0001558370-23-019057 | 10-Q | XBRL Viewer

Net Loss Per Share Attributable to Common Stockholders (Tables)

9 Months Ended

Sep. 30, 2023

Net Loss Per Share Attributable to Common Stockholders

Schedule of net loss per share attributable to common stockholders


	Three Months Ended				Nine Months Ended
(in thousands, except share and per share data)	September 30,				September 30,
	2023		2022		2023		2022
Numerator:
Net loss from continuing operations	$	(8,519)	$	(11,029)	$	(26,027)	$	(30,167)
Income (loss) from discontinued operations	$	(1,228)	$	1,119	$	(2,315)	$	2,710
Net loss	$	(9,747)	$	(9,910)	$	(28,342)	$	(27,457)
Denominator:
Weighted average number of common shares - basic and diluted		17,017,610		13,660,555		16,464,262		13,618,580

Net loss from continuing operations per share - basic and diluted	$	(0.50)	$	(0.81)	$	(1.58)	$	(2.22)
Net income (loss) from discontinued operations per share - basic and diluted	$	(0.07)	$	0.08	$	(0.14)	$	0.20
Net loss per share - basic and diluted	$	(0.57)	$	(0.73)	$	(1.72)	$	(2.02)

Schedule of potential common shares excluded from calculation, presented based on amounts outstanding at period end, from the computation of diluted net loss per share attributable to common stockholders


	September 30,
	2023	2022
Options to purchase common stock	1,648,190	1,755,447
Restricted stock units	369,525	373,332
Class A common stock warrants	187,969	187,969
Common Warrants	11,033,804	—
Prefunded Warrants	503,058	—
Total	13,742,546	2,316,748

Recently Issued Accounting Standards	9 Months Ended
Sep. 30, 2023
Recently Issued Accounting Standards
Recently Issued Accounting Standards	Note 3. Recently Issued Accounting Standards In 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Disclosure Framework – Measurement of Credit Losses on Financial Instruments, which requires financial assets measured at amortized cost, including trade receivables, be presented net of the amount expected to be collected. The measurement of all expected credit losses is based on relevant information about the credit quality of customers, past events, including historical experience, and reasonable and supportable forecasts that affect the collectability of the reported amount. In October 2019, the FASB voted to approve a proposal to defer the effective date of ASC 2016-13 for certain entities, including emerging growth companies that take advantage of the extended transition period, to fiscal years beginning after December 15, 2022. This ASU was effective for the Company beginning on January 1, 2023 and did not have a material impact on our condensed consolidated Financial Statements. The Company adopted this ASU using the modified retrospective transition method. Under this transition method, the new standard is applied from January 1, 2023 without restatement of comparative period amounts. The impact of transitioning to the new standard was immaterial and no adjustment was recorded to retained earnings for the cumulative effect of adopting this ASU on January 1, 2023. Results for reporting periods beginning after January 1, 2023 are presented under Topic 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP.

Recently Issued Accounting Standards

9 Months Ended

Sep. 30, 2023

Recently Issued Accounting Standards

Recently Issued Accounting Standards

Note 3. Recently Issued Accounting Standards

In 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Disclosure Framework – Measurement of Credit Losses on Financial Instruments, which requires financial assets measured at amortized cost, including trade receivables, be presented net of the amount expected to be collected. The measurement of all expected credit losses is based on relevant information about the credit quality of customers, past events, including historical experience, and reasonable and supportable forecasts that affect the collectability of the reported amount. In October 2019, the FASB voted to approve a proposal to defer the effective date of ASC 2016-13 for certain entities, including emerging growth companies that take advantage of the extended transition period, to fiscal years beginning after December 15, 2022. This ASU was effective for the Company beginning on January 1, 2023 and did not have a material impact on our condensed consolidated Financial Statements. The Company adopted this ASU using the modified retrospective transition method. Under this transition method, the new standard is applied from January 1, 2023 without restatement of comparative period amounts. The impact of transitioning to the new standard was immaterial and no adjustment was recorded to retained earnings for the cumulative effect of adopting this ASU on January 1, 2023. Results for reporting periods beginning after January 1, 2023 are presented under Topic 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP.

- Definition

The entire disclosure for change in accounting principle. Includes, but is not limited to, nature, reason, and method of adopting amendment to accounting standards or other change in accounting principle.

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+ Details

Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2023	Nov. 09, 2023
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Sep. 30, 2023
Entity File Number	001-39577
Entity Registrant Name	Elutia Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	47-4790334
Entity Address State Or Province	MD
Entity Address, Address Line One	12510 Prosperity Drive
Entity Address, Adress Line Two	Suite 370
Entity Address, City or Town	Silver Spring
Entity Address, Postal Zip Code	20904
City Area Code	240
Local Phone Number	247-1170
Title of 12(b) Security	Class A Common Stock, par value $0.001 per share
Trading Symbol	ELUT
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Central Index Key	0001708527
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Amendment Flag	false
Class A Common stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		18,884,146
Class B Common stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		4,313,406

Stock-Based Compensation - Option Valuation Assumption (Details)	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Stock Option
Weighted-average assumptions were used to determine the fair value of options
Dividend yield assumption to estimate fair value	0.00%	0.00%
Expected term (years)	6 years	6 years 2 months 12 days
Risk-free interest rate	3.90%	2.00%
Volatility factor	63.80%	53.00%
Dividend yield	0.00%	0.00%
Performance Based Options
Weighted-average assumptions were used to determine the fair value of options
Expected term (years)	3 years

Stock-Based Compensation - Stock Options Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Number of Shares
Outstanding at the beginning	1,864,739
Granted	157,500
Forfeited	(374,049)
Outstanding at the end	1,648,190	1,864,739
Vested and exercisable at the end	730,180
Weighted- Average Exercise Price
Outstanding at the beginning (in dollars per share)	$ 9.41
Granted (in dollars per share)	2.64
Forfeited (in dollars per share)	9.92
Outstanding at the end (in dollars per share)	8.63	$ 9.41
Vested and exercisable at the end (in dollars per share)	$ 9.80
Weighted-Average Remaining Contractual Term (years)
Outstanding (in years)	8 years 1 month 6 days	7 years 6 months
Vested and exercisable (in years)	7 years 4 months 24 days
Aggregate Intrinsic Value
Aggregate Intrinsic Value (in dollars)		$ 8
Other Disclosures
Weighted average grant date fair value of options granted	$ 1.63
Total unrecognized compensation expense	$ 2,400
Stock Option
Stock-Based Compensation
Exercise price as a percentage of market value of share of common stock at closing on the date of the grant	100.00%
Contractual term	10 years
Vesting period	4 years
Other Disclosures
Weighted-average recognition period	2 years

Stock-Based Compensation

9 Months Ended

Sep. 30, 2023

Stock-Based Compensation

Stock-Based Compensation

Note 5. Stock-Based Compensation

In 2015, the Company established its 2015 Stock Option/Stock Issuance Plan, as amended (the “2015 Plan”) which provided for the granting of incentive and non-qualified stock options to employees, directors and consultants of the Company. On October 7, 2020, the Company adopted its 2020 Incentive Award Plan, which was amended and restated on June 8, 2023 (the “2020 Plan”). The 2020 Plan authorizes the grant of incentive and non-qualified stock options, restricted stock, restricted stock units and stock appreciation rights to employees, directors and consultants. Shares of Class A common stock totaling 3,636,000 have been reserved for issuance under the 2020 Plan. In addition, the shares reserved for issuance under the 2020 Plan also include shares reserved but not issued under the 2015 Plan as well as an annual increase as set forth in the 2020 Plan. As of September 30, 2023, the Company had 3,370,201 shares of Class A common stock available for issuance under the 2020 Plan.

On June 21, 2022, C. Randal Mills, Ph.D., a member of the Board of Directors (the “Board”) of the Company, was appointed as the Company’s Interim President and Chief Executive Officer, succeeding Ronald Lloyd, who stepped down as the Company’s President and Chief Executive Officer and as a member of the Board. In connection with his appointment as the Interim President and Chief Executive Officer, Dr. Mills and the Company entered into an employment agreement for an initial term of 90 days (such period, the “Interim Period”). On August 9, 2022, Dr. Mills was appointed to the role of President and Chief Executive Officer of the Company, thereby ending the Interim Period, and his employment agreement was extended pursuant to the terms thereof. In accordance with the terms of his employment agreement, Dr. Mills (1) received a stock option award to purchase 456,278 shares of Class A common stock of the Company (the “Option Grant”) on June 21, 2022; three-fifths of such Option Grant is subject to time-based vesting (the “Time-Based Options”) and two-fifths of such Option Grant is subject to performance-based vesting (the “Performance Based Options”) and (2) received 224,734 restricted stock units (the “RSU Grant”); three-fifths of such RSU Grant is subject to time-based vesting (the “Time-Based RSUs”) and two-fifths of such RSU Grant is subject to performance-based vesting (the “Performance-Based RSUs”). One-third of the Time-Based Options vested on August 9, 2022 (end of the Interim Period), and two-thirds of the Time-Based Options vest over a four-year vesting schedule with 25% vesting on the first anniversary of June 21, 2022 and the remaining portion vesting in twelve equal quarterly installments. One-third of the Time-Based RSUs vest on the grant date, and two-thirds of the Time-Based RSUs vest over a four-year vesting schedule in equal annual installments. The Performance-Based Options and Performance-Based RSUs each vest in equal installments upon the achievement of certain share price thresholds for twenty consecutive days of trading at each respective threshold. Pursuant to the terms of the employment agreement, all of these awards were deemed granted on June 21, 2022, for purposes of and in accordance with ASC 718, Accounting for Stock Based Compensation; however, the RSUs were not legally granted until April 2023 and the vested shares underlying the award were not deemed outstanding until such time.

Stock Options

The Company’s policy is to grant stock options at an exercise price equal to 100% of the market value of a share of Class A common stock at closing on the date of the grant. The Company’s stock options generally have contractual terms of ten years and vest over a four-year period from the date of grant.

A summary of stock option activity under the Company’s 2015 Plan and 2020 Plan for the nine months ended September 30, 2023 is as follows:


				Weighted-
				Average
		Weighted-		Remaining		Aggregate
		Average		Contractual		Intrinsic
		Exercise		Term		Value
	Number of Shares	Price		(years)		(in thousands)
Outstanding, December 31, 2022	1,864,739	$	9.41		7.5	$	8
Granted	157,500	$	2.64
Exercised	—	$	—
Forfeited	(374,049)	$	9.92
Outstanding, September 30, 2023	1,648,190	$	8.63		8.1	$	-
Vested and exercisable, September 30, 2023	730,180	$	9.80		7.4	$	-

The weighted average grant date fair value of options granted during the nine months ended September 30, 2023 was $1.63. As of September 30, 2023, there was approximately $2.4 million of total unrecognized compensation expense related to unvested stock options. These costs are expected to be recognized over a weighted-average period of approximately two years.

The Company uses the Black-Scholes model to value its time-based stock option grants and expenses the related compensation cost using the straight-line method over the vesting period. The fair value of stock options is determined on the grant date using assumptions for the estimated fair value of the underlying common stock, expected term, expected volatility, dividend yield, and the risk-free interest rate. Before the completion of the Company’s IPO, the Board determined the fair value of common stock considering the state of the business, input from management, third party valuations and other considerations. The Company uses the simplified method for estimating the expected term used to determine the fair value of options. The expected volatility of the Class A common stock is primarily based on the historical volatility of comparable companies in the industry whose share prices are publicly available. The Company uses a zero-dividend yield assumption as the Company has not paid dividends since inception nor does it anticipate paying dividends in the future. The risk-free interest rate approximates recent U.S. Treasury note auction results with a similar life to that of the option. The period expense is then determined based on the valuation of the options and is recognized on a straight-line basis over the requisite service period for the entire award.

The following weighted-average assumptions were used to determine the fair value of time-based options granted during the nine months ended September 30, 2023 and 2022:


	Nine Months Ended
	September 30,
	2023		2022
Expected term (years)	6.0		6.2
Risk-free interest rate	3.9	%	2.0	%
Volatility factor	63.8	%	53.0	%
Dividend yield	—		—

For the Performance-Based Options with a market condition granted as described above, the Company used an option pricing model, the Monte Carlo model, to determine the fair value of the respective equity instruments and an expense recognition term of approximately three years.

Restricted Stock Units

Restricted stock units (“RSUs”) represent rights to receive common shares at a future date. There is no exercise price and no monetary payment is required for receipt of restricted stock units or the shares issued in settlement of the award. The Company’s RSUs generally vest over a three to four year period from the date of grant.

A summary of the RSU activity under the Company’s 2020 Plan for the nine months ended September 30, 2023 is as follows:


		Weighted-
		Average
	Number of Shares	Grant Date
	Underlying RSUs	Fair Value
Unvested, December 31, 2022	372,307	$	5.90
Granted	72,000	$	2.24
Vested	(35,044)	$	9.23
Forfeited	(39,738)	$	4.54
Unvested, September 30, 2023	369,525	$	4.96

For the Performance-Based RSUs, including those granted to Dr. Mills as described above, the Company accounted for the awards as market condition awards and used an option pricing model, the Monte Carlo model, to determine the fair value of the respective equity instruments and an expense recognition term of two to three years using the graded vesting method.

As of September 30, 2023, $0.9 million of unrecognized compensation costs related to RSUs is expected to be recognized over a weighted average period of approximately two years.

