Elutia (ELUT) 10-Q 10 May 22 2022 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2022	May 09, 2022
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Mar. 31, 2022
Entity File Number	001-39577
Entity Registrant Name	Aziyo Biologics, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	47-4790334
Entity Address State Or Province	MD
Entity Address, Address Line One	Delaware
Entity Address, City or Town	Silver Spring
Entity Address, Postal Zip Code	20904
City Area Code	240
Local Phone Number	247-1170
Title of 12(b) Security	Class A Common Stock, par value $0.001 per share
Trading Symbol	AZYO
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Central Index Key	0001708527
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1
Amendment Flag	false
Class A Common stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		9,306,738
Class B Common stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		4,313,406

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Current assets:
Cash	$ 22,066	$ 30,393
Restricted cash	109	35
Accounts receivable, net	6,010	5,996
Inventory	9,863	9,554
Prepaid expenses and other current assets	3,030	1,450
Total current assets	41,078	47,428
Property and equipment, net	1,155	1,200
Intangible assets, net	17,617	18,466
Other assets	76	76
Total assets	59,926	67,170
Current liabilities:
Accounts payable	1,715	1,582
Accrued expenses	5,750	6,375
Payables to tissue suppliers	2,884	2,467
Current portion of long-term debt	8,059	8,059
Current portion of revenue interest obligation	2,750	2,750
Revolving line of credit	6,160	4,763
Other current liabilities		5
Total current liabilities	27,318	26,001
Long-term debt	8,758	10,410
Long-term revenue interest obligation	16,520	16,540
Other long-term liabilities	771	698
Total liabilities	53,367	53,649
Commitments and contingencies (Note 8)
Stockholders' equity (deficit):
Additional paid-in capital	119,786	118,599
Accumulated deficit	(113,240)	(105,091)
Total stockholders' equity	6,559	13,521
Total liabilities and stockholders' equity	59,926	67,170
Class A Common stock
Stockholders' equity (deficit):
Common stock	9	9
Class B Common stock
Stockholders' equity (deficit):
Common stock	$ 4	$ 4

CONDENSED CONSOLIDATED BALANC_2

CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) - $ / shares	Mar. 31, 2022	Dec. 31, 2021
Class A Common stock
Common stock, par value (in dollar per share)	$ 0.001	$ 0.001
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	9,306,738	9,245,146
Common stock, shares outstanding	9,306,738	9,245,146
Class B Common stock
Common stock, par value (in dollar per share)	$ 0.001	$ 0.001
Common stock, shares authorized	20,000,000	20,000,000
Common stock, shares issued	4,313,406	4,313,406
Common stock, shares outstanding	4,313,406	4,313,406

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Net sales	$ 11,495	$ 12,884
Cost of goods sold	7,214	6,555
Gross profit	4,281	6,329
Sales and marketing	4,818	4,703
General and administrative	4,113	3,605
Research and development	2,272	1,720
Total operating expenses	11,203	10,028
Loss from operations	(6,922)	(3,699)
Interest expense	1,215	1,355
Loss before provision for income taxes	(8,137)	(5,054)
Income tax expense	12	13
Net loss	$ (8,149)	$ (5,067)
Net loss per share - basic (in dollar per share)	$ (0.60)	$ (0.50)
Net loss per share - diluted (in dollar per share)	$ (0.60)	$ (0.50)
Weighted average common shares outstanding - basic	13,574,058	10,226,152
Weighted average common shares outstanding - diluted	13,574,058	10,226,152

CONDENSED CONSOLIDATED STATEM_2

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) $ in Thousands	Common StockClass A Common stock	Common StockClass B Common stock	Additional Paid-in CapitalPrivate Placement [Member]	Additional Paid-in Capital	Accumulated Deficit	Private Placement [Member]	Total
Balance at the beginning at Dec. 31, 2020	$ 7	$ 3		$ 101,080	$ (80,259)		$ 20,831
Balance at the beginning (in shares) at Dec. 31, 2020	7,091,960	3,134,162
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Proceeds from stock option exercises				3			3
Proceeds from stock option exercises (in shares)	561
Stock-based compensation				677			677
Net loss					(5,067)		(5,067)
Balance at the ending at Mar. 31, 2021	$ 7	$ 3		101,760	(85,326)		16,444
Balance at the ending (in shares) at Mar. 31, 2021	7,092,521	3,134,162
Balance at the beginning at Dec. 31, 2021	$ 9	$ 4		118,599	(105,091)		13,521
Balance at the beginning (in shares) at Dec. 31, 2021	9,245,146	4,313,406
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock through Private Placement, net of issuance costs of $357			$ (110)			$ (110)
Proceeds from sale of common stock through Employee Stock Purchase Plan				192			192
Proceeds from sale of common stock through Employee Stock Purchase Plan (in shares)	42,345
Vesting of restricted stock units (in shares)	19,247
Stock-based compensation				1,105			1,105
Net loss					(8,149)		(8,149)
Balance at the ending at Mar. 31, 2022	$ 9	$ 4		$ 119,786	$ (113,240)		$ 6,559
Balance at the ending (in shares) at Mar. 31, 2022	9,306,738	4,313,406

CONDENSED CONSOLIDATED STATEM_3

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
OPERATING ACTIVITIES:
Net loss	$ (8,149)	$ (5,067)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	929	933
Amortization of deferred financing costs	15	30
Interest expense recorded as additional revenue interest obligation	660	663
Stock-based compensation	1,105	677
Changes in operating assets and liabilities:
Accounts receivable	(14)	(1,596)
Inventory	(309)	(101)
Prepaid expenses and other	(1,580)	465
Accounts payable and accrued expenses	(492)	(1,387)
Obligations to tissue suppliers	417	276
Deferred revenue and other liabilities	68	(67)
Net cash used in operating activities	(7,350)	(5,174)
INVESTING ACTIVITIES:
Expenditures for property, plant and equipment	(34)	(131)
Net cash used in investing activities	(34)	(131)
FINANCING ACTIVITIES:
Proceeds from Private Placement, net of offering costs	(110)
Net borrowings (repayments) under revolving line of credit	1,397	(3,064)
Proceeds from stock option exercises		3
Repayments of long-term debt	(1,667)
Payments on revenue interest obligation	(681)	(665)
Proceeds from sales of common stock through Employee Stock Purchase Plan	192
Net cash used in financing activities	(869)	(3,726)
Net decrease in cash and restricted cash	(8,253)	(9,031)
Cash and restricted cash, beginning of period	30,428	39,532
Cash and restricted cash, end of period	22,175	30,501
Supplemental Cash Flow and Non-Cash Financing Activities Disclosures:
Cash paid for interest	$ 1,162	$ 1,243

Organization and Description of

Organization and Description of Business	3 Months Ended
	Mar. 31, 2022
Organization and Description of Business
Organization and Description of Business	Note 1. Organization and Description of Business Aziyo Biologics, Inc. (together with its consolidated subsidiaries, "Aziyo” or the “Company”) is a regenerative medicine company, with a focus on patients receiving implantable medical devices. The Company has developed a portfolio of regenerative products using both human and porcine tissue that are designed to be as close to natural biological material as possible. Aziyo’s portfolio of core products spans the implantable electronic devices/cardiovascular-related market, the orthopedic/spinal repair market and the soft tissue reconstruction market (“Core Products”). These products are primarily sold to healthcare providers or commercial partners. The Company also sells human tissue products under contract manufacturing and certain other arrangements (“Non-Core Products”) with corporate customers.

