Good morning, ladies and gentlemen, and welcome to the Anika's Second Quarter Earnings Conference Call. I would now like to turn the call over to Mr. Matt Hall, Executive Director, Corporate Development and Investor Relations. Please proceed.

Good morning, and thank you for joining us for Anika's Second Quarter 2026 Conference Call and Webcast. I'm Matt Hall, Anika's Executive Director of Corporate Development and Investor Relations. Our earnings press release was issued earlier this morning and is available on our investor relations website located at www.annica.com as the supplementary PowerPoint slides that will be used for the discussion today. With me on the call are Steve Griffin, President and Chief Executive Officer, and Ian McLeod, Senior Vice President, Chief Accounting Officer, and Treasurer. They will present our second quarter 2026 financial results and business highlights. Please take a moment and open the slide presentation and refer to slide two. Before we begin, please understand that certain statements made during today's call constitute forward-looking statements as defined in the Securities Exchange Act of 1934. These statements are based on our current beliefs and expectations and are subject to certain risks and uncertainties. The company's actual results could differ materially from any anticipated future results, performance, or achievements. We make no obligation to update these statements should future financial data or events occur that differ from the forward-looking statements presented today. Please also see our most recent SEC filings for more information about risk factors that could affect our performance. In addition, during the call, we may refer to several adjusted or non-GAAP financial measures, which may include adjusted gross margin, adjusted EBITDA, adjusted net income from continuing operations, and adjusted earnings per share from continuing operations, which are used in addition to the results presented in accordance with GAAP financial measures. We believe that non-GAAP measures provide an additional way of viewing aspects of our operations and performance, but when considered with GAAP financial measures and the reconciliation of GAAP measures, they provide an even more complete understanding of our business. A reconciliation of these adjusted non-GAAP financial results to the most comparable GAAP measurements are available at the end of the presentation slide deck and our second quarter 2026 press release with that context i'll turn the call over to our president and ceo steve griffin to walk through our performance and discuss our priorities moving forward steve thanks matt good morning everyone and thank you for joining us the second quarter marked great progress in our efforts to build a stronger more profitable annika we delivered commercial channel revenue growth, significant gross margin expansion, our highest adjusted EBITDA since 2020, and improved profitability while continuing to invest in our growth initiatives.

