ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following section contains statements that are not statements of historical fact and are forward-looking statements within the meaning of the federal securities laws. These statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievement to differ materially from anticipated results, performance, or achievement, expressed or implied in such forward-looking statements. These statements reflect our current views with respect to future events, are based on assumptions, and are subject to risks and uncertainties. We discuss many of these risks and uncertainties at the beginning of this Annual Report on Form10-K and under the sections captioned “Business” and “Risk Factors.” The following discussion should also be read in conjunction with the consolidated financial statements and the Notes thereto appearing elsewhere in this Annual Report on Form 10-K.

Management Overview

We are a global joint preservation company that creates and delivers meaningful advancements in early intervention orthopedic care. Based on our collaborations with clinicians to understand what they need most to treat their patients, we develop minimally invasive products that restore active living for people around the world. We are committed to leading in high opportunity spaces within orthopedics, including osteoarthritis (“OA”) Pain Management and Regenerative Solutions.

We have thirty years of global expertise developing, manufacturing and commercializing products based on our hyaluronic (“HA”) technology platform. HA is a naturally occurring polymer found throughout the body that is vital for proper joint health and tissue function. Our proprietary technologies for modifying the HA molecule allow product properties to be tailored specifically to multiple uses, including enabling longer residence time to support OA Pain Management and creating a solid form of HA called Hyaff, which is a platform utilized in our regenerative solutions portfolio.

In early 2020, we expanded our product portfolio and commercial capabilities through the acquisitions of Parcus Medical, LLC and Arthrosurface Incorporated, adding sports medicine, joint preservation, and instrumentation offerings to our business. In 2024, we refined our strategic focus to prioritize OA Pain Management and regenerative solutions and, consistent with this focus, divested Arthrosurface Incorporated in October 2024 and Parcus Medical, LLC in March 2025.

As we look forward to the future, our business is positioned to capture value within our target market of OA Pain Management and Regenerative Solutions product portfolios. We believe our success will be driven by our:

● Energized and experienced team focused on strong values, talent, and culture.

For additional information regarding our business, please refer to “Item 1. Business” of this Annual Report on Form 10-K.

Products

OA Pain Management

Our OA Pain Management product family consists of Monovisc and Orthovisc, our injectable, HA-based OA Pain Management offerings that are indicated to provide pain relief from osteoarthritis conditions; and Cingal, our novel, next-generation, single-injection OA Pain Management product consisting of our proprietary cross-linked HA material combined with a fast-acting steroid. Cingal is our next generation fast-acting, long-lasting, non-opioid, clinically proven osteoarthritis pain product which is designed to provide both short- and long-term pain relief, through at least six months. It is currently sold outside the United States in 53 countries. In 2022, we completed a third Phase III clinical trial for Cingal, which achieved its primary endpoint. Cingal is currently not approved for commercial use in the United States. We have been actively engaging with the U.S. Food and Drug Administration (“FDA”) on next steps for U.S. regulatory approval.

Regenerative Solutions

Our Regenerative Solutions product family consists of: (a) our portfolio of orthopedic regenerative solutions products utilizing HA, including Integrity, our new arthroscopic patch system for rotator cuff repair and other tendon procedures, Tactoset to facilitate bone regeneration, and Hyalofast, sold outside of the United States in over 30 countries, for cartilage repair.

For additional information with respect to our products, including information related to how they are sold and new product development initiatives, please see the sections captioned “Products,” “Sales Channels,” and “Research and Development” contained within “Part I. Item I. Business” of this Annual Report on Form 10-K.

Results of Operations

Year ended December31, 2025 compared to year ended December31, 2024

Statement of Operations Detail

Year Ended December 31,

(in thousands, except percentages)

Gross margin 57 % 63 %

Operating expenses:

Loss from discontinued operations, net of tax (901 ) (47,557 ) 46,656 (98 %)

Revenue

We classify our revenue between the Original Equipment Manufacturer (“OEM”) Channel and the Commercial Channel. In the OEM Channel, we are responsible for development and manufacturing of products sold to our OEM partners governed by long-term agreements, but we do not control sales, marketing, or pricing with end users. In the Commercial Channel, we have full responsibility for sales, marketing, and pricing of products through our commercial leaders, direct sales representatives, and independent distributors. Revenue from our Regenerative Solutions and international OA Pain Management businesses is included in the Commercial Channel.

The following table presents revenue by product family for fiscal years 2025 and 2024 (dollars in thousands):

Years Ended December 31,

Revenue for the year ended December 31, 2025 was $112.8 million, a decrease of $7.1 million, or 6%, compared to the prior year. The decrease in revenue was driven by lower pricing with our OEM channel partners, primarily J&J MedTech.

Revenue from our OEM Channel product family decreased 17% for the year ended December 31, 2025, as compared to prior year, due to a $12.6 million decrease in J&J MedTech revenue, primarily due to lower pricing contributing $10.0 million of the decrease and lower volumes contributing to $2.6 million of the decrease. There was a $0.8 million decrease in the Non-Orthopedic category revenue with prior year due to lower veterinary sales offset by higher ophthalmic and surgery product sales.

Revenue from our Commercial Channel product family increased 15% for the year ended December 31, 2025, as compared to prior year, due to international sales growth on Cingal and Orthovisc, offset by lower Monovisc shipments due to manufacturing delays. This sales growth in international OA Pain Management products was primarily related to increased product demand of $3.6 million and minimal change on pricing with international customers. We also continued our full market release of Integrity in the U.S. in 2025 which contributed to a $3.4 million increase during the year ended December 31, 2025 and we had a $0.8 million increase in Hyalofast which is sold only outside of the United States. These increases in international OA Pain Management, Hyalofast and Integrity revenues were offset by a $1.5 million decrease in Tactoset sales during 2025.

Gross Profit and Margin

Gross profit for the year ended December 31, 2025 was $63.8 million, or gross margin of 57%, as compared with $76.0 million, or gross margin of 63%, for the year ended December 31, 2024. The decrease in gross profit for the year ended December 31, 2025, primarily resulted from lower revenue, primarily related to OA Pain Management products in the U.S., product channel mix with a higher percentage of international sales which have a lower selling price, increased manufacturing costs and higher inventory reserves.

Research and Development

Research and development costs for the years ended December 31, 2025 and 2024 were as follows:

Years Ended December 31,

(in thousands, except percentages)

External costs by program

Other early programs and unallocated expenses 3,631 3,884 (253 ) (7 %)

Internal costs:

Research and development external costs for the years ended December 31, 2025 and 2024 were $11.1 million and $9.7 million, respectively. The increase in research and development external costs was primarily due to increased spending on Cingal regulatory submission activities offset by lower regulatory costs related to EU MDR requirements.

Research and development internal costs for the years ended December 31, 2025 and 2024 were $14.7 million and $15.8 million, respectively. The decrease in internal research and development costs was primarily due to a reduction in headcount and a $0.1 million gain on the sale of an intangible asset during the year ended December 31, 2025.

For additional information on our research and development activities, please see the section captioned “Part I. Item 1. Business—Research and Development” in this Annual Report on Form 10-K.

Selling, General and Administrative

Selling, general and administrative (“SG&A”) expenses for the year ended December 31, 2025 were $49.1 million, a decrease of $6.5 million, or 12%, as compared to the prior year. The decrease in SG&A expenses for the year ended December 31, 2025 was due primarily to lower general and administrative expenses such as $2.2 million in shareholder activism costs that occurred in prior year, $1.5 decrease in stock-based compensation and the remainder attributable to lower headcount and professional fees. We have been investing and expect to continue to invest in selling and marketing expenses primarily related to our Commercial Channel.

Loss from Continuing Operations

For the year ended December 31, 2025, the loss from continuing operations was $10.0 million, compared to a loss from continuing operations of $8.8 million for the prior year. The $1.2 million decrease in the loss from continuing operations was due to lower revenues, primarily from J&J MedTech offset somewhat by lower operating expenses, primarily related to lower SG&A expenses.

Income Taxes

The provision for income taxes was $0.7 million for the year ended December 31, 2025, resulting in an effective tax rate of (7.1%). The provision from income taxes was $6.1 million for the year ended December 31, 2024, resulting in an effective tax rate of (219.4%). The decrease in our effective rate for the year ended December 31, 2025 as compared to the year ended December 31, 2024 is primarily due to the fact that we did not incur current income taxes in the United States during the year ended December 31, 2025.

Non-GAAP Financial Measures

We present certain information with respect to adjusted Earnings Before Interest, Tax, Depreciation and Amortization (“EBITDA”), adjusted net income, adjusted diluted earnings per share or adjusted Earnings Per Share (“EPS”), which are financial measures not based on any standardized methodology prescribed by accounting principles generally accepted in the United States (“GAAP”), and is not necessarily comparable to similarly titled measures presented by other companies.

We have presented adjusted EBITDA, adjusted net income, adjusted EPS, because they are key measures used by our management and board of directors to understand and evaluate our operating performance and to develop operational goals for managing our business. We believe these financial measures help identify underlying trends in our business that could otherwise be masked by the effect of the expenses that we exclude. We believe that the exclusion of these items in calculating these measures can provide a useful tool for period-to-period comparisons of our core operating performance. Accordingly, we believe that these measures provide useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects and allowing for greater transparency with respect to key financial metrics used by our management in their financial and operational decision-making.

Adjusted EBITDA

We present information below with respect to adjusted EBITDA, which we define as our net loss excluding interest and other income, net, income tax benefit, depreciation and amortization, stock-based compensation, product rationalization charges, and other non-recurring expenses.

Adjusted EBITDA is not prepared in accordance with U.S. GAAP, and should not be considered in isolation of, or as an alternative to, measures prepared in accordance with U.S. GAAP. There are a number of limitations related to the use of adjusted EBITDA rather than net income (loss), which is the nearest U.S. GAAP equivalent. Some of these limitations are:

The following is a reconciliation of adjusted EBITDA to net loss from operations for the years ended December 31, 2025 and 2024 respectively:

Years Ended December 31,

Net loss from continuing operations $ (9,979 ) $ (8,828 )

Interest and other income, net (1,744 ) (2,337 )

Provision for income taxes 672 6,064

Depreciation and amortization 5,580 5,688

Product rationalization charges - 606

Non-recurring professional fees 596 -

Costs of shareholder activism - 2,185

Adjusted EBITDA for year ended December 31, 2025 was $5.3 million, a decrease of $10.2 million as compared to 2024. The decrease in adjusted EBITDA was primarily due to lower revenues, primarily related to J&J MedTech and lower gross profit due to higher inventory reserves and manufacturing costs.

Adjusted Net Loss and Adjusted EPS from Continuing Operations

We present information below with respect to adjusted net loss and adjusted EPS from continuing operations. We define adjusted net loss from continuing operations as our net loss from continuing operations excluding amortization and depreciation of acquired assets, changes in the fair value of contingent consideration, as well as certain impairment charges, including impairment related to IPR&D assets and non-cash product rationalization charges, each on a tax effected basis. Acquisition-related expenses are those that we would not have incurred except as a direct result of acquisition transactions. The amortized assets contribute to revenue generation and the amortization of such assets will recur in future periods until such assets are fully amortized. These assets include the estimated fair value of certain identified assets acquired in acquisitions, including in-process research and development (“IPR&D”), developed technology, customer relationships and acquired trade names. We define adjusted EPS from continuing operations as U.S. GAAP diluted earnings per share from continuing operations excluding the above adjustments to net loss from continuing operations used in calculating adjusted net loss from continuing operations, each on a per share and tax effected basis.