Summary of Significant Accounti

Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2022
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies	Note 2. Summary of Significant Accounting Policies Basis of Presentation and Liquidity The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the Company’s consolidated financial statements and accompanying notes included in the Company's annual report on Form 10-K (“Annual Report”) for the fiscal year ended December 31, 2021. The financial information as of March 31, 2022 and for the three months ended March 31, 2022 and 2021 is unaudited, but in the opinion of management, all adjustments considered necessary for a fair statement of the results for these interim periods have been included. The condensed consolidated balance sheet data as of December 31, 2021 was derived from audited financial statements but does not include all disclosures required by GAAP. The results of the Company’s operations for any interim period are not necessarily indicative of the results that may be expected for any other interim period or any future year or period. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. In accordance with Accounting Standards Update (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40) In order to mitigate the current and potential future liquidity issues caused by the matters noted above, the Company may seek to raise capital through the issuance of common stock, either refinance or restructure its Term Loan Facility and Revolving Credit Facility (as such terms are defined, and further described, in Note 6), restructure its Revenue Interest Obligation (as such term is defined, and further described, in Note 7), or pursue asset sale transactions. However, such transactions may not be successful and the Company may not be able to raise additional equity, refinance or restructure its debt instruments, or sell assets on acceptable terms, or at all. As such, based on its current operating plans, the Company believes there is uncertainty as to whether its future cash flows along with its existing cash, availability under the Revolving Credit Facility and cash generated from expected future sales will be sufficient to meet the Company’s anticipated operating needs through twelve months from the financial statement issuance date. Due to these factors, there is substantial doubt about the Company’s ability to continue as a going concern within one year after the issuance of the financial statements. The accompanying condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. That is, the accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities in the ordinary course of business. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates and assumptions relating to inventory, receivables, long-lived assets, the valuation of stock-based awards, the valuation of the revenue interest obligation and deferred income taxes are made at the end of each financial reporting period by management. Management continually re-evaluates its estimates, judgments and assumptions, and management's evaluation could change. Actual results could differ from those estimates. Impact of COVID-19 The Company continues to closely monitor the impact of the COVID-19 pandemic on its business. In March 2020, the World Health Organization declared COVID-19 a global pandemic and recommended various containment and mitigation measures worldwide. Since that time, the number of procedures performed using the Company's products has intermittently decreased, as governmental authorities in the United States have recommended, and in certain cases required, that elective, specialty and other non-emergency procedures and appointments be suspended or canceled in order to avoid patient exposure to medical environments and the risk of potential infection with COVID-19, and to focus limited resources and personnel capacity on the treatment of COVID-19 patients. As a result, beginning in March 2020, a significant number of procedures using the Company's products have intermittently been postponed or cancelled, which has negatively impacted sales of its products. These measures and challenges will likely continue for the duration of the pandemic, which is uncertain, and may reduce the Company's net sales in the future and negatively impact its business, financial condition and results of operations while the pandemic continues. Net Loss per Share Attributable to Common Stockholders Our common stock has a dual class structure, consisting of Class A common stock and Class B common stock. Other than voting rights, the Class B common stock has the same rights as the Class A common stock, and therefore both are treated as the same class of stock for purposes of the earnings per share calculation. Basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average shares outstanding during the period. For purposes of the diluted net income (loss) per share attributable to common stockholders calculation, stock options and restricted stock units are considered to be common stock equivalents. All common stock equivalents have been excluded from the calculation of diluted net loss per share attributable to common stockholders, as their effect would be anti-dilutive for all periods presented. Therefore, basic and diluted net loss per share were the same for both periods presented. Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value: Level 1 -  Level 2 -  Level 3 -  The estimated fair value of financial instruments disclosed in the financial statements has been determined by using available market information and appropriate valuation methodologies. The carrying value of all current assets and current liabilities approximates fair value because of their short-term nature. Cash and Restricted Cash The Company maintains its cash balances at banks and financial institutions. The balances are insured up to the legal limit. The Company maintains cash balances that may, at times, exceed this insured limit. ​ Under the provisions of the Revolving Credit Facility (see Note 6), the Company has a lockbox arrangement with the banking institution whereby daily lockbox receipts are contractually utilized to pay down outstanding balances on the Revolving Credit Facility debt. Lockbox receipts that have not yet been applied to the Revolving Credit Facility are classified as restricted cash in the accompanying condensed consolidated balance sheets. The following table provides a reconciliation of cash and restricted cash included in the condensed consolidated balance sheets to the amounts included in the statements of cash flows (in thousands). ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ 2022 2021 Cash ​ $ 22,066 ​ $ 30,410 Restricted cash ​ 109 ​ 91 Total cash and restricted cash shown in statements of cash flows ​ $ 22,175 ​ $ 30,501 ​ Accounts Receivable and Allowances Accounts receivable in the accompanying balance sheets are presented net of allowances for doubtful accounts and other credits. The Company grants credit to customers in the normal course of business, but generally does not require collateral or any other security to support its receivables. The Company evaluates the collectability of accounts receivable based on a combination of factors. In circumstances where a specific customer is unable to meet its financial obligations to the Company, a provision to the allowance for doubtful accounts is recorded to reduce the net recognized receivable to the amount that is reasonably expected to be collected. For all other customers, a provision to the allowance for doubtful accounts is recorded based on factors including the length of time the receivables are past due, the current business environment and the Company’s historical experience. Provisions to the allowance for doubtful accounts are recorded to general and administrative expenses. Account balances are charged off against the allowance when it is probable that the receivable will not be recovered. Inventory Inventory, consisting of purchased materials, direct labor and manufacturing overhead, is stated at the lower of cost or net realizable value, with cost determined generally using the average cost method. Inventory write-downs for unprocessed and certain processed donor tissue are recorded based on the estimated amount of inventory that will not pass the quality control process based on historical data. At each balance sheet date, the Company also evaluates inventory for excess quantities, obsolescence or shelf life expiration. This evaluation includes analysis of the Company’s current and future strategic plans, historical sales levels by product, projections of future demand, the risk of technological or competitive obsolescence for products, general market conditions and a review of the shelf life expiration dates for products. To the extent that management determines there is excess or obsolete inventory or quantities with a shelf life that is too near its expiration for the Company to reasonably expect that it can sell those products prior to their expiration, the Company adjusts the carrying value to estimated net realizable value. Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed on the straight-line method over the following estimated useful lives of the assets: ​ ​ ​ ​ Processing and research equipment 5 to 10 years Office equipment and furniture 3 to 5 years Computer hardware and software 3 years ​ Leasehold improvements are amortized on the straight-line method over the shorter of the lease term or the estimated useful life of the asset. Repairs and maintenance costs are expensed as incurred. Long-Lived Assets Purchased intangible assets with finite lives are carried at acquired fair value, less accumulated amortization. Amortization is computed over the estimated useful lives of the respective assets. The Company periodically evaluates the period of depreciation or amortization for long-lived assets to determine whether current circumstances warrant revised estimates of useful lives. The Company reviews its property and equipment and intangible assets for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. Impairment exists when the carrying value of the company’s asset exceeds the related estimated undiscounted future cash flows expected to be derived from the asset. If impairment exists, the carrying value of that asset is adjusted to its fair value. A discounted cash flow analysis is used to estimate an asset’s fair value, using assumptions that market participants would apply. The results of impairment tests are subject to management’s estimates and assumptions of projected cash flows and operating results. Changes in assumptions or market conditions could result in a change in estimated future cash flows and could result in a lower fair value and therefore an impairment, which could impact reported results. There were no impairment losses for the three months ended March 31, 2022 or 2021. Revenue Recognition The Company’s revenue is generated from contracts with customers in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606. The core principle of ASC 606 is that the Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The ASC 606 revenue recognition model consists of the following five steps: (1) identify the contracts with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation. As noted above, the Company enters into contracts to primarily sell and distribute products to healthcare providers or commercial partners, or are produced and sold under contract manufacturing arrangements with corporate customers which are billed under ship and bill contract terms. Revenue is recognized when the Company has met its performance obligations pursuant to its contracts with its customers in an amount that the Company expects to be entitled to in exchange for the transfer of control of the products to the Company’s customers. For all product sales, the Company has no further performance obligations and revenue is recognized at the point control transfers which occurs either when: (i) the product is shipped via common carrier; or (ii) the product is delivered to the customer or distributor, in accordance with the terms of the agreement. A portion of the Company’s product revenue is generated from consigned inventory maintained at hospitals and from inventory physically held by direct sales representatives. For these types of product sales, the Company retains control until the product has been used or implanted, at which time revenue is recognized. The Company elected to account for shipping and handling activities as a fulfillment cost rather than a separate performance obligation. Amounts billed to customers for shipping and handling are included as part of the transaction price and recognized as revenue when control of the underlying products is transferred to the customer. The related shipping and freight charges incurred by the Company are included in sales and marketing costs. Contracts with customers state the final terms of the sale, including the description, quantity, and price of each implant distributed. The payment terms and conditions in the Company’s contracts vary; however, as a common business practice, payment terms are typically due in full within 30 to 60 days of delivery. The Company, at times, extends volume discounts to customers. The Company permits returns of its products in accordance with the terms of contractual agreements with customers. Allowances for returns are provided based upon analysis of the Company’s historical patterns of returns matched against the revenues from which they originated. The Company records estimated returns as a reduction of revenue in the same period revenue is recognized. Deferred Rent The Company recognizes rent expense by the straight-line method over the lease term. Funds received from the lessor used to reimburse the Company for the cost of leasehold improvements are recorded as a deferred credit resulting from a lease incentive and are amortized over the lease term as a reduction of rent expense. Stock-Based Compensation Plans The Company accounts for its stock-based compensation plans in accordance with FASB ASC 718, Accounting for Stock Compensation Research and Development Costs Research and development costs, which include mainly salaries, outside services and supplies, are expensed as incurred. Concentration of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash. At March 31, 2022, the Company maintained $22.1 million in bank deposit accounts that are in excess of the $0.25 million insurance provided by the Federal Deposit Insurance Corporation in one federally insured financial institution. The Company has not experienced any losses in such accounts. Significant Customers The Company sells certain of its products under large contract manufacturing or distribution arrangements. The following table presents percentage of total revenues derived from the Company’s largest customers as well as their respective percentage of total accounts receivable: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ ​ March 31, ​ ​ ​ 2022 ​ 2021 ​ Percent of revenues derived from: ​ ​ ​ ​ ​ Medtronic Sofamor Danek USA ​ - ​ 22% ​ Surgalign Holdings ​ 10% ​ 10% ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ December 31, ​ ​ ​ 2022 ​ 2021 ​ Percent of accounts receivable derived from: ​ ​ ​ ​ ​ Surgalign Holdings ​ 11% ​ 12% ​ ​ Comprehensive Income (Loss) Comprehensive income (loss) comprises net income (loss) and other changes in equity that are excluded from net income (loss). For the three months ended March 31, 2022 and 2021, the Company’s net loss equaled its comprehensive loss and accordingly, no additional disclosure is presented. Income Taxes The Company uses the asset and liability method of accounting for income taxes. Deferred income taxes are recorded to reflect the tax consequences on future years for differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to amounts that are more likely than not to be realized. The Company is subject to income taxes in the federal and state jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. In accordance with the authoritative guidance on accounting for uncertainty in income taxes, the Company recognizes tax liabilities for uncertain tax positions when it is more likely than not that a tax position will not be sustained upon examination and settlement with various taxing authorities. Liabilities for uncertain tax positions are measured based upon the largest amount of benefit that is more likely than not (greater than 50%) of being realized upon settlement. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense.

Recently Issued Accounting Stan

Recently Issued Accounting Standards	3 Months Ended
	Mar. 31, 2022
Recently Issued Accounting Standards
Recently Issued Accounting Standards	Note 3. Recently Issued Accounting Standards In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The ASU provides temporary relief from some of the existing rules governing contract modifications when the modification is related to the replacement of the London Interbank Offered Rate (“LIBOR”) or other reference rates discontinued as a result of reference rate reform. The ASU specifically provides optional practical expedients for contract modification accounting related to contracts subject to ASC 310, Receivables, ASC 470, Debt, ASC 842, Leases, and ASC 815, Derivatives and Hedging. The ASU also establishes a general contract modification principle that entities can apply in other areas that may be affected by reference rate reform and certain elective hedge accounting expedients. For eligible contract modifications, the principle generally allows an entity to account for and present modifications as an event that does not require contract remeasurement at the modification date or reassessment of a previous accounting determination. That is, the modified contract is accounted for as a continuation of the existing contract. The standard was effective upon issuance on March 12, 2020, and the optional practical expedients can generally be applied to contract modifications made and hedging relationships entered into on or before December 31, 2024. Borrowings under the Company’s term loan facility and revolving line of credit bear interest based on LIBOR or an alternate rate. Provisions currently provide the Company with the ability to replace LIBOR with a different reference rate in the event that LIBOR ceases to exist. In November 2019, the FASB issued ASU 2019-10, “Financial Instruments - Credit Losses (Topic 326), Derivative and Hedging (Topic 815), and Leases (Topic 842), Effective Dates.” The FASB deferred the effective dates of the new credit losses standard for all entities except filers with the Securities and Exchange Commission (the “SEC”) that are not smaller reporting companies (“SRCs”) to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Board also aligned the effective dates of ASU 2017-04 on goodwill impairment with the new effective dates of the credit losses standard. The FASB deferred the effective dates of its new standards on hedging and leases for entities that are not public business entities (“PBEs”) (and for leases, for entities that are not non-for-profit (“NFP”) entities that have issues, or are conduit bond obligors for, certain securities; and are not employee benefit plans (“EBPs”) that file or furnish financial statements with or to the SEC) to fiscal years beginning after December 15, 2020, and interim periods in the following year. The FASB is also reconsidering its philosophy on establishing effective dates for major standards for private companies, NFPs, EBPs and smaller public companies. The board has developed a two-bucket approach that would give these entities more time to implement major new standards. The Company is evaluating this standard to determine if adoption will have a material impact on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases. The standard requires that lessees recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The liability will be equal to the present value of lease payments. The asset will be based on the liability subject to certain adjustments. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Operating leases will result in straight-line expense (similar to current operating leases) while finance leases will result in a front-loaded expense pattern (similar to current capital leases). In November 2019, the FASB issued 2019-10 which extended the adoption of ASU 2016-02 for the Company to be effective for periods ending after December 15, 2022. While early adoption is permitted, the Company intends to adopt in the fourth quarter of 2022 for the full 2022 year. The Company is evaluating this standard to determine if adoption will have a material impact on the Company’s consolidated financial statements.

