Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion in conjunction with our financial statements and related notes appearing elsewhere in this report and our audited consolidated financial statements and related notes contained in our Annual Report on Form 10-K for the year ended December 31, 2025, or our 2025 Form 10-K. In addition to historical information, this report contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, concerning our business, consolidated financial condition, and results of operations. The Securities and Exchange Commission, or the SEC, encourages companies to disclose forward-looking statements so that investors can better understand a company's future prospects and make informed investment decisions. Forward-looking statements are subject to risks and uncertainties, many of which are outside our control, which could cause actual results to differ materially from these statements. Therefore, you should not rely on any of these forward-looking statements. Forward-looking statements can be identified by words such as "will," "likely," "may," "believe," "expect," "anticipate," "intend," "seek," "designed," "develop," "would," "future," "can," "could," and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters. All statements other than statements of historical facts included in this report regarding our strategies, prospects, financial condition, operations, costs, plans, and objectives are forward-looking statements. Examples of forward-looking statements include, among others, express or implied statements regarding expected future operating results, expectations regarding the timing and receipt of regulatory results, anticipated levels of capital expenditures, and expectations of the effect on our financial condition of claims, litigation, and governmental and regulatory proceedings.

Please also refer to "Item 1A. Risk Factors" of our 2025 Form 10-K for important factors that we believe could cause actual results to differ materially from those in our forward-looking statements. Any forward-looking statement made by us in this report is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

Management Overview

We are a global leader in the design, development, manufacturing and commercialization of hyaluronic acid, or HA, innovations. In partnership with our clinicians, our primary focus is dedicated to delivering and advancing osteoarthritis, or OA, pain management, orthopedic regenerative solutions and non-orthopedic products. At our core is a passion to deliver a differentiated portfolio that improves patient outcomes around the world.

We have over 30 years of global expertise developing, manufacturing and commercializing products based on our HA, technology platform. HA is a naturally occurring polymer found throughout the body that is vital for proper joint health and tissue function. Our proprietary technologies for modifying the HA molecule allow product properties to be tailored specifically to multiple uses, including enabling longer residence time to support OA pain management and creating a solid form of HA called Hyaff, which is a platform utilized in our regenerative solutions portfolio.

As we look forward to the future, our business is positioned to capture value within our target markets of OA pain management and regenerative solutions. We believe our future success will be driven by our:

●

Over 30 years of experience in HA and HA-based regenerative solutions and early intervention orthopedics, combined with seasoned leadership with a strong financial foundation for future investment in meaningful solutions for our customers and their patients;

●

Utilizing proprietary HA-based technology and manufacturing expertise to provide new and differentiated solutions in next generation OA pain management (e.g., Cingal) and regenerative (e.g., Integrity Implant System and Hyalofast) markets;

●

Growth of the Integrity Implant System, our HA-based scaffold for rotator cuff and other tendon repairs, with first commercial cases in 2023;

●

Targeting to introduce key HA-based products into the U.S. market upon U.S. Food and Drug Administration, or FDA approval/clearance, such as Cingal and Hyalofast, and developing additional products that leverage our proprietary Hyaff regenerative platform;

●

Robust network of stakeholders in our target markets to identify evolving unmet patient treatment needs;

●

Global commercial expertise, which we will leverage to drive growth across our product portfolio, including continued international expansion;

●

Opportunity to pursue strategic inorganic growth opportunities, including potential partnerships and smaller acquisitions, technology licensing, and leveraging our strong financial foundation and operational capabilities; and

●

Energized and experienced team focused on strong values, talent, and culture.

Products

OA Pain Management

Our OA pain management product family consists of Monovisc and Orthovisc, our injectable, HA-based OA pain management offerings that are indicated to provide pain relief from osteoarthritis conditions; and Cingal, our novel, single-injection OA pain management product consisting of our proprietary cross-linked HA material combined with a fast-acting steroid.

Cingal is our next generation fast-acting, long-lasting, non-opioid, clinically proven OA pain product that is designed to provide both short- and long-term pain relief through at least six months. It is currently sold outside the United States in over 35 countries. In 2022, we completed a third Phase 3 clinical trial for Cingal, which achieved its primary endpoint. We have been actively engaging with the FDA, on next steps for U.S. regulatory approval. We continue to work towards addressing the FDA's requirements for Cingal's approval and are continuing to advance New Drug Application or NDA, preparation activities and are working towards a submission to the FDA. In September 2026, we completed enrollment in the bioequivalence study, which was one of the key FDA requirements. Chemistry, Manufacturing and Controls, or CMC, activities required for approval of HA as a drug also remain a key milestone in the regulatory pathway and are expected to be a primary focus as we advance toward filing. We are targeting to make the NDA submission by December 31, 2027. Regulatory approval remains subject to the completion of these development and regulatory requirements. We are committed to bringing this revolutionary pain management therapy to the approximate $1 billion U.S. addressable market.

