Axogen, Inc.

Good morning. Joining me on today's call is Michael Dale, Axel Jentz, Chief Executive Officer and Director, and Lindsay Hartley, Chief Financial Officer. Michael will discuss third quarter 2025 financial results and corporate highlights. Lindsay will then provide details on financial performance, guidance, and overall outlook for the year. This will be followed by a question and answer session. Today's call and presentation is being webcast live via being broadcast live via webcast, which is available on the investor section of Axogen's website. Following the end of the live call, a replay will be available in the investor section of the company's website at www.axogeninc.com. Before we get started, I'd like to remind you that during the conference call, the company will make projections and forward-looking statements. Forward-looking statements include, but are not limited to, statements relating to financial guidance, market development priorities, estimated market opportunities, timing for future product and application launches, and the company's expectations for approval of the biologics license application for advanced nerve graft in December 2025, including the anticipated timing of approval and the assumption that advanced nerve graft will be designated as a reference product for any future biosimilar nerve graft and that such designation will provide marketplace exclusivity. Forward-looking statements are based on current beliefs and assumptions and are not guarantees of future performance and are subject to risks and uncertainties, including, without limitation, the risks and uncertainties reflected in the company's SEC filings, including its most recent Form 10-K and 10-Q. The forward-looking statements are representative only as of the date they are made, and except as required by applicable law, the company assumes no responsibility to publicly update or revise any forward-looking statements. In addition, for a reconciliation of non-GAAP measures, please refer to today's press release short presentation with highlights from today's call and the corporate presentation on the investor's section of the company's website. I'll now turn the call over to Michael.