Stock-Based Compensation

Stock-Based Compensation	3 Months Ended
	Mar. 31, 2022
Stock-Based Compensation
Stock-Based Compensation	Note 4. Stock-Based Compensation In 2015, the Company established the Aziyo Biologics, Inc. 2015 Stock Option/Stock Issuance Plan, as amended (the “2015 Plan”) which provided for the granting of incentive and non-qualified stock options to employees, directors and consultants of the Company. On October 7, 2020, in connection with the Company’s initial public offering (“IPO”), the Company adopted the Aziyo Biologics, Inc. 2020 Incentive Award Plan (the “2020 Plan”), which authorizes the grant of incentive and non-qualified stock options, restricted stock, restricted stock units and stock appreciation rights to employees, directors and consultants. Shares of Class A common stock totaling 1,636,000 were initially reserved for issuance pursuant to the 2020 Plan. In addition, the shares reserved for issuance under the 2020 Plan will also include shares reserved but not issued under the 2015 Plan as well as an annual increase as set forth in the 2020 Plan. As of March 31, 2022, the Company had 481,195 shares of Class A common stock available for issuance under the 2020 Plan. Stock Options The Company’s policy is to grant stock options at an exercise price equal to 100% of the market value of a share of Class A common stock at closing on the date of the grant. The Company’s stock options have contractual terms of seven A summary of stock option activity under the Company’s 2015 Plan and 2020 Plan for the three months ended March 31, 2022 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted- ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average ​ ​ ​ ​ ​ ​ Weighted- ​ Remaining ​ Aggregate ​ ​ ​ ​ Average ​ Contractual ​ Intrinsic ​ ​ Exercise Term Value ​ ​ Number of Shares ​ Price ​ (years) ​ (in thousands) Outstanding, December 31, 2021 ​ 1,386,811 ​ $ 13.28 ​ ​ 7.8 $ 179 Granted ​ 499,130 ​ $ 5.08 ​ ​ ​ ​ ​ ​ Exercised ​ — ​ $ — ​ ​ ​ ​ ​ ​ Forfeited ​ (28,850) ​ $ 12.26 ​ ​ ​ ​ ​ ​ Outstanding, March 31, 2022 ​ 1,857,091 ​ $ 11.10 ​ ​ 8.2 ​ $ 524 Vested and exercisable, March 31, 2022 ​ 477,322 ​ $ 11.04 ​ ​ 5.7 ​ $ 87 ​ As of March 31, 2022, there was approximately $7.3 million of total unrecognized compensation expense related to unvested stock options. These costs are expected to be recognized over a weighted-average period of 2.9 years. The weighted average grant date fair value of options granted during the three months ended March 31, 2022 was $3.03. Restricted Stock Units Restricted stock units (“RSUs”) represent rights to receive common shares at a future date. There is no exercise price and no monetary payment is required for receipt of restricted stock units or the shares issued in settlement of the award. A summary of the RSU activity under the Company’s 2020 Plan for the three months ended March 31, 2022 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ Number of Weighted- ​ ​ Shares ​ Average ​ ​ Underlying ​ Grant Date ​ ​ RSUs ​ Fair Value Unvested, December 31, 2021 235,985 ​ $ 15.98 Granted 356,349 ​ $ 3.58 Vested (19,247) ​ $ 14.53 Forfeited (8,928) ​ $ 8.66 Unvested, March 31, 2022 564,159 ​ $ 8.31 ​ The total fair value of the RSUs granted during the three months ended March 31, 2022 of $1.3 million, of which nearly all was based on the fair market value of the Company's Class A common stock on the date of grant and such fair value at the time of the grant is amortized to expense on a straight-line basis over the vesting period of three 30 Employee Stock Purchase Plan The Company makes shares of its Class A common stock available for purchase under the Aziyo Biologics, Inc. 2020 Employee Stock Purchase Plan (the “ESPP”). The ESPP provides for separate six-month offering periods that begin in March and September of each year. Under the ESPP, employees may purchase a limited number of shares of Aziyo Class A common stock at 85% of the fair market value on either the first day of the offering period or the purchase date, whichever is lower. The ESPP is considered compensatory for purposes of stock-based compensation expense. The number of shares reserved under the ESPP will automatically increase on the first day of each fiscal year through January 1, 2030, in an amount as set forth in the ESPP. As of March 31, 2022, the total shares of Class A common stock authorized for issuance under the ESPP was 380,997, of which 311,408 remained available for future issuance. During the three months ended March 31, 2022, 42,345 shares of Class A common stock were issued under the ESPP. Stock-Based Compensation Expense Stock-based compensation expense recognized during the three months ended March 31, 2022 and 2021 was comprised of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ March 31, ​ ​ 2022 2021 Sales and marketing $ 195 $ 128 ​ General and administrative ​ 682 ​ 411 ​ Research and development ​ 178 ​ 109 ​ Cost of goods sold ​ 50 ​ 29 ​ Total stock-based compensation expense ​ $ 1,105 ​ $ 677 ​ ​ The Company uses the Black-Scholes model to value its stock option grants and expenses the related compensation cost using the straight-line method over the vesting period. The fair value of stock options is determined on the grant date using assumptions for the estimated fair value of the underlying common stock, expected term, expected volatility, dividend yield, and the risk-free interest rate. Before the completion of the Company’s IPO, the Board of Directors determined the fair value of common stock considering the state of the business, input from management, third party valuations and other considerations. The Company uses the simplified method for estimating the expected term used to determine the fair value of options. The expected volatility of the Class A common stock is primarily based on the historical volatility of comparable companies in the industry whose share prices are publicly available. The Company uses a zero-dividend yield assumption as the Company has not paid dividends since inception nor does it anticipate paying dividends in the future. The risk-free interest rate approximates recent U.S. Treasury note auction results with a similar life to that of the option. The period expense is then determined based on the valuation of the options, and is recognized on a straight-line basis over the requisite service period for the entire award. The following weighted-average assumptions were used to determine the fair value of options during the three months ended March 31, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ ​ March 31, ​ ​ ​ 2022 2021 ​ Expected term (years) ​ 6.2 ​ 6.1 ​ ​ Risk-free interest rate ​ 1.8 % 1.0 % ​ Volatility factor ​ 64 % 64 % ​ Dividend yield ​ — ​ — ​ ​ ​

Inventory

Inventory	3 Months Ended
	Mar. 31, 2022
Inventory
Inventory	Note 5. Inventory Inventory was comprised of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ December 31, ​ ​ 2022 2021 Raw materials ​ $ 1,872 ​ $ 1,880 ​ Work in process ​ ​ 568 ​ ​ 834 ​ Finished goods ​ ​ 7,423 ​ ​ 6,840 ​ Total ​ $ 9,863 ​ $ 9,554 ​ ​

Long-Term Debt

Long-Term Debt	3 Months Ended
	Mar. 31, 2022
Long-Term Debt
Long-Term Debt	Note 6. Long-Term Debt On May 31, 2017, in connection with the Company’s acquisition of CorMatrix described in Note 7, Aziyo entered into a $12 million term loan facility (the “Term Loan Facility”) and an $8.0 million asset-backed revolving line of credit (the “Revolving Credit Facility”), under which the Company’s borrowing capacity is limited by certain qualifying assets, with a financial institution (the “May 2017 Financing”). As of March 31, 2022 and 2021, the Company’s borrowing capacity under its Revolving Credit Facility was $7.0 million and $8.0 million, respectively. The Term Loan Facility was amended in December 2017, February 2018 and July 2019 (all amendments being considered modifications) such that an additional $1.5 million, $3.0 million, and $3.5 million, respectively were received by the Company bringing the total aggregate principal amount outstanding under the Term Loan Facility to $20 million. Borrowings under the Term Loan Facility, as amended, bear interest at a rate per annum equal to the sum of  (x) the greater of  (i) 2.25% and (ii) the applicable London Interbank Offered Rate for U.S. dollar deposits divided by 1.00 minus the maximum effective reserve percentage for Eurocurrency funding (“LIBOR”) plus (y) 7.25%. The weighted average interest rate on Term Loan Facility borrowings was 9.5% for both the three months ended March 31, 2022 and 2021. The agreement governing the Term Loan Facility provides for interest only payments through January 2021 and interest and equal monthly principal payments from February 2021 through maturity in July 2024. However, the Term Loan Facility also provides that if certain conditions were satisfied prior to December 1, 2020 (including the completion of a qualified initial public offering and no continuing default or event of default), interest only payments may, upon the Company’s request, be extended to August 1, 2021. Accordingly, based on the Company’s successful completion of its IPO, Aziyo exercised this interest-only period extension right and as such, interest and equal principal payments commenced on August 1, 2021 and will continue through maturity in July 2024. The agreement that governs the Term Loan Facility, as amended, requires certain mandatory prepayments, subject to certain exceptions, with: (1) 100% of any net casualty proceeds in excess of $250,000 with respect to assets upon which the agent maintains a lien and (2) 100% of the net cash proceeds of non-ordinary course asset sales or sales pertaining to collateral upon which the borrowing base of the Revolving Credit Facility is calculated. In addition, the Company is required to prepay all outstanding obligations under the Term Loan Facility upon the termination of all commitments under the Revolving Credit Facility and the repayment of the outstanding borrowings thereunder. No such mandatory prepayments were required during the three months ended March 31, 2022 and 2021. The agreement governing the Term Loan Facility also includes an exit fee of 6.5% of the aggregate principal amount and prepayment penalties which, based on an amendment to the Term Loan Facility executed in January 2022, shall be equal to the amount prepaid multiplied by 3.0% until January 21, 2023 and 2.0% thereafter. Borrowings under the Revolving Credit Facility bear interest at a rate per annum equal to the sum of  (x) the greater of  (i) 2.25% and (ii) LIBOR plus (y) 4.95%. The agreement governing the Revolving Credit Facility includes an unused line fee in an amount equal to 0.5% per annum of the unused borrowing capacity and based on an amendment to the Revolving Credit Facility executed in January 2022, prepayment penalties equal to $8.0 million multiplied by 3.0% until January 21, 2023 and 2.0% thereafter. The weighted average interest rate on Revolving Credit Facility borrowings was 7.2% for the three months ended March 31, 2022 and 2021. Both debt instruments contain events of default, including, most significantly, a failure to timely pay interest or principal, insolvency, or an action by the United States Food and Drug Administration or such other material adverse event impacting the operations of Aziyo. The debt instruments also include a financial covenant based on cumulative minimum net product revenue, as defined, restrictions as to payment of dividends, and are secured by all assets of the Company. As of March 31, 2022, Aziyo was in compliance with this financial covenant. During 2017, the Company restructured certain of its liabilities with a tissue supplier and entered into an unsecured promissory note totaling $2.1 million. The note bears interest at 5% and includes quarterly interest-only payments in 2017 and quarterly interest and principal payments from March 31, 2018 through August 31, 2021. The notes are subordinated in payment to the Term Loan Facility and Revolving Credit Facility and in both 2022 and 2021, the Company’s senior lender restricted payment of the amounts due. Long-term debt was comprised of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, December 31, ​ ​ 2022 ​ 2021 Term Loan Facility, net of unamortized discount and deferred financing costs ​ $ 15,425 ​ $ 17,077 Note to Tissue Supplier ​ 1,392 ​ 1,392 Total ​ 16,817 ​ 18,469 Current Portion ​ (8,059) ​ (8,059) Long-Term Debt ​ $ 8,758 ​ $ 10,410 ​ The fair value of all debt instruments, which is based on inputs considered to be Level 2 under the fair value hierarchy, approximates the respective carrying values as of March 31, 2022 and December 31, 2021.