Regenerative Solutions

Our regenerative solutions product family consists of: (a) our portfolio of orthopedic regenerative solutions products utilizing HA, including Integrity, our hyaluronic acid-based scaffold for rotator cuff repair and other tendon procedures, Tactoset, an HA-enhanced, flowable, injectable and settable bone void filler used to facilitate bone regeneration and augment hardware in poor quality bone, and Hyalofast, a hyaluronic acid scaffold for cartilage repair, sold outside of the United States in over 30 countries.

Hyalofast is not currently approved for commercial use in the United States and is not available for commercial sale. We submitted a Premarket Approval, or PMA, application to the FDA on October 31, 2025, following completion of a pivotal Investigational Device Exemption, or IDE, clinical trial. In October 2026, we received formal notification from the FDA that our current Hyalofast PMA application is not approvable, primarily based on the clinical data included in the submission. We continue to believe strongly in Hyalofast's potential in the U.S. market, and we will continue discussions with the FDA regarding the evidence that may be required to support future approval.

Non-Orthopedic Products

Our Non-Orthopedic product family consists of legacy HA-based products that are marketed principally for non-orthopedic applications. These products include: Hyvisc, our high molecular weight injectable HA veterinary product for the treatment of joint dysfunction in horses due to non-infectious synovitis associated with equine OA; Hyalobarrier, an anti-adhesion barrier indicated for use after abdominal-pelvic surgeries; Hyalomatrix, our HA-based scaffold used in the treatment of complex wounds; and ophthalmic products, including injectable, high molecular weight HA products such as Anikavisc and Nuvisc, used as viscoelastic agents in ophthalmic surgical procedures such as cataract extraction and intraocular lens implantation. These Non-Orthopedic products are sold through commercial sales and marketing partners around the world.

Results of Operations

Three and Nine Months Ended September 30, 2026 Compared to Three and Nine Months Ended September 30, 2025

		Three Months Ended September 30,																Nine Months Ended September 30,
		2026				2025				$ Change				% Change				2026				2025				$ Change				% Change
		(in thousands, except percentages)																(in thousands, except percentages)
Revenue		$	30,594			$	27,817			$	2,777				10	%		$	92,816			$	82,204			$	10,612				13	%
Cost of revenue			11,757				12,233				(476	)			(4	%)			33,738				37,576				(3,838	)			(10	%)
Gross profit			18,837				15,584				3,253				21	%			59,078				44,628				14,450				32	%
Gross margin			62	%			56	%											64	%			54	%
Operating expenses:
Research & development			7,895				6,946				949				14	%			21,949				19,318				2,631				14	%
Selling, general & administrative			11,654				11,871				(217	)			(2	%)			40,375				37,007				3,368				9	%
Total operating expenses			19,549				18,817				732				4	%			62,324				56,325				5,999				11	%
Loss from operations			(712	)			(3,233	)			2,521				(78	%)			(3,246	)			(11,697	)			8,451				(72	%)
Interest and other income, net			390				997				(607	)			(61	%)			1,483				1,626				(143	)			(9	%)
Loss before income taxes			(322	)			(2,236	)			1,914				(86	%)			(1,763	)			(10,071	)			8,308				(82	%)
(Benefit from) Provision for income taxes			(11	)			939				(950	)			(101	%)			295				1,709				(1,414	)			(83	%)
Loss from continuing operations			(311	)			(3,175	)			2,864				(90	%)			(2,058	)			(11,780	)			9,722				(83	%)
Income from discontinued operations, net of tax			-				846				(846	)			(100	%)			-				608				(608	)			(100	%)
Net loss		$	(311	)		$	(2,329	)		$	2,018				(87	%)		$	(2,058	)		$	(11,172	)		$	9,114				(82	%)

Revenue

The following table presents revenue by product family for the three and nine-month periods ended September 30, 2026, and 2025:

		Three Months Ended September 30,
		2026				2025				$ Change				% Change
		(in thousands, except percentages)
Original Equipment Manufacturer ("OEM") Channel		$	16,601			$	15,844			$	757				5	%
Commercial Channel			13,993				11,973				2,020				17	%
		$	30,594			$	27,817			$	2,777				10	%

