Axogen (AXGN) 2026 年第三季法說會：營收成長 26%，調升財測

重點摘要

• 2026 年第三季營收年增 26.2% 至 7,580 萬美元，主要受到出貨量成長、Avance 的強勁需求，以及市場對 Axogen 神經修復產品組合更廣泛採用的推動。
• 乳房重建業務營收年增超過 60%。管理層估計 Resensation 的滲透率約為 11%，成長來自現有客戶帳戶的使用量提升、新加入的外科醫師以及新客戶帳戶。
• GAAP 淨利增加至 230 萬美元，或每股盈餘 0.04 美元。調整後 EBITDA 增至 1,340 萬美元，利潤率擴增 2.3 個百分點至 17.7%。
• Axogen 上調 2026 全年營收指引至至少 2.9 億美元，代表至少 29% 的成長。這包括來自 BioCircuit 的至少 700 萬美元，以及至少 2.83 億美元的本業有機營收。
• 該公司於 10 月 1 日完成了對 BioCircuit 價值 2 億美元的收購案。管理層預期 NerveTape 第一年將對營收成長及調整後 EBITDA 利潤率做出貢獻，同時 Axogen 將保持自由現金流為正。
• Axogen 計劃於 2027 年開始開發前列腺神經重建市場。前列腺業務未包含在當前或長期指引中。

關鍵財務數據

業務與營運表現

Avance 佔季度及今年以來總營收的 64%，而 2025 年約為 60%。所有目標市場皆對成長做出貢獻。

乳房重建仍為主要成長動能，年增超過 60%。Axogen 在本季結束時擁有約 485 個活躍的乳房重建客戶帳戶（增加 95 個以上），以及約 590 名活躍的外科醫師（增加 140 名以上）。該公司在 2026 年預定的最後兩場 Resensation 培訓計畫中，培訓了超過 50 名整形外科醫師。

四肢、口腔頜面以及頭頸部業務合計成長 10.7%。管理層表示，在扣除前一年病例備貨的影響後，四肢業務的成長率約為 15%。管理層繼續認為該市場的滲透率仍低，並預期長期成長率將介於高個位數至低雙位數之間。

高潛力客戶帳戶貢獻了今年以來 61% 的營收和 55% 的成長。這些客戶帳戶以及整體客戶基礎的生產力均提升了 22%。

Axogen 將其乳房重建業務的銷售團隊擴增至 31 名業務代表與 3 名區域總監。其四肢、口腔頜面及頭頸部團隊則達到 132 名業務代表與 15 名區域總監。在保持獲利能力的前提下，管理層打算繼續招聘。

Avance 的商業保險覆蓋率已涵蓋約 96% 的美國受保人口。Elevance 於 8 月取消了神經缺損長度的限制標準，而 Aetna 則於 10 月開始給付 30 公釐（含）以下的上肢感覺神經缺損。Axogen 表示正與外科醫師及 Aetna 合作，以應對較為嚴格的給付標準。

BioCircuit、NerveTape 與前列腺業務擴展

Axogen 於 10 月 1 日以 2 億美元外加交易費用完成了對 BioCircuit 的收購。NerveTape 成為該公司神經修復產品組合中的第六款產品，並將其涵蓋範圍延伸至直接神經修復領域；管理層指出，直接神經修復約佔斷裂神經手術的 40% 至 50%。

BioCircuit 過去透過約 50 名獨立經銷商代表服務約 400 個客戶帳戶。Axogen 已透過其覆蓋近 3,000 個帳戶的直銷組織接管了銷售與分銷業務。管理層預期此通路優勢將加速醫院價值分析委員會的審查通過。

Axoguard Connector 與 NerveTape 的合計滲透率目前約為估計手術潛在機會的 5%。公司表示，先前預測 2027 年 NerveTape 的 3,400 萬美元營收為淨增量，且已扣除預估的產品互斥效應。

在前列腺神經重建方面，已有超過 220 名患者在 15 個臨床開發中心接受了 Avance 治療。在追蹤至少六個月的 117 名患者中，外科醫師報告約有 80% 達到了優於預期的勃起功能恢復（定義為 SHIM 評分至少達 15 分）。超過 95% 達到了無須使用尿墊的控尿效果，達到或超越預期水準。未報告任何與移植物或手術相關的併發症。

管理層計劃於 2027 年開始開發前列腺市場，初期重點放在教學醫院與手術量較高的醫學中心。管理層估計每年約有 110,000 例機器人前列腺切除術的手術機會，但尚未將前列腺業務納入當前指引中。

管理層財務指引

管理層預期第四季毛利率將呈季減，並略低於第二季水準，原因在於產能正針對長度較長的 Avance 移植物（特別是用於乳房重建手術）更強勁的需求進行調整。定價與良率改善措施正在實施中，但其效益需要時間才能反映在銷貨成本中。

