Good afternoon, ladies and gentlemen. Welcome to Elutia's Second Quarter 2025 Financial Results Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Matt Steinberg with Finn Partners. Thank you. You may begin.

Thank you, operator, and thank you all for participating in today's call. Earlier today, Elutia released financial results for the quarter ended June 30, 2025. A copy of the press release is available on the company's website. Before we begin, I would like to remind you that management will make statements during this call that include forward-looking statements within the meaning of the federal securities laws, which are pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that do not relate to matters of historical facts or relate to expectations or predictions of future events, results, or performance are forward-looking statements. All forward-looking statements, including without limitation, those relating to our operating trends and future financial performance are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please refer to the Risk Factors section of our public filings within the SEC, including Elutia's annual report on Form 10-K for the year ended December 31, 2024, accessible on the SEC's website at www.sec.gov. Such factors may be updated from time to time in Elutia's other filings with the SEC. The conference call contains time-sensitive information and is accurate only as of the live broadcast today, August 14, 2025. Elutia disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. Also, during this presentation, we refer to gross margin, excluding intangible asset amortization, which is a non-GAAP financial measure. A reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure is available in the company's financial results release for the second quarter ended June 30, 2025, which is accessible on the SEC's website and posted on the Investor page of the Elutia website at www.elutia.com. And with that, I will turn the call over to Elutia's CEO, Randy Mills.

