Vericel Q4 2025 Earnings Report

Vericel EPS Results

• Actual EPS: $0.45
• Consensus EPS: $0.45
• Beat/Miss: Met Expectations
• One Year Ago EPS: $0.38

Vericel Revenue Results

• Actual Revenue: $92.92 million
• Expected Revenue: $92.66 million
• Beat/Miss: Beat by +$254.00 thousand
• YoY Revenue Growth: +23.30%

Vericel Announcement Details

• Quarter: Q4 2025
• Date: 2/26/2026
• Time: Before Market Opens
• Conference Call Date: Thursday, February 26, 2026
• Conference Call Time: 8:30AM ET

Vericel (NASDAQ:VCEL) is a biotechnology company specializing in the development, manufacturing and commercialization of cell-based therapies for patients with severe diseases and conditions. The company’s expertise lies in regenerative medicine, where it harnesses the power of autologous cell processing to create products designed to restore function and promote healing in damaged tissues.

Vericel currently markets two FDA-approved therapies. MACI® (autologous cultured chondrocytes on porcine collagen membrane) is indicated for the repair of symptomatic cartilage defects of the knee in adult patients. EPICEL® (cultured epidermal autograft) is approved for use in pediatric burn patients with deep partial-thickness or full-thickness burns covering at least 30% of total body surface area. Vericel manages the entire manufacturing process—from cell collection and expansion to final product release—at its state-of-the-art cell processing facilities in the United States.

The company distributes its products across the U.S. market and has established licensing and distribution partnerships to serve patients in select international regions, including Europe, Canada and Australia. Beyond its commercial portfolio, Vericel maintains a pipeline of investigational therapies targeting tendon repair and other musculoskeletal injuries. Its research and development efforts leverage proprietary cell culture platforms and delivery technologies aimed at addressing significant unmet medical needs in regenerative medicine.

Vericel Q4 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: The company reported record Q4 revenue of $92.9M (up 23% YoY) and MACI Q4 revenue of $84.1M, delivered record net income and industry-leading margins (Q4 gross margin ~79% and adjusted EBITDA margin 40%), and ended 2025 with ~$200M cash and no debt.
• Positive Sentiment: Management guided 2026 revenue to approximately $316M–$326M (MACI: $280M–$286M; Burn Care: $36M–$40M), expects Q1 company growth >20% and MACI Q1 of ~$54M–$55M, leaving room for upside if momentum continues.
• Positive Sentiment: Key commercial drivers include a ~30% expansion of the MACI sales force and ~1,000 MACI Arthro‑trained surgeons, with Arthro-trained and implanting surgeons showing higher biopsy, implant and conversion rates that management expects to further penetrate existing practices.
• Negative Sentiment: Guidance factors include higher operating costs (OpEx ~$220M) and near-term margin pressure from Burlington manufacturing start‑up and the Phase 3 MACI Ankle trial, and management did not include potential BARDA NexoBrid award revenue in its 2026 guidance due to timing uncertainty.

Presentation

[Operator]

Good day, welcome to the Vericel Corporation Q4 2025 earnings call. Today's call is being recorded. At this time, I'd like to turn the call over to Eric Burns, Vericel's Vice President of Finance and Investor Relations. Please go ahead, sir.

[Eric Burns, VP of Finance and Investor Relations at Vericel Corporation]

Thank you, operator, and good morning, everyone. Joining me on today's call are Vericel's President and Chief Executive Officer, Nick Colangelo, and our Chief Financial Officer, Joe Mara. Before we begin, let me remind you that on today's call, we will be making forward-looking statements covered under the Private Securities Litigation Reform Act of 1995. These statements may involve risks and uncertainties that could cause actual results to differ materially from expectations and are described in full in our filings with the SEC. In addition, all forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. Please note that a copy of our Q4 financial results press release and a short presentation with highs from today's call are available in the Investor Relations section of our website. I will now turn the call over to Nick Colangelo.

[Nick Colangelo, President and CEO at Vericel Corporation]

Thank you, Eric, Good morning, everyone. As highlighted in our preliminary financial results release last month, the company had a strong close to the year and delivered outstanding financial and business results in the Q4, with significant revenue and profit growth and continued progress across a number of key business initiatives. From a financial perspective, the company generated record Q4 total revenue, which increased 23% over last year and exceeded our guidance for the quarter. This strong revenue performance drove significant margin expansion and profit growth as the company delivered record net income, gross margin of nearly 80%, and adjusted EBITDA margin of 40% for the quarter. We also ended the year with approximately $200 million in cash and investments and no debt as we continue to elevate the company's top-tier financial profile.

[Nick Colangelo, President and CEO at Vericel Corporation]

We also achieved several key business objectives in the quarter, including the successful completion of the MACI sales force expansion and the initiation of the MACI ankle clinical study, and made substantial progress on other long-term growth initiatives as we remain on track to begin commercial manufacturing of MACI in our new facility this year and to potentially launch MACI outside the United States in 2027. MACI's second half momentum continued in the Q4, with record revenue of more than $84 million, representing 23% growth versus the prior year. This performance was driven by strong underlying fundamentals, as we had the highest number of MACI implants, implanting surgeons taking biopsies, and biopsies in any quarter since launch.