Thank you, Operator, and welcome to everyone joining us this morning as we discuss our 2025 third quarter financial results. I will begin today's call with a financial and corporate overview highlighting our progress through the third quarter and year-to-date implementing our strategic plan, followed by an update on the biologics license application, or BLA, for our advanced nerve graft. I will then pass the call to Lindsay to review the quarter's financials and outlook for the remainder of 2025, and then we will open the lines for question and answer session. As remarked in this morning's earnings release, we are delighted with our third quarter performance and progress year to date for the business. Our strong revenue growth and notable milestone achievements during the quarter further validate our strategic plan objectives and market development strategies, and importantly, Actogen's ability to operationally execute our plans. Indeed, I am proud of our executive team in each of the respective operating functions at Actogen for the performance year-to-date that is at or above plan. Looking ahead, we will continue to optimize our business models based on experience and have confidence in our ability to continue delivering growth consistent with the guidance we have provided for our strategic plan in both the near and longer term. Regarding the quarter, Q3 sales increased to $60.1 million, growing 23.5% compared to the same period last year. This performance reflects double-digit growth across all of our nerve repair target markets, including extremities, oral, maxillofacial, and head, neck, and breast. Consistent with prior quarters, our growth is driven by expanding adoption of nerve care using Atchigen's nerve algorithm for the treatment of all types of peripheral nerve injuries, including traumatic, iatrogenic, and chronic nerve injuries. The advanced nerve graft is the primary growth driver, often complemented based on the clinical situation by one or more of our nerve repair connection, protection, or termination products. In extremities, we continue to execute our high potential account strategy with solid growth in both traumatic and chronic nerve injury procedures in the quarter. In OMF and head and neck, surgeon adoption of the action algorithm during the quarter was strong across all products, excuse me, all procedures, but particularly in mandible reconstruction procedures. And likewise in breast, we continue to see strong adoption of our breast resensation techniques supported by new surgeon activation, increased procedure volume in implant-based reconstruction cases, and the expansion of our commercial infrastructure. In summary, we are encouraged by the broad-based adoption of our nerve care portfolio and momentum across each of our three target markets. To assess our progress, we continue to monitor key metrics tied to our plan and 2025 strategic priorities, including high potential accounts, commercial expansion, professional education, new product development, clinical research, and prostate market development. I'll begin with an update on our performance and growth in high potential accounts. We continue to focus on expanding our presence in these accounts to drive more consistent customer creation, algorithm adoption, and improvements in Salesforce productivity. Our goal for 2025 is to generate at least 66% of total revenue growth from high potential accounts and average account productivity of 21%. Through the first three quarters, approximately 64% of revenue growth was driven by high potential accounts based on an average account productivity of 19%. These results are slightly below our planned target, but notably the result of the fact that we are also seeing double digit revenue growth and account productivity growth year-to-date in our non-high potential designated accounts as well. Growth in all account types was amplified in the quarter by the discontinuation of our case stock sales program for advanced nerve graft in preparation for the anticipated BLA approval. This sales program previously allowed for advanced nerve grafts to be shipped for a case for an unused product to return to AxiGEN. With the discontinuation of the K-Stock program, previous K-Stock customers are transitioning to either order by direct sale or consignment. This shift in purchasing behavior contributed to our top line performance and reduced revenue growth from high potential accounts by an estimated 4%. To be clear, high potential account growth was actually quite strong on an absolute basis, while it appears lower than last quarter. it's really just a function of the denominator getting larger because of the nine high potential base is performing better as well. The underlying fundamentals in all account types remains very positive, and after accounting for the case stock impact in the third quarter, we continue to realize that our focus on high potential accounts is enabling broader, more enduring adoption of nerve care, and as such, more predictable growth. During the first three quarters of 2025, there were 668 active high potential accounts of the approximately 780 accounts that meet our high potential criteria, which represents an increase of eight accounts or 1.2% as compared to the first three quarters of 2024. Regarding our 2025 commercial infrastructure expansion goals, as of the end of third quarter, we are now at or ahead of our high-end plan for each target market. And press we ended the quarter with 22 breast resensation sales specialists and two regional sales directors. We have met our goal to double the breast sales force in 2025 by the end of the year. To support broader adoption in non-breast markets, we ended the quarter with 125 sales professionals, including 15 regional sales directors. In OMF and head and neck, we ended the quarter with four field-based market development managers. Surgeon training remains a core component of our customer creation and nerve repair algorithm adoption. Execution of our 2025 professional education programs are on track, and we fully expect to meet our 2025 surgeon training targets. In breast, we have trained 62 surgeon pairs year-to-date with one program planned in the fourth quarter. We are confident we will meet our 2025 target of 75 surgeon pairs trained. Active breast resensation programs increased 7% from the third quarter of 2024, from 113 to 121. We estimate 281 surgeons performed a breast resensation procedure in the third quarter, which represents a 20% increase versus third quarter of 2024. In extremities, we have trained 97 surgeons year to date, of which 30 were trained in the third quarter With three additional programs planned in the fourth quarter, we expect to meet our 2025 target of 105 surgeons trained. In OMF and head and neck, we have trained 57 surgeons year to date, up 16 from second quarter 2025, exceeding our 2025 target of 45 surgeons trained. Next, I will provide an update on our clinical research priorities. We continue to advance our 2025 initiatives and are on track to complete a Level 1 study protocol for implant-based neurotization, a clinical evidence plan for advanced versus autograft inviction motor nerves, and a clinical evidence plan for oral, maxillofacial, and head and neck. Regarding research and development, as we have outlined in our strategic plan, innovation remains critical to our long-term growth. Through the first three quarters of the year, we continue to progress and advance our innovation platform across three pillars. Those include therapeutic reconstruction, ease of coaptation, and protection expansion. Consistent with our clinical research objectives to build evidence in support of nerve care, in the third quarter, we received meaningful external validation of Axigen's differentiated technologies and leadership in peripheral nerve repair. Ten new peer-reviewed publications cited clinical use or discussion of our products bringing our total nerve repair-related literature body to 339 publications. This growing body of evidence underscores the clinical relevance and impact of our solutions. Notably, there has been a 70% increase in the number of nerve repair publications in the last five years, reflecting in part the growing experience and interest in nerve repair. For those interested, all peer-reviewed studies are available on our website. During the third quarter, we also saw significant validation from medical societies. Both the American Association of Hand Surgery and the American Society for Reconstructive Microsurgery released official position statements recognizing nerve allograft as a non-experimental and medically necessary standard medical practice option for the treatment of peripheral nerve defects. These position statements add to the previously released clinical practice guidelines from the American Association of Oral and Maxillofacial Surgeons. Together, these endorsements mark a critical step towards establishing peripheral nerve repair with Allograft as a recognized standard of care, and we believe this support will be helpful in our efforts to expand coverage. On the coverage and reimbursement front, we continue to see non-coverage policies removed within the Blue Cross Blue Shield network and within Medicare Advantage for NerveCare, resulting in an estimated $1.1 million newly covered lives in the third quarter. Year-to-date, we estimate 18.1 million additional lives are now covered for nerve repair for peripheral nerve injuries using synthetic conduits or allografts. This expansion brings coverage amongst commercial payers to more than 64%, reflecting continued momentum in expanding access. And finally, I will provide an update on our prostate clinical and market development plan. We remain enthusiastic about the opportunity to improve nerve function outcomes in robotic-assisted radical prostatectomy and are actively collaborating with key opinion leaders to advance surgical technique development. During the third quarter, our clinical development team provided field-based support to surgeons in clinical sites incorporating nerve repair into the robotic-assisted prostatectomy cases. We added four new clinical sites during the third quarter bringing our total to 10 active sites meeting our year end goal. Procedures are ongoing and we remain on track to complete 100 cases by year end. Before I hand it over to Lindsay, I would like to address the status of our biologics license application for advanced nerve graft. In August, the FDA extended the PDUFA goal date from September to December 5th, 2025. In the communication from the FDA, it stated that a recent submission by Oxygen of facility and manufacturing information provided in a response to an FDA information request constituted a major amendment to our BLA for the advanced nerve graft submission, which resulted in the three-month extension. Since our last public update, interactions with FDA have expanded to all elements of the BLA application. Based on these interactions, We remain confident we will successfully complete the application process consistent with the new December 5th PDUFA date. The BLA approval will secure 12 years of market exclusivity from biosimilar nerve allografts and establish advanced nerve graft as the only implantable biologic indicated for the repair of functional deficits in peripheral nerves. With this, I will now turn it over to Lindsey.

