Core Insights - Organogenesis Holdings Inc. has granted inducement awards to its newly hired Chief Technology Officer, Michael Catarina, consisting of non-statutory stock options and restricted stock units [1][2][3] Summary by Sections Inducement Awards - The inducement awards include non-statutory stock options to purchase 82,542 shares and restricted stock units for 47,962 shares of Class A common stock [1] - The stock options have an exercise price of $4.17 per share, which is the closing price on October 29, 2025 [2] - Both the stock options and restricted stock units will vest annually in substantially equal installments over four years, contingent on Mr. Catarina's continued employment [2] Compliance and Regulations - The awards were granted as an inducement material to Mr. Catarina's acceptance of employment, in accordance with Nasdaq Listing Rule 5635(c)(4) [3] Company Overview - Organogenesis Holdings Inc. specializes in regenerative medicine, focusing on advanced wound care and surgical & sports medicine markets [4] - The company offers a comprehensive portfolio of innovative regenerative products to meet patient needs across the continuum of care [4]

Core Viewpoint - Organogenesis Holdings Inc. is currently under investigation for potential securities fraud violations, which raises concerns regarding the company's compliance and governance practices [1] Group 1 - The investigation is being conducted by the DJS Law Group, indicating a formal inquiry into the company's financial practices [1] - Stakeholders are encouraged to discuss their rights in light of the ongoing investigation, suggesting potential implications for investors and shareholders [1]

Core Viewpoint - Pomerantz LLP is investigating potential securities fraud or unlawful business practices by Organogenesis Holdings Inc. following the failure of a key clinical trial for its product ReNu, which has led to a significant drop in the company's stock price [1][2]. Group 1: Company Performance - On September 25, 2025, Organogenesis announced that its second phase 3 trial for the cryopreserved amniotic suspension allograft ReNu did not meet its primary endpoint, failing to show a significant change in pain reduction [1]. - Following this announcement, Organogenesis's stock price decreased by $0.58 per share, or 12.39%, closing at $4.10 per share on September 26, 2025 [2]. Group 2: Legal Investigation - Pomerantz LLP is representing investors in investigating claims against Organogenesis and its officers/directors regarding possible securities fraud or other illegal business practices [1]. - The firm has a long history in corporate and securities class litigation, having recovered substantial damages for victims of securities fraud and corporate misconduct [3].

Core Viewpoint - Organogenesis Holdings Inc. will report its third quarter fiscal year 2025 financial results on November 6, 2025, after market close [1] Group 1: Financial Reporting - The financial results for the third quarter will be announced after the market closes on November 6, 2025 [1] - A conference call will be held at 5:00 p.m. Eastern Time on the same day to discuss the results and provide a corporate update [2] Group 2: Company Overview - Organogenesis Holdings Inc. specializes in regenerative medicine, focusing on advanced wound care and surgical and sports medicine markets [3] - The company offers a comprehensive portfolio of innovative regenerative products to meet patient needs across the continuum of care [3]

Company Overview - Organogenesis Holdings Inc. (NASDAQ: ORGO) is a healthcare company focused on developing regenerative therapies for advanced wound care (AWC), surgery, and sports medicine [1] - The AWC segment represents over 90% of the company's revenue [1] Financial Performance - The AWC segment has experienced a contraction of approximately 25% year-over-year [1]

Core Insights - Organogenesis Holdings Inc. announced topline data from the second Phase 3 randomized controlled trial of ReNu, a cryopreserved amniotic suspension allograft for knee osteoarthritis management [1][6] Study Results - The trial did not achieve statistical significance for its primary endpoint, although ReNu showed a numerical improvement in baseline pain reduction compared to the first Phase 3 trial [3][5] - Baseline pain reduction at six months for ReNu was -6.9 in the second Phase 3 study, compared to -6.0 in the first Phase 3 study [3] - The primary endpoint assessed the difference in knee pain reduction between ReNu and saline groups using the WOMAC pain scale [4] Statistical Analysis - The study demonstrated a numerical improvement of -0.51 favoring ReNu with a one-sided p-value of 0.0393, compared to the target threshold of 0.023 [5] - The first Phase 3 trial achieved a statistically significant improvement of -0.72 with a p-value of 0.0177 [5] Future Steps - The company plans to request a pre-BLA meeting with the FDA to discuss the submission pathway, including a combined efficacy analysis from both Phase 3 studies to support a BLA approval [6] Market Reaction - Following the announcement, Organogenesis Holdings shares fell by 15.49% to $3.95, trading within a 52-week range of $2.61 to $6.71 [7]