公司目前預計 2027 全年毛利率將與 2026 全年大致持平。正式的 2027 年指引與最新的前列腺業務假設預計將於 2027 年第一季公布。

風險與關注事項

• 乳房重建對較長 Avance 移植物的需求正對產品成本與毛利率帶來壓力。
• BioCircuit 的收購會計處理可能會產生存貨帳面價值調升，從而相較於當前預期對第四季及全年毛利率產生不利影響。
• BioCircuit 的整合具有潛在的營運干擾風險，而產品重疊可能會導致銷售在 NerveTape、Axoguard Connector 及 Axoguard Protector 之間發生轉移。
• Aetna 的給付範圍仍僅限於 30 公釐（含）以下的中短長度上肢感覺神經缺損，但管理層期望爭取更寬鬆的給付標準。
• 早期前列腺臨床成果僅基於臨床開發中心及有限的追蹤數據。財務與商業化的詳細資訊要到 2027 年 3 月的投資人日才會公佈。

分析師問答亮點

管理層估計乳房重建 Resensation 的滲透率約為 11%。管理層將成長歸因於現有客戶帳戶內利用率提升、更多外科醫師採用以及客戶帳戶的不斷擴展。

關於 NerveTape，管理層表示成長應來自直接神經修復、在現有 Avance 手術中使用的增加，以及尋求減少顯微縫合需求的外科醫師更廣泛的採用。公司未透露預期產品互斥效應的具體金額，但該假設已包含在有機成長指引中。

Axogen 預計從第三季到第四季營收不會出現大幅度的季增。全年展望反映了歷史正常季節性以及當前的規劃假設。

管理層表示，前列腺手術的生產效益應優於乳房重建，因為前列腺手術使用較短的移植物，能提高每位捐贈者的產出率，並避免遭受同樣的毛利率壓力。

完整法說會逐字稿

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完整財報電話會議逐字稿

管理層陳述

Operator

Good morning, everyone.

Joining me on today's call is Michael Dale, Axogen's President and Chief Executive Officer; and Lindsey Hartley, Chief Financial Officer.

Michael will discuss third quarter 2026 financial results and corporate highlights. Lindsey will then provide details on financial performance and overall outlook for the year. This will be followed by a question-and-answer session.

Today's call and presentation is being broadcast live via webcast, which is available on the Investors section of Axogen's website. Following the end of the live call, a replay will be available on the Investors section of the company's website at www.axogeninc.com.

Before we begin, I would like to remind you that during this conference call, management will be making forward-looking statements. Forward-looking statements include statements regarding financial guidance and outlook, clinical development and regulatory efforts, commercial growth initiatives, reimbursement and market access efforts, training and education initiatives, research and development activities and overall business strategy and performance, including anticipated benefits and integration activities related to the BioCircuit acquisition.

These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially, including, without limitation, the risks and uncertainties reflected in the company's filings with the Securities and Exchange Commission, including the most recent Annual Report on Form 10-K, subsequent quarterly reports on Form 10-Q and other filings made with the Securities and Exchange Commission. Forward-looking statements speak only as of the date they are made, and the company undertakes no obligation to update any forward-looking statements, except as required by law.

In addition, for reconciliation of non-GAAP measures, please refer to today's press release, presentation with highlights from today's call and the corporate presentation on the Investors section of the company's website.

Now, I'll turn the call over to Michael. Michael, please go ahead.

Michael Dale

Thank you, operator, and good morning, everyone.

Today, I will walk you through our third quarter performance using the same lens we've used all year, which are the 6 priorities that comprise our strategic plan. Once I conclude my commentary, Lindsey will review our financials in detail, after which we'll open the call for questions.

Before reviewing performance against each strategic priority, I would like to make clear how delighted we are with our third quarter and year-to-date results. We are meeting or exceeding our customer creation objectives across the board and remain confident in our ability to execute our strategic plan.

Starting with our first priority, which is revenue growth and financial operating leverage. Third quarter revenue was $75.8 million, up 26.2% from third quarter 2025, with growth in all of our markets. Breast grew more than 50% year-over-year and extremities, OMF, head and neck combined grew 10.7%.

Avance made up 64% of revenue in the quarter and year-to-date versus about 60% for 2025. GAAP net income was $2.3 million. Adjusted net income was $13.1 million and adjusted EBITDA was $13.4 million, with adjusted EBITDA margin up 2.3 percentage points from a year ago. We ended the quarter with $350 million in cash, cash equivalents, restricted cash and investments, including proceeds from our September equity offering. Gross margin was 74.8%, up from 72.7% in the second quarter and down from 76.6% a year ago.