Employee Stock Purchase Plan

The Company makes shares of its Class A common stock available for purchase under its 2020 Employee Stock Purchase Plan (the “ESPP”). The ESPP provides for separate six-month offering periods that begin in March and September of each year. Under the ESPP, employees may purchase a limited number of shares of Elutia Class A common stock at 85% of the fair market value on either the first day of the offering period or the purchase date, whichever is lower. The ESPP is considered compensatory for purposes of stock-based compensation expense. The number of shares reserved under the ESPP will automatically increase on the first day of each fiscal year through January 1, 2030, in an amount as set forth in the ESPP. As of September 30, 2023, the total shares of Class A common stock authorized for issuance under the ESPP was 542,365, of which 335,808 remained available for future issuance. During the three and nine months ended September 30, 2023, 63,628 and 104,905 shares, respectively, of Class A common stock were issued under the ESPP.

Stock-Based Compensation Expense

Stock-based compensation expense recognized during the three and nine months ended September 30, 2023 and 2022 was comprised of the following (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Sales and marketing	$	164	$	330	$	466	$	819
General and administrative		373		(124)		1,264		1,460
Research and development		15		(14)		102		414
Cost of goods sold		14		27		40		61
Total stock-based compensation expense	$	566	$	219	$	1,872	$	2,754

Stock-based compensation expense included within Discontinued Operations totaled $0.1 million for both the three and nine months ended September 30, 2023 and 2022.

Revenue Interest Obligation

9 Months Ended

Sep. 30, 2023

Revenue Interest Obligation

Revenue Interest Obligation

Note 8. Revenue Interest Obligation

On May 31, 2017, the Company completed an asset purchase agreement with CorMatrix Cardiovascular, Inc. (“CorMatrix”) and acquired all CorMatrix commercial assets and related intellectual property (the “CorMatrix Acquisition”). As part of the CorMatrix Acquisition, the Company assumed a restructured, long-term obligation (the “Revenue Interest Obligation”) to Ligand Pharmaceuticals (“Ligand”) with an estimated present value on the acquisition date of $27.7 million. Subject to annual minimum payments of $2.75 million per year, the terms of the Revenue Interest Obligation require Elutia to pay Ligand, 5% of future sales of the products Elutia acquired from CorMatrix, including CanGaroo, ProxiCor, Tyke and VasCure, as well as products substantially similar to those products, such as the version of CanGaroo Elutia is currently developing that is designed to include antibiotics.

Furthermore, a $5.0 million payment is due to Ligand if cumulative sales of these products exceed $100 million and a second $5.0 million will be due if cumulative sales exceed $300 million during the ten-year term of the agreement which expires on May 31, 2027. The initial $5.0 million milestone payment became due in the second quarter of 2023.

The Company recorded the present value of the estimated total future payments under the Revenue Interest Obligation as a long-term obligation, with the annual minimum payments, along with the expected payment timing of the first $5.0 million sales milestone payment noted above, serving to establish the short-term portion. At each reporting period, the value of the Revenue Interest Obligation is re-measured based on current estimates of future payments, with changes to be recorded in the condensed consolidated statements of operations using the catch-up method. There was no change to estimated future payments during the three and nine months ended September 30, 2023 and 2022, and thus, no re-measurement gain or loss was recognized. Interest expense related to the Revenue Interest Obligation of approximately $0.6 million and $0.7 million was recorded for the three months ended September 30, 2023 and 2022, respectively and approximately $1.6 million and $2.0 million was recorded for the nine months ended September 30, 2023 and 2022, respectively.

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2023

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Note 2. Summary of Significant Accounting Policies

Basis of Presentation and Liquidity

The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the Company’s consolidated financial statements and accompanying notes included in the Company's annual report on Form 10-K (“Annual Report”) for the fiscal year ended December 31, 2022. The financial information as of September 30, 2023 and for the three and nine months ended September 30, 2023 and 2022 is unaudited, but in the opinion of management, all adjustments considered necessary for a fair statement of the results for these interim periods have been included. The condensed consolidated balance sheet data as of December 31, 2022 was derived from audited financial statements but does not include all disclosures required by GAAP. The results of the Company’s operations for any interim period are not necessarily indicative of the results that may be expected for any other interim period or any future year or period.

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.

The financial position and operating results of the disposed-of Orthobiologics Business have been reported as discontinued operations in the condensed consolidated financial statements in the current as well as prior comparative periods.

In accordance with Accounting Standards Update (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued. For the nine months ended September 30, 2023, the Company incurred a net loss of $28.3 million, and as of September 30, 2023, the Company had an accumulated deficit of $166.3 million. In addition, during the nine months ended September 30, 2023, the Company used $12.7 million of cash in operating activities, and expects to continue to incur cash outflows during the remainder of 2023. Because of the numerous risks and uncertainties associated with the Company’s commercialization and development efforts, the Company is unable to predict when it will become profitable, and it may never become profitable. The Company’s inability to achieve and then maintain profitability would negatively affect its business, financial condition, results of operations and cash flow.

In order to mitigate the current and potential future liquidity issues caused by the matters noted above, the Company may seek to raise capital through the issuance of common stock, such as the private placement which we closed in September 2023 described in Note 9, pursue asset sale or other transactions, such as the completed sale of the Orthobiologics Business described in Note 4, or restructure our Revenue Interest Obligation. However, such transactions may not be successful, and we may not be able to raise additional equity, refinance our debt instruments, or sell assets on acceptable terms, or at all. As such, based on our current operating plans, the Company believes there is uncertainty as to whether our future cash flows along with our existing cash, issuances of additional equity and cash generated from expected future sales will be sufficient to meet our anticipated operating needs through twelve months from the financial statement issuance date. Due to these factors, there is substantial doubt about our ability to continue as a going concern within one year after the issuance of the financial statements.

The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. That is, the accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities in the ordinary course of business.

Reclassifications

The Company determined in its fourth quarter of 2022 that its operating and reportable segments are consistent with its major product groupings – Device Protection, Women’s Health, Cardiovascular and Orthobiologics prior to its divestiture. Segment results for the three and nine months ended September 30, 2022, have been recasted to conform to the new segment presentation, which now excludes Orthobiologics due to its divestiture noted above. Refer to the Segment Information in Note 12.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates and assumptions relating to inventories, receivables, long-lived assets, the valuation of stock-based awards and warrants, the valuation of the revenue interest obligation, the contingent liability for the FiberCel Litigation and deferred income taxes are made at the end of each financial reporting period by management. Management continually re-evaluates its estimates, judgments and assumptions, and management's evaluation could change. Actual results could differ from those estimates.

Net Loss per Share Attributable to Common Stockholders

Our common stock has a dual class structure, consisting of Class A common stock, $0.001 par value per share (the “Class A common stock”) and Class B common stock, $0.001 par value per share (the “Class B common stock”). Other than voting rights, the Class B common stock has the same rights as the Class A common stock, and therefore both are treated as the same class of stock for purposes of the earnings per share calculation. Basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average shares outstanding during the period. For purposes of the diluted net income (loss) per share attributable to common stockholders calculation, stock options, restricted stock units (“RSUs”) and warrants are considered to be common stock equivalents. All common stock equivalents have been excluded from the calculation of diluted net loss per share attributable to common stockholders, as their effect would be anti-dilutive for all periods presented. Therefore, basic and diluted net loss per share were the same for both periods presented.

Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:

Level 1 - Valuations based on quoted prices for identical assets and liabilities in active markets.

Level 2 - Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3 - Valuations based on unobservable inputs reflecting the Company’s own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

The estimated fair value of financial instruments disclosed in the financial statements has been determined by using available market information and appropriate valuation methodologies. The carrying value of all current assets and current liabilities approximates fair value because of their short-term nature.

Cash

The Company maintains its cash balances at banks and financial institutions. The balances are insured up to the legal limit. The Company maintains cash balances that may, at times, exceed this insured limit.

Accounts Receivable and Allowances

Accounts receivable in the accompanying balance sheets are presented net of allowances for credit losses. The Company grants credit to customers in the normal course of business, but generally does not require collateral or any other security to support its receivables.

The Company evaluates the collectability of accounts receivable based on a combination of factors. In circumstances where a specific customer is unable to meet its financial obligations to the Company, a provision to the allowance for doubtful accounts is recorded to reduce the net recognized receivable to the amount that is reasonably expected to be collected. For all other customers, a provision to the allowance for credit losses is recorded based on factors including the length of time the receivables are past due, the current business environment and the Company’s historical experience. Provisions to the allowance for doubtful accounts are recorded to general and administrative expenses. Account balances are charged off against the allowance when it is probable that the receivable will not be recovered.

Inventory

Inventory, consisting of purchased materials, direct labor and manufacturing overhead, is stated at the lower of cost or net realizable value, with cost determined generally using the average cost method. Inventory write-downs for unprocessed and certain processed donor tissue are recorded based on the estimated amount of inventory that will not pass the quality control process based on historical data. At each balance sheet date, the Company also evaluates inventory for excess quantities, obsolescence or shelf-life expiration. This evaluation includes analysis of the Company’s current and future strategic plans, historical sales levels by product, projections of future demand, the risk of technological or competitive obsolescence for products, general market conditions and a review of the shelf-life expiration dates for products. To the extent that management determines there is excess or obsolete inventory or quantities with a shelf life that is too near its expiration for the Company to reasonably expect that it can sell those products prior to their expiration, the Company adjusts the carrying value to estimated net realizable value.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed on the straight-line method over the following estimated useful lives of the assets:


Processing and research equipment		5 to 10 years
Office equipment and furniture		3 to 5 years
Computer hardware and software		3 years

Leasehold improvements are amortized on the straight-line method over the shorter of the lease term or the estimated useful life of the asset. Repairs and maintenance costs are expensed as incurred.

Leases

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No 2016-02, Leases to increase the transparency and comparability about leases among entities. ASU 2016-02 and certain additional ASUs are now codified as ASC 842, Leases. ASC 842 supersedes the lease accounting guidance in ASC 840 and requires lessees to recognize a lease liability and a corresponding lease asset for virtually all lease contracts. The Company determines if an arrangement contains a lease at inception. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from that lease. For leases with a term greater than 12 months, ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. The lease term includes the option to extend the lease when it is reasonably certain the Company will exercise that option. When available, the Company uses the rate implicit in the lease to discount lease payments to present value. In the case the implicit rate is not available, the Company uses its incremental borrowing rate based on information available at the lease commencement date, including publicly available data for instruments with similar characteristics, to determine the present value of lease payments. The Company combines lease and non-lease elements for office leases.

Long-Lived Assets

Purchased intangible assets with finite lives are carried at acquired fair value, less accumulated amortization. Amortization is computed over the estimated useful lives of the respective assets.

The Company periodically evaluates the period of depreciation or amortization for long-lived assets to determine whether current circumstances warrant revised estimates of useful lives. The Company reviews its property and equipment and intangible assets for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. Impairment exists when the carrying value of the company’s asset exceeds the related estimated undiscounted future cash flows expected to be derived from the asset. If impairment exists, the carrying value of that asset is adjusted to its fair value. A discounted cash flow analysis is used to estimate an asset’s fair value, using assumptions that market participants would apply. The results of impairment tests are subject to management’s estimates and assumptions of projected cash flows and operating results. Changes in assumptions or market conditions could result in a change in estimated future cash flows and could result in a lower fair value and therefore an impairment, which could impact reported results. There were no impairment losses for the three and nine months ended September 30, 2023 or 2022.

Revenue Recognition

The Company’s revenue is generated from contracts with customers in accordance with ASC 606. The core principle of ASC 606 is that the Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The ASC 606 revenue recognition model consists of the following five steps: (1) identify the contracts with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation.

As noted above, the Company enters into contracts to primarily sell and distribute products to healthcare providers or commercial partners. Revenue is recognized when the Company has met its performance obligations pursuant to its contracts with its customers in an amount that the Company expects to be entitled to in exchange for the transfer of control of the products to the Company’s customers. For all product sales, the Company has no further performance obligations and revenue is recognized at the point control transfers which occurs either when: i) the product is shipped via common carrier; or ii) the product is delivered to the customer or distributor, in accordance with the terms of the agreement.

A portion of the Company’s product revenue is generated from consigned inventory maintained at hospitals and from inventory physically held by distributors and direct sales representatives. For these types of products sales, the Company retains control until the product has been used or implanted, at which time revenue is recognized.

The Company elected to account for shipping and handling activities as a fulfillment cost rather than a separate performance obligation. Amounts billed to customers for shipping and handling are included as part of the transaction price and recognized as revenue when control of the underlying products is transferred to the customer. The related shipping and freight charges incurred by the Company are included in sales and marketing costs.

Contracts with customers state the final terms of the sale, including the description, quantity, and price of each implant distributed. The payment terms and conditions in the Company’s contracts vary; however, as a common business practice, payment terms are typically due in full within 30 to 60 days of delivery. The Company, at times, extends volume discounts to customers.

The Company permits returns of its products in accordance with the terms of contractual agreements with customers. Allowances for returns are provided based upon analysis of the Company’s historical patterns of returns matched against the revenues from which they originated. The Company records estimated returns as a reduction of revenue in the same period revenue is recognized.

Stock-Based Compensation Plans

The Company accounts for its stock-based compensation plans in accordance with ASC 718, Accounting for Stock Compensation. ASC 718 requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors, including employee stock options and restricted stock. Stock-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense on a straight-line basis over the requisite service period of the entire award.

Warrant Liability

The Company accounts for its warrants in accordance with ASC 815, Derivatives and Hedging – Contracts in Entity's Own Equity, as either liabilities or as equity instruments depending on the specific terms of the warrant agreement. Our Offering Warrants are classified as liabilities and are recorded at fair value. The warrants are subject to re-measurement at each settlement date and at each balance sheet date and any change in fair value is recognized in Other Income, net in the statements of operations.The Company estimates the fair value of the warrant liability using a Black-Scholes pricing model. We are required to make assumptions and estimates in determining an appropriate term, risk-free interest rate, volatility factor, dividend yield, and the fair value of common stock. Any significant adjustments to the unobservable inputs would have a direct impact on the fair value of the warrant liability.

