```markdown [FORWARD-LOOKING STATEMENTS](index=2&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section outlines forward-looking statements and key risks concerning operations, product commercialization, and ongoing litigation - The report contains forward-looking statements regarding **results of operations**, **financial position**, **business strategy**, **product expectations**, **sales and marketing growth**, **earnout payments from the Orthobiologics segment sale**, **product development**, **expenses**, **seasonality**, **competitive advantages**, and **ongoing litigation** (FiberCel, VBM, Medtronic)[7](index=7&type=chunk) - Key risks include the ability to successfully commercialize **EluPro**, continue as a **going concern**, achieve **profitability**, manage **product liability claims**, raise **future funds**, ensure **product acceptance**, enhance **product offerings**, and manage dependence on **commercial partners and suppliers**[9](index=9&type=chunk)[10](index=10&type=chunk)[17](index=17&type=chunk) [WEBSITE DISCLOSURE](index=4&type=section&id=WEBSITE%20DISCLOSURE) Elutia Inc. utilizes its Investor Relations website as a primary channel for material financial and company information - Elutia Inc. uses its Investor Relations section on **www.Elutia.com** as a distribution channel for material financial and other important company information, offering email alerts for updates[16](index=16&type=chunk) [TRADEMARKS, TRADE NAMES AND SERVICE MARKS](index=6&type=section&id=TRADEMARKS%2C%20TRADE%20NAMES%20AND%20SERVICE%20MARKS) This section lists proprietary trademarks and service marks protected under intellectual property laws - The report includes proprietary trademarks such as **Elutia®**, **CanGaroo®**, **EluPro®**, **CanGarooRM®**, **ProxiCor®**, **Tyke®**, **VasCure®**, **SimpliDerm®**, and **SimpliDerm Ellipse®**, which are protected under intellectual property laws[19](index=19&type=chunk) [INDUSTRY AND OTHER DATA](index=6&type=section&id=INDUSTRY%20AND%20OTHER%20DATA) Industry and market data in the report are based on management estimates and third-party publications, subject to inherent risks - Industry and market information in the report is based on management's estimates, internal research, and third-party publications, which are believed to be reliable but involve assumptions and limitations subject to various risks[21](index=21&type=chunk) [PART I – FINANCIAL INFORMATION](index=8&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This section presents Elutia Inc.'s unaudited condensed consolidated financial statements and management's analysis for the quarter [Item 1. Financial Statements (Unaudited)](index=8&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents Elutia Inc.'s unaudited condensed consolidated financial statements for the three months ended March 31, 2025, including balance sheets, statements of operations, changes in stockholders' equity, and cash flows, along with detailed notes on accounting policies, debt, equity, and contingencies. The company reported a net loss of $3.9 million for the quarter and faces substantial doubt about its ability to continue as a going concern due to accumulated deficits and cash outflows [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Balance Sheet Data | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Cash and cash equivalents | $17,358 | $13,239 | | Total current assets | $30,017 | $26,172 | | Total assets | $39,298 | $36,127 | | Total current liabilities | $36,851 | $37,795 | | Total liabilities | $75,756 | $82,387 | | Total stockholders' deficit | $(36,458) | $(46,260) | [Condensed Consolidated Statements of Operations](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Statements of Operations Data | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------------- | :----------------------------------- | | Net sales | $6,030 | $6,694 | | Gross profit | $2,457 | $2,843 | | Total operating expenses | $10,379 | $11,322 | | Loss from operations | $(7,922) | $(8,479) | | (Gain) loss on revaluation of warrant liability | $(5,187) | $9,637 | | Net loss | $(3,933) | $(17,994) | | Net loss per share - basic | $(0.10) | $(0.75) | | Net loss per share - diluted | $(0.21) | $(0.75) | [Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit)](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity%20(Deficit)) Stockholders' Equity Data | Metric | December 31, 2024 (in thousands) | March 31, 2025 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Total stockholders' deficit | $(46,260) | $(36,458) | | Issuance of common stock (net) | $12,596 | N/A | | Stock-based compensation | $1,211 | N/A | | Net loss | $(3,933) | N/A | - The company issued **5,520,000 shares** of Class A common stock in a registered direct offering, net of **$1.2 million** issuance costs, contributing **$12.6 million** to equity[32](index=32&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Data | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------------- | :----------------------------------- | | Net cash used in operating activities | $(8,881) | $(2,641) | | Net cash used in investing activities | $(278) | $(15) | | Net cash provided by (used in) financing activities | $13,278 | $(4,069) | | Net increase (decrease) in cash and cash equivalents | $4,119 | $(6,725) | | Cash and cash equivalents, end of period | $17,358 | $12,551 | - Financing activities provided **$13.3 million** in cash for Q1 2025, primarily from a private placement and warrants, offsetting cash used in operations[35](index=35&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes on Elutia Inc.'s accounting policies, debt, equity, and contingencies [Note 1. Organization and Description of Business](index=12&type=section&id=Note%201.