Moving to our second priority, market development. Consistent with prior quarters, all 3 target markets contributed positively to third quarter results. We continue to see momentum in breast as nerve reconstruction becomes a larger part of the breast reconstruction conversation. Growth is coming from expansion within existing accounts, new surgeon adoption and new account development, supported by rising patient awareness and interest in breast Resensation. Because this market remains early in its development, we see significant long-term growth potential from expanding our commercial footprint, developing new accounts and training new surgeons.

In third quarter, we held our final 2 surgeon training programs planned for 2026, training more than 50 plastic surgeons in the Resensation technique. We also continued investing in patient awareness and completed significant market development work to prepare for breast cancer awareness month in October. We now have roughly 485 active breast accounts, up more than 95 year-over-year and roughly 590 active surgeons, up more than 140 year-over-year.

Turning to extremities and OMF, and head and neck markets. Growth was double digit in the third quarter, continuing the steady progress described on prior calls, supported by account expansion and increased surgeon activation as driven by our high-potential account strategy. Extremities grew across key indications in both upper and lower extremities. In OMF, head and neck growth was driven by adoption of our algorithm in mandible reconstruction and continued momentum in oncologic procedures such as neck dissections.

With regards to priority 3 commercial expansion, breast now has 31 representatives and 3 Regional Directors, 10 more representatives than at the start of the year. Extremities and OMF and head and neck has 132 representatives and 15 Regional Directors, 15 more than at the start of the year. We also have 3 field-based market development managers supporting OMF and head and neck, and 3 clinical development managers supporting prostate.

The fourth priority of our strategic plan is commercial excellence. Our primary strategy over the past several years, focusing on high-potential accounts to build enduring nerve care practices continues to deliver results. In these accounts, our goal is to develop new surgeons and drive adoption of best practices and the full-treatment algorithm, making the restoration of peripheral nerve function a standard of care across the hospital.

Year-to-date, high-potential accounts generated 61% of revenue and 55% of growth, with productivity increasing 22%. Productivity in non-high potential accounts rose 25%, while productivity across all accounts increased 22%. These results point to broader adoption in nerve care as more surgeons practice across multiple sites, supported by expanded coverage.

Next, I'd like to update everyone on our fifth priority: standard of care evidence and coverage. Today, we have 2 national payer updates to provide. Let's start with Elevance. In April, Elevance removed Avance from its experimental and investigational list, but included a utilization management criterion based on the nerve gap length from the RECON trial. After a collaborative meeting with Elevance and a few world-leading surgeons in the second quarter, Elevance removed the gap length criteria in August. This timing beat our internal expectations.

Now Aetna. In early October, Aetna extended coverage to Avance for short-to-medium sensory nerve gaps of 30 millimeters or less in the upper extremity. As we've stated before, it is common for medical policy teams to initially adopt strict utilization management criteria for a new coverage position, and we believe that is what drove Aetna's decision.

Similar to how we have handled the prior Elevance situation, our health economics and reimbursement team will partner with surgeons to educate Aetna and resolve this situation collaboratively. With the updates from Elevance and Aetna, the commercial payer coverage for Avance is approximately 96% of covered lives in the United States. This satisfies the milestone in our strategic plan for near universal coverage.

Since the second quarter of 2025, we have added an estimated 87.6 million commercial and Medicare Advantage lives across Cigna, Elevance, Aetna and the 12 Blue Cross Blue Shield regional plans. Beyond expanding coverage, we continue to invest in the clinical evidence needed to advance nerve repair as an expected standard of care. This quarter, we made progress across that evidence strategy, including new peer-reviewed evidence and advancement of 2 important clinical studies.

Recently, results from our MATCH study were published, providing direct comparative evidence for Avance Nerve Graft and nerve autograft in mixed and motor nerve reconstruction. The study demonstrated that motor recovery with Avance was comparable with autograft, further strengthening the body of clinical evidence supporting Avance in mixed and motor nerve repair.

Nerve-RESTORE, which we described last quarter, builds upon this evidence through a randomized, assessor-blinded comparison of Avance Nerve Graft and sural nerve autograft in mixed and motor nerve repair. We are pleased to report that the first patient has now been enrolled, marking an important milestone in this study. Additional site activations are planned for the fourth quarter as enrollment continues.

We are also advancing EMBRACE, our prospective multi-center study evaluating sensory recovery following breast reconstruction with and without nipple areolar complex nerve reconstruction. The study is designed to generate comparative evidence on restoration of nipple areolar complex sensation, including patient-reported outcomes. Study start-up is underway, with the first site initiation planned for the fourth quarter.

And finally, our sixth priority, which is about innovation, R&D and therapeutic reconstruction. On October 1, we completed our acquisition of BioCircuit, adding NerveTape as a sixth product in our nerve repair algorithm. We see significant potential to scale NerveTape as a faster, easier coaptation aid.

In large gap repairs, NerveTape can be used with Avance to connect the proximal and distal nerve ends. NerveTape also expands our reach into direct repair, an underdeveloped and effectively new opportunity for Axogen, represents approximately 40% to 50% of transected nerve procedures. And these procedures, NerveTape enables surgeons to reconnect a transected native nerve more simply and effectively than with microsuturing, the predominant method used today.