The following is a reconciliation of adjusted net income from continuing operations to net loss from continuing operations for the years ended December 31, 2025 and 2024, respectively:

Years Ended December 31,

Net loss from continuing operations $ (9,979 ) $ (8,828 )

Product rationalization charges, tax effected - 457

Share-based compensation, tax effected 10,954 9,167

Non-recurring professional fees, tax effected 639 -

Costs of shareholder activism, tax effected - 1,647

Adjusted net income from continuing operations $ 1,614 $ 2,443

The following is a reconciliation of adjusted diluted income from continuing operations per share to diluted loss from continuing operations per share for the years ended December 31, 2025 and 2024, respectively (in thousands, expect per share data):

Years Ended December 31,

Diluted loss from continuing operations per share $ (0.70 ) $ (0.60 )

Product rationalization charges, tax effected - 0.03

Share-based compensation, tax effected 0.77 0.62

Non-recurring professional fees 0.04 -

Costs of shareholder activism, tax effected - 0.11

Adjusted diluted income from continuing operations per share $ 0.11 $ 0.16

Adjusted net income from continuing operations in 2025 was $1.6 million, a decrease of $0.8 million as compared to 2024. The decrease in adjusted net income from continuing operations and adjusted diluted income from continuing operations per share for the period was primarily due to lower revenues and higher manufacturing expenses during the year.

Results of Operations

Year ended December31, 2024 compared to year ended December31, 2023

Statement of Operations Detail

Year Ended December 31,

(in thousands, except percentages)

Gross margin 63 % 68 %

Operating expenses:

Provision for (benefit from) income taxes 6,064 6,595 (531 ) (8 %)

Revenue

The following table presents revenue by product family for fiscal years 2024 and 2023 (dollars in thousands):

Years Ended December 31,

Revenue for the year ended December 31, 2024 was $119.9 million, a decrease of $0.9 million, or 1%, compared to the prior year. The decrease in revenue was driven by lower sales activity with our OEM channel partners, primarily J&J MedTech and the discontinuation of certain non-orthopedic products.

Revenue from our OEM Channel product family decreased 8% for the year ended December 31, 2024, as compared to prior year, due to lower J&J MedTech revenue, primarily due to lower volumes resulting in a decrease of $4.3 million and lower pricing contributing to a $1.6 million decrease and the discontinuation of certain non-orthopedic products resulting in a decrease of $1.1 million.

Revenue from our Commercial Channel product family increased 17% for the year ended December 31, 2024, as compared to prior year, due to an international sales growth on all our main OA Pain Management products (Monovisc, Cingal and Orthovisc). This sales growth for international OA Pain Management products was primarily related to increased product demand of $4.3 million and minimal change on pricing with international customers. We also launched a full market release of Integrity in the U.S. in 2024 which contributed to a $1.7 million increase in regenerative product sales during the year ended December 31, 2024.

Gross Profit and Margin

Gross profit for the year ended December 31, 2024 was $76.0 million, or gross margin of 63%, as compared with $82.5 million, or gross margin of 68%, for the year ended December 31, 2023. The decrease in gross profit for the year ended December 31, 2024, primarily resulted from lower revenue, primarily related to OA Pain Management products in the U.S., product channel mix and higher inventory product rationalization charges.

Research and Development

Research and development costs for the years ended December 31, 2024 and 2023 were as follows:

Years Ended December 31,

(in thousands, except percentages)

External costs by program

Cingal clinical study 363 - 363 - %

Internal costs:

Research and development expenses for the year ended December 31, 2024 were $25.5 million, an increase of $3.7 million, or 17%, as compared to the prior year, primarily due to increased costs to ensure compliance with growing regulatory requirements globally, such as EU MDR, as well as regulatory, clinical and product development costs associated with our research and development pipeline, led by Hyalofast, in which we submitted the first part of our modular PMA application with the FDA in October 2024.

For additional information on our research and development activities, please see the section captioned “Part I. Item 1. Business—Research and Development” in this Annual Report on Form 10-K.

Selling, General and Administrative

Selling, general and administrative (“SG&A”) expenses for the year ended December 31, 2024 were $55.6 million, a decrease of $4.4 million, or 7%, as compared to the prior year. The decrease in SG&A expenses from the prior year was primarily due to reduced shareholder activism costs of $0.8 million, lower stock-based compensation of $0.8 million, and $1.2 million in other non-recurring costs incurred in 2023 with the remainder attributed to lower headcount.

Income (Loss) from Continuing Operations

For the year ended December 31, 2024, the loss from operations was $5.1 million, compared to income from operations of $0.8 million for the prior year. The $5.9 million decrease in income from operations was due to lower gross profit and higher research and development costs.

Income Taxes

The provision for income taxes was $6.1 million for the year ended December 31, 2024, resulting in an effective tax rate of (219.4%). The provision from income taxes was $6.6 million for the year ended December 31, 2023, resulting in an effective tax rate of 209.0%. The decrease in our effective rate for the year ended December 31, 2024 as compared to the year ended December 31, 2023 is primarily due to a lower valuation allowance being recorded on U.S. deferred tax assets in 2024.

Concentration of Risk

We have historically derived most of our revenue from a small number of customers, most of whom resell our products to end-users and are significantly larger companies than us. For the year ended December 31, 2025, J&J MedTech accounted for 50% of revenue, as compared to 57% in prior year. While we believe that our expanded commercial infrastructure has been and will continue to diversify our revenue base, we expect to continue to be dependent on a small number of large customers, especially J&J MedTech, for a sizeable portion of our revenues in the near-term future. The failure of these customers to purchase our products in the amounts they historically have or in amounts that we expect could materially impact our business. We also have Notes Receivable that we have recorded as consideration related to the divestiture of the Arthrosurface asset group in which repayment will be dependent upon the cash receipts that we receive from Arthrosurface.

In addition, if present and future customers terminate their purchasing arrangements with us, significantly reduce or delay their orders, or seek to renegotiate their agreements on terms less favorable to us, our business, financial condition, and results of operations will be adversely affected. If we accept terms less favorable than the terms of the current agreements, such renegotiations may have a material adverse effect on our business, financial condition, and/or results of operations. Furthermore, in any future negotiations we may be subject to the perceived or actual leverage that these customers may have given their relative size and importance to us. Any termination, change, reduction, or delay in orders could seriously harm our business, financial condition, and results of operations. Accordingly, unless and until we diversify and expand our customer base, our future success will significantly depend upon the timing and size of future purchases by our largest customers and the financial and operational success of these customers. The loss of any one of our major customers or the delay of significant orders from such customers, even if only temporary, could reduce or delay our recognition of revenues, harm our reputation in the industry, and reduce our ability to accurately predict cash flow, and, consequently, it could seriously harm our business, financial condition, and results of operations.

See Note 12, Revenue and Geographic Information; Geographic Information, to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for information regarding significant customers.

Liquidity and Capital Resources

We require cash to fund our operating activities and to make capital expenditures and other investments in the business. We expect that our requirements for cash to fund these uses will increase as our operations, particularly for our expansion of manufacturing capacity. We believe that our operating cash flows, cash currently on our balance sheet and availability under our credit facility will be sufficient to allow us to continue to invest in our existing business, to manage our capital structure on a short and long-term basis, and to meet our anticipated operating cash needs. Cash and cash equivalents aggregated $57.5 million and $55.6 million, and working capital totaled $80.2 million and $90.3 million, at December 31, 2025 and 2024, respectively.

We entered into a Third Amendment to Credit Agreement, on November 12, 2021, with Bank of America N.A. as administrative agent, which amended our existing revolving line of credit agreement dated October 24, 2017, and provides up to $75.0 million in the form of a senior revolving line of credit. Subject to certain conditions, we may request up to an additional $75.0 million for a maximum aggregate commitment of $150.0 million. As of December 31, 2025, and 2024, there were no outstanding borrowings, and we are in compliance with the terms of the credit facility.

Summary of Cash Flows (in thousands):

Years Ended December 31,

Cash provided by (used in)

Effect of exchange rate changes on cash 86 (48 ) 79

The following changes contributed to the net change in cash and cash equivalents from 2024 to 2025.

Operating Activities

Cash provided by (used in) operating activities was $11.2 million, $5.4 million and $(1.8) million for 2025, 2024 and 2023, respectively. The increase in cash provided by operating activities was primarily due to a lower net loss in 2025 as we incurred a $47.6 million loss from discontinued operations, offset somewhat by $44.1 million in non-cash impairment charges with the divestitures of Arthrosurface and Parcus Medical during the year ended December 31, 2024.

For the foreseeable future, we expect to continue to invest in research and development for new products and clinical trials related to our HA-based technology to support our growth strategy, particularly on Cingal and Integrity. These costs will be funded with a combination of cash on hand and cash expected to be generated from future operations.

Investing Activities

Cash used in investing activities was $0.4 million, $8.3 million and $5.4 million for 2025, 2024 and 2023, respectively. The decrease in cash used in investing activities was primarily related to proceeds received from the sales of Arthrosurface and Parcus Medical offset by an increase in capital expenditures in 2025 to support the expansion of manufacturing capacity at our Bedford facility.

Financing Activities

Cash used in financing activities was $10.6 million, $12.7 million and $6.3 million for 2025, 2024 and 2023, respectively. The decrease in cash used in financing activities was primarily due a reduction in stock repurchases as we incurred $9.5 million in 2025 versus $10.9 million on the stock repurchase program we started in May 2024. We also had lower payments in cash withheld for taxes related the vesting of restricted stock awards.

For a discussion of our liquidity and capital resources as of December 31, 2024, and our cash flow activities for the fiscal year ended December 31, 2024, see “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on March 17, 2025, which is incorporated by reference in this Report.

Contractual Obligations and Other Commercial Commitments

The table below summarizes our non-cancelable operating leases, purchase commitments, and contractual obligations related to future periods which are not reflected in our consolidated balance sheet at December 31, 2025. Purchase commitments relate primarily to non-cancellable inventory commitments and capital expenditures entered in the normal course of business:

Payments due by period (in thousands)

Less than More than

Total 1 year 1 - 3 years 3 - 5 years 5 years

We also have purchase orders and commitments for materials and other day-to-day business requirements in which there are no material commitments greater than one year.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, which consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. We monitor our estimates on an ongoing basis for changes in facts and circumstances, and material changes in these estimates could occur in the future. Changes in estimates are recorded in the period in which they become known. We base our estimates on historical experience and other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from our estimates if past experience or other assumptions do not turn out to be substantially accurate.

We have identified the policies below as critical to our business operations and the understanding of our results of operations. The impact and any associated risks related to these policies on our business operations are discussed throughout this section captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations” where such policies affect our reported and expected financial results. For a detailed discussion on the application of these and other accounting policies, see Note 2 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Revenue Recognition – General

Pursuant to Accounting Standards Codification (“ASC”) 606, we recognize revenue when a customer obtains control of promised goods or services. The amount of revenue that is recorded reflects the consideration that we expect to receive in exchange for those goods or services. We apply the following five-step model in order to determine this amount: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are capable of being distinct or distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) we satisfy each performance obligation.

