Artivion Inc.

05/08/2026 | Press release | Distributed by Public on 05/08/2026 08:57

Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.
Overview
Artivion, Inc. ("Artivion," the "Company," "we," or "us"), is a leader in the manufacturing, processing, and distribution of medical devices and implantable human tissues used in cardiac and vascular surgical procedures for patients with aortic disease. We have four major product families: aortic stent grafts, On-X® mechanical heart valves and related surgical products ("On-X" products), surgical sealants, and implantable cardiac and vascular human tissues. Aortic stent grafts include aortic arch stent grafts, abdominal stent grafts, and synthetic vascular grafts. Aortic arch stent grafts include our E-vita® Open NEO, E-vita Open Plus, Arcevo LSA, AMDSTM, the NEXUS ONETM, NEXUS DUOTM, and NEXUS TRETM aortic arch stent graft systems (the "NEXUS family of products"), and E-vita Thoracic 3G products. Abdominal stent grafts include our E-xtra Design Engineering, E-nsideTM, ArtivexTM, E-tegraTM, E-ventusTM BX, TuvaTM BX, and E-liacTM products. Surgical sealants include BioGlue Surgical Adhesive ("BioGlue") products. In addition to these four major product families, we sell or distribute PhotoFix bovine surgical patches ("PhotoFix"). We began to manufacture and supply PerClot® hemostatic powder ("PerClot") during the second quarter of 2023 (as part of our Transitional Manufacturing and Supply Agreement with Baxter International, Inc.).
We reported quarterly revenues of $116.3 million for the three months ended March 31, 2026, an 18% increase from the three months ended March 31, 2025. The increase in revenues for the three months ended March 31, 2026 was due to an increase in revenues from aortic stent grafts, preservation services, On-X products, and surgical sealants, partially offset by a decrease in revenues from other products. Constant currency revenues, as defined below, increased 12% for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025.
See the "Results of Operations" section below for additional analysis of the three months ended March 31, 2026.
Presentation
In addition to the corresponding measures under generally accepted accounting principles ("US GAAP"), management uses non-GAAP measures in reviewing and disclosing our financial results. The foreign exchange neutral revenues ("constant currency revenues") discussed below are non-GAAP financial measures and are not in accordance with, or an alternative to, measures prepared in accordance with US GAAP. Accordingly, the constant currency revenues appearing in the following discussion of our results of operations should be read in conjunction with the information provided in "Non-GAAP Measures of Financial Performance" below, which includes a reconciliation of constant currency financial measures to the most directly comparable US GAAP measure.
Results of Operations
($ in thousands)
Revenues
Revenues for the
Three Months Ended
March 31, 		Revenues as a Percentage of
Total Revenues for the
Three Months Ended
March 31,
2026 2025 Percent Change 2026 2025
Products:
Aortic stent grafts $ 44,397 $ 36,602 21% 38% 37%
On-X 25,951 21,574 20% 23% 22%
Surgical sealants 18,805 18,106 4% 16% 18%
Other 2,289 2,516 -9% 2% 3%
Total products 91,442 78,798 16% 79% 80%
Preservation services 24,895 20,180 23% 21% 20%
Total $ 116,337 $ 98,978 18% 100% 100%
Revenues increased 18% for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The increase in revenues for the three months ended March 31, 2026 was due to an increase in revenues from aortic stent grafts, preservation services, On-X products, and surgical sealants, partially offset by a decrease in revenues from other products.
The following table reconciles revenues to constant currency revenues for the periods presented:
Revenues for the
Three Months Ended
March 31, 		Percent
Change
From Prior
Year
2026 2025
US GAAP US GAAP Exchange Rate Effect Constant Currency Constant Currency
Products:
Aortic stent grafts $ 44,397 $ 36,602 $ 3,877 $ 40,479 10%
On-X 25,951 21,574 634 22,208 17%
Surgical sealants 18,805 18,106 749 18,855 -%
Other 2,289 2,516 25 2,541 -10%
Total products 91,442 78,798 5,285 84,083 9%
Preservation services 24,895 20,180 21 20,201 23%
Total $ 116,337 $ 98,978 $ 5,306 $ 104,284 12%
North America 58,695 47,793 86 47,879 23%
Europe, the Middle East, and Africa 43,986 37,045 4,681 41,726 5%
Asia Pacific 8,690 8,214 - 8,214 6%
Latin America 4,966 5,926 539 6,465 -23%
Total $ 116,337 $ 98,978 $ 5,306 $ 104,284 12%
A detailed discussion of the changes in product revenues and preservation services revenues for the three months ended March 31, 2026 is presented below.