Revenue Interest Obligation

Revenue Interest Obligation	3 Months Ended
	Mar. 31, 2022
Revenue Interest Obligation
Revenue Interest Obligation	Note 7. Revenue Interest Obligation On May 31, 2017, the Company completed an asset purchase agreement with CorMatrix Cardiovascular, Inc. ("CorMatrix") and acquired all CorMatrix commercial assets and related intellectual property (the "CorMatrix Acquisition"). As part of the CorMatrix Acquisition, the Company assumed a restructured, long-term obligation (the “Revenue Interest Obligation”) to Ligand Pharmaceuticals (“Ligand”) with an estimated present value on the acquisition date of $27.7 million. Subject to annual minimum payments of $2.75 million per year, the terms of the Revenue Interest Obligation require Aziyo to pay Ligand, 5% of future sales of the products Aziyo acquired from CorMatrix, including CanGaroo, ProxiCor, Tyke and VasCure, as well as products substantially similar to those products, such as the version of CanGaroo Aziyo is currently developing that is designed to include antibiotics. Furthermore, a $5.0 million payment will be due to Ligand if cumulative sales of these products exceed $100 million and a second $5.0 million will be due if cumulative sales exceed $300 million during the ten-year term of the agreement which expires on May 31, 2027. The Company recorded the present value of the estimated total future payments under the Revenue Interest Obligation as a long-term obligation, with the annual minimum payments serving to establish the short-term portion. At each reporting period, the value of the Revenue Interest Obligation is re-measured based on current estimates of future payments, with changes to be recorded in the condensed consolidated statements of operations using the catch-up method. There was no change to estimated future payments during the three months ended March 31, 2022 and 2021, and thus, no re-measurement gain or loss was recognized.

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2022
Commitments and Contingencies.
Commitments and Contingencies	Note 8. Commitments and Contingencies Operating Leases The Company leases two production facilities and one administrative and research facility under non-cancelable operating lease arrangements that expire through November 2025. All leases contain renewal options and escalation clauses based upon increases in the lessors’ operating expenses and other charges. The Company records rent expense on a straight-line basis over the life of the lease and the difference between the average rent expense and cash payments for rent is recorded as deferred rent and is included in other current and long-term liabilities on the balance sheet. Rent expense was approximately $0.3 million for both the three months ended March 31, 2022 and 2021, and is included as a component of either cost of goods sold or general and administrative expenses. Cook Biotech License and Supply Agreements Aziyo has entered into a license agreement with Cook Biotech (“Cook”) for an exclusive, worldwide license to the porcine tissue for use in the Company’s Cardiac Patch and CanGaroo products, subject to certain co-exclusive rights retained by Cook. The term of such license is through the date of the last to expire of the licensed Cook patents, which is anticipated to be July 2031. Along with this license agreement, Aziyo entered into a supply agreement whereby Cook would be the exclusive supplier to Aziyo of the licensed porcine tissue. Under certain limited circumstances, Aziyo has the right to manufacture the licensed product and pay Cook a royalty of 3% of sales of the Aziyo-manufactured tissue. The supply agreement expires on the same date as the related license agreement. No royalties were paid to Cook during the three months ended March 31, 2022 or 2021. Aziyo has also entered into an amendment to the Cook license agreement (the “Cook Amendment”) in order to add fields of exclusive use. Specifically, the Cook Amendment provides for a worldwide exclusive license to the porcine tissue for use with neuromodulation devices in addition to cardiovascular devices. The Cook Amendment includes license fee payments of $0.1 million per year in each of the years 2021 through 2026. Such license payments would accelerate if a change in control, as defined, occurs within Aziyo. The Company, in its sole discretion, can terminate the license agreement at any time. Legal Proceedings From time to time, the Company may be involved in claims and proceedings arising in the course of the Company’s business. The outcome of any such claims or proceedings, regardless of the merits, is inherently uncertain. The Company records accruals for contingencies when it is probable that a liability has been incurred and the amount can be reasonably estimated. These accruals are adjusted periodically as assessments change or additional information becomes available. In June 2021, the Company announced a voluntary recall of a single lot of FiberCel. Between June 21, 2021 and May 9, 2022, forty-seven lawsuits in Indiana, Delaware, Florida, Maryland, Colorado, Michigan, Ohio, Kentucky, Oregon, and North Carolina have been filed against Aziyo Biologics Inc., certain Medtronic entities, and others alleging that the plaintiffs contracted tuberculosis and/or suffered substantial symptoms and complications following the implantation of FiberCel during spinal fusion operations. Twenty lawsuits were filed in Indiana state court, captioned, respectively: (1) John Dukes and Kimberly Smith v. Aziyo Biologics, Inc., et al., Case No. 49D02-2109-CT-032234 (case dismissed without prejudice on 09/16/2021 and re-filed on 09/24/2021); (2) Tamara and Richard Marksberry v. Aziyo Biologics, Inc., et al., Case No. 49D04-2106-CT-021649 (consolidated); (3) Ramon Cabello v. Aziyo Biologics, Inc., et al., Case No. 49D13-2106-CT-021650 (consolidated); (4) Luis Caban v. Aziyo Biologics, Inc., Case No. 49D13-2107-CT-022413 (consolidated); (5) Machell and Samuel Hargrave v. Aziyo Biologics, Inc., et al., Case No. 49D01-2106-CT-021275 (consolidated); (6) Georgia Flinn as Personal Representative of the Estate of Gregory Flinn v. Aziyo Biologics, Inc., et al., Case No. 49D12-2107-CT-024051 (consolidated); (7) Ruth and William Flynn v. v. Aziyo Biologics, Inc., et al., Case No. 49D12-2107-CT-024624 (consolidated); (8) Tracy Warner and Kristin Foate v. v. Aziyo Biologics, Inc., et al., Case No. 49D04-2107-CT-024631 (consolidated); (9) Donna Schilling v. v. Aziyo Biologics, Inc., et al., Case No. 49D04-2107-CT-024443 (consolidated); (10) Robby and Stephanie Anderson v. v. Aziyo Biologics, Inc., et al., Case No. 49D13-2107-CT-025221 (consolidated); (11) Max Shepard v. v. Aziyo Biologics, Inc., et al., Case No. 49D11-2108-CT-025984 (consolidated); (12) Leon Chew v. Aziyo Biologics, Inc., et al., Case No. 49D12-2108-CT-025967 (consolidated); (13) Candace Kozor, Kenneth Largin and Anthony Young v. Aziyo Biologics, Inc., et al., Case No. 49D04-2107-CT-024626 (consolidated); (14) James and Lauri Ann Jackson v. v. Aziyo Biologics, Inc., et al., Case No. 49D02-2108-CT-028321 (re-filed in state court and consolidated); (15) James and Kathy Shaw v. Aziyo Biologics, Inc., et al, Case No. 49D11-2108-CT-028669 (consolidated); (16) Larry Szynski v. Aziyo Biologics, Inc., et al., Case No. 49D05-2108-CT-029225 (consolidated); (17) Jerrold Jenkins v. Aziyo Biologics, Inc., et al., Case No. 49D03-2108-CT-029367 (consolidated; (18) Hon Vien v. Aziyo Biologics, Inc., et al., Case No. 49D01-2202-CT-004812; (19) Jayson Hartman v. Aziyo Biologics, et al., Case No. 49D12-2202-CT-004835; and (20) Randy Smith v. Aziyo Biologics, Inc., et al., Case No. 49D01-2202-CT-005184 (collectively, the “Indiana State Complaints”). Fifteen lawsuits were filed in the Superior Court of the State of Delaware, captioned respectively: (1) Richard Williams v. Aziyo, Biologics Inc., et al., C.A. No. N21C-06-166 EMD; (2) Jean and Shante Georges v. Aziyo, Biologics Inc., et al., C.A. No. N21C-06-256-DJB; (3) Marjorie Hitchens v. Aziyo, Biologics Inc., et al., C.A. No. N21C-06-214-DJB; (4) Larry and Joanne Fortner v. Aziyo, Biologics Inc., et al., C.A. No. N21C-06-215-DJB; (5) Nancy and John Smith v. Aziyo, Biologics Inc., et al., C.A. No. N21C-06-219-DJB; (6) Joan Trincia v. Aziyo, Biologics Inc., et al., C.A. No. N21C-06-220-DJB; (7) Bernadette Burgess v. Aziyo, Biologics Inc., et al., C.A. No. N21C-06-264-DJB; (8) Summer Fitzhugh v. Aziyo, Biologics Inc., et al., C.A. No. N21C-06-221-DJB; (9) Linda Shields v. Aziyo, Biologics Inc., et al., C.A. No. N21C-06-166-DJB; and (10) Sharon Riddick v. Aziyo, Biologics Inc., et al., C.A. No. N21C-07-005-EMD; (11) Carl Stevens v. Aziyo, Biologics Inc., et al., C.A. No. N21C-08-149-DJB; (12) Joel and Melissa Stanton v. Aziyo, Biologics Inc., et al., C.A. No. N21C-08-212-AML; (13) Bruce and Beverly Carroll v. Aziyo, Biologics Inc., et al., C.A. No. N21C-08-130-DJB; (14) Margaret Cook v. Aziyo, Biologics Inc., et al., C.A. No. N21C-08-131-DJB; (15) Robert Jr. and Kelly Aspinall v. Aziyo, Biologics Inc., et al., C.A. No. N21C-09-065-DJB (collectively, the “Delaware State Complaints”). One lawsuit has been re-filed in the Circuit Court of Maryland (previously filed on 07/21/2021 and dismissed without prejudice on 08/12/2021 in the U.S. District Court of Maryland), captioned: Diana and James Hanson v. Aziyo Biologics, Inc., et al., Case No. C-02-CV-21-001094 (“Maryland State Complaint”). One lawsuit has been filed in the Court of Common Pleas of Ohio, captioned: Michelle and Charles Weethee v. Aziyo, Biologics Inc., et al., Case No. 2021 CV 03621 (“Ohio State Complaint”). One lawsuit was filed in the Northern District of Ohio, captioned: Heath Raker and Neal Raker v. Aziyo Biologics, Inc., et al., Case No. 1:22-cv-54 (“Ohio Federal Complaint”). One lawsuit filed in the Superior Court of North Carolina, captioned: Aurelia and Belvin Sherrill v. Aziyo Biologics, Inc., et al., Case No. 21-cvs-2797 has since been removed to the U.S. District Court for the Western District of North Carolina (“North Carolina Federal Complaint”). One lawsuit has been filed in the U.S. District Court for the Northern District of Florida, captioned Deborah Rice v. Aziyo Biologics, Inc., et al., Case No. 5:21-cv-00135-MW-MJF (“Florida Federal Complaint”). Two lawsuits were filed in the U.S. District Court for the Eastern District of Michigan, captioned: (1) Karrold Dudley v. Aziyo, Biologics Inc., et al., Case No. 2:21-cv-11813-GAD-EAS and (2) Diane Parron v. Aziyo Biologics Inc., et al., Case No. 2:22-cv-10522-NGE-EAS. A third lawsuit originally filed in the Circuit Court of Michigan, captioned: (3) Ilona and Christian Hildebrandt v. Aziyo Biologics, Inc., Case No. 2021-003804-NP has since been removed to the Eastern District of Michigan (collectively “Michigan Federal Complaints.”) One lawsuit has been filed in the U.S. District Court for the District of Colorado, captioned Christopher and Julie Buri v. Aziyo Biologics, Inc., et al., Case No. 1:21-cv-02789-SKC (“Colorado Federal Complaint”). One lawsuit has been filed in the U.S. District Court for the District of Oregon, captioned Christy Bryant v. Aziyo Biologics, Inc., et al., Case No. 1:21-cv-01759-AA (“Oregon Federal Complaint”). Two lawsuits have been filed in Fayette, Kentucky Circuit Court, captioned: (1) Earl Wesley Robinson and Joyce Ann Robinson v. Aziyo Biologics, Inc., Case No. 21-CI-03842 and (2) Horace B. Nelson, Sr. v. Aziyo Biologics, Inc., et al., Case No. 22-CI-00895 (collectively “Kentucky State Complaints”). Lastly, two lawsuits have been dismissed: (1) in the state court of Maryland, captioned Tracey and Stan Gearhart v. Aziyo Biologics, Inc., et al., Case No. C-02-CV-21-000997(dismissed without prejudice on 09/14/2021), and (2) in the U.S. District Court for the Northern District of Indiana, captioned: David Hahn v. Aziyo Biologics, Inc., et al., Case No. 2:21-cv-00265-PPS-JEM (dismissed without prejudice on 09/30/2021). Plaintiffs in the Indiana State Complaints allege a cause of action under Indiana’s Product Liability Act, citing manufacturing defects, defective design and failure to properly warn and instruct, and several of the complaints allege loss of consortium. Plaintiffs in these actions assert that the defendants are strictly liable or have breached the duty of care owed to plaintiffs by failing to exercise reasonable care in designing, manufacturing, marketing and labeling FiberCel and are seeking various types of damages, including economic damages, non-economic damages and loss of consortium. Plaintiffs in one of the Indiana State Complaints allege causes of action for product liability, negligence, breach of express and implied warranties, and punitive damages. Each of the plaintiffs in the Delaware State Complaints allege negligence, breach of implied warranty, breach of express warranty, medical monitoring and punitive damages, and two also allege loss of consortium. Plaintiffs in the Delaware State Complaints are seeking economic, consequential, and punitive damages. The Maryland Complaint asserts claims of negligence, breach of implied warranty, breach of express warranty, medical monitoring, and loss of consortium. The Florida Federal Complaint contains three strict liability claims for defective design, defective manufacture, and failure to warn. A claim for punitive damages is also pled. The Ohio State Complaint alleges causes of action for product liability and negligence, and seeks compensatory damages. The Colorado Federal Complaint asserts causes of action for strict product liability, misrepresentation, negligence, breach of express warranty, and breach of implied warranty of merchantability. The Michigan Federal Complaints assert causes of action for negligence, gross negligence breach of implied warranty, breach of express warranty, intentional infliction of emotional distress, and liability under the res ipsa loquitur doctrine. The Michigan Federal Complaints seek compensatory damages and punitive damages. The North Carolina Federal Complaint alleges causes of action for negligence, defective design, breach of implied warranty, breach of express warranty, and loss of consortium, and seeks both compensatory and punitive damages. The Oregon Federal Complaint asserts strict liability claims for defective design, defective manufacture, and failure to warn, and seeks compensatory damages. The Ohio Federal Complaint asserts strict liability claims for defective manufacturing, inadequate warning, nonconformance with representations, and also alleges loss of consortium and seeks compensatory damages. The Kentucky State Complaints assert strict liability claims based on manufacturing defect, design defect, failure to warn, negligence, breach of implied warranty, breach of express warranty, and seek recovery for medical monitoring, loss of consortium, compensatory damages, and punitive damages. In addition to the above, there have been forty-four claims related to the FiberCel recall, which have not yet resulted in a lawsuit. The Company refers to all of the aforementioned litigation, or claim notices, collectively as the “FiberCel Litigation.” In order to reasonably estimate a loss or range of loss for the FiberCel Litigation, the Company must assess a variety of factors, including, (i) what claims, if any, will survive dispositive motion practice, (ii) the extent of the claims, particularly when damages are not specified or are indeterminate, (iii) how the discovery process will affect the litigation, (iv) the settlement posture of the other parties to the litigation and (v) any other factors that may have a material effect on the litigation. At present, it is not possible for Aziyo to estimate a range of probable loss in the FiberCel Litigation; however, while unknown, the probable loss could have a material effect on the Company’s financial position and results of operations. Should Aziyo be required to pay claims related to the FiberCel Litigation, the Company believes that certain settlements and judgments, as well as legal defense costs, may be covered in whole or in part under the Company’s insurance policies. In certain circumstances, insurance carriers reserve their rights to contest or deny coverage. The Company intends to contest vigorously any disputes with its insurance carriers and to enforce its rights under the terms of its insurance policies. Accordingly, the Company will record receivables with respect to amounts due under these policies only when the realization of the potential claim for recovery is considered probable. Amounts recovered under the Company’s insurance policies could be materially less than stated coverage limits and may not be adequate to cover damages, other relief and/or costs relating to claims. In addition, there is no guarantee that insurers will pay claims or that coverage will otherwise be available. As of both March 31, 2022 and December 31, 2021, the Company was not a party to, or aware of, any material legal matters or claims except for the FiberCel Litigation.

