Axogen, Inc. Annual report [Section 13 and 15(d), not S-K Item 405]

Annual report [Section 13 and 15(d), not S-K Item 405]

Stock-Based Compensation

Stock-Based Compensation

12 Months Ended

Dec. 31, 2025

Share-Based Payment Arrangement [Abstract]

The Company maintains two stock-based incentive plans: (i) The Axogen, Inc. Fourth Amended and Restated 2019 Long-Term Incentive Plan (“2019 Plan”) which provides incentives through the grants of stock options, non-qualified stock options, PSUs and RSUs to employees, directors and consultants which replaced the Company’s 2010 Stock Incentive Plan and (ii) The Axogen 2017 Employee Stock Purchase Plan (“2017 ESPP”).

At the June 19, 2025 Annual Shareholder Meeting, approval was received to increase the number of shares available under the 2019 Plan from 10,500,000 to 13,400,000.

During the year ended December 31, 2025, the Company issued 148,000 RSUs and 58,000 PSUs as inducement grants to certain employees in accordance with Nasdaq Listing Rule 5635(c)(4). As of December 31, 2025, there were 4,833,771 shares of common stock available for future grant under the 2019 Plan.

Stock-based compensation expense is included in the following line items on the accompanying Consolidated Statements of Operations for the periods presented:


	Years Ended December 31,
(in thousands)	2025		2024		2023
Costs of goods sold	$	3,680	$	1,752	$	796
Sales and marketing	6,361		3,175		2,982
Research and development	8,848		3,417		3,875
General and administrative	11,223		7,562		6,764
Total non-cash stock-based compensation	$	30,112	$	15,906	$	14,418

Stock Options

Stock options granted to employees typically vest 50% two years after the grant date and 12.5% every six months thereafter for the remaining two-year period until fully vested after four years. Stock options granted to directors and certain options granted from time to time to certain executive officers vest ratably over three years. Options typically have terms of ten years. The Company estimates the fair value of each option award on the date of grant using a multiple-point Black-Scholes option-pricing model. In addition, the Company estimates the grant date fair value of stock options granted to employees at a premium price based on market conditions, such as the trading price of the Company’s common stock, using a Monte Carlo simulation option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s Consolidated Statements of Operations. The expense is reduced for forfeitures as they occur.

The following weighted-average assumptions were used in the calculation of fair value for stock options granted for the periods presented:


	Years Ended December 31,
	2024		2023
Expected term (in years)	5.48		5.40
Expected volatility	65.60	%	59.32	%
Risk free interest rate	4.19	%	3.52	%
Expected dividends	—	%	—	%

The following table summarizes the Company’s stock option activity for the year ended December 31, 2025:


	Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2024	3,926,952	$	12.39	4.56	$	22,692

Forfeited	(640,711)	$	22.18
Exercised	(1,032,547)	$	9.21
Outstanding at December 31, 2025 (1)	2,253,694	$	11.06	4.31	$	49,122

Exercisable at December 31, 2025	1,828,546	$	11.64	4.09	$	38,848

__________

(1)The Company did not grant any options during the year ended December 31, 2025.

The weighted-average grant-date fair value of stock options granted during the years ended December 31, 2024 and 2023 was $4.33 and $4.72, respectively.

The total intrinsic value of options exercised for the years ended December 31, 2025, 2024 and 2023 was $21,204, $2,031 and $1,710, respectively.

As of December 31, 2025, there was approximately $697 of total unrecognized compensation costs related to unvested stock options. These costs are expected to be recognized over a weighted-average period of 1.2 years.

Restricted Stock Units

RSUs granted to employees have a requisite service period of four years. The RSUs granted to directors and certain RSUs granted from time to time to certain executive officers and vice presidents have a requisite service period of three years, while certain of these RSUs have a requisite service period of one year. The Company estimates the fair value of RSU grants based upon the grant date closing market price of the Company’s common stock. The Company expenses the fair value of RSUs on a straight-line basis over the requisite service period.

The following table summarizes the activity for RSUs for the year ended December 31, 2025:


	Outstanding Restricted Stock Units
	Restricted Stock Units	Weighted Average Fair Value at Date of Grant per Share		Weighted Average Remaining Vesting Life (Years)	Aggregate Intrinsic Value (in thousands)
Unvested at December 31, 2024	2,358,323	$	8.77	1.17	$	38,865
Granted (1)	1,456,396	$	16.58
Released	(927,792)	$	8.62
Forfeited (2)	(472,721)	$	9.33
Unvested at December 31, 2025	2,414,206	$	13.43	1.43	$	79,017

__________

(1)RSUs granted include 148,000 inducement shares in accordance with Nasdaq Listing Rule 5635(c)(4).

(2)RSUs forfeited include 150,000 inducement shares in accordance with Nasdaq Listing Rule 5635(c)(4).

The weighted-average grant-date fair value of RSUs granted during the years ended December 31, 2025, 2024 and 2023 was $16.58, $8.79 and $8.10, respectively.

As of December 31, 2025, there was approximately $23,032 of total unrecognized compensation costs related to unvested restricted stock. These costs are expected to be recognized over a weighted-average period of 2.5 years.

Performance Stock Units

The Company estimates the fair value of PSUs based on its closing stock price at the time of grant and its estimate of achieving the applicable performance target goals and records compensation expense as the milestones are achieved. The number of shares delivered to recipients and the related compensation cost recognized as an expense will be based on the actual performance metrics as set forth in the applicable PSU award agreement. The amount actually awarded will be based upon achievement of the performance measures.

The Company’s CAGR TSR PSUs generally have a requisite service period of three years and are subject to vesting conditions based on goals defined within the award. The grant date fair value of the CAGR TSR PSUs is calculated using a Monte Carlo simulation. The Company expenses their fair value over the requisite service period. Over the performance period, the number of shares of common stock that will ultimately vest and be issued and the related compensation expense will be adjusted based upon the Company’s estimate of achieving such performance target.