Research and Development Costs

Research and development costs, which include mainly salaries, outside services and supplies, are expensed as incurred.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash. The Company’s cash balances with the individual institutions may at times exceed the federally insured limits.

On June 19, 2023, Surgalign Holdings, Inc. (“Surgalign”) and certain of its direct and indirect subsidiaries commenced voluntary proceedings under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas. As of September 30, 2023, the Company’s gross accounts receivable from Surgalign totaled $0.6 million which has fully been reserved at September 30, 2023 due to the uncertainty of collection.

Comprehensive Income (Loss)

Comprehensive income (loss) comprises net income (loss) and other changes in equity that are excluded from net income (loss). For the three and nine months ended September 30, 2023 and 2022, the Company’s net loss equaled its comprehensive loss and accordingly, no additional disclosure is presented.

Income Taxes

The Company uses the asset and liability method of accounting for income taxes. Deferred income taxes are recorded to reflect the tax consequences on future years for differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to amounts that are more likely than not to be realized.

The Company is subject to income taxes in the federal and state jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. In accordance with the authoritative guidance on accounting for uncertainty in income taxes, the Company recognizes tax liabilities for uncertain tax positions when it is more likely than not that a tax position will not be sustained upon examination and settlement with various taxing authorities. Liabilities for uncertain tax positions are measured based upon the largest amount of benefit that is more likely than not (greater than 50%) of being realized upon settlement. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense.

Divestiture of Orthobiologics (Tables)

9 Months Ended

Sep. 30, 2023

Divestiture of Orthobiologics

Schedules of assets and liabilities, financial results and cash flow reconciliation of the discontinued operations

The following tables shows the assets and liabilities of the discontinued operations:


	September 30,		December 31,
	2023		2022
Carrying amounts of the major classes of assets included in discontinued operations:
Accounts receivable, net of credit loss reserve of $62 and $62, respectively	$	2,311	$	3,056
Inventory		4,055		5,812
Prepaid expenses and other current assets		954		628
Total current assets		7,320		9,496
Property and equipment, net		1,253		1,158
Operating lease right-of-use assets and other		1,350		1,350
Total non-current assets		2,603		2,508
Total assets of discontinued operations	$	9,923	$	12,004


Carrying amounts of the major classes of liabilities included in discontinued operations:
Accounts payable	$	401	$	954
Accrued expenses and other current liabilities		906		1,273
Payables to tissue suppliers		1,395		2,252
Current operating lease liabilities		488		450
Total current liabilities		3,190		4,929
Long-term operating lease liabilities		585		956
Total liabilities of discontinued operations	$	3,775	$	5,885

The following table shows the financial results of the discontinued operations:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Net sales	$	2,291	$	6,540	$	12,894	$	19,260
Cost of goods sold		1,839		4,430		11,218		13,605
Gross profit		452		2,110		1,676		5,655
Sales and marketing		374		536		1,636		1,467
General and administrative		927		157		1,231		435
Research and development		262		243		776		988
Total operating expenses		1,563		936		3,643		2,890
Interest expense		117		55		348		55
Net income (loss)	$	(1,228)	$	1,119	$	(2,315)	$	2,710

Total operating and investing cash flows of discontinued operations for the nine months ended September 30, 2023 and 2022 are comprised of the following:


	Nine Months Ended
	September 30,
	2023		2022
Significant operating non-cash reconciliation items
Depreciation		213		149
Stock-based compensation		115		119
Changes in operating assets and liabilities:
Accounts receivable		745		(384)
Inventory		1,757		4,288
Prepaid expenses and other		(326)		32
Accounts payable and accrued expenses and other current liabilities		(920)		427
Obligations to tissue suppliers		(857)		(318)

Significant investing items
Expenditures for property, plant and equipment		287		271

- Definition

Tabular disclosure of information related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component.

+ References

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+ Details

Net Loss Per Share Attributable to Common Stockholders (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Numerator:
Net loss from continuing operations	$ (8,519)	$ (11,029)	$ (26,027)	$ (30,167)
Discontinued operations	(1,228)	1,119	(2,315)	2,710
Net loss	$ (9,747)	$ (9,910)	$ (28,342)	$ (27,457)
Denominator:
Weighted average number of common shares, basic	17,017,610	13,660,555	16,464,262	13,618,580
Weighted average number of common shares, diluted	17,017,610	13,660,555	16,464,262	13,618,580
Net loss from continuing operations per share - basic (in dollar per share)	$ (0.50)	$ (0.81)	$ (1.58)	$ (2.22)
Net loss from continuing operations per share - diluted (in dollar per share)	(0.50)	(0.81)	(1.58)	(2.22)
Net income (loss) from discontinued operations per share - basic (in dollar per share)	(0.07)	0.08	(0.14)	0.20
Net income (loss) from discontinued operations per share - diluted (in dollar per share)	(0.07)	0.08	(0.14)	0.20
Net loss per share - basic (in dollar per share)	(0.57)	(0.73)	(1.72)	(2.02)
Net loss per share -diluted (in dollar per share)	$ (0.57)	$ (0.73)	$ (1.72)	$ (2.02)

Divestiture of Orthobiologics - Non-cash reconciliation (Details) - Divestiture of Orthobiologics - Discontinued Operations, Held-for-sale - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2023	Sep. 30, 2022
Significant operating non-cash reconciliation items
Depreciation		$ 213	$ 149
Stock-based compensation	$ 100	115	119
Changes in operating assets and liabilities:
Accounts receivable		745	(384)
Inventory		1,757	4,288
Prepaid expenses and other		(326)	32
Accounts payable and accrued expenses and other current liabilities		(920)	427
Obligations to tissue suppliers		(857)	(318)
Significant investing items
Expenditures for property, plant and equipment		$ (287)	$ (271)

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) $ in Thousands	Common Stock Class A Common stock	Common Stock Class B Common stock	Additional Paid-in Capital	Accumulated Deficit	Total
Balance at the beginning at Dec. 31, 2021	$ 9	$ 4	$ 118,599	$ (105,091)	$ 13,521
Balance at the beginning (in shares) at Dec. 31, 2021	9,245,146	4,313,406
Stockholders' Equity Rollforward
Proceeds from stock option exercises			10		10
Proceeds from stock option exercises (in shares)	1,881
Additional issuance costs in connection with Private Placement			(110)		(110)
Proceeds from sale of common stock through Employee Stock Purchase Plan			317		317
Proceeds from sale of common stock through Employee Stock Purchase Plan (in shares)	74,408
Vesting of restricted stock units, net of shares withheld and taxes paid			(395)		(395)
Vesting of restricted stock units, net of shares withheld and taxes paid (in shares)	139,529
Issuance of warrants in connection with debt financing			560		560
Stock-based compensation			2,873		2,873
Net loss				(27,457)	(27,457)
Balance at the ending at Sep. 30, 2022	$ 9	$ 4	121,854	(132,548)	(10,681)
Balance at the ending (in shares) at Sep. 30, 2022	9,460,964	4,313,406
Balance at the beginning at Jun. 30, 2022	$ 9	$ 4	121,256	(122,638)	(1,369)
Balance at the beginning (in shares) at Jun. 30, 2022	9,306,838	4,313,406
Stockholders' Equity Rollforward
Proceeds from stock option exercises			10		10
Proceeds from stock option exercises (in shares)	1,881
Proceeds from sale of common stock through Employee Stock Purchase Plan			126		126
Proceeds from sale of common stock through Employee Stock Purchase Plan (in shares)	32,063
Vesting of restricted stock units, net of shares withheld and taxes paid			(395)		(395)
Vesting of restricted stock units, net of shares withheld and taxes paid (in shares)	120,182
Issuance of warrants in connection with debt financing			560		560
Stock-based compensation			297		297
Net loss				(9,910)	(9,910)
Balance at the ending at Sep. 30, 2022	$ 9	$ 4	121,854	(132,548)	(10,681)
Balance at the ending (in shares) at Sep. 30, 2022	9,460,964	4,313,406
Balance at the beginning at Dec. 31, 2022	$ 12	$ 4	132,939	(137,988)	(5,033)
Balance at the beginning (in shares) at Dec. 31, 2022	11,823,445	4,313,406
Stockholders' Equity Rollforward
Proceeds from sale of common stock in connection with private placement and secondary public offering, net of issuance costs	$ 7		1,708		1,715
Proceeds from sale of common stock in connection with private placement and in secondary public offering, net of issuance costs (in shares)	6,852,811
Proceeds from sale of common stock through Employee Stock Purchase Plan			219		219
Proceeds from sale of common stock through Employee Stock Purchase Plan (in shares)	104,905
Vesting of restricted stock units, net of shares withheld and taxes paid			(19)		(19)
Vesting of restricted stock units, net of shares withheld and taxes paid (in shares)	71,769
Stock-based compensation			1,987		1,987
Net loss				(28,342)	(28,342)
Balance at the ending at Sep. 30, 2023	$ 19	$ 4	136,834	(166,330)	(29,473)
Balance at the ending (in shares) at Sep. 30, 2023	18,852,930	4,313,406
Balance at the beginning at Jun. 30, 2023	$ 12	$ 4	134,439	(156,583)	(22,128)
Balance at the beginning (in shares) at Jun. 30, 2023	11,936,441	4,313,406
Stockholders' Equity Rollforward
Proceeds from sale of common stock in connection with private placement and secondary public offering, net of issuance costs	$ 7		1,708		1,715
Proceeds from sale of common stock in connection with private placement and in secondary public offering, net of issuance costs (in shares)	6,852,811
Proceeds from sale of common stock through Employee Stock Purchase Plan			72		72
Proceeds from sale of common stock through Employee Stock Purchase Plan (in shares)	63,628
Vesting of restricted stock units, net of shares withheld and taxes paid (in shares)	50
Stock-based compensation			615		615
Net loss				(9,747)	(9,747)
Balance at the ending at Sep. 30, 2023	$ 19	$ 4	$ 136,834	$ (166,330)	$ (29,473)
Balance at the ending (in shares) at Sep. 30, 2023	18,852,930	4,313,406

Summary of Significant Accounting Policies - Net Loss per Share (Details) - $ / shares	Sep. 30, 2023	Dec. 31, 2022
Class A Common stock
Net Loss per Share Attributable to Common Stockholders
Common stock, par value (in dollar per share)	$ 0.001	$ 0.001
Class B Common stock
Net Loss per Share Attributable to Common Stockholders
Common stock, par value (in dollar per share)	$ 0.001	$ 0.001

Stock-Based Compensation - Randal Mills (Details) - shares		9 Months Ended
	Jun. 21, 2022	Sep. 30, 2023	Oct. 07, 2020
Stock-Based Compensation
Options granted		157,500
2020 Plan
Stock-Based Compensation
Shares reserved for future issuance		3,370,201	3,636,000
Stock Option
Stock-Based Compensation
Vesting term		4 years
Restricted stock units \| 2020 Plan
Stock-Based Compensation
Restricted stock units (RSU) granted		72,000
Dr. Mills
Stock-Based Compensation
Employment agreement initial term	90 days
Dr. Mills \| Stock Option
Stock-Based Compensation
Options granted	456,278
Time-based awards percentage	60.00%
Performance-based awards percentage	40.00%
Dr. Mills \| Time Based Options \| Tranche one
Stock-Based Compensation
Percentage of vesting	33.00%
Vesting term	49 days
Dr. Mills \| Time Based Options \| Tranche Two
Stock-Based Compensation
Percentage of vesting	66.00%
Vesting term	4 years
Awards that vest on first anniversary	25.00%
Number of quarter of vesting	12
Dr. Mills \| Restricted stock units
Stock-Based Compensation
Time-based awards percentage	60.00%
Performance-based awards percentage	40.00%
Restricted stock units (RSU) granted	224,734
Dr. Mills \| Performance-Based RSU
Stock-Based Compensation
Share price threshold period	20 days
Dr. Mills \| Time-Based RSU \| Tranche one
Stock-Based Compensation
Percentage of vesting	33.00%
Vesting term	0 days
Dr. Mills \| Time-Based RSU \| Tranche Two
Stock-Based Compensation
Percentage of vesting	66.00%
Vesting term	4 years

Long-Term Debt - SWK Loan Facility (Details)					3 Months Ended	9 Months Ended
Long-Term Debt - SWK Loan Facility (Details)	Sep. 12, 2023 USD ($)	May 12, 2023 USD ($) item	Dec. 14, 2022 USD ($)	Aug. 10, 2022 USD ($) $ / shares shares	Sep. 30, 2023	Sep. 30, 2023	Sep. 30, 2022 USD ($)	Sep. 17, 2023 USD ($)
Long-Term Debt
Deferred financing costs							$ 468,000
SWK Loan Facility
Long-Term Debt
Maximum borrowing capacity				$ 25,000,000
Proceeds from Issuance of Debt			$ 4,000,000	$ 21,000,000
Quarterly principal amortization (percent)					5.00%	5.00%
Interest in-kind spread basis				4.50%
Exit fee (as a percent)				6.50%
Exit fee termination plus				$ 62,500
Prepayment penalty prior to first anniversary (as a percent)				2.00%
Prepayment penalty after first anniversary (as a percent)				2.00%
Weighted average interest rate					13.50%	13.10%
Maximum shares issuable at closing \| shares				187,969
Common stock, par value (in dollar per share) \| $ / shares				$ 0.001
Exercise price (in dollar per share) \| $ / shares				$ 6.65
Warrant value				$ 600,000
Deferred financing costs				$ 500,000
Percentage of casualty proceeds in excess of $250,000 to redeem loan balance				100.00%
Casualty proceeds threshold amount in excess of which is used to redeem loan balance				$ 250,000
Threshold amount in excess of which exempted from mandatory prepayment				$ 1,000,000
Mandatory prepayment triggered by divestiture of Orthobiologics Business								$ 4,000,000.0
Repayment of debt triggered by divestiture	$ 2,000,000.0
Number of prior consecutive fiscal quarters operating cash burn added to fix amount of minimum liquidity \| item		2
SWK Loan Facility \| Until August 15, 2023
Long-Term Debt
Minimum liquidity to be maintained		$ 5,000,000.0
SWK Loan Facility \| After August 15, 2023
Long-Term Debt
Minimum liquidity to be maintained		$ 5,000,000.0
SWK Loan Facility \| Maximum
Long-Term Debt
Warrants issued \| shares				187,969
SWK Loan Facility \| SOFR
Long-Term Debt
Basis spread on variable rate				7.75%
Interest in-kind spread basis				3.75%
SWK Loan Facility \| SOFR \| Minimum
Long-Term Debt
Basis spread on variable rate				2.75%
New Asset-Based Revolving Loan Facility
Long-Term Debt
Borrowing capacity				$ 8,000,000

