Bioventus Inc. (BVS)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of Bioventus Inc.’s (sometimes referred to as “we,” “us,” “our,” “Bioventus” or “the Company”) financial condition and results of operations should be read in conjunction with the “Special Note Regarding Forward-Looking Statements” and our unaudited consolidated condensed financial statements and related notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission (“SEC”) on March 5, 2026 (“2025 10-K”).

Executive Summary

We are a global medical device company focused on helping patients recover and live life to the fullest by relieving pain and addressing musculoskeletal challenges through a diverse portfolio of high-quality, innovative, and clinically proven solutions. We operate our business through two reporting segments, U.S. and International, and our portfolio of products is comprised of five patient-focused areas, grouped into three businesses based on clinical use: (i) Pain Treatments, (ii) Surgical Solutions, and (iii) Restorative Therapies.

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•Pain Treatments, consisting of:

◦Knee Osteoarthritis (“KOA”): Our product portfolio includes a range of intra-articular, hyaluronic acid (“HA”) injections that help relieve patient discomfort and improve quality of life. In the U.S., we also distribute the XCELL Platelet-Rich Plasma (“PRP”) system, a technology that is synergistic with our existing physician call points, as many surgeons who use HA also use PRP.

◦Peripheral Nerve Stimulation (“PNS”): We are focused on developing and commercializing a full portfolio of peripheral nerve stimulation products with solutions for acute, temporary and chronic pain.

•Surgical Solutions, consisting of:

◦Ultrasonics: Our Ultrasonics business offers precision bone resection for patients with degenerative spine conditions and spinal deformities. This portfolio also enables precision bone cutting in ultrasonic neuro and general surgery to address brain tumors and pathologies of the liver and other organs.

◦Bone Graft Substitutes (“BGS”): Our BGS product portfolio includes a range of products that facilitate optimal bone fusion following a surgical procedure.

•Restorative Therapies, consisting of:

◦Fracture Care: We provide low-intensity pulse ultrasound to help patients who suffer from bone fractures that do not heal through traditional methods. We plan to expand our U.S. clinical fracture care indications to address the healing of additional fresh fractures, especially for high-risk patients.

The following table sets forth total net sales, net income and Adjusted EBITDA for the periods presented:

(a)See below under Results of Operations-Adjusted EBITDA for a reconciliation of net income to Adjusted EBITDA.

Review of Potential Strategic Alternatives

Following receipt of a recent unsolicited acquisition proposal from a party interested in acquiring the Company and multiple other expressions of interest, the Company’s Board of Directors has established a committee of independent directors, which, with the assistance of independent advisors, is evaluating a range of strategic options, including but not limited to a sale of the Company or continued execution of the Company’s standalone plan, aimed at maximizing value for shareholders.

The Company has not set a timetable for completion of the strategic alternatives review process and there can be no assurance that the Company’s review will result in any transaction or other strategic outcome. Bioventus does not intend to disclose further developments unless and until the Board or committee has approved a specific transaction or strategic action or otherwise determines that such disclosure is appropriate or required by law.

Other Significant Developments

During the first and second quarters of 2026, the Company made discretionary prepayments of $22.0 million and $20.0 million, respectively, on the 2025 Term Loan, reducing its outstanding long-term debt. These prepayments were funded by strong operating cash flows and resulted in lower interest expense and borrowing costs, while also improving the Company's leverage and other financial metrics.

Results of Operations

For a description of the components of our results of operations, refer to Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2025 10-K.

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The following table sets forth components of our consolidated condensed statements of operations as a percentage of net sales for the periods presented:

The following table presents a reconciliation of net income to Adjusted EBITDA for the periods presented:

(a)Includes for the three and six months ended June 27, 2026 and June 28, 2025, respectively, depreciation and amortization of $9.9 million, $10.6 million, $20.0 million, $20.9 million in cost of sales and $1.1 million, $1.4 million, $2.2 million, $3.0 million in operating expenses presented in the consolidated condensed statements of operations and comprehensive income.

(b)Restructuring costs primarily resulted from severance associated with the elimination of certain positions and the consolidation of certain administrative functions and roles, as well as reversals resulting from severance contract cancellations.

(c)Includes compensation expense resulting from awards granted under our equity-based compensation plans.

(d)Consisted of third-party fees associated with our 2025 Credit Agreement.

(e)Costs incurred as a result of certain shareholder litigation unrelated to our ongoing operations.

(f)Represents the loss on the disposal of the Advanced Rehabilitation Business.

(g)Other items during the three and six months ended June 27, 2026 primarily consisted of strategic transaction costs.

Other items during the three months ended June 28, 2025 consisted of individually immaterial items that are not indicative of the Company’s ongoing operating performance. Other items during the six months ended June 28, 2025 primarily consisted of $0.5 million of expenses related to the divestiture of the Advanced Rehabilitation Business, which was completed on December 31, 2024.

