Anika Therapeutics, Inc.

(amounts in thousands, except share and per share amounts or as otherwise noted)

Anika Therapeutics, Inc. (the “Company”) is a global leader in the design, development, manufacturing, and commercialization of hyaluronic acid (HA) innovations. In partnership with clinicians, the Company’s sole focus is dedicated to delivering and advancing osteoarthritis (OA) pain management and orthopedic regenerative solutions. At the core is a passion to deliver a differentiated portfolio that improves patient outcomes around the world.

In early 2020, the Company expanded its overall technology platform through its strategic acquisitions of Parcus Medical, LLC (“Parcus Medical”), a sports medicine implant and instrumentation company, and Arthrosurface Incorporated (“Arthrosurface”), a company specializing in less invasive, bone preserving partial and total joint replacement solutions. These acquisitions broadened the Company's product portfolio, developed over its 30 years of expertise in HA technology, into joint preservation and restoration, increased its commercial capabilities, diversified its revenue base, and expanded its product pipeline and research and development expertise.

In October 2024, the Company announced a strategic shift to focus on its OA Pain Management and Regenerative Solutions businesses. This strategic decision resulted in the sale of Arthrosurface on October 31, 2024, and the sale of Parcus Medical on March 7, 2025.

The Company is subject to risks common to companies in the life sciences industry including, but not limited to, development by the Company or its competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, commercialization of existing and new products, and compliance with U.S. Food and Drug Administration (“FDA”) and foreign regulations and approval requirements, as well as the ability to grow the Company’s business through appropriate commercial strategies.

The accompanying unaudited condensed consolidated financial statements and related notes have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The financial statements include the accounts of Anika Therapeutics, Inc. and its subsidiaries. Inter-company transactions and balances have been eliminated. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to SEC rules and regulations relating to interim financial statements. The December 31, 2025 balances reported herein were derived from the audited consolidated financial statements. In the opinion of management, these unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to fairly state the condensed consolidated financial statements.

The accompanying unaudited condensed consolidated financial statements and related notes should be read in conjunction with the Company’s annual financial statements filed with its Annual Report on Form 10-K for the year ended December 31, 2025. The results of operations for the three-month period ended March 31, 2026, are not indicative of the results to be expected for the year ending December 31, 2026.

Recent Issued Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2024-03,Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):Disaggregation of Income Statement Expenses(“ASU 2024-03”), and in January 2025, the FASB issued ASU No. 2025-01,Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date(“ASU 2025-01”). ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for public companies for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently in the process of evaluating the impact of this pronouncement on its related disclosures.

In December 2025, the FASB issued ASU 2025‑11 —* Interim Reporting (Topic 270): Narrow*‑Scope Improvements to clarify and reorganize the U.S. GAAP guidance on interim financial reporting consistent with Accounting Standards Codification (“ASC”) Topic 270. This new pronouncement will require registrants to use a comprehensive list of interim disclosure requirements compiled in accordance with ASC 270 and recognize this list as the complete population of required interim GAAP disclosures. ASU 2025-11 is effective for public companies with interim periods beginning after December 15, 2027. The Company is currently in the process of evaluating the impact of this pronouncement on its related disclosures.

In October 2024, the Company announced a strategic shift to focus on its OA Pain Management and Regenerative Solutions businesses. This strategic decision resulted in the sale of Arthrosurface on October 31, 2024, and the sale of Parcus Medical on March 7, 2025.

Arthrosurface

On October 31, 2024 (the “Closing Date”), the Company completed the sale of all of the outstanding equity interests of Arthrosurface, a Delaware corporation and former wholly-owned subsidiary of the Company, which held the Company’s Arthrosurface business, to Phoenix Brio, Incorporated, a Delaware corporation (the “Buyer”), pursuant to the terms and conditions of a Share Purchase Agreement, dated as of the Closing Date (the “Purchase Agreement”), by and among the Company, Arthrosurface and Buyer (the “Arthrosurface Transaction”).

