, and welcome the Sanara team to the family. In closing, I would like to once again thank the entire MiMedx team for your persistence and focus as we navigate the profound changes and opportunities that face our company. Because of your dedication and never-quit mindset, we remain in a competitively strong position and believe our future is incredibly bright. Now let's shift over to Q&A and open the call to questions. Operator, we are ready for our first question. Please proceed.

Speaker #1: The range that we put out for revenue. If we stop there that's fantastic news. Now add in the Sonara acquisition. Yes, this is a deal that makes a ton of sense for us.

Speaker #2: Creating one of the most attractive, regenerative medicine companies in the market. We have a lot of work to do over the next few months to bring the deal to a successful conclusion and welcome the Sonara team to the family.

Speaker #1: You've heard us talk about the importance of expanding our surgical portfolio on every one of these calls. We've licensed a few products and we've seen excellent growth.

Speaker #2: In closing, I would like to once again thank the entire MIMEDX team for your persistence and focus as we navigate the profound changes and opportunities that face our company.

Speaker #1: That's where investments have been in terms of additional commercial resources, clinical data, etc. This just accelerates that plan. As you mentioned, most of their LTM revenue comes from the Celerate RX product.

Speaker #2: Because of your dedication and never-quit mindset, we remain in a competitively strong position and believe our future is incredibly bright. Now let's shift over to Q&A and open the call to questions.

Speaker #1: It's well-penetrated into the marketplace. We think we can help expand that even further, given the reach of our commercial organization. Second product that accounts for a fair amount of sales is their Biosurge product, which is a rinse product I talked about in my prepared comments.

Speaker #2: Operator, we are ready for our first question. Please proceed.

Speaker #3: Thank you. We will now be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad.

Operator: Thank you. We will now be conducting a question and answer session. If you'd like to ask a question, 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 remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We ask to please limit to one question and one follow-up. Thank you. Our first question comes from the line of Chase Knickerbocker with Craig-Hallum. Please go ahead.

Operator: Thank you. We will now be conducting a question and answer session. If you'd like to ask a question, 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 the star keys. We ask to please limit to one question and one follow-up. Thank you. Our first question comes from the line of Chase Knickerbocker with Craig-Hallum. Please go ahead.

Speaker #1: Super excited about that as well. We think our direct team can do more with that, frankly, and we think there's possibility to take a variant of that into the wound care center, which is, frankly, they haven't really penetrated much because that's not where their reach is today.

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Speaker #1: And then I also mentioned the Osdek product, which is a bone adhesive product. It's in development. And that, frankly, is another product that we're super excited about.

Speaker #3: For participants using your handset before pressing the star keys. We ask to please limit to one question and one follow-up.

Speaker #1: So all of these things together and other products that they have in development made a ton of sense for us. We've been working with their team for we started back in 2025, got to know them a lot better over the course of this process, and are super impressed with the people in that organization.

Speaker #4: Thank you. Our first question comes from a line of Chase, Knickerbocker, with Craig Holland. Please go ahead.

Speaker #5: Good afternoon. Thanks for taking the questions. Maybe just to start from me, Joe, just wanted to dig in a little bit further on kind of what makes this deal the right one.

Chase Knickerbocker: Good afternoon. Thanks for taking the questions. Maybe just to start for me, Joe, just want to dig in a little bit further on kind of what makes this deal the right one. A little bit more kind of specifically on the product side. I'd imagine CellerateRX was kind of central here, but maybe just take us through the three major Sanara products and your thoughts on kind of the synergies versus overlap and kind of the specifics of the products as well, as far as what kind of drew this deal being the right one.

Speaker #1: And that's probably the most important thing for me. When I look at combining companies, if you can't if you don't have cultures that match up, it's just not going to work.

Speaker #1: So the more we got to know them, the more excited we got about this potential deal.

Speaker #5: Joe, could you maybe just touch on kind of the momentum that you've seen kind of continuing through July? I would imagine that that kind of ending the quarter at $24 million, that was probably kind of a steep increase from kind of what you had seen in April per your commentary on the Q1 call.

Speaker #2: Yeah. Thanks, Chase. You know, before I jump into that, I don't want to lose sight on the fact that we had an outstanding quarter.

Joseph H. Capper: Yeah. Thanks, Chase. Before I jump into that, I don't want to lose sight on the fact that we had an outstanding quarter. This is an exciting deal, but it should not overshadow the fact that we made meaningful progress in Q2. Surgical revenues were up at 15% once again. We made great progress in the wound care market. We talked about our sequential volume growth in wound care centers of 22%, or in wound care overall. In wound care centers, sequential volume growth was up 44%. In wound care centers, we even had year-over-year volume growth. That is meaningful progress. Talked about taking out a fair amount of expense to get us back to profitability, which we saw towards the end of the quarter. We had sequential revenue growth for the company in AcryDebrin 9%, which was phenomenal performance. June revenue was $24 million.

