Restructuring

6 Months Ended

Jun. 30, 2023

Restructuring and Related Activities [Abstract]

Restructuring

Restructuring

On June 20, 2023, the Company announced that it was suspending all activities associated with its knee osteoarthritis clinical trial program and disbanding its Regenerative Medicine business unit (the “Restructuring”). This was the result of the Company’s decision to focus on its Wound & Surgical business to drive profitability and cash flows. The Company anticipates that activities related to the Restructuring will materially conclude in the second half of 2023. Expenses associated with the Restructuring are recognized as the associated liabilities are incurred in an amount equal to the fair value to settle the liability.

Severance

As part of the Restructuring, the Company separated from certain employees whose primary responsibilities were toward the advancement of the Company’s knee osteoarthritis clinical trial program. The Company offered an aggregate of severance arrangements of $2.1 million to separated employees. This amount was recognized as part of research and development expense on the unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2023, as these arrangements were determined not to qualify for accounting as a one-time separation benefit under ASC 420. This amount is reflected in accrued compensation on the unaudited condensed consolidated balance sheet as of June 30, 2023.

Impairments

On June 23, 2023, the Company provided notice to NBCD of the termination of the Nordic Agreement. As part of the Restructuring, the Company no longer anticipated that it would receive any benefits pursuant to the clinical trial program. Accordingly, it recognized an impairment of clinical trial assets related to the Nordic Agreement and all pass-through vendors of $2.1 million during the three and six months ended June 30, 2023. This amount is reflected as part of restructuring expense on the unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2023.

In addition, the Company recorded goodwill impairment for $0.5 million, reflecting all goodwill assigned to the Regenerative Medicine reporting unit. This amount is reflected as part of restructuring expense on the unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2023. See Note 6, “Goodwill and Intangible Assets, Net,” for further information regarding the impairment of goodwill due to the disbanding of the Company’s Regenerative Medicine business unit.

Contract Termination Costs

The Company anticipates that it will incur $0.6 million in expenses to wind-down certain contracts related to the knee osteoarthritis clinical trial program. This amount generally reflects the Company’s expectation for its obligation to carry out the protocol for the patients enrolled in the trial prior to the suspension of activities and close-out costs related to the trial. This amount is reflected as part of accrued expenses on the unaudited condensed consolidated balance sheet as of June 30, 2023 and as part of restructuring expense on the unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2023. The Company had not paid any of these amounts as of June 30, 2023.