BioCircuit historically sold through approximately 50 independent distributor representatives and served roughly 400 accounts. As of today, Axogen's direct sales organization has assumed all sales and distribution responsibilities. We expect the transaction to contribute to revenue growth and adjusted EBITDA margin in the first year, while Axogen remains free cash flow positive.

Looking ahead, we are confident that leveraging NerveTape across Axogen's direct commercial platform and demonstrating its ability to enable simpler, faster and more effective repairs will accelerate the adoption of nerve repair and strengthen our overall growth strategy.

Turning to prostate. As announced in this morning's earnings release, we will initiate prostate nerve reconstruction market development in 2027. Based on collaboration with global experts in urology and men's sexual health, we validated the clinical need, which is substantial, developed a scalable technique that is efficient and reproducible and see positive clinical outcome signals from our clinical development sites.

To date, over 220 patients have received prostate nerve reconstruction with Avance across 15 clinical development sites. Of these, 117 patients have at least 6 months of follow-up, 86 grafted on one side unilaterally and 31 grafted on both sides bilaterally. No graft or grafting procedure-related complications were reported.

Historically, men undergoing traditional non-nerve sparing radical prostatectomy have a high risk of severe erectile dysfunction with unilateral, non-nerve sparing patients reporting recovery of erectile function and only 33% to 56% of men and those undergoing bilaterally non-nerve sparing procedures, having a less than 13% chance of recovering useful erections.

When repairing the nerves with Avance, we see that among patients with at least 6 months of post-operative follow-up, surgeons report that approximately 80% have achieved better-than-expected recovery of erectile function defined as a sexual health inventory for men or otherwise known as SHIM score of 15 or higher. On this validated 25-point scale, a score of 15 or higher is generally associated with erection sufficient for sexual activity.

For reference, a score of 7 or lower indicates severe erectile dysfunction. These early results suggest that meaningful erectile function may return as early as 6 months after surgery when following post-operative penile rehabilitation protocols as prescribed with or without PDE5 inhibitors.

In addition, over 95% of patients achieved Pad-free urinary continence at or above expected levels. These results demonstrate an exceptional benefit-to-risk ratio and have established the foundation to initiate prostate nerve reconstruction market development in 2027. We look forward to sharing a detailed overview of the clinical outcomes and market research underlying our decision to move forward on November 9.

Dr. David Lee, Professor of Urology at the UC Irvine School of Medicine and Director of the University of California Irvine Health Comprehensive Prostate Cancer Program and Dr. Zeyad Schwen, Assistant Professor of Urologic Surgery at Cleveland Clinic, will join us to provide clinical and patient perspectives.

Regarding the financials and logistics of our prostate nerve reconstruction market development plan, we will share details during our March 2027 Investor Day. We believe nerve reconstruction in prostatectomy can become a meaningful long-term growth driver for Axogen and more importantly, a new standard of care for men facing prostate cancer.

Lastly, as a reminder, prostate is not included in our current or long-range guidance. We will provide an update on guidance in the first quarter of 2027.

To close, we are delighted with our overall business performance and have high confidence in our ability to continue executing our near- and longer-term plans.

With that, I will now turn the call over to Lindsey to review our financials.

Lindsey Hartley

Thanks, Mike.

I'm pleased to report our third quarter 2026 financial results. For the third quarter, we reported revenue of $75.8 million, reflecting growth of 26.2% year-over-year. Revenue growth continues to be driven by strong demand for Avance and adoption of our product algorithm across target markets, with unit volume serving as the primary driver than price.

Our gross profit for the quarter came in at $56.7 million. This represents a gross margin of 74.8%. Gross margin decreased 180 basis points year-over-year, driven by 3% higher product cost, partially offset by 1.2% lower write-offs. We continue to expect gross margin to decline in the fourth quarter sequentially and to be slightly less than our second quarter as a result of adjusting our production plans beginning in the third quarter to better align production, with the increased demand for long-length Avance, largely stemming from the growth of our breast business.

Yield improvements and pricing actions are underway, but their impact on gross margin will lag as they move through cost of goods sold. We expect full-year 2027 to be more in line with full-year 2026 and we'll provide formal 2027 guidance in the first quarter.

Operating expenses increased to $55.8 million in the third quarter, up from $44.1 million in the third quarter of 2025 and increased 0.1% of revenue. The increase year-over-year was driven primarily by compensation costs, stock-based compensation expense tied to certain PSUs anticipated to achieve above target on revenue growth components and costs related to the acquisition of BioCircuit. Sequentially, as a percentage of revenue, operating expenses decreased 2.3 percentage points.