Products
Revenues from products increased 16% for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The increase for the three months ended March 31, 2026 was due to an increase in revenues from aortic stent grafts, On-X products, and surgical sealants, partially offset by a decrease in revenues from other products. A discussion of the changes in product revenues for aortic stent grafts, On-X products, surgical sealants, and other product revenues is presented below.
Sales of certain products through our direct sales force and distributors across Europe and various other countries are denominated in a variety of currencies including Euros, Brazilian Reals, Polish Zlotys, British Pounds, Canadian Dollars, and Swiss Francs with a concentration denominated in Euros. Each currency is subject to exchange rate fluctuations. For the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, the US Dollar weakened in comparison to major currencies, resulting in revenue increases when these foreign currency denominated transactions were translated into US Dollars. Future changes in these exchange rates could have a material, adverse effect on our revenues denominated in these currencies. Additionally, our sales to many distributors around the world are denominated in US Dollars, and although these sales are not directly impacted by currency exchange rates, we believe that some of our distributors may delay or reduce purchases of products in US Dollars depending on the relative price of these goods in their local currencies.
Aortic Stent Grafts
Aortic stent grafts include aortic arch stent grafts, abdominal stent grafts, and synthetic vascular grafts, and original equipment manufacturing ("OEM") aortic stent graft products. Aortic arch stent grafts include our E-vita Open NEO, E-vita Open Plus, AMDS, the NEXUS family of products, and E-vita Thoracic 3G products. Abdominal stent grafts include our E-xtra Design Engineering, E-nside, Artivex, E-tegra, E-ventus BX, Tuva BX, and E-liac products. Aortic stent grafts are used in endovascular and open vascular surgery for the treatment of complex aortic arch, thoracic, and abdominal aortic diseases. Our aortic stent grafts are primarily distributed in international markets.
Revenues from the sales of aortic stent grafts increased 21% for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. This increase was primarily due to an increase in the volume of higher priced units sold, the effect of foreign exchange rates, as well as an increase in average sales prices.
Constant currency revenues from the sales of aortic stent grafts increased 10% for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. Revenues for the three months ended March 31, 2026 increased primarily in North America, and Europe, the Middle East, and Africa (collectively, "EMEA"), partially offset by a decrease in Asia Pacific ("APAC") and Latin America ("LATAM"). The revenue increase in North America for the three months ended March 31, 2026 was primarily due to an increase in sales of AMDS, reflecting increased adoption following the grant of a humanitarian device exemption ("HDE") by the FDA in December 2024 for use of the AMDS™ Hybrid Prosthesis in acute DeBakey Type I dissections in the presence of malperfusion. The HDE allows for, subject to certain restrictions, commercial distribution of AMDS in the United States ("US") prior to the approval of a Premarket Approval Application, which we currently anticipate receiving in 2026 allowing for full commercial distribution of AMDS in the US. The revenue increase in EMEA for the three months ended March 31, 2026 was primarily due to an increase in volume of higher priced products within the aortic stent graft product line in direct (to hospitals) markets. The decrease in revenues in APAC and LATAM for the three months ended March 31, 2026 was impacted by customer buying patterns in certain markets.
For the three months ended March 31, 2026 and 2025, the substantial majority of aortic stent graft revenues were generated from geographies outside the US.
On-X Products
The On-X products include the On-X aortic and mitral heart valves and the On-X ascending aortic prosthesis ("AAP") for heart valve replacement. Revenues from the sales of On-X products include revenues from the distribution of CarbonAid® CO2 diffusion catheters and from the sale of Chord-X® ePTFE sutures for mitral chordal replacement. On-X product revenue also includes revenue generated from pyrolytic carbon coating services for OEM customers.
Revenues from the sales of On-X products increased 20% for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. This increase was primarily due to an increase in the volume of units sold and an increase in average sales prices.
Constant currency revenues from the sales of On-X products increased 17% for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The increase in revenues for the three months ended March 31, 2026 was primarily due to growth in North America, EMEA, and APAC, reflecting gains in market share. The increase in revenues from EMEA for the three months ended March 31, 2026 was primarily due to an increase in unit sales in direct markets.
