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| Significant Accounting Policies | Significant Accounting Policies Recently Issued Accounting Pronouncements Not Yet Adopted In addition to qualifying both as a smaller reporting company and emerging growth company, the Company is an accelerated filer under SEC rules and regulations for purposes of this Annual Report. In December 2025, The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2025-11 (“ASU 2025-11”), Interim Reporting (Topic 270). The amendments in this update result in a comprehensive list of interim disclosures that are required by U.S. GAAP. The objective of ASU 2025-11 is to provide clarity about the current requirements, rather than evaluate whether to expand or reduce interim disclosure requirements. The amendments in ASU 2025-11 also include a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. The intent of the disclosure principle, which is modeled after previous disclosure requirements, is to help entities determine whether disclosures not specified in Topic 270 should be disclosed in interim reporting periods. The amendments in ASU 2025-11 also clarify the applicability of Topic 270, the types of interim reporting, and the form and content of interim financial statements in accordance with U.S. GAAP. The FASB expects that these clarifications will enhance consistency in interim reporting for all entities. ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted and the amendments in 2025-11 can be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating ASU 2025-11 to determine its impact on the Company’s consolidated financial statements and disclosures, as well as the method and timing of adoption. In November 2025, the FASB issued Accounting Standards Update 2025-09 (“ASU 2025-09”), Derivatives and Hedging (Topic 815). The objective of ASU 2025-09 is to more closely align hedge accounting with the economics of an entity’s risk management activities. The amendments included in ASU 2025-09 intend to better reflect strategies in financial reporting by enabling entities to achieve and maintain hedge accounting for highly effective economic hedges of forecasted transactions by: (1) expanding the hedged risks permitted to be aggregated in a group of individual forecasted transaction, thereby enabling entities to apply hedge accounting to potentially broader portfolios of forecasted transactions; (2) establishing an operable model to facilitate the application of cash flow hedge accounting to forecasted interest payments on variable-rate debt instruments with contractual terms that permit the borrower to change the interest rate index and interest rate frequency upon which interest is accrued; (3) expanding hedge accounting for forecasted purchases and sales of nonfinancial assets; (4) updating the hedge accounting guidance to accommodate differences in the loan and swap markets that developed after the cessation of the London Interbank Offered Rate; and (5) eliminating the recognition and presentation mismatch related to a dual hedge strategy. ASU 2025-09 will be effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. Early adoption is permitted on any date on or after the issuance of ASU 2025-09. The amendments under ASU 2025-09 must be adopted on a prospective basis for all hedging relationships. An entity may elect to adopt ASU 2025-09 for hedging relationships that exist as of the date of adoption and are permitted to modify certain critical terms of certain existing hedging relationships without dedesignating the hedge. The Company is currently evaluating ASU 2025-09 to determine its impact on the Company’s consolidated financial statements and disclosures. In September 2025, the FASB issued Accounting Standards Update 2025-06 (“ASU 2025-06”), Intangibles—Goodwill and Other—Internal-Use Software. ASU 2025-06 eliminates prescriptive and sequential software development stages, thus requiring companies to capitalize software costs when both of the following occur: (1) management authorizes and commits to funding the software project; and (2) it is probable that the project will be completed and the software will be used to perform its intended function (referred to as the “probable-to-complete recognition method”). In evaluating the probable-to-complete recognition method, an entity must consider whether there is significant uncertainty associated with the development activities of the software (referred to as “significant development uncertainty”). The two factors to consider in determining whether there is significant development uncertainty are whether: (1) the software being developed has technological innovations or novel, unique, or unproven functions or features, and the uncertainty related to those technological innovations, functions, or features, if identified, has not been resolved through coding and testing; and (2) the company has determined what it needs the software to do (for example, functions or features), including whether the company has identified or continues to substantially revise the software’s significant performance requirements. ASU 2025-06 specifies that the disclosures in Subtopic 360-10, Property, Plant, and Equipment—Overall are required for all capitalized internal-use software costs, regardless of how the company presents those costs in the financial statements. Additionally, ASU 2025-06 clarifies that the intangibles disclosures are not required for capitalized internal-use software costs. Further, ASU 2025-06 supersedes the website development costs guidance and incorporates the recognition requirements for website-specific development costs from Subtopic 350-50 into Subtopic 350-40. ASU 2025-06 will be effective for all entities for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period. The amendments under ASU 2025-06 may be adopted prospectively, retrospectively, or with modified transition adoption