Sales and marketing expenses as a percentage of total revenue decreased 2.7 percentage points to 40% in the third quarter compared to 42.7% in the third quarter of 2025. Sequentially, as a percentage of revenue, sales and marketing expenses decreased 4.2 percentage points.

Research and development expenses increased 18.3% to $9 million in the third quarter compared to $7.6 million in the third quarter of 2025. And as a percentage of total revenue decreased to 11.8% from 12.6%. Sequentially, as a percentage of revenue, research and development expenses decreased 0.5 percentage points.

General and administrative expenses increased 51.9% to $16.5 million in the third quarter compared to $10.8 million in the third quarter of 2025. And as a percentage of total revenue increased 3.6 percentage points to 21.7% from 18.1%. Sequentially, as a percentage of revenue, general and administrative expenses increased 2.4 percentage points.

During the quarter, we incurred $2 million of costs related to our acquisition of BioCircuit, contributing to the year-over-year and sequential increases. Net income for the third quarter was $2.3 million, or $0.04 per share compared to $700,000, or $0.01 per share in the third quarter of 2025. Sequentially, net income improved $3.9 million.

Adjusted net income was $13.1 million, or $0.21 per share for the third quarter compared to $6.1 million or $0.12 per share for the third quarter of 2025. Sequentially, adjusted net income improved $5.8 million. Adjusted EBITDA for the third quarter was $13.4 million compared to an adjusted EBITDA of $9.2 million in the same period last year and as a percentage of revenue increased 2.3 percentage points to 17.7% from 15.4%. Sequentially, adjusted EBITDA improved $5 million.

Adjusted net income and adjusted EBITDA are calculated as net income or EBITDA adjusted for stock-based compensation, the loss on the extinguishment of debt and the transaction and integration costs incurred in connection with the acquisition of BioCircuit. The improved bottom line performance demonstrates our continued ability to drive both top line growth and profitability.

As of September 30, 2026, cash, cash equivalents, restricted cash and investments totaled $350.1 million. Through the first 9 months of 2026, we generated $18.9 million of free cash flow. On October 1, we completed the acquisition of BioCircuit and funded the purchase price of $200 million plus transaction expenses.

Integration and purchase accounting activities are underway and progressing well. In connection with our purchase accounting for the transaction, we expect to adjust the value of the acquired BioCircuit inventory and recognize goodwill and intangible assets on our balance sheet. Amortization of these intangible assets over their respective lives will significantly increase our amortization expense and general and administration expenses going forward. Our preliminary purchase price allocation and required disclosures, including pro forma historical revenue and earnings related to the BioCircuit acquisition will be included in our 2026 Form 10-K.

Based on our year-to-date performance, acquisition of BioCircuit and visibility into the remainder of the year, we are revising our full-year 2026 financial guidance. We now expect full-year 2026 revenue growth of at least 29% or revenue of at least $290 million, including at least $7 million of revenue from BioCircuit. Excluding BioCircuit, we expect organic revenue to be at least $283 million, representing organic growth of at least 26%.

We continue to expect gross margin to be at least 73% and positive free cash flow for the full year. This guidance does not assume material benefit from payer coverage decisions beyond what's already known, nor from our decision to begin market development activities for prostate. While not expected, our BioCircuit revenue guidance does contemplate some level of integration or disruption risk associated with the acquisition.

The expected impact resulting from the overlap of BioCircuit's NerveTape with our Axoguard Connector and Axoguard Protector products is included in our organic revenue growth guidance of at least 26%. Our gross margin guidance is presented on a GAAP basis, but does not include the potential impact from the purchase accounting adjustments to BioCircuit's inventory value as of the acquisition date, which is currently underway. The resulting step-up in value of the acquired inventory could negatively impact gross margin in the fourth quarter and for the full year relative to our current expectations.

To close, I'm pleased with the quarter's results and progress we continue to make improving our profitability.

With that, we'll now open the line for questions. Operator?

Operator

[Operator Instructions] The first question today comes from the line of Rei Tan with Bank of America.

分析師問答

Rei Tan

My first question is related to breast, which continues to be a strong driver of growth. We saw accounts increase year-over-year. And I was just curious what share of eligible reconstructions now include Resensation with Axogen's portfolio? And how much of this growth is coming from new account activation versus increased utilization within existing accounts?

Michael Dale

Sure. With regards to penetration, it's probably around 11%. We don't know exactly, but it's within that range. In terms of the drivers, it's the basic mechanics of increased same-store sales, i.e., accounts are becoming more productive as they adopt Resensation as a true standard of care. Most surgeons who go through the initial training and then start eventually reach a point whereby it's considered a part of any kind of reconstructive procedure. And as that happens, their referral networks otherwise reflect that.