Core Insights - The second Phase 3 trial of ReNu did not achieve statistical significance for its primary endpoint, but showed a numerical improvement in pain reduction compared to the first Phase 3 trial [1][2][3] - The company plans to request a pre-BLA meeting with the FDA to discuss the submission pathway for ReNu, leveraging data from both Phase 3 trials [3][6] - ReNu has received FDA Regenerative Medicine Advanced Therapy (RMAT) designation, indicating its potential to address an unmet medical need in knee osteoarthritis [3][7] Study Results - The second Phase 3 trial involved 594 patients and demonstrated a baseline pain reduction of -6.9 for ReNu compared to -6.0 in the first Phase 3 trial [1][10] - The primary endpoint assessed the difference in knee pain reduction at six months using the WOMAC pain scale, with a numerical improvement of -0.5 favoring ReNu in the second trial [2][10] - The first Phase 3 trial achieved a statistically significant improvement of -0.7 favoring ReNu [2] Market Context - Knee osteoarthritis affects over 30 million Americans and is a leading cause of disability and poor quality of life [4] - The company believes that if approved, ReNu will meet a significant unmet medical need for patients suffering from symptomatic knee osteoarthritis [4][6]

Summary of Organogenesis Holdings Conference Call Company Overview - **Company**: Organogenesis Holdings (ORGO) - **Industry**: Biotechnology, specifically in wound care and surgical products - **Background**: Established in 1985 as a spin-off from MIT, with a focus on innovative wound care solutions. The company has evolved from a single product to a comprehensive portfolio addressing various wound care needs [1][2] Key Points Discussed Industry Changes and Regulatory Environment - **Physician Fee Schedule (PFS)**: A significant change in the reimbursement model is anticipated, which is viewed as a watershed moment for the industry. The proposed rule aims to standardize reimbursement across various care settings, enhancing patient access to products [4][5] - **Market Expansion**: The market volume has doubled from 2021 to 2024, indicating growth despite a tenfold increase in costs. This shift is expected to stabilize the market and reduce financial incentives based on product choice, focusing instead on clinical efficacy [6][7][8] Product Portfolio and Growth Areas - **Current Products**: The company highlighted the importance of PMA products, including the relaunch of Dermograph and the burn portfolio featuring Transite. These products are expected to gain value with the new reimbursement model [9][10] - **New Product Launches**: Two new dehydrated products were launched, which are gaining traction and are expected to contribute to stronger performance in the second half of the year [14][15] - **Surgical and Sports Medicine Growth**: The surgical segment grew by 16% in Q2 and 13% for the half-year, driven by the PuraPly brand and the introduction of Cygnus Matrix [16][17] Future Outlook and Strategic Initiatives - **Renew Product Update**: The second phase three trial has been completed, with top-line data expected soon. If successful, a BLA application will be filed by the end of the year, with commercialization anticipated in 2027 [20][21] - **Sales Strategy**: The company plans to build a direct sales force of 150 to 200 reps for the new product, focusing on the pain management market, particularly targeting the hyaluronic acid segment [22][23] Financial Health - **Balance Sheet**: The company reported a strong balance sheet with approximately $70 million in cash, positioning it well for future growth and profitability [25] Market Positioning - **Competitive Landscape**: The company aims to differentiate itself by offering a broad portfolio that addresses all stages of wound healing, utilizing both dehydrated and living technologies [26][27] Research and Development - **RCT Progress**: Ongoing research is expected to yield a publication by November 1, with plans to have PuraPly available on the LCD by January 1 [29] Additional Insights - **Hybrid Sales Model**: The introduction of hybrid representatives who can operate in both operating rooms and advanced wound care centers is seen as a valuable strategy to enhance customer relationships and sales [19] This summary encapsulates the key discussions and insights from the Organogenesis Holdings conference call, highlighting the company's strategic direction, product innovations, and market dynamics.