Thank you, Matt, and welcome one and all to our second quarter 2025 earnings call. Let me start with a rundown of today's topics. First and foremost, I want to provide some color on the success we continue to have with our EluPro launch and the commercial success we continue to have there. Then I'm going to switch gears, and I'm going to talk a little bit about the tremendous work our development teams are doing in the reconstruction pipeline that we have underway. I'm then going to turn it over to Matt, who's going to provide an update, which we have some pretty significant updates on the litigation front. Lastly, Matt will also do, as he always does, a rundown of our financial progress. As I indicated in the press release, on the business development front, we have a number of strategic opportunities that we're sort of in the middle of that we're driving towards conclusion, and we anticipate having more to say on those in the near future. But let's just jump right in with a review of EluPro's first year and what a year it was. On the commercial side, 49% sequential growth this quarter over last quarter built on the back of 7 national GPO contracts that the team has secured. As we've said all along, the key to revenue growth is the number of hospital systems we can get into. We're currently at 161 hospital systems actively ordering. A lot of this growth has been facilitated by the tremendous partnership that we've developed with our friends at Boston Scientific. It’s great commercial success built on a strong scientific foundation. Our drug-eluting technology, particularly our biologics drug-eluting technology, we believe, is the best in the world. In this first year, I think we've done a good job of validating that with five peer-reviewed publications validating not just the product but the base technology. We won the Edison Award, I got to actually go and receive at what I would call the Nerd Oscars for Innovation in Medical Technology; two Medical Device Network Excellence Awards, one for product innovation, which isn't surprising; another for product launch, really combining what the two teams working together are able to accomplish. Additionally, our Innovator in Chief, Dr. Michelle Williams, won the Medical Device Innovator of the Year award, which we believe was certainly well deserved. Turning to the scoreboard. Really, the numbers say it all. First half performance: BioEnvelope revenue for the quarter was up 33% year-over-year. That puts us at about a $14 million run rate driven almost exclusively by EluPro, up 49% sequentially for the quarter. EluPro now makes up 68% of our BioEnvelope revenue and continues to grow, driven by our VAC approvals. We now have over 160 hospitals that we've gotten through the VAC process. We don’t just mean on contract and able to order; we don’t actually count these hospitals until they are actively ordering and we are shipping them the product. So that provides a high-level view of what's going on with the product. So looking at the revenue, it’s kind of amazing. We sold the first unit of EluPro last September and experienced very modest revenue recognition in the third quarter of 2024. Since then, this product has been on a tear. The quarterly growth continues, and we now expect to end the year at a revenue rate approaching $20 million. This is due to the tremendous work of the commercial team. Upon digging in, what’s really going on is driven by our sales per account. If we can get on contract with the hospital, what we’re seeing is 130% higher revenue in those accounts for EluPro than we’re seeing with CanGaroo, reflecting greater utilization of the product. CanGaroo is a great biologic envelope. It holds the pacemaker in place, keeps it stable, prevents erosion from taking place and migration from taking place, and ultimately a fibrotic capsule forming. But if you add the powerful protection of rifampin and minocycline, you really get the full benefit of a drug-eluting biologic. That’s why we’re seeing this 130% higher utilization rate with EluPro than with CanGaroo. We couldn’t do this without our direct sales team, which is doing a great job, but also with our 1099 distributor network, making up about 33% of our total sales, enabling us to efficiently move across the country and gain new territories, but also with our partnership with Boston Scientific. Boston is actively involved in EluPro sales in 98 distinct hospitals ordering and facilitating approximately 30% of EluPro cases. If you extrapolate this out, we’re targeting around 1,600 hospital centers that would ultimately use EluPro that are active implanters of pacemakers. If it scales the way it’s going, it positions this as a $150 million product in just the U.S., just for pacemakers alone, and we think the neuro market presents at least as big of an opportunity. So from a revenue standpoint, it’s a strong performance so far. Again, we’ve said all along, if you want to know what our revenue is going to do, look at our VAC approvals. This reflects the great work of our team continuing to grind out those approvals. We have something along the lines of 90 submissions in progress, and about a 95% success rate. When we submit to a VAC, we have a strong likelihood of gaining approval. Facilitating that great work with the VACs is the work we’ve done with our GPO contracts. We are on contract now with 7 major GPOs, including Premier, S3P, Advantus, and we believe we will be reporting on a few more successes as the year concludes. All in all, what an incredible first year for EluPro. I want to thank the entire Elutia crew. It really was a team effort from science to operations to commercial, everybody working together the way our culture says we should. EluPro is a tremendous amount of fun and a great commercial success, but we are just getting started. Our mission is to humanize medicine so that patients can thrive without compromise, and there is no bigger need than in the breast reconstruction space. This year alone, 317,000 women will be told they have an invasive form of breast cancer. Many of those will require mastectomies and need reconstruction. A staggering 1 in 3 women going through breast reconstruction will suffer serious complications from that reconstruction procedure. Taking a look at the breast reconstruction market, it is a very large market already dominated by biologics. Biologics represent a $1.5 billion addressable market in the U.S. alone and account for 65% of the device-related spend in reconstruction. Breaking down the numbers, there are 151,000 mastectomies annually in the U.S., with two-thirds involving bilateral procedures. That generates between 200,000 to 225,000 individual breasts reconstructed. Biologics account for 80% of the reconstruction cases at a cost of between $7,500 and $9,500 per case, which is about 65% of the implant-related costs, but they do not address the primary cause of implant failure. This is a market where we see biologics as the standard of care, and that standard is currently failing. These numbers don’t lie: 1 in 3 women undergoing breast reconstruction suffer a serious complication. This complication is driven almost exclusively by persistent bacterial contamination. 10% to 14% of women will experience a significant infection, 19% to 29% will suffer capsular contracture, and up to 21% of women will have implant loss. There are significant economic costs associated with these two, almost $50,000 in economic burden to the hospital, which the hospital must bear alone since it's a postoperative infection, not covered by insurance. So if you think about this, and just about everyone I know knows a woman undergoing a procedure like this, you’ve been diagnosed with breast cancer, which is horrible news; you have the courage to go and face a mastectomy, radiation often, very frequently, chemotherapy. And instead, what do you face? Multiple surgeries, delays in your underlying cancer treatment, and the pain and suffering of a failed reconstructive procedure. This is something that the drug-eluting biologic technology we’ve developed aims to fix. You might be asking how bad is the situation. Well, surprisingly, breast reconstruction ranks among the riskiest procedures in medicine despite being performed over 150,000 times a year. It falls just between major limb amputation and colorectal resection with an ostomy for serious complications. It’s also not surprising that when faced with the option for breast reconstruction, 60% of women opt not to have it. Friends, this is a market that needs a revolution, and that is exactly what Elutia is bringing to the table. We have built on our award-winning technology from EluPro to bring you what's next. NXT-41X is a fully engineered next-generation biological matrix that combines both handling and the biological remodeling of a biologic matrix, and we've added powerful antibiotics with sustained antibiotic release to prevent the infection associated with these procedures. Our team has been hard at work on this for the past 3 years, and we are now in a position where it's actually just around the corner. We've spent a tremendous amount of time developing and perfecting a great base biological matrix, and our animal data supporting the use of that matrix is complete. We've held presubmission meetings with the Food and Drug Administration, and our teams are preparing submissions for approval. We anticipate having the NXT-41 base matrix approved and launching in the second half of 2026, and the antibiotic matrix in the first half of 2027. We will obviously be providing more detail on this in the coming months, but I wanted to give you a good sense of not just where we are in the development program, but more importantly, why the NXT-41 program for breast reconstruction has been prioritized by our development team for the last 3 years.