The Company’s TSR PSUs generally have a requisite service period of three years and are subject to vesting conditions based on goals defined within the award. The grant date fair value of the TSR PSUs is calculated using a Monte Carlo simulation. The Company expenses their fair value over the requisite service period. Over the performance period, the number of shares of common stock that will ultimately vest and be issued will be adjusted based upon the Company’s estimate of achieving such performance target.

PSUs issued in 2017 and 2019 tied to the achievement of certain milestones have performance periods through December 31, 2025 and a requisite service period of one year after the milestone achievement date but not sooner than one year after the grant date. PSUs issued in 2018 tied to the achievement of certain milestones have performance periods through January 1, 2025 and a requisite service period of one year after the milestone achievement date but not sooner than one year after the grant date.

PSUs issued in 2024 tied to the achievement of certain milestones have performance periods through December 31, 2025 and requisite service periods through the date of the milestone achievement but not sooner than one year after the grant date. The Company expenses the fair value upon the achievement of such milestone and subsequent requisite period.

The following table summarizes the activity for PSUs for the year ended December 31, 2025:


	Outstanding Performance Stock Units
	Performance Stock Units	Weighted Average Fair Value at Date of Grant per Share		Weighted Average Remaining Vesting Life (Years)	Aggregate Intrinsic Value (in thousands)
Unvested at December 31, 2024	2,962,292	$	9.84	1.64	$	48,819
Granted (1)	674,585	$	21.82
Released	(979,915)	$	10.71
Forfeited	(208,065)	$	13.16
Unvested at December 31, 2025	2,448,897	$	12.54	1.46	$	80,152
Vested and deferred (2)	550,787	$	8.27		$	18,027

__________

(1)PSUs granted include 58,000 inducement shares in accordance with Nasdaq Listing Rule 5635(c)(4).

(2)Represents PSUs tranches that vested based on achievement of performance metrics for the 2025, 2024 and 2023 performance periods. The related shares were released but deferred in accordance with the terms of the award agreements, with the release of shares occurring upon the earlier of termination of employment or the final vesting date of the full PSU award in February 2026.

The weighted-average grant-date fair value of PSUs granted during the years ended December 31, 2025, 2024 and 2023 was $21.82, $9.11 and $8.29, respectively.

As of December 31, 2025, there was approximately $22,595 of total unrecognized compensation costs related to unvested PSU awards. These costs are expected to be recognized over a weighted-average period of 1.5 years.

During 2017, 2018 and 2019, the Company issued PSU awards to certain employees related to their work on the Company’s Biologics License Application (“BLA”). The number of shares was allocated to certain milestones related to the BLA submission to and approval by the FDA. The performance measure is based upon achieving each of the specific milestones and will vest 50% upon achieving each of the milestones and 50% one year later. During 2024, the Company issued PSU awards to certain officers and employees related to their work on the Company’s BLA. The number of shares was allocated to certain milestones related to the BLA submission to and approval by the FDA. The performance measure is based upon achieving each of the specific milestones and will vest upon achieving each of the milestones but not sooner than one year after the grant date. As of December 31, 2025, substantially all of the awards issued related to achieving BLA milestones had vested. The Company generally recognizes expense on these milestones upon the achievement. During the three months ended December 31, 2025, the Company recognized $8,485 of PSU expense related to the approval of the BLA.

During 2023, the Company issued PSU awards to certain officers and employees tied to revenue from 2023 to 2025 with a pay-out range from 0% to 150% upon achievement of specific revenue targets. These awards were achieved at 112.6%, vested in the fourth quarter of 2025 and will be released in the first quarter of 2026.

During 2024, the Company issued TSR PSU awards to certain officers and employees tied to the Company’s share price targets with a pay-out range from 0% to 200% upon achievement of specific average share prices over a 30 day trading period immediately preceding the end of a performance period of February 2, 2024 through February 22, 2027.

During 2025, the Company issued CAGR TSR PSU awards to certain officers and employees tied to CAGR of revenue from 2025 to 2027, subject to modification based on the Company’s TSR relative to the TSR of certain peer companies.

The following weighted-average assumptions were used in calculation of fair value for PSUs granted using the Monte Carlo simulation pricing model for the periods presented:


	Years Ended December 31,
	2025		2024
Expected term (in years)	2.70		2.74
Expected volatility	63.20	%	65.31	%
Risk free interest rate	3.96	%	4.47	%
Expected dividends	—	%	—	%

Employee Stock Purchase Plan

The 2017 ESPP allows eligible employees to acquire shares of the Company’s common stock through payroll deductions at a discount to market price (currently 15.0%) of the lesser of the closing price of the Company’s common stock on the first day or last day of the offering period. The offering period is currently six months. Participants may not purchase more than $25 or 3,000 shares of the Company’s common stock in a calendar year through the ESPP. The Company estimates the grant date fair value, and the resulting stock-based compensation expense, using a Black-Scholes option pricing model for each purchase period. Stock-based compensation expense related to the 2017 ESPP, included in total stock-based compensation expense, was $442, $371 and $333 for the years ended December 31, 2025, 2024 and 2023, respectively.

The following are the weighted average assumptions used in the valuation of ESPP options for the periods presented:


	Years Ended December 31,
	2025	2024	2023
Expected term	0.5 years	0.5 years	0.5 years
Expected volatility	67.15%	70.20%	53.60%
Risk-free interest rate	4.27%	5.30%	5.10%
Expected dividends	—%	—%	—%

The weighted-average grant-date fair value of ESPP options during the years ended December 31, 2025, 2024 and 2023 was $4.81, $2.34 and $2.84, respectively.