Elutia Inc. Class A Common Stock 2026 Q2 Earnings Call

Please go ahead. Thank you, operator, and thank you all for participating in today's call.

Earlier today, Elutia released financial results for the second quarter ended June 30, 2026. A copy of the press release is available on the company's website. Before we begin, I would like to remind you that management will make statements during this call that include forward-looking statements within the meaning of the federal securities laws, which are pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that do not relate to matters of historical facts or relate to expectations or predictions of future events, results, or performance are forward-looking statements. All forward-looking statements, including, without limitation, those relating to our operating trends and future financial performance are based upon our current estimates and various assumptions.

These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For lists and descriptions of the risks and uncertainties associated with our business, please refer to the Risk Factors section of our public filings with the SEC, including Elutia's annual report on Form 10-K for the year ended December 31, 2025, and in our subsequent periodic reports on Form 10-Q and 10-K, accessible on the SEC's website at www.sec.gov. Such factors may be updated from time to time in Elutia's other filings with the SEC. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, August 13, 2026.

Elutia disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements because of new information, future events, or otherwise. Also, during this presentation, we refer to gross margin, excluding intangible asset amortization, which is a non-GAAP financial measure. A reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure is available on the company's financial results released for the second quarter ended June 30, 2026, which is accessible on the SEC's website and posted on the Investors page of the Elutia website at www.elutia.com. With that, I will turn the call over to Elutia's CEO, Randy Mills.

Thank you, Bernadine, and thank you everyone for joining us today. The second quarter was another solid quarter of execution for Elutia, so let's get right into it. Here's how we'll spend our time today. I'll start with why we are concentrating the company's efforts on the reconstruction opportunity. I'll walk through the highlights of the quarter, including our strengthened balance sheet and some exciting new survey data. Matt will take you through the financials and capital position, then we'll open the line up for questions. Four things defined this quarter. First, we're funded. Up to $26 million of additional capital with no equity offering. We believe that carries us through the NXT-41x clearance decision and the first full year of commercial launch in 2028 and beyond. Second, the company is becoming more focused as our strategic divestitures are being completed.

We signed a definitive agreement to sell SimpliDerm for up to $11 million, and the cardiovascular process is progressing well. The purpose of this activity is to align the company's capital and attention on the one thing that will drive the greatest value for patients and shareholders, the commercialization of NXT-41x. Third, we now have real data on surgeon demand for NXT-41x. In an independent blinded survey of 50 board-certified plastic and reconstructive surgeons, 96% expressed interest in adopting NXT-41x, and 92% said that they would champion it at their hospital's value analysis committee. I'm going to spend some time on this study today because it's important. Fourth, our regulatory and manufacturing teams continue to advance towards launch on schedule.

This quarter, we had a productive meeting with FDA and the NXT-41 program remains on track for what we believe will be a favorable clearance decision in the fourth quarter. Perhaps more importantly, we believe NXT-41x, the ultimate goal, is well-positioned for clearance in the first half of 2027. In preparation, our automated manufacturing process has been qualified for commercial production of NXT-41x at scale. For those newer to the Elutia story, here is a short version of what we are uniquely great at. We combine a biological matrix with sustained local antibiotic delivery at the surgical sites. The objective is straightforward. Create a surgical implant that can prevent bacterial colonization before it has the chance to become an infection. Importantly, we have done this before.

Our first generation drug-eluting product, EluPro, was the first FDA-cleared antibiotic-eluting bioenvelope. We developed it, we cleared it, we commercialized it, and last October, we sold that business to Boston Scientific for $88 million. We are now applying that same technology to solving the very real problems that exist in plastic and reconstructive surgery. The United States market for breast cancer surgery is valued at $1.5 billion, and importantly, it is an established market. Surgeons already use biological matrices in breast procedures today. We do not have to create a new category. At the same time, the clinical problem is substantial. Published data show postoperative infection rates remain between 15%-20% following mastectomy. The opportunity for us comes from the combination of three things, a large existing market, a significant unresolved clinical problem, and a technology platform that directly addresses it, a platform we created.

The magnitude of the problem is hard to ignore. These are published data, not Elutia estimates. Approximately one in three women experiences a serious complication following reconstruction, 15%-20% experience postoperative infection, up to 21% experience an implant loss, and the average hospital cost of a reconstruction with an infection is more than $48,000. That is a patient problem, a hospital problem, and it is a surgeon problem. We have shown you infection statistics before. What this slide shows are the consequences. Let us start with the patient. She is fighting cancer. That is why she is in the operating room. When an infection takes hold, chemotherapy stops, radiation stops, and she is looking at pain, fear, and more trips to the operating room. If she loses the implant, more than half of the women in that situation never go back and finish the reconstruction process. It ends. The hospital incurs an added cost, mostly without reimbursement.

It gives up revenue-generating operating room time slot and hospital bed, and it takes the reputational hit regarding its infection rate. The surgeon pays a unique price, and they pay it over and over again. Keep this in mind because they are the ultimate decision-makers regarding what gets used in the operating room. Let us look at a surgeon who does 140 cases a year and has the average infection rate of 17%. That means they are getting called back into the hospital every 15 days, irrespective of the time of day, the day of the week, or whether it is a holiday. That significantly impacts their quality of life. If you do not think so, think about this. The reconstructive specialty in plastic surgery is by itself an independent risk factor for burnout among plastic surgeons.

When those surgeons walk away, women lose access to reconstruction. Now that you understand what we are doing and why, let me turn to how we funded the plan. This quarter, we secured up to $26 million of additional capital without an equity offering. It comes from two places. First, a $15 million credit facility with Avenue Capital Group, $10 million of which is already in the bank, and another $5 million that is available to us upon an NXT-41x clearance. That is not only a substantial infusion of cash, but also an unequivocal endorsement of our plan by a sophisticated healthcare lender who conducted extensive due diligence. The second is the SimpliDerm transaction, which provides for up to $11 million in consideration. That includes $8 million in cash at closing and up to $3 million in tech transfer and commercial milestone payments.

On top of that, at the start of the fourth quarter, we anticipate receiving the full $8 million in escrow from Boston Scientific. Look at the bottom of the slide because the timing is the point. We believe this capital will take us through the NXT-41 clearance decision in the fourth quarter of this year, the anticipated NXT-41x clearance in the first half of 2027, and the full-year launch in 2028 and beyond. We are now fully funded. The divestitures are a key part of the strategy. We made a deliberate decision to stop spreading capital and management attention across multiple businesses and concentrate Elutia where we believe we can create the greatest value. The SimpliDerm transaction is now signed, with closing expected in the third quarter, and the previously announced strategic process for cardiovascular continues to advance with a potential transaction in 2026.

When that work is complete, Elutia will be solely focused on one primary opportunity, NXT-41x, and the approximately $1.5 billion plastic and reconstructive surgery market. That was intentional, and we are nearly done. Now to the part of the quarter I am most excited about. For two years, we have been telling you the demand for NXT-41x is out there. This quarter, we quantified it. We hired an independent market research firm to run a blinded survey. 50 board-certified plastic and reconstructive surgeons, eight states, averaging 11.6 years in practice and about 140 implant-based reconstructions a year. 42% practice in academic hospitals, and the group is split about evenly between east and west of the Mississippi. These are exactly the surgeons who will decide whether NXT-41x is ultimately adopted. A quick word about method. It was blinded. These are not our friends. We did not pick the respondents.