[Nick Colangelo, President and CEO at Vericel Corporation]

MACI's performance was particularly strong in December across all key performance metrics, including biopsy and implant procedures, as our commercial and operations team executed exceptionally well to close the year. MACI's leadership position in the cartilage repair market has continued to strengthen since we launched the product in the U.S. in 2017. Over the past 9 years, MACI's generated compound annual revenue growth of 24% and has delivered revenue growth of 20% or more in each of the last 3 years. Notably, as of the end of 2025, more than 20,000 patients have now been treated with MACI. We believe that MACI's strong clinical profile, together with the surgeon and patient benefits of a simpler, less invasive surgery, have driven MACI's strong growth and will continue to do so moving forward.

[Nick Colangelo, President and CEO at Vericel Corporation]

In addition, MACI's best-in-class pricing and reimbursement profile, with prior authorization approval rates remaining over 95% for commercial patients in 2025, demonstrates the significant clinical value MACI represents to payers, hospitals, surgeons, and patients. With this strong MACI foundation in place as we move into the new year, we're focused on executing on three strategic imperatives that we believe will position the company for sustained strong revenue and profit growth in 2026 and the years ahead. First, we're focused on capitalizing on our larger MACI sales force, which will meaningfully increase our reach across the entire MACI customer base. Starting the year with a significantly larger footprint provides an opportunity to not only continue to drive the expansion of new MACI surgeons, but also to drive deeper penetration and increase utilization within our current MACI surgeon base.

[Nick Colangelo, President and CEO at Vericel Corporation]

We're also implementing a number of important commercial excellence initiatives across the organization. We've made significant investments in new tools and additional resources to enhance our commercial analytics and standardize best practices across our larger sales team, which we believe will elevate execution across our commercial organization and drive deeper penetration within our surgeon user base, unlocking another key growth driver for MACI. Based on these initiatives and the quality of our entire expanded sales force, we expect that MACI sales rep productivity will return to 2025 levels as early as next year. Our second strategic priority is to leverage MACI Arthro to drive continued strong growth in smaller cartilage defects, principally on the femoral condyles, which represents the largest segment of MACI's addressable market.

[Nick Colangelo, President and CEO at Vericel Corporation]

As we've discussed throughout 2025, we've been very successful in training physicians on the MACI Arthro technique, with approximately 1,000 surgeons trained to date. Importantly, MACI Arthro trained surgeons have continued to demonstrate a significant increase in biopsy and implant growth following training. For those surgeons that have completed a MACI Arthro case, even higher biopsy and implant growth and higher conversion rates. With this foundation in place, our objective is to leverage MACI Arthro to drive significant growth in the treatment of small condyle defects, which historically have represented a smaller % of our overall patient volume and a lower growth segment for MACI.

[Nick Colangelo, President and CEO at Vericel Corporation]

Notably, growth in the small condyle defect segment accelerated in MACI Arthro's first full year on the market in 2025, as this segment became one of the highest MACI implant growth segments, along with the patella segment, which consistently has been our highest volume and fastest growing segment. We believe that the positive trends are driven by the fact that MACI Arthro is a less invasive procedure with the potential for improved patient outcomes. Early data from ongoing investigator case series suggest a significant reduction in post-surgical pain, improved range of motion, and a meaningful acceleration in the timeline to achieving full weight bearing following MACI Arthro treatment. These initial results suggest very positive patient outcomes that could also lead to shorter overall rehab and recovery timelines.

[Nick Colangelo, President and CEO at Vericel Corporation]

We expect these case series to be presented at upcoming industry meetings and in publications. We continue to work with additional surgeons as they complete MACI Arthro cases to collect prospective outcomes data in our MACI clinical registry. Our third strategic imperative is to leverage our lifecycle management initiatives to position the company for sustained longer-term growth. To that end, we initiated the phase III MACI Ankle MASCOT clinical study in the Q4. A potential MACI ankle indication represents a substantial growth opportunity with an estimated addressable market of more than $1 billion. It would also enable the company to expand into other areas of the orthopedics market. We also remain on track to initiate commercial manufacturing for MACI in our new facility this year, which will allow the company to potentially commercialize MACI outside the United States.

[Nick Colangelo, President and CEO at Vericel Corporation]

We're taking a staged approach to MACI U.S. expansion, with the first phase targeting a planned launch in the U.K. The U.K. represents an ideal first step for MACI U.S. expansion, as there's clearly defined expedited approval and reimbursement pathways, a high level of awareness and surgeon advocacy, given that MACI was previously on the market in the U.K., and concentrated points of care with a dozen or so centers of excellence for the treatment of cartilage injuries. We expect to submit a marketing authorization application to the U.K. MHRA in the middle of this year and potentially launch MACI in the U.K. in 2027, as we seek to expand the long-term growth and value creation opportunities for the company.

[Nick Colangelo, President and CEO at Vericel Corporation]

In summary, the company executed extremely well in the Q4, generating record revenue and financial results while achieving a number of key objectives that help position the company for continued growth in 2026 and beyond. I'll now turn the call over to Joe to discuss our financial results and 2026 guidance in more detail.