Joe Capper: Yeah. Thanks, Chase. Before I jump into that, I don't want to lose sight on the fact that we had an outstanding quarter. This is an exciting deal, but it should not overshadow the fact that we made meaningful progress in Q2. Surgical revenues were up at 15% once again. We made great progress in the wound care market. We talked about our sequential volume growth in wound care centers of 22%, or in wound care overall. In wound care centers, sequential volume growth was up 44%. In wound care centers, we even had year-over-year volume growth. That is meaningful progress. Talked about taking out a fair amount of expense to get us back to profitability, which we saw towards the end of the quarter. We had sequential revenue growth for the company in AcryDebrin 9%, which was phenomenal performance. June revenue was $24 million.

Speaker #5: So can you just maybe talk about kind of how that momentum has continued through July? And then just the point of clarification, could you just give us a sense for what portion of your wound business at this stage is HOPD, wound care center, relative to the other sites of service, and just kind of how what you're seeing is kind of differing in those different sites of service at this point?

Speaker #2: This is an exciting deal, but it should not overshadow the fact that we made meaningful progress in Q2. Surgical revenues were up 15% once again.

Speaker #2: We made great progress in the wound care market. We talked about our sequential volume growth in wound care centers of 22% or in wound care overall, in wound care centers.

Speaker #1: Well, that's HOPD is where all the growth is coming from. We're we're not seeing sequential growth anywhere else but there. We have not broken out by sites of service.

Speaker #2: Sequential volume growth was up 44%. And in wound care centers, we even had year-over-year volume growth. That is meaningful progress. Talked about taking out a fair amount of expense, get us back to profitability, which we saw towards the end of the quarter.

Speaker #1: As far as July since it's not over, I'm not going to comment on it. But suffice it to say, we continue to see good momentum in our business.

Speaker #2: We had sequential revenue growth for the company in aggregate 9%, which was phenomenal performance. June revenue was $24 million. If you took that June revenue and just figured we did that on average, for the back half of the year, on a monthly basis, you're already within range.

Speaker #5: It's fair to say you've seen continued improvement, Joe?

Joseph H. Capper: If you took that June revenue and just figured we did that on average for the back half of the year on a monthly basis, you're already within range, the range that we put out for revenue. If we stop there, that's fantastic news. Now add in the Sanara acquisition. Yes, this is a deal that makes a ton of sense for us. You've heard us talk about the importance of expanding our surgical portfolio on every one of these calls. We've licensed a few products, and we've seen excellent growth. That's where investments have been in terms of additional commercial resources, clinical data, et cetera. This just accelerates that plan. As you mentioned, most of their LTM revenue comes from CellerateRX product. It's well penetrated into the marketplace. We think we can help expand that even further given the reach of our commercial organization.

Joe Capper: If you took that June revenue and just figured we did that on average for the back half of the year on a monthly basis, you're already within range, the range that we put out for revenue. If we stop there, that's fantastic news. Now add in the Sanara acquisition. Yes, this is a deal that makes a ton of sense for us. You've heard us talk about the importance of expanding our surgical portfolio on every one of these calls. We've licensed a few products, and we've seen excellent growth. That's where investments have been in terms of additional commercial resources, clinical data, et cetera. This just accelerates that plan. As you mentioned, most of their LTM revenue comes from CellerateRX product. It's well penetrated into the marketplace. We think we can help expand that even further given the reach of our commercial organization.

Speaker #1: We continue to see good momentum across our business.

Speaker #5: Thank you.

Speaker #2: The range that we put out for revenue. If we stop there, that's fantastic news. Now add in the Sonara acquisition. Yes, this is a deal that makes a ton of sense for us.

Speaker #4: Your next question comes from the line of Frank Takkinen with Lake Street Capital Markets. Please go ahead.

Speaker #2: You've heard us talk about the importance of expanding our surgical portfolio on every one of these calls. We've licensed a few products and we've seen excellent growth.

Speaker #5: Great. Thank you for taking the questions. Congrats on the quarter and the acquisition, of course. Would like to start with one on the acquisition as well.

Speaker #2: That's where investments have been in terms of additional commercial resources, clinical data, etc. This just accelerates that plan. As you mentioned, most of their LTM revenue comes from the Celerate RX product.

Speaker #5: Would like to kind of cover the overlap question. You mentioned Sonara has over 4,000 accounts that they have contracts with, but I believe they have about 1,500 that they are active within.

Speaker #5: Realizing you're probably early and looking at all that overlap, maybe talk to how much of those incremental 2,500 you may already have relationships. And then two on their Salesforce, how much overlap do you have on those geographies and where might you be able to expand or see synergies from either side?

