Vericel Corp (VCEL) 2025 Q3 法說會逐字稿

Good day and welcome to the Vericel Corporation third quarter 2025 earnings call.

Today's conference is being recorded. At this time, I would like to turn the conference over to Eric Burns, Vericel Vice President of Finance and Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone.

Joining me on today's call are Vericel's President and Chief Executive Officer, Nick Colangelo, and our Chief Financial Officer, Joe Mara.

Before we begin, let me remind you that on today's call, we will be making forward-looking statements covered under the Private Securities Litigation Reform Act of 1995.

These statements may involve risks and uncertainties that could cause actual results to differ materially from expectations and are discussed more fully in our filings with the SEC.

In addition, all forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date.

Please note that a copy of our third-quarter financial results press release and a short presentation with highlights from today's call are available in the investor relations section of our website.

I will now turn the call over to Nick.

Thank you, Eric, and good morning, everyone. The company delivered outstanding financial and business results in the third quarter, with strong topline revenue growth and even higher profit growth, a significant inflection in operating cash flow, and continued progress across a number of key business initiatives.

The company generated record third-quarter total revenue, which exceeded our guidance for the quarter, record third-quarter MACI revenue, which increased 25% over last year, and the highest quarterly burn care revenue of the year, as Epicel had one of its highest revenue quarters to date, and Nexo Brid had its highest quarterly revenue since launch.

The strong revenue performance translated into significant profit growth and cash generation, as the company delivered GAAP net income of more than $5 million and adjusted EBITDA margin of 25% for the quarter, as well as record third-quarter operating cash flow of more than $22 million.

MACI’s third-quarter performance was driven by strong underlying business fundamentals, as we continue to expand the MACI surgeon base and drive growth in biopsies with the launch of MACI Arthro.

As anticipated, the strong MACI biopsy growth in the first half of the year, which outpaced implant growth to that point, drove an acceleration of implant and revenue growth in the third quarter.

MACI also had another quarter of double-digit biopsy growth, with record third-quarter highs in both MACI biopsies and the number of surgeons taking biopsies.

This momentum continued into the fourth quarter, as we had the highest number of MACI biopsies and surgeons taking biopsies in any month since launch in October.

In addition to the strength of the core MACI fundamentals, the early launch indicators remain very strong for MACI Arthro, which clearly is contributing to MACI’s overall biopsy and implant growth.

We now have more than 800 MACI Arthro-trained surgeons through the end of October, and the biopsy and implant growth rates continue to increase substantially for trained surgeons and remain significantly higher than the growth rates for surgeons that have not yet been trained.

In addition, early data indicates that the cohort of surgeons that have completed a MACI Arthro case to date have a markedly higher implant growth rate than biopsy growth rate, suggesting a higher overall conversion rate for MACI Arthro-implanting surgeons.

We believe that this dynamic may be driven by the fact that MACI Arthro is a less invasive procedure with the potential for improved patient outcomes.

To that end, we remain focused on generating clinical data to demonstrate these potential patient benefits, including a shorter rehab period with MACI Arthro administration.

Early data from ongoing investigator case series suggests a significant reduction in post-surgical pain, improved range of motion, and a meaningful acceleration in the timeline to achieving full weight-bearing following MACI Arthro treatment.

These initial results suggest very positive outcomes, which could also lead to a shorter overall recovery timeline for patients.

We expect to see these cases presented at industry meetings in early 2026, as well as in future publications, and we continue to work with additional surgeons as they complete MACI Arthro cases to collect prospective outcomes data in our MACI clinical registry.

Finally, the MACI salesforce expansion is on track to be completed in the fourth quarter, with the new reps supporting current territories this year and moving into their new territories at the start of next year, which will support our significant fourth-quarter volume growth and position MACI for a continued strong performance for the full year in 2026.

In terms of our longer-term MACI growth initiatives, we remain on track to initiate the Phase 3 MACI ankle clinical study this quarter, which represents a substantial growth opportunity for MACI and would enable the company to expand into other orthopedic markets. We also remain on track to initiate commercial manufacturing for MACI in our new facility next year, which is designed to meet both U.S. and global manufacturing requirements and will allow the company to potentially commercialize MACI outside the United States.

To that end, we're initiating a staged approach to our MACI OUS expansion, with the first phase targeting a planned MACI launch in the UK.

This is an ideal first step for OUS expansion in that the UK has an international mutual recognition procedure that allows for accelerated approval and market access. There's a high level of awareness and surgeon advocacy for MACI, given that the product was previously marketed in the UK.