Thanks, Mike. I'm pleased to report our third quarter results. We reported strong growth with revenue of 60.1 million, reflecting a 23.5% growth compared to the third quarter of 2024 and a 6% sequential increase over the second quarter of 2025. Revenue growth continues to be fueled by strong sales of advanced nerve grafts and the adoption of our comprehensive product algorithm across our target market, with unit volume and mix serving as the primary driver of our performance, revenue performance. As Mike noted, during our third quarter, we successfully ended our case stock sales program for advanced nerve graft in preparation of the anticipated BLA approval. We estimate our revenue for the third quarter was positively impacted by 1.6 million, or 3%, as the result of customers transitioning away from purchasing advance through the case stock program and ordering through direct sales. Our gross profit for the quarter came in at $46 million, up from $36.4 million in the third quarter of 2024 and $42 million in the second quarter of 2025. This represents a gross margin of 76.6%. up from 74.9% in the same period last year, and up from 74.2% in the second quarter of 2025. The year-over-year increase and sequential increase from second quarter were primarily driven by lower inventory write-offs and reduced shipping costs on products sold. These gains were partially offset by modestly higher product costs which had a minimal impact of less than half a percentage point on gross margin compared to both periods. Gross margin for the first three quarters of 2025 was 74.4%, 1.3% less than the first three quarters of 2024. The decrease of gross margin for the first three quarters of 2025 was driven by a 1.9% increase and year-over-year product costs. Product cost increased is the result of the transition of processing advanced nerve grafts to our Axigen Processing Center and costs related to additional steps and tests required as we approach the transition to processing as a biologic anticipated in December. We expect the cost of our advanced product to decrease over time as we gain economies of scale at the Axigen Processing Center And once the BLA is approved, we can begin implementing more significant continuous improvement programs. Our operating expenses increased to 44.1 million, up from 36.8 million in the third quarter of 2024. And as a percentage of revenue decreased, 2.2 million percent, highlighting our ability to increase our operating leverage. Sales and marketing expenses as a percentage of total revenue were up nearly 4% to 42.7% from 38.9% in the third quarter of 2024. Research and development expenses increased 8.1% to 7.6 million from 7 million in the third quarter of 2024 as a percentage of total revenue research and development expenses were down 1.8% to 12.6% from 14.4% in the third quarter of 2024. General and administrative expenses remained flat quarter over quarter at 10.8 million. As a percentage of total revenues, general and administrative expenses were down 4.2% to 18.1% from 22.3% in the third quarter of 2024. Net income for the quarter was 0.7 million or 1 cents per share compared to a net loss of 1.9 million or 4 cents per share in the third quarter of 2024. Adjusted net income for the quarter was 6.1 million or 12 cents per share compared to an adjusted net income of 3.1 million or $0.07 per share in the third quarter of 2024. Adjusted EBITDA for the quarter was $9.2 million compared to an adjusted EBITDA of $6.5 million in the same period last year. Adjusted EBITDA margin improved 210 basis points to 15.4% from 13.3% in the same period last year driven by revenue growth and increased operating leverage. As of September 30th, our balance of cash, cash equivalents, restricted cash and investments increased $3.9 million to $39.8 million from $35.9 million at the end of the second quarter of 2025. I am pleased to report that for the first three quarters of 2025, our balance of cash cash equivalents, restricted cash, and investments increased 0.3 million from a balance of 39.5 million at December 31 of 2024, demonstrating our ability to be free cash flow positive for the year. Now turning to our full year financial guidance for 2025. We are raising our revenue growth guidance to at least 19%. or revenue of at least $222.8 million. We reiterate our gross margin in the range of 73 to 75%, inclusive of one-time costs related to the BLA approval for advanced nerve grafts, which we are expecting to impact gross margin by approximately 1% or $2 million. As a reminder, these costs will be incurred around the anticipated BLA approval date, currently expected in December. Also, we estimate that two-thirds of these costs relate to the vesting of our BLA milestone-related stock compensation awards and are non-cash. We continue to expect to be net cash flow positive for the year. In summary, we are very pleased with our third quarter performance and the progress we have made. We remain focused on executing our strategy, investing in innovation, optimizing our resource allocation, and driving towards profitability. With that, we will now open the line for questions. Operator? Thank you.

