MiMedx(MDXG) - 2025 Q2 - Quarterly Report

Part I - FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Unaudited condensed consolidated financial statements for Q2 2025 and 2024, detailing balance sheets, operations, equity, cash flows, and notes Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (in thousands) | ASSETS (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Cash and cash equivalents | $118,869 | $104,416 | | Accounts receivable, net | $69,228 | $55,828 | | Inventory | $24,890 | $23,807 | | Total current assets | $220,876 | $191,886 | | Total assets | $291,109 | $263,915 | | LIABILITIES AND STOCKHOLDERS' EQUITY (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Total current liabilities | $50,290 | $45,595 | | Total liabilities | $74,485 | $70,808 | | Total stockholders' equity | $216,624 | $193,107 | | Total liabilities and stockholders' equity | $291,109 | $263,915 | - Total assets increased by $27.194 million from December 31, 2024, to June 30, 2025, primarily driven by an increase in cash and cash equivalents and accounts receivable[16] Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Operations (in thousands, except share and per share data) | (in thousands, except share and per share data) | 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 sales | $98,605 | $87,207 | $186,810 | $171,915 | | Gross profit | $79,924 | $72,352 | $151,571 | $144,074 | | Operating income | $12,370 | $23,450 | $20,620 | $36,649 | | Net income | $9,618 | $17,625 | $16,639 | $26,886 | | Basic net income per common share | $0.07 | $0.12 | $0.11 | $0.18 | | Diluted net income per common share | $0.06 | $0.12 | $0.11 | $0.18 | - Net sales increased by 13.1% for the three months ended June 30, 2025, and by 8.7% for the six months ended June 30, 2025. However, net income from continuing operations decreased by 45.4% and 37.6% for the three and six months ended June 30, 2025, respectively, primarily due to the absence of a significant investigation, restatement, and related benefit recognized in the prior year[18][73][84] Condensed Consolidated Statements of Stockholders' Equity Condensed Consolidated Statements of Stockholders' Equity (in thousands, except share data) | (in thousands, except share data) | Balance at Dec 31, 2024 | Share-based compensation | Net Income | Balance at June 30, 2025 | | :-------------------------------- | :---------------------- | :----------------------- | :--------- | :----------------------- | | Common Stock Issued (Shares) | 146,932,032 | - | - | 147,924,862 | | Common Stock Issued (Amount) | $147 | - | - | $148 | | Additional Paid-In Capital | $284,219 | $9,014 | - | $291,096 | | Accumulated Deficit | $(91,259) | - | $16,639 | $(74,620) | | Total Stockholders' Equity | $193,107 | $9,014 | $16,639 | $216,624 | - Total stockholders' equity increased from $193.1 million at December 31, 2024, to $216.6 million at June 30, 2025, driven by net income and share-based compensation[19] Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (in thousands) | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------- | :----------------------------- | :----------------------------- | | Operating Activities | $19,718 | $27,792 | | Investing Activities | $(1,293) | $(6,929) | | Financing Activities | $(3,972) | $(33,826) |\n| Net change in cash | $14,453 | $(12,963) | | Cash and cash equivalents, end of period | $118,869 | $69,037 | - Net cash provided by operating activities decreased to $19.7 million for the six months ended June 30, 2025, from $27.8 million in the prior year. Net cash used in investing activities significantly decreased due to lower acquisition payments. Net cash used in financing activities also decreased substantially, primarily due to the absence of large debt repayments seen in the prior year[23][95][96][97] Notes to the Condensed Consolidated Financial Statements 1. Nature of Business - MiMedx Group, Inc. is a pioneer in healing solutions, focusing on wound care, burn, and surgical sectors with FDA-regulated products. The company's primary market is the United States, with an emerging international presence, including Japan[24][25] 2. Significant Accounting Policies - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP for interim financial information. Management's estimates are crucial, affecting reported amounts of assets, liabilities, and operations, with actual results potentially differing[27][30] - The company is evaluating the impact of recently issued accounting standards, ASU 2023-09 (Income Taxes) and ASU 2024-04 (Expense Disaggregation Disclosures), which require