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Non-GAAP Financial Measures - Adjusted EBITDA

We present Adjusted EBITDA, a non-GAAP financial measure, because we believe it is a useful indicator for management to measure operating performance and for planning purposes, including the preparation of our annual operating budget and financial projections. We believe that Adjusted EBITDA is useful to our investors because it is frequently used by securities analysts, investors and other interested parties in their evaluation of the operating performance of companies in industries similar to ours. We define Adjusted EBITDA as net income before depreciation and amortization, provision of income taxes and interest expense, net, adjusted for the impact of certain cash, non-cash and other items that we do not consider in our evaluation of ongoing operating performance. These items include strategic transaction costs, such as acquisition and divestiture related costs, certain shareholder litigation costs, impairment of assets, restructuring costs, equity-based compensation expense, debt refinancing, loss on extinguishment of debt, and other items. Adjusted EBITDA by segment consists of net sales and costs directly attributable to a segment, as well as an allocation of corporate overhead costs primarily based on a ratio of net sales by segment to total consolidated net sales.

Non-GAAP financial measures have limitations as an analytical tool and should not be considered in isolation or as a substitute for, or as superior to, the financial information prepared and presented in accordance with U.S. GAAP. These measures might exclude certain normal recurring expenses. Therefore, these measures might not provide a complete understanding of the Company's performance and should be reviewed in conjunction with U.S. GAAP financial measures. Additionally, other companies might define their non-GAAP financial measures differently than we do. Investors are encouraged to review the reconciliation of the non-GAAP measure provided in this Quarterly Report on Form 10-Q, including all tables referencing Adjusted EBITDA to its most directly comparable U.S. GAAP measure.

Net Sales

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Item 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with Part I, Item 1A. Risk Factors and our consolidated financial statements and the related notes to those statements included elsewhere in this Annual Report on Form 10-K (“Annual Report”). In addition to historical consolidated financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Some of the numbers included herein have been rounded for the convenience of presentation. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under Part 1, Item 1A. Risk Factors and elsewhere in this Annual Report. A discussion of the year ended December 31, 2024 compared to the year ended December 31, 2023 has been reported previously in our Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on March 11, 2025, under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations."

Executive Summary

We are a global medical device company focused on helping patients recover and live life to the fullest by relieving pain and addressing musculoskeletal challenges through a diverse portfolio of high-quality, innovative, and clinically proven solutions. We operate our business through two reporting segments, U.S. and International, and our portfolio of products is comprised of five patient-focused areas, grouped into three businesses based on clinical use: (i) Pain Treatments & PRP (“Pain Treatments”), (ii) Surgical Solutions and (iii) Restorative Therapies.

•Pain Treatments, consisting of:

◦Knee Osteoarthritis (“KOA”): Our product portfolio includes a range of intra-articular, hyaluronic acid (“HA”) injections that help relieve patient discomfort and improve quality of life. In the U.S., we also distribute the XCELL Platelet-Rich Plasma (“PRP”) system, a technology that is synergistic with our existing physician call points, as many surgeons who use HA also use PRP.

◦Peripheral Nerve Stimulation (“PNS”): We are focused on developing a full portfolio of peripheral nerve stimulation products with solutions for acute, temporary and chronic pain.

•Surgical Solutions, consisting of:

◦Ultrasonics: Our Ultrasonics business offers precision bone resection for patients with degenerative spine conditions and spinal deformities. This portfolio also enables precision ultrasonic neuro and general surgery to address brain tumors and pathologies of the liver and other organs.

◦Bone Graft Substitutes (“BGS”): Our BGS product portfolio includes a range of products that facilitate optimal bone fusion following a surgical procedure.

•Restorative Therapies, consisting of:

◦Fracture Care: We provide low-intensity pulse ultrasound to help patients who suffer from bone fractures that do not heal through traditional methods. We plan to expand our U.S. clinical fracture care indications to address the healing of fresh fractures, especially for high-risk patients.

The following table sets forth total net sales, net income (loss) and Adjusted EBITDA for the periods presented:

(a)See below under Results of Operations-Adjusted EBITDA for a reconciliation of net income (loss) to Adjusted EBITDA.

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Significant Developments

2025 Credit Agreement

On July 31, 2025, we entered into a Credit Agreement (the “2025 Credit Agreement”) that provides for a $300.0 million term loan facility (the “2025 Term Loan”) and a $100.0 million revolving credit facility (the “2025 Revolver”). Proceeds from the 2025 Term Loan, borrowings of $30.0 million under the 2025 Revolver, and $2.6 million of available cash were used to fully repay the outstanding balance under the 2019 Credit and Guaranty Agreement, as amended, which totaled $332.6 million at the time of repayment. We recorded a $0.3 million loss on extinguishment and incurred $0.8 million in third-party costs as a result of these refinancing transactions.

The 2025 Credit Agreement is expected to provide $2.0 million of annual interest expense savings, increased liquidity and extended debt maturity to July 2030. On August 1, 2025, we entered into two interest rate swaps totaling $150.0 million to hedge the interest rate risk associated with our floating-rate SOFR-based borrowings under the 2025 Credit Agreement.