Domestic revenues from the sales of On-X products accounted for 62% and 65% of total On-X revenues for the three months ended March 31, 2026 and 2025, respectively.
Surgical Sealants
Surgical sealants include BioGlue products used as an adjunct to standard methods of achieving hemostasis (such as sutures and staples) in adult patients in open surgical repair of large vessels (such as aorta, femoral, and carotid arteries).
Revenues from the sales of surgical sealants increased 4% for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. This increase was primarily due to favorable foreign exchange rates and, to a lesser extent, an increase in average sales prices.
Constant currency revenues from the sales of surgical sealants were flat for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, as revenue growth in North America and, to a lesser extent, APAC, was offset by a decrease in revenue in LATAM. The increase in revenues in North America for the three months ended March 31, 2026 was primarily due to an increase in unit sales and an increase in average sales prices. The increase in revenues in APAC for the three months ended March 31, 2026 was primarily due to an increase in unit sales. The decrease in revenues in LATAM was primarily due to a decrease in unit sales in indirect markets.
Domestic revenues from the sales of surgical sealants accounted for 50% and 49% of total surgical sealant revenues for the three months ended March 31, 2026 and 2025, respectively.
Other
Other revenues are comprised of revenues from PhotoFix and PerClot.
Other revenues decreased 9% for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The decrease was primarily due to a decrease in PerClot product revenues resulting from the timing of shipments.
Preservation Services
Preservation services include service revenues from processing cardiac and vascular tissues. Our cardiac valves are primarily used in cardiac replacement and reconstruction surgeries, including the Ross procedure, for patients with endocarditis or congenital heart defects. Our cardiac tissues are primarily distributed in domestic markets. The majority of our vascular preservation services revenues are related to shipments of saphenous veins, which are mainly used in peripheral vascular reconstruction surgeries to avoid limb amputations. Competition with synthetic product alternatives and the availability of tissues for processing are key factors affecting revenue volume that can fluctuate from quarter to quarter. Our vascular tissues are primarily distributed in domestic markets.
We continue to evaluate modifications to our tissue processing procedures in an effort to improve tissue processing throughput and yields, reduce costs, and maintain quality across our tissue processing business. Preservation services revenues, particularly revenues for certain high-demand cardiac tissues, can vary from quarter to quarter and year to year due to a variety of factors, including quantity and type of incoming tissues, yields of tissue through the preservation process, timing of receipt of donor information, timing of the release of tissues for implant, demand for certain tissue types due to the number and type of procedures being performed, and pressures from competing products or services.
Revenues from tissue processing increased 23% for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The increase was primarily due to an increase in the volume of higher priced tissues shipped as well as an increase in average sales prices. Revenues for the three months ended March 31, 2025 were adversely affected by the 2024 cybersecurity incident.
Cost of Products and Preservation Services
Cost of Products
Three Months Ended
March 31,
2026 2025
Cost of products $ 29,697 $ 25,263
Cost of products increased 18% for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. Cost of products for the three months ended March 31, 2026 and 2025 included costs related to aortic stent grafts, On-X products, surgical sealants, and other products.
The increase in total cost of products for the three months ended March 31, 2026 was primarily due to an increase in the unit cost of certain aortic stent grafts and On-X products shipped, and an increase in the volume of On-X products and certain aortic stent grafts shipped, as compared to the three months ended March 31, 2025.
Cost of Preservation Services
Three Months Ended
March 31,
2026 2025
Cost of preservation services $ 11,192 $ 10,138
Cost of preservation services increased 10% for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. Cost of preservation services included costs for cardiac and vascular tissue preservation services.
The increase in total cost of preservation services for the three months ended March 31, 2026 was primarily due to an increase in the volume of certain tissues shipped, as compared to the three months ended March 31, 2025.
Gross Margin
Three Months Ended
March 31,
2026 2025
Gross margin $ 75,448 $ 63,577
Gross margin as a percentage of total revenues 65% 64%
Gross margin increased 19% for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025.
The increase in gross margin for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, was primarily due to a favorable mix of certain products and tissues shipped, an increase in the average sales price of certain products and tissues shipped, a favorable effect of foreign exchange rates, and an increase in volume of certain products and tissues shipped for the three months ended March 31, 2026. The increase was partially offset by unfavorable cost of certain products shipped, as compared to the three months ended March 31, 2025. Gross margin as a percentage of total revenues increased for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. Gross margin as a percentage of total revenues was positively impacted by a favorable product mix and favorable pricing of certain products and tissues shipped, partially offset by unfavorable costs of certain products shipped during the three months ended March 31, 2026.