additional disclosures and disaggregation of certain income statement expenses, respectively[31][32] 3. Accounts Receivable, Net Accounts Receivable, Net (in thousands) | (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------ | :------------ | :---------------- | | Accounts receivable, gross | $73,172 | $58,960 | | Less: allowance for doubtful accounts | $(3,944) | $(3,132) | | Accounts receivable, net | $69,228 | $55,828 | - Accounts receivable, net, increased by $13.4 million from December 31, 2024, to June 30, 2025, with a corresponding increase in the allowance for doubtful accounts[34] 4. Inventory Inventory (in thousands) | (in thousands) | June 30, 2025 | December 31, 2024 | | :------------- | :------------ | :---------------- | | Raw materials | $1,080 | $1,010 | | Work in process | $4,517 | $8,580 | | Finished goods | $19,293 | $14,217 | | Total Inventory | $24,890 | $23,807 | - Total inventory increased by approximately $1.08 million from December 31, 2024, to June 30, 2025, primarily due to a significant increase in finished goods, while work in process decreased[35] 5. Property and Equipment, Net Property and Equipment, Net (in thousands) | (in thousands) | June 30, 2025 | December 31, 2024 | | :------------- | :------------ | :---------------- | | Property and equipment, gross | $27,823 | $27,266 | | Less: accumulated depreciation and amortization | $(22,433) | $(21,322) | | Property and equipment, net | $5,390 | $5,944 | - Net property and equipment decreased by $0.554 million from December 31, 2024, to June 30, 2025, primarily due to increased accumulated depreciation[36] 6. Intangible Assets, Net Intangible Assets, Net (in thousands) | (in thousands) | June 30, 2025 Net Carrying Amount | December 31, 2024 Net Carrying Amount | | :------------------------ | :-------------------------------- | :------------------------------------ | | Patents and know-how | $1,913 | $1,832 | | Licenses | $871 | $896 | | Customer and supplier relationships | $5,747 | $6,512 | | Tradenames and trademarks | $2,416 | $1,087 | | Total amortized intangible assets | $10,947 | $10,327 | | Unamortized intangible assets | $1,081 | $1,299 | | Total intangible assets | $12,028 | $11,626 | - Total intangible assets, net, increased by $0.402 million from December 31, 2024, to June 30, 2025. The company expects $3.394 million in amortization expense for the remainder of 2025[37][38] 7. Accrued Expenses Accrued Expenses (in thousands) | (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------ | :------------ | :---------------- | | Commissions to sales agents | $4,192 | $3,843 | | Accrued rebates | $1,728 | $1,223 | | Estimated sales returns | $1,767 | $1,990 | | Legal costs | $1,969 | $459 | | Accrued inventory receipts | $3,730 | $871 | | Total Accrued expenses | $15,105 | $9,012 | - Accrued expenses increased significantly by $6.093 million from December 31, 2024, to June 30, 2025, primarily driven by increases in legal costs and accrued inventory receipts[39] 8. Long Term Debt, Net - The company has a Citizens Credit Agreement, including a $20.0 million Term Loan Facility and a $30.0 million Revolving Credit Facility. As of June 30, 2025, $18.5 million principal is outstanding on the Term Loan Facility at a 6.7% interest rate, with no outstanding borrowings on the Revolving Credit Facility[40][41][101] Long Term Debt, Net (in thousands) | (in thousands) | June 30, 2025 | December 31, 2024 | | :------------- | :------------ | :---------------- | | Current portion of long term debt | $1,250 | $1,000 | | Long term debt, net | $17,211 | $17,830 | | Total Outstanding principal | $18,500 | $19,000 | - Interest expense for the Term Loan Facility was $416 thousand for the three months ended June 30, 2025, and $838 thousand for the six months ended June 30, 2025[43] 9. Net Income Per Common Share Net Income Per Common Share (in thousands, except share and per share amounts) | (in thousands, except share and per share amounts) | 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 income from continuing operations | $9,618 | $17,621 | $16,639 | $26,682 | | Basic net income per common share | $0.07 | $0.12 | $0.11 | $0.18 | | Diluted net income per common share | $0.06 | $0.12 | $0.11 | $0.18 | - Basic and diluted net income per common share from continuing operations decreased significantly year-over-year for both the three and six months ended June 30, 2025, primarily due to lower net income[46][47] 10. Income Taxes Effective Tax Rate | Effective Tax Rate | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :----------------- | :------------------------------- | :------------------------------- | | Continuing operations | 26.1% | 24.1% | | Effective Tax Rate | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------- | :----------------------------- | :----------------------------- | | Continuing operations | 23.0% | 22.9% | - The effective tax rates were favorably impacted by restricted stock vestings but unfavorably impacted by deduction limitations on executive officer compensation. The company is evaluating the impact of the recently enacted "One Big Beautiful Bill Act" on its tax liability, which includes changes to R&D capitalization, interest expense deductions, and accelerated depreciation[49][50] 11. Supplemental Disclosure of Cash Flow and Non-cash Investing and Financing Activities Supplemental Disclosure of Cash Flow and Non-cash Investing and Financing Activities (in thousands) | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------- | :----------------------------- | :----------------------------- | | Cash paid for interest | $707 | $1,853 | | Cash paid for income taxes | $4,083 | $1,979 | | Non-cash activities: | | | | Issuance of shares pursuant to employee stock purchase plan | $848 | $797 | | Unpaid acquisition consideration in accrued expenses | $2,564 | — | | Fair value shares received in settlement of litigation | — | $9,300 | - Cash paid for interest decreased significantly in 2025, while cash paid for income taxes more than doubled. Non-cash activities in 2025 included $2.564 million in unpaid acquisition consideration[51] 12. Commitments and Contingencies - The company has a remaining obligation of $2.4 million in Profit Share Payments to TELA Bio, Inc. as of June 30, 2025, based on net sales of a xenograft product[52] - On June 30, 2025, MiMedx entered into a $2.0 million convertible note purchase agreement with Vaporox, Inc., funded on July 1, 2025[54] - The company is involved in ongoing litigation with the FDA regarding the classification of its AXIOFILL product, strongly disagreeing with the FDA's determination[56][57] 13. Revenue Revenue by Product Category (in thousands) | (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 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Wound | $64,476 | $57,547 | $120,549 | $114,595 | | Surgical | $34,129 | $29,660 | $66,261 | $57,320 | | Total | $98,605 | $87,207 | $186,810 | $171,915 | - Net sales increased by 13.1% for the three months ended June 30, 2025, and by 8.7% for the six months ended June 30, 2025. Wound product sales grew by 12.0% (3 months) and 5.2% (6 months), driven by newer products CELERA and EMERGE. Surgical product sales grew by 15.1% (3 months) and 15.6% (6 months), primarily from AMNIOFIX, AMNIOEFFECT, and HELIOGEN[59][76][85][86] 14. Segment Information - The company operates as a single operating segment, with the CEO serving as the Chief Operating Decision Maker (CODM). The CODM assesses performance using net income and adjusted EBITDA, evaluating actual results against budgets and forecasts to inform strategic investments[60][61] Selling, General and Administrative Expenses (in thousands) | (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 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Selling and marketing | $47,867 | $41,725 | $94,728 | $86,203 | | General and administrative | $16,284 | $13,676 | $29,392 | $24,327 | | Selling, general and administrative | $64,151 | $55,401 | $124,120 | $110,530 | 15. Acquisitions - During 2024 and the first six months of 2025, MiMedx acquired trademarks associated with CELERA and EMERGE, capitalizing payments as part of the acquired assets, including future contingent payments[65] 16. Discontinued Operations - In Q2 2023, the company disbanded its Regenerative Medicine segment and suspended its Knee Osteoarthritis clinical trial, shifting focus to its commercial pipeline. Material run-off operations ceased in Q4 2023, leading to classification as a discontinued operation[66][67] Income from Discontinued Operations (in thousands) | (in thousands) | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | | :------------- | :------------------------------- | :----------------------------- | | Selling, general and administrative expense | $(4) | $(4) | | Research and development expense | — | $(200) | | Income from discontinued operations | $(4) | $(204) | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Analyzes MiMedx's Q2 and H1 2025 financial performance, covering sales, expenses, profitability, liquidity, capital, and regulatory impacts Executive Summary - For Q2 2025, net sales reached $99 