As consideration for the Arthrosurface Transaction, at the closing, the Buyer delivered to the Company a ten-year non-interest-bearing promissory note in the principal amount of $7.0 million. Under the terms of the Purchase Agreement, the Company is also eligible to receive: (i) for each calendar quarter, an amount equal to a percentage of the net sales (the “Revenue Payments”) for the sale of certain commercial and pipeline products during the period commencing on the Closing Date and ending on the earlier of the fifth (5th) anniversary of the Closing Date or the date on which the Buy-Out Payment (as defined below) is paid to the Company; and (ii) a percentage of the gross proceeds with respect to the sale of certain commercial and pipeline products in a bona-fide arm’s length transaction with a third party that is not an affiliate of Buyer or the Company occurring within the first twenty four (24) months following the Closing Date. The Buyer can also elect to make a payment in an amount equal to the greater of (A) $14.0 million or (B) ten (10) times the Revenue Payments ((A) and (B) together, the “Buy-Out Payment”) paid to the Company during the last full calendar year prior to the consummation of a change of control transaction or Buyer’s written notice to the Company that it is electing to make the Buy-Out Payment. Pursuant to the Purchase Agreement, the aggregate consideration is subject to customary post-closing adjustments. The Company determined the fair value of the consideration with the sale of the Arthrosurface asset group to be $5.9 million and recorded as Notes Receivable on its balance sheet at the time of divestiture. The carrying value of the Notes Receivable was $5.7 million and $5.6 million, as of March 31, 2026, and December 31, 2025, respectively.

Selected financial information related to significant operating and investing cash flow items from discontinued operations (excluding working capital impacts) are as follows (in thousands):

The Company estimates an allowance for credit losses with its accounts receivable resulting from the inability of its customers to make required payments, which is included in selling, general and administrative expenses in the accompanying consolidated statements of operations. In determining the adequacy of the allowance, management specifically analyzes individual accounts receivable, historical bad debts, customer concentrations, customer creditworthiness, current and reasonable and supportable forecasts of future economic conditions, accounts receivable aging trends, and changes in the Company’s customer payment terms.

The components of the Company’s accounts receivable are as follows:

A summary of activity in the allowance for credit losses is as follows:

The Company has certain cash equivalents in money market funds that are classified within Level 1 of the fair value hierarchy and are valued based on quoted prices in active markets. For cash, accounts receivable, notes receivable, accounts payable, and accrued interest, the carrying amounts approximate fair value, because of the short maturity of these instruments, and therefore fair value information is not included in the table below. There were no transfers between fair value levels during the three-month periods ended March 31, 2026 and December 31, 2025, respectively.

The classification of the Company’s cash equivalents within the fair value hierarchy was as follows:

Inventories consist of the following:

Inventories are stated net of inventory reserves of approximately $4.0 million and $4.8 million, as of March 31, 2026, and December 31, 2025, respectively.

Property and equipment is stated at cost and consists of the following:

Depreciation expense was $1.4 million and $1.2 million for the three-month periods ended March 31, 2026, and 2025, respectively.

The Company assesses goodwill for impairment annually, or, under certain circumstances, more frequently, such as when events or changes in circumstances indicate there may be impairment.

The change in the carrying value of goodwill for the three-months ended March 31, 2026, was as follows:

The Company has intangible assets of $1.7 million at each of March 31, 2026, and December 31, 2025, which is comprised of in-process research and development assets.

Accrued expenses and other current liabilities consist of the following:

In certain of its contracts, the Company warrants to customers that the products it manufactures conform to the product specifications as in effect at the time of delivery of the specific product. The Company may also warrant that the products it manufactures do not infringe, violate, or breach any U.S. or international patent or intellectual property right, trade secret, or other proprietary information of any third party. On occasion, the Company contractually indemnifies its customers against any and all losses arising out of, or in any way connected with, any claim or claims of breach of its warranties or any actual or alleged defect in any product caused by the negligent acts or omissions of the Company. The Company maintains a products liability insurance policy that limits its exposure to these risks. Based on the Company’s historical activity, in combination with its liability insurance coverage, the Company believes the estimated fair value of these indemnification agreements is immaterial. The Company hadno accrued warranties as of March 31, 2026, or December 31, 2025, and has no history of claims paid.

The Company is also involved from time-to-time in various legal proceedings arising in the normal course of business. Although the outcomes of these legal proceedings are inherently difficult to predict, the Company does not expect the resolution of these occasional legal proceedings to have a material adverse effect on its financial position, results of operations, or cash flow.

Revenue by product classification is as follows:

Revenue from the Company’s sole significant customer, Johnson & Johnson MedTech (‘J&J MedTech’), part of the Johnson & Johnson Medical Companies, as a percentage of the Company’s total revenue was 47% and 50% for the three months ended March 31, 2026, and 2025, respectively.