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2023
Private Placement
Issuance and offering costs	$ 0.2	$ 0.2

Commitments and Contingencies - Legal Proceedings (Details) $ in Millions	1 Months Ended	9 Months Ended
	Jul. 31, 2023 item	Sep. 30, 2023 USD ($) lawsuit claim plaintiff case
Damages from Product Defects
Legal Proceedings
Number of lawsuits filed		1
Number of patients affected from post-surgical mycobacterium tuberculosis (mtb) infections treated with vbm product \| item	2
Number of claims asserted \| claim		12
FiberCel Litigation Product Lability
Legal Proceedings
Number of lawsuits filed		76
Number of plaintiffs \| plaintiff		78
Number of claims not resulted lawsuit yet \| claim		31
Number of cases settled \| case		27
Total amount of settlements \| $		$ 7.5
Number of cases settlement not reached \| case		82
Estimated a probable loss recorded \| $		$ 15.7
Loss contingency receivable \| $		7.5
Additional loss contingency receivable not reflected as receivable \| $		$ 3.8
INDIANA \| FiberCel Litigation Product Lability, Negligence, Breach of Express and Implied warranties, and Punitive Damages
Legal Proceedings
Number of lawsuits filed		1
DELAWARE \| FiberCel Loss of Consortium
Legal Proceedings
Number of lawsuits filed		2
FLORIDA \| FiberCel Strict Liability Claims for Defective Design, Defective Manufacture, and Failure to Warn
Legal Proceedings
Number of lawsuits filed		3

Commitments and Contingencies

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies.

Commitments and Contingencies

Note 10. Commitments and Contingencies

Cook Biotech License and Supply Agreements

Elutia has entered into a license agreement with Cook Biotech (“Cook”) for an exclusive, worldwide license to the porcine tissue for use in the Company’s Cardiac Patch and CanGaroo products, subject to certain co-exclusive rights retained by Cook (the “Cook License Agreement”). The term of such license is through the date of the last to expire of the licensed Cook patents, which is anticipated to be July 2031. Along with this license agreement, Elutia entered into a supply agreement whereby Cook would be the exclusive supplier to Elutia of licensed porcine tissue. Under certain limited circumstances, Elutia has the right to manufacture the licensed product and pay Cook a royalty of 3% of sales of the Elutia-manufactured tissue. The supply agreement expires on the same date as the related license agreement. No royalties were paid to Cook during the three and nine months ended September 30, 2023 or 2022. Elutia has also entered into an amendment to the Cook License Agreement (the “Cook Amendment”) in order to add fields of exclusive use. Specifically, the Cook Amendment provides for a worldwide exclusive license to the porcine tissue for use with neuromodulation devices in addition to cardiovascular devices. The Cook Amendment includes license fee payments of $0.1 million per year in each of the years 2021 through 2026. Such license payments would accelerate if a change in control, as defined in the Cook Amendment, occurs within Elutia. The Company, in its sole discretion, can terminate the Cook License Agreement at any time.

Legal Proceedings

From time to time, the Company may be involved in claims and proceedings arising in the course of the Company’s business. The outcome of any such claims or proceedings, regardless of the merits, is inherently uncertain. The Company records accruals for contingencies when it is probable that a liability has been incurred and the amount can

be reasonably estimated. Where the available information is only sufficient to establish a range of probable liability, and no point within the range is more likely than any other, the lower end of the range has been used. When a material loss contingency is reasonably possible, but not probable, the Company does not record a liability, but instead discloses the nature of the matter and an estimate of the loss or range of loss, to the extent such estimate can be made. Accruals recorded are adjusted periodically as assessments change or additional information becomes available, and management's judgments may be materially different than the actual outcomes.

FiberCel Litigation

In June 2021, the Company announced a voluntary recall of a single lot of FiberCel fiber viable bone matrix. Since September 2021, 76 lawsuits (78 plaintiffs) in Indiana, Delaware, Florida, Maryland, Colorado, Michigan, Ohio, Kentucky, Oregon, North Carolina, Louisiana, Illinois, Virginia, California, Pennsylvania, and Arizona have been filed against Elutia Inc., certain Medtronic entities, and others alleging that the plaintiffs were exposed to and/or contracted tuberculosis and/or suffered substantial symptoms and complications following the implantation of FiberCel during orthopedic fusion operations. Such lawsuits were filed in Indiana state court (collectively, the “Indiana State Complaints”); the Superior Court of the State of Delaware (collectively, the “Delaware State Complaints”); the Circuit Court of Maryland (collectively, the “Maryland State Complaints”); the Court of Common Pleas of Ohio and the U.S. District Court of the Southern District of Ohio (collectively, the “Ohio Complaints”); the U.S. District Court for the Western District of North Carolina (“North Carolina Federal Complaint”); the U.S. District Court for the Northern District of Florida and the U.S. District Court for the Southern District of Florida (collectively, the “Florida Federal Complaints”); the U.S. District Court for the Eastern District of Michigan (collectively “the Michigan Federal Complaints”); the U.S. District Court for the District of Colorado (“Colorado Federal Complaint”); the U.S. District Court for the District of Oregon (“Oregon Federal Complaint”); the Fayette, Kentucky Circuit Court and the U.S. District Court for the Eastern District of Kentucky (collectively, the “Kentucky Complaints”); the U.S. District Court for the Western District of Louisiana (“Louisiana Federal Complaint”) the Illinois Circuit Court (collectively, the “Illinois State Complaints”); the U.S. District Court for the Eastern District of Virginia (“Virginia Federal Complaint”); the U.S. District Court for the Eastern District of Pennsylvania (“Pennsylvania Federal Complaint”); Philadelphia County Court of Common Pleas (“Pennsylvania State Complaint”); the U.S. District Court for the Central District of California (“California Federal Complaint”) and the U.S. District Court for the District of Arizona (“Arizona Federal Complaint.”).

Plaintiffs in the Indiana State Complaints allege a cause of action under Indiana’s Product Liability Act, citing manufacturing defects, defective design and failure to properly warn and instruct, and several of the complaints allege loss of consortium. Plaintiffs in these actions assert that the defendants are strictly liable or have breached the duty of care owed to plaintiffs by failing to exercise reasonable care in designing, manufacturing, marketing and labeling FiberCel and are seeking various types of damages, including economic damages, non-economic damages and loss of consortium. Plaintiffs in one of the Indiana State Complaints allege causes of action for product liability, negligence, breach of express and implied warranties, and punitive damages. Each of the plaintiffs in the Delaware State Complaints alleges negligence, breach of implied warranty, breach of express warranty, medical monitoring and punitive damages, and two also allege loss of consortium. Plaintiffs in the Delaware State Complaints are seeking economic, consequential, and punitive damages. The Maryland State Complaints assert claims of negligence, breach of implied warranty, breach of express warranty, medical monitoring, and loss of consortium. The Florida Federal Complaints contain three strict liability claims for defective design, defective manufacture, and failure to warn. A claim for punitive damages is also pleaded. The Ohio State Complaints allege causes of action for product liability and negligence and seeks compensatory damages. The Colorado Federal Complaint asserts causes of action for strict product liability, misrepresentation, negligence, breach of express warranty, and breach of implied warranty of merchantability. The Michigan Federal Complaints assert causes of action for negligence, gross negligence breach of implied warranty, breach of express warranty, intentional infliction of emotional distress, and liability under the res ipsa loquitur doctrine. The Michigan Federal Complaints seek compensatory damages and punitive damages. The North Carolina Federal Complaint alleges causes of action for negligence, defective design, breach of implied warranty, breach of express warranty, and loss of consortium, and seeks both compensatory and punitive damages. The Oregon Federal Complaint asserts strict liability claims for defective design, defective manufacture, and failure to warn, and seeks compensatory damages. The Ohio Federal Complaint asserts strict liability claims for defective manufacturing, inadequate warning, nonconformance with representations, and also alleges loss of consortium and seeks compensatory damages. The Kentucky Complaints assert strict liability claims based on manufacturing defect, design defect, failure to warn, negligence, breach of implied warranty, breach of express warranty, and seek recovery for

medical monitoring, loss of consortium, compensatory damages, and punitive damages. The Louisiana Federal Complaint asserts claims of violation of the Louisiana products liability act, negligence and gross negligence, breach of implied warranty, breach of express warranty and seek recovery for medical monitoring. The Illinois State Complaints contain claims of strict liability- defective design and manufacturing, breach of express warranty, breach of implied warranty and negligence and seek compensatory damages. The Virginia Federal Complaint asserts causes of action for negligent failure to warn, negligence, breach of implied warranty and breach of express warranty and seeks recovery for medical monitoring, compensatory damages and punitive damages. The California Federal Complaint advances claims of strict liability (defective design and manufacture), negligence and breach of implied warranty and seeks compensatory damages and recovery for medical monitoring. The Arizona Federal Complaint asserts strict product liability claims for defective design, manufacture and failure to warn, negligence, breach of implied warranty and breach of express warranty and seeks recovery for medical monitoring, loss of consortium, compensatory damages, and punitive damages. Plaintiff in the Pennsylvania State Complaint, which was removed to the Eastern District of Pennsylvania, asserts claims for strict liability, negligence, breach of implied warranty, and breach of express warranty, as well as claims under the Wrongful Death Act and the Survival Act and seeks compensatory and punitive damages. Plaintiff in the Tennessee Federal Complaint asserts claims for indemnity and breach of contract.

In addition to the above, there are 31 claims related to the FiberCel recall that have not yet resulted in a lawsuit. The Company refers to all of the aforementioned litigation, or claim notices, collectively as the “FiberCel Litigation.”

Since August 2022, the Company has engaged in a process to negotiate and attempt to resolve many of the cases in the FiberCel Litigation. In total, Elutia’s liability in 27 of the cases was settled and paid for a total of approximately $7.5 million as of September 30, 2023. For the remaining 82 cases for which settlements have not been reached, the Company estimated a probable loss related to each case and has recorded a liability at an estimated amount of $15.7 million, which is recorded as Contingent Liability for FiberCel Litigation in the accompanying consolidated balance sheets. In order to reasonably estimate the liability for the unsettled FiberCel Litigation cases, the Company, along with outside legal counsel and medical professionals, has assessed a variety of factors, including (i) the extent of the injuries incurred, (ii) recent experience on the settled claims, (iii) settlement offers made to the other parties to the litigation and (iv) any other factors that may have a material effect on the FiberCel Litigation. While the Company believes its estimated liability to be reasonable, the actual loss amounts are highly variable and turn on a case-by-case analysis of the relevant facts. As more information is learned about asserted claims and potential future trends, adjustments may be made to this Contingent Liability for FiberCel Litigation as appropriate. Management believes that it is reasonably possible that the Company could incur liabilities in excess of amounts accrued and the ultimate liability could be material to the results of operations and the cash flows in the period recognized. The Company, however, is unable to estimate the possible loss or range of loss in excess of the amount recognized at this time.

Defense costs are recognized in the accompanying consolidated statements of operations as incurred.

The Company has purchased insurance coverage that, subject to common contract exclusions, provided coverage for the FiberCel Litigation product liability losses as well as legal defense costs. Additionally, the Company has various potential indemnity and/or contribution rights against third party sources with respect to certain product liability losses. When settlements are reached and/or amounts are recorded in the related Contingent Liability for FiberCel Litigation, the Company calculates amounts due to be reimbursed pursuant to the terms of the coverage and related agreements, and pursuant to other indemnity or contribution claims, in respect of product liability losses and related defense costs. The amounts probable of reimbursement or recovery from this calculation are recorded as receivables. The determination that the recorded receivables are probable of collection is based on the terms of agreements reached in respect of indemnity and contribution claims as well as the advice of the Company’s outside legal counsel. These receivables at September 30, 2023 totaled $7.5 million and are recorded as Receivables of FiberCel Litigation Costs in the accompanying consolidated balance sheets.

The indemnity and contribution receivables amount at September 30, 2023 represents amounts that are not believed to be subject to any current dispute. At September 30, 2023, the Company continues to pursue up to $3.8 million or more in additional amounts in respect of such indemnity and contribution claims and as such, has not been reflected as part of this receivable. The Company will vigorously pursue its position with respect to this amount.

Viable Bone Matrix Recall

In July 2023, the Company announced a voluntary recall of a single lot of a certain viable bone matrix (“VBM”) product and the market withdrawal of all of its VBM products produced after a specified date (the “VBM Matter”). Such VBM products are within the Company’s Orthobiologics Business. Notice of the voluntary recall was issued to centers after the Company learned of post-surgical Mycobacterium tuberculosis (MTB) infections in two patients treated with a VBM product from a single donor lot. Prior to release, samples from this specific lot had tested negative for MTB by an independent laboratory using a nucleic acid test that is designed to specifically detect the MTB organism.