Operating Expenses
General, Administrative, and Marketing Expenses
Three Months Ended
March 31,
2026 2025
General, administrative, and marketing expenses $ 60,820 $ 54,704
General, administrative, and marketing expenses as a percentage of total revenues 52% 55%
General, administrative, and marketing expenses increased 11% for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, which includes the impact of the Ascyrus contingent consideration fair value adjustment loss of $1.7 million and gain of $2.8 million for the three months ended March 31, 2026 and 2025, respectively. The remaining general, administrative, and marketing expenses for the three months ended March 31, 2026 increased $1.5 million as a result of investments in sales and marketing, as well as investments in information technology, partially offset by $1.5 million in net cyber insurance recoveries received.
Research and Development Expenses
Three Months Ended
March 31,
2026 2025
Research and development expenses $ 8,841 $ 6,728
Research and development expenses as a percentage of total revenues 8% 7%
Research and development expenses increased 31% for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. Research and development spending for the three months ended March 31, 2026 was primarily focused on clinical work to gain regulatory approvals for certain aortic stent grafts.
Interest Expense
Interest expense was $5.4 million and $7.7 million for the three months ended March 31, 2026 and 2025, respectively. Interest expense for the three months ended March 31, 2026 decreased primarily due to lower variable interest rates on our credit facilities and reduced interest expense as a result of the settlement of the Convertible Senior Notes. See Part I, Item 1, Note 8 of the "Notes to Condensed Consolidated Financial Statements" for further discussion of the settlement of the Convertible Senior Notes.
Other Expense (Income), Net
Other expense (income), net was $0.3 million of expense and $3.1 million of income for the three months ended March 31, 2026 and 2025, respectively. Other expense (income), net for the three months ended March 31, 2026 primarily included a net $0.8 million loss from realized and unrealized effects of foreign currency gains and losses, partially offset by a $0.5 million gain associated with fair value adjustments to loans issued pursuant to our Endospan agreements. Other expense (income), net for the three months ended March 31, 2025 primarily included a net $2.9 million gain from realized and unrealized effects of foreign currency gains and losses and a $0.3 million gain associated with fair value adjustments to loans issued pursuant to our Endospan agreements.
Income Tax Expense
Our effective income tax rate was a benefit of 318% and 78% for the three months ended March 31, 2026 and 2025, respectively. The effective income tax rate for the three months ended March 31, 2026 was primarily impacted by excess tax deductions on stock-based compensation, partially offset by state income taxes, non-deductible executive compensation, and changes in our valuation allowance against net deferred tax assets.
On July 4, 2025 the One Big Beautiful Bill Act ("OBBBA") was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We have reflected the impact of the enactment in our results for the three months ended March 31, 2026.
Non-GAAP Measures of Financial Performance
To supplement our Condensed Consolidated Financial Statements presented in accordance with US GAAP, we use constant currency revenues, which is a non-GAAP financial measure. We define constant currency revenues as revenues adjusted for the exchange rate effect. We define exchange rate effect as the year-over-year impact of foreign currency movements using current period foreign currency rates applied to prior period transactional currency amounts.
We have provided non-GAAP financial measures in this report as we believe that these figures are helpful in allowing management and investors to more accurately assess the ongoing nature of our operations and measure our performance more consistently across periods. Management uses constant currency revenues internally to assess the operational performance of the Company, as a component in compensation metrics, and as a basis for strategic planning.
We believe the provided non-GAAP measures are meaningful in addition to the information contained in the US GAAP presentation of financial performance. Investors should consider this non-GAAP information in addition to, and not as a substitute for, financial measures prepared in accordance with US GAAP. In addition, this non-GAAP financial information may not be the same as similar measures presented by other companies.
Seasonality
Historically, we believe the demand for most of our aortic stent grafts is seasonal, with a decline in demand generally occurring in the third quarter primarily due to the summer holiday season in Europe.
Historically, we believe the demand for surgical sealants is seasonal, with a decline in demand generally occurring in the third quarter followed by stronger demand in the fourth quarter. We believe that this trend may be due to the summer holiday season in Europe and the US.
Demand for our vascular preservation services has also traditionally been seasonal, with lowest demand generally occurring in the fourth quarter. We believe this trend for vascular preservation services is primarily due to fewer vascular surgeries being scheduled during the winter holiday months.