Speaker #2: It's well-penetrated into the marketplace. We think we can help expand that even further, given the reach of our commercial organization. Second product that accounts for a fair amount of sales is their BioSurge product, which is a rinse product I talked about in my prepared comments.

Joseph H. Capper: Second product that accounts for a fair amount of sales is their BIASURGE product, which is a rinse product. I talked about it in my prepared comments. Super excited about that as well. We think our direct team can do more with that, frankly, and we think there's a possibility to take a variant of that into the wound care center, which is, frankly, they haven't really penetrated much because that's not where their reach is today. Then I also mentioned the OsStic product, which is a bone adhesion product that's in development. That, frankly, is another product that we're super excited about. All of these things together and other products that they have in development made a ton of sense for us. We started back in 2025.

Joe Capper: Second product that accounts for a fair amount of sales is their BIASURGE product, which is a rinse product. I talked about it in my prepared comments. Super excited about that as well. We think our direct team can do more with that, frankly, and we think there's a possibility to take a variant of that into the wound care center, which is, frankly, they haven't really penetrated much because that's not where their reach is today. Then I also mentioned the OsStic product, which is a bone adhesion product that's in development. That, frankly, is another product that we're super excited about. All of these things together and other products that they have in development made a ton of sense for us. We started back in 2025.

Speaker #2: Super excited about that as well. We think our direct team can do more with that, frankly, and we think there's possibility to take a variant of that into the wound care center.

Speaker #1: Hey, Frank, two, way too early to talk about that level of specificity. We just signed this deal today. We will work very closely with the Sonara team over the next few months to develop a well-thought-out integration plan that takes into account best practices from both organizations and certainly we're going to look to see where we have overlap and where we have potential gaps that we could augment.

Speaker #2: Which is, frankly, they haven't. We've penetrated it much because that's not where their reach is today. And then I also mentioned the OSTIC product, which is a bone adhesive product.

Speaker #2: It's in development. And that, frankly, is another product that we're super excited about. So all of these things together and other products that they have in development made a ton of sense for us.

Speaker #1: But it's kind of too early to start going into the details of what that looks like.

Speaker #2: We've been working with their team for we started back in 2025, got to know them a lot better over the course of this process.

Speaker #5: Okay. Fair enough. And then maybe one on any overlapping products across your two portfolios where you could see some potential cannibalization in either direction or any thoughts on that?

Joseph H. Capper: Got to know them a lot better over the course of this process and are super impressed with the people in that organization. That's probably the most important thing for me when I look at combining companies. If you don't have cultures that match up, it's just not going to work. The more we got to know them, the more excited we got about this potential deal.

Joe Capper: Got to know them a lot better over the course of this process and are super impressed with the people in that organization. That's probably the most important thing for me when I look at combining companies. If you don't have cultures that match up, it's just not going to work. The more we got to know them, the more excited we got about this potential deal.

Speaker #2: And are super impressed with the people in that organization. And that's probably the most important thing for me. When I look at combining companies, if you can't if you don't have cultures that match up, it's just not going to work.

Speaker #1: No. For the most part, we view the two portfolios as extremely complementary. And the products and I would say even the physicians that we're targeting are incredibly complementary.

Speaker #2: So the more we got to know them, the more excited we got about this potential deal.

Speaker #5: Joe, could you maybe just touch on kind of the momentum that you've seen kind of continuing through July? I would imagine that that kind of ending the quarter at $24 million, that was probably a kind of a steep increase from kind of what you had seen in April per your commentary on the Q1 call.

Chase Knickerbocker: Joe, could you maybe just touch on the momentum that you've seen continuing through July? I would imagine that ending the quarter at $24 million, that was probably a steep increase from what you had seen in April per your commentary on the Q1 call. Can you just maybe talk about how that momentum has continued through July? Then just a point of clarification, could you just give us a sense for what portion of your wound business at this stage is HOPD wound care center, relative to the other sites of service, and just how what you're seeing is differing in those different sites of service at this point?

Speaker #1: And the procedures that we're targeting are incredibly complementary. There may be some overlap, but I think it's minimal.

Speaker #5: Okay. Fair enough. And then maybe back on the wound business, you made a couple of comments on MAX and it feels like there's some recovery there, but maybe take us a little bit deeper into how that trend line has looked and I assume that has a good contributor to why your June was as good as it is.

Speaker #5: So any other additional color on the MAX would be greatly appreciated.

Speaker #1: Yeah. I can't share market data because I'm not really getting great market data on the wound care. Business today. I could just talk about what we're seeing.

Speaker #2: Well, that's HOPD is where all the growth is coming from. We're not seeing sequential growth anywhere else but there. We have not broken out by sites of service.

Joseph H. Capper: Well, HOPD is where all the growth is coming from. We're not seeing sequential growth anywhere else but there. We have not broken out by sites of service. As far as July, since it's not over, I'm not going to comment on it. Suffice it to say, we continue to see good momentum in our business.