%20Organization%20and%20Description%20of%20Business) - Elutia Inc. is a commercial-stage company focused on improving medical device-patient interaction through biologics and local drug delivery, with products in **Device Protection**, **Women's Health**, and **Cardiovascular** markets[38](index=38&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=12&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP for interim information, and the company has evaluated its ability to continue as a **going concern**, noting substantial doubt due to a net loss of **$3.9 million** and an accumulated deficit of **$233.5 million** as of March 31, 2025[39](index=39&type=chunk)[44](index=44&type=chunk) - The company completed the sale of its Orthobiologics Business in November 2023 for approximately **$14.6 million**, with potential earn-out payments up to an additional **$20 million**, while retaining liabilities for FiberCel and VBM litigation[41](index=41&type=chunk) - Revenue is recognized when performance obligations are met and control of products transfers to customers, either upon shipment or delivery/use for consigned inventory[69](index=69&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk) - One customer accounted for **15%** of net sales and **15%** of accounts receivable as of March 31, 2025[79](index=79&type=chunk) [Note 3. Recently Issued Accounting Standards](index=22&type=section&id=Note%203.%20Recently%20Issued%20Accounting%20Standards) - ASU 2023-09 (Income Tax Disclosures) is effective for fiscal years beginning after **December 15, 2024**, and is not expected to have a material effect on financial condition, results of operations, or cash flows[83](index=83&type=chunk) - ASU 2024-03 (Expense Disaggregation Disclosures) is effective for annual reporting periods beginning after **December 15, 2026**, and the company is currently evaluating its disclosure requirements[84](index=84&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk) [Note 4. Stock-Based Compensation](index=24&type=section&id=Note%204.%20Stock-Based%20Compensation) Stock-Based Compensation Data | Metric | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Stock Options Outstanding | 3,204,215 | 3,220,991 | | RSUs Unvested | 1,342,766 | 1,417,123 | | Total Stock-Based Compensation Expense (Q1 2025) | $1,211 (in thousands) | N/A | | Total Stock-Based Compensation Expense (Q1 2024) | N/A | $2,197 (in thousands) | - Unrecognized compensation expense for unvested stock options was approximately **$2.7 million**, expected to be recognized over **1.7 years**, and for RSUs was **$3.9 million**, expected over **1.8 years**[88](index=88&type=chunk)[93](index=93&type=chunk) [Note 5. Inventory](index=28&type=section&id=Note%205.%20Inventory) Inventory Breakdown | Inventory Component | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------ | :----------------------------- | :----------------------------- | | Raw materials | $329 | $440 | | Work in process | $1,060 | $740 | | Finished goods | $2,897 | $2,731 | | Total | $4,286 | $3,911 | [Note 6. Long-Term Debt](index=28&type=section&id=Note%206.%20Long-Term%20Debt) - The company has a **$25 million** SWK Loan Facility maturing in **August 2027**, with principal amortization starting in **November 2025**, bearing interest at SOFR plus an applicable margin (**7.75%** or **3.75%** with PIK option)[99](index=99&type=chunk)[100](index=100&type=chunk) - A **May 2025** amendment to the SWK Loan Facility allowed **100% PIK interest** for **May 2025**, removed mandatory prepayments from non-ordinary course asset sales, and fixed the minimum liquidity covenant at **$8.0 million**[101](index=101&type=chunk)[102](index=102&type=chunk) Long-Term Debt Summary | Debt Component | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------------------------------ | :----------------------------- | :----------------------------- | | Term Loan Facility, net | $24,262 | $23,853 | | Current Portion | $(2,500) | $(1,250) | | Long-Term Debt | $21,762 | $22,603 | [Note 7. Revenue Interest Obligation](index=30&type=section&id=Note%207.%20Revenue%20Interest%20Obligation) - The company has a Revenue Interest Obligation to Ligand Pharmaceuticals, amended in January 2024, requiring **5%** of future sales of certain products (CanGaroo, ProxiCor, Tyke, VasCure, EluPro) through **May 2027**, subject to annual minimum payments of **$4.4 million**[106](index=106&type=chunk) - In **May 2025**, **$2.2 million** in outstanding royalty obligations to Ligand was satisfied by issuing **1,105,528 shares** of Class A common stock[108](index=108&type=chunk) - A **$1.4 million** gain on revaluation of the Revenue Interest Obligation was recognized in Q1 2024 due to changes in estimated future payments[109](index=109&type=chunk) [Note 8. Common Stock and Warrants](index=32&type=section&id=Note%208.%20Common%20Stock%20and%20Warrants) Equity and Warrant Data | Offering | Date | Gross Proceeds (approx.) | Shares of Class A Common Stock | Prefunded Warrants | | :-------------------- | :----------- | :----------------------- | :----------------------------- | :------------------- | | 2025 Registered Offering | Feb 4, 2025 | $15.0 million | 5,520,000 | 480,000 | | 2024 Registered Offering | June 16, 2024 | $13.3 million | 3,175,000 | 725,000 | | 2023 Private Offering | Sep 21, 2023 | $10.5 million | 6,852,811 (Common Units) | 503,058 (Prefunded Units) | - All Common Warrants from the 2023 Private Offering were exercised by **July 31, 2024**, generating **$13.8 million** in exercise proceeds[117](index=117&type=chunk) Warrant Data | Warrant Type | Warrant Liability, Dec 31, 2024 (in thousands) | Fair Value Upon Issuance (Q1 2025) (in thousands) | Gain on Revaluation (Q1 2025) (in thousands) | Warrant Liability, Mar 31, 2025 (in thousands) | | :-------------------- | :----------------------------------- | :------------------------------------------ | :----------------------------------------- | :----------------------------------- | | 2023 Prefunded Warrants | $13,365 | - | $(4,324) | $9,041 | | 2024 Prefunded Warrants | $2,711 | - | $(877) | $1,834 | | 2025 Prefunded Warrants | - | $1,200 | $14 | $1,214 | | Total | $16,076 | $1,200 | $(5,187) | $12,089 | [Note 9. Commitments and Contingencies](index=36&type=section&id=Note%209.