Things are about to look very different
Things Are About to Look Very Different in Wound Care
One policy decision compressed a decade of inflated economics into a single number: $127.14 per square centimeter. Everything that follows — the companies, the models, the relationships — is being rebuilt from scratch.
Most industry disruptions look obvious in hindsight. This one is happening in real time, which means the window for making the right decisions is still open — but it is narrowing fast. The companies repositioning now are working from a clear-eyed read of what the new economics actually support. The ones still waiting for clarity are making a decision whether they know it or not.
This piece is about what the new economics actually support, who they favor structurally, and what the next 12 months are likely to produce for the operators who haven't reckoned with that yet.
In 2019, Medicare was spending $256 million on skin substitutes. By 2024 that number was over $10 billion — a trajectory CMS attributed largely to abusive pricing practices and products with limited clinical evidence.1 Prices in some categories had cleared $2,000 per square centimeter. When the government finally moved, it didn't negotiate. It issued a flat incident-to supply rate of $127.14 per square centimeter, a change projected to cut gross fee-for-service program spending by $19.6 billion in 2026.2,3 Unit pricing dropped more than 80% inside of weeks. The cost structures that had supported an entire tier of operators stopped working at roughly the same moment.
That is the context. Everything below is what it means in practice.
This Has Happened Before
The compounding pharmacy industry ran a similar arc. From 2006 to 2015, Medicare Part D spending on compounded drugs increased 625% and the number of beneficiaries using them rose 281%.4 When the government moved, it moved decisively, and a lot of operators didn't survive the transition. The ones that did had real manufacturing infrastructure and compliance programs that weren't built around the assumption that the regulatory environment would stay permissive.
Wound care is living its own version of that correction. The payment environment rewarded volume and product proliferation over clinical outcomes. The regulator moved slowly and then all at once. The industry was caught between operators who had built real businesses and operators who had built arbitrage models, and the government did not distinguish carefully between the two when it acted. It rarely does.
The ones that survived the compounding correction had real manufacturing infrastructure and compliance programs that weren't built around the assumption that the regulatory environment would stay permissive.
What the Public Markets Are Saying
Publicly traded companies can't obscure what's happening the way private companies can. The disclosures are worth reading closely.
Record 2025 revenue of $564.2M, then guided full-year 2026 down 25–38% year-over-year. Management cited clinician confusion following CMS policy changes in late December 2025 as the primary driver. Stock fell to $3.40 on the announcement, removing approximately $39M from the company's valuation in a single session.6,7
Below analyst estimates of approximately $375M, with reimbursement navigation flagged as a primary headwind. Multiple analysts cut price targets in December and January.8
Full-year 2025 net revenue declined 32% from 2024, driven primarily by lower wound care volume from reimbursement uncertainty and increased competition in physician office and mobile settings.9
These are companies with legal obligations to report accurately. If this is what shows up in the public disclosures, the private company picture is considerably messier — and the private market is where most of this industry lives.
Tides Medical: The Clearest Case Study
The most honest account of what this shift did to a real company comes from Tides Medical, a vertically integrated manufacturer out of Lafayette, Louisiana. They owned their process end to end. They were on the Inc. 5000 list of fastest-growing private companies as recently as 2025, with three-year revenue growth of 226%.
The $127 per square centimeter cap caused revenues to fall 40% in 2025. Ahead of the reimbursement change, Tides laid off nearly half its workforce. The company now processes about two placentas a week.10
"Medicare just sort of took a blunt force instrument to the problem, and it's definitely presenting a lot of challenges. We're doing our best to figure out how to work in our new environment."
Tides owns its supply chain. If this is what the shift did to a company with that structural advantage, the situation at companies that don't own their manufacturing has been materially worse — and most of them haven't said so publicly yet.
Cash Doesn't Move, Companies Start Breaking
Behind the pricing collapse sits a problem that doesn't make it into earnings calls but does make it into board meetings every quarter.
When Medicare began auditing aggressively and reimbursement uncertainty took hold, a significant number of manufacturers ended up holding tens of millions in outstanding receivables they couldn't collect. There are two layers to this.
The first is that the industry did a poor job of enforcing payment discipline when times were good. Collection lines weren't held. Balances aged. When the market tightened, those open invoices didn't disappear.
The second is more complicated. Physicians who owe balances to manufacturers often can't pay because their own reimbursements are tied up in audits or clawback proceedings. Sending them to collections resolves nothing and damages relationships that still have value. So balances sit open on the receivables ledger quarter after quarter.
A company can show substantial profits while still struggling to pay its bills. A manufacturer doing significant revenue with uncollected invoices is essentially financing its customers' audit exposure with its own working capital.5 That is not a sustainable position, and for a number of companies in this space, it is already the position they're in.
