Executive Summary

Solid top-line, mixed margin quarter: revenue grew 17.4% year over year to $48.6M; gross margin compressed to 71.9% on higher product costs and inventory write-offs .
Clear beat vs Street on EPS and slight beat on revenue: Adjusted EPS was -$0.02 vs S&P Global consensus of -$0.07*, and revenue was $48.56M vs $48.35M consensus*; EBITDA came in well below consensus as reported by S&P Global (see Estimates Context) .
Guidance maintained: FY25 revenue growth 15–17%, gross margin 73–75% (≈1 ppt one-time BLA cost impact), and net cash flow positive for the year .
Regulatory trajectory on track; BLA milestones completed (mid-cycle, site and sponsor inspections), late-cycle meeting scheduled; management reiterated expectation of Avance BLA approval in September 2025 .
CFO transition: Lindsey Hartley appointed CFO (effective May 12) with outgoing CFO staying through July 1 in advisory role; transition framed as orderly .

What Went Well and What Went Wrong

What Went Well
- Broad-based growth across portfolio and markets (Extremities, OMF/Head & Neck, Breast) with double‑digit performance; CEO: “Our revenue growth remains robust across our full range of nerve repair and protection solutions” .
- Commercial execution exceeded internal goals in high‑potential accounts: 566 active HPAs in Q1 (+5% y/y) and average account productivity +24% vs 21% plan .
- BLA milestones: mid‑cycle meeting completed, clinical site and Bioresearch Monitoring sponsor inspections successful; confidence in September approval reiterated .
What Went Wrong
- Gross margin pressure: down to 71.9% from 78.8% y/y on increased product costs tied to new facility and inventory reserves/write‑offs; management expects improvement post‑BLA when process changes can be implemented .
- EBITDA below S&P consensus; while Adjusted EBITDA improved y/y to $2.9M, Street had modeled higher EBITDA (see Estimates Context) .
- Breast sales hiring lagged plan in Q1; management expects to catch up by end of Q2, but flagged it could affect cadence if delays persisted .

Financial Results

Headline P&L metrics (chronological)

Metric	Q1 2024	Q4 2024	Q1 2025
Revenue ($M)	$41.38	$49.41	$48.56
Gross Margin %	78.8%	76.1%	71.9%
GAAP Diluted EPS	-$0.15	$0.01	-$0.08
Adjusted EPS	-$0.06	$0.07	-$0.02
Adjusted EBITDA ($M)	$1.00	$6.72	$2.88

Notes: Adjusted figures exclude non‑cash stock‑based compensation per company’s non‑GAAP framework .

Q1 2025 Actuals vs S&P Global Consensus

Metric	Consensus	Actual	Surprise
Revenue ($M)	$48.35*	$48.56	+$0.21M (~+0.4%)*
Primary EPS (Adj.)	-$0.07*	-$0.02	+$0.05 (beat)*
EBITDA ($M)	$4.60*	$0.13*	-$4.47M (miss)*

Values with asterisks are retrieved from S&P Global.

Segment/Market Commentary (qualitative)

Market	Q1 2025 Commentary
Extremities	Double‑digit growth; adding 5 sales reps in 2025 to expand footprint .
Oral Maxillofacial & Head/Neck	Strong momentum, led by mandible reconstruction; hiring 5 market development managers; 26 surgeons trained in a fellows program .
Breast (Resensation)	Double‑digit growth in new customer creation; 119 active programs (+4% y/y), 229 active accounts (+6% y/y), 254 surgeons (+16% y/y); hiring behind plan but targeted to catch up by end of Q2 .

Operating/Cash

Q1 operating expenses declined y/y to $36.6M; S&M as % of revenue fell to 43.3% from 47.9% on better sales productivity .
Cash, equivalents, restricted cash and investments: $28.1M at 3/31/25 vs $39.5M at 12/31/24; Q1 operating cash flow -$13.2M (seasonal bonuses, sales meeting) .

Guidance Changes

Metric	Period	Previous Guidance (Feb 25, 2025)	Current Guidance (May 8, 2025)	Change
Revenue Growth	FY 2025	15%–17%	15%–17%	Maintained
Gross Margin	FY 2025	73%–75% incl. ~1 ppt one-time BLA costs	73%–75% incl. ~1 ppt one-time BLA costs	Maintained
Cash Flow	FY 2025	Net cash flow positive	Net cash flow positive	Maintained