These results reflect execution against the three strategic priorities I highlighted in my first earnings call in February. Accelerating sustainable revenue growth, driving operational excellence across the organization, and advancing our hyaluronic acid-based innovation pipeline. Our first priority remains accelerating sustainable revenue growth, and the second quarter results reflect progress in that direction. In the second quarter, commercial channel revenue increased 17% to a record level. This was driven by focused execution and broad growth in our international OA pain management and regenerative solutions businesses. The momentum was evident in our international commercial business, where focused execution and portfolio alignment continued to deliver results. Singal grew 32% and Monobis grew 24% year over year, together contributing approximately $2 million of incremental profitable revenue. The growth we've seen through the first half of the year, with Singal growing 23% and Monobis growing 19% has contributed more than $3 million of incremental revenue. These results underscore the durability and growing scale of our international OA pain management franchise. We believe this sustained growth also reflects the benefits of the increased focus and alignment across our international business following the portfolio actions completed over the last 18 months. During the quarter, we hosted our international distributor meeting with more than 35 of our international distributors represented, providing an opportunity to align around growth priorities, share best practices, and strengthen commercial execution. As our organization and distribution partners increasingly concentrate their attention on our core HA portfolio, we are seeing improved engagement, greater market focus, and stronger execution, which we believe is contributing to the growth trends we are seeing today. Within regenerative solutions, integrity remains a growth driver. Global surgeries and units sold increased both sequentially and year over year, with year-to-date sales up approximately 39% and revenue just under $2 million for the second consecutive quarter. Growth was driven by expanding international demand and continued adoption of the larger sizes introduced late last year, reflecting increased surgeon confidence and broader utilization of the platform across a variety of anatomies and tendon applications. We remain encouraged by the progress of integrity. The recently launched larger sizes have exceeded our initial expectations, supporting our view that the platform can address a broader range of tendon repair procedures and patient anatomies. We also continue to advance our post-market clinical follow-up study, with enrollment expected to be completed in the coming quarters, further strengthening the clinical evidence supporting the technology and providing the data needed to file in the EU. Internationally, momentum remains positive, with stocking orders outside the U.S. increasing more than 50% in the second quarter, and June representing the strongest month to date. As product availability expands and surge in experience grows, we believe integrity is positioned to support continued adoption across both U.S. and international markets. The strength of our HIAF-driven regenerative business extends beyond integrity. Hyalafast performed well during the quarter outside the U.S., contributing to double-digit growth in international regenerative solutions revenue. Its sustained adoption and expanding use across geographies highlight the strength and depth of this regenerative hyaluronic acid-based technology. Together, these drivers continue to enhance the franchise's reach and support sustainable long-term growth. The OEM channel grew 14% year-over-year, driven primarily by favorable order timing across both of our U.S. OA pain management products sold through our partnership with J&J to Pew Synthes. Within the portfolio, performance was led by MonoVisq unit volumes that exceeded projections for the quarter. Supported by favorable U.S. and market sales, MonoVisq more than offset lower-than-expected OrthoVisq revenue. While we believe a portion of the quarter's performance benefited from order timing, underlying demand trends remain encouraging. Given our performance through the first half of the year, we're raising our full-year OEM revenue guidance, expecting low single-digit revenue growth. We continue to anticipate quarterly revenue variability due to customer ordering patterns. The current Depew Synthes team has driven improved demand and enhanced commercial execution. Their focus on physician outreach, customer support, and franchise development has contributed meaningfully to the momentum we are seeing today. We look forward to continuing to build on that momentum together in the years ahead. While commercial channel execution and our J&J partnership remain important growth drivers, we also continue to focus on opportunities to expand and optimize revenue across our broader OEM product portfolio. We have several longstanding OEM relationships and legacy programs that generate attractive revenue and cash flow, and we continue to evaluate ways to enhance both growth and profitability. While these programs may be smaller individually than our primary growth drivers, collectively they represent an important contributor to shareholder value and are an area where disciplined execution can drive incremental returns. Our second priority, strengthening operational discipline and execution, has been an increased area of focus and contributed to second quarter financial performance and profitability. Gross margin improved to 65% in the second quarter, representing one of the highest levels we have delivered in recent years. This performance reflects progress across manufacturing productivity, operational efficiency, product mix, and disciplined execution throughout the organization. Many of the operational improvements contributing to these results are structural. During the first half of the year, we completed several projects to address manufacturing constraints. On our MonoVisc and Singal manufacturing line, we completed a capacity expansion project that effectively doubled throughput at a production step that had previously constrained manufacturing output. We also successfully completed a planned upgrade of our OrthoVisc and non-orthopedic manufacturing line, resulting in meaningful improvements in yield, throughput, and production efficiency. These investments strengthen our ability to support future growth while further improving the efficiency and cost structure of our manufacturing operations. Through the first half of the year, we have increased our focus on improving how we can run our core business, and those efforts contributed to our strongest quarterly profitability performance since 2020. We view current performance as evidence that we are building a more efficient, higher return in business, and our teams believe we are in early innings of improving returns. Our focus remains on applying lean principles across the organization, eliminating waste, simplifying processes, and improving productivity. Here in Bedford, we're optimizing our manufacturing operations to increase throughput and maximize facility utilization. We have added targeted headcount to support higher production levels while still increasing gross margin, enabled by process improvements, waste reduction, and a greater focus on value-added activities. In addition, we continue to make capital investments to enhance manufacturing capabilities, increase efficiency, and support future volume growth. Our manufacturing capabilities are becoming increasingly important competitive advantage, and we believe they can create additional value over time. While we're encouraged by the early progress made to date, we believe opportunities remain to increase throughput through our facility, improve productivity, and deliver higher profitability. Turning to our third priority, advancing our HA-based innovation pipeline, we continue to make progress across our development programs while building capabilities we believe will strengthen the long-term value of our innovation platform. Our strategy remains focused on leveraging our deep expertise in hyaluronic acid and HIAF technologies to address unmet needs across OA pain management and regenerative solutions. Starting with Hyalafast, we remain actively engaged with the FDA as the PMA review process continues. We are working through the agency's deficiency letter and expect to complete our response in the coming weeks. Based on our recent engagements, the co-primary endpoints of our clinical study are the most important components of the review and could impact the timeline for ultimate product approval. While the timing of an approval remains outside of our control, our confidence in the long-term opportunity for HylaFast remains unchanged. Importantly, the product continues to perform well outside the United States, contributing to double-digit revenue growth and international regenerative solutions revenue during the quarter. continued adoption across multiple international markets reinforces the clinical value of the product and the strength of our regenerative solutions portfolio we remain fully committed to bringing hylofast to patients in the united states and completing the pma process turning to singal enrollment in our bioequivalent study continues to progress as planned as the program advances the primary focus increasingly shifts to the chemistry manufacturing and Controls activities required to support the NDA submission. Singal is regulated as a drug-drug combination product, creating a substantially different regulatory and manufacturing framework for hyaluronic acid. As a result, establishing the manufacturing and quality systems necessary to support hyaluronic acid as a drug is a critical component of the program. To support these efforts, we have expanded our CMC capabilities this year and are making targeted investments in manufacturing HA as a drug to ensure we meet FDA's drug manufacturing requirements. These necessary CMC activities will likely be the final workstream completed before the NDA submission. This investment will also improve manufacturing scale over the coming years. Beyond these later stage programs, we continue to focus on long-term growth potential to unlock value from our hyaluronic acid and HIAF platforms. Our regenerative suture and tape program continues to make encouraging early progress and highlights the versatility of our HIAF fiber across soft tissue repair applications. More broadly, we remain focused on identifying and advancing differentiated applications where our biomaterials expertise can create meaningful clinical and commercial value. With that, I'll now turn the call over to Ian to walk through the financial details.

