PART I – FINANCIAL INFORMATION Item 1. Financial Statements The unaudited financial statements show a net loss of $13.5 million for H1 2025 and a significant 'going concern' uncertainty Condensed Consolidated Balance Sheets The balance sheet as of June 30, 2025, shows total assets of $33.8 million and a stockholders' deficit of $41.8 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $8,500 | $13,239 | | Total current assets | $22,280 | $26,172 | | Total assets | $33,849 | $36,127 | | Total current liabilities | $37,948 | $37,795 | | Total liabilities | $75,692 | $82,387 | | Total stockholders' deficit | $(41,843) | $(46,260) | Condensed Consolidated Statements of Operations The company reported a net loss of $13.5 million for H1 2025, an improvement from $46.2 million in H1 2024 due to warrant liability revaluation Q2 Statement of Operations Highlights (in thousands) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net sales | $6,263 | $6,291 | | Gross profit | $3,058 | $2,799 | | Loss from operations | $(9,875) | $(8,510) | | (Gain) loss on revaluation of warrant liability | $(2,233) | $18,337 | | Net loss from continuing operations | $(9,610) | $(28,360) | Six-Month Statement of Operations Highlights (in thousands) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net sales | $12,293 | $12,985 | | Gross profit | $5,515 | $5,642 | | Loss from operations | $(17,797) | $(16,989) | | (Gain) loss on revaluation of warrant liability | $(7,420) | $27,974 | | Net loss from continuing operations | $(13,543) | $(46,354) | Condensed Consolidated Statements of Cash Flows Cash used in operations increased to $17.1 million in H1 2025, leading to a net decrease in cash of $4.7 million Six-Month Cash Flow Summary (in thousands) | Cash Flow Activity | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(17,109) | $(6,973) | | Net cash provided by (used in) investing activities | $(392) | $167 | | Net cash provided by financing activities | $12,762 | $5,718 | | Net decrease in cash and cash equivalents | $(4,739) | $(1,088) | Notes to Condensed Consolidated Financial Statements Notes disclose substantial 'going concern' doubt, a $17.0 million contingent liability for product recalls, and debt amendments - The company has substantial doubt about its ability to continue as a going concern due to a net loss of $13.5 million and $17.1 million of cash used in operations for the six months ended June 30, 2025, along with an accumulated deficit of $243.1 million43 - The company has accrued a contingent liability of $17.0 million for legal proceedings as of June 30, 2025, related to the FiberCel and VBM product recalls27127129 - In May 2025, the company amended its SWK Loan Facility to, among other things, fix the minimum liquidity covenant at $8.0 million and allow the May 2025 interest payment to be paid-in-kind (PIK)99 Net Sales by Segment - Q2 2025 (in thousands) | Segment | Net Sales | | :--- | :--- | | Device Protection | $3,516 | | Women's Health | $2,011 | | Cardiovascular | $736 | | Total | $6,263 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the EluPro launch driving Device Protection sales, offset by declines in other segments and ongoing liquidity challenges Overview The company focuses on Device Protection and Women's Health markets, with success highly dependent on the new EluPro product - The company's mission is to reduce complications associated with implanted medical devices, focusing on Device Protection and Women's Health markets148150 - The company's success is highly dependent on the successful commercialization, marketing, and sale of its EluPro product, which was cleared by the FDA in June 2024159 - The company divested its Orthobiologics Business in November 2023 but retained liabilities from the FiberCel and VBM product recalls, which are subject to ongoing litigation160162163 Results of Operations Q2 2025 net sales were flat as Device Protection growth was offset by declines elsewhere, while litigation costs rose significantly Net Sales by Segment: Q2 2025 vs Q2 2024 (in thousands) | Segment | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Device Protection | $3,516 | $2,639 | $877 | 33.2% | | Women's Health | $2,011 | $2,571 | $(560) | (21.8)% | | Cardiovascular | $736 | $1,081 | $(345) | (31.9)% | | Total Net Sales | $6,263 | $6,291 | $(28) | (0.4)% | - Gross margin, excluding intangible asset amortization, improved to 62.4% in Q2 2025 from 58.0% in Q2 2024, primarily due to production efficiencies in the Device Protection segment177 - Litigation costs increased to $4.0 million in Q2 2025 from $2.3 million in Q2 2024, as the company has no more insurance to cover the cost of the FiberCel Litigation182 Liquidity and Capital Resources The company faces significant liquidity concerns with only $8.5 million in cash and substantial doubt about its 'going concern' status - As of June 30, 2025, the company had cash of $8.5 million and an accumulated deficit of $243.1 million199 - The company raised gross proceeds of approximately $15.0 million in a registered direct offering in February 2025 and $13.3 million in June 2024 to fund operations200201 - Management has substantial doubt about the company's ability to continue as a going concern due to expected continued losses and uncertainty about its ability to raise sufficient capital205227 - The company has $24.3 million of indebtedness outstanding as of June 30, 2025, primarily under its SWK Loan Facility, with principal payments scheduled to begin in November 2025212 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks are interest rate fluctuations on its variable-rate debt and credit risk from cash deposits - The company's main market risk is interest rate risk from its variable-rate SWK Loan Facility235 - Credit risk exists as cash balances are maintained at two financial institutions and may exceed federally insured limits236 Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period - Management concluded that disclosure controls and procedures were effective as of June 30, 2025241 - No material changes to internal control over financial reporting occurred during the six months ended June 30, 2025242 PART II – OTHER INFORMATION Item 1. Legal Proceedings This section refers to Note 9 of the financial statements for details on legal proceedings related to product recalls - For information about legal proceedings, the report refers to Note 9 of the condensed consolidated financial statements244 Item 1A. Risk Factors No material changes to the company's previously disclosed risk factors were reported during the period - There have been no material changes in risk factors from those included in the company's Annual Report245 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company did not conduct any unregistered sales of equity securities during the reporting period - None246 Item 5. Other Information No directors or officers adopted or terminated Rule 10b5-1 trading plans during the six-month period - No directors or officers adopted or terminated any Rule 10b5-1 trading plans during the six-month period250 Item 6. Exhibits This section lists all exhibits filed with the report, including credit agreement amendments and officer certifications - Lists various agreements and certifications filed as exhibits, such as amendments to the Royalty Agreement with Ligand and the Credit Agreement with SWK Funding251252253
Elutia(ELUT) - 2025 Q2 - Quarterly Report