Earnings Call Themes & Trends

Topic	Q3 2024 (Nov 2024)	Q4 2024 (Feb 2025)	Q1 2025 (May 2025)	Trend
BLA status for Avance	Filing accepted; PDUFA 9/5/25; no AdCom planned	Expect approval Sep 2025; process ongoing	Mid‑cycle completed; site & sponsor inspections successful; late‑cycle meeting scheduled; confidence reiterated	Advancing on plan
Gross margin trajectory	74.9%; efficiency work at APC; high end of FY24 guide	76.1%; FY25 GM guide 73–75% (includes BLA costs)	71.9%; impacted by higher costs and write‑offs; improvement expected post‑BLA	Near‑term pressure; medium‑term improving
High‑potential accounts focus	Strategy emphasized to deepen presence	Continued focus; sales productivity improving	566 active HPAs (+5% y/y), productivity +24% vs 21% plan; >66% of growth targeted from HPAs	Execution improving
Breast neurotization build‑out	Training and demand strong	Plan to double sales footprint to ~24	Hiring behind plan in Q1; on track by end Q2; 254 surgeons active (+16% y/y)	Growth intact; near‑term hiring catch‑up
OMF/Head & Neck	Growing adoption; education programs	Continued market development emphasis	Focus on mandible reconstruction; add 5 field market dev. managers	Broadening
Prostate initiative	Identified opportunity (elective procedures)	Strategy outlined; minimal near‑term revenue	3 pilot sites confirmed; aim for 10 by YE; not in FY25 guide	Early build
Payer coverage	—	Expect balanced growth/profitability with investments	Post‑BLA plan to tackle regional non‑coverage then national payers	Coverage work to accelerate post‑BLA
Organizational changes	New CEO (Nov 2024)	Plan & guidance established	CFO transition announced; successor named	Leadership continuity plan

Management Commentary

“We are pleased with our first quarter 2025 results… Our revenue growth remains robust across our full range of nerve repair and protection solutions, driven by enhanced sales productivity and commercial execution.” — Michael Dale, CEO .
“The year‑over‑year [gross margin] decline was driven by… higher cost at our new facility in Dayton, Ohio… [and] increased inventory reserves and related write‑offs… Once we receive [BLA] approval, we will be able to implement… improvements, which we expect to positively impact our gross margin.” — Nir Naor, CFO .
“These important regulatory milestones further reinforce our confidence… and align with prior guidance that we expect BLA approval in September.” — Michael Dale, CEO .
On post‑BLA process improvements: “It won't be a stepwise improvement… through the next 12 months thereafter.” — Michael Dale, CEO .
On breast hiring cadence: “We are running behind our original hiring and training plan, but we believe we will be on track by the end of the second quarter.” — Michael Dale, CEO .

Q&A Highlights

BLA commercialization impact: Company does not expect major changes to ordering, shipment, storage or reimbursement; CPT pathway remains; some P&T approvals possible .
Gross margin cadence: Q1 impacted by write‑offs; improvement expected over the year, with ~$2M BLA‑related non‑cash costs mostly in Q3; step‑up in GM expected after process changes post‑BLA .
OpEx trajectory: Gradual growth as investments ramp in sales/market access; some BLA costs roll off after approval .
Sales expansion: Plan to add net ~20 “true salespeople” across businesses by year end; breast footprint expansion underway but slightly delayed .
Coverage playbook: Post‑BLA, work with evidence intermediaries to address regional non‑coverage policies in Q4, then national payers next year .
Prostate pilot: 3 pilot sites confirmed; aim for 10 by year‑end; no FY25 revenue contributions in guidance .

KPIs and Commercial Build (Q1 2025)

KPI	Q1 2025
Active High‑Potential Accounts	566 (+5% y/y)
HPA Productivity vs Plan	+24% vs 21% plan
Breast Resensation Active Programs	119 (+4% y/y)
Breast Active Accounts	229 (+6% y/y)
Breast Surgeons Performing Procedures	254 (+16% y/y)
OMF/Head & Neck Fellows Trained	26 surgeons
Prostate Pilot Sites	3 confirmed; goal of 10 by YE

Estimates Context

Q1 2025 results vs S&P Global consensus: Revenue $48.56M vs $48.35M estimate*; Primary EPS (company‑adjusted) -$0.02 vs -$0.07 estimate* — clear beat on EPS and slight revenue beat. EBITDA was $0.13M actual* vs $4.60M estimate*, below expectations; company‑reported Adjusted EBITDA was $2.88M (ex‑stock comp) .
Forward Street setup (select quarters):
- Q3 2025: Revenue $56.90M est., EPS -$0.027 est., EBITDA $7.28M est.* (S&P Global)
- Q4 2025: Revenue $57.94M est., EPS -$0.018 est., EBITDA $6.98M est.* (S&P Global)
  Values with asterisks are retrieved from S&P Global.

Implications: modest positive revisions likely on EPS; EBITDA models may calibrate lower near term given process constraints until post‑BLA improvements .

Key Takeaways for Investors

Durable top‑line momentum across end markets with HPA strategy driving productivity; execution remains the core growth engine .
Near‑term gross margin noise is tied to inventory write‑offs and higher cost base at APC; structural improvement hinges on BLA approval unlocking process changes .
FY25 guide reiterated; maintaining growth and gross margin targets with clear disclosure of BLA‑related costs supports credibility in outlook .
Regulatory risk reduced: mid‑cycle and inspections completed; late‑cycle meeting scheduled; timeline intact for September approval .
Commercial catalysts: breast expansion (footprint doubling), OMF headcount adds, and prostate pilots (not in FY25 numbers) should support multi‑year growth optionality .
Coverage opportunity: post‑BLA push to convert regional non‑coverage to coverage, then national payers, could expand addressable demand and reduce friction in extremities .
Leadership transition appears orderly; new CFO brings institutional knowledge, continuity through transition period .

Citations: Company press release and 8‑K exhibits . Earnings call transcript for operational KPIs, guidance color, and Q&A . Prior quarters for trend context .

Values marked with asterisks are retrieved from S&P Global.

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