Segment Information

12 Months Ended

Dec. 31, 2022

Segment Reporting [Abstract]

Segment Information

Segment Information

The Company has two reportable segments: Wound & Surgical and Regenerative Medicine.

•Wound & Surgical focuses on the Advanced Wound Care and Surgical Recovery markets through the sale of the Company’s existing product portfolio and product development to serve these primary end markets. Its platform technologies include tissue allografts derived from human placental membrane (EPIFIX®, AMNIOFIX®, and AMNIOEFFECT®), tissue allografts derived from human umbilical cord (EPICORD® and AMNIOCORD®), and a particulate extracellular matrix derived from human placental disc (AXIOFILL®™). This segment is also responsible for the international sales of the Company’s Section 351 products.

•The Regenerative Medicine business focuses solely on Regenerative Medicine technologies, specifically progressing the Company’s placental biologics platform towards registration as an FDA-approved biological drug. mDHACM is the lead product candidate in its late-stage pipeline targeted at achieving FDA approval for an indication to help decrease pain and improve function in patients suffering from KOA.

The Company’s Corporate function includes expenses incurred by executive, finance, human resource, information systems, legal, other functions which are generally shared and whose activities are not specifically identifiable solely to either of the other segments. It also includes amortization of intangible assets. The Company has another operating segment related to an expiring dental sales contract, reflecting all sales of the Company’s dental product. All net sales and cost of sales presented in the Corporate & Other columns below relate to this operating segment.

Wound & Surgical net sales reflects sales of the Company’s Advanced Wound Care products (as discussed in Note 12, Revenue), except for sales of the Company’s dental product. In addition, Wound & Surgical reflects international sales of the Company’s Section 351 products, which represent all Section 351 sales not reflected in Regenerative Medicine.

The Company evaluates the performance of its segments and allocates resources based on segment contribution, defined as net sales less (i) cost of sales, (ii) selling, general and administrative expense, (iii) research and development expense, and (iv) amortization of intangible assets. Prior period results were recast on the basis of new operating segments. The only components which comprise loss before income tax provision that are not included in operating loss are interest expense, net and other expense, net.

Net sales and segment contribution for each reportable segment for the year ended December 31, 2022 were as follows (in thousands):

	Wound & Surgical		Regenerative Medicine		Corporate & Other		Consolidated
Net sales	$	264,906	$	—	$	2,935	$	267,841
Cost of sales	44,462		—		3,854		48,316
Selling, general and administrative expense	145,887		—		62,902		208,789
Research and development expense	7,836		14,993		—		22,829
Amortization of intangible assets	—		—		701		701
Segment contribution	$	66,721	$	(14,993)
Investigation, restatement and related expense							12,177
Operating loss							$	(24,971)
Supplemental information
Depreciation expense	$	1,791	$	165	$	1,389	$	3,345
Share-based compensation	$	6,513	$	1,158	$	4,995	$	12,666

Net sales and segment contribution for each reportable segment for the year ended December 31, 2021 were as follows (in thousands):

	Wound & Surgical		Regenerative Medicine		Corporate & Other		Consolidated
Net sales	$	238,940	$	16,596	$	3,079	$	258,615
Cost of sales	35,204		3,655		4,424		43,283
Selling, general and administrative expense	123,583		12,910		61,866		198,359
Research and development expense	5,864		11,480		—		17,344
Amortization of intangible assets	—		—		820		820
Segment contribution	$	74,289	$	(11,449)
Investigation, restatement and related expense							3,791
Impairment of intangible assets							53
Operating loss							$	(5,035)
Supplemental information
Depreciation expense	$	1,644	$	246	$	2,473	$	4,363
Share-based compensation	$	5,158	$	1,461	$	8,138	$	14,757

Net sales and segment contribution for each reportable segment for the year ended December 31, 2020 were as follows (in thousands):

	Wound & Surgical		Regenerative Medicine		Corporate & Other		Consolidated
Net sales	$	213,489	$	32,362	$	2,383	$	248,234
Cost of sales	30,185		5,856		3,289		39,330
Selling, general and administrative expense	103,039		17,546		60,437		181,022
Research and development expense	3,979		7,736		—		11,715
Amortization of intangible assets	—		—		1,073		1,073
Segment contribution	$	76,286	$	1,224
Investigation, restatement and related expense							59,465
Impairment of intangibles							1,027
Operating loss							$	(45,398)
Supplemental information
Depreciation expense	$	1,755	$	451	$	3,576	$	5,782
Share-based compensation	$	4,373	$	1,256	$	9,728	$	15,357

The Company does not allocate any assets to the reportable segments. No asset information is reported or disclosed to the CODM in the financial information for each segment.