Total revenue by geographic location based on the location of the customer in total and as a percentage of total revenue were as follows:

Equity Incentive Plans

The Anika Therapeutics, Inc. 2017 Omnibus Incentive Plan (the “2017 Plan”) was approved by the Company’s stockholders on June 13, 2017, and subsequently amended most recently on June 25, 2025. On June 25, 2025, the Company’s stockholders approved an amendment to the 2017 Plan increasing the number of shares by 475,000 shares from 5,285,000 shares to 5,760,000 shares. The 2017 Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights (“SARs”), restricted stock awards, performance restricted stock units (“PSUs”), restricted stock units (“RSUs”), total shareholder return options (“TSRs”) and performance options that may be settled in cash, stock, or other property. In accordance with the 2017 Plan approved by the Company’s stockholders, including the amendments thereto, each share award other than stock options or SARs will reduce the number of total shares available for grant bytwo shares. Subject to adjustment for specified types of changes in the Company’s capitalization, no more than 5.8 million shares of common stock may be issued under the 2017 Plan. There were 0.8 million shares available for future grants as of March 31, 2026, under the 2017 Plan.

The Anika Therapeutics, Inc. 2021 Inducement Plan (the “Inducement Plan”) was adopted by the Company’s board of directors on November 4, 2021, in which the Company reserved for issuance pursuant to equity-based awards granted under the Inducement Plan. Such awards may be granted only to an individual who was not previously an employee of the Company or director with the Company. The Inducement Plan provides for the grant of awards under terms substantially similar to the 2017 Plan (as amended). The Inducement Plan was amended in December 2023 to add 125,000 shares and in May 2024 to add 100,000 shares. There were 0.1 million shares available for future grants as of March 31, 2026, under the Inducement Plan.

The Company may satisfy share-settled awards upon exercise, or upon fulfillment of the vesting requirements for other equity-based awards, with either newly issued shares or shares reacquired by the Company. Stock-based awards are granted with an exercise price equal to or greater than the market price of the Company’s stock on the date of grant. Awards contain service conditions or service and performance conditions, and they generally become exercisable ratably over three years with a maximum contractual term often years.

The Company presents the expenses related to stock-based compensation awards in the same expense line items as cash compensation paid to each of its employees as follows (in thousands):

Stock Options and Stock Appreciation Rights

Stock options and SARs are granted to purchase common shares at prices that is equal to the fair market value of the Company’s common stock on the date the options or SARs are granted or, in the case of premium awards, are granted at 110% of the market price of the Company’s common stock on the date of grant. Stock options entitle the holder to purchase common shares, while SARs provide the right to receive the appreciation in the value of the Company’s common stock over the grant price, that can be settled in shares or cash at the Company’s election. Options and SARs generally vest in equal annual installments over a period ofthree years and expire 10 years after the date of grant. The grant-date fair value of stock options and SARs is recognized as compensation expense on a straight-line basis over the requisite service period, which is generally the vesting period.

The following summarizes the activity under the Company’s stock option and SARs plans:

There were no stock options or SARs exercised for the three-month period ended March 31, 2026.

The Company granted 476,221 stock appreciation rights (SARs) during the three-months ended March 31, 2026 which can be settled in cash or stock at the Company’s election. The Company uses the Black-Scholes pricing model to determine the fair value of options or SARs granted. The calculation of the fair value of stock options and SARs is affected by the stock price on the grant date, the expected volatility of the Company’s common stock over the expected term of the award, the expected life of the award, the risk-free interest rate and the dividend yield.

Listed below are the assumptions used in the Black-Scholes pricing model for options and SARs granted during the three months ended March 31, 2026. There were no stock options or SARs granted for the three-month period ended March 31, 2025.

The assumptions were as follows:

As of March 31, 2026, there was $3.8 million of unrecognized compensation cost related to unvested stock options and SARs. This expense is expected to be recognized over a weighted average period of 2.1** **years.

Restricted Stock Units

RSUs generally vest either in equal annual installments over athree-year period or on a cliff-vesting basis after three years of continuous service. The grant-date fair value of RSUs is recognized as expense on a straight-line basis over the requisite service period, which is generally the vesting period. The Company determines the fair value of RSUs based on the closing price of its common stock on the date of grant.

RSU activity for the three-month period ended March 31, 2026, was as follows:

The weighted-average grant-date fair value per share of RSUs granted was $12.95 and $15.03 for the three-month periods ended March 31, 2026, and 2025, respectively. The total fair value of RSUs vested was $6.5 million and $5.5 million for the three-month periods ended March 31, 2026, and 2025, respectively. As of March 31, 2026, there was $13.3 million of unrecognized compensation cost related to time-based RSUs, which was expected to be recognized over a weighted-average period of 2.4 years.