for certain in-process projects. The Company is currently evaluating ASU 2025-06 to determine its impact on the Company’s consolidated financial statements and disclosures, as well as the method and timing of adoption. In November 2024, the FASB issued Accounting Standards Update 2024-03 (“ASU 2024-03”), Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures, which requires additional disclosures regarding income statement expense categories. The additional disclosures will further disaggregate relevant expense captions in tabular form within the notes to the consolidated financial statements because they include one or more expense categories such as: (1) purchases of inventory, (2) employee compensation, (3) depreciation, (4) intangible asset amortization and (5) depreciation, depletion and amortization recognized as part of oil- and gas-producing activities or other types of depletion expenses. ASU 2024-03 also requires: (i) disclosure of certain amounts that are already required to be disclosed under current requirements in the same disclosure as the other disaggregation requirements; (ii) a qualitative description of the amount remaining in relevant expense captions that are not separately disaggregated quantitatively; and (iii) disclosure of the total amount of selling expenses. In January 2025, the FASB issued Accounting Standards Update 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures: Clarifying the Effective Date, further defining that ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within the annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments in this update should be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this update, or (2) retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating ASU 2024-03 to determine its impact on the Company’s disclosures and method of adoption and plans to adopt ASU 2024-03 in the Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2027. The Company expects that further disaggregation of income statement captions will be necessary, which will be disclosed in the notes to the consolidated financial statements upon the adoption of ASU 2024-03. Accounting Pronouncements Recently Adopted The Company adopted FASB’s Accounting Standards Update 2023-09, Income Taxes, for the annual period ended December 31, 2025 on a retrospective basis. Refer to Note 11. Income Taxes for further details regarding impact of adoption. Variable Interest Entity The Company reviews each investment and collaboration agreement to determine if it has a variable interest in the entity. In assessing whether the Company has a variable interest in the entity as a whole, the Company considers and makes judgments regarding the purpose and design of the entity, the value of the licensed assets to the entity, the value of the entity’s total assets and the significant activities of the entity. If the Company has a variable interest in the entity as a whole, the Company assesses whether or not the Company is a primary beneficiary of that variable interest entity (“VIE”), based on a number of factors, including: (i) which party has the power to direct the activities that most significantly affect the VIE’s economic performance, (ii) the parties’ contractual rights and responsibilities pursuant to the collaboration agreement, and (iii) which party has the obligation to absorb losses of or the right to receive benefits from the VIE that could be significant to the VIE. If the Company determines that it is the primary beneficiary of a VIE at the onset of the collaboration, the collaboration is treated as a business combination and the Company consolidates the financial statement of the VIE into the Company’s consolidated financial statements. On a quarterly basis, the Company evaluates whether it continues to be the primary beneficiary of the consolidated VIE. If the Company determines that it is no longer the primary beneficiary of a consolidated VIE, it deconsolidates the VIE in the period the determination is made. Assets and liabilities recorded as a result of consolidating financial results of the VIE into the Company’s consolidated balance sheet do not represent additional assets that could be used to satisfy claims against the Company’s general assets or liabilities for which creditors have recourse to the Company’s general assets. Noncontrolling Interest The Company records noncontrolling interest on its consolidated balance sheet related to the economic interest in BV LLC held by the only continuing BV LLC owner as well as consolidated VIEs. The Company records loss attributable to noncontrolling interest on its consolidated statements of operations, which reflects the net loss for the reporting period, adjusted for changes in the noncontrolling interest holders claim to net assets, including contingent milestone and royalty payments, which are evaluated each reporting period. Deconsolidation and Discontinued Operations Upon the occurrence of certain events and on a regular basis, the Company evaluates whether it no longer has a controlling interest in its subsidiaries, including consolidated VIEs. If the Company determines it no longer has a controlling interest, the subsidiary is deconsolidated. The Company records a gain or loss on deconsolidation based on the difference on the deconsolidation date between (i) the aggregate of (a) the fair value of any consideration received, (b) the fair value of any retained noncontrolling investment in the former subsidiary and (c) the carrying amount of any noncontrolling interest in the subsidiary being deconsolidated, less (ii) the carrying amount of the former subsidiary’s assets and liabilities. The Company assesses whether a deconsolidation is required to be presented as discontinued operations in its consolidated financial statements on the deconsolidation date. This assessment is based on if the deconsolidation represents a strategic