There's an established reimbursement pathway for this technology, given a prior positive NICE opinion for MACI, and there are concentrated points of care with a dozen or so centers of excellence for the treatment of cartilage injuries in the UK.

We'd expect to submit a marketing application in the middle of next year and potentially launch MACI in the UK in the first half of 2027, as we seek to expand the long-term growth and value creation opportunities for the company.

In summary, MACI remains the clear market leader for knee cartilage repair with a significant competitive moat.

Based on the strength of its underlying business fundamentals, we believe that MACI is very well positioned for a strong close to 2025 and continued strong growth in 2026 and beyond.

The early launch indicators for MACI Arthro remain very strong and clearly are contributing to the overall biopsy and implant growth for MACI.

As we move into 2026, we expect to capitalize on having a full year to engage with the current MACI Arthro-trained surgeons and to continue to meaningfully expand the number of trained surgeons next year.

In addition to increasing the MACI salesforce to drive further growth, we're also supporting the expanded MACI sales team with additional investments across our sales operations, marketing, and medical functions to enhance our operational excellence and commercial execution and create additional opportunities for surgeons to engage with Vericel.

We believe that all of these initiatives will reinforce MACI's leadership position and drive continued strong revenue and profit growth in 2026 and the years ahead.

I'll now turn the call over to Joe.

Thanks, Nick, and good morning, everyone.

The company delivered very strong financial results in the third quarter, with record total revenue of $67.5 million.

MACI had a strong quarter, with revenue growing 25% to $55.7 million, which was above the high end of our guidance range for the quarter.

Importantly, year-to-date, MACI revenue growth is over 20%, with its growth rate having increased each quarter during the year.

Burn care also had a strong third quarter, with revenue of $11.8 million, which increased 21% sequentially over the second quarter.

Epicel revenue of $10.4 million was the highest quarter of the year and one of its highest quarters to date, while Nexo Brid revenue of $1.5 million represented its highest quarterly revenue since launch, growing 38% versus the prior year and 26% versus the prior quarter.

The company's substantial revenue growth translated into significant margin expansion, with gross profit of nearly $50 million, or 73.5% of revenue.

The company also delivered GAAP net income of $5.1 million, and adjusted EBITDA increased nearly 70% to $17 million, or 25% of revenue—an increase of nearly 800 basis points versus the prior year—as the company's profit growth continues to outpace our strong revenue growth.

Finally, the company generated record third-quarter operating cash flow of $22.1 million, nearly matching the fourth quarter of last year.

And with just $2.6 million of CapEx during the quarter, the company achieved record free cash flow of nearly $20 million.

Ending the quarter with $185 million in cash and investments, as the expected inflection of our cash generation following the completion of our new manufacturing facility is now being realized.

Turning to our financial guidance, we expect full-year total revenue of approximately $272 million to $276 million.

For MACI, we are maintaining our revenue guidance expectations of low 20% growth for the full year and expect full-year MACI revenue of approximately $237.5 million to $239.5 million and fourth-quarter revenue of approximately $82 million to $84 million.

Given MACI's strong third-quarter results and expectations for its continued strong performance in Q4, MACI remains on track for a significant acceleration in revenue growth from 18% in the first half of the year to approximately 23% in the second half of the year.

For Epicel, we expect full-year revenue of approximately $34.5 million to $36.5 million, with fourth-quarter revenue of approximately $6.5 million to $8.5 million, as Epicel trends to date in the fourth quarter are similar to Q4 of last year.

I would also note that we are not assuming any additional NexoBrid revenue related to the BARDA RFP process initiated in August, although there is potential for incremental Nexo Brid revenue in the fourth quarter.

From a profitability perspective, we have reaffirmed our full-year profitability guidance of gross margin of 74% and adjusted EBITDA margin of 26%.

For the fourth quarter, we expect gross margin of approximately 77%, approximately $50 million of total operating expenses—which includes the investments related to our recent salesforce expansion—and adjusted EBITDA margin of approximately 40%.

Overall, 2025 is set up to be another positive year for the company, with strong top-line growth as well as significant margin expansion and profit growth. As we look ahead to next year and beyond, we believe that the durable growth of our portfolio positions the company to sustain strong top-line growth in the years ahead and supports our midterm profitability targets that we announced earlier this year of gross margin in the high 70% range and adjusted EBITDA margin in the high 30% range by 2029.

This now concludes our prepared remarks. We'll now open the call to your questions.