The other element is adding new surgeons within an existing account. So, one surgeon begins to practice Resensation as part of their repertoire as a standard of care. Invariably, other surgeons within the same account will ultimately adopt the same practice. And then in addition, adding new accounts. And so these are the drivers. Both elements are contributing to the double-digit growth. And that's why our priority is expanding footprint so that we can competently and appropriately support the education process and then, obviously, working through the process of opening all accounts. And I guess to put a fine point on it, that's why we continuously say that we expect growth in this area to continue for years as this basic infrastructure process plays out.

Rei Tan

Great. And then I appreciate that we probably will get more information on the November 9 call. But just on prostate. Of the 110,000 robotic prostatectomies a year, how many procedures are you planning to target at launch or can be targeted at launch? And what determines, which procedures can be initially targeted?

Michael Dale

Jens will take that question.

Jens Schroeder Kemp

Yes. So, our estimated TAM procedure volume is around 110,000 procedures. So, obviously, we're not going to target all centers initially. So, we are developing the targeting algorithm. We'll be focusing on academic centers, high-volume centers and centers that do a mix of both, new lateral, bilateral reconstructions and nerve sparing procedures.

Operator

The next question is from the line of Lawrence Biegelsen with Wells Fargo.

Ross Osborn

This is Ross Osborn on for Larry. So to start off, there's been some confusion around how much NerveTape is incremental versus cannibalistic to your business. And we heard Lindsey's comments on 26% organic growth this year. But how should we think about the $34 million in NerveTape sales next year? How much is incremental versus cannibalistic?

Lindsey Hartley

Ross, this is Lindsey. For next year, the $34 million that I put out in the press release at closing is incremental. That is net of cannibalization. We'll provide more guidance in the first quarter on 2027.

Ross Osborn

Okay. Great. And then regarding your Aetna coverage update, what share of your Aetna insured advanced procedures falls inside the policy of shorter than 30 millimeters today? And then are Aetna breast cases being paid under WHCRA today? Or are you seeing denials?

Rick Ditto

Yes. Great question, Ross. On the second point, which I'll answer first. In the Aetna policy, they have a footnote that says that federal and state mandates apply, and it's been our experience that Aetna and CVS Health intend to comply with WHCRA and so they pay these claims. On the first point, we don't break out our procedures by gap length and whether it's sensory or mixed and motor, but it's a fair number of procedures.

And Mike talked about in the prepared remarks, our MATCH publication -- and we just believe the evidence body supports the coverage criteria that we see from the other payers. So again, we're confident we can resolve this with surgeons and Aetna's team, and it's probably in line with next year's annual update, but that work is already underway.

Operator

Our next question is from the line of Michael Sarcone with Jefferies.

Michael Sarcone

Congrats on a nice quarter. I guess just to start, the updated guide when you exclude the BioCircuit contribution, I think that implies 4Q growth of around 27% year-over-year. And that's about a 1 point acceleration from 3Q. So, just wanted to get your take on what you're seeing so far in 4Q in your core markets and where that expected growth acceleration is coming from in 4Q?

Michael Dale

Sure, Mike. The growth that we're seeing is really driven by the fundamentals we mentioned each quarter, which is expand the footprint, that allows you to support more surgeons, open more accounts, open more accounts and then go deeper within those. And so those basic sales fundamentals are what applies in our opportunity. As we've long discussed, the opportunity to add value from a benefit versus risk value proposition across the spectrum of nerve dysfunction presentation is huge.

And so that question is really what drives and underlies the whole opportunity. And so our job as we see it is making sure that we have people present in each of the areas where we have the ability to develop the education process to drive that process through new surgeon development, education and the addition of new accounts not yet practicing nerve repair. And so there's nothing really new under the sun, I guess, is the best way to summarize it is that the math on this in terms of the footprint just becomes a multiplier effect as that situation expands.

Lindsey Hartley

And to add a little color on the guidance, sequentially from Q3 to Q4, we don't see a large step-up. So, we just went based on our normal historical seasonality and our planning in our guide.

Michael Sarcone

Got it. That's helpful. And then second question is a 2-parter. I guess, first, can you talk about what you're seeing in your experience so far with your sales force selling NerveTape, particularly around how doctors may be transitioning from using Connector to NerveTape?

And then the second part of that is, Lindsey, I believe you mentioned the 26% growth guide for this year includes some -- your cannibalization estimate. I was wondering how you're thinking about that quantitatively and what's baked into the guide for the full year?

Michael Dale

With regards to the process of our sales organization representing NerveTape, that's all just underway. All I can really speak to at the moment is great enthusiasm. People are very excited. And the reasons why we thought that this would be a good fit for organization, there's nothing that we've experienced thus far to suggest that, that original sentiment wasn't well placed and built on a good foundation.

As for the issues or the question about the cannibalization, NerveTape is far broader than just Connector. And I think that's very important to emphasize and appreciate is that there's many different permutations on a technical nerve repair, whether it be direct or otherwise. And so while there will be product mix naturally in favor of NerveTape versus Connector, Connector will still continue to be used for specific procedures. NerveTape will obviously be adopted more for large gaps. But then in particular, the application towards direct repair, where we can eliminate the requirement for microsurgery in a more effective way in a simpler and faster manner.