shift that has or will have a major effect on the Company’s operations or financial results. If the Company determines that a deconsolidation requires presentation as a discontinued operation on the deconsolidation date, it will present the former subsidiary as a discontinued operation for all periods presented. Effect of Foreign Currency The assets and liabilities of foreign subsidiaries whose functional currency is the local currency are translated into U.S. Dollars at exchange rates in effect at the end of the reporting period. Equity accounts are translated at historical exchange rates. Revenues and expenses are translated at the exchange rate on the transaction date. Translation adjustments resulting from this process are included in accumulated other comprehensive income (loss) as a separate component of stockholders’ equity. Foreign currency transaction gains and losses are included in other expense (income) in the consolidated statements of operations and other comprehensive income (loss). The Company recorded foreign currency transaction losses of $1,976 for the year ended December 31, 2025 and gains of $1,306 and $351 for the years ended December 31, 2024 and 2023, respectively. Comprehensive Income (Loss) Comprehensive income (loss) consists of two components: net income (loss) and other comprehensive income (loss), which refers to gains and losses that are recorded under U.S. GAAP as an element of stockholders’ equity and is excluded from net income (loss). The Company’s other comprehensive income (loss) consists of a defined benefit plan adjustment, changes in fair value of interest rate swaps, and foreign currency translation adjustments from those subsidiaries not using the U.S. Dollar as their functional currency. Cash and Cash Equivalents Cash equivalents consist of highly liquid investments with an original maturity of three months or less at date of purchase. The Company’s cash is primarily held in financial institutions in the United States and the Netherlands. The Company maintains cash balances in the United States in excess of the federally insured limits. Fair Value The Company records certain assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for that asset or liability in an orderly transaction between market participants at the measurement date. The Company applies a three-level fair value hierarchy that prioritizes the input used in measuring fair value. This hierarchy requires the use of observable inputs whenever available and minimizes the use of unobservable inputs. Assets and liabilities are categorized within the hierarchy based on the lowest level input that is significant to the fair value measurement: •Level 1—Quoted prices in active markets for identical assets or liabilities; •Level 2—Observable inputs other than quoted prices included within 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; and •Level 3—Unobservable inputs that are supported by little or no market data. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. Refer to Note 6. Fair Value Measurements for further details regarding the Company’s assets and liabilities measured at fair value. Revenue Recognition Sale of Products The Company derives revenue primarily from product sales in its (i) Pain Treatments portfolio, which includes osteoarthritic (“OA”) pain treatments, which are hyaluronic acid (“HA”), viscosupplementation therapies and peripheral nerve stimulation products, (ii) Surgical Solutions portfolio, which includes bone graft substitutes, tissue resection, ultrasonic bone cutting and sculpting systems and other surgical products, and (iii) Restorative Therapies portfolio, which includes minimally invasive fracture treatments. The Company sells directly to healthcare institutions, patients, distributors and dealers. The Company also enters into arrangements with pharmacy and health benefit managers that provide for privately negotiated rebates, chargebacks and discounts with respect to the purchase of the Company’s products. The Company recognizes revenue generally at a point in time upon transfer of control of the promised product to customers in an amount that reflects the consideration it expects to receive in exchange for those products. The Company excludes taxes collected from customers and remitted to government authorities from revenues. Revenues are recorded at the transaction price, which is determined as the contracted price net of estimates of variable consideration resulting from discounts, rebates, returns, chargebacks, contractual allowances, estimated third-party payer settlements, and certain distribution and administration fees offered in customer contracts and other indirect customer contracts relating to the sale of products. The Company establishes reserves for the estimated variable consideration based on the amounts earned or eligible to be claimed on the related sales. Where appropriate, these estimates take into consideration a range of possible outcomes, which are probability-weighted for relevant factors such as the Company’s historical experience, current contractual requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. The amount of variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. The Company regularly updates its reserves as new information becomes available, including newly received payer or customer invoices, by incorporating this information into its reserves at the end of each reporting period, as needed. At the end of the third quarter of 2025, a large private insurance payer informed the Company that it had made changes to its claims data management and billing systems and that, as a result, the Company could experience significantly larger rebate volumes for its HA viscosupplement products than the Company had previously experienced. Using the expected value method, the Company estimated the variable consideration related to this contract based on