Financial Data and Key Metrics Changes - Net product revenue for Q2 was $100.8 million, down 23% year over year, within the guidance range of $100 million to $110 million [16] - Advanced Wound Care net product revenue was $92.7 million, down 25%, while Surgical and Sports Medicine products revenue increased by 16% to $8.1 million [16][20] - Gross profit for Q2 was $73.1 million, representing 73% of net product revenue, down from 78% the previous year [17] - Operating expenses decreased to $113.6 million from $144.1 million, a reduction of 21% year over year [17] - GAAP net loss for Q2 was $9.4 million, compared to a net loss of $17 million last year, showing improvement [18] Business Line Data and Key Metrics Changes - Advanced Wound Care products saw a revenue decline of 25%, attributed to customer demand disruptions and competitive pricing strategies [5][16] - Surgical and Sports Medicine products experienced a revenue increase of 16%, indicating strong performance in this segment [16] Market Data and Key Metrics Changes - The proposed Medicare payment reform for skin substitutes is expected to significantly impact the market, with a proposed rate of approximately $125 per square centimeter [30] - The current market for Aplograft is only 3% of units sold, indicating substantial growth potential with the new payment structure [31] Company Strategy and Development Direction - The company is focused on gathering clinical and real-world evidence to enhance its product portfolio and market penetration [10] - Expansion of biomanufacturing capabilities is underway, with a new facility in Smithfield, Rhode Island, aimed at supporting product reintroduction and new launches [11] - The RENEW program is on track for submission by the end of the year, targeting a significant market of over 30 million Americans suffering from knee osteoarthritis [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the proposed CMS payment reforms, viewing them as a transformational opportunity for the company and the industry [30] - The company anticipates aggressive pricing strategies from competitors in the latter half of 2025 but remains confident in its product momentum [33] - The guidance for 2025 has been updated, expecting net revenue between $480 million and $510 million, reflecting a year-over-year change of flat to a 6% increase [19][20] Other Important Information - The company has no outstanding debt obligations and reported cash and equivalents of $73.7 million as of June 30, 2025, down from $136.2 million at the end of 2024 [19] - Adjusted EBITDA loss for Q2 was $3.6 million, compared to adjusted EBITDA income of $15.6 million last year, indicating a significant shift in profitability [18] Q&A Session Summary Question: How does the CMS proposal for 2026 impact the company? - Management views the CMS proposal as a transformational event, providing a significant opportunity for their products and leveling the playing field in reimbursement [30][31] Question: Has the guidance reduction accounted for aggressive market behavior? - Management believes the guidance reduction reflects the current market conditions and anticipates strong performance from recently launched products in the second half of the year [34][35] Question: What is the timing for the reintroduction of Dermagraft? - Management indicated that Dermagraft is expected to be launched by 2027 [37] Question: How does RENEW position itself in the knee OA treatment landscape? - Management highlighted the strength of RENEW's data, indicating it will compete well against existing injectable options [41] Question: What drove the strength in the Surgical and Sports Medicine segment? - The segment's growth was attributed to strong performance and the implementation of hybrid sales strategies, with a 16% increase in Q2 [42]

PART I. FINANCIAL INFORMATION [Item 1. Unaudited Condensed Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section presents the company's unaudited condensed consolidated financial statements and accompanying notes for the periods ended June 30, 2025, and December 31, 2024 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total Assets | $461,128 | $497,886 | | Total Liabilities | $99,909 | $112,570 | | Redeemable Convertible Preferred Stock | $127,977 | $122,419 | | Total Stockholders' Equity | $233,242 | $262,897 | | Cash and cash equivalents | $73,076 | $135,571 | | Accounts receivable, net | $120,382 | $109,861 | | Inventories, net | $33,042 | $26,219 | | Total current assets | $260,223 | $285,941 | | Total current liabilities | $65,839 | $77,477 | - Total assets decreased by **$36.76 million** from December 31, 2024, to June 30, 2025, primarily driven by a significant reduction in cash and cash equivalents[11](index=11&type=chunk) - Cash and cash equivalents decreased by **$62.495 million**, from $135.571 million at December 31, 2024, to $73.076 million at June 30, 2025[11](index=11&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $101,005 | $130,234 | $187,698 | $240,210 | | Loss from Operations | $(12,576) | $(13,892) | $(39,322) | $(17,744) | | Net Loss and Comprehensive Loss | $(9,392) | $(17,043) | $(28,235) | $(19,143) | | Net Loss Attributable to Common Stockholders | $(12,202) | $(17,043) | $(33,793) | $(19,143) | | Basic and Diluted Net Loss Per Share | $(0.10) | $(0.13) | $(0.27) | $(0.14) | - Total revenue decreased by **22.4%** for the three months ended June 30, 2025, and by **21.8%** for the six months ended June 30, 2025, compared to the same periods in 2024[13](index=13&type=chunk) - Net loss attributable to common stockholders improved for the three months ended June 30, 2025, decreasing to **$(12,202) thousand** from $(17,043) thousand in 2024, but worsened for the six months ended June 30, 2025, increasing to **$(33,793) thousand** from $(19,143) thousand in 2024[13](index=13&type=chunk) [Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Redeemable%20Convertible%20Preferred%20Stock%20and%20Stockholders'%20Equity) | Metric (in thousands) | December 31, 2024 | June 30, 2025 | | :--- | :--- | :--- | | Redeemable Convertible Preferred Stock | $122,419 | $127,977 | | Common Stock | $13 | $13 | | Additional Paid-in Capital | $302,994 | $301,574 | | Accumulated Deficit | $(40,110) | $(68,345) | | Total Stockholders' Equity | $262,897 | $233,242 | - Total stockholders' equity decreased by **$29.655 million** from December 31, 2024, to June 30, 2025, primarily due to the net loss incurred during the period and accretion of redeemable convertible preferred stock[16](index=16&type=chunk) - The accumulated deficit increased significantly from **$(40,110) thousand** at December 31, 2024, to **$(68,345) thousand** at June 30, 2025, reflecting the net losses[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(52,808) | $(5,424) | | Net cash used in investing activities | $(7,264) | $(4,102) | | Net cash used in financing activities | $(2,344) | $(4,335) | | Net change in cash, cash equivalents and restricted cash | $(62,416) | $(13,861) | | Cash, cash equivalents, and restricted cash, end of period | $73,735 | $90,477 | - Net cash used in operating activities increased substantially to **$(52,808) thousand** for the six months ended June 30, 2025, compared to $(5,424) thousand in the prior year, driven by net loss and changes in operating assets and liabilities[19](index=19&type=chunk)[137](index=137&type=chunk) - Cash, cash equivalents, and restricted cash at the end of the period decreased by **$62.416 million** to $73.735 million as of June 30, 2025[19](index=19&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - The Company is a leading regenerative medicine and tissue innovations company focused on advanced wound care, and surgical and sports medicine markets[22](index=22&type=chunk) - New accounting policies for 2025 include performance-based share awards, assets held for sale, and government assistance, with performance-based share awards recognized when achievement of conditions is probable[24](index=24&type=chunk)[30](index=30&type=chunk) Revenue by Category | Revenue Category (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Advanced Wound Care | $92,696 | $123,237 | $172,623 | $227,101 | | Surgical & Sports Medicine | $8,083 | $6,997 | $14,849 | $13,109 | | Total Net Product Revenue | $100,779 | $130,234 | $187,472 | $240,210 | | Grant Income | $226 | $— | $226 | $— | - The Company received a **$5 million government grant** in Q2 2025 for its Smithfield Facility, with $2.5 million cash received and the remaining $2.5 million considered probable[38](index=38&type=chunk) - Accounts receivable, net, increased to **$120.382 million** at June 30, 2025, from $109.861 million at December 31, 2024, with the allowance for credit losses increasing to $11.153 million[39](index=39&type=chunk) - Inventories, net, increased to **$33.042 million** at June 30, 2025, from $26.219 million at December 31, 2024, with charges for excess and obsolescence of $6.093 million for the six months ended June 30, 2025[40](index=40&type=chunk) - Property and equipment, net, decreased to **$75.607 million** at June 30, 2025, from $89.128 million at December 31, 2024, partly due to a $8.313 million write-down of an asset held for sale in the six months ended June 30, 2025[41](index=41&type=chunk)[45](index=45&type=chunk) - Goodwill remained stable at **$28.772 million**, and intangible assets, net, decreased to $10.785 million at June 30, 2025, from $12.468 million at December 31, 2024[46](index=46&type=chunk) - Accrued expenses and other current liabilities decreased to **$26.348 million** at June 30, 2025, from $39.453 million at December 31, 2024, mainly due to decreases in personnel costs and accrued taxes[47](index=47&type=chunk) - The Company had **no outstanding borrowings** under its Term Loan Facility or Revolving Facility as of June 30, 2025, after prepaying the Term Loan Facility in November 