Who Survives and Why
The profile of a company that doesn't make it through the next 12 months isn't hard to describe. It holds a Q code, contracts out manufacturing to a third party, and distributes under its own label. That model worked when reimbursement was generous enough to absorb licensing fees, royalties, and a full field sales force. It does not work at $127.14 per square centimeter.
There is no middle tier left. Three types of companies have a real path forward.
The first is manufacturers that own their infrastructure completely and carry no licensing burden — the only operators who can actually compete at the floor price. The second is companies with GPO contracts, OR presence, and meaningful hospital-based wound center volume, who are largely insulated from the physician office collapse. The new payment structure is expected to shift more wound care volume back into hospital-based settings,11 and the companies that built those relationships before the rule took effect are now in a different competitive position than the ones that didn't. The third is the diversified operator — a company with other revenue lines that share the same processing infrastructure as wound care products, allowing fixed manufacturing costs to spread across a broader base and pricing to hold longer than a pure-play wound care manufacturer can manage.
Reps are gone. Area VPs are gone. The layers between manufacturer and end user that the old margin structure supported have been stripped out, and they are not coming back.
BTIG noted in a research report that many large sales forces in wound care will likely be reduced, as the new pricing structure may not support current commission structures, and anticipated that consolidation could lead to materially higher operating profits for companies that remain competitive.12 That is the polite analyst version of what has already happened.
What Comes Next
Every company that wants to participate in what wound care becomes on the other side of this needs to look materially different. Lean operations. Diversified revenue. A realistic accounting of what the new market actually supports versus what the high-reimbursement years made possible.
The underlying clinical need isn't going away. Tides Medical's CEO estimates that only about 600,000 of the 3.8 million people who suffer from chronic wounds are currently receiving treatment.10 That gap is real. But the infrastructure that grew up around serving it is being stripped down, and the companies that survive will be the ones building for the environment that exists now — not waiting for a return to the one that existed in 2022.
Audit pressure on providers shows no signs of easing. In 2025, the CMS Fraud Defense Operations Center stopped nearly $185 million in improper payments to suspect providers billing for skin substitutes.1 Physicians are hesitant. Some will come back when the environment clarifies. Some won't. The utilization patterns that return in 2027 and beyond will be more conservative, more documented, and more hospital-centric than what the market looked like at its peak.
The rep-heavy, relationship-intensive model that defined physician office wound care for the last decade doesn't make economic sense at today's reimbursement rates. What replaces it will be leaner, more direct, and more dependent on compliance infrastructure and clinical evidence than on field presence alone.
At Bionavix, we've been working through what this means with our partners. The fundamentals of good wound care haven't changed. What's changing is who can afford to support it, and what that support has to look like going forward.
The Verdict
Some of these companies are already in terminal decline. The balance sheets don't work. The receivables don't move. The capital isn't coming. The exit is closer than leadership wants to admit.
The companies that survive this will earn it. They will be leaner, more vertically integrated, more evidence-driven, and more honest about what this market actually supports. The ones that don't will find out that waiting for conditions to improve was itself a strategic decision — and not a good one.
Some of the companies operating in this space today will not be here in 12 months. That is a mathematical conclusion more than a prediction. Things are about to look very different.
- 1CMS.gov. "CMS Modernizes Payment Accuracy and Significantly Cuts Spending Waste." October 31, 2025.
- 2CMS.gov. Ibid.
- 3BDO Healthcare Advisory. "CMS Withdraws Prominent LCD for Skin Substitutes." January 2026.
- 4Government Contracts Navigator. "Compounding Pharmacies Should Expect Greater Scrutiny." August 2017.
- 5Entrepreneur.com. "Why Businesses Fail Financially Even When They're Profitable." November 2025.
- 6Daily Political / StockTitan. "Organogenesis Q4 Earnings Call Highlights." March 2026.
- 7StockTitan. "Wound-Care Firm Organogenesis Hits Record Sales, Warns 2026 Drop Up to 38%." February 2026.
- 8TickerReport. "MiMedx Group Reaches New 1-Year Low." February 2026.
- 9BioSpace. "BioStem Technologies Reports Fourth Quarter and Full Year 2025 Financial Results." March 24, 2026.
- 10NOLA.com. "Louisiana Company That Turns Placentas into Skin Grafts Pivots to 3D Bioprinter Business." January 30, 2026.
- 11Wound Care Advantage. "Medicare's 2026 Rule Shakes Up Wound Care Payments." October 2025.
- 12Investing.com. "Organogenesis Stock Price Target Raised to $9 by BTIG on Reimbursement Changes." November 2025.