		Nine Months Ended September 30,
		2026				2025				$ Change				% Change
		(in thousands, except percentages)
Original Equipment Manufacturer ("OEM") Channel		$	52,341			$	47,093			$	5,248				11	%
Commercial Channel			40,475				35,111				5,364				15	%
		$	92,816			$	82,204			$	10,612				13	%

Revenue for the three- and nine-month periods ended September 30, 2026 were $30.6 million and $92.8 million, respectively, representing increases of $2.8 million and $10.6 million, or 10% and 13%, respectively, compared to the same period in 2025. The increase was primarily driven by higher Commercial Channel revenue due to international OA pain management revenues and Integrity product sales as well as higher OEM revenue through our OEM Channel partners, primarily DePuy Synthes.

Revenue from our OEM Channel product family increased 5% and 11% for the three- and nine-month periods ended September 30, 2026, respectively, compared to the same periods in 2025. For the three-month period ended September 30, 2026, the $0.8 million increase was due to a $0.5 million increase in non-orthopedic revenues primarily from the relaunch of Hyalomatrix and higher veterinary revenue; and a $0.3 million increase in DePuy Synthes revenues due to a $1.3 million increase in volume, primarily on Monovisc sales, offset by a $1.0 million decrease due to lower pricing. For the nine-month period September 30, 2026, the $5.2 million increase in OEM Channel revenue was primarily attributable to a $4.4 million increase in DePuy Synthes revenue, due to a $10.1 million increase in sales volume, offset by a $5.7 million decrease due to lower pricing and a $0.8 million increase in non-orthopedic revenues from higher Hyvisc, Hyalomatrix and Hyalobarrier product sales.

Revenue from our Commercial Channel product family increased 17% and 15% for the three- and nine-month periods ended September 30, 2026, respectively, compared to the same periods in 2025. For the three-month period ended September 30, 2026, Commercial Channel revenue increased by $2.0 million, driven by a $1.6 million increase in international OA Pain Management revenues, primarily from higher sales of Monovisc and Cingal and a $0.4 million increase in regenerative revenue, primarily from sales of Integrity products. For the nine-month period ended September 30, 2026, Commercial Channel revenue increased by $5.4 million, driven by a $3.9 million increase in international OA Pain Management revenues, primarily from higher sales volume of Monovisc and Cingal and a $1.4 million increase in regenerative revenue, primarily from sales of Integrity and Hyalofast products.

Gross Profit and Margin

Gross profit for the three- and nine-month periods ended September 30, 2026, was $18.8 million and $59.1 million, respectively. Gross profit for the three- and nine-month periods ended September 30, 2025, was $15.6 million and $44.6 million, respectively. The increase in gross profit for the three- and nine-month periods ended September 30, 2026, was primarily related to higher sales volumes and manufacturing productivity.

Gross margin for the three- and nine-month periods ended September 30, 2026, was 62% and 64%, respectively. Gross margin was 56% and 54% for the three- and nine-month periods ended September 30, 2025, respectively. The increase in gross margin was due to higher sales volume, increased manufacturing production, lower inventory reserves and improved product sales mix, primarily from higher DePuy Synthes revenues.

Research and Development

Research and development expenses for the three- and nine-month periods ended September 30, 2026, and 2025 were as follows:

		Three Months Ended September 30,
		2026				2025				$ Change				% Change
		(in thousands, except percentages)
External costs by program
Hyalofast clinical study		$	176			$	671			$	(495	)			(74	%)
Integrity development costs			322				286				36				13	%
Cingal clinical study			830				1,058				(228	)			(22	%)
Regulatory external costs			390				118				272				230	%
Other early programs and unallocated expenses			1,290				1,118				172				15	%
Total external costs			3,008				3,251				(243	)			(8	%)
Internal costs:
Employee compensation and benefits			4,300				3,171				1,129				36	%
Facility and other			587				524				63				12	%
Total internal costs			4,887				3,695				1,192				32	%
Total research and development expense		$	7,895			$	6,946			$	949				14	%

		Nine Months Ended September 30,
		2026				2025				$ Change				% Change
		(in thousands, except percentages)
External costs by program
Hyalofast clinical study		$	790			$	1,812			$	(1,022	)			(56	%)
Integrity development costs			957				1,017				(60	)			(6	%)
Cingal clinical study			2,415				2,096				319				15	%
Regulatory external costs			989				675				314				47	%
Other early programs and unallocated expenses			3,310				2,766				544				20	%
Total external costs			8,461				8,366				95				1	%
Internal costs:
Employee compensation and benefits			11,773				9,495				2,278				24	%
Facility and other			1,715				1,457				258				18	%
Total internal costs			13,488				10,952				2,536				23	%
Total research and development expense		$	21,949			$	19,318			$	2,631				14	%