%20Commitments%20and%20Contingencies) - The company has a license and supply agreement with Cook Biotech for porcine tissue, with annual license fees of **$0.1 million** through **2026**[120](index=120&type=chunk) - FiberCel Litigation: **58 active lawsuits** as of March 31, 2025, with **$17.5 million** settled for **52 cases** and an estimated **$14.3 million** liability for the remaining cases. No more insurance coverage is available for FiberCel litigation costs[122](index=122&type=chunk)[126](index=126&type=chunk)[133](index=133&type=chunk) - VBM Litigation: **12 active lawsuits** as of March 31, 2025, with **$1.5 million** settled for **12 cases** and an estimated **$3.6 million** liability for the remaining **23 cases** (including unasserted claims). Insurance coverage remains available for VBM litigation costs[124](index=124&type=chunk)[129](index=129&type=chunk)[133](index=133&type=chunk) - Medtronic Litigation: Elutia sued Medtronic for breach of a supply agreement related to FiberCel. The court dismissed the insurance coverage claim but allowed the indemnity obligation claim to proceed[125](index=125&type=chunk) - Insurance Receivables of Litigation Costs totaled **$3.9 million** as of March 31, 2025, all related to the VBM Litigation[132](index=132&type=chunk)[133](index=133&type=chunk) [Note 10. Net Income (Loss) Per Share](index=41&type=section&id=Note%2010.%20Net%20Income%20(Loss)%20Per%20Share) Net Loss Per Share Data | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Net loss | $(3,933) (in thousands) | $(17,994) (in thousands) | | Net loss for diluted earnings per share | $(9,134) (in thousands) | $(17,994) (in thousands) | | Weighted average common shares outstanding - basic | 38,616,207 | 23,912,326 | | Weighted average common shares outstanding - diluted | 42,913,111 | 23,912,326 | | Net loss per share - basic | $(0.10) | $(0.75) | | Net loss per share - diluted | $(0.21) | $(0.75) | - Potential dilutive securities, including stock options, restricted stock units, and warrants, were excluded from diluted net loss per share calculation as their effect would be anti-dilutive[135](index=135&type=chunk) [Note 11. Segment Information](index=41&type=section&id=Note%2011.%20Segment%20Information) - Elutia operates in three segments: **Device Protection**, **Women's Health**, and **Cardiovascular**, with performance evaluated by the CEO based on segment net sales and gross profit (excluding intangible asset amortization)[136](index=136&type=chunk)[137](index=137&type=chunk) Segment Performance Data | Segment | Net Sales (Q1 2025, in thousands) | Segment Gross Profit (Q1 2025, in thousands) | | :---------------- | :------------------------------ | :------------------------------------------- | | Device Protection | $3,079 | $1,655 | | Women's Health | $2,625 | $1,452 | | Cardiovascular | $326 | $199 | | Total | $6,030 | $3,306 | Segment Performance Data | Segment | Net Sales (Q1 2024, in thousands) | Segment Gross Profit (Q1 2024, in thousands) | | :---------------- | :------------------------------ | :------------------------------------------- | | Device Protection | $2,357 | $1,628 | | Women's Health | $3,567 | $1,567 | | Cardiovascular | $770 | $497 | | Total | $6,694 | $3,692 | - One customer in the Women's Health segment represented **15%** of total net sales in Q1 2025 and **17%** in Q1 2024[138](index=138&type=chunk)[139](index=139&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=43&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Elutia Inc.'s financial condition and operational results for the three months ended March 31, 2025, compared to the prior year. It details the company's business overview, the impact of discontinued operations and product recalls, a breakdown of revenue and expenses, and an analysis of liquidity and capital resources, including ongoing concerns about profitability and funding requirements [Overview](index=43&type=section&id=Overview) - Elutia's mission is to humanize medicine by leveraging biologics and local drug delivery to reduce complications with implanted medical devices, focusing on **Device Protection** (EluPro, CanGaroo) and **Women's Health** (SimpliDerm) markets[142](index=142&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk) - **EluPro**, cleared by the FDA in **June 2024** and fully launched in **January 2025**, is the only drug-eluting biomatrix (DEB) in the U.S. implantable electronic device protection market, designed to mitigate infection and other complications[145](index=145&type=chunk)[153](index=153&type=chunk) - The company utilizes a direct sales force and commercial partners (Boston Scientific for Device Protection, Tiger Aesthetics Medical for Women's Health) for product distribution, and plans to expand DEB offerings and internal production capabilities at a new Gaithersburg, MD facility by **Q4 2025**[149](index=149&type=chunk)[150](index=150&type=chunk)[151](index=151&type=chunk)[152](index=152&type=chunk) [Discontinued Operations – Sale of Orthobiologics Business](index=45&type=section&id=Discontinued%20Operations%20%E2%80%93%20Sale%20of%20Orthobiologics%20Business) - The sale of the Orthobiologics Business to Berkeley Biologics, LLC was completed in **November 2023**, yielding **$14.6 million** upfront and potential earn-out payments of up to **$20 million** over **five years**, with a **$1.5 million** indemnity holdback[154](index=154&type=chunk)[155](index=155&type=chunk)[156](index=156&type=chunk) - Elutia retained liabilities for the FiberCel and VBM product recalls, which were part of the divested Orthobiologics Business[156](index=156&type=chunk) [Product Recalls](index=47&type=section&id=Product%20Recalls) - Voluntary recalls were issued for **FiberCel** (**June 2021**) and a **VBM product** (**July 2023**) due to post-surgical tuberculosis infections, both of which were part of the divested Orthobiologics Business[157](index=157&type=chunk) [Components of Our Results of Operations](index=47&type=section&id=Components%20of%20Our%20Results%20of%20Operations) - Net sales are generated from **Device Protection**, **Women's Health**, and **Cardiovascular** products, distributed through direct sales, commercial partners, and independent sales agents[158](index=158&type=chunk) - Operating expenses include Cost of Goods Sold (raw materials, processing, manufacturing overhead, intangible amortization), Sales and Marketing (direct sales force, commissions, distribution), General and Administrative (compensation, legal, public company costs), Research and Development (salaries, supplies, clinical studies), and Litigation Costs, net (legal fees, settlement