And so nothing's changed in terms of the thesis here, and people will be able to, of course, measure what we've just expressed in terms of explaining BioCircuit. On a quarter-to-quarter basis, we'll publish those results from a pro forma standpoint. But we have high confidence that this will be highly synergistic and appropriately accretive to the business.

Lindsey Hartley

Yes. And when setting the guide for the organic growth, through our research, we modeled just an assumption of what the cannibalization will look like. And so as we move forward with integrating BioCircuit, we'll continue to challenge those assumptions and then see how close we are and adjust as needed. But they are baked in. We're not going to guide to the exact amount of cannibalization that we are anticipating, but we're just going to disclose the organic growth.

Operator

The next question comes from the line of Christopher Pasquale with Barclays.

Unknown Analyst

This is Michael on for Chris. And congrats on a nice quarter. I wanted to ask just one question on the NerveTape opportunity. It seems like there are several different levers you could pull on here to drive growth moving forward. And I just wanted to understand what you think is the biggest opportunity. Is it entering the direct nerve repair procedures, increasing NerveTape utilization in existing advanced cases or even expanding the population of surgeons willing to use Avance because of the easier procedure? And how soon do you think you could capitalize on each of those opportunities and at which pace?

Michael Dale

To be very honest, I know this might be unsatisfying, but it's all of the above. So, any time you can make any procedure more adoptable to ease of use without sacrificing effectiveness. This basically removes burdens and barriers. So, we think it will be enabling of nerve repair in general over time to include people taking on practicing certain elements of nerve repair that otherwise might not have been able to do so or wouldn't do so because of the microsuturing requirement. So, that won't happen overnight, but that is part of the strategic rationale.

In terms of its adoption, I think in the procedures where it's currently gotten start, OMF mandible procedures and then you add into that breast, that will continue to grow for the reasons that it started, which simply makes the procedures more accessible and easier and faster. And then finally, strategically, direct repair, which is an area that we haven't really had tools that would provide a superior value proposition when you're simply taking a nerve that's been -- that's suffered a simple transaction and you put it back together.

Now with NerveTape, we have the ability to bring a real value there in terms of, again, effectiveness, simplicity and speed. And so all of these are going to contribute to the incremental growth. And we've seen nothing in our early experience to suggest otherwise. And again, as a reminder, we've been following this asset for quite a while. So it's not as if we don't have familiarity with it.

Operator

The next question is from the line of Mike Kratky with Leerink Partners.

Michael Kratky

And congrats on another great quarter. Maybe you could start, and I apologize if I missed that. Can you help quantify what your growth looks like in breast during the third quarter after the 47% growth in the first half?

Michael Dale

Higher, higher.

Lindsey Hartley

It's over -- yes, in the third quarter, the breast growth is over 60%.

Michael Kratky

Okay. Very helpful. And then just in terms of a follow-up, can you help quantify to what extent you've seen incremental growth coming from your recent commercial wins? And is it fair to think that those commercial wins are having an outsized impact in extremities and OMS? Or is breast also benefiting from that equally?

Michael Dale

It's very difficult to quantify it, Mike. And part of the reason is kind of a bias analysis insofar as you know when you have an issue because everyone brings it to your attention. But when it's no longer an issue, no one tells you, hey, it's no longer an issue. So, we don't really have the ability to quantify other than to generalize and say, clearly, our work is enabled in terms of customer creation simply because there's fewer and fewer coverage and reimbursement issues.

Operator

Our next question is from the line of Caitlin Roberts with Canaccord Genuity.

Caitlin Cronin

Maybe just some more color on the over 4,000 surgeons. I think you noted on the last call that are potential users of NerveTape. So, how many of those would be market expansionary to Axogen? And what kinds of surgeons are you adding there? And what's the medical education strategy over the longer term for you guys there?

Michael Dale

Sure. With regard -- well, first of all, we've only just begun. So, I can't report any differences in terms of adoption yet. It's just too early. But in terms of medical education strategy, the actual technical use of the product is extremely simple, very, very low levels of required education. where most of the -- it's also selling and market development will take place will be in best use case scenarios in development.

So for example, direct nerve repair, what I mentioned earlier, OMF procedures, we have individuals who are not necessarily microsurgical trained, but have very difficult procedures where you're trying to reconnect a nerve to a nerve stump in the mandible. Those are very difficult and sometimes becomes a barrier to actually doing the nerve part of the procedure. So, NerveTape enables that to making it much, much simpler by virtue of its form factor. So, those are the -- that's where most of the training will come back. The actual use literally of the tape is like in the movies that we provided in the links. It's that simple. So hopefully, that answers your question.