If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. To allow for as many questions as possible, we ask that you each keep to one question and one follow-up. Our first question comes from the line of Chris Pasquale with Nefron Research. Please proceed with your question.

Thanks. Congrats on the nice quarter. You know, if I look back at the last few years, your fourth quarter revenue tends to be up slightly compared to 3Q. I know guidance is for at least 19% growth, so you're leaving the door open for something better than that. But at 19, it would imply a 4% sequential decline. So I want to make sure we understand how to think about this case stock program transition and whether that $1.6 million was, in effect, kind of pulled forward from 4Q into 3Q and And then if there's anything else about the dynamics this year that we should be keeping in mind as we're updating our models, especially related to the BLA decision dates, we'd love to sort of flesh that out.

Thanks, Chris. For our fourth quarter, we are expecting our typical seasonality. But in giving our guidance, we have been prudent as because of the case stock program. During the third quarter, we saw an increase of 1.6 million related to these customers transitioning mostly to direct sales. We could discontinue that program September 1st, so we're just one month in. So we're still trying to get a grasp on what that full potential impact could be and if that was a one-time pickup as a result of a shift to direct sales. So when modeling, I would exclude the $1.6 million that we saw from the KSOC program in Q3.

Okay, that's helpful. And then, you know, looking ahead to 26, consensus is right now embedding about 16% revenue growth. You've actually done better than that now three-quarters in a row, but that's obviously going to create some tougher comps as well. I know you guys will give formal guidance in February, but just curious if there's any directional comments you'd like to make now about how you're thinking about next year and maybe some of the key puts and takes you know, across the business.

Hi, Chris. We're not prepared at this point to give any color in 2026 beyond the general statement that we remain very positive about the business and have full confidence in the strategic plan. I realize you guys are looking for more granularity in that, but not ready to provide that. All right. Thanks, Mike. Sure.

Thank you. Our next question comes from the line of Michael Sarcone with Jefferies. Please proceed with your question.

Hey, good morning, and thanks for taking the question. I guess just to start on the BLA, thanks for all the color, Mike. You know, in the press release you had put out in late August, you mentioned the FDA was targeting November to maybe start talks around the label. Is this still the expectation? And then I guess just the follow-up I'll throw out there. Just on the labeling front, can you comment on how you're thinking about the label in terms of being broad versus narrow? And you've made some good progress with the medical societies. Does the FDA take that into account when kind of thinking about the label? Thanks.

Sure. With regards to the last part of your question, we do not know explicitly whether or not the FDA takes that information into account, so I can't comment definitively. With regards to label, as I mentioned in my comments a moment ago, we have expanded already into all parts of the BL application to include a scope of label, and hence why I was able to provide some color based upon those interactions. We believe that we will continue to serve the full scope of the patient indications that we have been serving historically. So no diminution of our ability to provide support and service for mixed and motor nerve patients as we have historically.

Great. Thanks, Mike.