Joe Capper: Well, HOPD is where all the growth is coming from. We're not seeing sequential growth anywhere else but there. We have not broken out by sites of service. As far as July, since it's not over, I'm not going to comment on it. Suffice it to say, we continue to see good momentum in our business.

Speaker #1: And I outlined those percent increases on the sequential basis. What we anticipated was patients would start to migrate into the wound care centers and certainly that seems like that has happened, right?

Speaker #2: As far as July since it's not over, I'm not going to comment on it. But suffice it to say, we continue to see good momentum in our business.

Speaker #1: And we have a pretty good position in that segment and is likely why our business is trending the way it is. I can't speak for other companies.

Speaker #5: It's fair to say you've seen continued improvement, Joe?

Chase Knickerbocker: Is it fair to say you've seen continuing improvement, Joe?

Joseph H. Capper: We continue to see good momentum across our business.

Joe Capper: We continue to see good momentum across our business.

Speaker #2: We continue to see good momentum across our business.

Speaker #1: I'm not sure how everybody's doing. But so I can't really speak to the wound care market at large. I just know that we have a strong position there and our business is trending in a very positive direction.

Speaker #5: Thank you.

Chase Knickerbocker: Thank you.

Speaker #4: Your next question comes from a line of Frank to Kenan with Lake Street Capital Markets. Please go ahead.

Operator: Your next question comes from the line of Frank Tizzonen with Lake Street Capital Markets. Please go ahead.

Operator: Your next question comes from the line of Frank Takkinen with Lake Street Capital Markets. Please go ahead.

Speaker #1: So remember though, we're still in kind of the early recovery phase and there's a lot of noise in the market. We talked about challenges at the MAC level to process claims.

Speaker #5: Great. Thank you for taking the questions. Congrats on the quarter and the acquisition, of course. Would like to start with one on the acquisition as well.

Frank Tizzonen: Great. Thank you for taking the questions. Congrats on the quarter and the acquisition, of course. Would like to start with one on the acquisition as well. Would like to cover the overlap question. You mentioned Sanara has over 4,000 accounts that they have contracts with, but I believe they have about 1,500 that they are active within. Realizing you're probably early in looking at all that overlap, maybe talk to how much of those incremental 2,500 you may already have relationships. Then two, on their sales force, how much overlap do you have on those geographies, and where might you be able to expand or see synergies from either side?

Frank Takkinen: Great. Thank you for taking the questions. Congrats on the quarter and the acquisition, of course. Would like to start with one on the acquisition as well. Would like to cover the overlap question. You mentioned Sanara has over 4,000 accounts that they have contracts with, but I believe they have about 1,500 that they are active within. Realizing you're probably early in looking at all that overlap, maybe talk to how much of those incremental 2,500 you may already have relationships. Then two, on their sales force, how much overlap do you have on those geographies, and where might you be able to expand or see synergies from either side?

Speaker #1: We've mentioned the challenges with CMS's implementation of the wiser model, which is really impacting us in four states. That's been a real headwind. There's a lot of customers that have left the business.

Speaker #1: Folks are being plagued with audits and callbacks that they're trying to work their way through. All of that just creates challenges in the overall market, in spite of that, we're seeing fairly good progress.

Speaker #1: Again, specifically in wound care centers.

Speaker #2: Hey, Frank. Two, way too early to talk about that level of specificity. We just signed this deal today. We will work very closely with the Sonara team over the next few months to develop a well-thought-out integration plan that takes into account best practices for both organizations and certainly we're going to look to see where we have overlap and where we have potential gaps that we could augment.

Joseph H. Capper: Hey, Frank. Way too early to talk about that level of specificity. We just signed this deal today. We will work very closely with the Sanara team over the next few months to develop a well-thought-out integration plan that takes into account best practices from both organizations. Certainly, we're going to look to see where we have overlap and where we have potential gaps that we could augment. It's too early to start going into the details of what that looks like.

Joe Capper: Hey, Frank. Way too early to talk about that level of specificity. We just signed this deal today. We will work very closely with the Sanara team over the next few months to develop a well-thought-out integration plan that takes into account best practices from both organizations. Certainly, we're going to look to see where we have overlap and where we have potential gaps that we could augment. It's too early to start going into the details of what that looks like.

Speaker #5: Got it. That's helpful. Thanks for taking the questions.

Speaker #4: Your next question comes from the line of Dave Turkaly with Citizens. Please go ahead.

Speaker #6: Hey, good evening. Yeah, congrats on the transaction and the performance, the sequential uptake. I don't know if you're going to be willing to talk about some of the details here, but I'll throw a couple out and see if you can expand on them.

Speaker #2: But it's kind of too early to start going into the details of what that looks like.