The Company’s annual grants of RSU awards made in March 2024, 2025, and 2026 can be settled at vesting in cash or shares at the Company’s election. The Company has recorded these RSUs as a liability due to the expectation that the Company will settle the vesting of these RSU awards in cash due to a potential shortage of shares in the 2017 Plan at the time of vesting. As a result, these RSUs will be subject to change in value at the time of each reporting period. The RSU vestings in March 2026 with these annual award grants totaled 310,370 shares and were settled in shares. As of March 31, 2026, the Company had 897,905 shares outstanding for which a liability of $1.4 million was recorded in Accrued Expenses and Other Liabilities.

Performance Stock Units

PSU activity for the three-month period ended March 31, 2026, was as follows:

There were no PSUs granted for the three-month period ended March 31, 2026.

The Company’s grants of PSU awards can be settled at vesting in cash or shares at the Company’s election. The Company has recorded these PSUs as a liability due to the expectation that the Company will settle the vesting of these PSU awards in cash due to a potential shortage of shares in the 2017 Plan at the time of vesting. As a result, these PSUs will be subject to change in value at the time of each reporting period. The PSU awards vested in March 2026 totaled 48,963 shares and were settled in shares. As of March 31, 2026, the Company had 230,791** **shares outstanding for which a liability of $1.5 million was recorded in Accrued Expenses and Other Liabilities and there is unrecorded compensation cost of $1.4 million which is to be recognized over a weighted-average period of 2.0 years.

On March 14, 2025, the Company granted 290,792 PSUs to certain senior management employees. The Company granted two types of PSU awards. One PSU award is a market-based award in which the number of shares can vest between 50-200% of target based on the Company’s stock price achieving certain price targets from March 14, 2025, through March 1, 2028. No shares will vest if these stock price targets are not achieved. If the price targets are achieved, vesting will occur on March 14, 2028. The Company estimated the fair value of these PSUs using a Monte-Carlo simulation model at grant date and will update at each reporting period. The second type of PSUs are award that may vest upon achievement of certain strategic performance objectives based on regulatory milestones and financial targets. These awards vest annually on each anniversary date of the grant date over three years if the performance milestones are met. The Company recognizes stock-based compensation based on the probability of achieving these milestones.

During the three-month period ended March 31, 2026, the Company initiated actions to reduce general and administrative expenses to reflect a more focused cost structure following the recent strategic divestitures. This included a workforce reduction resulting in the recognition of severance and employee‑related** **costs, which primarily consist of cash severance payments, employer‑paid benefits during the severance period, and payroll‑related taxes. These costs were recognized in accordance with ASC 420,Exit or Disposal Cost Obligations. The Company expects to incur total severance and employee-related costs of approximately $2.3 million in connection with the workforce reduction plan, of which $1.6 million was recognized in Selling, General and Administrative expenses during the three-month period ended March 31, 2026. The restructuring actions are expected to be substantially completed by the end of the second quarter of 2026.

The following table is a summary of the changes in the severance liability, included with accrued expenses on the consolidated balance sheets related to the workforce reduction:

In addition, the Company announced a leadership transition in January 2026 in which the Company's former Chief Executive Officer became Executive Chair of the Company’s Board of Directors. The Company and Dr. Cheryl Blanchard, the Company's former Chief Executive Officer, entered into a Transitional Services and Separation Agreement (the “Transition Agreement”). Pursuant to the Transition Agreement, Dr. Blanchard stepped down from her role as the Company’s President and Chief Executive Officer, effective January 31, 2026. Dr. Blanchard will continue to serve on the Board of Directors through the January 31, 2028. Pursuant to the Transition Agreement, Dr. Blanchard will be entitled to receive her base salary rate and related employee benefits for 18 months immediately at the time of transition which will be paid over 24 months through January 31, 2028. Dr. Blanchard will also continue to serve on the Board of Directors through the Company’s 2028 annual stockholders meeting. Her equity awards granted under the Company’s 2017 Omnibus Incentive Plan and any other equity plan shall continue to vest throughout her service relationship, in accordance with the terms of the applicable award agreements and equity plans.

Following the change in circumstances, Dr. Blanchard will be required to provide service to the Company in her capacity as Executive Chair and later Board Member. In accordance with ASC 718-10, Compensation-Stock Compensation, the Company evaluated the accounting for the value of the continued services expected to be received in exchange for Dr. Blanchard’s equity awards concluding that the substance of the requisite services was not commensurate with the value of the equity awards. Accordingly, the Company recognized stock-based compensation expense of $3.3 million related to these awards during the three-month period ended March 31, 2026.