We generate sales principally through three types of customers: (i) commercial partnerships (ii) hospitals and ambulatory service centers, and (iii) distributors, referred to as distribution model.

For commercial partnership sales, we sell our products directly to these partners, who perform most of the downstream sales and marketing activities to customers and end users. These arrangements may include the grant of certain licenses, performance of development services, and the supply of products. We recognize revenue from product sales when the customer obtains control of our product, which typically occurs upon shipment to the customer. Commercial partnership agreements may also include sales-based royalties and milestones. Sales-based royalties and milestones are only recognized when the latter of the underlying sale occurs or the performance obligation to which some or all of the sales-based royalties have been satisfied (or partially satisfied). This is generally in the same period that our commercial partners complete their product sales in their territory, for which we are contractually entitled to a percentage-based royalty. We record royalty revenues based on estimated net sales of licensed products as reported to us by our commercial partners. The differences between actual and estimated royalty revenues have not been material and are typically adjusted in the following quarter when the actual amounts are known. Revenue from sales-based royalties is included in revenues in our consolidated statement of operations.

Our largest customer, J&J MedTech, represented 50% of total revenues for the year ended December 31, 2025. Our collaboration agreement with J&J MedTech includes contracts with Orthovisc and Monovisc products, which were entered into in 2003 and 2011, respectively. Pursuant to the J&J MedTech contracts, we are the exclusive supplier responsible for the manufacture and sale to J&J MedTech of the Orthovisc and Monovisc products pursuant to J&J MedTech’s purchase orders, while J&J MedTech is responsible for the marketing, sales and distribution to end-customers. In general, our long-term contractual arrangements do not allow for any other product source suppliers for the OEM Channel partners. Furthermore, given the proprietary nature of the products, manufacturing would not be easily replicated by the OEM Channel partners, including J&J MedTech nor would an alternative source of supply be available, such that the product supply and license are not distinct. For these reasons, we believe that revenue earned from the combined fixed and variable consideration paid for the sales of the product meets the objective of ASC 606-10-50-5 in depicting how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.

For sales to hospitals and ambulatory service centers, which generally pair in-house sales representatives with local or regional distributors, the inventory is generally consigned so that products are available when needed for surgical procedures. No revenue is recognized upon the placement of inventory into consignment, as we retain the ability to control the inventory. Revenue is recognized typically as of the date of surgical implantation of the product.

For distributor sales, we sell our products to our distributors, generally outside the United States, who subsequently resell the products to sub-distributors and health care providers, among others. We recognize revenue from product sales when the distributor obtains control of our product, which typically occurs upon shipment to the distributor, in return for agreed-upon, fixed-price consideration. Performance obligations are generally settled quickly after purchase order acceptance. We have no performance obligations greater than one year; therefore, the value of unsatisfied performance obligations at the end of any reporting period is generally insignificant. We sell to a diversified base of distributors and, therefore, we believe there is no material concentration of credit risk.

Certain of our supply agreements contain terms that represent a promise to deliver product at the customer’s discretion that are considered distributor options. We assess if these options provide a material right to the licensee, and if so, they are accounted for as separate performance obligations. Our supply agreements do not provide options that are considered material rights.

Our payment terms are consistent with prevailing practice in the respective markets in which we do business. Most of our customers make payments based on contract terms, which are not affected by contingent events that could impact the transaction price. Payment terms fall within the one-year guidance for the practical expedient, which allows us to forgo adjustment of the contractual payment amount of consideration for the effects of a significant financing component.

Some of our distributor agreements have volume-based discounts with tiered pricing which are generally prospective in nature. These prospective discounts together with any free-of-charge sample units offered are evaluated as potential material rights. If the prospective discounts or free-of-charge sample units are considered material rights, these would be separate performance obligations, and a portion of the sales transaction price is allocated to the material right. Revenue allocated to the material rights are recognized when the additional goods are transferred to the customer or when the option expires. During 2025, the consideration allocated to material rights was not significant.

We receive payments from our customers based on billing schedules established in each contract. Up-front payments and fees are recorded as deferred revenue upon receipt or when due and may require deferral of revenue recognition to a future period until we perform our obligations under these arrangements. Amounts are recorded as accounts receivable when our right to consideration is unconditional. There was no deferred revenue as of December 31, 2025 and 2024, respectively.

Generally, customer contracts contain Free on Board (“FOB”) or Ex-Works shipping point terms where the customer pays the shipping company directly for all shipping and handling costs. In those contracts in which we pay for shipping and handling, the associated costs are generally recorded along with the product sale at the time of shipment in cost of revenue when control over the products has been transferred to the customer. Value-added and other taxes we collected concurrently with revenue-producing activities are excluded from revenue. Our general product warranty does not extend beyond an assurance that the product or services delivered will be consistent with stated contractual specifications, which does not create a separate performance obligation. We recognize the incremental costs of obtaining contracts as an expense when incurred as the amortization period of the assets that we otherwise would have recognized is one year or less in accordance with the practical expedient in paragraph Code 340-40-25-4. These costs are included in selling, general and administrative expenses.

Inventories

Inventories are primarily stated at the lower of standard cost and net realizable value, with approximate cost determined using the first-in, first-out method. Work-in-process and finished goods inventories include materials, labor, and manufacturing overhead. Manufacturing variances attributable to abnormally low production are expensed in the period incurred. Inventory costs associated with product candidates that have not yet received regulatory approval are capitalized if we believe there is probable future commercial use and future economic benefit.

Our policy is to write down inventory when conditions exist that suggest inventory may be in excess of anticipated demand or is obsolete based upon assumptions about future demand for our products and market conditions. We regularly evaluate the ability to realize the value of inventory based on a combination of factors including, but not limited to, historical usage rates, forecasted sales or usage, product end of life dates, and estimated current or future market values. Inventory needs and alternative usage avenues are explored within these processes to mitigate inventory exposure.

When recorded, inventory write-downs are intended to reduce the carrying value of inventory to its net realizable value. If actual demand for our products deteriorates, or if market conditions are less favorable than those projected, additional inventory write-downs may be required. Other long-term assets include inventory expected to remain on hand beyond one year.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

We manage our investment portfolio in accordance with our investment policy. The primary objectives of our investment policy are to preserve principal, maintain a high degree of liquidity to meet operating and other needs, and obtain competitive returns subject to prevailing market conditions without significantly increasing risk. To achieve this objective, we maintain our portfolio of cash equivalents and investments in a variety of high-quality securities, including money market funds and U.S. treasury bills. The investments are classified as available-for-sale and consequently are recorded at fair value with unrealized gains or losses reported as a separate component of accumulated other comprehensive income (loss). Our portfolio of cash equivalents and investments is subject to interest rate fluctuations, changes in credit quality of the issuer, and other factors.

Foreign Currency Exchange Risk

Foreign currency risk arises from our investments in subsidiaries owned and operated in non-U.S. countries. Such risk is also a result of transactions with customers in countries outside the United States. Approximately $27.6 million of our revenue was denominated in foreign currencies (primarily the Euro and UK pound sterling) for the year ended December 31, 2025. Gains and losses arising from transactions denominated in foreign currencies are primarily related to intercompany accounts that have been determined to be temporary in nature and cash, accounts payable, and accounts receivable denominated in non-functional currencies. We also utilize clinical vendors that are located in various countries outside of the United States that invoice us in their local currency and we have one major supplier contract denominated in a foreign currency. We do not engage in foreign currency hedging arrangements for these transactions, and, consequently, foreign currency fluctuations may adversely affect our earnings. Unfavorable fluctuations in exchange rates would have a negative impact on our financial statements. The impact of currency exchange rate fluctuations related to our international subsidiaries on our financial statements was insignificant in 2025. We recognize foreign currency gains or losses arising from our operations in the period incurred.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ANIKA THERAPEUTICS,INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34) 50

Consolidated Balance Sheets as of December 31, 2025 and 2024 52

Notes to Consolidated Financial Statements 56

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Anika Therapeutics, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Anika Therapeutics, Inc. and subsidiaries (the "Company") as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America (GAAP).

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 2, 2026, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Reserve for Excess and Obsolete Inventories — Refer to Notes 2 and 5to the financial statements

Critical Audit Matter Description

The Company evaluates inventory each reporting period for excess quantities and obsolescence, establishing reserves when necessary, based upon historical experience, assessment of economic conditions, and expected demand. Once recorded, the inventory reserve write-offs are considered permanent adjustments to the carrying value of inventory. As of December 31, 2025, the Company has total inventories of $22.3 million, net of excess quantities and obsolescence reserves.

We identified the reserve for excess quantities and obsolete inventory as a critical audit matter because of the significant estimates and assumptions management makes to quantify and to record the reserve, including the determination of expected demand. This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the methodology and the reasonableness of assumptions including expected demand.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the reserve for excess quantities and obsolete inventory including management’s estimate of expected demand, included the following, among others:

/s/ Deloitte & Touche LLP

Boston, Massachusetts

March 2, 2026

We have served as the Company’s auditor since 2017.

Anika Therapeutics, Inc. and Subsidiaries

Consolidated Balance Sheets

(in thousands, except per share data)

December 31,

Current assets:

Prepaid expenses and other current assets 3,400 5,494

Current assets held for sale - 5,126

Non-current assets held for sale - 2,026

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accrued expenses and other current liabilities 15,867 13,567

Current liabilities held for sale - 4,122

Other long-term liabilities 701 772

Non-current liabilities held for sale - 659

Commitments and contingencies (Note 11)

Stockholders’ equity:

Accumulated other comprehensive loss (4,959 ) (6,783 )

Total liabilities and stockholders’ equity $ 190,270 $ 202,740

The accompanying notes are an integral part of these consolidated financial statements.

Anika Therapeutics, Inc. and Subsidiaries

Consolidated Statements of Operations and Comprehensive Income (Loss)

(in thousands, except per share data)

For the Years Ended December 31,

Operating expenses:

Loss from discontinued operations, net of tax (901 ) (47,557 ) (79,228 )

Loss per share:

Basic

Continuing operations $ (0.70 ) $ (0.60 ) $ (0.23 )

Discontinued operations (0.06 ) (3.23 ) (5.41 )

Diluted

Continuing operations $ (0.70 ) $ (0.60 ) $ (0.23 )

Discontinued operations (0.06 ) (3.23 ) (5.41 )

Weighted average common shares outstanding:

Foreign currency translation adjustment 1,824 (840 ) 500

The accompanying notes are an integral part of these consolidated financial statements.