At present, one lawsuit has been filed, and twelve claims have been asserted as a result of the VBM Matter. Management has determined that there is a reasonably possible likelihood of material claims due to the recall and market withdrawal but does not believe that the claims are estimable. Consequently, management has determined that no liability for such possible claims would be recognized for the VBM recall and market withdrawal as of September 30, 2023. While unknown at this time, possible losses in connection with the VBM Matter could have a material effect on the Company’s financial position and results of operations. Consistent with the FiberCel Litigation above, the Company has purchased insurance coverage that, subject to common contract exclusions, provide coverage for the possible claims associated with the VBM Matter as well as legal defense costs.

Liabilities recognized for the FiberCel Litigation and potential liabilities in connection with the VBM Matter are excluded from the liabilities assumed by Berkeley in connection with their purchase of the Orthobiologics Business described in Note 4.

As of both September 30, 2023 and 2022, the Company was not a party to, or aware of, any legal matters or claims with material financial exposure, except for the FiberCel Litigation and VBM Matter.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Net sales	$ 6,127	$ 5,849	$ 18,870	$ 17,262
Cost of goods sold	3,286	2,910	9,943	8,689
Gross profit	2,841	2,939	8,927	8,573
Sales and marketing	2,802	4,379	10,514	13,672
General and administrative	2,757	4,330	10,137	12,788
Research and development	557	1,723	3,016	5,867
FiberCel litigation costs, net	4,096	1,474	7,278	1,908
Total operating expenses	10,212	11,906	30,945	34,235
Loss from operations	(7,371)	(8,967)	(22,018)	(25,662)
Interest expense	1,448	1,247	4,285	3,666
Other income, net	(312)	803	(312)	803
Loss before provision for income taxes	(8,507)	(11,017)	(25,991)	(30,131)
Income tax expense	12	12	36	36
Net loss from continuing operations	(8,519)	(11,029)	(26,027)	(30,167)
Income (loss) from discontinued operations	(1,228)	1,119	(2,315)	2,710
Net loss	$ (9,747)	$ (9,910)	$ (28,342)	$ (27,457)
Net loss from continuing operations per share - basic (in dollar per share)	$ (0.50)	$ (0.81)	$ (1.58)	$ (2.22)
Net loss from continuing operations per share - diluted (in dollar per share)	(0.50)	(0.81)	(1.58)	(2.22)
Net income (loss) from discontinued operations per share - basic (in dollar per share)	(0.07)	0.08	(0.14)	0.20
Net income (loss) from discontinued operations per share - diluted (in dollar per share)	(0.07)	0.08	(0.14)	0.20
Net loss - basic (in dollar per share)	(0.57)	(0.73)	(1.72)	(2.02)
Net loss - diluted (in dollar per share)	$ (0.57)	$ (0.73)	$ (1.72)	$ (2.02)
Weighted average common shares outstanding - basic	17,017,610	13,660,555	16,464,262	13,618,580
Weighted average common shares outstanding - diluted	17,017,610	13,660,555	16,464,262	13,618,580

Summary of Significant Accounting Policies - Revenue Recognition (Details)	9 Months Ended
	Sep. 30, 2023
Minimum
Disaggregation of Revenue [Line Items]
Term of payment	30 days
Maximum
Disaggregation of Revenue [Line Items]
Term of payment	60 days

Inventory

9 Months Ended

Sep. 30, 2023

Inventory

Inventory

Note 6. Inventory

Inventory was comprised of the following (in thousands):


	September 30,		December 31,
	2023		2022
Raw materials	$	1,107	$	652
Work in process		781		541
Finished goods		4,615		3,047
Total	$	6,503	$	4,240

See Note 4 for inventory attributable to the divested Orthobiologics Business.

The VBM recall and market withdrawal, as described in Note 10, necessitated the establishment of a product returns reserve and reversal of revenue totaling $3.0 million during the three months ended June 30, 2023. Based on the timing of the market withdrawal and additional information received from our customers, the Company recorded an additional reversal of revenue totaling $0.3 million during the three months ended September 30, 2023. As of September 30, 2023, the remaining product returns reserve was $2.7 million, which is included in accrued expenses and other current liabilities in the condensed consolidated balance sheet as of September 30, 2023. Furthermore, the Company wrote off the full value of its VBM inventory on-hand at June 30, 2023 resulting in a $2.0 million charge to cost of goods sold in the condensed consolidated income statement for the nine months ended September 30, 2023. Such write-down was deemed necessary due to the limited shelf-life of the inventory and the inability to sell the VBM inventory until a valid MTB test can be identified or developed, both of which continue to be uncertain at this time.

Common Stock and Warrants

9 Months Ended

Sep. 30, 2023

Common Stock and Warrants

Common Stock and Warrants

Note 9: Common Stock and Warrants

Private Placement of Common Stock and Warrants

On September 21, 2023, the Company sold, in a private offering exempt from the registration provisions of the Securities Act of 1933, as amended, an aggregate of (i) 6,852,811 units (the “Common Units”) to certain purchasers, each comprised of (a) one share of the Company’s Class A common stock, par value $0.001 per share (“Class A Common Stock”) and (b) a warrant (a “Common Warrant”) to purchase one and one half shares of Class A Common Stock, and (ii) 503,058 units (the “Prefunded Units”) to certain purchasers, each comprised of (a) a prefunded warrant (a “Prefunded Warrant”) to purchase one share of Class A Common Stock, and (b) a Common Warrant. The Common Units were sold at a purchase price of $1.4275 per unit, and the Prefunded Units were sold at a purchase price of $1.4265 per unit, for aggregate gross proceeds of approximately $10.5 million, before deducting offering expenses (the “Offering”). Each Common Warrant is exercisable at any time until the earlier of (a) 30 trading days after the clearance by the U.S. Food & Drug Administration of the Company’s CanGarooRM antibiotic-eluting biologic envelope or (b) five years from the date of the Offering, at an exercise price per share of $1.4275. Each Prefunded Warrant is exercisable at any time at a nominal exercise price per share of $0.001 (with the remainder of the exercise price per share of Class A Common Stock having been prefunded to the Company).

The Company incurred transaction fees, including commissions and legal fees, of approximately $0.9 million in connection with the private placement, of which $0.2 million were allocated to the issuance of the common stock. See below for discussion of the accounting for warrants and the allocation of the remainder of the transaction fees.

Warrant Liabilities

The Company has concluded that the Common Warrants and the Prefunded Warrants (collectively, the “Offering Warrants”) do not meet the equity contract scope exception under ASC 815-40 as in the event of a (i) fundamental transaction such as a merger and (ii) failure to timely delivery warrant shares upon exercise, certain provisions may require

the Company to adjust the settlement value that is not consistent with a fixed-for-fixed option pricing model. As a result, as of the September 21, 2023 issuance date, the Company allocated $8.6 million of the gross proceeds from the offering to the Offering Warrants based on their fair value, and the remaining $1.9 million was allocated to the common shares and recorded as permanent equity. The warrant liability is included within Warrants and other long-term liabilities in the accompanying condensed consolidated balance sheet as of September 30, 2023.

The valuation of the Offering Warrants is adjusted to fair value (Level 3) at each subsequent balance sheet date until the warrants are settled. To this end, due primarily to fluctuations in the Company’s underlying common stock price between the issuance date of the Offering Warrants and September 30, 2023, the warrant liability was revalued to $7.6 million as of September 30, 2023. The change in fair value of $1.1 million has been recorded as other income, net in the accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2023.

The Company also allocated a portion of the transaction fees noted above to the Offering Warrants and expensed within other expense, net, approximately $0.7 million of these fees.

The Company calculated the fair value of the Common Warrants and Prefunded Warrants using the Black-Scholes option pricing model with the following inputs:


	Common Warrants				Prefunded Warrants
	September 21, 2023		September 30, 2023		September 21, 2023		September 30, 2023
Common stock price	$ 1.53		$ 1.43		$ 1.53		$ 1.43
Expected term (years)	0.9		0.9		0.9		0.9
Risk-free interest rate	5.5	%	5.5	%	5.5	%	5.5	%
Volatility factor	117.4	%	114.9	%	117.4	%	114.9	%
Dividend yield	—	%	—	%	—	%	—	%

The expected term of the Common Warrants and Prefunded Warrants is based on a significant unobservable input, the Company’s probability-weighted expectations relative to the timing of the clearance by the U.S. Food & Drug Administration of the Company’s CanGarooRM antibiotic-eluting biologic envelope.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-URI https://asc.fasb.org/topic&trid=2208762

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 14
-Subparagraph (c)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496171-112644

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 14
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496171-112644

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-URI https://asc.fasb.org/extlink&oid=120397183&loc=d3e187085-122770

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 18
-Subparagraph (d)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496189-112644

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (g)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
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-Section 50
-Paragraph 18
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496189-112644

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (h)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 14
-Subparagraph (a)
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Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
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-Paragraph 13
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Reference 15: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
-Topic 235
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-Section S99
-Paragraph 1
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Reference 16: http://www.xbrl.org/2003/role/disclosureRef
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-Paragraph 6
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126731327&loc=SL126733271-114008

+ Details

Organization and Description of Business (Details) $ in Millions	Sep. 17, 2023 USD ($)
Organization and Description of Business
Earn-out payments, as a percent actual revenue	10.00%
Divestiture of Orthobiologics
Organization and Description of Business
Purchase price due after closing in the form of earn-out payments	$ 20.0
Divestiture of Orthobiologics \| Discontinued Operations, Held-for-sale
Organization and Description of Business
Aggregate purchase price	35.0
Purchase price due at closing	14.6
Purchase price due after closing in the form of earn-out payments	$ 20.0
Earn-out period	5 years

Inventory (Tables)

9 Months Ended

Sep. 30, 2023

Inventory

Summary of inventory

Inventory was comprised of the following (in thousands):


	September 30,		December 31,
	2023		2022
Raw materials	$	1,107	$	652
Work in process		781		541
Finished goods		4,615		3,047
Total	$	6,503	$	4,240

Common Stock and Warrants - Warrant Liabilities (Details) $ in Thousands			3 Months Ended	9 Months Ended
	Sep. 21, 2023 USD ($) Y $ / shares	Sep. 18, 2023 USD ($)	Sep. 30, 2023 USD ($) Y $ / shares	Sep. 30, 2023 USD ($) Y $ / shares
Warrant Liabilities
Proceeds from Issuance of Private Placement		$ 10,500		$ 10,335
Warrant liability value			$ 7,550	7,550
Other income, net
Warrant Liabilities
Transaction fee allocated to warrants and expense		$ 700
Change in fair value			$ 1,100	$ 1,100
Common stock warrants \| Common stock price
Warrant Liabilities
Fair value calculation input \| $ / shares	1.53		1.43	1.43
Common stock warrants \| Expected term (years)
Warrant Liabilities
Fair value calculation input \| Y	0.9		0.9	0.9
Common stock warrants \| Risk-free interest rate
Warrant Liabilities
Fair value calculation input	5.5		5.5	5.5
Common stock warrants \| Volatility factor
Warrant Liabilities
Fair value calculation input	117.4		114.9	114.9
Prefunded Warrants [Member[ \| Common stock price
Warrant Liabilities
Fair value calculation input \| $ / shares	1.53		1.43	1.43
Prefunded Warrants [Member[ \| Expected term (years)
Warrant Liabilities
Fair value calculation input \| Y	0.9		0.9	0.9
Prefunded Warrants [Member[ \| Risk-free interest rate
Warrant Liabilities
Fair value calculation input	5.5		5.5	5.5
Prefunded Warrants [Member[ \| Volatility factor
Warrant Liabilities
Fair value calculation input	117.4		114.9	114.9
Private Placement [Member]
Warrant Liabilities
Private placement fees	$ 900
Private Placement [Member] \| Common Stock
Warrant Liabilities
Proceeds from Issuance of Private Placement	1,900
Private Placement [Member] \| Offering Warrants
Warrant Liabilities
Proceeds from Issuance of Private Placement	$ 8,600

Stock-Based Compensation - Restricted Stock Units (Details) $ / shares in Units, $ in Millions	9 Months Ended
	Sep. 30, 2023 USD ($) $ / shares shares
Restricted stock units
Weighted-Average Grant Date Fair Value
Unrecognized compensation costs \| $	$ 0.9
Weighted-average recognition period	2 years
Restricted stock units \| Minimum
Weighted-Average Grant Date Fair Value
Vesting period	3 years
Restricted stock units \| Maximum
Weighted-Average Grant Date Fair Value
Vesting period	4 years
Restricted stock units \| 2020 Plan
Number of Shares Underlying RSUs
Unvested at the beginning \| shares	372,307
Granted \| shares	72,000
Vested, net of shares withheld for taxes paid \| shares	(35,044)
Forfeited \| shares	(39,738)
Outstanding at the end \| shares	369,525
Weighted-Average Grant Date Fair Value
Unvested at the beginning (in dollars per share) \| $ / shares	$ 5.90
Granted (in dollars per share) \| $ / shares	2.24
Vested, net of shares withheld for taxes paid (in dollars per share) \| $ / shares	9.23
Forfeited (in dollars per share) \| $ / shares	4.54
Unvested at the ending (in dollars per share) \| $ / shares	$ 4.96
Performance-Based RSU \| Minimum
Weighted-Average Grant Date Fair Value
Vesting period	2 years
Performance-Based RSU \| Maximum
Weighted-Average Grant Date Fair Value
Vesting period	3 years