Speaker #6: The $20 million in synergies given that your placental and their college and synthetic could you just talk about where you think you're going to get those?

Frank Tizzonen: Okay. Fair enough. Maybe one on any overlapping products across your two portfolios where you could see some potential cannibalization in either direction or any thoughts on that?

Frank Takkinen: Okay. Fair enough. Maybe one on any overlapping products across your two portfolios where you could see some potential cannibalization in either direction or any thoughts on that?

Speaker #6: Specifically from what bucket?

Speaker #1: Yeah. Dave, this is Doug. Good question.

Speaker #3: I think the way we look at it is the synergies are going to be derived from your typical public-to-public acquisition overlaps. So we'll get more than half of the $20 million from G&A and the rest of it will be we'll be spread around.

Speaker #2: No. For the most part, we view the two portfolios as extremely complementary. And the products and I would say even the physicians that we're targeting are incredibly complementary.

Joseph H. Capper: No. For the most part, we view the two portfolios as extremely complementary. The products, and I would say even the physicians that we're targeting, are incredibly complementary, and the procedures that we're targeting are incredibly complementary. There may be some overlap. I think it's minimal.

Joe Capper: No. For the most part, we view the two portfolios as extremely complementary. The products, and I would say even the physicians that we're targeting, are incredibly complementary, and the procedures that we're targeting are incredibly complementary. There may be some overlap. I think it's minimal.

Speaker #2: And the procedures that we're targeting are incredibly complementary. There may be some overlap, but I think it's minimal.

Speaker #5: Okay. Fair enough. And then maybe back on the wound business. You made a couple of comments on Max and it feels like there's some recovery there, but maybe take us a little bit deeper into how that trend line has looked and I assume that has a good contributor to why your June was as good as it is.

Frank Tizzonen: Okay. Fair enough. Maybe back on the wound business. You made a couple comments on MACs. It feels like there's some recovery there. Maybe take us a little bit deeper into how that trend line has looked. I assume that has a good contributor to why your June was as good as it is. Any other additional color on the MACs would be greatly appreciated.

Frank Takkinen: Okay. Fair enough. Maybe back on the wound business. You made a couple comments on MACs. It feels like there's some recovery there. Maybe take us a little bit deeper into how that trend line has looked. I assume that has a good contributor to why your June was as good as it is. Any other additional color on the MACs would be greatly appreciated.

Speaker #6: Thank you for that. I guess the other one I had, there was a comment in the release that said driving strong profitability post-close. Was that comment intended to mean EBITDA or does that actually mean bottom line like net income?

Speaker #5: So any other additional color on the Max would be greatly appreciated.

Speaker #3: Well, we look at the whole gamut of financial measures, but primarily EBITDA is our focus. Initially. And we'll exit the year on a positive note.

Speaker #2: Yeah. I can't share market data because I'm not really getting great market data on the wound care. Business today. I could just talk about what we're seeing.

Joseph H. Capper: Yeah. I can't share market data because I'm not really getting great market data on the wound care business today. I could just talk about what we're seeing, and I outlined those % increases on a sequential basis. What we anticipated was patients would start to migrate into the wound care centers, and certainly that seems like that has happened, right? We have a pretty good position in that segment, and is likely why our business is trending the way it is. I can't speak for other companies. I'm not sure how everybody's doing. I can't really speak to the wound care market at large. I just know that we have a strong position there, and our business is trending in a very positive direction. Remember, though, we're still in the early recovery phase, and there's a lot of noise in the market.

Joe Capper: Yeah. I can't share market data because I'm not really getting great market data on the wound care business today. I could just talk about what we're seeing, and I outlined those % increases on a sequential basis. What we anticipated was patients would start to migrate into the wound care centers, and certainly that seems like that has happened, right? We have a pretty good position in that segment, and is likely why our business is trending the way it is. I can't speak for other companies. I'm not sure how everybody's doing. I can't really speak to the wound care market at large. I just know that we have a strong position there, and our business is trending in a very positive direction. Remember, though, we're still in the early recovery phase, and there's a lot of noise in the market.

Speaker #3: From an organic perspective and Sonara already has a strong track record of healthy flow-through on their side, coupled with the synergies that we expect.

Speaker #2: And I outlined those percent increases on the sequential basis. What we anticipated was patients would start to migrate into the wound care centers. And certainly that seems like that has happened, right?

Speaker #3: We expect a really healthy financial profile after the combination.

Speaker #2: And we have a pretty good position in that segment and is likely why our business is trending the way it is. I can't speak for other companies.

Speaker #1: Yeah, it's really rare that you can execute an acquisition like this. It's immediately a creative up and down the P&L. So that's really exciting.

Speaker #2: I'm not sure how everybody's doing. But so I can't really speak to the wound care market at large. I just know that we have a strong position there.