Thanks, Steve. Please refer to slide 5 of the presentation. Before discussing the quarter in detail, I'll take a moment to call out our first half performance. Year-to-date, revenue increased 14% to $62 million, driven by growth in our commercial and OEM channels. Notably, international revenue reached a record $23 million, up 17% year-over-year. This growth translated into improved financial performance. The first half gross margin expanded more than 1,400 basis points to 65%. That led to $11 million in adjusted EBITDA as compared to a breakeven start last year. The actions taken this year are translating into measurable improvements in both growth and profitability. Now turning to the quarter, Anika generated $32.6 million in total revenue, an increase of 16% year-over-year. Commercial revenue grew 17% to $13.9 million, driven by international execution, momentum and integrity, and growth across both our OA pain management and regenerative solutions portfolios. International revenue reached a record $12.6 million, increasing 22% year-over-year, reflecting broad-based growth across markets and product categories. This performance was driven by market share gains in OAP management and increasing contributions from our regenerative solutions products. Notably, our growth comes from multiple products, geographies, and channels, reflecting the broadening reach of our business. The OEM channel grew 14% year-over-year, supported by Montevist demand and favorable order time. While quarterly OEM performance can vary, the strength of the first half supports our increased full-year outlook. Assuming a relatively even revenue contribution between the third and fourth quarters, our outlook implies strong year-over-year growth in the third quarter and moderate growth in the fourth quarter as a result of a difficult comparison with a strong fourth quarter in 2025. Gross margin expanded to 65% compared to 51% in the prior year. This improvement reflects higher manufacturing productivity, increased throughput, favorable product mix, and the continued impact of our operational excellence initiatives. These results demonstrate the operating leverage inherent in our business model as we continue to improve execution across our manufacturing operations. Turning to operating expenses, total operating expenses were $18.3 million, compared to $18.5 million in the prior year period. Excluding approximately $800,000 of one-time severance costs, adjusted operating expenses were approximately $17.5 million, down 6% year-over-year. G&A expenses excluding severance declined 30% in the quarter, reflecting increased organizational focus, disciplined spending, and the benefits of the actions we have taken to improve operating efficiencies. R&D expense was $7.3 million compared to $6.3 million in the prior period, reflecting investments in our highest priority pipeline programs. This includes advancement of and Gall, where enrollment in our bioequivalent study is progressing as planned, as well as expanded CMC activities required to support the NDA submission. Adjusted EBITDA for the quarter was $7.1 million, representing an adjusted EBITDA margin of 22%, and our strongest quarterly profitability performance since 2020. We ended the quarter with approximately $38.4 million in cash. This provides financial flexibility as we continue investing in our strategic priorities while maintaining a disciplined approach to capital allocation. Consistent with that approach, we recently extended our credit facility. The amended agreement maintains substantially similar terms while reducing the overall facility size to better align with our credit. The facility includes a $50 million revolving commitment along with an accordion feature that provides the flexibility request up to an additional $50 million for a total potential commitment of $100 million. We believe this structure provides ample liquidity and financial flexibility to support our strategic priorities while maintaining an efficient capital structure. As part of our disciplined approach to capital allocation, we completed our previously announced $15 million share repurchase program during the first half of the year. Combined with actions we have taken to reduce equity-based compensation. Shares outstanding declined to approximately 13.3 million shares, representing the lowest share count. Stock-based compensation expense declined 28% year-over-year in the second quarter, reducing dilution and allowing a greater portion of the value created by the business. Taken together, these actions reflect our focus on disciplined and capital allocation, operational efficiency and driving value on a per share base. Turning to our outlook, based on our first half performance, commercial momentum, favorable OEM revenue trends, and improving profitability, we are raising our full year 2026 guidance. We now expect OEM channel revenue growth of 0% to 5% compared to our previous expectation of down 5% to flat. For the commercial channel, we now expect 12% to 18% growth compared to a prior outlook of 10% to 20%. This narrowed outlook is supported by integrity adoption, sustained international OA pain management growth, and ongoing strength across a regenerative portfolio. As a result, total company revenue gains increase to growth of 5% to 10%, from 1% to 9% previously. Additionally, we are raising our adjusted EBITDA margin guidance to 13% to 17%, compared to our prior expectation of 5% to 10%. This increase reflects the operating level average across the business. Profitability in the second half will be modestly lower than the first half due to OEM order Lastly, impacting our 2027 revenue forecast, we are adopting a new revenue guidance practice to include only revenue from products that have received regulatory approval for clearance. Our outlook now excludes the previously implied $3 million of high alifax sales in the U.S. Despite this change, total company revenue is expected to be between 0% and 5% growth in 2027. With that, I'll turn the call back over to Steve.