[Joe Mara, CFO at Vericel Corporation]

Thank you, Nick, good morning, everyone. As Nick referenced, the company had an outstanding close to the year, with record Q4 revenue of $92.9 million and 23% growth versus the prior year. For the full year, total revenue increased to $276.3 million, which was above the high end of our guidance range for the year. MACI also had a strong close to the year, with record Q4 revenue of $84.1 million, representing 23% growth versus the prior year and 51% sequential growth versus the third quarter. For the full year, MACI revenue increased 21%-$239.5 million, and burn care Q4 revenue was $8.8 million, which was above our guidance range for the quarter. For the full year, burn care revenue was $36.8 million, consisting of $32.1 million of Epicel revenue and $4.7 million of NexoBrid revenue. The company's substantial growth in the Q4 translated into significant margin expansion, with gross profit of more than $73 million in the quarter or 79% of revenue, and adjusted EBITDA of more than $37 million or 40% of revenue, representing the company's highest quarterly margins in any quarter to date.

[Joe Mara, CFO at Vericel Corporation]

On a full year basis, the company also delivered meaningful margin expansion, with 74% gross margin, an increase of nearly 200 basis points compared to the prior year, and 26% adjusted EBITDA margin, an increase of over 300 basis points versus the prior year, which were both above our guidance to start the year, despite the incremental investments in 2025 for our new facility and the MACI sales force expansion. GAAP net income also grew nearly 60%-$16.5 million for the full year, as the company's profit growth continues to significantly outpace our strong revenue growth.

[Joe Mara, CFO at Vericel Corporation]

Finally, the company generated full-year operating cash flow of $52 million and ended the year with approximately $200 million in cash and investments, an increase of $35 million during the second half of the year, as the expected inflection in our cash generation following the completion of our new manufacturing facility is now being realized. Turning to our financial guidance. We are entering 2026 with a great deal of momentum and have gotten off to a very strong start of the year in the Q1. Consistent with our commentary on our prior earnings call regarding 2026 revenue for both franchises, we expect total company revenue this year of approximately $316-$326 million.

[Joe Mara, CFO at Vericel Corporation]

For MACI, we expect another year of strong revenue growth, and as a starting point for our guidance, we expect MACI revenue of approximately $280-$286 million for the full year. Our initial guidance reflects a continuation of current MACI key growth driver trends, including surgeon growth, biopsies per surgeon, conversion rate, and price to start the year. Recognizing that there is an opportunity for outperformance based on the momentum in our key performance indicators, our expanded sales force, and the commercial initiatives that we have put in place. As part of our initial framework, we expect a similar quarterly mix of MACI full year revenue as last year, and importantly, a similar growth rate for MACI each quarter this year versus the prior year.

[Joe Mara, CFO at Vericel Corporation]

For Burn Care, we are maintaining our run rate approach to guidance, with revenue of approximately $9-$10 million per quarter, recognizing that revenue can vary on a quarterly basis. For the full year, this points to approximately $36-$40 million of total Burn Care revenue. Of note, we are not assuming any additional NexoBrid revenue in our initial guidance related to a potential BARDA award, although there is a reasonable possibility for incremental NexoBrid BARDA revenue during the year. For the Q1, we are on track to exceed 20% total company revenue growth as we are off to a very strong start to the year for both franchises. MACI's Q4 momentum has continued into this year, with MACI performance trending toward higher Q1 growth than in recent years, and Burn Care performance trends have also been strong to start the year.

[Joe Mara, CFO at Vericel Corporation]

As such, we expect MACI revenue of approximately $54-$55 million and Burn Care revenue of $9-$10 million for the Q1. Moving down the P&L, for the full year, we expect gross margin of approximately 75% and Adjusted EBITDA margin of approximately 27%, which accounts for additional costs related to our new Burlington manufacturing facility, the incremental investments related to our MACI sales force expansion, and increased MACI Ankle MASCOT clinical trial expense as patient enrollment begins. We expect total operating expenses to be approximately $220 million for the full year and anticipate a similar level of spend each quarter. For the Q1, we expect gross margin of approximately 70% and adjusted EBITDA margin of approximately 10%.

[Joe Mara, CFO at Vericel Corporation]

Overall, 2026 is set up to be another positive year for the company, with strong top-line revenue growth as well as continued margin expansion and profit growth. We look ahead, we believe that the durable growth of our portfolio positions the company to sustain strong top-line growth in the years ahead and supports our midterm revenue and profitability targets. This concludes our prepared remarks. We will now open the call to your questions.

[Operator]

Thank you. Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, star one to ask a question. We'll move to our first question, Ryan Zimmerman with BTIG.

[Ryan Zimmerman, Managing Director and Medical Technology Analyst at BTIG]

Good morning. Can you guys hear me okay?

[Joe Mara, CFO at Vericel Corporation]

Yeah. Good morning, Ryan.

[Ryan Zimmerman, Managing Director and Medical Technology Analyst at BTIG]

Morning. busy morning for a lot of us, so I'll try and squeeze in both questions. you know, I think there was a number of price increases on MACI that were taken in 2025. Correct me if I'm wrong on that, Joe, you know, how do you think about kind of the mix of price versus volume? You know, if you reflect back on 2025, particularly on volume, I think investors, you know, are rightly ahead to 2026, kind of, you know, how do you think about that balance as well?

[Joe Mara, CFO at Vericel Corporation]

All right, we'll start. Do you want to ask your second question or just start there?