Divestiture of Orthobiologics - Assets and liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Carrying amounts of major classes of assets included in discontinued operations
Total current assets	$ 7,320	$ 9,496
Total non-current assets	2,603	2,508
Carrying amounts of the major classes of liabilities included in discontinued operations
Total current liabilities	3,190	4,929
Divestiture of Orthobiologics \| Discontinued Operations, Held-for-sale
Carrying amounts of major classes of assets included in discontinued operations
Accounts receivable	2,311	3,056
Credit loss reserve	62	62
Inventory	4,055	5,812
Prepaid expenses and other current assets	954	628
Total current assets	7,320	9,496
Property and equipment, net	1,253	1,158
Operating lease right-of-use assets and other	1,350	1,350
Total non-current assets	2,603	2,508
Total assets held of discontinued operations	9,923	12,004
Carrying amounts of the major classes of liabilities included in discontinued operations
Accounts payable	401	954
Accrued expenses and other current liabilities	906	1,273
Payables to tissue suppliers	1,395	2,252
Current operating lease liabilities	488	450
Total current liabilities	3,190	4,929
Long-term operating lease liabilities	585	956
Total liabilities held for sale of discontinued operations	$ 3,775	$ 5,885

Common Stock and Warrants - Private Placement of Common Stock (Details) $ / shares in Units, $ in Thousands			3 Months Ended	9 Months Ended
	Sep. 21, 2023 USD ($) shares	Sep. 18, 2023 USD ($) D $ / shares shares	Sep. 30, 2023 USD ($) $ / shares	Sep. 30, 2023 USD ($) $ / shares	Dec. 31, 2022 $ / shares
Common Stock and Warrants
Proceeds from Issuance of Private Placement \| $		$ 10,500		$ 10,335
Class A Common stock
Common Stock and Warrants
Common stock, par value (in dollar per share)			$ 0.001	$ 0.001	$ 0.001
Private Placement [Member]
Common Stock and Warrants
Aggregate Common units sold \| shares	6,852,811
Number of common stock per unit \| shares		1
Number of Prefunded Units to sell \| shares		503,058
Common unit purchase price (in dollar per unit)		$ 1.4275
Prefunded unit purchase price (in dollar per unit)		1.4265
Private placement fees \| $	$ 900
Amount allocated to issuance of the common stock \| $			$ 200	$ 200
Private Placement [Member] \| Class A Common stock
Common Stock and Warrants
Common stock, par value (in dollar per share)		$ 0.001
Amount allocated to issuance of the common stock \| $	$ 200
Private Placement [Member] \| Common stock warrants
Common Stock and Warrants
Number of common stock per warrant (in shares) \| shares		0.5
Number of trading days after clearance by the U.S. Food & Drug Administration of the Company's CanGarooRM antibiotic-eluting biologic envelope to exercise warrant \| D		30
Warrants term		5 years
Exercise price (in dollar per share)		$ 1.4275
Private Placement [Member] \| Prefunded Warrants [Member[
Common Stock and Warrants
Number of common stock per warrant (in shares) \| shares		1
Exercise price (in dollar per share)		$ 0.001

Long-Term Debt (Tables)

9 Months Ended

Sep. 30, 2023

Long-Term Debt

Summary of PPP loan recorded within long-term debt

Long-term debt was comprised of the following (in thousands):


	September 30,		December 31,
	2023		2022
Term Loan Facility, net of unamortized discount and deferred financing costs	$	25,278	$	24,260
Current Portion		—		—
Long-Term Debt	$	25,278	$	24,260

Long-Term Debt - Long-Term Debt - Table (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Contractual maturities of the long-term debt
Long-term debt	$ 25,278	$ 24,260
SWK/Term Loan Facility
Contractual maturities of the long-term debt
Total, net	$ 25,278	$ 24,260

- Definition

Amount, excluding unamortized premium (discount) and debt issuance cost, of long-term debt. Excludes lease obligation.

+ References + Details

Segment Information (Tables)

9 Months Ended

Sep. 30, 2023

Segment Information

Schedule of sales information

The Company’s net sales disaggregated by segment were as follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Net sales:
Device protection	$	2,575		2,319	$	7,147	$	6,617
Women's health		2,614		1,812		7,309		5,270
Cardiovascular		938		1,718		4,414		5,375
Total Net Sales	$	6,127	$	5,849	$	18,870	$	17,262

The Company’s gross profit disaggregated by segment were as follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Gross profit:
Device protection	$	1,704	$	1,670	$	4,998	$	4,419
Women's health		1,417		765		3,376		2,443
Cardiovascular		569		1,353		3,100		4,258
Gross profit, excluding intangible asset amortization	$	3,690		3,788		11,474		11,120
Intangible asset amortization expense		849		849		2,547		2,547
Gross profit	$	2,841	$	2,939	$	8,927	$	8,573

The following table is a reconciliation of segment gross profit to the consolidated loss before provision for income taxes (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Gross profit, excluding intangible asset amortization	$	3,690	$	3,788	$	11,474	$	11,120

Adjustments:
Intangible asset amortization expense		(849)		(849)		(2,547)		(2,547)
Sales and marketing		(2,802)		(4,379)		(10,514)		(13,672)
General and administrative		(2,757)		(4,330)		(10,137)		(12,788)
Research and development		(557)		(1,723)		(3,016)		(5,867)
FiberCel litigation costs		(4,096)		(1,474)		(7,278)		(1,908)
Loss from operations		(7,371)		(8,967)		(22,018)		(25,662)
Interest expense		1,448		1,247		4,285		3,666
Other income, net		(312)		803		(312)		803
Loss before provision for income taxes	$	(8,507)	$	(11,017)	$	(25,991)	$	(30,131)

Summary of Significant Accounting Policies - Property and Equipment (Details)	9 Months Ended
	Sep. 30, 2023
Computer hardware and software
Property, Plant and Equipment [Line Items]
Estimated useful lives	3 years
Minimum \| Processing and research equipment
Property, Plant and Equipment [Line Items]
Estimated useful lives	5 years
Minimum \| Office equipment and furniture
Property, Plant and Equipment [Line Items]
Estimated useful lives	3 years
Maximum \| Processing and research equipment
Property, Plant and Equipment [Line Items]
Estimated useful lives	10 years
Maximum \| Office equipment and furniture
Property, Plant and Equipment [Line Items]
Estimated useful lives	5 years

Common Stock and Warrants (Tables)

9 Months Ended

Sep. 30, 2023

Common Stock and Warrants

Schedule of inputs used to calculate fair value of Common Warrants and Prefunded Warrants


	Common Warrants				Prefunded Warrants
	September 21, 2023		September 30, 2023		September 21, 2023		September 30, 2023
Common stock price	$ 1.53		$ 1.43		$ 1.53		$ 1.43
Expected term (years)	0.9		0.9		0.9		0.9
Risk-free interest rate	5.5	%	5.5	%	5.5	%	5.5	%
Volatility factor	117.4	%	114.9	%	117.4	%	114.9	%
Dividend yield	—	%	—	%	—	%	—	%

Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2023

Summary of Significant Accounting Policies

Summary of estimated useful lives of the assets


Processing and research equipment		5 to 10 years
Office equipment and furniture		3 to 5 years
Computer hardware and software		3 years

Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2023

Stock-Based Compensation

Summary of stock options outstanding, exercisable and vested or expected to vest


				Weighted-
				Average
		Weighted-		Remaining		Aggregate
		Average		Contractual		Intrinsic
		Exercise		Term		Value
	Number of Shares	Price		(years)		(in thousands)
Outstanding, December 31, 2022	1,864,739	$	9.41		7.5	$	8
Granted	157,500	$	2.64
Exercised	—	$	—
Forfeited	(374,049)	$	9.92
Outstanding, September 30, 2023	1,648,190	$	8.63		8.1	$	-
Vested and exercisable, September 30, 2023	730,180	$	9.80		7.4	$	-

Summary of weighted-average assumptions were used to determine the fair value of options


	Nine Months Ended
	September 30,
	2023		2022
Expected term (years)	6.0		6.2
Risk-free interest rate	3.9	%	2.0	%
Volatility factor	63.8	%	53.0	%
Dividend yield	—		—

Schedule of RSU activity


		Weighted-
		Average
	Number of Shares	Grant Date
	Underlying RSUs	Fair Value
Unvested, December 31, 2022	372,307	$	5.90
Granted	72,000	$	2.24
Vested	(35,044)	$	9.23
Forfeited	(39,738)	$	4.54
Unvested, September 30, 2023	369,525	$	4.96

Schedule of stock-based compensation expense recognized

Stock-based compensation expense recognized during the three and nine months ended September 30, 2023 and 2022 was comprised of the following (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Sales and marketing	$	164	$	330	$	466	$	819
General and administrative		373		(124)		1,264		1,460
Research and development		15		(14)		102		414
Cost of goods sold		14		27		40		61
Total stock-based compensation expense	$	566	$	219	$	1,872	$	2,754

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (Parentheticals) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2023
Private Placement [Member]
Issuance and offering costs	$ 0.2	$ 0.2

CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Credit loss reserve	$ 652	$ 87
Class A Common stock
Common stock, par value (in dollar per share)	$ 0.001	$ 0.001
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	18,852,930	18,852,930
Common stock, shares outstanding	11,823,445	11,823,445
Class B Common stock
Common stock, par value (in dollar per share)	$ 0.001	$ 0.001
Common stock, shares authorized	20,000,000	20,000,000
Common stock, shares issued	4,313,406	4,313,406
Common stock, shares outstanding	4,313,406	4,313,406

Net Loss Per Share Attributable to Common Stockholders

9 Months Ended

Sep. 30, 2023

Net Loss Per Share Attributable to Common Stockholders

Net Loss Per Share Attributable to Common Stockholders

Note 11. Net Loss Per Share


	Three Months Ended				Nine Months Ended
(in thousands, except share and per share data)	September 30,				September 30,
	2023		2022		2023		2022
Numerator:
Net loss from continuing operations	$	(8,519)	$	(11,029)	$	(26,027)	$	(30,167)
Income (loss) from discontinued operations	$	(1,228)	$	1,119	$	(2,315)	$	2,710
Net loss	$	(9,747)	$	(9,910)	$	(28,342)	$	(27,457)
Denominator:
Weighted average number of common shares - basic and diluted		17,017,610		13,660,555		16,464,262		13,618,580

Net loss from continuing operations per share - basic and diluted	$	(0.50)	$	(0.81)	$	(1.58)	$	(2.22)
Net income (loss) from discontinued operations per share - basic and diluted	$	(0.07)	$	0.08	$	(0.14)	$	0.20
Net loss per share - basic and diluted	$	(0.57)	$	(0.73)	$	(1.72)	$	(2.02)

The Company’s potential dilutive securities have been excluded from the computation of diluted net loss per share as the effect would be anti-dilutive. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. The Company excluded the following potential common shares, presented based on amounts outstanding at period end, from the computation of diluted net loss per share attributable to common stockholders:


	September 30,
	2023	2022
Options to purchase common stock	1,648,190	1,755,447
Restricted stock units	369,525	373,332
Class A common stock warrants	187,969	187,969
Common Warrants	11,033,804	—
Prefunded Warrants	503,058	—
Total	13,742,546	2,316,748

Long-Term Debt

9 Months Ended

Sep. 30, 2023

Long-Term Debt

Long-Term Debt

Note 7. Long-Term Debt

On August 10, 2022 (the “Closing Date”), the Company entered into a senior secured term loan facility with SWK Funding LLC (“SWK”), as agent, and other lenders party thereto (the “SWK Loan Facility”) for an aggregate principal amount of $25 million. An initial draw of $21 million was made on the Closing Date with the additional $4 million drawn on December 14, 2022 upon satisfaction of the amended terms enabling such receipt. The SWK Loan Facility also allows for the establishment of a separate, new asset-based revolving loan facility of up to $8 million, which had not been entered into as of September 30, 2023. The SWK Loan Facility matures on August 10, 2027 and accrues interest, payable quarterly in arrears. Principal amortization of the SWK Loan Facility starts on November 15, 2024, which amortization may be extended to November 17, 2025 if certain conditions have been satisfied. Principal payments during the amortization period will be limited based on revenue-based caps. As of September 30, 2023, quarterly principal payments are scheduled to begin on November 15, 2024, in an amount equal to 5% of the outstanding principal on such principal payment commencement date with the balance paid at maturity. The SWK Loan Facility also includes both revenue and minimum liquidity covenants, restrictions as to payment of dividends, and is secured by all assets of the Company, subject to certain customary exceptions. On May 12, 2023, the Company entered into that certain First Amendment to the SWK Loan Facility Agreement with SWK, as agent, and the other lenders party thereto (the “Amendment”). The Amendment modified the minimum liquidity covenant applicable to the Company under the SWK Loan Facility Agreement, such that the Company must maintain a minimum liquidity of at least $5.0 million until August 15, 2023. After such date, a minimum liquidity of at least the greater of (i) $5.0 million, and (ii) the sum of the operating cash burn (as defined in the SWK Loan Facility Agreement) for the two prior consecutive fiscal quarters then ended. As of September 30, 2023, Elutia was in compliance with its financial covenants under the agreement governing the SWK Loan Facility (the “SWK Loan Facility Agreement”).

All of the SWK Loan Facility borrowings take the form of Secured Overnight Financing Rate (“SOFR”) loans and bear interest at a rate per annum equal to the sum of an applicable margin of (i) 7.75% and the “Term SOFR Rate” (based upon an interest period of 3 months), or (ii) if the Company has elected the PIK Interest option (as defined below), 3.75% and the “Term SOFR Rate.” The Company may elect a portion of the interest due, to be paid in-kind at a rate per annum of 4.5% (“PIK Interest”), and such election may be made (x) until November 15, 2024 if the conditions to draw the Additional Term Loan have not been met, or (y) if such conditions to draw the Additional Term Loan have been satisfied, until November 17, 2025. The “Term SOFR Rate” is subject to a floor of 2.75%. The agreement, as amended, governing the SWK Loan Facility also includes an exit fee equal to 6.5% of the aggregate principal amount

funded prior to termination plus $62,500 and prepayment penalties equal to: (i) if such prepayment occurs prior to the first anniversary of the Closing Date, 2% of the aggregate principal amount funded prior to the termination plus remaining unpaid interest payments scheduled to be paid during the first year of the loan or (ii) if such prepayment occurs after the first anniversary of the Closing Date but prior to the second anniversary of the Closing Date, 2% of the aggregate principal amount funded prior to the termination. The weighted average interest rate on the SWK Loan Facility was 13.5% and 13.1% for the three and nine months ended September 30, 2023, respectively.