the range of possible outcomes and the probabilities of each outcome. Rebates accrued under this contract, including the estimated impact of the billing system changes, totaled $16,401 at December 31, 2025 compared to $14,449 at December 31, 2024. Pain Treatments Revenue from customers, such as healthcare providers, distribution centers or specialty pharmacies, is recognized at the point in time when control is transferred to the customer, typically upon shipment. Distributor Chargebacks The Company has preexisting contracts with established rates with many of the distributors’ customers that require the distributors to sell products at their established rate. The Company offers chargebacks to distributors who supply these customers with products. The Company reduces revenue at the time of sale for the estimated future chargebacks. The Company records chargeback reserves as a reduction of accounts receivable and bases the reserves on the expected value by using probability-weighted estimates of volume of purchases, inventory holdings and historical chargebacks requested for each distributor. Discounts and Gross-To-Net Deductions The Company offers retrospective discounts and gross-to-net deductions linked to the volume of purchases which may increase at negotiated thresholds within a contract-buying period. The Company reduces revenue and records the reserve as a reduction to accounts receivable for the estimated discount and rebate at the expected amount the customer will earn, based on historical buying trends and forecasted purchases. Surgical Solutions Most of the Company’s product sales related to bone graft substitutes are through consignment inventory with hospitals, where ownership remains with the Company until the hospital or ambulatory surgical center (“ASC”) performs a surgery and consumes the consigned inventory. The Company recognizes revenue when the surgery has been performed. Control of the product is not transferred until the customer consumes it, as the Company is able to request the return or transfer of the product to a third-party prior to the product’s use. An unconditional obligation to pay for the product does not exist until the customer uses it. The Company consistently recognizes revenue from sales of its ultrasonic products in accordance with shipping terms. Control is transferred to the customer when the product is shipped or received, and revenue is recognized accordingly. Restorative Therapies The Company recognizes revenue from third-party payers, such as governmental agencies, insurance companies or managed care providers, when the Company transfers control to the patient, typically when the patient has accepted the product or upon delivery. The Company records this revenue at the contracted rate, net of contractual allowances and estimated third-party payer settlements at the time of sale, or an estimated price based on historical data and other available information for non-contracted payers. The Company estimates the contractual allowances using the portfolio approach and based on probability weighting historical data and collections history within those portfolios. The portfolios determined using the portfolio approach consist of the following customer groups: government payers, commercial payers, and patients. Settlements with third-party payers for retroactive revenue adjustments due to audits, reviews or investigations are considered variable consideration and are included in the determination of the estimated transaction price using the expected amount method. These settlements are estimated based on the terms of the payment agreement with the payer, correspondence from the payer and historical settlement activity, including an assessment to ensure that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the retroactive adjustment is subsequently resolved. Estimated settlements are adjusted in future periods as adjustments become known (that is, new information becomes available), or as years are settled or are no longer subject to such audits, reviews and investigations. The Company is not aware of any claims, disputes or unsettled matters with any payer that would materially affect revenues for which the Company has not adequately provided for or disclosed in the accompanying consolidated financial statements. Refer to Note 12. Commitments and Contingencies for further information. The Company recognizes revenue from patients (self-pay and insured patients with coinsurance and deductible responsibilities) based on billed amounts giving effect to any discounts and implicit price concessions. Implicit price concessions represent differences between amounts billed and the amounts the Company expects to collect from patients, which considers historical collection experience and current market conditions. The Company recognizes revenue from other restorative therapies products generally at the point in time when control is transferred to the customer, either upon shipment or delivery, depending on the product. Product Returns The Company estimates the amount of returns and reduces revenue in the period the related product revenue is recognized. The Company records a liability for expected returns based on probability-weighted historical data. Accounts Receivable, Net Accounts receivable, net are amounts billed and currently due from customers. The Company records the amounts due net of allowance for credit losses. The Company maintains an estimated allowance for credit losses to provide for receivables the Company does not expect to collect. The Company bases the allowance on an assessment of customer creditworthiness, historical payment experience, the age of outstanding receivables and other information as applicable. Collection of the consideration that the Company expects to receive typically occurs within 30 to 90 days of billing. The Company applies the practical expedient for