AxoGen (NASDAQ:AXGN) reported third-quarter revenue growth of 26.2% as demand for its nerve-repair products increased across its breast, extremities, oral and maxillofacial, and head-and-neck markets. The company also raised its full-year revenue outlook following the October acquisition of BioCircuit and said it plans to begin prostate nerve reconstruction market-development activities in 2027.
Third-quarter revenue totaled $75.8 million, compared with the year-earlier period, while GAAP net income was $2.3 million, or $0.04 per share. Adjusted net income was $13.1 million, or $0.21 per share, and adjusted EBITDA was $13.4 million, representing a 17.7% margin.
“We are meeting or exceeding our customer creation objectives across the board and remain confident in our ability to execute our strategic plan,” President and Chief Executive Officer Michael Dale said on the company’s earnings call.
Breast Market Drives Growth
Dale said breast revenue grew more than 50% year over year during the quarter, while growth in the combined extremities, oral and maxillofacial, and head-and-neck businesses was 10.7%. During the question-and-answer session, management said breast revenue growth exceeded 60% in the third quarter.
The company attributed breast-market momentum to expansion within current accounts, adoption by additional surgeons and the opening of new accounts. AxoGen said it had approximately 485 active breast accounts at quarter-end, an increase of more than 95 from a year earlier, and about 590 active breast surgeons, up more than 140 year over year.
Management estimated its Resensation breast reconstruction approach has penetrated about 11% of eligible reconstruction procedures. Dale said the market remains in an early development stage and that surgeons who initially adopt the technique can increasingly view it as a standard component of reconstruction procedures.
AxoGen held its final two planned surgeon-training programs for 2026 during the quarter, training more than 50 plastic surgeons in the Resensation technique. The company also expanded its commercial organization, ending the period with 31 breast representatives and three regional directors, compared with 21 representatives at the beginning of the year.
In extremities, Dale said growth was about 15% after adjusting for a prior-year case-stock item. He said the company continues to view the market as underpenetrated and expects it to grow from high single digits to low double digits on a quarter-to-quarter basis.
Coverage and Clinical Evidence Updates
AxoGen said commercial payer coverage for its Avance Nerve Graft now reaches approximately 96% of covered lives in the United States. The company cited updates from Elevance and Aetna, as well as coverage additions since the second quarter of 2025 across Cigna, Elevance, Aetna and 12 regional Blue Cross Blue Shield plans.
Elevance removed a utilization-management criterion tied to nerve-gap length in August, following discussions involving the payer and surgeons, according to management. Aetna in early October extended Avance coverage for short-to-medium sensory nerve gaps of 30 millimeters or less in the upper extremity. AxoGen said it plans to work with surgeons and Aetna to seek broader criteria.
The company also highlighted publication of results from its MATCH study, which compared Avance Nerve Graft with nerve autograft in mixed and motor nerve reconstruction. Dale said the study showed motor recovery with Avance was comparable with autograft.
AxoGen enrolled the first patient in its Nerve-RESTORE study, a randomized assessor-blinded comparison of Avance and sural nerve autograft in mixed and motor nerve repair. It also said startup work is underway for the EMBRACE breast reconstruction study, with the first site initiation planned for the fourth quarter.
BioCircuit Acquisition Adds NerveTape
On Oct. 1, AxoGen completed its acquisition of BioCircuit for $200 million plus transaction expenses. The deal added NerveTape as a sixth product in the company’s nerve-repair algorithm.
Dale said NerveTape can be used in large-gap repairs alongside Avance and may expand AxoGen’s opportunity in direct nerve repair, which management estimates represents roughly 40% to 50% of transected nerve procedures. The product is intended to provide an alternative to microsutures for reconnecting transected native nerves.
BioCircuit had historically served roughly 400 accounts through approximately 50 independent distributor representatives. AxoGen’s direct sales organization has now assumed sales and distribution responsibilities. Chief Medical Officer Jens Schroeder Kemp said AxoGen has a footprint of close to 3,000 accounts and believes that presence can accelerate hospital approval processes for NerveTape.
Chief Financial Officer Lindsey Hartley said the $34 million of expected NerveTape sales referenced at the transaction closing is incremental to AxoGen’s business after accounting for expected cannibalization. The company said its organic growth outlook already includes anticipated overlap between NerveTape and its Axoguard Connector and Axoguard Protector products.
Guidance Raised; Prostate Initiative Planned for 2027
AxoGen raised its full-year 2026 outlook and now expects revenue of at least $290 million, representing growth of at least 29%. The forecast includes at least $7 million in BioCircuit revenue. Excluding BioCircuit, the company expects organic revenue of at least $283 million and organic growth of at least 26%.
The company maintained expectations for gross margin of at least 73% and positive free cash flow for the full year. Hartley said fourth-quarter gross margin is expected to decline sequentially as production plans are adjusted to meet rising demand for longer-length Avance products, particularly in breast procedures. She said the company expects full-year 2027 gross margin to be more in line with full-year 2026, though formal 2027 guidance will be issued in the first quarter.
AxoGen ended Sept. 30 with $350.1 million in cash equivalents, restricted cash and investments, and generated $18.9 million in free cash flow through the first nine months of 2026.
Separately, the company said it will initiate prostate nerve reconstruction market development in 2027. More than 220 patients have received prostate nerve reconstruction with Avance at 15 clinical development sites, management said. Among 117 patients with at least six months of follow-up, surgeons reported that about 80% achieved better-than-expected erectile-function recovery, defined as a Sexual Health Inventory for Men score of 15 or above. Management said no graft- or grafting-procedure-related complications had been reported.
The prostate opportunity is not included in AxoGen’s current or long-range guidance. The company said it will provide additional details on its financial and commercial plan at its March 2027 Investor Day.
About AxoGen (NASDAQ:AXGN)
AxoGen, Inc (NASDAQ: AXGN) is a medical technology company focused on developing and commercializing products for the repair and regeneration of peripheral nerves. Its technologies are designed to help restore sensory and motor function following traumatic injuries, surgical procedures, and other conditions affecting peripheral nerves.
The company’s product portfolio includes Avance Nerve Graft, a processed human nerve allograft used to bridge gaps in damaged nerves without requiring tissue to be taken from another part of the patient’s body.