Thank you. Our next question comes from the line of Caitlin Roberts with Canaccord Genuity. Please proceed with your question.

Hi, congrats on an awesome quarter and thanks for taking the questions. I guess just to start off, yeah, hi. I guess just to start off in terms of the commercial coverage, I mean, pretty impressive move up from last quarter. I mean, do you see this plateauing at a certain point prior to the BLA or can you give any more color in terms of the trajectory going forward?

Well, I think it's – I'll tell you what, I'll let Rick answer that question.

All right. Hey, Caitlin, great question. So the increase in our percentage of commercially covered lives primarily reflects the refinement in our data. So we acquired a data set that tracks health plan enrollment by state and metro area. And so that is the main driver of the uplift from 55% coverage to 64% coverage. We're really excited with the progress we've made, and we're a few weeks away from engaging the national payers. There are three big national payers that currently list this investigational experimental, and so that work is ongoing. I've been here seven months, and I would say we're probably five or six months ahead of the initial plans on when we would engage them. So the society support's helpful. We're not going to speculate on when those payers will flip medical policy to cover us, but we're marching forward in our pursuit of making nerve repair an expected standard of care, and we're happy with the progress.

The way we look at it in our strategic plan over time, Caitlin, is to use that phrase I often use, like a little engine that could. It's going to become fits and starts, but it's going to keep going up and to the right, simply because factually and objectively, we have the information to justify these asks, what's happening over the last 12 months and going forward. is that we are methodically engaging with the payers with regards to the information they need and the processes they utilize so that we can make these asks. And when you do, when you have the high ground objectively to make the ask, most of the time you're going to win. And so that's really what's underway and the effort that Rick and his team is leading. And all we can say is so far, so good.

That's awesome. Thanks so much. And then just as a follow-up, Lindsay, I don't think I heard the breakdown in revenue growth this quarter between price and volume and mix. Do you have that available?

Yeah, we're seeing about this typical increase from price. Our mix is the same as what we've seen historically.

Okay, great. Thank you so much.

Thank you.

Thank you. Our next question comes from the line of Jason Bedford with Raymond James. Please proceed with your question.

Good morning and congrats on the progress. Maybe just a quick financial. Hey, Mike. The case stock program that was there, I realize it's relatively small, but was there any impact on gross margin either in 3Q or an expected impact in 4Q?

From case stock specifically?

Yeah, on the gross margin line.

We're not seeing it yet. In the future, we do anticipate some savings just from the nature of that program. It required a lot of additional resources shipping back and forth. With one month in right now, it's hard to say what that total impact is going to be, but we hope to see in the next quarter or two.

But there will be no negative impact. The only question is to what degree positive. The KSTOP program was not a very efficient program.

Okay. Okay. Internationally, I think historically you've talked about addressing the international market. I'm just wondering what the timing is and is it somewhat dependent on the BLA at all?

Completely connected to the BLA in terms of any formative efforts going forward. So until we actually have that, and then can then reengage with competent authorities overseas, we're not going to make any significant investment changes.

Okay. Thank you.

So bottom line, at some point during the first half of 2026, we'll come to a conclusion as to what we will do and where we will do it, and then we'll be providing updates at that point.

Helpful. Thank you.

Thank you. Our next question comes from the line of Mike Kratke with Lering Partners. Please proceed with your question.

Yeah, hi, everyone. Congrats on the strong quarter. You provided some really helpful color on the dynamics between high productivity accounts and other accounts. So what seems to be driving some of the adoption in the non-high productivity accounts? And have you seen any signs of utilization growth in those or how you could convert some of those to high productivity accounts over time? Thanks.

Sure. Jens, are you on the call still?

I am.

Yes. Go ahead.

So, yeah. So our strategy continues to be really focusing the majority of our efforts in the high potential cohort, which is about 800 accounts. The reason for focusing in that segment is because that's where the majority of the nerve repair takes place in the hospital segment. Now, we do have, of course, a lot of other accounts. And the progress that we've been making and the support that we're getting from societies and the increased awareness of the exogen nerve repair algorithm also basically means that you have more procedures adopting the exogen algorithm outside of our high potential focus. So in some ways, the progress that we're making within these academic institutions also have a spillover effect in the other non-high potential accounts.

Understood. Thanks very much. Thanks, Mike.

Thank you. Our next question comes from the line of Ross Osborne with Cantor Fitzgerald. Please proceed with your question.