Net Loss Per Share Attributable

Net Loss Per Share Attributable to Common Stockholders	3 Months Ended
	Mar. 31, 2022
Net Loss Per Share Attributable to Common Stockholders
Net Loss Per Share Attributable to Common Stockholders	Note 9. Net Loss Per Share Attributable to Common Stockholders ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ (in thousands, except share and per share data) ​ March 31, ​ ​ 2022 2021 Numerator: ​ ​ Net loss attributable to common stockholders ​ $ (8,149) ​ $ (5,067) ​ Denominator: ​ ​ ​ Weighted average number of common shares, basic and diluted ​ 13,574,058 ​ 10,226,152 ​ Net loss per common share attributable to common stockholders, basic and diluted ​ $ (0.60) ​ $ (0.50) ​ ​ The Company’s potential dilutive securities have been excluded from the computation of diluted net loss per share as the effect would be anti-dilutive. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. The Company excluded the following potential common shares, presented based on amounts outstanding at period end, from the computation of diluted net loss per share attributable to common stockholders: ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ ​ 2022 2021 Options to purchase common stock 1,857,091 ​ 1,238,548 Restricted stock units ​ 564,159 ​ 232,098 ​ Total 2,421,250 ​ 1,470,646 ​

Related Party Transactions

Related Party Transactions	3 Months Ended
	Mar. 31, 2022
Related Party Transactions
Related Party Transactions	Note 10. Related Party Transactions As part of the contribution of assets transacted from Tissue Banks International, now KeraLink International (“KeraLink”), to Aziyo upon formation of the Company, a provision existed which guaranteed a certain level of working capital, as defined, on the opening balance sheet of Aziyo. Such guarantee was largely finalized in 2016; however, an additional $0.4 million was received by the Company in connection with a settlement reached in 2018. Furthermore, as part of the 2018 settlement, it was agreed that when KeraLink sells its Aziyo common shares for net proceeds greater than $550,000, KeraLink is obligated to pay Aziyo $550,000 within three days of such cash being received. In May 2021, KeraLink sold Aziyo common shares for proceeds in excess of $550,000, and as such, remitted $550,000 to Aziyo in full satisfaction of the 2018 settlement.