Research and development external costs were $3.0 million and $8.5 million for the three- and nine-month periods ended September 30, 2026, respectively, compared to $3.3 million and $8.4 million for the corresponding periods in 2025. The decrease in external research and development costs for the three-month period ended September 30, 2026 was primarily driven by lower spending on the Hyalofast and Cingal clinical studies. For the nine-month period ended September 30, 2026, external research and development costs increased slightly by $0.1 million, primarily from higher clinical spending on Cingal and an increase in regulatory and new product development costs, offset by a decrease in Hyalofast clinical expenditures related to PMA submission to the FDA in late 2025.

Research and development internal costs were $4.9 million and $13.5 million for the three- and nine-month periods ended September 30, 2026, respectively, compared to $3.7 million and $11.0 million for the corresponding periods in 2025. The increase in the three-month period ended September 30, 2026, was primarily driven by higher employee-related costs, mostly related to higher stock-based compensation expense and investments to support Cingal CMC efforts. The increase in the nine-month period ended September 30, 2026, was primarily driven by higher employee-related costs, mostly related to higher stock-based compensation expense and investments to support Cingal CMC efforts and, to support product development and clinical programs.

Selling, General and Administrative

Selling, general and administrative expenses for the three- and nine-month periods ended September 30, 2026, were $11.7 million and $40.4 million, respectively. Selling, general and administrative expenses for the three- and nine-month periods ended September 30, 2025 were $11.9 million and $37.0 million, respectively. The decrease for the three-month period ended September 30, 2026 was due primarily to a $0.7 million decrease in legal expenses and lower employee-related costs due to a reduction in headcount offset by a $1.4 million increase in stock-based compensation. The increase for the nine-month period ended September 30, 2026, was primarily due to $2.5 million in severance costs and a $3.9 million increase in stock-based compensation primarily related to a charge during the three-month period ended March 31, 2026, for the transition of our former Chief Executive Officer, which was partially offset by a $1.2 million decrease in legal expense and lower headcount costs.

Loss from Continuing Operations

For the three- and nine-month periods ended September 30, 2026, loss from continuing operations was $0.3 million and $2.1 million, respectively. For the three- and nine-month periods ended September 30, 2025, loss from continuing operations was $3.2 million and $11.8 million, respectively. The decrease in loss from continuing operations was primarily due to higher revenue and improved gross margin driven by higher manufacturing production and efficiencies.

Income Taxes

We had a small income tax benefit for the three-month period ended September 30, 2026, and $0.3 million in income tax expense for the nine-month period ended September 30, 2026, resulting in effective tax rates of 3.4% and (16.7)%, respectively. We had income tax expense of $0.9 million and $1.7 million for the three- and nine-month periods ended September 30, 2025, resulting in an effective tax rate of (42.0)% and (17.0)%, respectively. Our effective tax rate for the three-month and nine-month periods ended September 30, 2026, was primarily driven by the full valuation on our deferred tax assets in the United States and our projected taxable income resulting in current tax expense in 2026.

Non-GAAP Financial Measures

We present certain information with respect to adjusted Earnings Before Interest, Tax, Depreciation and Amortization, or EBITDA, adjusted net income from continuing operations, and adjusted diluted earnings per share or adjusted EPS from continuing operations, which are financial measures not based on any standardized methodology prescribed by accounting principles generally accepted in the United States, or GAAP, and are not necessarily comparable to similarly titled measures presented by other companies.

We have presented adjusted EBITDA, adjusted net income from continuing operations, and adjusted EPS from continuing operations, because they are key measures used by our management and board of directors to understand and evaluate our operating performance and to develop operational goals for managing our business. We believe these financial measures help identify underlying trends in our business that could otherwise be masked by the effect of the expenses that we exclude. In particular, we believe that the exclusion of these items in calculating these measures can provide a useful tool for period-to-period comparisons of our core operating performance. Accordingly, we believe that these measures provide useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects and allowing for greater transparency with respect to key financial metrics used by our management in their financial and operational decision-making.