Hi. Good morning. Thanks for taking our questions. So what are those next steps for targeting the prostate market following the completion of your targeted 100 procedures by year end?

At the conclusion of the initial clinical trials that we're running and development of the procedure guides, we will follow those patients and we will evaluate those outcomes. And based upon those outcomes, that will determine the velocity that we invest thereafter. So we're assuming it will be positive, but we are watching. And realistically, we won't see the clinical feedback on that initial 100 patients that we are enrolling in this trial until sometime towards the middle part of 2026 at the earliest. In the meantime, what we are doing in terms of work product is we are further characterizing the market, refining the support plans, and beginning the process to think through what would be required in terms of a control study, level one type studies. So that's what's underway with Prostate.

Perfect. And then outside of prostate, would you provide some more color on where you stand on generating level one evidence across your portfolio?

We have protocols in development with respect to breast. And then we will have the same, really for each of the segments to be prioritized, we will have one or more studies that we'll be looking to kick off formally during 2026. Actual dates and timing of that have not been confirmed, but as soon as we do, we will update everyone publicly.

Thanks for taking our questions and congrats on the progress. Thank you.

Thank you. Our next question comes from the line of Dave Turkley with Citizens JMP. Please proceed with your question.

Hey, good morning. Mike, I know the society updates are positive, and I know you've been working on them for a while, but I was curious if you could just comment on sort of the process there and maybe why you think this happened kind of right in front of the BLA. Is there anything to read into that?

Well, fortunately, it's serendipitously coincidental, but this is really a process of socialization of clinical evidence. and the society's understanding that for nerve care to go forward, they as the leaders of their membership need to take an effort formally to provide the guidelines and the expectations because that's part of their duties and roles as a society. And for any novel therapies, until societies do that, it's very difficult for these types of new therapies to be adopted to go forward And furthermore, it directly impacts coverage and payment, as coverage and payment is really driven by medical care and clinical guidelines.

And then just as a quick follow-up, is there any thoughts on sort of your other products, maybe the AxiGuard lines and such, in terms of the societies maybe looking at them and maybe having a policy at some point down the line that may include them or incorporate them as well?

There is nothing imminent in that regard. And frankly, it will be really dependent upon evidence in the future for them to take up the mantle or something like that. And that's work that still has to be done. So some of these algorithms that are being adopted are things that people believe in based on their clinical practice and experience. But objectively, we also need to develop the evidence to support them the way you would to put them into the guidelines. Thank you. So that's underway, but that won't happen this year and unlikely to actually complete next year either. More like a 2027 event. Thanks. Sure.

Thank you.

Thanks, Dan. Thank you. Our next question comes from the line of Anthony Patron with Mizuho Group. Please proceed with your question. Sorry, Mr. Patron disconnected. Our next question comes from the line of Frank Akkinen with Lake Street Capital Markets. Please proceed with your question.

Hi, Frank. Thanks for taking the questions. Hey, Mike. Thanks for taking the questions. Congrats on a nice quarter. I was hoping to start with some more guideline commentary as well. How should we think about impacts commercially? Can you do anything differently? Would you maybe pull hiring forward even more? Sounds like you've already been hiring a little faster than anticipated. But with some of these positive guideline wins, do you change strategy and get a little bit more aggressive in any of those areas?

No, we won't change strategy. Although I think maybe to provide open clarity on this, what we have decided is with respect to the strategic plan is we will incrementally hire on a quarterly basis across all target markets. So, we believe that we do not touch every customer and every opportunity, and that the most important thing we can do for our therapies are to ensure that we have coverage in order to develop use of nerve care in all locations of service. So, to that end, and we'll continue to update everybody, but actually, we'll be incrementally expanding the sales footprint for several years going forward on an incremental basis. But we will also do that within the constraints we previously described in terms of financials. So we'll do this with our operating cash flow, and we'll do this only as we can maintain positive leverage.

Got it. That's helpful. I know there was previously some street perception that the government shutdown could impact the BLA process. Based on your commentary today, that feels like those conversations are going well and potentially ahead of expectations in some areas. I assume it's fair to think that the government shutdown is not having an impact on any of your FDA interactions at this point?

That is fair. So to date, We've maintained productive discussions, and as I've just described, we've already extended our discussions to future labeling and scope and expectations. So these things are not finalized yet, but directionally, we're already receiving insights.