Segment Information

Segment Information	3 Months Ended
	Mar. 31, 2022
Segment Information
Segment Information	Note The Company operates as one segment, regenerative medicines. The segment is based on financial information that is utilized by the Company’s Chief Operating Decision Maker (“CODM”), who is the Company’s Chief Executive Officer, to assess performance and allocate resources. For the three months ended March 31, 2022 and 2021, the Company’s net sales disaggregated by the major sources - Core Products and Non-Core Products (see Note 1) - were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ March 31, ​ ​ 2022 2021 Sales by product ​ ​ ​ ​ ​ ​ ​ Core Products ​ $ 8,140 ​ $ 10,664 ​ Non-Core Products ​ 3,355 ​ 2,220 ​ Total Net Sales ​ $ 11,495 ​ $ 12,884 ​ ​

Summary of Significant Accoun_2

Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2022
Summary of Significant Accounting Policies
Basis of Presentation and Liquidity	Basis of Presentation and Liquidity The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the Company’s consolidated financial statements and accompanying notes included in the Company's annual report on Form 10-K (“Annual Report”) for the fiscal year ended December 31, 2021. The financial information as of March 31, 2022 and for the three months ended March 31, 2022 and 2021 is unaudited, but in the opinion of management, all adjustments considered necessary for a fair statement of the results for these interim periods have been included. The condensed consolidated balance sheet data as of December 31, 2021 was derived from audited financial statements but does not include all disclosures required by GAAP. The results of the Company’s operations for any interim period are not necessarily indicative of the results that may be expected for any other interim period or any future year or period. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. In accordance with Accounting Standards Update (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40) In order to mitigate the current and potential future liquidity issues caused by the matters noted above, the Company may seek to raise capital through the issuance of common stock, either refinance or restructure its Term Loan Facility and Revolving Credit Facility (as such terms are defined, and further described, in Note 6), restructure its Revenue Interest Obligation (as such term is defined, and further described, in Note 7), or pursue asset sale transactions. However, such transactions may not be successful and the Company may not be able to raise additional equity, refinance or restructure its debt instruments, or sell assets on acceptable terms, or at all. As such, based on its current operating plans, the Company believes there is uncertainty as to whether its future cash flows along with its existing cash, availability under the Revolving Credit Facility and cash generated from expected future sales will be sufficient to meet the Company’s anticipated operating needs through twelve months from the financial statement issuance date. Due to these factors, there is substantial doubt about the Company’s ability to continue as a going concern within one year after the issuance of the financial statements. The accompanying condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. That is, the accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities in the ordinary course of business.
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates and assumptions relating to inventory, receivables, long-lived assets, the valuation of stock-based awards, the valuation of the revenue interest obligation and deferred income taxes are made at the end of each financial reporting period by management. Management continually re-evaluates its estimates, judgments and assumptions, and management's evaluation could change. Actual results could differ from those estimates.
Impact of COVID-19	Impact of COVID-19 The Company continues to closely monitor the impact of the COVID-19 pandemic on its business. In March 2020, the World Health Organization declared COVID-19 a global pandemic and recommended various containment and mitigation measures worldwide. Since that time, the number of procedures performed using the Company's products has intermittently decreased, as governmental authorities in the United States have recommended, and in certain cases required, that elective, specialty and other non-emergency procedures and appointments be suspended or canceled in order to avoid patient exposure to medical environments and the risk of potential infection with COVID-19, and to focus limited resources and personnel capacity on the treatment of COVID-19 patients. As a result, beginning in March 2020, a significant number of procedures using the Company's products have intermittently been postponed or cancelled, which has negatively impacted sales of its products. These measures and challenges will likely continue for the duration of the pandemic, which is uncertain, and may reduce the Company's net sales in the future and negatively impact its business, financial condition and results of operations while the pandemic continues.
Net Loss per Share Attributable to Common Stockholders	Net Loss per Share Attributable to Common Stockholders Our common stock has a dual class structure, consisting of Class A common stock and Class B common stock. Other than voting rights, the Class B common stock has the same rights as the Class A common stock, and therefore both are treated as the same class of stock for purposes of the earnings per share calculation. Basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average shares outstanding during the period. For purposes of the diluted net income (loss) per share attributable to common stockholders calculation, stock options and restricted stock units are considered to be common stock equivalents. All common stock equivalents have been excluded from the calculation of diluted net loss per share attributable to common stockholders, as their effect would be anti-dilutive for all periods presented. Therefore, basic and diluted net loss per share were the same for both periods presented.
Fair Value of Financial Instruments	Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value: Level 1 -  Level 2 -  Level 3 -  The estimated fair value of financial instruments disclosed in the financial statements has been determined by using available market information and appropriate valuation methodologies. The carrying value of all current assets and current liabilities approximates fair value because of their short-term nature.
Cash and Restricted Cash	Cash and Restricted Cash The Company maintains its cash balances at banks and financial institutions. The balances are insured up to the legal limit. The Company maintains cash balances that may, at times, exceed this insured limit. ​ Under the provisions of the Revolving Credit Facility (see Note 6), the Company has a lockbox arrangement with the banking institution whereby daily lockbox receipts are contractually utilized to pay down outstanding balances on the Revolving Credit Facility debt. Lockbox receipts that have not yet been applied to the Revolving Credit Facility are classified as restricted cash in the accompanying condensed consolidated balance sheets. The following table provides a reconciliation of cash and restricted cash included in the condensed consolidated balance sheets to the amounts included in the statements of cash flows (in thousands). ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ 2022 2021 Cash ​ $ 22,066 ​ $ 30,410 Restricted cash ​ 109 ​ 91 Total cash and restricted cash shown in statements of cash flows ​ $ 22,175 ​ $ 30,501
Accounts Receivable and Allowances	Accounts Receivable and Allowances Accounts receivable in the accompanying balance sheets are presented net of allowances for doubtful accounts and other credits. The Company grants credit to customers in the normal course of business, but generally does not require collateral or any other security to support its receivables. The Company evaluates the collectability of accounts receivable based on a combination of factors. In circumstances where a specific customer is unable to meet its financial obligations to the Company, a provision to the allowance for doubtful accounts is recorded to reduce the net recognized receivable to the amount that is reasonably expected to be collected. For all other customers, a provision to the allowance for doubtful accounts is recorded based on factors including the length of time the receivables are past due, the current business environment and the Company’s historical experience. Provisions to the allowance for doubtful accounts are recorded to general and administrative expenses. Account balances are charged off against the allowance when it is probable that the receivable will not be recovered.
Inventory	Inventory Inventory, consisting of purchased materials, direct labor and manufacturing overhead, is stated at the lower of cost or net realizable value, with cost determined generally using the average cost method. Inventory write-downs for unprocessed and certain processed donor tissue are recorded based on the estimated amount of inventory that will not pass the quality control process based on historical data. At each balance sheet date, the Company also evaluates inventory for excess quantities, obsolescence or shelf life expiration. This evaluation includes analysis of the Company’s current and future strategic plans, historical sales levels by product, projections of future demand, the risk of technological or competitive obsolescence for products, general market conditions and a review of the shelf life expiration dates for products. To the extent that management determines there is excess or obsolete inventory or quantities with a shelf life that is too near its expiration for the Company to reasonably expect that it can sell those products prior to their expiration, the Company adjusts the carrying value to estimated net realizable value.
Property and Equipment	Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed on the straight-line method over the following estimated useful lives of the assets: ​ ​ ​ ​ Processing and research equipment 5 to 10 years Office equipment and furniture 3 to 5 years Computer hardware and software 3 years ​ Leasehold improvements are amortized on the straight-line method over the shorter of the lease term or the estimated useful life of the asset. Repairs and maintenance costs are expensed as incurred.
Long-Lived Assets	Long-Lived Assets Purchased intangible assets with finite lives are carried at acquired fair value, less accumulated amortization. Amortization is computed over the estimated useful lives of the respective assets. The Company periodically evaluates the period of depreciation or amortization for long-lived assets to determine whether current circumstances warrant revised estimates of useful lives. The Company reviews its property and equipment and intangible assets for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. Impairment exists when the carrying value of the company’s asset exceeds the related estimated undiscounted future cash flows expected to be derived from the asset. If impairment exists, the carrying value of that asset is adjusted to its fair value. A discounted cash flow analysis is used to estimate an asset’s fair value, using assumptions that market participants would apply. The results of impairment tests are subject to management’s estimates and assumptions of projected cash flows and operating results. Changes in assumptions or market conditions could result in a change in estimated future cash flows and could result in a lower fair value and therefore an impairment, which could impact reported results. There were no impairment losses for the three months ended March 31, 2022 or 2021.
Revenue Recognition	Revenue Recognition The Company’s revenue is generated from contracts with customers in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606. The core principle of ASC 606 is that the Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The ASC 606 revenue recognition model consists of the following five steps: (1) identify the contracts with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation. As noted above, the Company enters into contracts to primarily sell and distribute products to healthcare providers or commercial partners, or are produced and sold under contract manufacturing arrangements with corporate customers which are billed under ship and bill contract terms. Revenue is recognized when the Company has met its performance obligations pursuant to its contracts with its customers in an amount that the Company expects to be entitled to in exchange for the transfer of control of the products to the Company’s customers. For all product sales, the Company has no further performance obligations and revenue is recognized at the point control transfers which occurs either when: (i) the product is shipped via common carrier; or (ii) the product is delivered to the customer or distributor, in accordance with the terms of the agreement. A portion of the Company’s product revenue is generated from consigned inventory maintained at hospitals and from inventory physically held by direct sales representatives. For these types of product sales, the Company retains control until the product has been used or implanted, at which time revenue is recognized. The Company elected to account for shipping and handling activities as a fulfillment cost rather than a separate performance obligation. Amounts billed to customers for shipping and handling are included as part of the transaction price and recognized as revenue when control of the underlying products is transferred to the customer. The related shipping and freight charges incurred by the Company are included in sales and marketing costs. Contracts with customers state the final terms of the sale, including the description, quantity, and price of each implant distributed. The payment terms and conditions in the Company’s contracts vary; however, as a common business practice, payment terms are typically due in full within 30 to 60 days of delivery. The Company, at times, extends volume discounts to customers. The Company permits returns of its products in accordance with the terms of contractual agreements with customers. Allowances for returns are provided based upon analysis of the Company’s historical patterns of returns matched against the revenues from which they originated. The Company records estimated returns as a reduction of revenue in the same period revenue is recognized.
Deferred Rent	Deferred Rent The Company recognizes rent expense by the straight-line method over the lease term. Funds received from the lessor used to reimburse the Company for the cost of leasehold improvements are recorded as a deferred credit resulting from a lease incentive and are amortized over the lease term as a reduction of rent expense.
Stock-Based Compensation Plans	Stock-Based Compensation Plans The Company accounts for its stock-based compensation plans in accordance with FASB ASC 718, Accounting for Stock Compensation
Research and Development Costs	Research and Development Costs Research and development costs, which include mainly salaries, outside services and supplies, are expensed as incurred.
Concentration of Credit Risk	Concentration of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash. At March 31, 2022, the Company maintained $22.1 million in bank deposit accounts that are in excess of the $0.25 million insurance provided by the Federal Deposit Insurance Corporation in one federally insured financial institution. The Company has not experienced any losses in such accounts.
Significant Customers	Significant Customers The Company sells certain of its products under large contract manufacturing or distribution arrangements. The following table presents percentage of total revenues derived from the Company’s largest customers as well as their respective percentage of total accounts receivable: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ ​ March 31, ​ ​ ​ 2022 ​ 2021 ​ Percent of revenues derived from: ​ ​ ​ ​ ​ Medtronic Sofamor Danek USA ​ - ​ 22% ​ Surgalign Holdings ​ 10% ​ 10% ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ December 31, ​ ​ ​ 2022 ​ 2021 ​ Percent of accounts receivable derived from: ​ ​ ​ ​ ​ Surgalign Holdings ​ 11% ​ 12% ​
Comprehensive Income (Loss)	Comprehensive Income (Loss) Comprehensive income (loss) comprises net income (loss) and other changes in equity that are excluded from net income (loss). For the three months ended March 31, 2022 and 2021, the Company’s net loss equaled its comprehensive loss and accordingly, no additional disclosure is presented.
Income Taxes	Income Taxes The Company uses the asset and liability method of accounting for income taxes. Deferred income taxes are recorded to reflect the tax consequences on future years for differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to amounts that are more likely than not to be realized. The Company is subject to income taxes in the federal and state jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. In accordance with the authoritative guidance on accounting for uncertainty in income taxes, the Company recognizes tax liabilities for uncertain tax positions when it is more likely than not that a tax position will not be sustained upon examination and settlement with various taxing authorities. Liabilities for uncertain tax positions are measured based upon the largest amount of benefit that is more likely than not (greater than 50%) of being realized upon settlement. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense.