2024[54](index=54&type=chunk) - Shareholders approved the issuance of Class A common stock upon conversion of Convertible Preferred Stock in excess of Ownership Limitations, allowing conversion into an aggregate of **36,051,283 shares** as of June 30, 2025[57](index=57&type=chunk) - Stock-based compensation expense for the six months ended June 30, 2025, was **$5.909 million**, an increase from $4.975 million in the prior year[64](index=64&type=chunk) - The Company granted **198,900 Performance Share Units (PSUs)** in the six months ended June 30, 2025, with the 2025 performance target deemed probable of being achieved[68](index=68&type=chunk) - The income tax benefit for the six months ended June 30, 2025, was **$9.382 million**, a significant increase from an expense of $(260) thousand in the prior year, due to a higher estimated effective tax rate and R&D tax credits[87](index=87&type=chunk)[132](index=132&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition, results of operations, liquidity, and capital resources for the reported periods [Overview](index=26&type=section&id=Overview) - Organogenesis is a leading regenerative medicine and tissue innovations company, focusing on advanced wound care and surgical & sports medicine markets[92](index=92&type=chunk) - The company's products, including Apligraf, PuraPly AM, CYGNUS Dual, and NuShield, address chronic and acute wounds, and tendon/ligament injuries, supported by clinical data and FDA approvals[93](index=93&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk) [Dermagraft](index=26&type=section&id=Dermagraft) - Manufacturing and sales of Dermagraft were suspended in Q4 2021 and Q2 2022, respectively[96](index=96&type=chunk) - The company plans to transition Dermagraft manufacturing to its new Smithfield, Rhode Island facility, with sales expected to resume by the end of 2027, aiming for substantial long-term cost savings[96](index=96&type=chunk) [Local Coverage Determinations and Centers for Medicare & Medicaid Services (CMS) Proposed Rule](index=26&type=section&id=Local%20Coverage%20Determinations%20and%20Centers%20for%20Medicare%20%26%20Medicaid%20Services%20(CMS)%20Proposed%20Rule) - New proposed Local Coverage Determinations (LCDs) for skin substitute grafts/CTPs for DFUs and VLUs, finalized in November 2024, have been **delayed until January 1, 2026**[97](index=97&type=chunk)[99](index=99&type=chunk) - If implemented in their current form, these LCDs would classify over 200 products, including PuraPly, Novachor, Dual, and Matrix, as **'non-covered'** for DFU and VLU indications, while Apligraf and Dermagraft would remain covered[99](index=99&type=chunk) - CMS proposed new rules in July 2025 for Medicare payments under the Physician Fee Schedule (PFS) and Hospital Outpatient Prospective Payment System (OPPS) for skin substitute products, effective January 1, 2026[100](index=100&type=chunk) - CMS proposes to align skin substitute categorization with FDA regulatory status (361 HCT/Ps, PMAs, 510(k)s) and use a single payment rate for 2026, with differentiated rates planned for future years[100](index=100&type=chunk) [License And Manufacturing Agreement](index=28&type=section&id=License%20And%20Manufacturing%20Agreement) - The company has a trademark license and manufacturing agreement with Vivex for Dual, Matrix, and VIA products[101](index=101&type=chunk) - The company pays a **low double-digit royalty** on Net Sales of Dual and VIA, and a **high single-digit royalty** on Net Sales of Matrix, with the initial term expiring December 31, 2026, and renewable for up to five additional one-year terms[101](index=101&type=chunk) [Components of Our Condensed Consolidated Results of Operations](index=28&type=section&id=Components%20of%20Our%20Condensed%20Consolidated%20Results%20of%20Operations) - Net product revenue is derived from Advanced Wound Care and Surgical & Sports Medicine products, sold through direct sales representatives and third-party agencies, respectively[103](index=103&type=chunk) - Grant income is recognized through 2027, offsetting expenses related to the Smithfield Facility[106](index=106&type=chunk) - Cost of goods sold includes personnel, testing, quality assurance, raw materials, manufacturing, and facility costs, affected by sales units and product mix[107](index=107&type=chunk) - Selling, general and administrative expenses are expected to increase due to investments in market development and sales force expansion[109](index=109&type=chunk) - Impairment and write-down expenses include adjustments for assets held for sale and write-downs of capitalized internal-use software costs[111](index=111&type=chunk) [Results of Operations](index=31&type=section&id=Results%20of%20Operations) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $101,005 | $130,234 | $187,698 | $240,210 | | Total Operating Expenses | $113,581 | $144,126 | $227,020 | $257,954 | | Loss from Operations | $(12,576) | $(13,892) | $(39,322) | $(17,744) | | Net