Perfect. I'll stop there. Thanks for taking the questions. Thank you.

Thank you. Our next question comes from the line of Anthony Petrone with Mizuho Group. Please proceed with your question.

Thank you. Hi, Mike. How are you? Congrats on the quarter. Apologize to just hopping between earnings calls. Had some phone difficulties. It's actually a follow-up question to the one that was just asked just on timing just to get that down a little bit more closely. So the label will you know, I think the original communication was that label could come before BLA announcement, targeted PDUFA day, December 5th. Is that still the thinking, or will those sort of, you know, coincide more in a December timeframe? And then I'll have a quick follow-up.

Well, we will, I think the way everyone should plan for this is explicit to the guidance previously provided, in which the FDA said November 1st, would then be labeling, and then the final date would be December 5th. So could it come earlier? Yes, but there's no discussion to that effect, and we have no insight that that will occur. All we know is that the work product that supports labeling and all the rest of the BLA application is continuing to pace, and some of it a little bit ahead of the official schedule. So I think for the sake of planning and assumptions, everyone should still assume, because we are, that this will go through December 5th.

And then just a higher level one. It was kind of asked a couple times here, but you did get some medical society positive announcements and also Blue Cross Blue Shield as well as Medicare Advantage extended number of covered lives. So when you think about what a BLA can do to... maybe incremental society announcements and or, you know, coverage expansion, you know, is that just something that we should be expecting in 2026 under a scenario where you do get a positive outcome on the BLA? Thanks again and congrats.

Thank you, Anthony. So the BLA will no doubt be a positive support for all of our market development efforts and guidelines developments. There are still institutions, there are still certain quarters of medical community who, based upon the current regulatory status, consider advanced nerve graft as experimental. So, with the conclusion of the BLA, that question will be resolved. And we will have, as part of our regulatory status, a now codified official benefit-risk profile. that we can all refer to and reference, and all of our future data will build off of that. So strategically and tactically, it will have an impact. What I want to caution everybody about, though, is it will not be a light switch effect. For many customers, they are barely aware that this process is underway, but there are exceptions. So it will be positive, but I don't want anyone to think that this is going to be like a traditional market approval where you're not on the market and then all of a sudden the floodgates open. That's not what will transpire.

Thanks, Anthony.

Thank you. Our final question this morning comes from the line of Yi Chen with HC Wainwright. Please proceed with your question.

Hi, Yi. Hi, this is Eduardo. Oh, hey, how's it going? This is Eduardo on for Yi. I guess to follow up a little bit on the segment growth, I'm curious about If you're seeing particular profitability, I know you have different fragmentations of each of these markets and breast and extremity and OMF. I'm curious if you see anyone to be more specifically profitable and if that's guiding any of your strategic decisions in investing.

Good question. The simple answer is all the segments are, from a profitability standpoint, very positive. the markets that we have established were part of a process to determine what would be the most efficient as well as effective ways to further our business purpose. And so in that sense, we love all of our children, to use that expression. So they were selected explicitly because we thought they were addressable in different ways. So I know it's a little bit of a non-answer, but it's because they're all positive. Any of them that we make progress in is accretive to the business.

Got it. And then just following up, if you could, you mentioned how the BLA would obviously unlock better coverage potentially. I'm curious if you could quantify that. You obviously, again, have pretty good support within the medical groups and societies. And like you mentioned, reimbursement is largely driven by these medical guidelines. I'm curious if you could quantify the impact of the BLA. You mentioned international markets and kind of Obviously, that would be a gate to open up international market discussions, but I guess focusing on more local in the U.S.

This is Rick. I'm happy to chime in and answer that. Sorry. In terms of the BLA unlocking incremental coverage, And quantifying the impact, I think the way to think about it is that it helps unlock portions of the TAM that may have not been accessible prior, rather than thinking about it in terms of a direct impact to revenue in 26. In the way Mike said it, you know, this isn't a light switch, and so that's how I would think about it.

Got it. Thanks for answering the question, and congrats on the quarter. Thanks.

Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Dale for any final comments.

Thank you, operator. On behalf of the Axiogen team, I want to thank everyone for their time and interest in our work to fulfill the promise and potential for all stakeholders in our business purpose to restore health and improve quality of life by making restoration of peripheral nerve function an expected standard of care. We look forward to updating you on our continued progress and plans or on our earnings call next quarter. Thank you.