costs offset by insurance)[160](index=160&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk) - Future R&D efforts will focus on expanding **EluPro** offerings, developing new DEB products, and conducting clinical studies to support commercialization[163](index=163&type=chunk) [Results of Operations (Comparison of the Three Months Ended March 31, 2025 and 2024)](index=50&type=section&id=Results%20of%20Operations%20(Comparison%20of%20the%20Three%20Months%20Ended%20March%2031%2C%202025%20and%202024)) [Net Sales](index=50&type=section&id=Net%20Sales) Net Sales by Product Category | Product Category | Q1 2025 Net Sales (in thousands) | Q1 2024 Net Sales (in thousands) | Change ($) | Change (%) | | :--------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Device Protection | $3,079 | $2,357 | $722 | 30.6% | | Women's Health | $2,625 | $3,567 | $(942) | (26.4)% | | Cardiovascular | $326 | $770 | $(444) | (57.7)% | | Total Net Sales | $6,030 | $6,694 | $(664) | (9.9)% | - Total net sales decreased by **$0.7 million** (**9.9%**) year-over-year, driven by volume declines in Women's Health and Cardiovascular, partially offset by growth in Device Protection from EluPro's commercial launch[167](index=167&type=chunk) [Cost of Goods Sold](index=52&type=section&id=Cost%20of%20Goods%20Sold) Cost of Goods Sold and Gross Margin | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Change ($) | Change (%) | | :------------------------------------------ | :--------------------- | :--------------------- | :--------- | :--------- | | Total Cost of Goods Sold | $3,573 | $3,851 | $(278) | (7.2)% | | Gross margin | 40.7% | 42.5% | (1.8)% | N/A | | Gross margin, excluding intangible asset amortization | 54.8% | 55.2% | (0.4)% | N/A | - Cost of goods sold decreased by **$0.3 million**, with gross margin declining slightly to **40.7%** (from **42.5%**). Women's Health gross margin increased due to fewer non-recurring write-offs, while Device Protection gross margin declined with the addition of EluPro, which currently has a lower margin[169](index=169&type=chunk) [Operating Expenses](index=52&type=section&id=Operating%20Expenses) Operating Expenses Breakdown | Expense Category | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Change ($) | Change (%) | | :------------------------ | :--------------------- | :--------------------- | :--------- | :--------- | | Sales and marketing | $3,031 | $3,309 | $(278) | (8.4)% | | General and administrative | $3,871 | $5,056 | $(1,185) | (23.4)% | | Research and development | $905 | $1,172 | $(267) | (22.8)% | | Litigation costs, net | $2,572 | $1,785 | $787 | 44.1% | | Total operating expenses | $10,379 | $11,322 | $(943) | (8.3)% | - Sales and marketing, G&A, and R&D expenses all decreased, primarily due to lower non-cash equity compensation and reduced legal fees (G&A) and outside testing services (R&D) post-EluPro FDA clearance[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk) - Litigation costs, net, increased by **44.1%** to **$2.6 million**, mainly because insurance coverage for FiberCel Litigation defense costs was available in Q1 2024 but not in Q1 2025[174](index=174&type=chunk) [Interest Expense](index=54&type=section&id=Interest%20Expense) Interest Expense Summary | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Change ($) | Change (%) | | :--------------- | :--------------------- | :--------------------- | :--------- | :--------- | | Interest expense | $1,085 | $1,313 | $(228) | (17.4)% | - Interest expense decreased by **$0.2 million**, primarily due to lower principal outstanding on the SWK debt following mandatory repayments related to the Orthobiologics Business sale[175](index=175&type=chunk) [Other Expense (Income), net](index=54&type=section&id=Other%20Expense%20(Income)%2C%20net) Other Expense (Income) Summary | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Change ($) | Change (%) | | :--------------- | :--------------------- | :--------------------- | :--------- | :--------- | | Other expense (income), net | $105 | $(1,443) | $1,548 | NM | - Other expense (income), net, shifted from an income of **$1.4 million** in Q1 2024 (due to a gain on revaluation of the Revenue Interest Obligation) to an expense of **$0.1 million** in Q1 2025 (due to transaction fees for 2025 Prefunded Warrants)[176](index=176&type=chunk)[177](index=177&type=chunk) [Non-GAAP Financial Measures](index=54&type=section&id=Non-GAAP%20Financial%20Measures) - The company presents gross margin, excluding intangible asset amortization, as a non-GAAP measure to provide supplemental information on operating performance by removing amortization expense[178](index=178&type=chunk) Non-GAAP Gross Margin Reconciliation | Metric | Q1 2025 | Q1 2024 | | :------------------------------------------ | :------ | :------ | | Gross margin | 40.7% | 42.5% | | Gross margin, excluding intangible asset amortization | 54.8% | 55.2% | [Seasonality](index=56&type=section&id=Seasonality) - The company historically experiences seasonality with higher sales in the **fourth quarter** (due to hospital budget cycles and patient deductibles) and lower sales in the **first quarter** (due to re-established patient deductibles)[182](index=182&type=chunk) [Liquidity and Capital Resources](index=56&type=section&id=Liquidity%20and%20Capital%20Resources) - As of March 31, 2025, cash and cash equivalents totaled **$17.4 million**, with an accumulated deficit of **$233.5 million**, indicating substantial doubt about the company's ability to continue as a **going concern** within **one year**[183](index=183&type=chunk)[190](index=190&type=chunk) - The company raised capital through a **$15.0 million** registered direct offering in **February 2025** and a **$13.3 million** registered direct offering in **June 2024**, involving Class A common stock and prefunded warrants[184](index=184&type=chunk)[185](index=185&type=chunk) Cash Flow Summary | Cash Flow Activity | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :----------------------- | :--------------------- | :--------------------- | | Operating activities | $(8,881) | $(2,641) | | Investing activities | $(278) | $(15) | | Financing activities | $13,278 | $(4,069) | | Net increase (decrease) in