Loss and Comprehensive Loss | $(9,392) | $(17,043) | $(28,235) | $(19,143) | [EBITDA and Adjusted EBITDA](index=31&type=section&id=EBITDA%20and%20Adjusted%20EBITDA) - Management uses Adjusted EBITDA as a non-GAAP financial measure to evaluate operating performance and trends, believing it provides useful information by excluding certain items[119](index=119&type=chunk) Reconciliation of Net Loss to EBITDA and Adjusted EBITDA | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Loss | $(9,392) | $(17,043) | $(28,235) | $(19,143) | | EBITDA | $(7,928) | $(9,720) | $(30,386) | $(9,576) | | Adjusted EBITDA | $(3,640) | $15,649 | $(16,164) | $18,200 | - **Adjusted EBITDA significantly decreased** to $(3,640) thousand for the three months ended June 30, 2025, from $15,649 thousand in the prior year, and to $(16,164) thousand for the six months ended June 30, 2025, from $18,200 thousand in the prior year[120](index=120&type=chunk) [Comparison of Three and Six Months Ended June 30, 2025 and 2024](index=32&type=section&id=Comparison%20of%20Three%20and%20Six%20Months%20Ended%20June%2030,%202025%20and%202024) Net Product Revenue by Category | Revenue Category (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Advanced Wound Care | $92,696 | $123,237 | $(30,541) | (25%) | | Surgical & Sports Medicine | $8,083 | $6,997 | $1,086 | 16% | | Net Product Revenue | $100,779 | $130,234 | $(29,455) | (23%) | - Advanced Wound Care net product revenue decreased by **25% and 24%** for the three and six months ended June 30, 2025, respectively, primarily due to increased ambiguity and disruption from delayed LCD implementation[121](index=121&type=chunk) - Surgical & Sports Medicine net product revenue increased by **16% and 13%** for the three and six months ended June 30, 2025, respectively, driven by increased customer buying patterns[123](index=123&type=chunk) - Cost of goods sold decreased by **5% and 11%** for the three and six months ended June 30, 2025, respectively, primarily due to decreased sales volume and a shift in product mix[124](index=124&type=chunk) - Gross profit decreased by **28% and 25%** for the three and six months ended June 30, 2025, respectively, with gross profit as a percentage of revenue also decreasing due to product mix shift[125](index=125&type=chunk) - Research and development expenses decreased by **33% and 26%** for the three and six months ended June 30, 2025, respectively, mainly due to reduced clinical research and trial expenses[126](index=126&type=chunk) - Selling, general and administrative expenses decreased by **4% and 2%** for the three and six months ended June 30, 2025, respectively, primarily due to lower commissions and royalty expense from decreased sales[127](index=127&type=chunk)[128](index=128&type=chunk) - The company recorded a **$1.7 million and $8.3 million write-down** for assets held for sale during the three and six months ended June 30, 2025, respectively[129](index=129&type=chunk) - Other income (expense), net, improved by **$1.4 million and $2.8 million** for the three and six months ended June 30, 2025, respectively, primarily due to interest income from interest-bearing sweep accounts[130](index=130&type=chunk) - Income tax expense shifted to a benefit of **$2.4 million and $9.4 million** for the three and six months ended June 30, 2025, respectively, driven by a higher estimated effective tax rate and R&D tax credits[131](index=131&type=chunk)[132](index=132&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) - As of June 30, 2025, the company had working capital of **$189.1 million** and **$73.1 million** in cash and cash equivalents[133](index=133&type=chunk) - Management expects current cash, working capital, and net cash flows from product sales to fund operating expenses, capital expenditures, and debt service for at least 12 months[133](index=133&type=chunk) - Primary uses of cash include working capital, capital expenditures (e.g., Smithfield facility build-out), and debt service payments[134](index=134&type=chunk) - Net cash used in operating activities was **$(52.8) million** for the six months ended June 30, 2025, a significant increase from $(5.4) million in the prior year[136](index=136&type=chunk)[137](index=137&type=chunk) - Net cash used in investing activities was **$(7.3) million** for the six months ended June 30, 2025, primarily for capital expenditures[136](index=136&type=chunk)[139](index=139&type=chunk) - Net cash used in financing activities was **$(2.3) million** for the six months ended June 30, 2025, mainly for finance lease obligations and stock award payments[136](index=136&type=chunk)[140](index=140&type=chunk) - The company had **no outstanding borrowings** under its Term Loan Facility or Revolving Facility as of June 30, 2025, following prepayment of the Term Loan in November 2024[147](index=147&type=chunk) - An August 2025 amendment to the 2021 Credit Agreement waived the Consolidated