[Ryan Zimmerman, Managing Director and Medical Technology Analyst at BTIG]

Oh, sorry. Let's just start there. Sorry, Joe. Thank you. Keeping me honest.

[Joe Mara, CFO at Vericel Corporation]

Look, from a pricing perspective, you know, obviously that's, you know, remains a key growth driver for us. You know, Nick talked about in his prepared remarks, you know, our kind of access position remains very strong. I think over 95% of our commercial cases from a prior authorization perspective are approved. You know, kind of looking back historically, and I would say looking forward, you know, certainly pricing kind of has been and will remain part of our growth algorithm. You know, if you look at the second half of last year, obviously there was a significant improvement in the MACI performance. You know, I'd say that step up was, you know, was volume driven, although of course, I would say, you know, both price and volume, you know, play a part in the growth.

[Ryan Zimmerman, Managing Director and Medical Technology Analyst at BTIG]

Yeah. Okay. you know, the other one of the other key, I think, variables to the algorithm is new doctor growth. you know, as you think about kind of who's adopting arthro, you know, I'm curious if you could reflect on maybe kind of existing or same-source sales dynamics relative to kind of new doctor growth and appreciate the comments you gave about those adopting Arthro, you know, certainly being more robust. Is that a reflection of your existing customer base or potentially new doctor growth? Thanks. Thanks for taking the question.

[Nick Colangelo, President and CEO at Vericel Corporation]

Hey, Ryan, I'll start. It's Nick. You know, I think the sort of ratio of trained surgeons that we talked about previously is held throughout the year. You know, about 2/3 come from existing MACI users, split between kind of former patella users and patella and condyle users, and then about 1/3 from sort of either prior open targets who had not adopted MACI at that time, and then obviously the new arthro-only surgeons. That's kind of remained relatively consistent.

[Nick Colangelo, President and CEO at Vericel Corporation]

You know, I'd say the dynamics that we see once the surgeons are trained, regardless of which bucket they come out of, sort of hold true in terms of obviously increasing if they're new, but even sort of former users, increasing both biopsy and growth rates, and then particularly when they start doing Arthro cases, their growth rates for both biopsies and implants are even higher, and their conversion rate was higher for the year as well. All obviously very encouraging trends for us as we move forward.

[Joe Mara, CFO at Vericel Corporation]

Thanks, Nick.

[Operator]

We'll go next to Mike Kratky with Leerink Partners.

[Analyst at Leerink Partners]

Hi, guys. This is Sam on for Mike. Can you hear me all right?

[Nick Colangelo, President and CEO at Vericel Corporation]

Yep.

[Joe Mara, CFO at Vericel Corporation]

Yeah. Good morning. How are you?

[Analyst at Leerink Partners]

Yeah, doing good. Thanks, guys. Just, you know, during your 3Q 2025 earnings call, I think you had mentioned that 20% growth for MACI would kind of be a good starting point for fiscal 2026. The current guidance kind of implies growth slightly below that at roughly 18% at the midpoint. Is this just a function of, you know, kind of 4Q being a little bit better than expected? Is there anything that materially changed, from then versus, now when you know, issued the new guidance here?

[Joe Mara, CFO at Vericel Corporation]

I'll start. I mean, I'll just give a quick update on the guidance, you know, maybe overall. I would say just on that last part, I mean, nothing's certainly materially changed. You know, I think, you know, if anything, we're probably, you know, really end of the year, a bit stronger, you know, across the business, which was great. Just in terms of the guidance framework, you know, to your question, I would say, you know, if you look at both franchises, you know, it's really consistent with the commentary we gave in the last call. On the MACI side, you know, the guidance is kind of in that low to mid $280 million range. That's, you know, consistent, I think, you know, right on top of consensus or very close.

[Joe Mara, CFO at Vericel Corporation]

You know, we talked about in the last call, having that similar year-over-year incremental growth, you know, which I think is accomplishes as well, kind of the midpoint of that range in the $283, $282 or $283 is right in line with last year, which is about a $42 million increase. You know, I'd say on the specific question around the 20%, I mean, obviously, there's a range around MACI. You know, we want to be prudent to start the year, but, you know, what we said in the last call, in addition to having that similar incremental growth was, you know, I think coming into the call, you know, there were analysts kind of on either side of that number.

[Joe Mara, CFO at Vericel Corporation]

You know, I think we were comfortable with something at that range, but I think we tried to be clear that we were not going to guide above that. You know, I think more than anything, it's probably just being prudent on the MACI side. We feel really good about, you know, the start of the year on MACI and the full year. Just quickly on Burn Care, you know, I think that's important as well. You know, that one's pretty straightforward. We said last quarter, we're going to maintain this run rate framework, which I think has worked well in the last couple of quarters, in particular, you know, call it $9-$10 million per quarter, get you $36-$40 million or $38 million at the midpoint.

[Joe Mara, CFO at Vericel Corporation]

You know, one thing that, you know, is probably a bit off, you know, coming into the call is, you know, we referenced the high $30s million last quarter, but if you actually look at external estimates, they're kind of more into the lower $40s million. That's obviously impacting both Burn Care and the total company, you know, external starting points. I did want to point that out. You put that together, I think we have a nice balanced guide, you know, something around, you know, call it, you know, mid $280 million or the mid of that range rather, and high $30s million on Burn Care, you're probably around $320 million or so at the midpoint, which we think is a very balanced starting point.