million, a 13% increase year-over-year, with Wound products growing 12% to $64 million and Surgical products growing 15% to $34 million[69][75] - GAAP net income for Q2 2025 was $10 million, with a 10% net income margin. The cash balance increased to $119 million, up $12 million sequentially and $50 million year-over-year[75] - CMS proposed a consistent payment approach for skin substitutes at $125.38 per square centimeter across private office and HOPD settings, effective January 1, 2026, which could significantly impact the industry and MiMedx[70] Overview - MiMedx is a leader in healing solutions, providing products for wound care, burn, and surgical sectors, all regulated by the FDA and produced under Current Good Tissue Practices (CGTP) with terminal sterilization[71] Results of Operations Three Months Ended June 30, 2025 Compared to the Three Months Ended June 30, 2024 Financial Performance for Three Months Ended June 30 (in thousands) | (in thousands) | 2025 | 2024 | $ Change | % Change | | :------------- | :---------- | :---------- | :---------- | :------- | | Net sales | $98,605 | $87,207 | $11,398 | 13.1 % | | Gross profit | $79,924 | $72,352 | $7,572 | 10.5 % | | Operating income | $12,370 | $23,450 | $(11,080) | (47.2)% | | Net income from continuing operations | $9,618 | $17,621 | $(8,003) | (45.4)% | - Net sales increased by 13.1% to $98.6 million, driven by growth in both Wound (12.0%) and Surgical (15.1%) products. Gross profit margin decreased from 83.0% to 81.1% due to production variances, product mix, and amortization of acquired intangible assets[74][76][77] - Selling, General and Administrative (SG&A) expenses increased by 15.8% to $64.2 million, primarily due to higher sales commissions and increased legal and regulatory dispute costs. Research and Development (R&D) expenses rose by 9.7% to $3.3 million, supporting the EPIEFFECT clinical trial and future product development[78][79] - Operating income decreased by 47.2% and net income from continuing operations decreased by 45.4%, largely due to the absence of a $9.7 million investigation, restatement, and related benefit recognized in the prior year[73][80] Six Months Ended June 30, 2025 Compared to the Six Months Ended June 30, 2024 Financial Performance for Six Months Ended June 30 (in thousands) | (in thousands) | 2025 | 2024 | $ Change | % Change | | :------------- | :---------- | :---------- | :---------- | :------- | | Net sales | $186,810 | $171,915 | $14,895 | 8.7 % | | Gross profit | $151,571 | $144,074 | $7,497 | 5.2 % | | Operating income | $20,620 | $36,649 | $(16,029) | (43.7)% | | Net income from continuing operations | $16,639 | $26,682 | $(10,043) | (37.6)% | - Net sales increased by 8.7% to $186.8 million, with Wound product sales up 5.2% and Surgical product sales up 15.6%. Gross profit margin decreased from 83.8% to 81.1% due to increased sales volume, production variances, product mix, and amortization of intangible assets[85][86][87] - SG&A expenses increased by 12.3% to $124.1 million, driven by higher sales commissions and increased legal/regulatory dispute costs. R&D expenses increased by 13.3% to $6.6 million, supporting the EPIEFFECT clinical trial and pipeline development[88][89] - Operating income decreased by 43.7% and net income from continuing operations decreased by 37.6%, primarily due to the absence of a $9.4 million investigation, restatement, and related benefit from the prior year[84][90] - Interest income, net, improved significantly from an expense of $1.7 million in 2024 to income of $1.2 million in 2025, driven by decreased outstanding debt, lower interest rates, increased cash balances, and the absence of a $1.4 million loss on extinguishment of debt from the prior year[93] Discussion of Cash Flows - Net cash provided by operating activities from continuing operations decreased to $19.7 million for the six months ended June 30, 2025, from $27.8 million in the prior year, primarily due to greater expenses[95] - Net cash used for investing activities decreased significantly to $1.3 million from $6.9 million, mainly due to lower cash paid for acquisitions ($0.7 million in 2025 vs. $5.0 million in 2024)[96] - Net cash used for financing activities decreased to $4.0 million from $33.8 million, primarily because the prior year included a $30.0 million repayment of the Revolving Credit Facility, with 2025 activity mainly related to tax withholdings on restricted stock vestings[97] Liquidity and Capital Resources - As of June 30, 2025, MiMedx had $118.9 million in cash and cash equivalents, $220.9 million in total current