Anika Therapeutics, Inc. and Subsidiaries

Consolidated Statements of Stockholders' Equity

(in thousands, except per share data)

Accumulated

Common Stock Other Total

Number of $.01 Par Additional Paid Retained Comprehensive Stockholders'

Shares Value in Capital Earnings Loss Equity

Issuance of common stock for equity awards 2 - 23 - - 23

Vesting of restricted stock units 262 3 (3 ) - - -

Issuance of common stock from employee purchase plan 41 - 805 - - 805

Stock-based compensation expense - - 15,243 - - 15,243

Other comprehensive loss - - - - 500 500

Issuance of common stock for equity awards 3 - 76 - - 76

Vesting of restricted stock units 312 3 (2 ) - - 1

Issuance of common stock from employee purchase plan 44 - 708 - - 708

Stock-based compensation expense - - 11,677 - - 11,677

Other comprehensive loss - - - - (840 ) (840 )

Issuance of common stock from employee purchase plan 55 1 500 - - 501

Stock-based compensation expense - - 7,388 - - 7,388

Other comprehensive income - - - - 1,824 1,824

The accompanying notes are an integral part of these consolidated financial statements.

Anika Therapeutics, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands)

For the years ended December 31,

(a) (a) (a)

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash provided by operating activities:

Amortization of acquisition related intangible assets 357 1,237 7,783

Loss on impairment of long-lived assets - 2,462 62,190

Interest income on notes receivable (896 ) - -

Changes in operating assets and liabilities:

Prepaid expenses, other current and long-term assets 2,327 558 560

Net cash provided by (used in) operating activities 11,188 5,403 (1,788 )

Cash flows from investing activities:

Purchases of property and equipment (6,826 ) (7,734 ) (5,427 )

Proceeds from sale of Parcus 4,496 - -

Note receivable 1,329 - -

Proceeds from sale of intangible asset 600 - -

Acquisition of intangible asset - (600 ) -

Net cash used in investing activities (401 ) (8,334 ) (5,427 )

Cash flows from financing activities:

Proceeds from employee stock purchase program 500 708 805

Proceeds from exercises of equity awards - 76 23

Exchange rate impact on cash 86 (48 ) 79

Increase (decrease) in cash and cash equivalents 322 (15,708 ) (13,460 )

Supplemental disclosure of cash flow information:

Cash paid for income taxes, net of refunds $ 1,076 $ 3,993 $ 3,117

Non-cash investing activities:

Notes receivable $ - $ 5,935 $ -

The accompanying notes are an integral part of these consolidated financial statements.

Anika Therapeutics,Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(amounts in thousands, except share and per share amounts or as otherwise noted)

1. Nature of Business

Anika Therapeutics, Inc. (the “Company”) is a global joint preservation company in the osteoarthritis (“OA”) pain management and regenerative solutions spaces, focusing on early intervention orthopedics. The Company offers differentiated advancements in regenerative therapies and OA Pain Management, all designed to restore active living, empower surgeon choice, and enhance patient outcomes worldwide.

In early 2020, the Company expanded its overall technology platform through its strategic acquisitions of Parcus Medical, LLC (“Parcus Medical”), a sports medicine implant and instrumentation company, and Arthrosurface Incorporated (“Arthrosurface”), a company specializing in less invasive, bone preserving partial and total joint replacement solutions. These acquisitions broadened the Company's product portfolio, developed over its 30 years of expertise in hyaluronic acid technology, into joint preservation and restoration, added higher-growth revenue streams, increased its commercial capabilities, diversified its revenue base, and expanded its product pipeline and research and development expertise.

In October 2024, the Company announced a strategic shift to concentrate on OA Pain Management and Regenerative Solutions. This strategic decision resulted in the sale of Arthrosurface on October 31, 2024 and the sale of Parcus Medical on March 7, 2025, both of which were acquired in early 2020.

The Company is subject to risks common to companies in the life sciences industry including, but not limited to, development by the Company or its competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, commercialization of existing and new products, and compliance with U.S. Food and Drug Administration (“FDA”) and foreign regulations and approval requirements, as well as the ability to grow the Company’s business through appropriate commercial strategies.

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (“US GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Basis of Presentation

The accompanying consolidated financial statements include the accounts of Anika Therapeutics, Inc. and its wholly owned subsidiaries, Anika Securities, Inc., Anika Therapeutics S.r.l. (“Anika S.r.l.”), Anika Therapeutics Limited, Parcus Medical and Arthrosurface. All intercompany balances and transactions have been eliminated in consolidation.

As noted above, the Company made a strategic decision in October 2024 that resulted in the divestitures of Arthrosurface and Parcus Medical. The consolidated financial statements reflect the Arthrosurface and Parcus results of operations as discontinued operations, and the related assets and liabilities as held-for-sale for all periods presented.

Certain reclassifications have been made to prior period financial operations to reflect discontinued operations presentation. Unless otherwise noted, amounts and disclosures throughout these consolidated financial statements relate solely to continuing operations and exclude all discontinued operations.

Foreign Currency Translation

The functional currency of Anika S.r.l. is the Euro and the functional currency of Anika Therapeutics Limited is the British Pound Sterling. Assets and liabilities of the foreign subsidiaries are translated using the exchange rate existing on each respective balance sheet date. Revenues and expenses are translated using the average exchange rates for the period. The translation adjustments resulting from this process are included in stockholders’ equity as a component of accumulated other comprehensive income (loss) which resulted in a (loss) gain from foreign currency translation of $1.8 million, ($0.8) million, and $0.5 million for the years ended December 31, 2025, 2024, and 2023, respectively.

Gains and losses resulting from foreign currency transactions are recognized in the consolidated statements of operations. Recorded balances that are denominated in a currency other than the functional currency are remeasured to the functional currency using the exchange rate at the balance sheet date and gains or losses are recorded in the statements of operations. The Company recognized a loss from foreign currency transactions of ($0.4) million, ($0.2) million, and ($0.1) million during the years ended December 31, 2025, 2024, and 2023, respectively.

Accounts Receivable

The Company estimates an allowance for credit losses with its accounts receivable resulting from the inability of its customers to make required payments, which is included in selling, general and administrative expenses in the accompanying consolidated statements of operations. In determining the adequacy of the allowance, management specifically analyzes individual accounts receivable, historical bad debts, customer concentrations, customer creditworthiness, current and reasonable and supportable forecasts of future economic conditions, accounts receivable aging trends, and changes in the Company’s customer payment terms.

The components of the Company’s accounts receivable are as follows:

As of December 31,

Less: Allowance for credit losses 1,127 730

A summary of activity in the allowance for credit losses is as follows:

As of December 31,

Balance, beginning of the year $ 730 $ 666 $ 821

Translation adjustments 70 (30 ) (26 )

Revenue Recognition

Pursuant to Accounting Standard Codification 606, Revenue from Contracts with Customers (“ASC 606”), the Company recognizes revenue when a customer obtains control of promised goods or services. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are capable of being distinct or distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

Revenue

The Company generates sales principally through the sale of products to three types of customers: (i) commercial partnerships (ii) hospitals and ambulatory surgical centers (“ASCs”), and (iii) distributors, referred to as the distribution model.

For commercial partnership sales, the Company sells its products directly to these partners, who perform most of the downstream sales and marketing activities to customers and end-users. These arrangements may include the grant of certain licenses, performance of development services, and the supply of products. The Company recognizes revenue from product sales when the customer obtains control of the Company’s product, which typically occurs upon shipment to the customer. Commercial partnership agreements may also include variable revenue measured as a percentage of sales to end-customers (“sales-based royalties”) and milestones. Sales-based royalties and milestones are only recognized when the latter of the underlying sale occurs or the performance obligation to which the sales-based royalty has been satisfied (or partially satisfied). This is generally in the same period that the Company’s commercial partners complete their product sales in their territory, for which the Company is contractually entitled to a percentage-based royalty. The Company records royalty revenues based on estimated net sales of licensed products as reported to the Company by its commercial partners. The differences between actual and estimated royalty revenues have not been material and are typically adjusted in the following quarter when the actual amounts are known. Revenue from sales-based royalties is included in revenue in the consolidated statement of operations. The Company’s certain supply agreements represent a promise to deliver products at the customer’s discretion that are considered distributor options. The Company assesses if these options provide a material right to the licensee, and if so, they are accounted for as separate performance obligations. Substantially all the Company’s supply agreements do not provide options that are considered material rights.

The Company’s largest such customer, Johnson & Johnson MedTech (“J&J MedTech”) (previously known as DePuy Synthes Mitek Sports Medicine), a division of DePuy Orthopedics, Inc., part of the Johnson & Johnson Medical Companies, represented 50%, 57% and 62% of total revenues for the years-ended December 31, 2025, 2024 and 2023 respectively. The Company’s collaboration agreement with J&J MedTech include contracts with Orthovisc and Monovisc products, which were entered into in 2003 and 2011, respectively. The Company completed the performance obligations related to granted licenses and development services under the agreements with J&J MedTech prior to 2016 and has no remaining material performance obligations. Pursuant to the J&J MedTech contracts, the Company is the exclusive supplier responsible for the manufacture and sale to J&J MedTech of the Orthovisc and Monovisc products pursuant to J&J MedTech’s purchase orders, while J&J MedTech is responsible for the marketing, sales and distribution to end-customers. In general, the Company’s long-term contractual arrangements do not allow for any other product source suppliers for the OEM Channel partners. Furthermore, given the proprietary nature of the products, manufacturing would not be easily replicated by the OEM Channel partners, including J&J MedTech nor would an alternative source of supply be available, such that the product supply and license are not distinct. For these reasons, the Company believes that revenue earned from the combined fixed and variable consideration paid for the sales of the product meets the objective of ASC 606-10-50-5 in depicting how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.

For sales to hospitals and ASCs, which generally pair in-house sales representatives with local or regional distributors, the inventory is generally consigned so that products are available when needed for surgical procedures. No revenue is recognized upon the placement of inventory into consignment, as the Company retains the ability to control the inventory. Revenue is typically recognized as of the date of surgical implantation of the product.

For distributor sales, the Company sells its products principally to distributors, generally outside the United States, who subsequently resell the products to sub-distributors and health care providers, among others. The Company recognizes revenue from product sales when the distributor obtains control of the Company’s product, which typically occurs upon shipment to the distributor, in return for agreed-upon, fixed-price consideration.

Performance obligations are generally settled quickly after purchase order acceptance; therefore, the value of unsatisfied performance obligations at the end of any reporting period is generally insignificant. The Company sells to a diversified base of international distributors and, therefore, believes there is no material concentration of credit risk.

The Company’s payment terms are consistent with prevailing practice in the respective markets in which the Company does business. Most of the Company’s customers make payments based on contract terms, which are not affected by contingent events that could impact the transaction price. Payment terms fall within the one-year guidance for the practical expedient, which allows the Company to forgo adjustment of the contractual payment amount of consideration for the effects of a significant financing component.

Some of the Company’s distributor agreements have volume-based discounts with tiered pricing which are generally prospective in nature. These prospective discounts together with any free-of-charge sample units offered are evaluated as potential material rights. If the prospective discounts or free-of-charge sample units are considered material rights, these would be separate performance obligations and a portion of the sales transaction price is allocated to the material right. Revenue allocated to the material rights are recognized when the additional goods are transferred to the customer or when the option expires. During 2025, 2024 and 2023, the consideration allocated to material rights was not significant.

The Company receives payments from its customers based on billing schedules established in each contract. Any up-front payments and fees are recorded as deferred revenue upon receipt or when due and may require deferral of revenue recognition to a future period until the Company performs its obligations under these arrangements. Amounts are recorded as accounts receivable when its right to consideration is unconditional. The Company had no deferred revenue as of December 31, 2025 and 2024, respectively.

