Oct 28, 2026: a beat and raise reverses a six-week slide
Axogen first traded at $39.98 at 7:03am and was at $43.69 minutes later. It reached a premarket high of $46.25 and traded at $45.19 at 9:29am. It opened at $45.45, reached $46.15 and was $45.78 at 9:42am on 1.2 million shares, about 80% of its 20-day average for a full day. The conference call began at 8:00am.
What happened:
- A clean beat. Revenue of $75.8 million was $2.6 million above the $73.16 million consensus. Gross profit was $56.7 million. Adjusted net income was $13.1 million, or $0.21 a share, against $6.1 million and $0.12 a year earlier.
- A raised outlook. Full-year revenue is now expected at no less than $290 million, growth of at least 29%. Before the report the consensus for the year was $283.8 million, so the new floor sits $6.2 million above it. Our page on why guidance changes move stocks explains why the outlook usually matters more than the quarter.
- Cash and free cash flow. Cash, restricted cash and investments were $350.1 million at Sept 30, up from $113.4 million at June 30 after the September stock offering. Free cash flow for the nine months was $18.9 million, against a $5.9 million outflow a year earlier.
- Coverage. Commercial payer coverage for Avance nerve graft reached about 96% of covered lives. Elevance removed its gap-length limits in August and Aetna extended coverage in early October to short and medium sensory nerve gaps of 30 millimeters or less in the upper extremity.
From the Oct 27 close, at about 9:42am:
| Stock or fund | Oct 27 close | Oct 28, 9:42am | Change |
|---|---|---|---|
| Axogen (AXGN) | $37.46 | $45.78 | +22.2% |
| Invesco QQQ (QQQ) | $721.25 | $722.90 | +0.2% |
| Integra LifeSciences (IART) | $11.99 | $12.01 | +0.2% |
| MiMedx (MDXG) | $3.90 | $3.91 | +0.4% |
| iShares Biotechnology (IBB) | $212.20 | $213.30 | +0.5% |
| Organogenesis (ORGO) | $0.90 | $0.89 | -1.2% |
| iShares Medical Devices (IHI) | $54.53 | $54.29 | -0.4% |
At 9:41am RSI(14) stood at 70, the shares sat 8% above their 50-day average and 17% above their 200-day average, volume had reached 0.8 times its 20-day average, and the stock was 13% below its 52-week high of $52.91.
What changed in the numbers
The guidance is the center of the day, and it is easier to read in two pieces. The July outlook was at least $279 million. The new outlook of at least $290 million includes at least $7 million from BioCircuit, a nerve repair company Axogen bought on Oct 1 for $200 million. Without it, the outlook is at least $283 million, growth of at least 26%. That is a $4 million raise from July on the base business, and it sits close to where analysts already were.
The nine-month revenue was $207.0 million, so the new floor implies at least $83.0 million in the fourth quarter. Take out BioCircuit's $7 million and the base business is guided to at least $76.0 million, only $0.2 million above the third quarter. Axogen's Hartley said "we don't see a large step up, so we just went based on our normal historical seasonality." A floor that low is a cautious guide. Our guide to reading an earnings release covers how to tell a floor from a forecast.
Profit moved the right way at the adjusted level and the wrong way at the reported level:
| Third quarter | 2026 | 2025 |
|---|---|---|
| Revenue | $75.8M | $60.1M |
| Gross margin | 74.8% | 76.6% |
| Operating expenses | $55.8M | $44.1M |
| Income from operations | $1.0M | $1.9M |
| Net income | $2.3M | $0.7M |
| Adjusted EBITDA | $13.4M | $9.2M |
Operating expenses grew 26.5%, a hair faster than revenue, because of compensation, stock-based pay and about $2 million of BioCircuit deal costs. Stock-based compensation was $24.4 million for the nine months against $13.5 million a year earlier. The gap between $13.4 million of adjusted EBITDA and $1.0 million of operating income is mostly that expense, a point our explainer on stock-based compensation takes up.
The bull case
- Growth is steady and broad. Year-to-date growth came from extremities, oral, maxillofacial and head and neck, and breast. Revenue for nine months was $207.0 million against $165.3 million.
- Coverage is still widening. Management said about 87.6 million commercial and Medicare Advantage lives were added since the second quarter of 2025.
- The price fell while the business improved. The stock closed at $51.47 on Aug 28 and $34.62 on Oct 16. In that time the outlook rose and coverage grew. Part of the drop came on Sept 10, when Axogen filed for an upsized offering of 5,646,500 shares that raised $225 million net, which our page on what a secondary offering does to a stock explains, with the share-count effect in our dilution explainer.
- Prostate is free upside. Management excluded it from guidance. More than 220 patients have been treated and 117 have at least six months of follow-up. Surgeons reported better-than-expected erectile function recovery in about 80%. The target is about 110,000 robotic prostatectomies a year, starting at high-volume academic centers.
- The balance sheet funds the plan. Cash was $350.1 million at Sept 30, before the $200 million BioCircuit payment on Oct 1, which by our arithmetic leaves about $150 million.
The bear case and the risks
- Margin is moving down. Gross margin was 74.8%, down from 76.6% a year earlier, though up from 72.7% in the second quarter. Hartley said it should fall sequentially in the fourth quarter to slightly below the second-quarter level, and that a purchase-accounting step-up on BioCircuit inventory could add pressure.
- Part of the raise was bought. Of the $11 million increase in the floor, $7 million is BioCircuit, whose sales will also take some from Axogen's own nerve connector products. Management said the effect is "baked in" and gave no figure.
- The valuation is full. The forward price-to-earnings ratio is 66, price to sales is 10.75 and price to book is 9.6. When a stock trades at those levels, a small miss moves it a long way, as our page on forward versus trailing P/E shows, and our guide to price to sales covers what 10.75 asks of future growth.
- A gap can close. The stock rose 22% in a day. Short interest is 8.95% of the float, which can feed a squeeze on the way up and a reversal on the way down, as our short interest explainer describes.
- Prostate is unproven at scale. The 80% figure is surgeon-reported, not a controlled comparison, and launch is a year away.
What comes next
Axogen holds an investment-community call on prostate market development on Nov 9, 2026 at 9:00am ET, and a fuller review at an investor day in March 2027. The fourth-quarter report will give the first read on BioCircuit's contribution and the gross margin step-down. The stock has an analyst consensus target of $52.33 and a range of $50 to $55. For revisions after the report, see our page on why estimate revisions move stocks, and for the day's other large moves see today's biggest stock moves.