cash | $4,119 | $(6,725) | - Net cash used in operating activities increased to **$8.9 million** in Q1 2025, primarily due to higher trade obligation paydowns and **$3.0 million** in FiberCel settlement payments[193](index=193&type=chunk) - Net cash provided by financing activities was **$13.3 million** in Q1 2025, mainly from the 2025 Registered Offering, contrasting with cash used in Q1 2024 due to debt and revenue interest obligation repayments[196](index=196&type=chunk) - The SWK Loan Facility had **$24.3 million** outstanding as of March 31, 2025, and was amended in **May 2025** to allow PIK interest, remove mandatory prepayments from asset sales, and fix the minimum liquidity covenant at **$8.0 million**[197](index=197&type=chunk)[198](index=198&type=chunk)[208](index=208&type=chunk) - The Ligand Revenue Interest Obligation was further amended in **May 2025**, satisfying **$2.2 million** in royalty obligations through the issuance of **1,105,528 shares** of Class A common stock[209](index=209&type=chunk)[210](index=210&type=chunk) - Future funding requirements are significant due to ongoing commercialization of **EluPro**, product development, clinical activities, and public company operating costs, with potential capital raises through equity, debt, or asset sales[211](index=211&type=chunk)[212](index=212&type=chunk)[214](index=214&type=chunk) [Critical Accounting Policies and Estimates](index=66&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - No material changes to critical accounting policies and estimates were reported during the three months ended March 31, 2025, other than those outlined in Note 2[215](index=215&type=chunk) [Recent Accounting Pronouncements](index=68&type=section&id=Recent%20Accounting%20Pronouncements) - Information regarding recently issued accounting pronouncements is detailed in Note 3 to the condensed consolidated financial statements[217](index=217&type=chunk) [JOBS Act](index=68&type=section&id=JOBS%20Act) - As an 'emerging growth company,' Elutia Inc. has elected to use the extended transition period for adopting new or revised accounting standards, which may result in financial statements not being comparable to those of public companies complying with earlier effective dates[218](index=218&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=68&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses Elutia Inc.'s exposure to market risks, including interest rate risk, credit risk, and foreign currency risk, and their potential impact on the company's financial condition and results of operations - The company's primary market risk exposure is to changes in interest rates, particularly on its variable-rate SWK Loan Facility, though a hypothetical 10% change would not materially affect financial statements[221](index=221&type=chunk) - Credit risk exists as cash balances with financial institutions may exceed federally insured limits, but these institutions are believed to have sufficient assets and liquidity[222](index=222&type=chunk) - Foreign currency risk is currently minimal as business is primarily conducted in U.S. dollars, but exposure could increase with operational growth[223](index=223&type=chunk) [Item 4. Controls and Procedures](index=70&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms that Elutia Inc.'s management, including the CEO and CFO, evaluated the effectiveness of its disclosure controls and procedures as of March 31, 2025, concluding they were effective, and reported no material changes in internal control over financial reporting during the quarter - The company's disclosure controls and procedures were evaluated and deemed effective as of March 31, 2025[226](index=226&type=chunk) - There were no material changes in internal control over financial reporting during the three months ended March 31, 2025[227](index=227&type=chunk) [PART II – OTHER INFORMATION](index=70&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This section provides additional information on legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings](index=70&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 9 of the condensed consolidated financial statements for detailed information on legal proceedings, acknowledging the inherent uncertainty of their outcomes - Information regarding legal proceedings, including the FiberCel, VBM, and Medtronic litigations, is detailed in Note 9 to the condensed consolidated financial statements[229](index=229&type=chunk) [Item 1A. Risk Factors](index=70&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes to the risk factors previously disclosed in the company's Annual Report, which could materially and adversely affect its business, financial condition, operating results, and stock price - No material changes to the risk factors disclosed in the Annual Report have occurred[230](index=230&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=70&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports that there were no unregistered sales of equity securities or use of proceeds during the period - No unregistered sales of equity securities or use of proceeds occurred during the period[231](index=231&type=chunk) [Item 3. Defaults Upon Senior Securities](index=70&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section indicates that there were no defaults upon senior securities during the reporting period - No defaults upon senior securities were reported[232](index=232&type=chunk) [Item 4. Mine Safety Disclosures](index=72&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to the company[233](index=233&type=chunk) [Item 5. Other Information](index=72&type=section&id=Item%205.%20Other%20Information) This section confirms that no directors or officers adopted or terminated any Rule 10b5-1 trading arrangements during the three months ended March 31, 2025 - No directors or officers adopted or terminated any Rule 10b5-1 trading arrangements during the three months ended March 31, 2025[234](index=234&type=chunk) [Item 6. Exhibits](index=73&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Quarterly Report on Form 10-Q, including various agreements, certificates, and certifications - The report includes exhibits such as the Asset Purchase Agreement, Restated Certificate of Incorporation, Amended and Restated Bylaws, various warrant forms (SWK, Common, Prefunded), and certifications[236](index=236&type=chunk)[237](index=237&type=chunk)[238](index=238&type=chunk)[240](index=240&type=chunk) [SIGNATURES](index=77&type=section&id=SIGNATURES) This section contains the official signatures of the President, Chief Executive Officer, and Chief Financial Officer - The report is signed by C. Randal Mills, Ph.D., President and Chief Executive Officer, and Matthew Ferguson, Chief Financial Officer, on **May 13, 2025**[244](index=244&type=chunk) ```