Adjusted EBITDA

We present information below with respect to adjusted EBITDA, which we define as our net loss from continuing operations excluding interest and other income, net, income tax benefit (provision), depreciation and amortization, stock-based compensation expense, non-recurring professional fees and severance costs.

Adjusted EBITDA is not prepared in accordance with GAAP, and should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. There are a number of limitations related to the use of adjusted EBITDA rather than net loss from continuing operations, which is the nearest GAAP equivalent. Some of these limitations are:

●

adjusted EBITDA excludes depreciation and amortization, and, although these are non-cash expenses, the assets being depreciated or amortized may have to be replaced in the future, the cash requirements for which are not reflected in adjusted EBITDA;

●

we exclude stock-based compensation expense from adjusted EBITDA although (a) it has been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy and (b) if we did not pay out a portion of our compensation in the form of stock-based compensation, the cash salary expense included in operating expenses would be higher, which would affect our cash position;

●

the expenses and other items that we exclude in our calculation of adjusted EBITDA may differ from the expenses and other items, if any, that other companies may exclude from adjusted EBITDA when they report their operating results;

The following is a reconciliation of adjusted EBITDA, a non-GAAP metric, to net loss from continuing operations, the most directly comparable GAAP financial measure, for the three and nine-month periods ended September 30, 2026, and 2025, respectively:

		For the Three Months Ended September 30,								For the Nine Months Ended September 30,
		2026				2025				2026				2025
Net loss from continuing operations		$	(311	)		$	(3,175	)		$	(2,058	)		$	(11,780	)
Interest and other income, net			(390	)			(997	)			(1,483	)			(1,626	)
(Benefit from) provision for income taxes			(11	)			939				295				1,709
Depreciation and amortization			1,439				1,403				4,351				4,263
Stock-based compensation expense			4,244				2,215				12,718				7,758
Non-recurring professional fees			-				480				169				480
Severance costs			127				-				2,486				-
Adjusted EBITDA		$	5,098			$	865			$	16,478			$	804

Adjusted EBITDA for the three-month period ended September 30, 2026 increased by $4.2 million compared to the same period in 2025. The increase was primarily driven by higher revenue as well as higher gross profit resulting from manufacturing efficiencies and favorable product mix.

Adjusted EBITDA in the nine-month period ended September 30, 2026, increased $15.7 million compared to the same period in 2025. The increase was primarily driven by higher revenue and higher gross profit from manufacturing efficiencies, favorable product mix and lower inventory-related reserves.

Adjusted Net Income (Loss) From Continuing Operations and Adjusted EPS From Continuing Operations

We present information below with respect to adjusted net income (loss) from continuing operations and adjusted EPS. We define adjusted net income (loss) from continuing operations as our net loss from continuing operations excluding, stock-based compensation expense, non-recurring professional fees and severance costs, all on a tax-effected basis. We define adjusted EPS as GAAP diluted earnings per share excluding the above adjustments to net loss from continuing operations used in calculating adjusted net income (loss) from continuing operations, each on a per share and tax effected basis.

The following is a reconciliation of adjusted net income (loss) from continuing operations, a non-GAAP metric, to net loss from continuing operations, the most directly comparable GAAP financial measure, for the three and nine-month periods ended September 30, 2026, and 2025, respectively:

		For the Three Months Ended September 30,								For the Nine Months Ended September 30,
		2026				2025				2026				2025
Net loss from continuing operations		$	(311	)		$	(3,175	)		$	(2,058	)		$	(11,780	)
Stock-based compensation, tax effected			4,099				3,145				14,846				9,075
Non-recurring professional fees, tax effected			-				682				197				561
Severance costs, tax effected			123				-				2,902				-
Adjusted net income (loss) from continuing operations		$	3,911			$	652			$	15,887			$	(2,144	)

The following is a reconciliation of adjusted diluted EPS from continuing operations, a non-GAAP metric, to diluted EPS from continuing operations, the most directly comparable GAAP financial measure, for the three and nine-month periods ended September 30, 2026, and 2025, respectively:

		For the Three Months Ended September 30,								For the Nine Months Ended September 30,
		2026				2025				2026				2025
Diluted loss from continuing operations per share		$	(0.02	)		$	(0.22	)		$	(0.15	)		$	(0.82	)
Share based compensation, tax effected			0.30				0.21				1.11				0.63
Non-recurring professional fees, tax effected			-				0.05				-				0.04
Severance costs, tax effected			0.01				-				0.22				-
Adjusted diluted income (loss) from continuing operations per share		$	0.29			$	0.04			$	1.18			$	(0.15	)

Adjusted net income from continuing operations and adjusted diluted EPS in the three-month period ended September 30, 2026, increased $3.2 million and $0.25 respectively compared to the same period in 2025. The increase for the period was primarily due to higher revenue and improved gross profit from favorable product mix and improved manufacturing efficiencies.