[Joe Mara, CFO at Vericel Corporation]

Then just briefly on Q1, because I think that's important as well, you know, in the context of the guide. Just to reiterate what we said in the call, you know, we think we're off to a great start, you know, on track to exceed 20% as a company for the quarter. You know, the MACI metrics have been really strong, and we are guiding Q1, you know, higher than, you know, trended and certainly higher than we've guided, you know, in the last couple of years. Obviously feel good about MACI and, you know, Burn Care has had a strong start as well. Very much on track to that, you know, run rate for Q1. We think that sets us up well.

[Joe Mara, CFO at Vericel Corporation]

you know, lastly, just, you know, on the MACI question and just generally, you know, I think as we talked about in the last call, you know, I'd say we just want a very, I would say, prudent and disciplined start of the year in our initial guide. you know, MACI has a ton of momentum. We have a number of initiatives, including the increased sales force. we did see some inflection in some of our growth drivers in the second half, but, you know, we're not baking any of that in. We're assuming, you know, pretty similar trends on a full year basis. similarly, I would say on the Burn Care side, you know, there's certainly an opportunity for incremental BARDA revenue. you know, I think that's a reasonable possibility, but we're not baking that in.

[Joe Mara, CFO at Vericel Corporation]

You know, I think it's prudence on both franchises. Just one last point on MACI. You know, we did make the comments, you know, if you look at the full year growth rate at the midpoint of that range, it's actually right in line with our Q1 guide. We felt starting the year with not only a similar mix of business, because we know our business is seasonal, but also pretty essentially consistent growth rates, really the same growth rate across all four quarters was a good way to start the year, and I think positions us really well to potentially outperform on that if we execute well. I think it's a, you know, a prudent way to start the year again, just given the seasonality of our business.

[Analyst at Leerink Partners]

Understood. Thanks for the, for the call, guys.

[Joe Mara, CFO at Vericel Corporation]

Thank you.

[Operator]

We'll go next to Richard Newitter with Truist Securities.

[Analyst at Truist Securities]

Hi, this is Felipe on for Rich. just on the sales force expansion, you know, you guys pretty quickly expanded your territories about 30% in the last couple of months. I'm just wondering, like, just talk me through, like, rep adds and the strategies for the year and I guess, like, how those you expect those new territories to ramp. Then just a second question, if you could give some guidance and expectations for free cash flow ramp for the year, that would be helpful. Thanks so much.

[Nick Colangelo, President and CEO at Vericel Corporation]

Yep. Hey, it's Nick. I'll start with the sales force expansion. Well, you know, obviously, we're really excited about the expansion. As if you will recall from last year, you know, we decided to accelerate the expansion into Q4 because we wanted to support what we knew were going to be significantly higher volumes in Q4 and make sure that we were positioned to take advantage of this momentum in MACI for the entire year and not kind of have the sales force expansion in the first, you know, third of the year. Really excited about that. Obviously, the larger footprint, as I mentioned on my prepared remarks, will increase our reach across the surgeon base and really gives us an opportunity to drive expansion of surgeons and deeper penetration in our existing surgeons.

[Nick Colangelo, President and CEO at Vericel Corporation]

I would just say, you know, I think the team executed flawlessly on the expansion. Obviously, people outside of the company can worry about disruption when you're expanding the sales force in your largest quarter. Great job by our sales and commercial leadership team to execute and put a plan in place. Great job by both the new and existing reps in the Q4 to not only drive our highest quarter ever, but to position us well as we come into 2026. As we mentioned earlier, these are extremely experienced and talented reps that we think together with, you know, our existing sales force, are going to drive strong performance as we move forward through the year. That's an important piece of it. I mentioned on the call that, you know, we expect our rep productivity to kind of get back to last year's level as quickly as next year. Really excited about the opportunity for the sales force expansion and what it's going to mean for our business.

[Joe Mara, CFO at Vericel Corporation]

Yeah, and then in terms of, kind of the sort of cash flow question, I think probably the best way to think about, you know, we're not guiding to that specifically, but obviously, you know, we think we are in an inflecting, cash, you know, cash flow position, which is great. You know, I think generally, I think what we talk about is our adjusted EBITDA is a good proxy for operating cash flow. It doesn't always line up because there could be collections in, you know, at the end of the year and some timing differences, but kind of over time, that tends to be a pretty good proxy, you know, for the most part. And then you can kind of look at our, you know, run rate on the CapEx side.

[Joe Mara, CFO at Vericel Corporation]

In the last couple of quarters, it's been in the, in the low single digit millions, obviously much lower as we've gotten back to more of a steady state, you know, after getting through the building project. That's probably the right way to think about it, but, you know, we don't have a specific number we've guided to there.

[Operator]

We'll move next to Mason Carrico with Stephens.

[Mason Carrico, Research Analyst at Stephens]

Hey, good morning, guys, and thanks for taking the questions. In the context of your MACI outlook for this year, recognizing your comments, Joe, that leaves some room for upside. How should we think about what's baked in in terms of the larger sales force, conversion rates, maybe surgeon growth that's in the guide today?