Thanks, Ian. Before we open the call for questions, I'd like to leave you with a few final thoughts. The second quarter reflects solid progress across our strategic priorities. We delivered commercial channel revenue growth, expanded gross margins, improved profitability, advanced our pipeline, and raised our full-year outlook. Just as importantly, we see multiple opportunities ahead to strengthen and grow the business. An important contributor to this progress is the culture we are building through our lean transformation. By empowering teams closest to the work to solve problems and improve processes every day, we are becoming a more efficient, agile, and accountable organization. Finally, to the many employees listening in on today's call, I want to thank you for your commitment, perseverance, and for driving the positive changes taking place here at Annika. Your contributions and hard work are making these changes possible. I also want to thank our distributor partners, whose dedication helps bring products to our patients around the world, and the patients who place their trust in our therapies every day. Looking ahead, our priorities remain, driving sustainable growth, improving profitability, and creating shareholder value. With that, operator, let's now open the line for questions.

Thank you. Ladies and gentlemen, we'll now begin the question and answer session. Should you have a question, please press the star followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. And your first question comes from Anderson Schock from B-Riley Securities. Please go ahead.

Hi, good morning. Thank you for taking our questions and congrats on the strong quarter. So first, I mean, strong first half for OEM revenue, and you've raised full year guidance for growth in this channel. However, the guidance does imply a pretty meaningful sequential step down in the back Is this mainly a reversal of first half order timing, or does it reflect visibility into second half pricing or volume?