Fixed Charge Coverage Ratio covenant for Q2 2025, but requires new financial covenants by September 30, 2025, or it will constitute an **event of default**[142](index=142&type=chunk) [Critical Accounting Policies and Significant Judgments and Estimates](index=40&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) - The preparation of financial statements requires management to make estimates, assumptions, and judgments that affect reported amounts, with significant uncertainty in income tax assets/liabilities and long-lived asset recoverability[148](index=148&type=chunk) [Off-Balance Sheet Arrangements](index=40&type=section&id=Off-Balance%20Sheet%20Arrangements) - The company did not have any off-balance sheet arrangements during the periods presented[149](index=149&type=chunk) [Recently Issued Accounting Pronouncements](index=40&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) - The company has reviewed recently issued accounting standards as disclosed in Note 2, Summary of Significant Accounting Policies[150](index=150&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states there were no material changes to the company's market risk disclosures during the six months ended June 30, 2025 - No material changes to market risk disclosures occurred during the six months ended June 30, 2025[151](index=151&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of disclosure controls and procedures and reports no material changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=40&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - Management concluded that disclosure controls and procedures were **effective** as of June 30, 2025[152](index=152&type=chunk) [Changes in Internal Control Over Financial Reporting](index=40&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) - **No material changes** in internal controls over financial reporting occurred during the quarter ended June 30, 2025[153](index=153&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) This section notes the dismissal of a False Claims Act complaint and confirms no other material legal proceedings are currently active - A False Claims Act complaint filed against the company was **dismissed without prejudice** on May 19, 2025, with consent from the United States and the State of Texas[154](index=154&type=chunk)[155](index=155&type=chunk) - The company is not a party to any other material legal proceedings and believes that the resolution of current claims would not have a material adverse effect on its financial position, operating results, or cash flows[156](index=156&type=chunk) [Item 1A. Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) This section highlights new material risks related to proposed Medicare coverage policy changes and their potential adverse impact on the business - New proposed LCDs, if implemented, could classify over 200 of the company's products as **'non-covered'** for DFU and VLU treatments, potentially having a material adverse effect on utilization and revenue[158](index=158&type=chunk) - CMS proposed rules for Medicare payments under the PFS and OPPS, effective January 1, 2026, could materially impact product utilization, business, and revenue by changing payment structures and aligning categorization with FDA regulatory status[159](index=159&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section states there were no unregistered sales of equity securities or use of proceeds during the reporting period - No unregistered sales of equity securities or use of proceeds occurred[160](index=160&type=chunk) [Item 3. Defaults Upon Senior Securities](index=31&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section confirms that there were no defaults upon senior securities during the reporting period - No defaults upon senior securities occurred[161](index=161&type=chunk) [Item 4. Mine Safety Disclosures](index=31&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable[162](index=162&type=chunk) [Item 5. Other Information](index=31&type=section&id=Item%205.%20Other%20Information) This section reports no director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[163](index=163&type=chunk) [Item 6. Exhibits](index=32&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including organizational documents, certifications, and XBRL-related documents - The report includes various exhibits such as Certificate of Incorporation, Bylaws, Certificate of Designations of Series A Convertible Preferred Stock, and certifications from principal executive and financial officers[164](index=164&type=chunk) SIGNATURES [SIGNATURES](index=46&type=section&id=SIGNATURES) This section contains the formal signatures confirming the submission of the Quarterly Report on Form 10-Q on August 7, 2025 - The report was signed by David Francisco, Chief Financial Officer (Principal Financial and Accounting Officer), on behalf of Organogenesis Holdings Inc. on August 7, 2025[168](index=168&type=chunk)