Generally, customer contracts contain Free on Board (“FOB”) or Ex-Works shipping point terms where the customer pays the shipping company directly for all shipping and handling costs. In those contracts in which the Company pays for the shipping and handling, the associated costs are generally recorded along with the product sale at the time of shipment in cost of revenue when control over the products has been transferred to the customer. Value-add and other taxes collected by the Company with revenue-producing activities are excluded from revenue. The Company’s general product warranty does not extend beyond an assurance that the product or services delivered will be consistent with stated contractual specifications, which does not create a separate performance obligation. The Company recognizes the incremental costs of obtaining contracts as an expense when incurred as the amortization period of the assets that the Company otherwise would have recognized is one year or less in accordance with the practical expedient in paragraph Code 340-40-25-4. These costs are included in selling, general and administrative expenses.

Licensing, Milestone and Contract Revenue

The agreements with J&J MedTech include variable consideration such as contingent development and regulatory milestones. Since 2016, there have been no remaining regulatory milestones related to the J&J MedTech agreements. In general, variable consideration is included in the transaction price only to the extent a significant reversal in the amount of cumulative revenue recognized is not probable to occur.

Cash and Cash Equivalents

The Company considers only those investments which are highly liquid, readily convertible to cash, and that mature within 90 days from the date of purchase to be cash equivalents. The Company’s cash equivalents consist of money market funds.

Investments

The Company may invest its excess cash in investments, which are classified as available-for-sale. Investments are recognized on a recurring basis at fair value with unrealized gains and losses recorded as a component of accumulated other comprehensive income (loss), net of related income taxes. For securities sold prior to maturity, the cost of securities sold is based on the specific identification method. Realized gains and losses on the sale of investments are recorded in interest and other income, net. Interest is recorded when earned. Investments with original maturities greater than approximately three months and remaining maturities less than one year are classified as short-term investments. Investments with remaining maturities greater than one year are classified as long-term investments. The Company had no long-term investments as of December 31, 2025 or December 31, 2024.

Investments are subject to a periodic impairment review. For available-for-sale debt securities in an unrealized loss position, the Company first assesses whether (i) the Company intends to sell, or (ii) it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis. If either case is affirmative, any previously recognized allowances are charged off and the security's amortized cost is written down to fair value through earnings. If neither case is affirmative, the security is evaluated to determine whether the decline in fair value has resulted from credit losses or other factors.

Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income. Adjustments to the allowance are reported in the consolidated statement of operations as a component of credit loss expense. Available-for-sale securities are charged off against the allowance or, in the absence of any allowance, written down through earnings when deemed uncollectible by management or when either of the criteria regarding intent or requirement to sell is met.

During the years ended December 31, 2025, 2024 and 2023, the Company did not record any impairment charges on its available-for-sale securities because it is not more likely than not that the Company will be required to sell these securities before the recovery of their cost basis.

Concentration of Credit Risk

The Company has no significant off-balance sheet risks related to foreign exchange contracts, option contracts, or other foreign hedging arrangements. The Company’s cash equivalents and investments are held with three major financial institutions.

The Company, by policy, routinely assesses the financial strength of its customers. As a result, the Company believes that its accounts receivable credit risk exposure is limited.

As of December 31, 2025 and 2024, J&J MedTech represented 55% and 56%, respectively, of the Company’s accounts receivable balance. No other single customer accounted for more than 10% of accounts receivable in either period.

Notes Receivable

In October 2024, the Company sold the Arthrosurface Asset Group to Phoenix Brio, Inc. (the “Buyer”) (refer to Note 3) in exchange for consideration which included a 10-year $7.0 million non-interest-bearing note receivable (the “Term Note Receivable”), as well as variable consideration to be paid by the Buyer in twenty quarterly installments of 3% of the Buyer’s net sales (the “Royalty Note Receivable” and collectively the “Notes Receivable”). The Company recognized the Term Note Receivable and the Royalty Note Receivable at their estimated fair values of $3.8 million and $2.1 million, respectively. The fair value of the Notes Receivable was determined based on a discounted cash flow analysis of the contractually scheduled repayments for the Term Note Receivable and the forecasted variable payments for the Royalty Note Receivable, using a discount rate of 12.75%. The Notes Receivable are subsequently measured at amortized cost, as adjusted for estimated credit losses.

Inventories

Inventories are primarily stated at the lower of standard cost and net realizable value, with cost determined using the first-in, first-out method. Work-in-process and finished goods inventories include materials, labor, and certain manufacturing overhead. Manufacturing variances attributable to abnormally low production are expensed in the period incurred.

The Company’s policy is to write down inventory when conditions exist that suggest inventory may be in excess of anticipated demand or is obsolete based upon assumptions about future demand for the Company’s products and market conditions. The Company regularly evaluates the ability to realize the value of inventory based on a combination of factors including, but not limited to, historical usage rates, forecasted sales or usage, product end of life dates, and estimated current or future market values. Purchasing requirements and alternative usage avenues are explored within these processes to mitigate inventory exposure.

When recorded, inventory write-downs are intended to reduce the carrying value of inventory to its net realizable value. If actual demand for the Company’s products deteriorates, or if market conditions are less favorable than those projected, additional inventory write-downs may be required. Other long-term assets include inventory expected to remain on hand beyond one year.

Leases

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the circumstances present and evaluates whether the lease is an operating lease or a finance lease at the commencement date. Operating and finance leases with a term greater than one year are recognized on the consolidated balance sheet as right-of-use assets, lease liabilities, and, if applicable, long-term lease liabilities. The Company includes renewal options to extend the lease in the lease term where it is reasonably certain that it will exercise these options. Operating and finance lease liabilities and the corresponding right-of-use assets are recorded based on the present values of lease payments over the lease terms. The Company elected an accounting policy to combine the non-lease components (which include common area maintenance, taxes and insurance) with the related lease component. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the appropriate incremental borrowing rates, which are the rates that would be incurred to borrow on a collateralized basis, over similar terms, amounts equal to the lease payments in a similar economic environment. Lease contracts do not include residual value guarantees nor do they include restrictions or other covenants. Certain adjustments to the right-of-use assets may be required for items such as initial direct costs paid, incentives received or lease prepayments. If significant events, changes in circumstances, or other events indicate that the lease term or other inputs have changed, the Company would reassess lease classification, remeasure the finance and operating lease liabilities by using revised inputs as of the reassessment date, and adjust the right-of-use asset. Operating lease expense is recognized on a straight-line basis over the lease term. Finance lease expense is recognized based on the effective-interest method over the lease term.

Property and Equipment

Property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives, which are typically:

Asset Estimated useful life (in years)

Computer equipment and software 3 - 12

Furniture and fixtures 5 - 7

Equipment 5 - 20

Leasehold improvements Shorter of useful life or term of lease

Maintenance and repairs are charged to expense when incurred; additions and improvements are capitalized. Fully depreciated assets are retained in the accounts until they are no longer used and no further charge for depreciation is made in respect of these assets. When an item is sold, retired or removed from service, the cost and related accumulated depreciation is relieved, and the resulting gain or loss, if any, is recognized in income.

Construction-in-process assets are stated at cost, which includes the cost of construction and other direct costs attributable to the construction. Construction-in-process assets are not depreciated until such time as the relevant assets are completed and put into use.

Goodwill and In-Process Research and Development (“IPR&D”) Assets

Goodwill is the amount by which the purchase price of acquired net assets in a business combination exceeded the fair values of net identifiable assets on the date of acquisition. Acquired In-Process Research and Development (“IPR&D”) represents the fair value assigned to research and development assets that the Company acquires that have not been completed at the date of acquisition or are pending regulatory approval in certain jurisdictions. The value assigned to the acquired IPR&D assets is determined by estimating the costs to develop the acquired technology into commercially viable products, estimating the resulting revenue from the projects, and discounting the net cash flows to present value.

Goodwill and IPR&D assets are not amortized but are evaluated for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. The goodwill impairment assessment is performed by reporting unit. A reporting unit is the operating segment, or a business one level below that operating segment (the component level) if discrete financial information is prepared and regularly reviewed by segment management. However, components are aggregated as a single reporting unit if they have similar economic characteristics. The Company has currently one reporting unit that it is has defined as its the legacy Anika reporting unit, which specializes in therapies based on its hyaluronic acid (“HA”) technology platform. Factors that the Company considers important, on an overall company basis, that could trigger an impairment review include significant underperformance relative to historical or projected future operating results, significant changes in the Company’s use of the acquired assets or the strategy for its overall business, significant negative industry or economic trends, a significant decline in the Company’s stock price for a sustained period, or a reduction of its market capitalization relative to net book value.

Under U.S. GAAP, the Company has the option to perform a qualitative assessment to determine if it is necessary to perform the impairment test. If the Company concludes, based on a qualitative assessment, it is not more likely than not that Goodwill or the IPR&D assets are impaired, the Company is not required to perform the quantitative test. The Company has an unconditional option to bypass the qualitative assessment in any period and proceed directly to the quantitative impairment test.

To conduct quantitative impairment tests of goodwill, the fair value of the reporting unit is compared to its carrying value. If the reporting unit’s carrying value exceeds its fair value, the Company records an impairment loss to the extent that the carrying value of goodwill exceeds its implied fair value, not to exceed the recorded amount of goodwill.

The Company performed a quantitative annual assessment for impairment of the remaining goodwill with respect to legacy Anika reporting unit as of November 30, 2025, where the estimated fair value of the reporting unit was based on a combination of an income and market approach. The discounted cash flow method of the income approach which is based on the present value of projected cash flows and a terminal value, which represents the expected normalized cash flows of the reporting units beyond the cash flows from the discrete projection period. The market approach utilizes our market capitalization plus an appropriate control premium, whereby the market capitalization is determined by multiplying the number of shares of common stock outstanding by the market price of our common stock and the control premium is determined by utilizing data from publicly available premium studies for similarly situated public company transactions. As a result of this impairment testing, the Company determined it was not more likely than not that the fair value of the legacy Anika reporting unit is less than its carrying amount and thus goodwill was not impaired as of November 30, 2025.

To conduct impairment tests of IPR&D assets, the fair value of the IPR&D project is compared to its carrying value. If the carrying value exceeds its fair value, the Company records an impairment loss to the extent that the carrying value of the IPR&D project exceeds its fair value. The Company estimates the fair value for IPR&D assets using the income approach, which is based on the Multi-Period Excess Earnings Method (“MPEEM”). MPEEM measures economic benefit indirectly by calculating the income attributable to an asset after appropriate returns are paid to complementary assets used in conjunction with the subject asset to produce the earnings associated with the subject asset, commonly referred to as contributory asset charges. This approach incorporates significant estimates and assumptions related to the forecasted results including revenues, expenses, expected economic life of the asset, contributory asset charges and discount rates to estimate future cash flows.