I appreciate the question, Anderson. I would say we did note in our prepared remarks that there is a little bit of favorability, probably between a million and $2 million just due to order timing in the second quarter. That does drive some of the sequential step down. The other element, when you take a look at last year, and I know Ian noted it in his comments, is fourth quarter was very strong in last year's quarterly split. And so, you know, we'd expect to see some level of decline related to that. But broadly speaking, when we talk about the OEM channel, you know, for a while now, almost two years, we've been talking about it being flat or modestly lower. And we're raising our guidance now to imply that it's actually going to grow year over We're really pleased with the performance in the end market from a product perspective here in the U.S. that's helped us support that. Pricing always remains volatile quarter to quarter, but underlying it when we add it all together, revenue overall is expected to grow, which is a nice change in pace.

Okay, got it. And then growth margin, this is now the third quarter above 60%, improving sequentially. I guess what are the main drivers here and how sustainable are these levels? Should we view this as the new norm?

I would say, in short, yes. I think the mid-60s is where you could expect us to operate at. You know, the main drivers that you ask about, I noted in my remarks about the lean transformation. I mean, lean is all about eliminating waste and driving throughput and productivity. We've been able to increase our output without increasing our operating expenses. We've been able to improve our yields. And then I noted there have been a number of projects that our teams have worked to implement in our manufacturing operations that have benefited in terms of how we make our products. So we're really, really proud of that work. And I think, you know, this represents a really important step for us. As you noted, the third straight quarter of a mid-60s gross margin and something that I think we, you know, will look to hold ourselves accountable to. The other element that I would note, though, is, you know, we're really still very much so in the early innings of what we're looking to accomplish. So when we think about the number of projects that we have on deck to go execute across our operations, You know, we do see multiple opportunities to continue to create value. So we're going to continue to invest in the manufacturing side of the business.

Okay. And then on Singal, could you give us an update on the bioequivalence study enrollment? Does this current pace still support completion inside 2026?

In short, yeah, I'd say the bioequivalence study is going as we would have expected. Enrollment remains on track, and we did historically note that we'd expect it to be completed in around year-end, and there's been no change to our expectations associated with that. So it's a small study. It's not something that I have concern around at this point, but enrollment continues.

Got it. Thank you for taking our questions. Thank you.

Thank you. And your last question comes from Mike Podewski from Barrington Research. Please go ahead.

Good morning. So, Steve, I just want to, I guess, drill down on your commentary around the sustainability of gross margin in the mid-60s. Obviously, the first couple of quarters here, you've had the benefit of probably some decent, you know, favorable mix, you know, with OEM. And then, you know, on the other side, you've, you know, you've put in, you know, some good improvements in terms of manufacturing productivity. And so I just want to make sure, you know, just in terms of the second half, I mean, you won't, presumably, won't have that kind of favorable tailwind in terms of orders in OEM. And I just want to make sure that sort of the, I guess, the productivity improvements on manufacturing sort of fill that gap. And I, anyway, just want to drill down and make sure you're saying what I think you're saying. Thanks.

Yeah, I appreciate that. First question, Mike, I would say, you know, we've started the year at 64 and 65 percent. I mean, gross margin is never going to be in a straight linear line, as you know. So there is always some level of volatility. But implied in our guidance is that we will maintain sort of that 64 percent level. There is an element of mix that has to do with how gross margin plays out from a business perspective, but not in a way that's more material than the overall impact of the projects that we've been able to implement. The gains that we've been able to drive from improved yields and better throughput will start to continue to flow through. So what you heard me say is accurate, is that second half of the year, we expect to see sort of that 64% range, and we'll stand behind it. Great. Right.

Just in terms of, you know, the communication between you guys and your U.S. distributor for Montevisc OrthoVisc, I mean, what's your expectation in terms of pricing over the next, say, six to 12 months? I mean, is there anything you can sort of speak to there in terms of your expectation of, I mean, you know, moderate declines, more than moderate give-ups there? I mean, can you speak to that at all?