Okay. Thank you, Randy. So first off, the litigation update, which is a new section for our conference calls, stems from a product recall we had over 4 years ago, in a part of the company that we sold 2 years ago. It really relates to the history of the company as opposed to anything we are doing now. What we have been left with, based on that product recall, is a substantial number of lawsuits; we had 110 individual lawsuits stemming from this event. It has been a significant burden for the company both from a value point of view and a personal point of view. I am glad to say that we are very close to the end of that process. We’ve made substantial progress recently, and it has been a focus for a small number of people in the company for some time. We started making a concerted effort to settle these cases a couple of quarters ago. Just in the last quarter, we settled 27 of these cases, and now we’ve settled 97 out of the original 110. The remaining 13 cases should be easier to settle than much of what we've dealt with over the last few years. No single trial attorney is handling more than 3 of those. This substantially reduces the expenses we incur going forward and removes an overhang that made it very difficult for us during discussions about any strategic transactions. We have really addressed those concerns and are close to putting this entirely behind us. Now I will move on to the financial update, which integrates directly with everything that Randy talked about. The performance of EluPro saw 49% growth sequentially from Q1 to Q2 this year, driving substantial growth, even in the overall BioEnvelope business, despite a portion of the business still coming from CanGaroo. We saw $3.5 million in sales in the BioEnvelope business versus $2.6 million from a year ago. We expect that growth to continue as more accounts convert to EluPro. Our other two main product areas are cardiovascular patch products and SimpliDerm. Regarding cardiovascular products, we regained control from an exclusive distributor last quarter and generated over $700,000 of revenue from those products in just a part of the quarter, which is more than double what we were able to do through the distributor the previous quarter. We expect to see continued growth there. For SimpliDerm, we generated $2 million of revenue last quarter, down from the higher previous quarter. I believe there are multiple ways we can generate value from that franchise, either through driving additional sales or partnering with another company to bring value to our shareholders. Overall, those three components contributed to sales of $6.3 million for the quarter, comparable to the year-ago quarter. Our gross margins improved, reaching 62.4% for Q2, up about 4 percentage points from a year ago, largely due to the efficiency in the BioEnvelope business as we scale up. On a bottom-line basis, whether viewed as operating, net, or EBITDA basis, the most instructive metric is adjusted EBITDA, which saw a $3.8 million loss for the quarter. Nevertheless, I am really pleased with the efficiency we’re observing as we move this company toward profitability. We ended Q2 with $8.5 million in cash. The important aspect to highlight is that we have several business development transactions being evaluated. We expect to share more details soon, which will positively impact our cash position.

Thank you, Matt. Let’s conclude the call by providing guidance and clarity on our company's future directions. A lot of our focus will be dedicated to EluPro. EluPro is now at the stage of scaling. We know exactly how to grow revenue in EluPro; it’s simply by increasing the number of VACs on contract. We will continue to scale revenue in EluPro by expanding our VACs and GPO coverage, leveraging both momentum developed through direct sales and our partners at Boston Scientific. We’re also increasing our production capacity and lowering COGS, evidenced by the improvement in gross margin by our operations team. Lastly, the NXT-41 platform is close to being ready, with proven drug-eluting biologics technology going into a much larger market with unmet medical needs. We are excited to pursue this, and we are also working on several strategic opportunities, expecting to reach conclusion in the near future with more updates as they develop.

Our first question is from Frank Takkinen with Lake Street Capital Markets.

Congrats on all the exciting progress. I wanted to start with one on EluPro. Obviously, you've had very strong market receptivity. Just curious about bottlenecks along the way, whether that’s still VACs and the process or anything else you need to address to continue this growth trajectory.

Thanks, Frank. I would say that initially, the commercial team really did give the operations team a run for their money. There were some challenges keeping up with production initially, but they’ve mastered that and improved efficiency showing in our gross margin. We keep a strong number of those accounts in the pipeline. We happen to have 90 because of pull-through, but we add new filings every day, and our partners at Boston Scientific are tremendously helpful in opening up those new doors which drive revenue with EluPro. If we get through the VAC, we are seeing the ordering scale.

Great. That’s good color. Maybe one on the NXT-41. A clarification on the two-step process: I believe I read that the first one is expected in the second half of '26 and then the drug-eluting version in the first half of '27. Can you provide additional background on that?

Sure. Regarding regulatory strategy, we're taking a conservative approach by uncoupling the regulatory clearances. The first approval will be the matrix by itself; this isn't a derivative of SimpliDerm. We went with a fully engineered matrix to eliminate donor-to-donor variability, optimizing it for handling and incorporation. Expect the base matrix in the second half of '26 and the antibiotic delivery version shortly thereafter. We have powerful antimicrobial effects that we've proven in the lab, and we’re excited about its potential.

Perfect. Helpful. Regarding your comments about business development, would you characterize very soon as weeks, months, or quarters?

Nothing is done until it's done. I would expect it to be in weeks, months, or quarters. We have several transactions we’re contemplating; we expect at least one to bear fruit, but I don't want to set any unrealistic expectations since it’s only us who will bear the consequences if those are not met.

This is Matt Park on for Ross today. Starting with gross margins, you had a good step up this quarter with cardiovascular coming back in the mix. How should we frame your ability to maintain or potentially expand gross margins from here?

Absolutely, we have opportunities across all segments to improve gross margin going forward. In EluPro, we’re scaling operations, and in cardiovascular, we are now selling at a higher gross margin. Growing this business will positively impact overall gross margin. We have opportunities for improvement in SimpliDerm as well, though to a lesser extent.

Can you discuss the level of clinical evidence or study design needed for FDA approval for both the base matrix and the drug-eluting version?

We’re using the same regulatory pathway as for EluPro for both the base matrix and the antibiotic delivery matrix. The staggered launch allows us to generate the clinical data necessary for long-term marketing success. We’re not rushing to market with a synthetic matrix; we’re focused on proving a biologic matrix first before adding the drug-eluting component through a well-established development pathway.

There are no further questions at this time. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.