contracts with payment terms of one year or less which does not consider the effects of the time value of money. Occasionally, the Company enters into payment agreements with patients that allow payment terms beyond one year. In those cases, the financing component is not deemed significant to the contract. Contract Assets Contract assets consist of unbilled amounts resulting from estimated future royalties from an international distributor that exceeds the amount billed. Contract assets totaling $177 and $76 as of December 31, 2025 and 2024, respectively, are included in prepaid and other current assets on the consolidated balance sheets. Contract Liabilities Contract liabilities consist of customer advance payments or deposits and deferred revenue. Occasionally for certain international customers, the Company requires payments in advance of shipping product and recognizing revenue resulting in contract liabilities. Contract liabilities were $955 and $1,679 as of December 31, 2025 and 2024, respectively, and are included in accrued liabilities on the consolidated balance sheets. Shipping and Handling The Company classifies amounts billed for shipping and handling as a component of net sales. The related shipping and handling fees and costs as well as other distribution costs are included in cost of sales. The Company has elected to recognize shipping and handling activities that occur after control of the related product transfers to the customer as fulfillment costs and are included in cost of sales. Contract Costs The Company applies the practical expedient of recognizing the incremental costs of obtaining contracts as an expense when incurred as the amortization period of the assets that the Company otherwise would have recognized is one year or less. These incremental costs include the Company’s sales incentive programs for the internal sales force and third-party sales agents as the compensation is commensurate with annual sales activities. These costs are included in selling, general and administrative expense on the consolidated statements of operations and comprehensive income (loss). Inventory The Company values its inventory at the lower of cost or net realizable value and adjusts for the value of inventory that is estimated to be excess, obsolete or otherwise unmarketable. Cost is determined using the first-in, first-out method. Elements of cost in inventory include raw materials, direct labor, manufacturing overhead and inbound freight. The Company records allowances for excess and obsolete inventory based on historical and estimated future demand and market conditions. Inventory items used for demonstration purposes, rentals and consigned generators are classified as property and equipment. Business Combinations Accounting for acquisitions requires the Company to recognize separately from goodwill assets acquired and the liabilities assumed at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. While best estimates and assumptions are used to accurately value assets acquired and liabilities assumed at the acquisition date, as well as contingent consideration where applicable, estimates are inherently uncertain and subject to refinement. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with a corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded within the consolidated statements of operations and comprehensive income (loss). Subsequent changes in the estimated fair value of contingent consideration are recognized in earnings in the period of change. Long-Lived Assets The carrying values of property, equipment, intangible assets, and other long-lived and indefinite-lived assets are reviewed for recoverability if facts, events or changes in circumstances indicate that a potential impairment might have occurred. If such a review indicates that carrying values may not be recoverable, the Company performs an assessment to determine if an impairment charge is required to reduce carrying values to estimated fair value. If quoted market prices are not available, fair value is estimated using an undiscounted value of estimated future cash flows. Upon retirement or sale of property and equipment, the cost of assets disposed of and the related accumulated depreciation and amortization are removed from the accounts, and any resulting gain or loss is included in income from operations. The Company recorded an impairment loss of $33,901 during the year ended December 31, 2024 within the U.S. reporting segment for net intellectual property attributable to the Advanced Rehabilitation Business, which includes products such as the L100, L300 Go, L360, H200, Vector Gait & Safety System and Bioness Integrated Therapy System (BITS). This loss was recorded in impairment of assets within the consolidated statements of operations and comprehensive income (loss). Refer to Note 4. Divestitures for further information regarding the sale of advanced rehabilitation products and the impairment loss. The Company recorded impairment losses of $2,456 for two right-of-use assets related to office and warehouse spaces during the year ended December 31, 2024. The Company ceased using these assets during 2024 and intended to sublease them. During the fourth quarter of 2024, the probability of subleasing declined due to market saturation and proximity to lease expiration. A recoverability analysis indicated that the carrying values exceeded undiscounted future cash flows on potential subleases, triggering impairment. Fair value was determined using market prices for similar assets and probability-based assumptions on sublease opportunities. The carrying values of the right-of-use assets exceeded their fair values, resulting in a loss recorded in the impairment of assets within the consolidated statements of operations and comprehensive income (loss). The Company recorded an impairment loss of $78,615 during the year ended December 31, 2023 