Financial Data and Key Metrics Changes - The company reported a total revenue of $6 million for Q1 2025, down from $7 million in the previous year but up 10% sequentially from Q4 2024 [33][34][38] - The adjusted gross margin was 54.8%, slightly down from 55.2% year-over-year, but expected to improve with operational efficiencies [36][37] - Adjusted EBITDA for the quarter was $3.3 million, an improvement from $4.5 million in the previous year [37] Business Line Data and Key Metrics Changes - The BioEnvelope division generated $3.1 million in revenue, representing a 31% year-over-year growth and a 16% sequential increase [33][34] - Simploderm revenue was $2.6 million, down from $3.6 million year-over-year but up 13% from Q4 2024 [34] - The cardiovascular products division reported $300,000 in sales, with expectations for significant growth as the company takes back control of sales efforts [35] Market Data and Key Metrics Changes - The company has secured contracts with 125 hospitals actively ordering Elupro, with an additional 130 Value Analysis Committees (VACs) in process [11][12] - The partnership with Boston Scientific has expanded the sales force to 900 representatives, enhancing market penetration [18][20] Company Strategy and Development Direction - The primary focus is on driving top-line growth for Elupro through expanding VAC and Group Purchasing Organization (GPO) coverage [41] - The company plans to explore strategic alternatives for its Simploderm product line and advance its drug-eluting biologic pipeline [42][43] - A new facility in Gaithersburg, Maryland, is expected to alleviate production bottlenecks and reduce costs [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about a strong second half of 2025, driven by the successful launch of Elupro and the partnership with Boston Scientific [13][41] - The company is focused on increasing production capacity and lowering costs to achieve gross margins in the mid-70% range [42] Other Important Information - The company received an Edison Award for innovation in post-surgical recovery for Elupro [27] - A real-world clinical study has begun, with the first patients enrolled at UCSD, aimed at gathering clinical outcome data [27][61] Q&A Session Summary Question: How have relationships with physicians gone in accounts selling with Boston Scientific? - Management noted that adoption patterns for Elupro are positive, with initial orders often leading to higher subsequent orders as physicians experience the product [49][50] Question: What is the current manufacturing capacity without the Gaithersburg facility? - Current manufacturing capacity allows for approximately $140 million in Elupro revenue, but without the antibiotic disc expansion, it is constrained to $25 million to $30 million [54] Question: What is the expected cash burn profile going forward? - The cash flow statement is expected to show operational cash flow around $4 million to $5 million after Q2, following the settlement of litigation costs [56][57] Question: How will the registry study support commercial conversions? - The registry study is anticipated to be more impactful in the second half of next year, aiding in regulatory submissions and enhancing the VAC process [60][61] Question: What is the expected revenue growth for Elupro compared to Kangaroo? - Elupro is projected to reach approximately $200 million in U.S. revenue at maturity, significantly surpassing Kangaroo's $10 million at maturity [63][64]

Financial Data and Key Metrics Changes - The company reported a total revenue of $6 million for the first quarter, down from $7 million a year ago but up 10% sequentially from the previous quarter [33][34][38] - The adjusted gross margin was 54.8%, slightly down from 55.2% year over year, but expected to improve as efficiencies in manufacturing are realized [36][37] - Adjusted EBITDA for the quarter was $3.3 million, an improvement from $4.5 million in the previous year [37] Business Line Data and Key Metrics Changes - The BioEnvelope division generated $3.1 million in revenue, representing a 31% year-over-year growth and a 16% sequential increase [33][34] - Simploderm revenue was $2.6 million, down from $3.6 million a year ago but up 13% from the previous quarter [34] - The cardiovascular products division reported $300,000 in sales, with expectations for significant growth as the company takes back control of sales efforts [35] Market Data and Key Metrics Changes - The company has secured Value Analysis Committee (VAC) approvals from 125 hospitals, with an additional 130 VACs in process [11][12] - The partnership with Boston Scientific has expanded the sales force to over 900 representatives, enhancing market reach [18][20] Company Strategy and Development Direction - The primary focus is on driving top-line growth for Elupro through expanding VAC and Group Purchasing Organization (GPO) coverage [41] - The company plans to explore strategic alternatives for its Simploderm product line [42] - There is an ongoing effort to advance the drug-eluting biologic pipeline for reconstructive surgery [44] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about a strong second half of 2025, driven by the successful launch of Elupro and the partnership with Boston Scientific [13][41] - The company is focused on increasing production capacity and lowering costs for Elupro, targeting gross margins in the mid-70% range [42][43] Other Important Information - The company opened a new facility in Gaithersburg, Maryland, to enhance manufacturing capacity for critical components, which is expected to reduce costs [22][23] - The