(Operator Instructions)

Hi, good morning. This is Josh Jennings from TD calendar. Is that, am I coming through, okay?

Yes, good morning, Josh. We can hear you fine.

I'm sorry that I got an operating notice. I didn't hear my name called.

Thank you. So, maybe just appreciate your comments. Congratulations on the strong Q3 results, and your comments just a moment ago, Joe, on 2026 continued momentum.

Just sorry for the typical question a little bit too early prior to 2026, guys. Maybe just for the MACI franchise—just thinking about MACI Arthro contributions in 2026—additive versus cannibalistic of standard MACI, and how we should be thinking about the MACI growth as we move into the coming quarters next year. I have one follow-up.

Yeah, so good morning, Josh, again, and thanks for the question. So first off, just a reminder—we haven’t given any specific 2026 commentary as of yet—but happy to give kind of our initial thoughts. Of course, we’ll give more formal guidance as we move into next year.

You know, I would say—kind of hit just briefly on both franchises but certainly cover MACI—so I would say across the portfolio, our expectations next year are very high. We have a number of impactful initiatives that we’re very excited about across both franchises, particularly MACI. But I do think we’ll be pretty prudent to start the year from a guidance perspective.

So maybe just briefly starting with burn care—I think that one’s pretty straightforward. So, you know, we talked about last quarter this kind of run rate concept, which we think is appropriate. We said we would adjust it as needed on a quarterly basis, but if you look at our run rate over the last several quarters, we’ve kind of been in that $9 million to $10 million range on burn care. So I think as a starting point for next year, kind of being in that range—call it in the high 30s on a full-year basis next year—is a good place to start.

We do have expectations that Nexo Brid will continue to increase. Certainly, there remains a possibility of some potential BARDA-related revenue that could materialize, but just given Epicel’s variability, we’re just going to be prudent on that. And I think that one’s pretty straightforward.

So from a MACI perspective, I would say, as we think about the guidance and kind of what next year looks like—if you kind of look at where analysts are, I mean, most analysts are kind of right around 20% on a full-year basis, plus or minus—we think that’s a good starting point as we think about 2026.

If you look at where we were on a full-year basis last year, MACI was 20%. It’s 20% on a year-to-date basis this year. So, you know, we’re not going to get ahead of ourselves and plan to start the year guiding above the trends with that 20%. So again, that’s a good place to start. You can also look at kind of the incremental revenue on a year-over-year basis—that points to something kind of similar in that $40 million-plus range. Again, we don’t want to get ahead of ourselves.

And I guess kind of the last point I’ll make on the Arthro question...

I think as we think about 2026 and really moving forward, we're not really thinking about this as kind of Arthro versus non-Arthro—we're thinking about this from a MACI total level. But if you kind of step back and think about the progression during the year, I think we're seeing exactly what we wanted to see as we’ve marched through the year.

So first off, great foundation in terms of engagement with surgeons—we're up to 800 trained surgeons. I think the majority of those are either new to MACI or new to smaller defects, so that's exactly what we'd want to see.

The second point there, that we've talked about for a few quarters now, is we are seeing higher biopsy and implant growth after surgeons are trained. So that's obviously exactly what we want to see, and we think that could be impactful over time.

And then the last point—early days—but when we look at our Arthro implanters, so the surgeons that have done Arthro implants, we're actually seeing signals of a higher conversion rate. So, I mean, if you kind of look at that collectively, that is a pretty strong data set and consistent with what we hear externally.

So, good signals on Arthro for sure, but I would say certainly we're mindful of that. But, you know, we're just not going to get ahead of ourselves in terms of a planning assumption or guidance next year, and would rather start the year a bit more prudently, which we think sets us up for success as we move throughout the year.

Appreciate that, and it's great to see the conversion rate thesis playing out from MACI Arthro. We've anecdotally kind of gotten back from some surgeons that patient demand for MACI Arthro is increasing. More patients are seeking out ortho surgeons that perform MACI Arthro or are coming in requesting MACI Arthro.

Just wondering if what we're picking up is a trend, and whether that's helping drive surgeon adoption rates—surgeons hearing from patients and then getting more interested—or also driving volumes. But anything you can share on that dynamic would be helpful.

Thanks for taking the questions.

Yeah, hey Josh, it's Nick. Yeah, I mean, as we've talked about repeatedly, we've heard and seen the anecdotal feedback since the early days with MACI Arthro. There's a lot of social media activity from top MACI Arthro implanters—that certainly can be one contributing factor to patients' awareness of a MACI Arthro option. So that makes perfect sense to us, and as Joe mentioned...