We do not believe demand for our On-X products, other products, and cardiac preservation services is materially seasonal.
Liquidity and Capital Resources
Our primary uses of liquidity include the payment of operating expenses, capital expenditures, servicing of debt and the funding of acquisitions or other collaborative arrangements. Our primary sources of funding are operating cash flows and borrowings under our debt facilities. As of March 31, 2026 we had approximately $220.0 million of total principal indebtedness outstanding.
Our liquidity as of March 31, 2026 consisted of cash and cash equivalents of $55.8 million, unused commitments of $30.0 million under a revolving credit facility, and unused commitments of $150.0 million on the new delayed draw term loan facility (see "Credit Facilities" below). As of March 31, 2026 approximately 33% of our cash and cash equivalents were held in foreign jurisdictions. Our practice is to maintain sufficient liquidity through cash from operations and our revolving credit facility to mitigate the impacts of any adverse financial market conditions on our operations. We believe that cash generated from operations, together with amounts available under our Credit Facilities, as defined below, will be sufficient to meet working capital requirements and anticipated capital expenditures, and other strategic uses of cash, if any, and debt payments, if any, over the next twelve months.
Our future cash requirements are expected to include interest payments under our credit facilities, expenditures for clinical trials, research and development expenditures, general working capital needs, capital expenditures, other corporate purposes, obligations pursuant to the exercise of the Endospan purchase option, and may include cash to fund other business development activities including obligations pursuant to the acquisition of Ascyrus and Endospan. These items may have a significant effect on our future cash flows during the next twelve months. Subject to the terms of our credit facilities, we may seek additional borrowing capacity or financing, pursuant to our current or any future shelf registration statement, for general corporate purposes or to fund other future cash requirements. If we undertake any further significant business development activity, we may need to finance such activities by obtaining additional debt financing or using a registration statement to sell equity securities. There can be no assurance that we will be able to obtain any additional debt or equity financing at the time needed or that such financing will be available on terms that are favorable or acceptable to us.
Significant Sources and Uses of Liquidity
Credit Facilities
On January 18, 2024 we entered into a credit and guaranty agreement with Ares Management Credit funds (the "Ares Credit Agreement") for $350.0 million of senior secured, interest-only, credit facilities, consisting of a $190.0 million secured term loan facility (the "Term Loan Facility"), a $100.0 million secured delayed draw term loan facility (the "Delayed Draw Term Loan Facility" and, together with the Term Loan Facility, the "Term Loan Facilities") and a $60.0 million "senior-priority" secured revolving credit facility with a priority claim ahead of the other secured facilities (the "Revolving Credit Facility" and, together with the Term Loan Facilities, the "Credit Facilities"). Upon closing, we borrowed $190.0 million under the Term Loan Facility and $30.0 million under the Revolving Credit Facility. The proceeds of the initial borrowings were used along with cash on hand to pay off our previously existing credit agreement and pay related fees and expenses. The Delayed Draw Term Loan Facility remained undrawn and was terminated on July 2, 2025 as we entered into separate, privately negotiated exchange agreements with the Holders of the Convertible Senior Notes as discussed below.
On September 12, 2025 we entered into a Second Amendment to the credit and guaranty agreement (the "Amendment"), with Ares Management Credit funds, which amends the credit and guaranty agreement dated as of January 18, 2024. The Amendment provides for (i) an extension of the maturity date of the existing term loans (the "Existing Term Loan Facility") and the existing revolving credit facility (the "Existing Revolving Credit Facility") under the Credit Agreement by one year to January 18, 2031, (ii) a reduction in the interest rate margin applicable to the Existing Term Loan Facility and the Existing Revolving Credit Facility and (iii) a new $150.0 million secured delayed draw term loan facility (the "New Delayed Draw Term Loan Facility" and, together with the Existing Term Loan Facility, the "Term Loan Facilities").
In May 2026, in connection with our election to exercise the Endospan Option, we borrowed $150.0 million under the New Delayed Draw Term Loan Facility, of which $135.0 million will be used to fund the upfront purchase price for the acquisition of Endospan. See Part I, Item 1, Note 3 - "Agreements with Endospan" for further discussion of the Endospan Option acquisition.