Summary of Significant Accoun_3

Summary of Significant Accounting Policies (Tables)	3 Months Ended
	Mar. 31, 2022
Summary of Significant Accounting Policies
Summary of reconciliation of cash and restricted cash included in the consolidated balance sheets	The following table provides a reconciliation of cash and restricted cash included in the condensed consolidated balance sheets to the amounts included in the statements of cash flows (in thousands). ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ 2022 2021 Cash ​ $ 22,066 ​ $ 30,410 Restricted cash ​ 109 ​ 91 Total cash and restricted cash shown in statements of cash flows ​ $ 22,175 ​ $ 30,501
Summary of estimated useful lives of the assets	​ ​ ​ ​ Processing and research equipment 5 to 10 years Office equipment and furniture 3 to 5 years Computer hardware and software 3 years
Schedule of largest customers as well as their respective percentage of total accounts receivable	​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ ​ March 31, ​ ​ ​ 2022 ​ 2021 ​ Percent of revenues derived from: ​ ​ ​ ​ ​ Medtronic Sofamor Danek USA ​ - ​ 22% ​ Surgalign Holdings ​ 10% ​ 10% ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ December 31, ​ ​ ​ 2022 ​ 2021 ​ Percent of accounts receivable derived from: ​ ​ ​ ​ ​ Surgalign Holdings ​ 11% ​ 12% ​

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	3 Months Ended
	Mar. 31, 2022
Stock-Based Compensation
Summary of stock options outstanding, exercisable and vested or expected to vest	​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted- ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average ​ ​ ​ ​ ​ ​ Weighted- ​ Remaining ​ Aggregate ​ ​ ​ ​ Average ​ Contractual ​ Intrinsic ​ ​ Exercise Term Value ​ ​ Number of Shares ​ Price ​ (years) ​ (in thousands) Outstanding, December 31, 2021 ​ 1,386,811 ​ $ 13.28 ​ ​ 7.8 $ 179 Granted ​ 499,130 ​ $ 5.08 ​ ​ ​ ​ ​ ​ Exercised ​ — ​ $ — ​ ​ ​ ​ ​ ​ Forfeited ​ (28,850) ​ $ 12.26 ​ ​ ​ ​ ​ ​ Outstanding, March 31, 2022 ​ 1,857,091 ​ $ 11.10 ​ ​ 8.2 ​ $ 524 Vested and exercisable, March 31, 2022 ​ 477,322 ​ $ 11.04 ​ ​ 5.7 ​ $ 87
Schedule of RSU activity	​ ​ ​ ​ ​ ​ ​ ​ Number of Weighted- ​ ​ Shares ​ Average ​ ​ Underlying ​ Grant Date ​ ​ RSUs ​ Fair Value Unvested, December 31, 2021 235,985 ​ $ 15.98 Granted 356,349 ​ $ 3.58 Vested (19,247) ​ $ 14.53 Forfeited (8,928) ​ $ 8.66 Unvested, March 31, 2022 564,159 ​ $ 8.31
Schedule of stock-based compensation expense recognized	Stock-based compensation expense recognized during the three months ended March 31, 2022 and 2021 was comprised of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ March 31, ​ ​ 2022 2021 Sales and marketing $ 195 $ 128 ​ General and administrative ​ 682 ​ 411 ​ Research and development ​ 178 ​ 109 ​ Cost of goods sold ​ 50 ​ 29 ​ Total stock-based compensation expense ​ $ 1,105 ​ $ 677 ​
Summary of weighted-average assumptions were used to determine the fair value of options	​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ ​ March 31, ​ ​ ​ 2022 2021 ​ Expected term (years) ​ 6.2 ​ 6.1 ​ ​ Risk-free interest rate ​ 1.8 % 1.0 % ​ Volatility factor ​ 64 % 64 % ​ Dividend yield ​ — ​ — ​ ​

Inventory (Tables)

Inventory (Tables)	3 Months Ended
	Mar. 31, 2022
Inventory
Summary of inventory	Inventory was comprised of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ December 31, ​ ​ 2022 2021 Raw materials ​ $ 1,872 ​ $ 1,880 ​ Work in process ​ ​ 568 ​ ​ 834 ​ Finished goods ​ ​ 7,423 ​ ​ 6,840 ​ Total ​ $ 9,863 ​ $ 9,554 ​

Long-Term Debt (Tables)

Long-Term Debt (Tables)	3 Months Ended
	Mar. 31, 2022
Long-Term Debt
Summary of PPP loan recorded within long-term debt	Long-term debt was comprised of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, December 31, ​ ​ 2022 ​ 2021 Term Loan Facility, net of unamortized discount and deferred financing costs ​ $ 15,425 ​ $ 17,077 Note to Tissue Supplier ​ 1,392 ​ 1,392 Total ​ 16,817 ​ 18,469 Current Portion ​ (8,059) ​ (8,059) Long-Term Debt ​ $ 8,758 ​ $ 10,410 ​

Net Loss Per Share Attributab_2

Net Loss Per Share Attributable to Common Stockholders (Tables)	3 Months Ended
	Mar. 31, 2022
Net Loss Per Share Attributable to Common Stockholders
Schedule of net loss per share attributable to common stockholders	​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ (in thousands, except share and per share data) ​ March 31, ​ ​ 2022 2021 Numerator: ​ ​ Net loss attributable to common stockholders ​ $ (8,149) ​ $ (5,067) ​ Denominator: ​ ​ ​ Weighted average number of common shares, basic and diluted ​ 13,574,058 ​ 10,226,152 ​ Net loss per common share attributable to common stockholders, basic and diluted ​ $ (0.60) ​ $ (0.50) ​
Schedule of potential common shares excluded from calculation, presented based on amounts outstanding at period end, from the computation of diluted net loss per share attributable to common stockholders	​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ ​ 2022 2021 Options to purchase common stock 1,857,091 ​ 1,238,548 Restricted stock units ​ 564,159 ​ 232,098 ​ Total 2,421,250 ​ 1,470,646

Segment Information (Tables)

Segment Information (Tables)	3 Months Ended
	Mar. 31, 2022
Segment Information
Schedule of sales information	For the three months ended March 31, 2022 and 2021, the Company’s net sales disaggregated by the major sources - Core Products and Non-Core Products (see Note 1) - were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ March 31, ​ ​ 2022 2021 Sales by product ​ ​ ​ ​ ​ ​ ​ Core Products ​ $ 8,140 ​ $ 10,664 ​ Non-Core Products ​ 3,355 ​ 2,220 ​ Total Net Sales ​ $ 11,495 ​ $ 12,884 ​

Summary of Significant Accoun_4

Summary of Significant Accounting Policies - Basis of Presentation (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Summary of Significant Accounting Policies
Net loss	$ (8,149)	$ (5,067)
Accumulated deficit	(113,240)		$ (105,091)
Cash used in operating activities	7,350	5,174
Cash used in financing activities	$ 869	$ 3,726

Summary of Significant Accoun_5

Summary of Significant Accounting Policies - Cash and Restricted Cash (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021	Mar. 31, 2021	Dec. 31, 2020
Cash and Restricted Cash
Cash	$ 22,066	$ 30,393	$ 30,410
Restricted cash	109	35	91
Total cash and restricted cash shown in statements of cash flows	$ 22,175	$ 30,428	$ 30,501	$ 39,532

Summary of Significant Accoun_6

Summary of Significant Accounting Policies - Property and Equipment (Details)	3 Months Ended
	Mar. 31, 2022
Computer hardware and software
Property, Plant and Equipment [Line Items]
Estimated useful lives	3 years
Minimum | Processing and research equipment
Property, Plant and Equipment [Line Items]
Estimated useful lives	5 years
Minimum | Office equipment and furniture
Property, Plant and Equipment [Line Items]
Estimated useful lives	3 years
Maximum | Processing and research equipment
Property, Plant and Equipment [Line Items]
Estimated useful lives	10 years
Maximum | Office equipment and furniture
Property, Plant and Equipment [Line Items]
Estimated useful lives	5 years

Summary of Significant Accoun_7

Summary of Significant Accounting Policies - Long-Lived Assets (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Long-Lived Assets
Impairment losses	$ 0	$ 0

Summary of Significant Accoun_8

Summary of Significant Accounting Policies - Revenue Recognition (Details)	3 Months Ended
	Mar. 31, 2022
Minimum
Disaggregation of Revenue [Line Items]
Term of payment	30 days
Maximum
Disaggregation of Revenue [Line Items]
Term of payment	60 days

Summary of Significant Accoun_9

Summary of Significant Accounting Policies - Concentration of Credit risk (Details) - USD ($) $ in Millions	3 Months Ended		12 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Concentration Risk [Line Items]
Bank deposit accounts	$ 22.1
Revenues | Customer concentration risk | Medtronic Sofamor Danek USA
Concentration Risk [Line Items]
Concentration risk (as a percent)		22.00%
Revenues | Customer concentration risk | Surgalign Holdings
Concentration Risk [Line Items]
Concentration risk (as a percent)	10.00%	10.00%
Accounts Receivable | Customer concentration risk | Surgalign Holdings
Concentration Risk [Line Items]
Concentration risk (as a percent)	11.00%		12.00%

Stock-Based Compensation - 2020

Stock-Based Compensation - 2020 Plan (Details) - shares	3 Months Ended
	Mar. 31, 2022	Oct. 07, 2020
Options to purchase common stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise price as a percentage of market value of share of common stock at closing on the date of the grant	100.00%
Vesting term	4 years
Options to purchase common stock | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Contractual term	7 years
Options to purchase common stock | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Contractual term	10 years
2020 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares reserved for future issuance	481,195	1,636,000