XCELL PRP System

In August 2025, we fully launched the XCELL PRP System in the Orthopedic and Sports Medicine specialties across the U.S. market. The XCELL PRP System is designed to deliver customization, precision and efficiency with high platelet count in a single 10-minute process, allowing providers to select between leukocyte-rich and leukocyte-poor options with flexible dosing to meet individual patient and procedural needs.

Peripheral Nerve Stimulation

In July 2025, we received FDA 510(k) clearances for both TalisMann and StimTrial, expanding our innovative growth portfolio of PNS solutions for chronic pain management. These clearances mark an important step forward and represent a substantial growth opportunity as we look to expand in the PNS market. With TalisMann and StimTrial now FDA-cleared, we offer a comprehensive PNS portfolio that empowers physicians to potentially treat a broader spectrum of patients—from initial assessment to long-term therapy—with greater confidence and flexibility. This development also reinforces our commitment to delivering non-opioid, minimally invasive therapies designed to address real-world clinical needs.

TalisMann combines our patented electric field conduction technology with an integrated pulse generator to potentially reach deeper, larger nerves. This combination is designed to provide long-term relief from chronic nerve pain for patients, potentially increasing the number of patients who respond to neuromodulation therapy. From a physician's perspective, the increase in power allows for easier lead placement and potentially broadens addressable nerves. StimTrial provides physicians the ability to evaluate patient response to PNS therapy, which we expect will facilitate physician adoption and payer reimbursement where trial assessments are required. We began a limited commercial release of both TalisMann and StimTrial in select U.S. markets during the third quarter of 2025. The broader market launch of these products commenced in early 2026.

Advanced Rehabilitation Business

On December 31, 2024, we completed the sale of certain products within our Advanced Rehabilitation Business, including the L100, L300 Go, L360, H200, Vector Gait & Safety System and Bioness Integrated Therapy System (collectively, the “Advanced Rehabilitation Business”). This divestiture reflects our strategic decision to focus on core business areas and streamline operations. The Advanced Rehabilitation Business was considered non-core and required additional research and development investment to achieve its next stage of growth. We received $24.7 million of cash proceeds at closing, net of transactional fees, which were subject to a post-closing adjustment for net working capital. We paid $0.7 million in the second quarter of 2025 to settle the adjustment for net working capital. The net proceeds were used to pay $20.0 million in long-term debt obligations on December 31, 2024. We may also receive an aggregate of $20.0 million in potential earn-out payments based on the achievement of certain revenue and financial performance thresholds related to the Advanced Rehabilitation Business during the fiscal years ending December 31, 2025 and 2026. The revenue and specified financial performance criteria for the fiscal year ended December 31, 2025 were not achieved.

Components of our results of operations

Net Sales

We generate net sales from a portfolio of active healing products that serve physicians spanning the orthopedic continuum, including sports medicine, total joint reconstruction, hand and upper extremities, foot and ankle, podiatric surgery, trauma, spine and neurosurgery. We report sales net of contractual allowances, rebates and returns.

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We sell our products primarily through our direct sales team, which manages and maintains the sales relationship with healthcare providers, distribution centers or specialty pharmacies. Certain Surgical Solutions products are sold through independent distributors to hospitals so our neurosurgeon and orthopedic spine surgeon customers can use them in procedures. In certain international markets, we also sell to independent distributors on prearranged business terms, who manage or maintain the sales relationship with their physician customers. Refer to Item 8. Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note 2. Significant Accounting Policies for further information.

We generally recognize revenue at the point in time when control is transferred to the customer, for example, when the product is shipped to the customer, when the patient has accepted the product or upon consumption in a surgical procedure.

Cost of Sales

Our cost of sales primarily consists of costs of products purchased from our third-party suppliers, direct labor and allocated overhead associated with manufacturing and assembly, excess and obsolete inventory charges, shipping, inspection and related costs incurred in making our products available for sale or use. In addition, cost of sales includes depreciation related to production as well as amortization of product-related intellectual property and distribution rights associated with marketed products. Certain products are manufactured by or obtained from third-party suppliers primarily located in Japan, Switzerland, Sweden and the United States.

Gross Profit and Gross Margin

Gross profit consists of net sales less cost of sales. We calculate gross margin as gross profit divided by net sales. Our gross margin has been and will continue to be affected by a variety of factors, including costs of products purchased from our third-party suppliers, manufacturing costs, product mix and implementation over time of cost-reduction strategies. We expect net sales and product mix to vary quarter by quarter and therefore our gross profit will likely fluctuate from quarter to quarter.

Selling, General and Administrative Expense

Selling, general and administrative expense primarily consists of salaries, benefits and other related costs, including equity-based compensation, for personnel employed in sales, marketing, finance, legal, compliance, administrative, information technology, medical education and training, quality and human resource departments. Selling, general and administrative expense also includes third-party marketing, supply chain and distribution, product recall costs, information technology, legal, human resources, insurance and facilities expenses, selling, general and administrative expenses also include commissions, generally based on a percentage of sales, to our direct sales team and independent distributors. We expect our selling, general and administrative expenses will increase with the continued expansion of our sales organization and marketization of our current and pipeline products. We plan to hire more personnel to support the growth of our business. However, over time, as we grow our net sale

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