AxoGen (NASDAQ:AXGN) reported fourth-quarter and full-year 2025 results that management said marked a “financial inflection point,” citing accelerating adoption of the company’s nerve repair algorithm, improved operating leverage, and a major regulatory milestone for its Avance nerve graft.
2025 results and profitability metrics
Fourth-quarter revenue was $59.9 million, up 21.3% year-over-year, while full-year revenue increased 20.2% to $225.2 million. CEO Michael Dale said growth was supported by “double-digit growth across all three target markets” and expanding use of the company’s portfolio, with Avance remaining the primary growth driver.
Gross margin declined year-over-year, in part due to one-time costs tied to the FDA approval of the Avance biologics license application (BLA). Fourth-quarter gross margin was 74.1% versus 76.1% a year earlier, and full-year gross margin was 74.3% versus 75.8% in 2024.
Hartley said gross profit was negatively impacted by $1.9 million in one-time costs in the fourth quarter associated with the BLA approval, two-thirds of which were non-cash stock-based compensation tied to milestone vesting. Excluding one-time items, she attributed margin pressure mainly to higher product costs related to additional testing steps as Avance transitioned to a biologic, partially offset by fewer inventory write-offs and lower shipping costs following the case stock program’s discontinuation.
AxoGen posted a fourth-quarter net loss of $13.2 million, or $0.28 per share, compared to net income of $0.5 million, or $0.01 per share, in the prior-year quarter. Full-year net loss was $15.7 million, or $0.34 per share, compared to a $10.0 million net loss, or $0.23 per share, in 2024.
On a non-GAAP basis, adjusted net income for the fourth quarter was $3.5 million, or $0.07 per share, and full-year adjusted net income was $14.4 million, or $0.29 per share, versus $5.9 million, or $0.13 per share, in 2024. Adjusted EBITDA was $27.9 million for the year, up 41% from 2024, with the adjusted EBITDA margin improving to 12.4% from 10.6%.
Hartley said cash, cash equivalents, restricted cash, and investments rose $6.0 million year-over-year to $45.5 million as of Dec. 31, 2025, which she said demonstrated the company’s ability to be cash-flow positive for the year.
Balance sheet actions and capital structure
Dale highlighted a January upsized public offering that generated $133.3 million in net proceeds. The company used $69.7 million to fully retire its term loan facility. Dale said eliminating related interest and revenue participation obligations should improve earnings quality over time, while remaining proceeds provide capacity to fund ongoing strategic initiatives.
Commercial execution: market growth, sales expansion, and education
Management framed performance around six strategic priorities, including market development and commercial expansion across extremities, oral maxillofacial/head and neck, breast, and prostate.
Dale said extremities remains AxoGen’s most mature market, supported by growth in traumatic and chronic procedures. Oral maxillofacial/head and neck delivered “high double-digit growth,” which he attributed to increasing surgeon adoption and recognition of the quality-of-life impact of nerve repair. Breast was described as one of the company’s fastest-growing opportunities, driven by greater adoption of Resensation techniques and higher implant-based reconstruction volumes.
In prostate, Dale said the company completed more than 100 procedures across 10 clinical sites and worked with surgeon partners to establish a standardized surgical technique. He said meaningful clinical signals are expected to begin emerging in the second half of 2026 as data matures, but later clarified in Q&A that prostate is not expected to be a significant revenue contributor in 2026.
AxoGen expanded its commercial organization in 2025 and plans continued additions in 2026. Dale provided year-end headcount and targets:
- Breast: added 10 reps and two regional directors in 2025, ending with 21 reps and two directors; plans to grow to ~30 reps in 2026.
- Extremities: added 12 reps in 2025, ending with 117 reps and 15 regional directors; plans to grow to ~130 reps in 2026.
- Oral maxillofacial/head and neck: ended 2025 with three field-based market development managers.
- Prostate development: added three clinical development managers and one director.