The income tax expense was $0.2 million for the three-month period ended March 31, 2026, resulting in an effective tax rate of (4.9%). The income tax expense was $0.1 million for the three-month period ended March 31, 2025, resulting in an effective tax rate of (2.3%). The tax rates are consistent for the three-month period ended March 31, 2026, as compared to the same period in 2025, primarily due to a full valuation allowance being recorded against domestic deferred tax assets at March 31, 2026, and 2025.

The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under the tax law, and results of recent operations. The Company has incurred operating losses in recent years. As a result, the Company anticipates that deferred tax assets originating during the year ended December 31, 2026, will exceed the availability of reversing taxable temporary differences. Due to significant negative evidence, including the Company’s prior year operating losses, the Company concluded its anticipated net deferred tax assets in the U.S. are not more likely than not to be realizable. Accordingly, the income tax provision for the three-month period ended March 31, 2026, includes an adjustment for the valuation allowance required against the U.S deferred tax assets. As of March 31, 2026, the Company continues to believe its foreign deferred tax assets are realizable based upon future reversals of existing taxable temporary differences and projected future taxable income.

The Company files income tax returns in the United States on a federal basis, in certain U.S. states, and in certain foreign jurisdictions. The associated tax filings remain subject to examination by applicable tax authorities for a certain length of time following the tax year to which those filings relate, which varies by jurisdiction.

Basic EPS is calculated by dividing net income (loss) by the weighted average number of shares outstanding during the period. Unvested restricted shares, although legally issued and outstanding, are not considered outstanding for purposes of calculating basic EPS. Diluted EPS is calculated by dividing net income by the weighted average number of shares outstanding plus the dilutive effect, if any, of outstanding share-based awards using the treasury stock method. Due to the Company’s loss position, the share-based payment awards are anti-dilutive.

The Company had a net loss during the three-month periods ended March 31, 2026, and 2025, respectively, and therefore all potential common shares would have been anti-dilutive and accordingly were excluded from the computation of diluted EPS. Stock options/SARs of 2.2 million shares and 1.9 million shares were outstanding for the three-month periods ended March 31, 2026, and 2025, respectively. RSUs and PSUs totaling 1.4 million shares and 1.3 million shares were outstanding for the three-month periods ended March 31, 2026, and 2025, respectively. These securities were not included in the computation of diluted EPS because the awards’ impact on EPS would have been anti-dilutive.

In May 2024, the Company approved a share repurchase program for an aggregate purchase price of $40.0 million to occur as follows: (i) first $15.0 million was effected through a Rule 10b5-1 Plan initiated prior to June 1, 2024 and to be effective through June 30, 2025, and (ii) the remaining amount to be purchased in the open market (“2024 Share Repurchase Program”). In the event of positive “free cash flow” as defined in the Cooperation Agreement dated May 28, 2024, with Caligan Partners LP, Caligan Partners Master Fund LP and David Johnson, for the period from July 1, 2024, through June 30, 2025, the amount under the share repurchase program shall be increased by 50% of such positive amount. In no event would the Company be required to make any purchases in the event that the Company’s cash would be less than $45.0 million after taking into account the share repurchase and reasonably anticipated capital expenditures and restructuring costs.

On May 28, 2024, the Company entered into a share repurchase agreement under a Rule 10b5-1 Plan with Bank of America. On November 6, 2025, the Company entered into a share repurchase agreement under a Rule 10b5-1 Plan with Clear Street LLC for another $15.0 million related to the 2024 Share Repurchase Program. As of March 31, 2026, the Company had repurchased 2,083,183 shares at a cost of $29.2 million representing 73% of the 2024 Share Repurchase Program. In April 2026, the Company completed its $15.0 million share repurchase agreement with Clear Street LLC and is no longer actively repurchasing stock.

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision-maker (“CODM”) in deciding how to allocate resources and assess performance. The Company operates inone business segment. The Company’s CODM is its President and Chief Executive Officer, who reviews financial information presented on a consolidated basis. The CODM’s financial review is focused on the consolidated financial results of the Company which is used as the basis for financial performance assessment and allocation of resources.

The following table presents financial information with respect to the Company’s single operating segment for the three months ended March 31, 2026, and 2025 (in thousands):

Total U.S revenues were $18.5 million and $16.4 million for the three months ended March 31, 2026, and 2025, respectively. See Note 11Revenue and Geographic Information for additional information about revenue by region.