[Joe Mara, CFO at Vericel Corporation]

Yeah. Good morning, Mason. You know, I think it's, you know, again, from a MACI perspective, I think we wanted to start the year with a very balanced view. Obviously, Q1 is off to a good start. You know, I think if you as you think about the key growth drivers there, as I said, I would say, you know, you can think of those as, you know, similar on a full year basis, whether you're talking about, you know, kind of some of the key buy-ups drivers or whatnot. You know, I wouldn't say there's anything specific we're kind of baking in terms of, you know, the new sales force. I think it's probably more just overall looking at the overall trends.

[Joe Mara, CFO at Vericel Corporation]

You know, to kind of Nick's earlier point, you know, I think we have pretty high expectations of, you know, our new ads and are excited about just the increased reach and frequency we're going to have. We do think that can be impactful over time, but, you know, we're actually not really baking anything into the guide. You know, obviously, it's a long sales cycle, so you want to have a little bit of, you know, patience there. You know, obviously, at the same time, we expect it to kind of get back to, you know, our rep productivity rates pretty quickly. You know, I think there's certainly an opportunity if the teams can do a good job to help drive that outperformance, but nothing specifically baked in, you know, assuming kind of any sort of inflection in trends.

[Mason Carrico, Research Analyst at Stephens]

Okay. Thank you for that. Would you be able to share any thoughts or anything you can point us to on how conversion rates for MACI tracked over the course of 2025? What proof are you seeing that Arthro might be able to improve the conversion rates and really shorten that time from biopsy to implant? Thanks for taking the questions.

[Nick Colangelo, President and CEO at Vericel Corporation]

I think on an overall basis, you know, as Joe mentioned, that conversion rates, you know, were relatively stable for the year. As I mentioned, you know, within that segment of MACI Arthro-trained surgeons that actually performed a case, again, we see higher biopsy and implant growth rates than MACI Arthro-trained surgeons generally, which are higher than the overall average. We do see higher conversion rates for those MACI Arthro implanting surgeons as well. That's the evidence, as I mentioned on my earlier remarks.

[Operator]

We'll move next to Jeffrey Cohen with Ladenburg Thalmann.

[Jeffrey Cohen, Managing Director and Director of Equity Research at Ladenburg Thalmann]

Hey, good morning. Thanks for taking our questions. In particular, could you unpack OpEx a little bit for your 26 guide? I'm curious on the sales force expansion from last year, does that pull through any anticipated expansions for this year and R&D as well?

[Joe Mara, CFO at Vericel Corporation]

Yeah. I think we gave guidance at the total company level. We said, you know, approximately $220 million on a full year basis in OpEx. Probably the easy way to think about that is, you know, call it, you know, $55 million a quarter, pretty consistent, including the Q1. You know, I think to your kind of question and point, I mean, one thing we've been talking about is as we move into 2026, you know, there are some incremental costs that are going to flow through the PNL, including on the OpEx side. To your question on the SG&A side, certainly it's the expansion of the sales force. You know, it's roughly 30 people.

[Joe Mara, CFO at Vericel Corporation]

You know, you can think of that as, you know, probably something in the $10 million range on an annual basis. You know, I'd say a pretty meaningful increase on the R&D side as well as part of that, where you can think about, obviously, the ankle trial, which was kind of in a startup phase, is now, you know, thinking kind of more sites and patient enrollment and whatnot. Those are really the two key drivers from an OpEx perspective that we baked in on a full year basis.

[Jeffrey Cohen, Managing Director and Director of Equity Research at Ladenburg Thalmann]

Okay. As a follow-up, with the arthro surgeons out there, the anticipation for 26 is being driven by new surgeons or repeat surgeons. Are there 1,000 more surgeons to reach this year, or are you seeing more drive from existing physicians?

[Nick Colangelo, President and CEO at Vericel Corporation]

Hey, Jeff, it's Nick. As I mentioned in my remarks, the sales force and MACI Arthro combined, you know, give us a greater reach on the sales force side. With MACI Arthro, you know, we expect to continue to train surgeons. You know, we're really focused, given the dynamics you see with those trained and implanting surgeons, on sort of the depth of penetration that you can achieve with those surgeons in their practice. You know, that is a meaningful piece of what we're doing. We've already trained, you know, a good portion of our, you know, existing MACI users. I think we'll continue to do that, and it'll bring new surgeons into the fold with MACI Arthro.

[Nick Colangelo, President and CEO at Vericel Corporation]

Again, getting depth, into those practices is really a key growth driver and the subject a lot of our commercial excellence initiatives that we referenced earlier on the call.

[Jeffrey Cohen, Managing Director and Director of Equity Research at Ladenburg Thalmann]

Got it. Thanks for taking our questions.

[Joe Mara, CFO at Vericel Corporation]

Thank you.

[Operator]

We'll move next to Caitlin Cronin with Canaccord Genuity.

[Analyst at Canaccord Genuity]

Hey, guys. It's Michaela on for Caitlin. Thanks for taking the questions. Our first one is, are you continuing to see Dormant Epicel accounts reactivated given NexoBrid, and what does the next stage of NexoBrid adoption look like, if you can give any more color there?