Speaker #1: We'll be profitable as a standalone company in the back half of the year. Sonara is already running at a fairly decent adjusted EBITDA margin.

Speaker #1: And then we'll have the combination synergies on top of that. So we feel pretty good about the direction of the company in terms of both revenue and profitability.

Speaker #2: And our business is trending in a very positive direction. So remember though, we're still in kind of the early recovery phase. And there's a lot of noise in the market.

Speaker #6: One last one I'll just throw out there, Doug. I don't know if you have this number off the top of your head, but given the stock component of the deal, do you have an estimate of what the shares outstanding will be in '27?

Speaker #2: We talked about challenges at the Mac level to process claims. We've mentioned the challenges with CMS's implementation of the wiser model, which is really impacting us in four states.

Joseph H. Capper: We talked about challenges at the MAC level to process claims. We've mentioned the challenges with CMS's implementation of the WISeR model, which is really impacting us in four states. That's been a real headwind. There's a lot of customers that have left the business. Folks are being plagued with audits and callbacks that they're trying to work their way through. All of that just creates challenges in the overall market. In spite of that, we're seeing fairly good progress, again, specifically in wound care centers.

Joe Capper: We talked about challenges at the MAC level to process claims. We've mentioned the challenges with CMS's implementation of the WISeR model, which is really impacting us in four states. That's been a real headwind. There's a lot of customers that have left the business. Folks are being plagued with audits and callbacks that they're trying to work their way through. All of that just creates challenges in the overall market. In spite of that, we're seeing fairly good progress, again, specifically in wound care centers.

Speaker #2: That's been a real headwind. There's a lot of customers that have left the business. Folks are being plagued with audits and callbacks that they're trying to work their way through.

Speaker #3: All in, Dave, we're at roughly 150 million shares today and we're going to issue just over 4 million new shares if that gives you an idea.

Speaker #3: About total going forward.

Speaker #5: Yeah. And Dave, just to pile on there in the queue, there's some disclosure. We talked about the share repurchase, which took three and a half or so out in the second quarter.

Speaker #2: All of that just creates challenges in the overall market. In spite of that, we're seeing fairly good progress. Again, specifically in wound care centers.

Speaker #5: So there's kind of a netting effect. I mean, it's slightly higher, but don't think of it as an all-in extra four and a half.

Speaker #5: Got it. That's helpful. Thanks for taking the questions.

Frank Tizzonen: Got it. That's helpful. Thanks for taking the questions.

Frank Takkinen: Got it. That's helpful. Thanks for taking the questions.

Speaker #1: Yeah. Excellent point, Matt. We took out close to three and a half million shares at $3.67. We'll reissue about 4.2 million shares at its so a net increase of about 700,000 shares to our float since the time we executed our buyback program.

Speaker #4: Your next question comes from a line of Dave Turkey with Citizens. Please go ahead.

Operator: Your next question comes from the line of Dave Turkaly with Citizens. Please go ahead.

David Turkaly: Hey, good evening. Yeah, congrats on the transaction and the performance, the sequential uptick. I don't know if you're going to be willing to talk about some of the details here, but I'll throw a couple out and see if you can expand on them. The $20 million in synergies, given that you're placental and they're collagen and synthetic, could you just talk about where you think you're going to get those, specifically from what bucket?

Speaker #1: And obviously, we stopped the buyback program as this deal got closer to looking likely.

Speaker #6: The 20 million in synergies given that your placental and their college and synthetic could you just talk about where you think you're going to get those?

Speaker #6: Got it. Thank you very much.

Speaker #4: Your last question comes from the line of Brad Bowers with Mizuho Securities. Please go ahead.

Speaker #6: Specifically from what bucket?

Speaker #7: Hey, thanks for taking the questions, guys. Maybe to ask one kind of on the reverse side. I mean, looking at the Sonara business, some pretty attractive things about it, 100 million or so revenue-based, 90% plus gross margins.

Speaker #2: Yep, Dave. This is Doug. Good question. I think the way we look at it is the synergies are going to be derived from your typical public to public acquisition overlaps.

Doug Rice: Yeah, Dave, this is Doug. Good question. I think the way we look at it is the synergies are going to be derived from your typical public-to-public acquisition

Speaker #2: So we'll get more than half of the 20 million dollars from G&A and the rest of it will be spread around.

Doug Rice: Overlaps. We'll get more than half of the $20 million from G&A, and the rest of it will be spread around.

Speaker #7: Why is it the right time for this business to kind of be selling to Mimetics? Honestly, on the surgical side, I think similar EV, similar size businesses.

Speaker #7: So just wanted to kind of hear about what they've seen and why they're selling and then if it is that growth was kind of slowing, how Mimetics can kind of take it to the next leg.

Speaker #6: Thank you for that. This other one I had, there was a comment in the release that said, driving strong profitability post-close. Was that comment intended to mean EBITDA or does that actually mean bottom line like net income?