Long-Lived Assets

Long-lived assets primarily include property and equipment and intangible assets with finite lives. The Company’s intangible assets are comprised of purchased developed technologies, patents, trade names, customer relationships and distributor relationships. These intangible assets are carried at cost, net of accumulated amortization. Amortization is recorded on a straight-line basis over the intangible assets' useful lives, which range from approximately three to sixteen years. The Company reviews long-lived assets for impairment when events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of those assets are no longer appropriate. Each impairment test is based on a comparison of the undiscounted cash flows to the recorded value of the asset. If impairment is indicated, the asset is written down to its estimated fair value based on a discounted cash flow analysis.

In determining the useful lives of intangible assets, the Company considers the expected use of the assets and the effects of obsolescence, demand, competition, anticipated technological advances, changes in surgical techniques, market influences and other economic factors. For technology-based intangible assets, the Company considers the expected life cycles of products, absent unforeseen technological advances, which incorporate the corresponding technology.

Fair Value Measurements

Fair value is defined as the price that would be received from selling an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of non-performance. The accounting standard establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs that may be used to measure fair value are:

The Company’s financial assets have been classified as Level 1. The Company’s financial assets (which include cash equivalents and investments) have been initially valued at the transaction price and subsequently valued, at the end of each reporting period, utilizing third-party pricing services.

Non-Recurring Fair Value Measurement

In measuring the impairment of intangible assets, the fair value of the Company's developed technology definite lived intangible assets are classified within Level 3 of the fair value hierarchy because of the use of unobservable inputs in measuring the estimated fair value. When performing a quantitative assessment for impairment of these definite lived intangible assets, the Company measures the amount of impairment by calculating the amount by which the carrying value of the definite lived intangible assets exceeds its estimated fair value (as discussed in Note 7 – Acquired Intangible Assets, Net).

Research and Development

Research and development costs consist primarily of salaries and related expenses for personnel, clinical trial expenses and fees paid to outside consultants and outside service providers. Research and development costs are expensed as incurred.

Stock-Based Compensation

The Company has stock-based compensation plans under which it grants various types of equity-based awards, the cost of which is based on the grant-date fair value of the underlying award and recognized over the period during which an employee is required to provide service in exchange for the award, which is generally the vesting period.

For performance-equity awards with market-based conditions, compensation cost is measured at the date of the award and is recorded over the vesting period, regardless of the likelihood of achievement of the market-based performance criteria. For performance-based equity awards with financial and business milestone achievement targets, compensation cost is based on the probable outcome of the performance conditions. Changes to the probability assessment and the estimated shares expected to vest will result in adjustments to the related stock-based compensation expense that will be recorded in the period of the change. If the performance targets are not achieved, no compensation cost is recognized, and any previously recognized compensation cost is reversed.

See Note 14, Equity Incentive Plan, for a description of the types of stock-based awards granted, the compensation expense related to such awards, and detail of equity-based awards outstanding.

Income Taxes

We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets (“DTAs”) and deferred tax liabilities (“DTLs”), for the expected future tax consequences of events that have been included in the financial statements. Under this method, we determine DTAs and DTLs based on the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on DTAs and DTLs is recognized in income in the period that includes the enactment date.

We recognize DTAs to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under the tax law, and results of recent operations.

We record uncertain tax positions in accordance with Code 740, Income Taxes, on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. Interest and penalties associated with income tax filings are recorded in income tax expense.

Comprehensive Income (Loss)

Comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss), which includes foreign currency translation adjustments. For the purposes of comprehensive income (loss) disclosures, the Company does not record tax provisions or benefits for the net changes in the foreign currency translation adjustment, as it intends to indefinitely reinvest undistributed earnings of its foreign subsidiary. Accumulated other comprehensive income (loss) is reported as a component of stockholders' equity.

Contingencies

In the normal course of business, the Company is involved from time to time in various legal proceedings and other matters such as contractual disputes, which are complex in nature and have outcomes that are difficult to predict. The Company records accruals for loss contingencies to the extent that it concludes that it is probable that a liability has been incurred, and the amount of the related loss can be reasonably estimated. The Company considers all relevant factors when making assessments regarding these contingencies. Although the outcomes of any potential legal proceedings are inherently difficult to predict, the Company does not expect the resolution of any potential legal proceedings to have a material adverse effect on its financial position, results of operations, or cash flows.

Recently Adopted Accounting Pronouncements

In December 2023, the FASB issued Accounting Standards Update 2023-09, Improvements to Income Tax Disclosures, (“ASU 2023-09”), which is effective for annual periods beginning after December 15, 2024. ASU 2023-09 intends to enhance the transparency as well as usefulness of income tax disclosures, primarily related to the rate reconciliation and income taxes paid. The Company adopted ASU 2023-09 during the year ended December 31, 2025. See Note 17 Income Taxes in the accompanying notes to the consolidated financial statements for further detail.

Recent Issued Accounting Pronouncements

In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, and in January 2025, the FASB issued ASU No. 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for public companies for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating the impact of ASU 2024-03 on its disclosures.

3. Discontinued Operations

In October 2024, the Company announced a strategic shift to concentrate on OA pain management and regenerative solutions. This strategic decision involved the sale of Arthrosurface Incorporated and the planned divestiture of Parcus Medical, LLC, both of which were acquired in early 2020.

Arthrosurface

On October 31, 2024 (the “Closing Date”), the Company completed the sale of all of the outstanding equity interests of Arthrosurface Incorporated, a Delaware corporation and former wholly-owned subsidiary of the Company (“Arthrosurface”), which held the Company’s Arthrosurface business, to Phoenix Brio, Incorporated, a Delaware corporation (“Buyer”), pursuant to the terms and conditions of a Share Purchase Agreement, dated as of the Closing Date (the “Purchase Agreement”), by and among the Company, Arthrosurface and Buyer (the “Arthrosurface Transaction”).

As consideration for the Arthrosurface Transaction, at the closing, the Buyer delivered to the Company a ten-year non-interest-bearing promissory note in the principal amount of $7.0 million. Under the terms of the Purchase Agreement, the Company is also eligible to receive: (i) for each calendar quarter, an amount equal to a percentage of the net sales (the “Revenue Payments”) for the sale of certain commercial and pipeline products during the period commencing on the Closing Date and ending on the earlier of the fifth (5th) anniversary of the Closing Date or the date on which the Buy-Out Payment (as defined below) is paid to the Company; and (ii) a percentage of the gross proceeds with respect to the sale of certain commercial and pipeline products in a bona-fide arm’s length transaction with a third party that is not an affiliate of Buyer or the Company occurring within the first twenty four (24) months following the Closing Date. The Buyer can also elect to make a payment in an amount equal to the greater of (A) $14.0 million or (B) ten (10) times the Revenue Payments ((A) and (B) together, the “Buy-Out Payment”) paid to the Company during the last full calendar year prior to the consummation of a change of control transaction or Buyer’s written notice to the Company that it is electing to make the Buy-Out Payment. Pursuant to the Purchase Agreement, the aggregate consideration is subject to customary post-closing adjustments. The Company valued the consideration with the sale of the Arthrosurface asset group to be $5.9 million and recorded as Notes Receivable on its balance sheet at December 31, 2024. The Notes Receivable balance was $5.6 million at December 31, 2025.

As a result of the Arthrosurface Transaction, the Company tested the assets associated with the Arthrosurface asset group to determine if the carrying value of the assets at September 30, 2024 were fully recoverable. Given that the proceeds from the sale of the Arthrosurface assets group was less than the carrying value of its net assets, the Company recorded asset impairment charges totaling $27.4 million during the three-month period ended September 30, 2024 related to a write-down of its accounts receivable, inventories, property and equipment and intangible assets related to the Arthrosurface asset group.

Parcus Medical

On March 7, 2025, the Company completed the sale of all of the outstanding equity interests of Parcus Medical, LLC, (“Parcus Medical”) to Medacta Americas Manufacturing, Inc. (“Medacta”), pursuant to the terms and conditions of a Membership Interest Purchase Agreement (the “Parcus Transaction”). As consideration for the Parcus Transaction, at closing, Medacta delivered to the Company a payment of $4.5 million in cash. Pursuant to the terms of the agreement, the aggregate consideration is subject to customary post-closing adjustments.

As a result of the Parcus Transaction, the Company tested the assets associated with the Parcus Medical asset group to determine if the carrying value of the assets at December 31, 2024 were fully recoverable. Given that the proceeds from the sale of the Parcus Medical assets group was less than the carrying value of its net assets, the Company recorded asset impairment charges totaling $20.1 million during the three-month period ended December 31, 2024 related to a write-down of its inventories, property and equipment and intangible assets related to the Parcus Medical asset group.

The results of operations for Arthrosurface and Parcus are reported in income from discontinued operations within the consolidated statements of operations for the years ended December 31, 2025, 2024 and 2023, and the related assets and liabilities are presented within assets and liabilities held-for-sale on the consolidated balance sheets as of December 31, 2024.

Years Ended December 31,

Loss from discontinued operations before income taxes (901 ) (47,974 ) (88,483 )

Benefit from income taxes - (417 ) (9,255 )

Net loss from discontinued operations $ (901 ) $ (47,557 ) $ (79,228 )

The assets and liabilities reported as held-for-sale consist of the following (in thousands):

As of December 31,

Assets

Cash and cash equivalents $ 1,531

Accounts receivable, net 3,285

Prepaid expenses and other current assets 89

Property and equipment, net 1,134

Right-of-use assets 892

Total assets held-for-sale $ 7,152

Liabilities

Accounts payable $ 797

Accrued expenses and other current liabilities 3,324

Lease liabilities 660

Total liabilities held-for-sale $ 4,781

There are no assets and liabilities reported as held-for-sale as of December 31, 2025, as the Company completed the divestitures of the Arthrosurface and Parcus Medical asset groups during the year ended December 31, 2025.

Selected financial information related to significant operating and investing cash flow items from discontinued operations are as follows (in thousands):

Years Ended December 31,

Amortization of acquisition related intangible assets - 559 7,148

Loss on impairment of long-lived assets - 2,142 62,190

Purchases of property and equipment 19 467 3,310

4. Fair Value Measurements

There were no available-for-sale securities as of December 31, 2025 and 2024.

The Company’s investments, including cash equivalents, are all classified within Levels 1 of the fair value hierarchy and are valued based on quoted prices in active markets. For cash, accounts receivable, accounts payable, and accrued interest, the carrying amounts approximate fair value, because of the short maturity of these instruments, and therefore fair value information is not included in the table below.

The classification of the Company’s cash equivalents and investments within the fair value hierarchy is as follows:

Active Markets Significant Other Significant

for Identical Assets Observable Inputs Unobservable Inputs

December 31, 2025 (Level 1) (Level 2) (Level 3) Amortized Cost

Cash equivalents:

Active Markets Significant Other Significant

for Identical Assets Observable Inputs Unobservable Inputs

December 31, 2024 (Level 1) (Level 2) (Level 3) Amortized Cost

Cash equivalents:

There were no transfers between fair value levels during the years ended December 31, 2025 and 2024, respectively.

5. Inventories

Total inventories included in the balance sheet consist of the following:

As of December 31,

Inventories are stated net of inventory reserves of approximately $4.8 million and $3.9 million, as of December 31, 2025 and 2024, respectively.

6. Propertyand Equipment

Property and equipment is stated at cost and consists of the following:

December 31,

Depreciation expense was $5.4 million, $5.0 million, and $4.9 million for the years ended December 31, 2025, 2024, and 2023, respectively.