The final scheduled maturity date of the Credit Facilities is January 18, 2031. There are no scheduled repayments of principal required to be made prior to the final maturity date. We have the right to prepay loans under the Credit Agreement in whole or in part at any time, subject to certain premium payment requirements. Amounts repaid in respect of loans under the Term Loan Facilities may not be reborrowed. The Credit Facilities currently bear interest at the Secured Overnight Financing Rate ("SOFR") plus applicable margins. As of March 31, 2026 the aggregate interest rate was 8.41% and 7.16% per annum for the Term Loan Facility and Revolving Credit Facility, respectively. See Part I, Item 1, Note 8 of the "Notes to Condensed Consolidated Financial Statements" for further discussion of our new Ares Credit Agreement.
Convertible Senior Notes
On June 18, 2020 we issued $100.0 million aggregate principal amount of 4.25% Convertible Senior Notes with a maturity date of July 1, 2025 (the "Convertible Senior Notes"). In May 2025 we entered into separate, privately negotiated exchange agreements ("Exchange Agreements") with the Holders of the Convertible Senior Notes. The transactions contemplated by the Exchange Agreements closed on May 28, 2025. Under the terms of the Exchange Agreements, the Holders exchanged an aggregate principal amount of approximately $99.5 million of the Convertible Senior Notes held by the Holders in exchange for an aggregate of 4,334,347 shares of our common stock. In addition, pursuant to the Exchange Agreements, we made a cash payment of approximately $1.7 million to the Holders in respect of accrued and unpaid interest on the exchanged Convertible Senior Notes. The remaining $0.5 million in aggregate principal amount of the Convertible Senior Notes was settled on July 1, 2025 resulting in the issuance of 19,605 shares of our common stock.
Cash Flows
The following table summarizes cash flows from operating activities, investing activities, and financing activities for the periods indicated (in thousands):
Three Months Ended
March 31,
2026 2025
Cash flows provided by (used in):
Operating activities $ 1,154 $ (16,953)
Investing activities (10,503) (3,638)
Financing activities 463 3,937
Effect of exchange rate changes on cash and cash equivalents (258) 884
Decrease in cash and cash equivalents $ (9,144) $ (15,770)
Net Cash Flows from Operating Activities
Net cash provided by operating activities increased $18.1 million during the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, primarily due to increased profitability, an increase in cash collected from customers, and the favorable impact of lower costs and insurance recoveries associated with the 2024 cybersecurity incident. These favorable impacts were partially offset by an increase in inventories and deferred preservation costs to support the increase in revenues.
Net Cash Flows from Investing Activities
Net cash used in investing activities was $10.5 million and $3.6 million for the three months ended March 31, 2026 and 2025, respectively. During the three months ended March 31, 2026 cash flows used in investing activities included $8.0 million of cash used for capital expenditures, $1.5 million payment related to sale of PerClot, and $1.0 million payment for Endospan agreements.
Net Cash Flows from Financing Activities
Net cash provided by financing activities was $0.5 million and $3.9 million for the three months ended March 31, 2026 and 2025, respectively. The current year cash provided by financing activities was primarily due to $1.3 million of proceeds from the exercise of stock options and issuances of common stock, partially offset by $0.6 million for principal payments on short-term notes payable.
Scheduled Contractual Obligations and Future Payments
As of March 31, 2026 there have been no material changes outside of the ordinary course of business with respect to our material cash requirements for our contractual and other obligations as set forth in the table included in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025.
Capital Expenditures
Capital expenditures were $8.0 million and $3.6 million for the three months ended March 31, 2026 and 2025, respectively. Capital expenditures for the three months ended March 31, 2026 were primarily related to computer software development, purchases of manufacturing and tissue processing equipment, leasehold improvements, and computer equipment to support our business.
Off-Balance Sheet Commitments and Arrangements
As of March 31, 2026 there have been no material changes to our indemnification obligations as disclosed in Part II, Item 8, Note 11 - "Commitments and Contingencies" in our Annual Report on Form 10-K for the year ended December 31, 2025. For information concerning contingencies, see Note 9 - "Commitments and Contingencies" in Part I, Item 1 of this Form 10-Q.
Recent Accounting Pronouncements
For a discussion of recent accounting pronouncements, see Note 1 - "Basis of Presentation and Summary of Significant Accounting Policies" in Part I, Item 1 of this Form 10-Q.
Risks and Uncertainties
See the "Risk Factors" identified in Part II, Item 1A of this Form 10-Q.
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