company received an Edison Award for innovation in post-surgical recovery for Elupro [27] Q&A Session Summary Question: How have relationships with physicians gone in those cases with Boston Scientific? - Management noted that adoption patterns for Elupro are positive, with initial orders often leading to higher subsequent orders as more physicians in practices begin to use the product [49][50] Question: What is the current manufacturing capacity without the Gaithersburg facility? - Current manufacturing capacity allows for approximately $140 million in Elupro revenue, but without the new facility, capacity would be constrained to $25 million to $30 million [54] Question: What should be expected regarding cash burn going forward? - Cash flow from operations is expected to stabilize around $4 million to $5 million after Q2, following the settlement of litigation costs [56][57] Question: How will the registry study data support commercial conversions? - The data from the registry study is anticipated to be more impactful in the second half of next year, aiding in regulatory submissions and enhancing the VAC process [60][61] Question: What is the expected revenue for Elupro as it matures? - Elupro is projected to reach approximately $200 million in U.S. revenue at maturity, significantly surpassing the previous product, Kangaroo [63][64]

Financial Data and Key Metrics Changes - The company reported Q1 2025 revenue of $6,000,000, down from $7,000,000 in Q1 2024 but up 10% sequentially from Q4 2024 [33][34][36] - Adjusted gross margin for Q1 2025 was 54.8%, slightly down from 55.2% in the previous year, with expectations for improvement as efficiencies are realized [35][36] - Adjusted EBITDA for Q1 2025 was $3,300,000, an improvement from $4,500,000 in the previous year [37] Business Line Data and Key Metrics Changes - The BioEnvelope division generated $3,100,000 in revenue, representing a 31% year-over-year growth and a 16% sequential increase [10][33] - Simploderm revenue was $2,600,000, down from $3,600,000 year-over-year but up 13% from Q4 2024 [34] - Cardiovascular products division reported $300,000 in sales, with expectations for significant growth as the company takes back control of sales [35][36] Market Data and Key Metrics Changes - The company has secured contracts with 125 hospitals actively ordering Elupro, with an additional 130 Value Analysis Committees (VACs) in process [12][13] - The partnership with Boston Scientific has expanded the sales force to 900 representatives, enhancing market penetration [18][20] Company Strategy and Development Direction - The primary focus is on driving top-line growth for Elupro through expanding VAC and Group Purchasing Organization (GPO) coverage [41] - The company plans to explore strategic alternatives for its Simploderm product line and advance its drug-eluting biologic pipeline for reconstructive surgery [42][44] - The new Gaithersburg facility will enhance production capacity and reduce costs by manufacturing critical components in-house [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about a strong second half of 2025, driven by the successful launch of Elupro and the partnership with Boston Scientific [14][41] - The company is focused on increasing production capacity and lowering costs to achieve gross margins in the mid-seventy percent range [42] Other Important Information - The company received an Edison Award for innovation in post-surgical recovery for Elupro [27] - A real-world clinical study has commenced, with the first patients enrolled at UCSD, aimed at gathering clinical outcome data [27][60] Q&A Session Summary Question: How have relationships with physicians gone in those cases with Boston Scientific? - Adoption patterns for Elupro show that initial orders are often followed by higher subsequent orders, indicating strong physician interest and usage [48][50] Question: What is the current manufacturing capacity without the Gaithersburg facility? - Current manufacturing capacity allows for approximately $140,000,000 in Elupro revenue, but without the antibiotic disc expansion, it is limited to $25,000,000 to $30,000,000 [53] Question: What should be expected regarding cash burn going forward? - Cash flow from operations is expected to stabilize around $4,000,000 to $5,000,000 as litigation settlements conclude [55][56]

Financial Performance - EluPro sales experienced significant sequential growth of 84%, now representing 52% of BioEnvelope revenue[8, 11] - BioEnvelope revenue increased by 31% year-over-year, reaching $3.1 million[11] - The company's cash balance as of March 31, 2025, was $17.4 million[29] - A registered direct offering generated gross proceeds of $15.0 million on February 4, 2025[29] Strategic Initiatives - A strategic partnership with Boston Scientific aims to accelerate EluPro adoption, leveraging a combined commercial footprint of over 900 sales professionals[8, 15, 16] - The company reacquired distribution rights for its cardiovascular portfolio from LeMaitre, expecting it to contribute to cash flow with approximately 80% gross margin[8, 24, 27] Operational Improvements - The company is focused on increasing production capacity and reducing COGS for EluPro[17, 33] - The Roswell, GA facility has scalable capacity to support approximately $140 million in EluPro sales at over 70% gross margin[20] Market Expansion - Elutia is targeting approximately 1,000 hospitals with Cardiac Implantable Electronic Devices (CIED) volumes exceeding 100 cases per year[14] - Elutia is actively engaging with hospitals, with 125 institutions actively ordering and 130 Value Analysis Committees (VACs) in process, adding 10-12 institutions per month[11, 14]

Exhibit 99.1 Elutia Announces Strong First Quarter 2025 Financial Results Driven by 84% Sequential Growth in EluPro™ Sales - New Boston Scientific distribution partnership now underway - - Conference call today at 5:00 p.m. ET / 2:00 p.m. PT - SILVER SPRING, Md., May 8, 2025 — Elutia Inc. (Nasdaq: ELUT) ("Elutia" or the "Company"), a pioneer in drug-eluting biomatrix technologies, today reported strong first-quarter results for 2025 and highlighted key developments driving the adoption of EluPro™. In its fi ...