7. Acquired Intangible Assets, Net

Intangible assets consist of the following:

Total amortization expense with respect to the definite lived acquired intangible assets was $0.4 million, $0.7 million and $0.6 million for each of the years ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025, the Company’s definite lived acquired intangible assets are fully amortized.

The Company performed its annual assessment of the IPR&D intangible asset as of November 30, 2025. The Company estimated the fair value of the IPR&D intangible assets using the income approach which is based on the Multi-Period Excess Earnings Method (“MPEEM”). MPEEM measures economic benefit indirectly by calculating the income attributable to an asset after appropriate returns are paid to complementary assets used in conjunction with the subject asset to produce the earnings associated with the subject asset, commonly referred to as contributory asset charges. This approach incorporates significant estimates and assumptions related to the forecasted results including revenues, expenses, expected economic life of the asset, contributory asset charges and discount rates to estimate future cash flows. While assumptions utilized are subject to a high degree of judgment and complexity, the Company made its best estimate of future cash flows under a high degree of economic uncertainty that existed as of November 30, 2025. In developing its assumptions, the Company also considered observed trends of its industry participants. No impairment existed as the estimated fair value of the remaining IPR&D intangible asset was greater than its carrying value.

8. Goodwill

The following table provides a roll forward of goodwill for the years ended December 31, 2025 and 2024:

As of December 31,

Effect of foreign currency adjustments 929 (446 )

The goodwill balance at December 31, 2025 and 2024 was related to the Company’s legacy Anika reporting unit.

The Company estimated the fair value of its reporting unit using a combination of the income and market approaches. The discounted cash flow method of the income approach estimates the present value of projected cash flows and a terminal value, which represents the expected normalized cash flows of the reporting units beyond the cash flows from the discrete projection period. This approach incorporates significant estimates and assumptions related to the forecasted results including revenues, expenses, the achievement of certain cost synergies, terminal growth rates and discount rates to estimate future cash flows. While assumptions utilized are subject to a high degree of judgment and complexity, the Company made its best estimate of future cash flows under a high degree of economic uncertainty that existed as of November 30, 2025. In developing its assumptions, the Company also considered observed trends of its industry participants. In addition, the Company estimated the fair value of its reporting unit based on its market capitalization and an appropriate control premium. Market capitalization is determined by multiplying the number of shares of common stock outstanding by the market price of its common stock. The control premium, or the amount paid by a new controlling shareholder for the benefits resulting from synergies and other potential benefits derived from controlling the acquired company, is determined by utilizing data from publicly available premium studies for similarly situated public company transactions. As a result of this impairment testing, the Company determined it was not more likely than not that the fair value of the legacy Anika reporting unit is less than its carrying amount and thus goodwill was not impaired as of November 30, 2025.

For its legacy Anika reporting unit, the Company performed a quantitative assessment as of November 30, 2025. The results of the impairment test indicated that the estimated fair value of the legacy Anika reporting unit was greater than its carrying value, therefore the Company determined that was more likely than not that the fair value of the legacy Anika reporting unit was not impaired as of November 30, 2025.

9. Leases

The Company leases its buildings and manufacturing facilities under operating leases. As of December 31, 2025, the Company has real estate leases in Bedford, Massachusetts, Warsaw, Indiana and Padova, Italy.

In June 2022, the Company finalized a renewal option to extend the current term for its operating headquarters and manufacturing facility in Bedford through 2027. There are also lease renewal options into 2038 that the Company is reasonably certain to exercise.

The Company leases office space in Padova, Italy. The current term of the Padova lease extends to 2032, with a right to terminate at the Company’s option in 2026 without penalty. The Company is not expected to terminate this lease prior to the lease expiration date in 2032. During 2025, the Company determined that it became reasonably certain that the Company would not exercise its option to terminate and accordingly, the right of use asset and lease liability were increased to account for the lease extension to 2032.

The significant assumptions in recognizing the right-of-use asset and lease liability are as follows:

Incremental borrowing rate. The Company derives its incremental borrowing rate from information available at the lease commencement date in determining the present value of lease payments. The incremental borrowing rate represents a collateralized rate of interest the Company would have to pay to borrow over a similar term an amount equal to the lease payments in a similar economic environment. The Company’s lease agreements do not provide implicit rates. As the Company did not have any external borrowings at either the transition or subsequent renewal dates with comparable terms to its lease agreements, the Company estimated its incremental borrowing rate based on its credit quality, line of credit agreement and by comparing interest rates available in the market for similar borrowings, and adjusting this amount based on the impact of collateral over the term of the lease. The weighted average discount rate at December 31, 2025 was 3.7% for operating leases.

Lease term. The lease term begins at the lease commencement date and is determined on that date based on the non-cancelable term of the lease together with periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option, or periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option.

The components of lease expense and other information for continued and discontinued operations are as follows:

Years Ended December 31

Weighted Average Remaining Lease Term (in years)

Weighted Average Discount Rate

Operating leases 3.7 % 3.5 %

Other information

Operating cash flows from operating leases $ 2,837 $ 3,267

Future commitments due under these lease agreements as of December 31, 2025 are as follows:

Years ended December 31, Operating Leases

Present value adjustment (6,485 )

Present value of lease payments 26,248

Total lease liabilities $ 24,196

10. Accrued Expenses

Accrued expenses consist of the following:

As of December 31,

Compensation and related expenses $ 8,658 $ 6,828

Operating lease liability - current 2,052 1,918

Income taxes payable - 63

11. Revolving Credit Agreement

On November 12, 2021, the Company, entered into a “Third Amendment to Credit Agreement” amending the existing revolving line of credit agreement dated October 24, 2017 with Bank of America, N.A., as administrative agent, swingline lender and issuer of letters of credit, for a $75.0 million senior revolving line of credit (the “Credit Agreement”). Subject to certain conditions, the Company may request up to an additional $75.0 million in commitments for a maximum aggregate commitment of $150.0 million, which requests must be approved by the Revolving Lenders (as defined in the Credit Agreement). Loans under the Credit Agreement generally bear interest at a rate equal to (a) the Bloomberg Short-Term Bank Yield Index, (“BSBY”), rate plus (b) an additional percentage that will range from 0.25% to 1.00%, based on the Company’s consolidated leverage ratio at the time of the borrowings. The Company is required to pay a commitment fee in an amount that is equal to 0.20% to 0.30% per annum, based on the Company’s consolidated leverage ratio, on the actual daily unused amount of the credit facility and that is due and payable quarterly in arrears. Loan origination costs are included as assets on the balance sheet and are being amortized over the five-year term of the Credit Agreement. As of December 31, 2025 and 2024, there were no outstanding borrowings under the Credit Agreement and the Company is in compliance with the terms of the Credit Agreement.

The Credit Agreement contains customary representations, warranties, affirmative and negative covenants, including financial covenants, events of default, and indemnification provisions in favor of the Lenders. These include restrictive covenants that require the Company not to exceed certain maximum leverage and interest coverage ratios, limit its incurrence of liens and indebtedness, and its entry into certain merger and acquisition transactions or dispositions and place additional restrictions on other matters, all subject to certain exceptions. The Revolving Lenders has been granted a first priority lien and security interest in substantially all of the Company’s assets, except for certain intangible assets.

12. Commitments and Contingencies

In certain of its contracts, the Company warrants to its customers that the products it manufactures conform to the product specifications as in effect at the time of delivery of the specific product. The Company may also warrant that the products it manufactures do not infringe, violate or breach any U.S. or international patent or intellectual property rights, trade secret, or other proprietary information of any third party. On occasion, the Company contractually indemnifies its customers against any and all losses arising out of, or in any way connected with, any claim or claims of breach of its warranties or any actual or alleged defect in any product caused by the negligent acts or omissions of the Company. The Company maintains a products liability insurance policy that limits its exposure to these risks. Based on the Company’s historical activity, in combination with its liability insurance coverage, the Company believes the estimated fair value of these indemnification agreements is immaterial. The Company had no accrued warranties at December 31, 2025 or 2024, respectively, and has no history of claims paid.

The Company is also involved from time to time in various legal proceedings arising in the normal course of business. Although the outcomes of these legal proceedings are inherently difficult to predict, the Company does not expect the resolution of these occasional legal proceedings to have a material adverse effect on its financial position, results of operations, or cash flows.

13. Revenue and Geographic Information

The Company has two classifications of revenue: Original Equipment Manufacturer (“OEM”) Channel and the Commercial Channel. In the OEM Channel, the Company is responsible for development and manufacturing of products sold to the Company’s OEM partners governed by long-term agreements, but the Company does not control sales, marketing, or pricing with end users. Revenue from the Company’s U.S. OA Pain Management business and the Non-Orthopedic businesses is included in the OEM Channel. In the Commercial Channel, the Company has full responsibility for sales, marketing, and pricing of products through its commercial leaders, direct sales representatives, and independent distributors. Revenue from the Company’s Regenerative Solutions and international OA Pain Management businesses is included in the Commercial Channel.

Product revenue by product family is as follows:

Years Ended December 31,

Product revenue from the Company’s sole significant customer, J&J MedTech, as a percentage of the Company’s total product revenue was 50%, 57%, and 62% for the years ended December 31, 2025, 2024, and 2023, respectively.

Total revenue by geographic location based on the location of the customer in total and as a percentage of total revenue are as follows:

Years Ended December 31,

Total Percentage of Total Percentage of Total Percentage of

Revenue Revenue Revenue Revenue Revenue Revenue

Geographic Location:

Net long-lived assets, consisting primarily of net property and equipment, are subject to geographic risks because they are generally difficult to move and to effectively utilize in another geographic area in a reasonable time period and because they are relatively illiquid. Net tangible long-lived assets by principal geographic areas are as follows:

As of December 31,

United Kingdom 2 29

14. Equity Incentive Plan

Equity Incentive Plan

The Anika Therapeutics, Inc. 2017 Omnibus Incentive Plan (the “2017 Plan”) was approved by the Company’s stockholders on June 13, 2017 and subsequently amended most recently on June 25, 2024. On June 25, 2025, the Company’s stockholders approved an amendment to the 2017 Plan increasing the number of shares by 475,000 shares from 5,285,000 shares to 5,760,000 shares. The 2017 Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights (“SARs”), restricted stock awards (“RSAs”), performance restricted stock units (“PSUs”), restricted stock units (“RSUs”), total shareholder return options (“TSRs”) and performance options that may be settled in cash, stock, or other property. In accordance with the 2017 Plan approved by the Company’s stockholders, including the amendments thereto, each share award other than stock options or SARs will reduce the number of total shares available for grant by two shares. Subject to adjustment for specified types of changes in the Company’s capitalization, no more than 4.6 million shares of common stock may be issued under the 2017 Plan. There are 1.4 million shares available for future grant at December 31, 2025 under the 2017 Plan. These shares available for future grant exclude 0.9 million of PSUs and RSUs that are subject to liability accounting based on the expectation the shares will be settled in cash. If these PSUs and RSUs were to be settled in shares at vesting then the Company will have fewer shares available for future issuance.