[Nick Colangelo, President and CEO at Vericel Corporation]

Yeah, we definitely see, you know, more Epicel Dormant accounts. That has continued as we've sort of, I think, just by way of reference, you know, we now have our entire burn care team of 17 territories cross-selling both products. You certainly see additional dormant accounts each year coming on board. Again, it's a pretty sporadic patient base, and you know, you can have hospitals that may or may not see a patient in that particular year, but we definitely are bringing on additional Epicel accounts. On NexoBrid, you know, we're continuing to see, you know, obviously, changing the standard of care takes time, but we're continuing to see progress there. You know, we launched the product with about 90 target accounts.

[Nick Colangelo, President and CEO at Vericel Corporation]

To date, over 70 accounts have actually placed orders for NexoBrid, you know, good penetration on the overall number of accounts. As we've talked about on prior calls, it's really about how do you move all of the accounts up the curve to be consistent users, which, you know, is what we're in the process of doing. You know, we remain sort of optimistic on what NexoBrid can do as we move forward. As Joe mentioned, you know, while we're not baking any sort of BARDA award revenue into our guidance, you know, we think that is a strong possibility for the year. If so, that will reinforce NexoBrid as a standard of care, in addition to sort of, you know, some important financial enhancements for the company as well.

[Analyst at Canaccord Genuity]

Great. That's helpful. Thanks. Maybe just another quick one from us. Do you have any updates on when the MACI Arthro 2.0 instruments will be launched, and maybe what improvements you're making?

[Nick Colangelo, President and CEO at Vericel Corporation]

Yeah. You know, that's an ongoing process. You know, we wanted to have MACI Arthro instruments on the market for a sufficient period of time, you know, in the first year, and then, you know, gather feedback on enhancements that would be most important to continue sort of a journey of making MACI Arthro a simpler, less invasive procedure. I'd say we're kind of gathering up that market input now. Depending on changes, you know, these things can be, you know, by the time you develop new instruments, go through the sort of validation process, the approval process, et cetera, you know, it's a, call it an 18-month or more process. You know, that would suggest maybe next year, probably at the earliest, that we would have additional enhancements.

[Analyst at Canaccord Genuity]

Great. Thank you.

[Operator]

We'll move next to RK with H.C. Wainwright.

[Swayampakula Ramakanth, Managing Director and Senior Healthcare Analyst at H.C. Wainwright & Co.]

Good morning, Nick and Joe. Just a quick question on gross margin. You recorded 79% gross margin in the Q4, but the 2026 guidance calls for a margin of 75%. I'm just trying to understand, trying to understand the 400 basis point compression. Is that coming from trying to get the manufacturing start-up activities going, or is it some amount of depreciation baked into it? When all is said and done and the MACI manufacturing is completely transitioned into the Burlington facility, what could be the steady-state margin profile?

[Joe Mara, CFO at Vericel Corporation]

Yeah. Good morning, RK, and thanks for the question. You know, I would say, you know, just a reminder, you know, when we talked about the 79% margin, that's based on our Q4 performance in 2025. We do see some seasonality in terms of margins. Just because our business, you know, particularly MACI, is so Q4 driven, of course, in terms of the mix of the year, we do tend to see our margins scale up in that quarter. When you look on a kind of more apples and apples, I would say full year basis, you know, last year on a full year basis, we did 74%. You know, next year or, for 2026 rather, we're guiding to 75%. Some increase on a year-over-year basis.

[Joe Mara, CFO at Vericel Corporation]

You know, broadly, I would say there are kind of some additional costs that we are absorbing as we move into the new facility here in Burlington and now have kind of multiple facilities that we're operating. You know, still feel like that's the right guidance assumption for the year. Then longer term, you know, just a reminder, we said on the gross margin side, you know, we think we can get into the high 70s, you know, by the end of the decade. You know, I would say just generally kind of already being on a full year basis, you know, in the mid-70s and, you know, trending that way this year, to start the year, you know, I think, you know, we're pretty well positioned in terms of that kind of long-term target that's out there.

[Joe Mara, CFO at Vericel Corporation]

Maybe just to bring your Q4 data point back, you know, I think, you know, Q4 is helpful when you look at those margins, because we tend to grow into similar margins over time as the company, you know, grows, you know, more on an annual basis. It is a good marker to look at, but, you know, again, I think on a full year basis, it is an increase on the gross margin side. It's just comparing Q4 to full year.

[Swayampakula Ramakanth, Managing Director and Senior Healthcare Analyst at H.C. Wainwright & Co.]

Thank you. One quick question on the ex-U.S. business. As you were stating, Nick, that you're planning to submit to the U.K. regulatory authorities in mid-2026 or in 2026. How are you planning the commercial infrastructure there? Is this going to be a direct launch by you, or do you plan to enter into some sort of a partnership, you know, to initiate that business?

[Nick Colangelo, President and CEO at Vericel Corporation]

Yeah. Thanks, RK. As I mentioned in my prepared remarks, you know, the U.K. is a very attractive first step for us, you know, for MACI OUS expansion, because there is an expedited approval pathway, mutual recognition pathway. That, you know, is very attractive, as well as established reimbursement pathways. I also mentioned there's a, you know, concentrated call point. There's a 12 or so centers of excellence where patients in the U.K. with cartilage injuries are treated, which means it doesn't require a big commercial footprint. We would absolutely plan to commercialize on our own in the U.K.

[Swayampakula Ramakanth, Managing Director and Senior Healthcare Analyst at H.C. Wainwright & Co.]

Thank you. Thank you both for taking my questions.