We maintain very close communications and regular dialogue with J&J and DePuce and these. And I would say our expectations for the full year was always that there would be some element of price erosion offset by volume. And I would say the beneficial sort of results so far through the first half of the year and also what's implied in our guidance is that pricing will continue to be a headwind, but volume will more than offset it. And that's what we've seen thus far. So I think the modest decline in pricing that you noted is probably a fair representation of what we'd expect to see in the coming months and quarters. And as it relates to longer term, I mean, I think there's always going to be that tradeoff between price and volume. And I think at this point, for the year, they're probably going to be offsetting each other to the point where we'll grow MonoBISC overall from a revenue perspective driven by higher volume. And we'll expect to see some decline from an orthoBISC perspective. And we haven't given much longer term guidance beyond that. But I think the pricing headwind and that dynamic that's always been in place here in the U.S. market will continue as we look to drive volume.

Great. Just a couple more. In terms of what you guys have been able to do, it feels like you guys have gotten some meaningful things done in terms of your internal processes there. And I assume that, you know, like pretty much every other company, you go after the low-hanging fruit, the things that are easiest to accomplish first. And I'm just curious, I mean, is there more juice to be squeezed here? You know, I mean, do you see meaningful opportunities to continue to sort of improve the way you guys do things that, you know, presumably can support continued margin progress? Thanks.

Yeah, I think it's a good question, and I'm going to break apart my answer in kind of two steps. The first one is we did institute a very sizable restructuring on the G&A side earlier this year. That's resulted in a 30% reduction in G&A in the quarter and, as you note, a 28% reduction in stock-based comp. So from a structural change perspective, you know, there's nothing further. But as it relates to the operating expenses of the business, when we think about sort of manufacturing operations, I still think that there's a very long way to go. We're very much so in the early innings of driving this lean transformation. Those won't play out over 90 days. They take years. And it's a playbook that's been developed by, you know, many other companies. But when deploying this lean transformation, you're really looking for both daily improvement in operations, but also sort of breakthrough projects that can impact our business over a longer time horizon, that being years. And we're working on both of those things simultaneously. So I think we're just very much so in the early innings of the manufacturing improvements that we're looking to drive. But I think in terms of the low-hanging fruit that you referenced from a G&A perspective, I think those are, you know, mostly behind us. Great.

And then just last one, Steve, maybe asking you to put your CFO cap, hold one back on. Obviously, you guys have moved the needle across a lot of metrics over a very short period of time. The one metric that has not sort of come along, at least over the past couple of quarters, is the cash generation. I just I just I guess I just wonder, obviously, you have a strong balance sheet, you know, you don't need necessarily to generate cash in the near term. But I'm just curious how you think about, you know, cash generation moving forward and, you know, maybe timing for for that coming alongside some of the other improvements you guys have been able to achieve. Thanks.

Yeah, I would say it's definitely an area of focus of mine and Ian's and our teams. I think the reason for why you see a little bit of a lag from a cash flow perspective is we did see a larger amount of orders go out during the June time period. So AR is a little higher than normal, and we don't really ever have an AR issue in this business. So it's more so from a timing perspective. You wouldn't expect to see some of that cash flow convert until the second half of the year. We do typically see a difficult start to the year from a cash flow timing perspective. That's just the seasonality effect of this business and a stronger end of the year. So we would expect that trend to continue such that we're driving for positive free cash flow in the second half of the year. I would say the other area that we've been very conscious about is investing in inventory to support our manufacturing operations. Having the appropriate levels of safety stock to enable our operations to run at the pace that they're running now is key. And that's something that we pay very close attention to and make decisions around very carefully, but have been a conscious decision that we've made. It's absolutely an expectation of ours that over time we generate stronger free cash flow and probably more of a conversation for 27 and beyond.

Great. Thank you. Thank you very much. Appreciate it.

Yeah, thank you.

Thank you. And there are no further questions at this time. Mr. Steve Griffin, you may continue.

Great. Thank you, everybody, for listening in on today's call. And we look forward to speaking to you after the coming quarter.

Ladies and gentlemen, this concludes today's conference call. Thank you very much for your participation. You may now disconnect. Have a great day.