Besides the anecdotal kind of feedback we've been getting, which has been very positive, everything—the parameters that Joe mentioned—just sort of lines up with everything we expected to happen, and it's the progression that we've been talking about for the entire year. So yeah, really kind of pleased with the trends, and I think it makes a lot of sense that patients would be interested in a less invasive procedure that has potential benefits in terms of faster recovery and potentially overall rehab timelines.

And then, of course, the surgeon interest—we're well ahead of where we expected to be on trained surgeons for the year, so that awareness and engagement has been really positive as well.

Thanks, man.

Richard Newiter, Truest Securities.

Hi, thanks for taking the questions, and congrats on the quarter. I just wanted to get a better understanding of where you're potentially seeing MACI Arthro actually getting used where the traditional MACI was not—just the cannibalization versus market expansion. Anything anecdotal that you can give us there? And then I'll follow up. Thank you.

Yeah, hey Rich, it's Nick. So I think it's kind of continuing the trends that we've talked about in past quarters. And again, cannibalization is not really how we think about this. We look at increasing MACI utilization, and whether a surgeon implants MACI through a mini-arthrotomy, a small open incision, or arthroscopically, that all contributes to the strong MACI growth that we are seeing.

So, as we talked about before—and as alluded to—when you think about it from a surgeon perspective, the trained surgeons, and now the biopsying and implanting surgeons, come from existing MACI users, but also new users who were former open targets or the new Arthro-only targets that we added.

And the training kind of breaks down, as we talked about before, roughly one-third from former MACI users who were primarily condyle users, then a third from those that did both condyle and femoral condyles, and then a third new users—whether they were open targets or the new targets. So, a good distribution of surgeons, all of whom are taking biopsies and obviously doing implants.

And then from a defect location or a patient perspective—we've talked a lot about that—we've seen use not only on the femoral condyles, but also in areas of the knee like the trochlea and tibia, even a few patella cases here and there. And that, I think, will continue, especially as we think about the continued innovation with the MACI Arthro instruments, where we will work with surgeons to design the next version—2.0—of MACI instruments that will allow access to different portions of the knee and so on.

So, I think it's pretty broad-based, as we've been talking about all year, and supports the growth that we've seen in this third quarter.

Okay, that's really encouraging to hear. I'm just curious, given where you are in kind of a new product launch here as we look to next year—and understanding you might not want to provide official guidance, totally understand that for 2026—but is there anything that we should be aware of on the cadence, on revenue, or on the P&L? It's been a little bit counterintuitive for the last two years, and just to pre-empt any surprises as we all calibrate our models into next year. Thanks.

Yeah, so thanks, Rich, for the question. This is Joe. So, I would say, as we go into any year, I think from a MACI perspective, there's always going to be that seasonality. I mean, it can certainly ebb and flow a bit on a quarterly basis.

I would say one thing—as we're thinking about the full year—we have tended to see in the last couple of years that the first quarter has tended to be a kind of lower growth rate, for whatever reason, coming off Q4. So, I mean, that of course is a dynamic we've seen, and I would point out that it was present in the last couple of years. So that's probably one piece.

In general, I would say it typically follows a pattern, as we've seen. And again, it can vary a bit by quarters, but they have tended to look pretty similar. So nothing I would call out.

Obviously, on the burn care side—which I don't think you're necessarily getting to—but clearly, there can be variability there. And again, we're going to kind of stick with that run rate framework, and we'll adjust as needed, as we've done in the fourth quarter here, just based on what we're seeing. Because we certainly want to make sure we're not going to get ahead of ourselves in any quarter on burn care. So that's more of a framework question.

I would say on the P&L—maybe just to hit the profitability for next year and kind of the profitability concept—nothing to call out quarterly, but I would say as you're thinking about the year and just going forward...

I'd say first off, I think it's pretty notable if you look back at Q3. This is, of course, the fourth quarter—just based on the MACI trajectory—is always our highest revenue quarter, highest margin quarter, etc. But to be net income positive at a $5 million level, I think is pretty notable in the third quarter. We achieved 25% adjusted EBITDA margin in the third quarter, which is also pretty notable.

And then just the cash generation for a moment—whether you look at free cash flow or operating cash flow—your kind of around $20 million for the quarter. So, you know, we talked a few years ago about that P&L inflection that we're starting to really get on the stronger side of, and I think we're just starting that kind of inflection on the cash generation piece.

In terms of the fourth quarter, obviously, we would expect a strong quarter there as well, as I talked about in the remarks.

Next year, I would say...

As you think about next year, I think we would expect, on the margin side, things to continue to tick up—on both the gross margin and the adjusted EBITDA side. Probably want to just be a little bit prudent there to start the year, in the sense that the last two or three years have been really strong and probably a bit ahead of our expectations in terms of how quickly the margin has gotten up the curve.

But I certainly think being up—call it a point on gross margin, maybe a point or two on adjusted EBITDA—is a reasonable starting point. We will have to factor in investments on the salesforce on a full-year basis, the ankle trial ramping up, and the cost of goods sold will absorb some of the new buildings, so that has to be contemplated next year.

Lastly, I would just say...

I think from a broader lens, if you kind of look at where the financial trajectory of the company is and our P&L metrics, they are really starting to ramp up pretty significantly. So, last year we had $50 million of adjusted EBITDA. This year, our guidance is pointing to $70 million. So we're already starting to get into that $100 million zone on an adjusted EBITDA level now.

And so, you know, if you assume even similar revenue growth over the next few years—and at a high 30% adjusted EBITDA—I think it's certainly reasonable to be kind of getting close to that $200 million EBITDA range by 2029, call it.

So, you know, we're pretty excited about everything that's going on the MACI side and across the business, but we're also very focused on that kind of financial trajectory—not just in 2026, but really over the next several years—which could be pretty significant. And again, we think it makes us pretty unique for a company of our size and scale.

Thank you.

Ryan Zimmerman , BTIG.

Hey guys, can you hear me okay?

Yeah, good morning, Ryan.

Good morning. Nice quarter.

Thank you.

Just given the biopsy trends you saw early in the year and the results this quarter—MACI, the MACI guidance was tightened—and I'm wondering why the fourth quarter wouldn't step up, maybe relative to your prior guidance, given what you're seeing in your commentary about biopsies in the third and into the fourth quarter?

Yeah, so thanks for the question, Ryan. So I'll take that. I mean, I think, clearly a very strong 3rd quarter, as we referenced in the biopsies, the start of the year, start, led to that higher implant and revenue growth, which is great to see, to your point, the leading indicators have been strong. I think particularly the biopsies, Yeah, so thanks for the question, Ryan. So I'll take that. I mean, I think clearly a very strong third quarter, as we referenced—the biopsies at the start of the year led to that higher implant and revenue growth, which is great to see. To your point, the leading indicators have been strong, particularly the biopsies, which are, of course, the key leading indicator for us.

I think in terms of the guidance, I would say another dimension there is—with that strong third quarter—it really de-risks where we need to be in the fourth quarter to achieve our full-year guidance. So to your point, we're essentially maintaining the full-year guide at the same level, which kind of points to about $82 million to $84 million in the fourth quarter, right in line with where estimates and consensus are.

But I'd also say this points to a pretty strong acceleration still from an H1 to H2 perspective. Depending on where you are in the range, it's 18% to call it, 22% to 23%, so a pretty significant step-up in the second half. It also gives us, I'd say, a pretty achievable step-up from Q3 to Q4.

And I'd just say broadly, we want to be prudent here on Q4. We recognize there certainly remains a wider range, given some of the leading indicators. We've got a great foundation of biopsies in place, but Q4 is our largest quarter. December is our highest month, and there always could be some variability at quarter-end, particularly with the year-end holidays. So, we think this is appropriate—it's an achievable step-up, and we just do not want to get ahead of ourselves as we close out the year.

Yeah, okay, fair enough. And the other question—and you kind of talked about this, Nick—which is, you're seeing adoption in MACI Arthro, but I guess I'm not clear. I mean, how much MACI Arthro sales were in the third quarter, and what are you expecting relative to legacy MACI, if you will, as we convert and move into both the fourth quarter and then into 2026?

I mean, if you were to think about it with broad strokes—does it entirely convert over this next quarter? Do you convert over the course of 2026? I guess I'm just curious how you think about the rise of MACI Arthro relative to maybe the decline of legacy MACI. Thanks.

Yeah, so we kind of don't—like we said earlier—think about a decline of legacy MACI. I mean, legacy MACI was principally focused on patella defects and large defects anywhere in the knee. I'd say that patella defects are one of the strongest, if not the strongest, growth drivers for the core, and that remains the case.

So, there's not a decline in the core MACI. And again, you're never going to have a full sort of switch over to MACI Arthro, because MACI Arthro instruments are designed for the smaller defects. If it's above 4 square centimetres, you're doing an open procedure. If it's a patella case, you're typically going to do an open procedure.

And so, these small defects were the smaller part—we had some lower penetration there. That's the whole thesis for launching the MACI Arthro instruments. And so, as we've seen an increase in biopsies and implants on smaller condyle defects, those are kind of MACI Arthro-attributable cases.

So again, we don't think about it as, "it's got to be blank on the core and then blank on Arthro." You can often start intending to do an Arthro case and flip to open if the defect got bigger since you did the biopsy. I mean, it's almost like a halo effect on the whole brand. And so, that's how we approach it.

But no doubt, as we've talked about, the trends for trained surgeons and how they're behaving are exactly what you want to see and support the overall growth for the brand.

Okay, that's very helpful. And if I could sneak one last one in—and I'll hop back in the queue—if you go back to some of the insurance carriers and their policies, some don't restrict lesion size, some do. Have you had to work through that? And is there any impact or any gating factor there in terms of lesion size as you launch MACI Arthro? Thanks for taking the question.

Yeah, so the short answer is not at all. As you mentioned, there are some plans that don't have any sort of size restrictions or parameters. There are some that require that the defect be 1, 1.5, or 2 square centimeters or above. That's, again, exactly what the MACI Arthro instruments are designed for—they're for 2, 3, or 4 square centimetre defects. So really, that has not been an issue at all.

And, as we've talked about often, every major medical plan has a policy—a medical policy—for MACI, and our prior approval rates are up in the mid-90% range. So for the appropriate patients, MACI gets approved.

Yeah, all right, appreciate it.

Thanks, Brian.

Thanks.

Caitlin Roberts ,Canaccord Genuity.

Hi, thanks for taking the questions. Congrats on the quarter. Just to start with burn care—can you walk us through the puts and takes here? You said Epicel—you expect similar Q4 dynamics to this quarter or last year. And then, the BARDA contract—any more colour on that and why there could be some BARDA upside to Nexo Brid? And also, has the new Category III code for Nexo Brid helped uptake there?

Yeah, hey Caitlin, this is Nick. So just on the Epicel trends coming into the quarter that I referenced—what we said was, to start the quarter—and again, we're still relatively early, only a third of the way through the quarter—that the trends to date, which essentially is the biopsies that we have coming into the quarter and in the first weeks of the quarter, were more like Q4 last year. So that's what we're going to guide to, as we still have a good amount of the quarter to go. The biopsies for patients we're going to treat in December aren't even in-house yet, so we just don't have the visibility on that.

So, as mentioned, we want to be very prudent in making sure that we don't get ahead of ourselves on Epicel guidance, given its variability.

On the BARDA opportunity—as the RFP is public and was intended to begin on October 1st—obviously, we're all aware there was a government shutdown, so things sort of came to a screeching halt. But we are hopeful and expect that when the government reopens, there's an opportunity to move forward on that RFP and the procurement, etc., and advanced development of Nexo Brid. So more to come on that, but obviously until that happens, we can't really share much more about it.

And then on the CPT code—I think, as we've talked about—we’ve had a pretty good number of P&T committee approvals for Nexo Brid, up in the 70 range, and more than 60 ordering centres. So, kind of in the CPT world, I think we feel comfortable there's pretty widespread utilization.

We would expect that next year we'll pursue a permanent code, which would then become effective in 2027. So that would be our plan right now—more to come on that as we get into next year.

That's great. And then just maybe touching on the MACI salesforce hiring—where are you now? You noted you're on track to be completed in Q4. Any changes to the amount that you noted last quarter that you would hire into the year?

Yeah, no. We said we were going to be adding 25 new territories and 3 new regions, and that is essentially virtually complete—just a few left to go on that. So we are extremely pleased with the quality and calibre of the talent we've brought in.

If you're in the sports medicine business, this is a great place to be with MACI. So, zero issues in attracting top talent, and we couldn't be more excited to have this expanded team—again, to support our Q4 volumes, but also as we move into next year.

And so, really excited about that. And that, quite frankly, is just one piece—as I mentioned—of the overall investments and enthusiasm around MACI. So, expanding the salesforce—we're really proud to have built this franchise from a $30 million product 10 years ago to close to a quarter-billion dollars now.

And we're really focused on the people, the resources, the processes that we have to have in place to take it from a $250 million to a half-billion-dollar product over the next several years. And that's what we're focused on.

The salesforce expansion is one piece of it. As I alluded to in my prepared remarks, we're also focused on additional marketing, sales ops, and other kinds of investments in mediacies affairs and engagement with our key customers to make sure that we drive and achieve what's clearly right in front of us as we move forward over the next several years.

Great, thank you so much.

Okay, thank you.

Mike Kratke , Leering Partners.

Hi everyone. Thanks for taking my question, and congrats on a nice quarter. You've continued to show great progress on some of the leading indicators like biopsies and surgeons taking biopsies. Can you just clarify how much of your Q3 growth for MACI is being driven by implant volume versus pricing? Have you seen some of these really positive leading indicators start to materialize in your MACI volume growth? And how has that tracked relative to your expectations? Thanks.

Yeah, so good morning, Mike. Thanks for the question. So yes, I’d say the acceleration that we’re seeing in Q3 in terms of performance—that’s really volume-driven. As we talked about, early in the year we obviously had some strong biopsy growth. The implant growth was not tracking at the same level, and so what we really saw in the third quarter—which is what we anticipated—was the volume from an implant perspective really kicked up.

And then again, as you think going forward, obviously the most important indicator as we look ahead—or one of the most important, of course—is that biopsy growth. And that’s really something that has continued to be strong. Nick referenced October was really strong as well—I think our highest month ever—so, you know, it’s really been driven by that piece, both in Q3 and then again, as you think about those volumes as we start Q4, that’s what’s going to drive us going forward.

Understood. Thanks very much.

Mason Carrico, Stevens.

Hey guys, good morning. This is Ben on for Information.

In terms of the MACI Arthro-trained surgeons, you called out that one-third split between surgeon types. Could you compare and contrast Arthro biopsy growth and maybe Arthro procedures across these different groups?

Yeah, so just to be clear, we talked about the fact that we had former MACI users—about half of whom were condyle-only surgeons or users—and then we had the other half of those prior users that did both femoral condyle and patella cases. And then we have new users. So it kind of splits between those three: one-third, one-third, one-third.

And to be honest, we've seen biopsy growth across the board, and I don't think there's any notable group that’s significantly outperforming the others. Obviously, if they were smaller users and they ramp up even a handful, it's a high biopsy growth rate—or if you're a new one, it's a really high biopsy growth rate. So I think the rates across those segments are relatively similar.

And, as Joe alluded to, it's pretty exciting for us to say that between the new users—a third of the surgeons being trained—and then another third coming from patella-only, that’s two-thirds of these trained surgeons who probably didn’t think about using MACI, or certainly didn’t in smaller condyle defects. And so, that’s again exactly what we would have wanted to see this early in the launch.

Great, thanks for that. Then you’ve historically called out mid to high single-digit pricing for MACI. Could you speak to the durability of that pricing moving forward, or just the durability of that in light of the current reimbursement environment?

Thank you.

Yeah, so again, just so everybody understands, MACI is reimbursed under a medical benefit, so it requires prior approval by each plan before a case can move forward.

So obviously the pricing is known—when plans include MACI in their medical benefits, they know the appropriate patients are going to be treated because they have to approve them in advance. And that’s what leads to these high, mid-90% prior approval rates that we’ve achieved consistently for the last decade since we launched MACI.

Some of the other things—we don’t have a big Medicare business at all, and so a lot of the macro stuff that’s circulating out there doesn’t really apply to MACI.

In terms of the mid to high single-digit price increases that we’ve routinely taken—we do a lot of pricing research with plans and hospital administrators. And again, this is viewed as a very high-tech product, more like a biologic in the pharma space, where mid to high single-digit increases are pretty routine. So, we’re pretty comfortable in our pricing practices and our approach.

Great. Thanks for taking the questions.

Okay, thank you.

Jeffrey Cohen , Ladenburg & Co.

Oh, hey Nick and Joe, thanks for taking our questions. Congrats on the quarter. Two specifically—firstly, Joe, perhaps you could talk about R&D a bit and your anticipation for the full year, and general commentary there?

Yeah, I mean, so we haven’t, from a spend perspective broadly—I mean, we don’t typically get into the pieces—but I would say, I think we called out, as you're thinking about Q4, we called out about $50 million of total OpEx, which I think kind of gets us back to a similar point on a full-year basis that we’ve been talking about all year.

And I think as you think about R&D going forward, it really kind of touches all the buckets. Again, I referenced it earlier, but there are two key incremental investments on the operating spend side: the salesforce expansion—which we’ve talked about—and we have some related investments around that, which I think will be important and incremental next year.

And then, you know, the ankle trial—next year will really become much more operational, where you're going to see more sites and potentially patients ramping up. So I would expect that to increase, particularly next year. But we’ll get to where next year’s spend is as we get into next year—probably at a somewhat similar rate in terms of growth to this year, perhaps a bit higher just with some of those investments.

But again, on Q4, we did specifically call out $50 million, just to be clear on what was expected there.

Okay, got it. And then secondly, I know you brought up post-surgical pain. Could you talk about that in a little more detail—as far as anything that has been noted or you’ve noted in terms of medical treatment, as well as weight-bearing timelines and some of the medications that you’ve understood so far?

Yeah, so this started way back—even in the first quarter— when we were talking about the fact that surgeons who had done the initial MACI Arthro cases were posting on social media about these immediate positive benefits in terms of post-surgical pain, range of motion, or getting back to full weight-bearing. Those are kind of the key early indicators.

And, as expected—both by us and by surgeons through our market research—when you have a less invasive surgery, you have less arthrofibrosis, so the knee is not as swollen, you get better range of motion, etc. And so it just promotes a potentially faster healing process.

We’ve been really focused—we were fortunate to be able to get MACI Arthro instruments on the market quickly through the human factors study pathway, which didn’t involve a clinical study. So obviously, we didn’t have the clinical data supporting a faster post-surgical recovery.

But that’s what we’ve been focused on. And I alluded to in my comments that through case series and through the MACI Clinical Outcomes Registry, we’ve been gathering that data. We would expect in early 2026 that data will be presented at industry conferences and, ultimately, hopefully make its way into publications.

We think, in the progression of MACI Arthro, when you go from high awareness and training—which we’ve clearly checked that box—to surgical technique demonstrations (which you saw, for instance, at the International Cartilage Repair Society meeting recently held in Boston), that was a very effective presentation.

And then you move into these clinical benefits for patients—that’s the progression you would expect to see for MACI Arthro. And so that’s kind of exactly what we’re seeing, and why we made those comments in our prepared remarks.

Perfect, thanks for taking our questions.

Okay, thanks, Jeff.

Hey, good morning. Nick and Joe, can you hear me, okay?

Yes, good morning.

Hey, this is the author on for Rca. So I just had two quick questions on the MACI side.

Maybe for the MACI Arthro—could you give us more colour regarding the timing from when the surgeon finishes the training to when they are taking their first biopsy? How does that compare to the initial MACI launch? And on the conversion side—you mentioned there's a high conversion rate in terms of Arthro—but how about the average time to conversion? How does that compare to open surgery?

Yeah, so just starting with the training— it's very much like core MACI when we launched, where training is never really a barrier. You can train online; you can do cadaver labs—we have MACI Arthro synthetic knees they can practice on. And obviously, in the first cases that were done, biopsies were already taken, and then they trained and did the MACI Arthro procedure.

So there's really no gating item around training. Often, if there's a surgery that a surgeon intends to do arthroscopically, they'll just get trained ahead of the procedure. So there's really not a strict connection between whether you take a biopsy first or get trained first—any of those scenarios are possible.

For MACI Arthro training, we make a lot of different methodologies available to surgeons, and they just kind of do what they feel most comfortable with.

In terms of the conversion rate—I think we mentioned on our last call that we haven’t seen any notable differences in the MACI Arthro conversion timelines versus regular MACI. So, kind of early days on that, but it’s looking pretty similar at this point.

Oh, thanks, Nick. And last one—could you discuss the timing and scale of the MACI Ankle phase? How should we think about the data readout there?

Well, just in terms of the timing— we’ve said we’re set to initiate the study in the fourth quarter of this year. We’ve built a timeline very much like the pivotal study—the SUMMIT pivotal study—for the indication in the knee, which was two years to enrol, two-year follow-up, and then, call it, 18 months plus on the regulatory pathway.

So, we’ve always said this is kind of a 2030-plus opportunity. That’s a very important part of our long-term strategy for MACI—with the core business obviously having a ton of momentum, MACI Arthro, then MACI OUS expansion opportunities, and then MACI Ankle following that. So just kind of this long runway of growth opportunities for MACI, particularly with no like-for-like competition on the horizon.

Thanks, Nick, and thanks for taking my question. Congrats on the call

Well, I believe that concludes all of the questions. So I just want to thank everyone for joining us this morning. Obviously, we had an outstanding third quarter and are very well positioned for a strong close to the year and to continue to deliver a unique combination of sustained high revenue growth and profitability in 2026 and the years ahead.

We look forward to providing further updates on our progress on our next call. Thanks again and have a great day.

This concludes today's call.

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