[Joe Mara, CFO at Vericel Corporation]

Thanks, RK.

[Operator]

We'll take our next question from Josh Jennings with TD Cowen.

[Josh Jennings, Managing Director at TD Cowen]

Hello, can you hear me okay?

[Joe Mara, CFO at Vericel Corporation]

Yeah, good morning, Josh.

[Josh Jennings, Managing Director at TD Cowen]

Oh, I'm sorry. The, operator-

[Joe Mara, CFO at Vericel Corporation]

Can you hear us?

[Josh Jennings, Managing Director at TD Cowen]

is talking in my ear.

[Joe Mara, CFO at Vericel Corporation]

Yep.

[Josh Jennings, Managing Director at TD Cowen]

Yeah, yeah, I've got an operator in my ear. Sorry about that. just I know you're not breaking out MACI Arthro contributions directly, and we're thinking about the MACI franchise holistically, but I was hoping maybe qualitatively, you can just share with us just whether the MACI Arthro launch in 2025 exceeded your internal expectations or in line with your internal expectations. It seems like it's exceeded it, and including what's going on in this Q1 of 2026, where you're combating the historical seasonal trends and thinking you're gonna deliver 20% growth or forecasting 20% growth of that MACI franchise here in 1Q 2026. Yeah. Thanks, Josh.

[Nick Colangelo, President and CEO at Vericel Corporation]

Yeah, I mean, I think when you look at different dimensions of the MACI Arthro launch, I mean, surgeon training, as we said, we've now trained a substantial, you know, a meaningful portion of our surgeon base, which is great. Their behavior, as you mentioned, and I've mentioned a couple of times, you know, is exactly what you'd want to see in terms of increase in growth rates and now for MACI Arthro implanters, you know, having higher conversion rates. I'd say when you look at MACI growth overall, you know, we had a couple hundred, nearly a couple hundred basis points of growth. When you look at that in the context of the increase growth rate in our small condyle defect segment, it clearly accounted essentially for that accelerated growth for the year for MACI.

[Nick Colangelo, President and CEO at Vericel Corporation]

Yeah, from that perspective, we're very pleased. Obviously, we entered last year with, you know, 150 trained surgeons. We entered this year with kind of more like 900, as we mentioned, you know, early in the year. That's now grown since that time. You know, there's an opportunity, if those trends continue, to really sort of meaningfully impact the business as we move through 2026 and beyond.

[Josh Jennings, Managing Director at TD Cowen]

Thanks for that. I know... I was just hoping if you could share some details on this BARDA RFP. It sounds like the team's more optimistic that will come through, but, you know, what's left? Is it just administrative sign-off? I think this is in the public domain, but maybe just help us think about if that does come through, you know, what type of revenue contributions in 2026 and beyond could this BARDA RFP deliver for Vericel? Thanks for taking the questions.

[Nick Colangelo, President and CEO at Vericel Corporation]

Yep. As you're aware, there were kind of three components to the RFP from BARDA. One was kind of strategic stockpiling for national preparedness and procurement revenue that would result from that. There was a desire to add additional indications for blast injury and funding for that and then for a room-temperature stable formulation as well. There were kind of three components to it that would flow through our income statement differently. You know, that obviously was impacted by the government shutdown initially. As you're well aware, you know, there were parts of funding for 2026 that were pushed out to the end of January, and that's still an ongoing issue.

[Nick Colangelo, President and CEO at Vericel Corporation]

While HHS was funded for the year as of the close of January, that's only, you know, a few weeks ago, you know, obviously, getting the machinery up and running takes a little time, it seems. You know, we do think there's a pretty strong possibility that we'll be able to get that award done this year, and it would have the impacts that we mentioned. You know, the RFP obviously set forth the stockpiling numbers, starting with 2,750 units and then additional procurement down the line. You know, the exact revenue that would come out of that, you know, we're not prepared to share right now. It's obviously, subject to the negotiations on pricing and so on, but, you know, as you know, that moves forward, we can share more about that.

[Operator]

That will wrap our question and answer session. I will now turn the call back over to CEO, Dominic Colangelo, for any additional or closing remarks.

[Nick Colangelo, President and CEO at Vericel Corporation]

Okay. Well, thanks everyone for joining us this morning. As we've mentioned, the company had an outstanding Q4 and is very well positioned to continue to deliver on what we believe is a unique combination of sustained high revenue growth and profitability in 2026 and the years ahead. We look forward to providing further updates on our progress on our next call. Thanks again, and have a great day.

[Operator]

Thank you. That will conclude today's conference. Ladies and gentlemen, we thank you for your participation. You may disconnect at this time.

Participants

Executives

• Eric Burns, VP of Finance and Investor Relations
• Joe Mara, CFO
• Nick Colangelo, President and CEO

Analysts

• Jeffrey Cohen, Managing Director and Director of Equity Research at Ladenburg Thalmann
• Josh Jennings, Managing Director at TD Cowen
• Mason Carrico, Research Analyst at Stephens
• Ryan Zimmerman, Managing Director and Medical Technology Analyst at BTIG
• Swayampakula Ramakanth, Managing Director and Senior Healthcare Analyst at H.C. Wainwright & Co.
• Analyst at Canaccord Genuity
• Analyst at Leerink Partners
• Analyst at Truist Securities