On August 10, 2022, the Company issued to SWK Funding LLC a warrant (the “Warrant”) to purchase, in the aggregate, up to 187,969 shares of Class A common stock of the Company, $0.001 par value per share at an exercise price of $6.65 per share. The Warrant is immediately exercisable for up to 187,969 shares of Class A common stock from time to time on or after the Closing Date. The exercise price and number of shares of Class A common stock issuable upon exercise of the Warrant are subject to adjustment in the event of stock dividends, stock splits and certain other events affecting the Class A common stock. Unless earlier exercised or terminated in accordance with its terms, the Warrant will expire on the seventh anniversary of the Closing Date. Upon issuance, the Company valued the Warrant at approximately $0.6 million using the Black-Scholes model. The recognition of the Warrant as well as deferred financing costs of approximately $0.5 million incurred in securing the SWK Loan Facility resulted in a reduction in the recorded value of the associated debt. The debt discount and deferred financing costs will be recognized as interest expense through the maturity of the loan.

The SWK Loan Facility Agreement requires certain mandatory prepayments, subject to certain exceptions, with: (1) 100% of any net casualty proceeds in excess of $250,000 and (2) for non-ordinary course asset sales, an amount equal to the difference between (x) the proportion of divested gross profit (as defined in the SWK Loan Facility Agreement) to the Company’s total gross profit (as defined in the SWK Loan Facility Agreement) multiplied by the outstanding loans under the SWK Loan Facility and (y) the difference between $1,000,000 and the aggregate sale proceeds of any assets previously sold during the fiscal year. No such mandatory prepayments were required during the three and nine months ended September 30, 2023; however, the closing of the divestiture of the Orthobiologics Business triggered the mandatory prepayment of $4.0 million. Of such amount, $2.0 million was paid shortly after closing of the divestiture of the Orthobiologics Business and the remainder is to be paid by the earlier of (i) February 15, 2024 and (ii) two business days following written request by SWK based on mutual agreement between the parties.

In connection with the August 2022 debt refinancing, the Company used $16 million of the proceeds of the SWK Loan Facility to repay all outstanding obligations on its former MidCap term loan (“MidCap Loan Facility”) and former asset-backed revolving line of credit (“MidCap Credit Facility”). Borrowings under the MidCap Loan Facility bore interest at a rate per annum equal to the sum of (x) the greater of (i) 2.25% and (ii) the applicable London Interbank Offered Rate for U.S. dollar deposits divided by 1.00 minus the maximum effective reserve percentage for Eurocurrency funding (“LIBOR”) plus (y) 7.25%. The weighted average interest rate on MidCap Loan Facility was 9.5% for the three and nine months ended September 30, 2022. Borrowings under the MidCap Credit Facility bore interest at a rate per annum equal to the sum of (x) the greater of (i) 2.25% and (ii) LIBOR plus (y) 4.95%. The weighted average interest rate on MidCap Credit Facility was 7.2% for the three and nine months ended September 30, 2022.

Long-term debt was comprised of the following (in thousands):


	September 30,		December 31,
	2023		2022
Term Loan Facility, net of unamortized discount and deferred financing costs	$	25,278	$	24,260
Current Portion		—		—
Long-Term Debt	$	25,278	$	24,260

The fair value of all debt instruments, which is based on inputs considered to be Level 2 under the fair value hierarchy, approximates the respective carrying values as of September 30, 2023 and December 31, 2022.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-URI https://asc.fasb.org/topic&trid=2208564

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-Subparagraph (h)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-SubTopic 20
-Section 50
-Paragraph 1C
-Subparagraph (c)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1I
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1I
-Subparagraph (d)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(c))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-Subparagraph (g)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1C
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1C
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1E
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495348-112611

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1I
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-Subparagraph (i)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

+ Details

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Current assets:
Cash	$ 14,517	$ 16,989
Accounts receivable, net of credit loss reserve of $652 and $87, respectively	2,883	3,774
Inventory	6,503	4,240
Receivables of FiberCel litigation costs	7,452	13,813
Prepaid expenses and other current assets	452	2,387
Current assets of discontinued operations	7,320	9,496
Total current assets	39,127	50,699
Property and equipment, net	175	245
Intangible assets, net	12,520	15,069
Operating lease right-of-use assets and other	155	320
Noncurrent assets of discontinued operations	2,603	2,508
Total assets	54,580	68,841
Current liabilities:
Accounts payable	2,962	1,374
Accrued expenses and other current liabilities	10,723	8,830
Payables to tissue suppliers	707	900
Current portion of revenue interest obligation	11,053	8,990
Contingent liability for FiberCel litigation	15,702	17,360
Current operating lease liabilities	399	232
Current liabilities of discontinued operations	3,190	4,929
Total current liabilities	44,736	42,615
Long-term debt	25,278	24,260
Long-term revenue interest obligation	5,471	5,916
Warrant liability	7,550
Other long-term liabilities	433	127
Noncurrent liabilities of discontinued operations	585	956
Total liabilities	84,053	73,874
Commitments and contingencies
Stockholders' equity (deficit):
Additional paid-in capital	136,834	132,939
Accumulated deficit	(166,330)	(137,988)
Total stockholders' deficit	(29,473)	(5,033)
Total liabilities and stockholders' deficit	54,580	68,841
Class A Common stock
Stockholders' equity (deficit):
Common stock	19	12
Class B Common stock
Stockholders' equity (deficit):
Common stock	$ 4	$ 4

Revenue Interest Obligation - (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
	May 31, 2017	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Jun. 30, 2023
Debt Instrument [Line Items]
Payments due based on cumulative sales	$ 5,000
Revenue Interest Obligation.
Debt Instrument [Line Items]
Interest expense related to revenue interest obligation		$ 600	$ 700	$ 1,600	$ 2,000
Ligand Pharmaceuticals
Debt Instrument [Line Items]
Estimated present value on the acquisition date	27,700
Annual minimum sale	$ 2,750
Percentage of future sales	5.00%
Term of agreement	10 years
Ligand Pharmaceuticals \| Revenue Interest Obligation.
Debt Instrument [Line Items]
Initial milestone payment						$ 5,000
Cumulative sales of products exceed $100.0 \| Ligand Pharmaceuticals
Debt Instrument [Line Items]
Payments due based on cumulative sales	$ 5,000
Cumulative sales	100,000
Cumulative sales of products exceed $300.0 \| Ligand Pharmaceuticals
Debt Instrument [Line Items]
Payments due based on cumulative sales	5,000
Cumulative sales	$ 300,000

Net Loss Per Share Attributable to Common Stockholders - Anti-dilutive securities (Details) - shares	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities	13,742,546	2,316,748
Options to purchase common stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities	1,648,190	1,755,447
Restricted stock units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities	369,525	373,332
Class A common stock warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities	187,969	187,969
Common stock warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities	11,033,804
Prefunded Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities	503,058

Inventory (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Inventory (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Jun. 30, 2023	Sep. 30, 2023	Dec. 31, 2022
Inventory
Raw materials	$ 1,107		$ 1,107	$ 652
Work in process	781		781	541
Finished goods	4,615		4,615	3,047
Total	6,503		6,503	$ 4,240
Product returns reserve and reversal of revenue	300	$ 3,000
Inventory write-down			2,000
Accrued expenses and other current liabilities
Inventory
Product return reserve	$ 2,700		$ 2,700

Divestiture of Orthobiologics

9 Months Ended

Sep. 30, 2023

Divestiture of Orthobiologics

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

Note 4. Divestiture of Orthobiologics Business

As described in Note 1, on September 17, 2023, the Company executed the Purchase Agreement for the sale of its Orthobiologics Business. Accordingly, the Orthobiologics Business is reported as discontinued operations in accordance with ASC 205-20 - Discontinued Operations. The related assets and liabilities of the Orthobiologics Business are classified as assets and liabilities of discontinued operations as of September 30, 2023 and December 31, 2022 in the condensed consolidated balance sheets and the results of operations from the Orthobiologics Business are reported as discontinued operations in the condensed consolidated statements of operations for the three and nine months ended September 30, 2023 and 2022. Applicable amounts in the prior year have been recast to conform to this discontinued operations presentation.

The following tables shows the assets and liabilities of the discontinued operations:


	September 30,		December 31,
	2023		2022
Carrying amounts of the major classes of assets included in discontinued operations:
Accounts receivable, net of credit loss reserve of $62 and $62, respectively	$	2,311	$	3,056
Inventory		4,055		5,812
Prepaid expenses and other current assets		954		628
Total current assets		7,320		9,496
Property and equipment, net		1,253		1,158
Operating lease right-of-use assets and other		1,350		1,350
Total non-current assets		2,603		2,508
Total assets of discontinued operations	$	9,923	$	12,004


Carrying amounts of the major classes of liabilities included in discontinued operations:
Accounts payable	$	401	$	954
Accrued expenses and other current liabilities		906		1,273
Payables to tissue suppliers		1,395		2,252
Current operating lease liabilities		488		450
Total current liabilities		3,190		4,929
Long-term operating lease liabilities		585		956
Total liabilities of discontinued operations	$	3,775	$	5,885

In accordance with ASC 205-20, only expenses specifically identifiable and related to a business to be disposed may be presented in discontinued operations. The following table shows the financial results of the discontinued operations:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Net sales	$	2,291	$	6,540	$	12,894	$	19,260
Cost of goods sold		1,839		4,430		11,218		13,605
Gross profit		452		2,110		1,676		5,655
Sales and marketing		374		536		1,636		1,467
General and administrative		927		157		1,231		435
Research and development		262		243		776		988
Total operating expenses		1,563		936		3,643		2,890
Interest expense		117		55		348		55
Net income (loss)	$	(1,228)	$	1,119	$	(2,315)	$	2,710

Total operating and investing cash flows of discontinued operations for the nine months ended September 30, 2023 and 2022 are comprised of the following:


	Nine Months Ended
	September 30,
	2023		2022
Significant operating non-cash reconciliation items
Depreciation		213		149
Stock-based compensation		115		119
Changes in operating assets and liabilities:
Accounts receivable		745		(384)
Inventory		1,757		4,288
Prepaid expenses and other		(326)		32
Accounts payable and accrued expenses and other current liabilities		(920)		427
Obligations to tissue suppliers		(857)		(318)

Significant investing items
Expenditures for property, plant and equipment		287		271

The Company’s Women’s Health product, SimpliDerm, has historically been processed by Elutia at our Richmond, California facility; however, with the divestiture of the Orthobiologics Business, which includes such facility, SimpliDerm will be provided to us on a go forward basis through a long-term supply agreement with the purchaser, Berkeley.

Organization and Description of Business

9 Months Ended

Sep. 30, 2023

Organization and Description of Business

Organization and Description of Business

ELUTIA INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1. Organization and Description of Business

Elutia Inc. (formerly known as Aziyo Biologics, Inc., together with its consolidated subsidiaries, “Elutia” or the “Company”) is a regenerative medicine company, with a focus on patients receiving implantable medical devices. The Company has developed a portfolio of regenerative products using both human and porcine tissue that are designed to be as close to natural biological material as possible. Elutia’s portfolio of products span the device protection, women’s health and cardiovascular markets. These products are primarily sold to healthcare providers or commercial partners.

On September 17, 2023, the Company executed an Asset Purchase Agreement (the “Purchase Agreement”) with Berkeley Biologics, LLC (“Berkeley”), a Delaware limited liability company and wholly owned subsidiary of GNI Group, Ltd. On November 8, 2023, at the closing (the “Closing”) of the transactions contemplated by the Purchase Agreement (the “Asset Purchase”), Berkeley purchased from the Company substantially all of the assets that are related to (i) the Company’s prior business of researching, developing, administering, insuring, operating, commercializing, manufacturing, selling and marketing the Company’s Orthobiologics products identified in the Purchase Agreement (the “Products”), and (ii) the business of contract manufacturing of particulate bone, precision milled bone, cellular bone matrix, acellular dermis, soft tissue and other products (but excluding the business of contract manufacturing of acellular dermis products for use in the field of breast reconstruction, other than as a supplier to Elutia). The assets sold represent the entirety of the Company’s Orthobiologics segment (the “Orthobiologics Business”). The Purchase Agreement provides for an aggregate purchase price, subject to certain adjustments pursuant to the terms of the Purchase Agreement, of up to $35 million in cash, with approximately $14.6 million, as adjusted, having been paid shortly after Closing and up to $20 million potentially payable after the Closing in the form of earn-out payments (“Earn-Out Payments”). For each of the five years following the Closing, Berkeley would be required to pay to the Company an Earn-Out Payment equal to 10% of the actual revenue earned by Berkeley in the applicable year that is derived from sales of those Products defined as “Earn-Out Products” under the Purchase Agreement, and from any improvements, modifications, derivatives and enhancements related to the Earn-Out Products, with the aggregate amount of Earn-Out Payments capped at $20 million.

The sale of the Orthobiologics Business represents a strategic shift that has a major effect on the Company’s operations and financial results. Accordingly, this transaction is accounted for as Discontinued Operations for all periods presented in accordance with Accounting Standards Codification (“ASC”) 205-20, Discontinued Operations. Unless indicated otherwise, the information in the notes to the Condensed Consolidated Financial Statements relates to continuing operations. See Note 4 for further discussion of the divestiture of the Orthobiologics Business.