David Turkaly: Thank you for that. The other one I had, there was a comment in the release that said, Driving strong profitability post-close. Was that comment intended to mean EBITDA, or does that actually mean bottom line, like net income?

Speaker #1: Brad, I'm not going to speak for them. I will tell you that they are still incredibly bullish on their business. They have a robust product portfolio.

Speaker #2: Well, we look at the whole gamut of financial measures, but primarily EBITDA is our focus. Initially. And we'll exit the year. On a positive note, from an organic perspective and Sonara already has a strong track record of healthy flow-through on their side coupled with the synergies that we expect.

Doug Rice: Well, we look at the whole gamut of financial measures, but primarily EBITDA is our focus initially. We'll exit the year on a positive note from an organic perspective, and Sanara already has a strong track record of healthy flow-through on their side, coupled with the synergies that we expect. We expect a really healthy financial profile after the combination.

Speaker #1: They have more products in the pipeline. They've been resourcing the business. They streamlined it a bit last year. They sold nice growth last year, nice growth into this year.

Speaker #1: So you would have to ask them why this made the right made sense for them to do it and why this was the right time.

Speaker #2: We expect a really healthy financial profile after the combination.

Speaker #7: Okay. Sure thing. That makes sense. Just thinking about, I guess, the gap between the 100 million, I guess, of revenue that's being bought and the $4 billion of new TAM, clearly underpenetrated.

Speaker #6: Yeah. It's really

Speaker #2: rare that you can execute an acquisition like this. It's immediately a creative up and down the P&L. So that's really exciting. We'll be profitable as a standalone company in the back half of the year.

Joseph H. Capper: Yeah. It's really rare that you can execute an acquisition like this. It's immediately accretive up and down the P&L. That's really exciting. We'll be profitable as a standalone company in the back half of the year. Sanara's already running at a fairly decent adjusted EBITDA margin, and then we'll have the combination synergies on top of that. We feel pretty good about the direction of the company in terms of both revenue and profitability.

Joe Capper: Yeah. It's really rare that you can execute an acquisition like this. It's immediately accretive up and down the P&L. That's really exciting. We'll be profitable as a standalone company in the back half of the year. Sanara's already running at a fairly decent adjusted EBITDA margin, and then we'll have the combination synergies on top of that. We feel pretty good about the direction of the company in terms of both revenue and profitability.

Speaker #7: And just wanted to hear about, I guess, what's available maybe near term and what level of investment is required to get maybe some of the other pieces of the new TAM.

Speaker #2: Sonara is already running at a fairly decent adjusted EBITDA margin. And then we'll have the combination synergies on top of that. So we feel pretty good about the direction of the company in terms of both revenue and profitability.

Speaker #1: I think just with our larger commercial presence and the momentum that they've built up behind their portfolio, we'll find a lot of cross-selling opportunities.

David Turkaly: One last one I'll just throw out there, Doug. I don't know if you have this number off the top of your head, but given the stock component of the deal, do you have an estimate of what the shares outstanding will be in 2027?

Speaker #1: And again, you mentioned the TAM. It is a big TAM. It is underpenetrated. These markets are still in development. Use of these types of products in certain variety of different surgical subspecialties is still in development, which is frankly quite exciting for us.

Speaker #2: All in, Dave, we're at roughly 150 million shares today and we're going to issue just over 4 million new shares if that gives you an idea.

Doug Rice: All in, Dave, we're at roughly 150 million shares today. We're going to issue just over 4 million new shares, if that gives you an idea about total going forward.

Speaker #1: So I think there's a ton of upside here.

Speaker #2: About total going forward.

Speaker #7: Thanks. And then just one on the core business, just obviously, again, buying a good amount of EBITDA here, obviously nice that it's in a creative deal.

Speaker #5: Yeah. And Dave, just to pile on there in the queue, there's some disclosure. We talked about the share repurchase, which took three and a half or so out in the second quarter.

Matt Notarianni: Yeah, Dave, just to pile on there, in the queue, there's some disclosure. We talked about the share repurchase, which took three and a half or so out in Q2. There's kind of a netting effect. It's slightly higher, but don't think of it as an all-in extra four and a half.

Speaker #7: Just wanted to hear about what was implied on the core business. I think you guys have actually been pretty good with guiding us on the wound business.

Speaker #5: So there's kind of a netting effect. I mean, it's slightly higher, but don't think of it as an all-in extra four and a half.

Speaker #7: So there's some visibility here. And it sounds like next year would be better. So maybe just, I don't know, about if you'd be willing to give kind of what core EBITDA would have been obviously 20% with the deal, but it might imply something like low double digits for the core business.

Speaker #2: Yeah. Excellent point, Matt. We took out close to three and a half million shares. And $3.67 will reissue about 4.2 million shares. And it's so a net increase of about 700,000 shares to our float since the time we executed our buyback program.