within the U.S. reporting segment related to net intellectual property attributable to the TheraSkin and TheraGenesis products, which were sold in May 2023. The loss was recorded in impairment of assets within the consolidated statements of operations and comprehensive income (loss). Refer to Note 4. Divestitures for further information regarding this impairment. Except for the previously described impairments of intangibles, there were no other events, facts or circumstances for the years ended December 31, 2025, 2024 and 2023 that resulted in any impairment charges to the Company’s property, equipment, intangible or other long-lived assets. Property and Equipment Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization expense are recognized using the straight-line method over the estimated useful life of each asset, or the shorter of the lease term or useful life if related to leasehold improvements. Refer to Note 12. Commitments and Contingencies for further details regarding leased assets. Depreciation of generators used with certain surgical solutions are consigned to customers and depreciation is charged to selling expenses. The useful lives in years are as follows:
Intangible Assets Finite‑lived intangible assets were initially recorded at fair value upon acquisition and are amortized using the straight‑line method over their estimated weighted‑average useful lives. The useful lives (in years) are as follows:
Goodwill The Company evaluates goodwill for impairment annually on October 31, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The Company evaluates Goodwill separately for its two reporting units: U.S. and International. For the current year, the Company performed a qualitative assessment to determine whether it was more likely than not that the fair value of the international reporting unit was less than its carrying amount. There was no goodwill balance in the U.S. reporting unit. This qualitative assessment considered all relevant macroeconomic, industry, financial, and entity‑specific factors in accordance with ASC 350. Specifically, the Company compared the results of its most recent fair value quantitative assessment from 2024 to the 2025 carrying values and concluded that the fair value significantly exceeded the carrying amount of the reporting unit. The Company also determined no events or circumstances occurred since the last quantitative analysis that would have been likely to cause a significant decrease in the fair value of the reporting unit. Further, the Company evaluated updated long-term growth projections, noting that no factors indicated a quantitative analysis should be performed. Accordingly, a quantitative goodwill impairment test was not deemed necessary in accordance with ASC 350. In prior years, the Company elected to bypass the qualitative assessment and performed a quantitative goodwill impairment analysis. A reporting unit's fair value is determined using the income approach and discounted cash flow models by utilizing Level 3 inputs and assumptions such as future cash flows, discount rates, long-term growth rates, market value and income tax considerations. Specifically, the value of each reporting unit is determined on a stand-alone basis from the perspective of a market participant and represents the price estimated to be received in a sale of the reporting unit in an orderly transaction between market participants at the measurement date. If the fair value of the reporting unit is less than its carrying value, the Company will recognize the difference as an impairment loss, which is limited to the amount of goodwill allocated to the reporting units. There were no goodwill impairment charges for the years ended December 31, 2025, 2024 and 2023. The Company qualitatively analyzes all other indefinite-lived intangible assets to determine if it is more likely than not that an impairment exists. If so, the Company performs a quantitative analysis to determine whether, and to what extent, an impairment exists. There were no impairment charges on indefinite-lived intangible assets for the years ended December 31, 2025, 2024 and 2023. Software Development Costs The Company capitalizes internal and external costs incurred to develop internal-use software during the application development stage for software design, configuration, coding and testing upon placing the asset in service and then amortizes these costs on a straight-line basis over the estimated useful life of the product, not to exceed three years. The Company does not capitalize costs that are precluded from capitalization in authoritative guidance, such as preliminary project phase costs, training costs or data conversion costs. Capitalized software costs totaled $34,163 and $37,621 as of December 31, 2025 and 2024 and the related accumulated amortization totaled $31,659 and $33,324, respectively. Amortization expense was $3,632, $5,578 and $6,694 for the years ended December 31, 2025, 2024 and 2023, respectively. Acquired In-Process Research and Development The fair value of in-process research and development (“IPR&D”) assets acquired in a business combination are capitalized and accounted for as indefinite-lived intangible assets and are not amortized until development is completed and the product is available for sale. Once the product is available for sale, the asset is transferred to developed technology and amortized over its estimated useful life. Impairment tests for IPR&D assets occur at least annually in December, or more frequently if events or changes in circumstances indicate that the asset might be impaired. If the fair value of the intangible assets is less than the carrying amount, an impairment loss is recognized for the difference. Concentration of Risk The Company provides credit to its customers in the normal course of business. The Company does not require collateral or other securities to support customer receivables. Credit losses are provided for through allowances and have historically been materially within management’s estimates. Certain suppliers provide the Company with product that results in a significant percentage of total sales for the years ended December 31 as follows:
Accounts payable to these significant suppliers at December 31 were as follows:
Certain products provide the Company with a significant percentage of total sales for the years ended December 31 as follows:
Restructuring Costs The Company has restructured portions of its operations and may engage in future restructuring activities. Identifying and calculating the cost to exit these operations requires certain assumptions, the most significant of which relate to anticipated future liabilities. Although estimates have historically been reasonably accurate, significant judgment is required, and these estimates and assumptions may change as additional information becomes available or as facts and circumstances evolve. Restructuring costs are recorded at estimated fair value. Key assumptions in determining restructuring costs include negotiated terms and payments to terminate contractual obligations. These costs have generally consisted of employee severance and related benefits, lease termination and facility closure costs and other exit-related expenses. Equity-Based Compensation The Company measures compensation cost for all share-based payments at fair value and recognizes this cost as compensation expense over the vesting period. The Company uses the Black-Scholes method to value options and the market price on the date of grant to value restricted stock. The Company utilizes the straight-line amortization method to recognize the expense associated with the awards with graded vesting terms. Compensation expense is included in selling, general and administrative expense and research and development expense on the consolidated statement of operations and comprehensive income (loss) based upon the classification of the employees who were granted the awards. Advertising Costs Advertising costs include costs incurred to promote the Company’s business and are expensed as incurred and recorded as selling, general and administrative expense within the consolidated statement of operations and comprehensive income (loss). Advertising costs were $4,140, $4,422 and $3,853 for the years ended December 31, 2025, 2024 and 2023, respectively. Research and Development Expense Research and development expense consists primarily of employee compensation and related expenses as well as contract research organization services. Internal research and development costs are expensed as incurred. Research and development costs incurred by third parties are expensed as the contracted work is performed. Collaborative Agreements The Company periodically enters into strategic alliance agreements with counterparties to produce products and/or provide services to customers. Alliances created by such agreements are not legal entities, have no employees, no assets and have no true operations. These arrangements create contractual rights and the Company accounts for these alliances as collaborative arrangements by reporting costs incurred from transactions within research and development expense within the consolidated statements of operations comprehensive income (loss). Contingencies The Company records a liability in the consolidated financial statements on an undiscounted basis for loss contingencies when a loss is known or considered probable and the amount may be reasonably estimated. If the reasonable estimate of known or probable loss is a range, and no amount within the range is a better estimate than any other, the minimum amount of the range is accrued. If a loss is reasonably possible but not known or probable, and may be reasonably estimated, the estimated loss or range of loss is disclosed. Legal fees expected to be incurred in connection with a loss contingency are not included in the estimated loss contingency. The Company accrues for any legal costs as they are incurred. Income Taxes The Company accounts for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and income tax basis of assets and liabilities, and for operating losses and credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the years in which those items are expected to be realized. Tax law and rate changes are recorded in the period such changes are enacted. The Company establishes a valuation allowance when it is more likely than not that certain deferred tax assets will not be realized in the foreseeable future. The Company recognizes a tax benefit from any uncertain tax positions only if they are more likely than not to be sustained upon examination based on the technical merits of the position. The amount of the accrual for which an exposure exists is measured as the largest amount of benefit determined on a cumulative probability basis that the Company believes is more likely than not to be realized upon ultimate settlement of the position. Components of the reserve, if relevant, are classified as a current or noncurrent liability in the consolidated balance sheet based on when the Company expects each of the items to be settled. Interest and penalties related to unrecognized tax benefits are recognized as a component of income tax expense. Earnings Per Share Basic earnings per share is calculated using net income or loss attributable to Bioventus Inc. Class A common stockholders, divided by the weighted-average Class A common stock outstanding. Diluted earnings per share is calculated using net income attributable to Bioventus Inc. Class A common stockholders, divided by the weighted average Class A common stock outstanding adjusted for the effect of granted stock awards determined to be dilutive under the treasury stock method.
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