Adjusted net income from continuing operations and adjusted diluted EPS in the nine-month period ended September 30, 2026, increased $18.0 million and $1.33, respectively, compared to the same period in 2025. The increase for the period was primarily due higher revenue and improved gross profit driven by manufacturing efficiencies, favorable product mix and lower inventory-related reserves as well as lower operating expenses, excluding stock-based compensation and depreciation and amortization.

Liquidity and Capital Resources

We require cash to fund our operating activities and to make capital expenditures and other investments in our business. We expect that our requirements for cash to fund these uses will increase as our operations expand. We continue to generate cash from operating activities and believe that our operating cash flows, cash currently on our balance sheet and availability under our credit facility will be sufficient to allow us to continue to invest in our existing business, to manage our capital structure on a short and long-term basis, and to meet our anticipated operating cash needs. Cash and cash equivalents aggregated $45.0 million and $57.5 million, and working capital totaled $76.3 million and $81.5 million, at September 30, 2026 and December 31, 2025, respectively.

On July 10, 2026, we entered into a Fifth Amendment to Credit Agreement with Bank of America N.A. as administrative agent, which amended our existing revolving line of credit agreement dated October 24, 2017, which provides up to $50.0 million in the form of a senior revolving line of credit. Subject to certain conditions, we may request up to an additional $50.0 million for a maximum aggregate commitment of $100.0 million. As of September 30, 2026, and December 31, 2025, there were no outstanding borrowings, and we are in compliance with the terms of the credit facility.

Summary of Cash Flows (in thousands):

		Nine Months Ended September 30,
		2026				2025
Cash (used in) provided by
Operating activities		$	2,847			$	6,551
Investing activities			(4,275	)			(599	)
Financing activities			(11,075	)			(5,272	)
Effect of exchange rate changes on cash			(21	)			151
Net (decrease) increase in cash and cash equivalents		$	(12,524	)		$	831

The following changes contributed to the net change in cash and cash equivalents in the nine-month period ended September 30, 2026, as compared to the same period in 2025.

Operating Activities

Cash provided by operating activities was $2.8 million for the nine-month period ended September 30, 2026, compared to cash provided by operating activities of $6.6 million for the same period in 2025. The decrease in cash provided by operating activities was primarily due to higher inventory levels resulting in unfavorable working capital, partially offset by improved earnings and higher non-cash charges including stock-based compensation expense and depreciation of fixed assets.

Investing Activities

Cash used in investing activities was $4.3 million for the nine-month period ended September 30, 2026 compared to cash used in investing activities of $0.6 million for the same period in 2025. The change was primarily due to $4.5 million received from the sale of Parcus Medical in March 2025. Capital expenditure was $4.6 million in the nine-month period ended September 30, 2026, compared to $6.2 million for the same period in 2025. The decrease in capital expenditure was due to timing of purchases related to our continued manufacturing capacity expansion at our facility in Bedford, Massachusetts.

Financing Activities

Cash used in financing activities was $11 million for the nine-month period ended September 30, 2026, compared to cash used in financing activities of $5.3 million for the same period in 2025. The change was primarily due to increased repurchases of common stock and an increase in cash paid for withholding tax on employee restricted stock award vestings.

Critical Accounting Policies and Estimates

The preparation of our condensed consolidated financial statements in conformity with GAAP requires management to use judgment in making estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. We believe that our accounting policies for revenue recognition, accounts receivable and allowance for credit losses, goodwill, acquired in-process research and development, inventory and contingencies are based on, among other things, judgments and assumptions made by management that include inherent risks and uncertainties. There have been no significant changes to the above critical accounting policies or in the underlying accounting assumptions and estimates used in such policies from those disclosed in our annual consolidated financial statements and accompanying notes included in our 2025 Form 10-K. We monitor our estimates on an ongoing basis for changes in facts and circumstances, and material changes in these estimates could occur in the future. Changes in estimates are recorded in the period in which they become known. We base our estimates on historical experience and other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from our estimates if past experience or other assumptions do not turn out to be substantially accurate.

Recent Accounting Pronouncements

A discussion of Recent Accounting Pronouncements is included in our 2025 Form 10-K and is updated in the Notes to the condensed consolidated financial statements included in this report.