Joseph H. Capper: Yeah. Excellent point, Matt. We took out close to three and a half million shares at $3.67. We'll reissue about 4.2 million shares. It's a net increase of about 700,000 shares to our float since the time we executed our buyback program. Obviously, we stopped the buyback program as this deal got closer to looking likely.

Joe Capper: Yeah. Excellent point, Matt. We took out close to three and a half million shares at $3.67. We'll reissue about 4.2 million shares. It's a net increase of about 700,000 shares to our float since the time we executed our buyback program. Obviously, we stopped the buyback program as this deal got closer to looking likely.

Speaker #7: Just wanted to hear about recovery into next year, expectations. Thank you.

Speaker #2: And obviously, we stopped the buyback program as this deal got closer to looking likely.

Speaker #3: So I'll start and you can provide color. But we expect to be profitable in the back half of the year, Dave, for all the reasons that we articulated in the script.

Speaker #6: Got it. Thank you very much.

David Turkaly: Got it. Thank you very much.

Speaker #3: And just consistent with our prior quarter call. So we'll exit the year on a strong sequential revenue growth and strong flow-through, which we expect to carry into 2027 as we sort of get back to not just double digits, but certainly well into the double digits in terms of just organic flow-through for next year.

Speaker #4: Your last question comes from a line of Brad Bowers with Mizuho Securities. Please go ahead.

Operator: Your last question comes from the line of Brad Bowers with Mizuho Securities. Please go ahead.

Brad Bowers: Hey there. Thanks for taking the questions, guys. Maybe to ask one kind of on the reverse side. Looking at the Sanara business, some pretty attractive things about it. $100 million or so revenue base, 90% plus gross margins. Why is it the right time for this business to be selling to MiMedx? Honestly, on the surgical side, I think similar EV, similar size businesses. Just wanted to hear about what they've seen and why they're selling, and then if it is that growth was kind of slowing, how MiMedx can take it to the next leg.

Speaker #7: Why is it the right time for this business to kind of be selling to Mimetics? Honestly, on the surgical side, I think similar EV, similar size businesses.

Speaker #3: Just based on everything that we know about our new products, our launches, and momentum, both in wound and surgical, we expect to grow in both of those franchises.

Speaker #7: So just wanted to kind of hear about what they've seen and why they're selling and then if it is that growth was kind of slowing, how Mimetics can kind of take it to the next leg.

Speaker #1: Yeah. You could put the pieces together. This is 2026 is clearly a reset year. For the wound care business, and we continue to see great momentum in surgical.

Speaker #2: Brad, I'm not going to speak for them. I will tell you that they are still incredibly bullish on their business. They have a robust product portfolio.

Speaker #1: So you reset the business in 2026. If you're back to normal growth rates, for the business overall in 2027, that chunk of our business is up 300 million plus.

Joseph H. Capper: Brad, I'm not going to speak for them. I will tell you that they are still incredibly bullish on their business. They have a robust product portfolio. They have more products in the pipeline. They've been resourcing the business. They streamlined it a bit last year. They saw nice growth last year, nice growth into this year. You would have to ask them why this made sense for them to do it, and why this was the right time.

Joe Capper: Brad, I'm not going to speak for them. I will tell you that they are still incredibly bullish on their business. They have a robust product portfolio. They have more products in the pipeline. They've been resourcing the business. They streamlined it a bit last year. They saw nice growth last year, nice growth into this year. You would have to ask them why this made sense for them to do it, and why this was the right time.

Speaker #2: They have more products in the pipeline. They've been resourcing the business. They streamlined it a bit last year. They sold nice growth last year, nice growth into this year.

Speaker #1: And then you add these guys in, we're saying conservatively, we're over 400 million. We're not saying how much over 400 million because we're still in the early stages of this.

Speaker #2: So you would have to ask them why this made the right sense for them to do it and why this was the right time.

Speaker #1: And I think the 20-plus percent EBITDA margin is also very safe. We're being conservative there as well.

Speaker #7: Thanks, guys. Congrats on the deal.

Speaker #1: Thank you.

Brad Bowers: Okay. Sure thing. That makes sense. Just thinking about, I guess, the gap between the $100 million of revenue that's being bought and the $4 billion of new TAM, clearly under-penetrated. Just wanted to hear about, I guess, what's available maybe near-term

Speaker #3: Thanks, Dave.

Speaker #4: This now concludes our question and answer session. I would like to turn the floor back over to Joe Capper for closing comments.

Speaker #7: Thanks, operator. Thanks everybody for your continued interest in the company. At this point, we'll conclude the call and we'll talk to you all at the end of next quarter.

Speaker #7: Thank you very much.

Q2 2026 MiMedx Group Inc Earnings Call

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