On May 4, 2023, the Company received a letter from the Listing Qualifications Department of the Nasdaq Stock Market (“Nasdaq”) notifying us that it did not meet the Market Value of Listed Securities (“MVLS”) requirement for continued listing on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(b)(2) (the “Market Value Standard”), and noting that the Company did not meet the requirements under Nasdaq Listing Rules 5550(b)(1) (Equity Standard) and 5550(b)(3) (Net Income Standard). The Original Notice provided that, in accordance with Nasdaq Listing Rule 5810(c)(3)(C), the Company would have a period of 180 calendar days from the date of the Original Notice, or until October 31, 2023 (the “Compliance Date”), to regain compliance with the Market Value Standard by having the Company’s MVLS close at or above $35 million for a minimum of 10 consecutive business days prior to the Compliance Date.

On November 1, 2023, the Company received a delisting determination letter (the “Letter”) from the Staff advising the Company that the Staff had determined that the Company did not regain compliance with the Market Value Standard by the Compliance Date. As a result, if not for the Company’s appeal of the Staff’s determination, trading of our common stock on the Nasdaq Capital Market would have been suspended at the opening of business on November 10, 2023, and Form 25-NSE would have been filed with the Securities and Exchange Commission to remove the Company’s securities from listing and registration on the Nasdaq Capital Market. However, the Company timely submitted a hearing

request to Nasdaq's Hearings Panel (the “Panel”), which stayed the suspension of our common stock pending the panel's conclusion of the hearing process.

The Company’s hearing has been scheduled for February 15, 2024. At the hearing, the Company intends to present a plan to regain compliance with the Market Value Standard, and in the interim, the Company’s common stock will continue to trade on the Nasdaq Capital Market under the symbol “ELUT” at least pending the ultimate conclusion of the hearing.

There can be no assurance that the the Company’s plan will be accepted by the Panel or that, if it is, the Company will be able to regain compliance with the applicable Nasdaq listing requirements. If the Company cannot regain compliance with the Market Value Standard or under Nasdaq’s alternative continued listing requirements, and if the Company’s common stock is delisted by Nasdaq, it could lead to a number of negative implications, including an adverse effect on the price of our common stock, increased volatility in our common stock, reduced liquidity in our common stock, the loss of federal preemption of state securities laws and greater difficulty in obtaining financing. In addition, delisting of our common stock could deter broker-dealers from making a market in or otherwise seeking or generating interest in our common stock, could result in a loss of current or future coverage by certain sell-side analysts and might deter certain institutions and persons from investing in our securities at all. Delisting could also cause a loss of confidence of our collaborators, vendors, suppliers and employees, which could harm the Company’s business and future prospects.

Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2023

Summary of Significant Accounting Policies

Basis of Presentation and Liquidity

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.

Reclassifications

Use of Estimates

Net Loss per Share Attributable to Common Stockholders

Fair Value of Financial Instruments

Level 1 - Valuations based on quoted prices for identical assets and liabilities in active markets.

Cash

Accounts Receivable and Allowances

Inventory

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed on the straight-line method over the following estimated useful lives of the assets:


Processing and research equipment		5 to 10 years
Office equipment and furniture		3 to 5 years
Computer hardware and software		3 years

Leasehold improvements are amortized on the straight-line method over the shorter of the lease term or the estimated useful life of the asset. Repairs and maintenance costs are expensed as incurred.

Leases

Long-Lived Assets

Purchased intangible assets with finite lives are carried at acquired fair value, less accumulated amortization. Amortization is computed over the estimated useful lives of the respective assets.

Warrant Liability

Revenue Recognition

Stock-Based Compensation Plans

Warrant Liability

Research and Development Costs

Research and development costs, which include mainly salaries, outside services and supplies, are expensed as incurred.

Concentration of Credit Risk

Comprehensive Income (Loss)

Income Taxes

Stock-Based Compensation - Employee Stock Purchase Plan (Details) - Employee Stock Purchase Plan	3 Months Ended	9 Months Ended
	Sep. 30, 2023 shares	Sep. 30, 2023 shares
Stock-Based Compensation
Offering period		6 months
Price of the common stock purchased as percentage of fair market value of common stock		85.00%
Grant of equity awards authorized	542,365	542,365
Awards available for grant	335,808	335,808
Shares issued under ESPP	63,628	104,905

Long-Term Debt - MidCap Loan and Credit Facilities (Details) $ in Millions			3 Months Ended	9 Months Ended
	Aug. 10, 2022 USD ($)	May 31, 2017	Sep. 30, 2022	Sep. 30, 2022
MidCap Loan Facility
Long-Term Debt
Weighted average interest rate			9.50%	9.50%
Prepayment amount of loan	$ 16
Interest rate		2.25%
MidCap Loan Facility \| LIBOR
Long-Term Debt
Basis spread on variable rate		7.25%
Variable rate divider		1.00
MidCap Credit Facility
Long-Term Debt
Weighted average interest rate			7.20%	7.20%
Interest rate		2.25%
MidCap Credit Facility \| LIBOR
Long-Term Debt
Basis spread on variable rate		4.95%

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
OPERATING ACTIVITIES:
Net loss	$ (28,342)	$ (27,457)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	2,854	2,796
(Gain) loss on extinguishment of debt and revaluation of warrant liability	(1,070)	311
Amortization of deferred financing costs and debt discount	161	63
Interest expense recorded as additional revenue interest obligation and long-term debt	2,473	1,983
Stock-based compensation	1,987	2,873
Bad debt expense	590
Losses associated with viable bone matrix recall and market withdrawal	1,984
Changes in operating assets and liabilities:
Accounts receivable	1,045	(1,163)
Inventory	(2,490)	(638)
Receivables of FiberCel litigation costs	6,361	(17,234)
Prepaid expenses and other	1,609	467
Accounts payable and accrued expenses and other current liabilities	2,562	4,029
Obligations to tissue suppliers	(1,049)	743
Contingent liability for FiberCel litigation	(1,658)	17,643
Deferred revenue and other liabilities	305	(605)
Net cash used in operating activities	(12,678)	(16,189)
INVESTING ACTIVITIES:
Expenditures for property, plant and equipment	(329)	(406)
Net cash used in investing activities	(329)	(406)
FINANCING ACTIVITIES:
Proceeds from private placement and warrants, net of offering costs of $0.2 million	10,335
Additional issuance costs in connection with private placement		(110)
Net borrowings (repayments) under revolving line of credit		(4,763)
Proceeds from stock option exercises		10
Proceeds from long-term debt		21,000
Deferred financing costs		(468)
Repayments of long-term debt		(18,615)
Costs related to the extinguishment of debt		(633)
Payments on revenue interest obligation		(2,075)
Payments for taxes upon vesting of restricted stock units	(19)	(395)
Proceeds from sales of common stock through Employee Stock Purchase Plan	219	317
Net cash provided by (used in) financing activities	10,535	(5,732)
Net decrease in cash and restricted cash	(2,472)	(22,327)
Cash and restricted cash, beginning of period	16,989	30,428
Cash and restricted cash, end of period	14,517	8,101
Supplemental Cash Flow and Non-Cash Financing Activities Disclosures:
Cash paid for interest	$ 1,696	5,047
Fair value of warrants issued		$ 560

Summary of Significant Accounting Policies - Basis of Presentation and Liquidity (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Summary of Significant Accounting Policies
Net loss	$ 9,747	$ 9,910	$ 28,342	$ 27,457
Accumulated deficit	$ 166,330		166,330		$ 137,988
Cash used in operating activities			$ 12,678	$ 16,189

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 220
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+ Details

Segment Information - Reconciliation of segment gross profit (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Reconciliation of segment gross profit to the consolidated loss from operations
Gross profit, excluding intangible asset amortization	$ 3,690	$ 3,788	$ 11,474	$ 11,120
Adjustments:
Intangible asset amortization expense	(849)	(849)	(2,547)	(2,547)
Sales and marketing	(2,802)	(4,379)	(10,514)	(13,672)
General and administrative	(2,757)	(4,330)	(10,137)	(12,788)
Research and development	(557)	(1,723)	(3,016)	(5,867)
FiberCel litigation costs	(4,096)	(1,474)	(7,278)	(1,908)
Loss from operations	(7,371)	(8,967)	(22,018)	(25,662)
Interest expense	1,448	1,247	4,285	3,666
Other income, net	(312)	803	(312)	803
Loss before provision for income taxes	$ (8,507)	$ (11,017)	$ (25,991)	$ (30,131)

Segment Information

9 Months Ended

Sep. 30, 2023

Segment Information

Segment Information

Note 12. Segment Information

With the divestiture of the Orthobiologics Business, the Company now operates in three segments. These segments are based on financial information that is utilized by the Company’s chief operating decision maker to assess performance and allocate resources. The Company determined its operating and reportable segments to be consistent with its major product groupings – Device Protection, Women’s Health and Cardiovascular.

The Company’s net sales disaggregated by segment were as follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Net sales:
Device protection	$	2,575		2,319	$	7,147	$	6,617
Women's health		2,614		1,812		7,309		5,270
Cardiovascular		938		1,718		4,414		5,375
Total Net Sales	$	6,127	$	5,849	$	18,870	$	17,262

The Company’s gross profit disaggregated by segment were as follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Gross profit:
Device protection	$	1,704	$	1,670	$	4,998	$	4,419
Women's health		1,417		765		3,376		2,443
Cardiovascular		569		1,353		3,100		4,258
Gross profit, excluding intangible asset amortization	$	3,690		3,788		11,474		11,120
Intangible asset amortization expense		849		849		2,547		2,547
Gross profit	$	2,841	$	2,939	$	8,927	$	8,573

The following table is a reconciliation of segment gross profit to the consolidated loss before provision for income taxes (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Gross profit, excluding intangible asset amortization	$	3,690	$	3,788	$	11,474	$	11,120

Adjustments:
Intangible asset amortization expense		(849)		(849)		(2,547)		(2,547)
Sales and marketing		(2,802)		(4,379)		(10,514)		(13,672)
General and administrative		(2,757)		(4,330)		(10,137)		(12,788)
Research and development		(557)		(1,723)		(3,016)		(5,867)
FiberCel litigation costs		(4,096)		(1,474)		(7,278)		(1,908)
Loss from operations		(7,371)		(8,967)		(22,018)		(25,662)
Interest expense		1,448		1,247		4,285		3,666
Other income, net		(312)		803		(312)		803
Loss before provision for income taxes	$	(8,507)	$	(11,017)	$	(25,991)	$	(30,131)

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

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+ Details

Segment Information - Disaggregation (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2023 USD ($) segment	Sep. 30, 2022 USD ($)
Segment Reporting Information [Line Items]
Number of operating segments \| segment			3
Total sales	$ 6,127	$ 5,849	$ 18,870	$ 17,262
Gross profit, excluding intangible asset amortization	3,690	3,788	11,474	11,120
Intangible asset amortization expense	849	849	2,547	2,547
Gross profit	2,841	2,939	8,927	8,573
Device Protection
Segment Reporting Information [Line Items]
Total sales	2,575	2,319	7,147	6,617
Gross profit, excluding intangible asset amortization	1,704	1,670	4,998	4,419
Women's Health
Segment Reporting Information [Line Items]
Total sales	2,614	1,812	7,309	5,270
Gross profit, excluding intangible asset amortization	1,417	765	3,376	2,443
Cardiovascular
Segment Reporting Information [Line Items]
Total sales	938	1,718	4,414	5,375
Gross profit, excluding intangible asset amortization	$ 569	$ 1,353	$ 3,100	$ 4,258

- Definition

Aggregate revenue less cost of goods and services sold or operating expenses directly attributable to the revenue generation activity.

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- Definition

Amount, including tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value-added and excise.

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+ Details

Divestiture of Orthobiologics - Financial results (Details) - Divestiture of Orthobiologics - Discontinued Operations, Held-for-sale - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract]
Net sales	$ 2,291	$ 6,540	$ 12,894	$ 19,260
Cost of goods sold	1,839	4,430	11,218	13,605
Gross profit	452	2,110	1,676	5,655
Sales and marketing	374	536	1,636	1,467
General and administrative	927	157	1,231	435
Research and development	262	243	776	988
Total operating expenses	1,563	936	3,643	2,890
Interest expense	117	55	348	55
Net loss	$ (1,228)	$ 1,119	$ (2,315)	$ 2,710

Summary of Significant Accounting Policies - Concentration of Credit risk (Details) $ in Millions	Sep. 30, 2023 USD ($)
Surgalign Holdings
Concentration Risk [Line Items]
Accounts receivable	$ 0.6

Commitments and Contingencies - License and Supply (Details) - License agreement with Cook Biotech - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Cook Biotech License and Supply Agreements
Percentage of royalty on sales			3.00%
Royalty expense	$ 0	$ 0	$ 0	$ 0
License fee payments per year	$ 100		$ 100

Summary of Significant Accounting Policies - Long-Lived Assets (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Long-Lived Assets
Impairment losses	$ 0	$ 0	$ 0	$ 0

Stock-Based Compensation - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Stock-Based Compensation
Stock-based compensation expense	$ 566	$ 219	$ 1,872	$ 2,754
Divestiture of Orthobiologics \| Discontinued Operations, Held-for-sale
Stock-Based Compensation
Stock-based compensation	100		115	119
Sales and marketing
Stock-Based Compensation
Stock-based compensation expense	164	330	466	819
General and administrative
Stock-Based Compensation
Stock-based compensation expense	373	(124)	1,264	1,460
Research and development
Stock-Based Compensation
Stock-based compensation expense	15	(14)	102	414
Cost of goods sold
Stock-Based Compensation
Stock-based compensation expense	$ 14	$ 27	$ 40	$ 61