Stock-Based Compensation - Outs

Stock-Based Compensation - Outstanding (Details) - 2020 Plan - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Number of Shares
Outstanding at the beginning	1,386,811
Granted	499,130
Forfeited	(28,850)
Outstanding at the end	1,857,091	1,386,811
Vested and exercisable at the end	477,322
Weighted- Average Exercise Price
Outstanding at the beginning (in dollars per share)	$ 13.28
Granted (in dollars per share)	5.08
Forfeited (in dollars per share)	12.26
Outstanding at the end (in dollars per share)	11.10	$ 13.28
Vested and exercisable at the end (in dollars per share)	$ 11.04
Weighted-Average Remaining Contractual Term (years)
Outstanding (in years)	8 years 2 months 12 days	7 years 9 months 18 days
Vested and exercisable (in years)	5 years 8 months 12 days
Aggregate Intrinsic Value
Outstanding at the end (in dollars)	$ 524	$ 179
Vested and exercisable at the end (in dollars)	$ 87
Other Disclosures
Weighted average grant date fair value of options granted	$ 3.03
Options to purchase common stock
Other Disclosures
Total unrecognized compensation expense	$ 7,300
Weighted-average period	2 years 10 months 24 days

Stock-Based Compensation - Rest

Stock-Based Compensation - Restricted Stock Units (Details) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2022USD ($)$ / sharesshares
Number of Shares Underlying RSUs
Unvested at the beginning | shares	235,985
Granted | shares	356,349
Vested | shares	(19,247)
Forfeited | shares	(8,928)
Outstanding at the end | shares	564,159
Weighted-Average Grant Date Fair Value
Unvested at the beginning (in dollars per share)	$ 15.98
Granted (in dollars per share)	3.58
Vested (in dollars per share)	14.53
Forfeited (in dollars per share)	8.66
Unvested at the ending (in dollars per share)	$ 8.31
Shares issued in settlement of the award | $	$ 192
Restricted stock units
Weighted-Average Grant Date Fair Value
Exercise price	$ 0
Shares issued in settlement of the award | $	$ 0
Restricted stock units | 2020 Plan
Weighted-Average Grant Date Fair Value
Total fair value of the restricted stock units granted | $	1,300
Unrecognized compensation costs | $	$ 3,300
Weighted-average period	1 year 8 months 12 days
Restricted stock units | 2020 Plan | Scenario, Closing Price of Common Stock Exceeds 10 per Share
Number of Shares Underlying RSUs
Granted | shares	199,388
Weighted-Average Grant Date Fair Value
Weighted-average period	2 years
Restricted stock units | 2020 Plan | Scenario, Closing Price of Common Stock Exceeds 10 per Share | Class A Common stock
Weighted-Average Grant Date Fair Value
Share Price	$ 10
Period over which price must exceed $10 for awards to vest	30 days
Restricted stock units | 2020 Plan | Minimum
Weighted-Average Grant Date Fair Value
Vesting period	3 years
Restricted stock units | 2020 Plan | Maximum
Weighted-Average Grant Date Fair Value
Vesting period	4 years

Stock-Based Compensation - Empl

Stock-Based Compensation - Employee Stock Purchase Plan (Details) - Employee Stock Purchase Plan	3 Months Ended
	Mar. 31, 2022shares
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Price of the common stock purchased as percentage of fair market value of common stock	85.00%
Grant of equity awards authorized	380,997
Stock options available for grant	311,408
Shares issued under ESPP	42,345

Stock-Based Compensation - Stoc

Stock-Based Compensation - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total	$ 1,105	$ 677
Sales and marketing
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total	195	128
General and administrative
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total	682	411
Research and development
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total	178	109
Cost of goods sold
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total	$ 50	$ 29

Stock-Based Compensation - Assu

Stock-Based Compensation - Assumption (Details)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Weighted-average assumptions were used to determine the fair value of options
Expected term (years)	6 years 2 months 12 days	6 years 1 month 6 days
Risk-free interest rate	1.80%	1.00%
Volatility factor	64.00%	64.00%
Dividend yield	0.00%	0.00%

Inventory (Details)

Inventory (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Inventory
Raw materials	$ 1,872	$ 1,880
Work in process	568	834
Finished goods	7,423	6,840
Total	$ 9,863	$ 9,554

Long-Term Debt - Term Loan Faci

Long-Term Debt - Term Loan Facility and Revolving Credit (Details) - USD ($)	May 31, 2017	Jul. 31, 2019	Feb. 28, 2018	Dec. 31, 2017	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Revolving Credit Facility
Long-Term Debt
Maximum borrowing capacity	$ 8,000,000
Borrowing capacity					$ 7,000,000		$ 8,000,000
Interest rate	2.25%
Weighted average interest rate					7.20%	7.20%
Unused line fee (as a percent)	0.50%
Prepayment penalties until January 21, 2023 (as a percent)	3.00%
Prepayment penalties after January 21, 2023 (as a percent)	2.00%
LIBOR | Revolving Credit Facility
Long-Term Debt
Basis spread on variable rate	4.95%
Term Loan Facility
Long-Term Debt
Face amount of debt	$ 12,000,000
Proceeds from Issuance of Debt		$ 3,500,000	$ 3,000,000	$ 1,500,000
Total amount outstanding		$ 20,000,000
Interest rate		2.25%
Weighted average interest rate					9.50%	9.50%
Percentage of casualty proceeds in excess of $250,000 to redeem loan balance	100.00%
Casualty proceeds threshold amount in excess of which is used to redeem loan balance	$ 250,000
Percentage of cash proceeds of non-ordinary course asset sale or sale of borrowing base assets required to redeem loan balance	100.00%
Exit fee (as a percent)	6.50%
Term Loan Facility | Minimum
Long-Term Debt
Prepayment penalties (as a percent)	2.00%
Term Loan Facility | Maximum
Long-Term Debt
Prepayment penalties (as a percent)	3.00%
Term Loan Facility | LIBOR
Long-Term Debt
Variable rate divider		1.00%
Basis spread on variable rate		7.25%

Long-Term Debt - Unsecured Prom

Long-Term Debt - Unsecured Promissory Notes (Details) - Unsecured promissory note two $ in Millions	Dec. 31, 2017USD ($)
Debt Instrument [Line Items]
Face amount of debt	$ 2.1
Interest rate	5.00%

Long-Term Debt - Long-Term Debt

Long-Term Debt - Long-Term Debt (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Contractual maturities of the long-term debt
Total, net	$ 16,817	$ 18,469
Current Portion	(8,059)	(8,059)
Long-term debt	8,758	10,410
Term Loan Facility
Contractual maturities of the long-term debt
Total, net	15,425	17,077
Note to Tissue Supplier
Contractual maturities of the long-term debt
Total, net	$ 1,392	$ 1,392

Revenue Interest Obligation - (

Revenue Interest Obligation - (Details) - USD ($) $ in Thousands	May 31, 2017	Mar. 31, 2022	Mar. 31, 2021
Revenue Interest Obligation.
Debt Instrument [Line Items]
Interest expense related to revenue interest obligation		$ 700	$ 700
Ligand Pharmaceuticals
Debt Instrument [Line Items]
Estimated present value on the acquisition date	$ 27,700
Annual minimum sale	$ 2,750
Percentage of future sales	5.00%
Term of agreement	10 years
Cumulative sales of products exceed $100.0 | Ligand Pharmaceuticals
Debt Instrument [Line Items]
Payments due based on cumulative sales	$ 5,000
Cumulative sales	100,000
Cumulative sales of products exceed $300.0 | Ligand Pharmaceuticals
Debt Instrument [Line Items]
Payments due based on cumulative sales	5,000
Cumulative sales	$ 300,000

Commitments and Contingencies -

Commitments and Contingencies - Operating Leases (Details) $ in Millions	3 Months Ended
	Mar. 31, 2022USD ($)product	Mar. 31, 2021USD ($)
Commitments and Contingencies.
Number of production facilities under operating lease	2
Number of administrative and research facility under operating lease	1
Rent expense | $	$ 0.3	$ 0.3

Commitments and Contingencies_2

Commitments and Contingencies - License and Supply (Details) - License agreement with Cook Biotech - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Cook Biotech License and Supply Agreements
Percentage of royalty on sales	3.00%
Royalty expense	$ 0	$ 0
Payment of license fee per year	$ 100

Commitments and Contingencies_3

Commitments and Contingencies - Legal Proceedings (Details)	3 Months Ended
	Mar. 31, 2022lawsuit	Mar. 31, 2022lawsuitclaim
Legal Proceedings
Number of lawsuits filed	47
Number of claims not resulted lawsuit yet	44	44
INDIANA
Legal Proceedings
Number of lawsuits filed	20
INDIANA | Product Lability
Legal Proceedings
Number of lawsuits filed	1
DELAWARE
Legal Proceedings
Number of lawsuits filed	15
DELAWARE | Product Lability
Legal Proceedings
Number of lawsuits filed	2
MARYLAND
Legal Proceedings
Lawsuits dismissed	2	2
Lawsuits refiled	1	1
OHIO
Legal Proceedings
Number of lawsuits filed	1
NORTH CAROLINA
Legal Proceedings
Number of lawsuits filed	1
FLORIDA
Legal Proceedings
Number of lawsuits filed	1	3
MICHIGAN
Legal Proceedings
Number of lawsuits filed	2
COLORADO
Legal Proceedings
Number of lawsuits filed	1
OREGON
Legal Proceedings
Number of lawsuits filed	1
KENTUCKY
Legal Proceedings
Number of lawsuits filed	2

Net Loss Per Share Attributab_3

Net Loss Per Share Attributable to Common Stockholders (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Numerator:
Net loss attributable to common stockholders	$ (8,149)	$ (5,067)
Denominator:
Weighted average common shares outstanding - basic	13,574,058	10,226,152
Weighted average number of common shares, diluted	13,574,058	10,226,152
Net loss per common share attributable to common stockholders, basic (in dollar per share)	$ (0.60)	$ (0.50)
Net loss per common share attributable to common stockholders, diluted (in dollar per share)	$ (0.60)	$ (0.50)

Net Loss Per Share Attributab_4

Net Loss Per Share Attributable to Common Stockholders - Anti-dilutive securities (Details) - shares	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities	2,421,250	1,470,646
Options to purchase common stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities	1,857,091	1,238,548
Restricted stock units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities	564,159	232,098

Related Party Transactions (Det

Related Party Transactions (Details) - KeraLink International - USD ($)	12 Months Ended
	Dec. 31, 2018	May 31, 2021
Related Party Transaction [Line Items]
Amount of settlement received	$ 400,000
Shares sale proceeds over which Keralink to pay Aziyo	550,000	$ 550,000
Amount to receive from KeraLink upon sale of shares over $550,000	$ 550,000
Amount remitted from sale of shares		$ 550,000
Period for Keralink to pay Aziyo	3 days

Segment Information (Details)

Segment Information (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2022USD ($)segment	Mar. 31, 2021USD ($)
Segment Reporting Information [Line Items]
Number of operating segments | segment	1
Total sales	$ 11,495	$ 12,884
Core Products
Segment Reporting Information [Line Items]
Total sales	8,140	10,664
Non-Core Products
Segment Reporting Information [Line Items]
Total sales	$ 3,355	$ 2,220