Wound care is about to Look Very Different
The notion that some of the companies operating in this space today will not be here in 12 months is a mathematical conclusion more than a prediction. The cost structures don’t work, receivables don’t resolve, and the capital that kept marginal operators alive has moved on. What’s left is a market in the middle of a forced restructuring, and the outcome is going to look nothing like what this industry looked like three years ago.
People inside wound care already know most of this. What’s harder to sit with is how permanent it feels.
The Numbers That Drove the Crackdown
Medicare spending on skin substitutes rose from $256 million in 2019 to over $10 billion in 2024, according to Medicare Part B claims data. CMS attributed this dramatic increase largely to abusive pricing practices, including the use of products with limited evidence of clinical value. Current prices reached more than $2,000 per square centimeter.¹
When those numbers became public, the response was predictable. CMS finalized a rule moving skin substitutes from biologic reimbursement to a flat incident-to supply rate, a change estimated to reduce gross fee-for-service program spending by $19.6 billion in 2026.² The new flat rate landed at $127.14 per square centimeter.³
That single number rearranged the economics of an entire industry overnight. What I watched happen in real time was jarring. Unit pricing that had been holding dropped by more than 80% inside of weeks. The companies that could survive that compression were the ones who owned their manufacturing and carried no licensing or royalty burden. Everyone else started doing math they didn’t like.
The compounding pharmacy industry went through something similar a decade ago. 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. Many operators didn’t survive the transition. The ones that did had real manufacturing infrastructure and compliance programs that didn’t depend on the regulatory environment staying permissive. Wound care is living its own version of that correction right now.
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 with tens of millions in outstanding receivables they couldn’t collect. There are two distinct 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 layer 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 doesn’t resolve anything and damages relationships that still have value. So companies negotiate where they legally can, and the balances sit open on the receivables ledger quarter after quarter.
A company can show substantial profits while still struggling to pay its bills. The problem isn’t in the income statement, it’s in the timing. 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.
What the Public Markets Are Telling You
Publicly traded companies in wound care can’t obscure what’s happening the way private companies can. The disclosures are instructive.
Organogenesis reported record 2025 revenue of $563 million. Then it guided full year 2026 revenue down 25% to 38% year-over-year. Management expects Q1 2026 revenue declines of approximately 50% year-over-year, citing clinician confusion following CMS policy changes in late December 2025 as the primary driver.⁶ The stock dropped to $3.40 on the announcement, removing approximately $39 million from the company’s valuation in a single session.⁷
MiMedx, one of the most established names in the space, guided FY 2026 revenue to $340 million to $360 million, below analyst estimates of approximately $375 million, and flagged navigating reimbursement changes as a primary headwind.⁸ Multiple analysts cut price targets in December and January in response.
BioStem reported that net revenue for full year 2025 was $47.5 million, compared to $69.7 million for full year 2024, with the decline primarily driven by lower wound care volume resulting from reimbursement uncertainty and increased competition in the physician office and mobile settings.⁹
These are public companies with legal obligations to report accurately. If this is what shows up in the public disclosures, the private company picture is considerably messier.
Tides Medical Is Worth Reading Closely
One of the more honest accounts of what this reimbursement shift did to a real company comes from Tides Medical, a vertically integrated manufacturer out of Lafayette, Louisiana. They owned their process. They were on the Inc. 5000 list of fastest-growing private companies as recently as 2025 with three-year revenue growth of 226%.
Then the market moved. The $127 per square centimeter cap caused Tides’ revenues to fall 40% in 2025. Ahead of the reimbursement change, Tides laid off nearly half of its employees and now processes only about two placentas a week.¹⁰
Their CEO put it plainly: “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.”¹⁰
Tides is a manufacturer. They own their supply chain end to end. If this is what the shift did to a company with that structural advantage, companies that don’t own their manufacturing have been in significantly worse shape. Many of them simply haven’t said so publicly yet.
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’s a company that 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 cover licensing fees, royalties, and a full field sales force. It does not work at $127.14 per square centimeter with a flat rate applied uniformly across the category.
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 The companies that built those relationships before the rule went into effect are now in a different competitive position than the ones that didn’t. The third survival profile is the diversified operator, a company with other revenue lines that share the same processing infrastructure as wound care products, allowing them to spread fixed manufacturing costs across a broader base and hold the line on pricing longer than a pure-play wound care manufacturer can.
BTIG noted in a research note that many large sales forces in the wound care space will likely be reduced, as the new pricing structure may not support current commission structures, and anticipated that industry 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. 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.
Getting Lean, Finding Adjacent Ground
Every company that wants to participate in what wound care becomes on the other side of this is going to have to look materially different. Lean operations. Diversified revenue. A realistic reckoning with what the new market actually supports versus what the high-reimbursement years made possible.
The underlying clinical need is not 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 during the gold rush years around serving that gap 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.
The audit pressure on providers is real and 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.
How manufacturers, distributors, and end users interact with each other will evolve too. The relationship-intensive, rep-heavy 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 and relationships 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 Bottom Line
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.
Things are about to look very different.
Sources
¹ CMS.gov. “CMS Modernizes Payment Accuracy and Significantly Cuts Spending Waste.” October 31, 2025. cms.gov/newsroom/press-releases/cms-modernizes-payment-accuracy-significantly-cuts-spending-waste
² CMS.gov. “CMS Modernizes Payment Accuracy and Significantly Cuts Spending Waste.” October 31, 2025.
³ BDO Healthcare Advisory. “CMS Withdraws Prominent LCD for Skin Substitutes.” January 2026.
⁴ Government Contracts Navigator. “Compounding Pharmacies Should Expect Greater Scrutiny as Government Healthcare Budgets Get Squeezed.” August 2017.
⁵ Entrepreneur.com. “Why Businesses Fail Financially Even When They’re Profitable.” November 2025.
⁶ Daily Political / StockTitan. “Organogenesis Q4 Earnings Call Highlights.” March 2026.
⁷ StockTitan. “Wound-Care Firm Organogenesis Hits Record Sales, Warns 2026 Drop Up to 38%.” February 2026.
⁸ TickerReport. “MiMedx Group Reaches New 1-Year Low.” February 2026.
⁹ BioSpace. “BioStem Technologies Reports Fourth Quarter and Full Year 2025 Financial Results.” March 24, 2026.
¹⁰ NOLA.com. “Louisiana Company That Turns Placentas into Skin Grafts Pivots to 3D Bioprinter Business.” January 30, 2026.
¹¹ Wound Care Advantage. “Medicare’s 2026 Rule Shakes Up Wound Care Payments.” October 2025.
¹² Investing.com. “Organogenesis Stock Price Target Raised to $9 by BTIG on Reimbursement Changes.” November 2025.