Core Insights - Elutia Inc. reported strong first-quarter results for 2025, highlighting the successful launch and adoption of its EluPro™ product, which has established itself as a significant solution for cardiac implantable electronic device (CIED) procedures [1][4]. Business Highlights - EluPro experienced an 84% sequential sales increase, contributing to a 31% year-over-year growth in BioEnvelope revenue, totaling $3.1 million, with EluPro accounting for approximately 52% of BioEnvelope sales [4][5]. - The partnership with Boston Scientific is expected to enhance the adoption of EluPro, with over 900 sales professionals involved and initial training completed, leading to sales generation in over 50 hospitals [3][4]. - EluPro's marketing efforts include a prominent presence at the Heart Rhythm Society 2025 and a new national campaign aimed at increasing awareness [4]. - EluPro received a 2025 Edison Award for innovation, and new peer-reviewed data has validated its antibacterial efficacy [4]. Financial Performance - Total net sales decreased by 10% to $6.0 million compared to $6.7 million in Q1 2024, with BioEnvelope products showing a 31% increase [5][9]. - Gross margin on a GAAP basis was 40.7%, down from 42.5%, while adjusted gross margin was 54.8%, slightly down from 55.2% [9][17]. - The company reported a loss from operations of $7.9 million, an improvement from a loss of $8.5 million in the previous year [9][16]. Strategic Developments - Elutia regained full commercial rights to its ProxiCor™, Tyke™, and VasCure™ products, which are now sold through a contractor-based model expected to enhance cash flow [4]. - The company raised $15 million through a registered direct offering and amended loan terms to improve financial flexibility [4].

Core Insights - Elutia Inc. is reclaiming U.S. sales and distribution responsibilities for its cardiovascular portfolio, which includes ProxiCor®, VasCure®, and Tyke®, after ending its distribution agreement with LeMaitre Vascular, Inc. This strategic move is expected to enhance top-line revenue and improve gross margins and profitability for this product segment [1][4] Company Developments - Dwayne Montgomery has been appointed as Head of Cardiovascular to lead the newly established business unit, bringing extensive experience from previous roles at Osiris Therapeutics, Smith & Nephew, Guidant, and C.R. Bard [2] - Under Montgomery's leadership, Elutia has assembled a team of 26 independent sales representatives dedicated to the cardiovascular line, allowing for focused operations separate from the EluPro™ commercial organization [3] Financial Expectations - The cardiovascular portfolio is projected to deliver approximately 80% gross margins and maintain a premium price position in the market. In 2024, sales from cardiovascular products accounted for $2.9 million, representing about 12% of total revenue [4]

Core Points - Elutia Inc. will release its first quarter 2025 financial results on May 8, 2025, after market close [1] - A conference call and webcast will be hosted by the management team at 5:00 p.m. Eastern Time on the same day [1] - The conference call can be accessed by U.S. investors at 877-407-8029 and international investors at 201-689-8029, with a Conference ID of 13753035 [1] Company Overview - Elutia develops and commercializes drug-eluting biomatrix products aimed at improving compatibility between medical devices and patients [2] - The company focuses on addressing the needs of a growing population requiring implantable technologies [2] - Elutia's mission is to humanize medicine, enabling patients to thrive without compromise [2]

Core Insights - Elutia Inc. is participating in Chardan's Trending Issues in Drug Development Conference Series on April 29, 2025, with Dr. Michelle LeRoux Williams as the Chief Scientific Officer [1] - The conference will be held in a virtual format, featuring a fireside chat at 11:00 a.m. ET, and a webcast will be available on Elutia's investor website [2] - Elutia focuses on developing and commercializing drug-eluting biomatrix products aimed at enhancing the compatibility of medical devices with patients [3] Company Overview - Elutia is dedicated to improving medical technology for a growing population that requires implantable devices, with a mission to humanize medicine [3] - The company emphasizes the importance of patient compatibility and aims to ensure that patients can thrive without compromise [3]