The Anika Therapeutics, Inc. 2021 Inducement Plan (the “Inducement Plan”) was adopted by the Company’s board of directors on November 4, 2021 in which the Company reserved 125,000 shares of common stock for issuance pursuant to equity-based awards granted under the Inducement Plan. Such awards may be granted only to an individual who was not previously the Company’s employee or director with the Company. The Inducement Plan provides for the grant of awards under terms substantially similar to the 2017 Plan (as amended). The Inducement Plan was amended in December 2023 to add 125,000 shares. There are 0.1 million shares available for future grant at December 31, 2025 under the Inducement Plan.

The Company may satisfy the awards upon exercise, or upon fulfillment of the vesting requirements for other equity-based awards, with either newly issued shares or shares reacquired by the Company. Stock-based awards are granted with an exercise price equal to or greater than the market price of the Company’s stock on the date of grant. Awards contain service conditions or service and performance conditions, and they generally become exercisable ratably over one to four years with a maximum contractual term of ten years.

For the years ended December 31, 2025, and 2024, the tax benefit associated with stock-based compensation was $0.8 million and $1.9 million, respectively. A summary of the stock-based compensation in the Company’s statements of operations is as follows (in thousands):

Years Ended December 31,

For the years ended December 31, 2025, 2024 and 2023, windfall (shortfall) tax expense of ($0.5) million, ($0.1) million and ($0.1) million, respectively, are associated with the stock-based compensation expense above.

Stock Options

Stock options are granted to purchase common shares at prices that are equal to the fair market value of the shares on the date the options are granted or, in the case of premium options, are granted with an exercise price at 110% of the market price of the Company’s common stock on the date of grant. Options generally vest in equal annual installments over a period of three to four years and expire 10 years after the date of grant. The grant-date fair value of options is recognized as expense on a straight-line basis over the requisite service period, which is generally the vesting period.

The following summarizes the activity under the Company’s stock option plans:

Exercised - $ -

The aggregate intrinsic value of options exercised was immaterial for the years ended December 31, 2025, 2024 and 2023, respectively.

The Company granted 16,300 stock options during the year ended December 31, 2025. The Company uses the Black-Scholes pricing model to determine the fair value of options granted. The calculation of the fair value of stock options is affected by the stock price on the grant date, the expected volatility of the Company’s common stock over the expected term of the award, the expected life of the award, the risk-free interest rate and the dividend yield.

The assumptions used in the Black-Scholes pricing model for options granted during the years ended December 31, 2025, 2024 and 2023, along with the weighted-average grant-date fair values, were as follows:

Expected life of options (in years) 4.5 4.5 4.5

Expected dividend yield 0.0% 0.0% 0.0%

As of December 31, 2025, there was $2.4 million of unrecognized compensation related to unvested stock options. This expense is expected to be recognized over a weighted average period of 1.3 years.

Restricted Stock Units

RSUs generally vest in equal annual installments over a three- or four-year period. The grant-date fair value of RSUs is recognized as expense on a straight-line basis over the requisite service period, which is generally the vesting period. The Company determines the fair value of restricted stock units based on the closing price of its common stock on the date of grant.

RSU activity for the year ended December 31, 2025 is as follows:

Number of Shares Weighted Average Fair Value

The weighted-average grant-date fair value per share of RSUs granted was $14.85, $26.62 and $26.66 for the years ended December 31, 2025, 2024 and 2023, respectively. The total fair value of RSUs vested was $8.2 million, $8.7 million and $6.9 million for the years ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025, the Company had outstanding 342,713 RSUs being treated as equity awards in which $1.5 million of unrecognized compensation cost related to time-based RSUs, which is expected to be recognized over a weighted-average period of 0.8 years.

The Company’s annual grants of RSU awards in March 2024 and 2025 can be settled at vesting in cash or shares at the Company’s election. The Company has recorded these RSU grants as a liability due to the expectation that the Company will settle the vesting of these RSU awards in cash due to a potential shortage of shares in the 2017 Plan at the time of vesting. As a result, these RSUs will be subject to change in value at the time of each reporting period. The first tranche of the March 2024 RSU awards vested in March 2025 and the Company issued 106,550 shares to employees. As of December 31, 2025, the Company had 611,000 RSUs outstanding for which a liability of $1.8 million was recorded in Accrued Expenses and Other Liabilities at December 31, 2025 and there is unrecorded compensation cost of $4.1 million which is to be recognized over a weighted-average period of 2.0 years.

Performance Stock Units (“PSUs”)

PSU activity for the year ended December 31, 2025 was as follows:

Weighted Average

Number of Grant Date

Shares Fair Value

Outstanding as of December 31, 2024 - $ -

Vested - $ -

The weighted-average grant-date fair value per share of PSUs granted was $15.36 for the year ended December 31, 2025. There were no PSUs granted in the years ended December 31, 2024 and 2023, respectively.

On March 14, 2025, the Company granted 290,792 PSUs to certain senior management employees. The Company granted two different PSU awards to each PSU award recipient. One form of PSU award has a 3-year cliff vest subject to achievement of certain market-based metrics in which 50-200% of target shares granted may vest based on achievement of the specified Company market price targets during the performance period from March 14, 2025 through March 1, 2028. No shares will vest if these market price targets are not achieved. The Company estimated the fair value of these market-based PSUs using a Monte Carlo simulation model in which multiple simulations were using inputs based on the Black-Scholes formula using inputs for expected volatility, risk-free interest rate and dividend yield. The market-based PSUs were valued at the grant date and the Company will continue to use the Monte- Carlo simulation model to update the fair value at the end of each reporting period.

The second form of PSU awards is vesting in equal annual installments of target on each anniversary date of grant over three years, subject to annual achievement of the specified strategic performance objectives each year based upon certain regulatory milestones and financial targets. Subject to achievement of each milestone, these awards will vest annually on each anniversary date of the grant date over three years. The Company recognizes stock-based compensation based on the evaluation of probability outcomes of achieving these milestones each reporting period.

The Company’s annual grants of PSU awards in March 2025 can be settled at vesting in cash or shares at the Company’s election. The Company has recorded these PSUs as a liability due to the expectation that the Company will settle the vesting of these PSU awards in cash due to a potential shortage of shares in the 2017 Plan at the time of vesting. As a result, these PSUs will be subject to change in value at the time of each reporting period. As of December 31, 2025, the Company had 279,754 shares outstanding for which a liability of $0.6 million was recorded in Accrued Expenses and Other Liabilities and there is unrecorded compensation cost of $0.8 million associated with these PSUs which is to be recognized over a weighted-average period of 2.3 years.

15. Employee Benefit Plan

The Company’s U.S. employees are eligible to participate in the Company’s 401(k) savings plan. Employees may elect to contribute a percentage of their compensation to the plan, and the Company will make 100% matching contributions up to a limit of 5% of an employee's eligible compensation. In addition, the Company may make annual discretionary contributions. The Company made matching contributions of $1.4 million, $2.6 million, and $2.7 million for the years ended December 31, 2025, 2024, and 2023, respectively.

16. Share Repurchase Plan

In May 2024, the Company’s Board of Directors approved a share repurchase program for an aggregate purchase price of $40.0 million to occur as follows: (i) first $15.0 million was to be effected through a Rule 10b5-1 plan initiated prior to June 1, 2024 and to be effective through June 30, 2025, and (ii) the remaining amount to be purchased in the open market (the “2024 Share Repurchase Program”). In the event of positive “free cash flow” as defined in the 2024 Cooperation Agreement dated May 28, 2024, with Caligan Partners LP, Caligan Partners Master Fund LP and David Johnson, for the period from July 1, 2024 through June 30, 2025, the amount under the share repurchase program shall be increased by 50% of such positive amount and in no event would we be required to make any purchases in the event that our cash would be less than $45.0 million after taking into account the share repurchase and reasonably anticipated capital expenditures and restructuring costs.

On May 28, 2024, the Company entered into a share repurchase agreement under a Rule 10b5-1 plan with Bank of America and we completed the first $15.0 million tranche of the 2024 Share Repurchase Program in March 2025. On November 6, 2026, the Company entered into a share repurchase agreement under a Rule 10b5-1 plan with Clear Street LLC for another $15.0 million related to the 2024 Share Repurchase Program. As of December 31, 2025, the Company had repurchased 1,308,445 shares at a cost of $20.5 million, representing 51% of the 2024 Share Repurchase Program.

17. Income Taxes

Income Tax Expense

The components of the Company’s income (loss) before income taxes and its provision for (benefit from) income taxes consist of the following:

Years ended December 31,

(Loss) income before income taxes

Years ended December 31,

Provision for income taxes:

Current:

Deferred:

State - - (692 )

Deferred Tax Assets and Liabilities

Significant components of the Company’s deferred tax assets and liabilities consist of the following:

December 31,

Deferred tax assets:

Net operating loss carryforwards 13,294 650

Stock-based compensation expense 3,629 3,908

Accrued expenses and other 819 1,403

Acquisition-related intangible asset 776 5,959

Tax credits 612 -

Impairment of assets - 4,215

Foreign currency exchange - 48

December 31,

Deferred tax liabilities:

Acquisition-related intangible asset - (42 )

The One Big Beautiful Bill Act (the “OBBBA”), was enacted on July 4, 2025, among other things, repealed the mandatory capitalization of Internal Revenue Code Section 174 research and development expenditures allowing taxpayers to fully expense qualifying costs in the year incurred. The Company does not expect to accelerate the write-off of previously capitalized research and development costs. This approach results in a more consistent pattern of deductions and moderates the creation of additional tax attributes. The OBBBA did not otherwise have a material impact on the Company’s consolidated financial statements.

As of December 31, 2025, the Company had $53.7 million and $34.5 million of Federal and State net operating loss (“NOL”) carryforwards, of which $53.7 million and $11.6million, respectively, do not expire and $22.9 million of State net operating losses that will begin expiring in 2036. The Company also had NOL carryforwards in Italy of $1.6 million that do not expire. As of December 31, 2025, the Company had $0.4 million of Federal research and development credits and $0.2 million of State credits that begin expiring in 2028.

The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under the tax law, and results of recent operations. Based upon future reversals of existing taxable temporary differences and projected future taxable income, the Company believes it is more likely than not it will realize its foreign deferred tax assets.

The Company recorded a full valuation allowance on all deferred tax assets in the U.S. as it was determined that it is more likely than not that these deferred tax assets were not realizable as of December 31, 2025 and 2024. The Company intends to maintain a full valuation allowance until there is sufficient evidence to support release of all or a portion of the allowance. As of December 31, 2025, the Company continues to believe its foreign deferred tax assets are realizable based upon future reversals of existing taxable temporary differences and projected future taxable income in the Company’s foreign jurisdictions.

Undistributed earnings of certain of the Company’s foreign subsidiaries amounted to approximately $0.7 million at December 31, 2025. The Company expects to be able to take a 100% dividend received deduction to offset any U.S. federal income tax liability on the undistributed earnings. Determination of the amount of unrecognized state and local deferred income tax liability is not practicable due to the complexities associated with its hypothetical calculation.

Effective Tax Rate

ANIK US Equity

ANIK · 10-K · period ended 2025-12-31

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ANIK US Equity☆

ANIK · 10-K · period ended 2025-12-31

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ANIK US Equity