Dale said new hires typically reach independence and breakeven within six to nine months. Responding to a question about sales force sizing, he said the company is “a long way from full coverage” in extremities and breast, citing a large provider and site-of-service universe and describing a multi-year plan to build coverage through 2028.
On commercial excellence, Dale said 61% of total revenue growth in 2025 came from high-potential accounts, and average productivity in those accounts increased 21%. The company ended 2025 with 679 active high-potential accounts out of an approximately 780 account universe, and Dale said the high-potential universe could expand as new indications and procedures are targeted. For 2026, AxoGen’s stated goals include having 60% of revenue growth come from high-potential accounts and achieving 18% productivity growth in those accounts, while activating at least 100 surgeons.
Management also emphasized surgeon training as a core competency. Dale said 2025 training included nine extremities programs (170 surgeons), three oral maxillofacial/head and neck programs (59 surgeons), and five breast programs (79 surgeon pairs). For 2026, AxoGen plans 10 extremities programs (200 surgeons), six oral/maxillofacial programs (100 surgeons), and five breast programs (75 surgeon pairs).
FDA BLA approval, coverage momentum, and reimbursement dynamics
Dale called the December FDA approval of Avance’s BLA “the most significant milestone” in AxoGen’s history, making Avance “the first and only FDA-approved biologic therapeutic” for peripheral nerve discontinuities with 12 years of market exclusivity. He said the company is acting on the milestone through customer engagement, payer outreach, clinical advancement under an approved framework, and manufacturing investments aimed at scalability and margin expansion under a single quality system.
Management also cited support from medical societies. Dale said the American Association of Hand Surgery and the American Society for Reconstructive Microsurgery issued position statements recognizing nerve allograft as “non-experimental” and medically necessary standard of care for peripheral nerve defects, complementing earlier guidelines from the American Association of Oral and Maxillofacial Surgeons.
On reimbursement, Dale said approximately 19.8 million additional lives gained coverage in 2025, bringing commercial coverage to above 65%. In Q&A, Dale said the BLA provides a new vehicle to address payer objections that the product was experimental, though he said timing of payer responses is uncertain; he added that under the strategic plan, the company expects to overcome remaining negative coverage decisions between now and 2028.
Management also discussed a new CMS outpatient payment classification implemented in January. Executives characterized it as supportive of site-of-care flexibility over time but not an immediate “light switch.” AxoGen said it does not break out revenue by inpatient versus outpatient setting. Dale added that, as the company currently understands the situation, the outpatient change is not expected to be a significant factor for the breast opportunity, since most of those procedures will remain inpatient.
2026 outlook: revenue growth, margins, and cash flow
For 2026, AxoGen guided to revenue growth of at least 18%, implying at least $265.7 million in revenue. Dale characterized the outlook as “prudent,” noting the larger base and the need to manage customer creation models quarter to quarter. Management said revenue seasonality should resemble the past two years, with the first quarter typically the most modest and the second and third quarters stronger.
The company guided to 2026 gross margin of 74% to 76%, with Hartley citing anticipated cost pressure as AxoGen begins selling Avance biologic product in the second quarter of 2026. She said margin improvement is expected to begin in 2027 as continuous improvement programs and scale benefits take hold. AxoGen also said it expects to be free-cash-flow positive for full-year 2026, while anticipating higher cash burn in the first quarter.
About AxoGen (NASDAQ:AXGN)
AxoGen, Inc is a Florida-based medical technology company that develops and commercializes surgical solutions for peripheral nerve damage. Founded in 2002 and headquartered in Alachua, Florida, the company focuses on restoring nerve function and improving patient outcomes through innovative biologic and engineered products. AxoGen’s offerings address a range of traumatic and iatrogenic injuries, offering alternatives to traditional nerve autografts.
The company’s core product portfolio includes the Avance® Nerve Graft, a decellularized human nerve allograft designed to bridge nerve gaps without the need for a secondary harvest site, and the Axoguard® Nerve Connector and Protector devices, which facilitate nerve coaptation and protect repaired sites from surrounding scar tissue.
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