AZIYO BIOLOGICS(AZYO) - 2025 Q2 - Quarterly Report

Financial Performance - For the three months ended June 30, 2025, net sales were $6,263,000, a slight decrease of 0.4% compared to $6,291,000 for the same period in 2024[29]. - Gross profit for the six months ended June 30, 2025, was $5,515,000, compared to $5,642,000 for the same period in 2024, reflecting a decrease of 2.3%[29]. - The net loss for the three months ended June 30, 2025, was $9,610,000, significantly improved from a net loss of $28,180,000 for the same period in 2024[29]. - For the six months ended June 30, 2025, the company reported a net loss of $13.5 million, a significant improvement from a net loss of $46.2 million in the same period of 2024, representing a reduction of approximately 70.8%[34]. - The net loss from continuing operations for the three months ended June 30, 2025, was $9,610 million, compared to a loss of $28.360 million for the same period in 2024[136]. Cash Flow and Liquidity - The company used $17.1 million in cash for operating activities during the first half of 2025, compared to $7.0 million in the same period of 2024, indicating increased cash outflows[34]. - Cash and cash equivalents at the end of the period were $8.5 million, down from $18.2 million at the end of June 2024, reflecting a decrease of 53.3%[34]. - The company anticipates continued losses in the foreseeable future, impacting its financial position and profitability[204]. - The company may seek to raise capital through equity or debt securities to address liquidity issues, with substantial doubt about its ability to continue as a going concern within one year after the issuance of the financial statements[205]. Assets and Liabilities - Total current assets decreased to $22,280,000 as of June 30, 2025, down from $26,172,000 as of December 31, 2024, representing a decline of 15%[27]. - Total liabilities increased to $75,692,000 as of June 30, 2025, compared to $82,387,000 as of December 31, 2024, indicating a reduction of 8.1%[27]. - The accumulated deficit increased to $243,136,000 as of June 30, 2025, from $229,593,000 as of December 31, 2024[27]. - The total stockholders' deficit improved to $41,843,000 as of June 30, 2025, compared to $46,260,000 as of December 31, 2024[27]. Research and Development - Research and development expenses for the three months ended June 30, 2025, were $1,456,000, an increase of 45.5% compared to $1,001,000 for the same period in 2024[29]. - R&D expenses increased to $2.4 million for the six months ended June 30, 2025, reflecting heightened development activity, including expanding the EluPro offering[191]. Stock and Compensation - The company reported stock-based compensation expenses of $2.4 million for the six months ended June 30, 2025, down from $4.9 million in the same period of 2024[34]. - The Company has approximately $2.5 million of total unrecognized compensation expense related to unvested stock options, expected to be recognized over a weighted-average period of 1.4 years[84]. - The Company had 1,167,991 unvested Restricted Stock Units (RSUs) as of June 30, 2025, with a weighted average fair value of $3.45 per share[88]. Litigation and Legal Matters - The Company has 47 active lawsuits related to FiberCel, with settlements reached in 34 cases but not yet paid as of June 30, 2025[123]. - Elutia has settled liabilities in 63 cases of the FiberCel Litigation for a total cash outlay of $21.5 million, with $9.6 million covered by insurance proceeds[127]. - The estimated probable loss for the remaining 47 FiberCel cases is $13.3 million, which includes $11.1 million for settlements reached but not yet paid[128]. Sales and Market Segments - The Company operates in three segments: Device Protection, Women's Health, and Cardiovascular, following the divestiture of the Orthobiologics Business in 2023[139]. - Device Protection sales increased by $0.9 million to $3.516 million, representing a growth of 33.2%, while Women's Health and Cardiovascular sales declined by 21.8% and 31.9%, respectively[175]. - The company anticipates future growth in Cardiovascular sales through volume growth and higher unit prices following the termination of the exclusive distribution agreement[176]. Debt and Financing - The company raised approximately $15.0 million in gross proceeds from the 2025 Registered Offering, selling 5,520,000 shares of Class A common stock at $2.50 per share[109][110]. - The SWK Loan Facility matures on August 10, 2027, with principal payments commencing on November 15, 2025, at a rate of 5% of the outstanding principal[217]. - The company entered into an amendment to the SWK Loan Facility in May 2025, allowing for 100% of the interest payment to be paid as PIK interest and fixing the Liquidity Covenant to a minimum of $8.0 million[220].