Segment Information

9 Months Ended

Sep. 30, 2023

Segment Reporting [Abstract]

Segment Information

Segment Information

The Company had two reportable segments during the three and nine months ended September 30, 2023: Wound & Surgical and Regenerative Medicine.

•Wound & Surgical focused on the Advanced Wound Care and Surgical Recovery markets through the sale of the Company’s portfolio of products 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 international sales of the Company’s Section 351 products.

•Prior to June 20, 2023, Regenerative Medicine focused solely on Regenerative Medicine technologies, specifically progressing the Company’s placental biologics platform towards registration as an FDA-approved biological drug. On June 20, 2023, the Company announced a plan to disband the Regenerative Medicine business unit and suspended its Knee Osteoarthritis clinical trial program. The Company is actively managing wind-down activities for its Regenerative Medicine business unit, primarily related to regulatory obligations associated with its clinical trial. The Company expects that these activities will materially conclude in the fourth quarter of 2023.

The accounting policies of the segments were the same as the Company’s accounting policies. See Note 2, “Significant Accounting Policies,” included in the 2022 Form 10-K.

The Company evaluated the performance of its segments and allocated 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, (iv) amortization of intangible assets, and (v) restructuring. The only components which comprised income (loss) before income tax provision that were not included in operating income (loss) were interest expense, net and other expense, net.

The Company did not allocate any assets to the reportable segments. No asset information was reported or disclosed to the chief operating decision maker in the financial information for each segment.

Net sales and segment contribution by each reportable segment for the three months ended September 30, 2023 were as follows (in thousands):

	Wound & Surgical		Regenerative Medicine		Corporate & Other		Consolidated
Net sales	$	80,376	$	—	$	1,336	$	81,712
Cost of sales	13,305		—		1,485		14,790
Selling, general and administrative expense	38,687		—		13,884		52,571
Research and development expense	3,175		—		—		3,175
Restructuring	—		208		—		208
Amortization of intangible assets	—		—		190		190
Segment contribution	$	25,209	$	(208)
Investigation, restatement and related expense							(38)
Operating income							$	10,816
Supplemental information
Depreciation expense	$	423	$	—	$	230	$	653
Share-based compensation	$	1,902	$	—	$	2,486	$	4,388

Net sales and segment contribution by each reportable segment for the three months ended September 30, 2022 were as follows (in thousands):

	Wound & Surgical		Regenerative Medicine		Corporate & Other		Consolidated
Net sales	$	66,873	$	—	$	816	$	67,689
Cost of sales	11,159		—		1,029		12,188
Selling, general and administrative expense	35,530		—		17,945		53,475
Research and development expense	1,680		4,273		—		5,953
Amortization of intangible assets	—		—		175		175
Segment contribution	$	18,504	$	(4,273)
Investigation, restatement and related expense							3,001
Operating loss							$	(7,103)
Supplemental information
Depreciation expense	$	451	$	36	$	344	$	831
Share-based compensation	$	1,945	$	347	$	80	$	2,372

Net sales and segment contribution by each reportable segment for the nine months ended September 30, 2023 were as follows (in thousands):

	Wound & Surgical		Regenerative Medicine		Corporate & Other		Consolidated
Net sales	$	231,466	$	—	$	3,179	$	234,645
Cost of sales	37,373		—		3,419		40,792
Selling, general and administrative expense	114,853		—		41,920		156,773
Research and development expense	6,330		11,838		—		18,168
Restructuring	—		3,464		—		3,464
Amortization of intangible assets	—		—		570		570
Segment contribution	$	72,910	$	(15,302)
Investigation, restatement and related expense							4,652
Operating income							$	10,226
Supplemental information
Depreciation expense	$	1,208	$	135	$	711	$	2,054
Share-based compensation	$	5,130	$	259	$	7,404	$	12,793

Net sales and segment contribution by each reportable segment for the nine months ended September 30, 2022 were as follows (in thousands):

	Wound & Surgical		Regenerative Medicine		Corporate & Other		Consolidated
Net sales	$	191,297	$	—	$	2,169	$	193,466
Cost of sales	31,126		—		2,821		33,947
Selling, general and administrative expense	108,256		—		50,582		158,838
Research and development expense	6,068		11,361		—		17,429
Amortization of intangible assets	—		—		519		519
Segment contribution	$	45,847	$	(11,361)
Investigation, restatement and related expense							8,771
Operating loss							$	(26,038)
Supplemental information
Depreciation expense	$	1,364	$	120	$	1,065	$	2,549
Share-based compensation	$	5,609	$	910	$	4,279	$	10,798