assets, and $50.3 million in total current liabilities, resulting in a strong current ratio of 4.4[99] - The company has $18.5 million of long-term debt outstanding and $75 million available under its Revolving Credit Facility. Management believes existing cash, operating activities, and available credit will meet operational liquidity needs for the next twelve months[99][100][101] Citizens Credit Agreement - The Citizens Credit Agreement, established in January 2024, includes a $20 million Term Loan Facility and a $30 million Revolving Credit Facility. As of June 30, 2025, $18.5 million principal is outstanding on the Term Loan Facility at 6.7% interest, with no borrowings on the Revolving Credit Facility[101] - Borrowings bear interest at a rate per annum equal to the Alternate Base Rate or Term SOFR plus an applicable margin ranging from 1.25% to 3.50%[102] Contractual Obligations - There were no significant changes to the company's contractual obligations during the six months ended June 30, 2025, compared to those disclosed in the 2024 Form 10-K[104] Critical Accounting Estimates - No new critical accounting estimates were applied in the preparation of this Form 10-Q; a summary of critical accounting estimates was previously provided in the 2024 Form 10-K[105] Recent Accounting Pronouncements - Information regarding the effect of recent accounting pronouncements is detailed in Note 2, Significant Accounting Policies, within the unaudited condensed consolidated financial statements[106] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is exposed to interest rate risks but does not hedge against them. There have been no material changes to market risk disclosures since the 2024 Form 10-K - The company is exposed to risks from changes in interest rates but does not engage in hedging activities to mitigate this risk[107] - No material changes in market risk have occurred since the disclosures in the 2024 Form 10-K[107] Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025. There were no material changes in internal control over financial reporting during the quarter - Management, with CEO and CFO participation, evaluated and concluded that disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025[108] - No material changes in internal control over financial reporting occurred during the fiscal quarter ended June 30, 2025[109] Part II – OTHER INFORMATION Item 1. Legal Proceedings The company is involved in various legal claims and lawsuits arising in the ordinary course of business, some involving substantial amounts, with uncertain ultimate outcomes - The company is a party to numerous pending and threatened legal, regulatory, and governmental actions and proceedings, some involving substantial claims, with unpredictable outcomes[111] Item 1A. Risk Factors There have been no material changes to the company's risk factors as previously disclosed in its 2024 Form 10-K - No material changes to the Company's risk factors have occurred since those included in its 2024 Form 10-K[112] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities or use of proceeds to report during the period - No unregistered sales of equity securities or use of proceeds occurred during the reporting period[113] Item 3. Defaults upon Senior Securities This item is not applicable for the current reporting period - This item is not applicable[114] Item 4. Mine Safety Disclosures This item is not applicable for the current reporting period - This item is not applicable[115] Item 5. Other Information 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 - No director or officer adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the three months ended June 30, 2025[116] Item 6. Exhibits This section lists the exhibits filed or furnished with the Form 10-Q, including certifications from the CEO and CFO, and XBRL taxonomy documents Exhibits Filed with Form 10-Q | Exhibit Number | Description | | :------------- | :----------------------------------------------------------------------- | | 31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | | 31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | | 32.1 | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | | 32.2 | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | | 101.INS | XBRL Instance Document | | 101.SCH | XBRL Taxonomy Extension Schema Document | | 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | | 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | | 101.LAB | XBRL Taxonomy Extension Label Linkbase Document | | 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |