AxoGen (NASDAQ:AXGN) reported second-quarter 2026 revenue of $69.7 million, up 23.1% from a year earlier, as demand for its Avance nerve graft and broader product portfolio increased across its target markets. The company raised its full-year revenue outlook to at least $279 million, representing growth of at least 24%, while lowering its gross-margin expectation to at least 73% due to product-mix changes tied to faster-than-expected growth in breast reconstruction.
President and Chief Executive Officer Michael Dale said the company exceeded its goals for surgeon adoption, new surgeon additions, account expansion and patient awareness. Breast reconstruction contributed about two-thirds of the company’s quarterly growth, while extremities, oral and maxillofacial, head and neck, and other indications delivered combined 15% growth in the first half.
Breast Business Becomes Larger Growth Driver
AxoGen said it had about 215 active breast programs at the end of the quarter, more than 40 above the prior-year level, and approximately 560 active breast surgeons, an increase of more than 150 surgeons year over year.
“We believe we’re still early in this market’s development, even as it becomes a larger part of our overall mix,” Dale said. He said the company sees growing interest from surgeons seeking training and from patients asking about its ReSensation offering during reconstruction discussions.
The company’s commercial organization totaled 172 sales representatives, market development managers and regional directors at quarter-end. It added 15 positions year to date, including nine in extremities and six in breast. Dale said representatives who have been in their roles for fewer than nine months continued to contribute meaningfully to growth.
Margin Pressure From Longer Avance Grafts
Second-quarter gross profit was $50.7 million, producing a gross margin of 72.7%, compared with 74.2% in the prior-year quarter. Hartley said the decline reflected higher product costs, partially offset by lower write-offs.
Management attributed the shortfall versus internal expectations primarily to sales of higher-cost biologic Avance products beginning in April and unexpectedly strong demand for longer-length Avance grafts. Demand for the longer grafts, largely associated with breast growth, exceeded the company’s internal expectation by about 14% during the quarter.
Dale said the company’s production and gross-margin plans had anticipated breast growth but did not anticipate the magnitude of the relative shift in product mix. Longer grafts carry higher production costs, while pricing does not increase proportionally with length, he said.
AxoGen has adjusted production plans beginning in the third quarter and plans to pursue pricing actions and production-efficiency initiatives. However, Dale said these measures will not materially affect the product mix forecast for the rest of 2026. The company expects third-quarter gross margin to be higher than fourth-quarter margin and said it still views 75% as an appropriate longer-term gross-margin target.
Profitability and Updated Outlook
Operating expenses increased to $52.8 million from $40.3 million a year earlier, driven primarily by compensation costs and stock-based compensation. Sales and marketing expense rose to 44.2% of revenue from 42.0%, reflecting investments in commercial expansion. Research and development expense increased 25.3% to $8.6 million, while general and administrative expense rose 38.4% to $13.4 million.
The company reported a net loss of $1.5 million, or $0.03 per share, compared with net income of $0.6 million, or $0.01 per share, in the second quarter of 2025. Adjusted net income was $7.3 million, or $0.12 per share, compared with $5.7 million, or $0.12 per share, a year earlier. Adjusted EBITDA was $8.4 million, down from $9.3 million in the prior-year period.
- Revenue guidance: At least $279 million for 2026, representing growth of at least 24%.
- Gross-margin guidance: At least 73% for 2026.
- Cash position: $113.4 million in cash equivalents, restricted cash and investments as of June 30.
- Free cash flow: $4.1 million generated during the first half; management continues to expect positive free cash flow for the full year.
Hartley said the outlook does not assume a material benefit from payer coverage decisions beyond those already known. Commercial payer coverage for Avance currently represents about 86% of covered U.S. lives, management said. Aetna remains the largest commercial payer that has not yet issued coverage, although AxoGen said Aetna’s review remains ongoing.
Clinical Evidence and Strategic Investments
AxoGen highlighted several clinical and development initiatives. The company said the recently published REPOSE study provided prospective, randomized evidence evaluating AxoGuard Nerve Cap as an adjunct to standard neurectomy for symptomatic neuroma.
It also activated its first U.S. site for the Nerve-RESTORE trial, a randomized assessor-blinded study comparing Avance with sural nerve autograft in mixed and motor peripheral nerve reconstruction. Additional site activations are planned for the second half of 2026.
The company said its Embrace study, evaluating sensory restoration after nipple-sparing mastectomy and implant-based breast reconstruction, remains on track to begin later this year.
In addition, AxoGen acquired a minority ownership stake in Trace Biosciences, including a limited right of first refusal. Dale said Trace’s Nerve Trace imaging technology is intended to help surgeons visualize nerves in real time and could complement AxoGen’s nerve-repair products. He said the technology could support nerve care across the company’s procedural markets.
For its prostate program, AxoGen said it expects to provide more detail during its third-quarter call. Dale said the company has enrolled more than 100 patients across more than 10 sites in its surgical experience program involving radical prostatectomy procedures, with about half of patients having more than six months of follow-up. Management said it is evaluating safety, reproducibility, erectile-function outcomes and incontinence outcomes.
About AxoGen (NASDAQ:AXGN)
AxoGen, Inc is a Florida-based medical technology company that develops and commercializes surgical solutions for peripheral nerve damage. Founded in 2002 and headquartered in Alachua, Florida, the company focuses on restoring nerve function and improving patient outcomes through innovative biologic and engineered products. AxoGen’s offerings address a range of traumatic and iatrogenic injuries, offering alternatives to traditional nerve autografts.
The company’s core product portfolio includes the Avance® Nerve Graft, a decellularized human nerve allograft designed to bridge nerve gaps without the need for a secondary harvest site, and the Axoguard® Nerve Connector and Protector devices, which facilitate nerve coaptation and protect repaired sites from surrounding scar tissue.