Jens would like to add.

Jens Schroeder Kemp

I'll just give you some additional color on the actual penetration. If you combine the Axoguard Connector and NerveTape penetration of the overall procedure TAM that we see, it's around 5% today. So, there's a significant opportunity to grow NerveTape in procedures across all of our markets as we see both in direct repair and indirect repairs.

Caitlin Cronin

Understood. And then you also touched briefly on this on your last call relative to Axoguard. But maybe just speak to, again, the economics and the reimbursement landscape for NerveTape.

Rick Ditto

Yes. So the proper code for NerveTape procedure is 64910. That's a nerve repair with the conduit. And so, yes, I think we updated the corporate deck with also the CMS payments for a direct repair code as well. So, you can see that there's adequate facility payment to cover the implantables in any procedure like that.

Operator

The next question is from the line of Ravi Misra with Truist Securities.

Ravi Misra

So just one. My first question. Just on the sales force kind of productivity and headcount additions. You've pretty much achieved your full-year guidance here in the third quarter, at least exiting 3Q. How should we think about the pace of rep adds for the remainder of the year? And productivity took a pretty nice step-up even ahead of the NerveTape being layered into the bag. Do we just kind of assume similar run rate and kind of layer on NerveTape? Or do you see further increases, I guess, at least in 4Q on that front?

Lindsey Hartley

Yes. We're going to continue to add headcount. We'll come out in Q1 with our guidance for 2027. As we go into '27, we will be posting for more positions and continue to hire into these roles.

Michael Dale

The constraint mentioned before in terms of our pace of add will be that we don't affect profitability. But that said, we see footprint expansion as to be one of the most important levers in the business.

Ravi Misra

And then just strategically on the NerveTape integration and the BioCircuit integration. Our checks have at least suggests a pretty robust enthusiasm for this product that the company might not have been able to kind of get through hospitals on their own. How do we think about the VAC process with existing Axogen contracts? Or just the kind of logistics of getting this into doctors' hands now that you own it. Could you maybe provide a little bit of color how you plan on accelerating that?

Jens Schroeder Kemp

That's a great question. So, BioCircuit had around 400 accounts -- active accounts. We have a footprint of close to 3,000 accounts. And given our presence in these accounts and the presence of our portfolio connections within the facilities, we do believe that we'll be able to accelerate approval in the VAC process for NerveTape. So, we definitely believe that we will continue to expand the presence of NerveTape throughout our accounts in the coming months, and that process has already started.

Operator

The next question is from the line of Jayson Bedford with Raymond James.

Zachary Gold

Zach Gold on for Jayson here. I'll just take a step away from NerveTape for a second here. I feel like you've got a couple of questions on that. I think, Lindsey, you made a comment that '27 margins will be similar to '26. I don't want to kind of ask for '27 guidance before you're ready. Maybe can you walk us through some of the puts and takes? What helps, what hurts '27 margins? Does this include any impact from selling prostate? Or how did you get to '27 similar to '26 margin?

Lindsey Hartley

Yes. So we're going through right now some pricing initiatives as well as yield initiatives. And as we put those in place, they're just going to take time to be able to go through COGS. And so we don't predict right now that we'll see a big uplift in '27 from that. So, that's why I've guided the way that I have informally until we get to Q1 and we have pricing baked. With prostate, it does help with our initiatives in production in terms of just getting more from each donor. And we do see that as being helpful. But again, we won't probably see that in '27.

Zachary Gold

Got it. That makes sense. And then on prostate, just a follow-up there. I know breast has been a source of margin softness just given the length of the breast and Mike, you spoken about this last quarter with the COGS proportional. Will you guys see sort of a similar margin dynamic from prostate? Is it also sort of a disproportionate COGS versus revenue dynamic?

Jens Schroeder Kemp

Generally speaking, prostate should be helpful. The grafts are shorter in length. So therefore, your productivity per donor is better. So the answer to your question is we don't see the same pressure.

Operator

The next question is from the line of Anthony Petrone with Mizuho.

Anthony Petrone

And congrats on another solid quarter. Maybe one on core extremities and then I'll have a follow-up on prostate. On core extremities, Mike, maybe could we just kind of go back to those numbers and maybe put an estimate out there of where penetration in that core peripheral market is? And I know in the quarter, just leading in, there was a little noise in some of the data that was out there. There was some tough comps, I think, in the September month, but it certainly seems like we're still relatively early in terms of penetration into core extremities. So, just a revisit on those numbers would be helpful. And then I'll have one on prostate.

Michael Dale

That's correct, Anthony. So, we still view that market as underpenetrated. If you make an adjustment for the case stock from third quarter prior year, growth in extremities was about 15%. And as we look at the business on a going-forward basis, we still believe that extremities will be a business, which will range from very high single digit to low double-digit growth quarter-to-quarter, year in, year out, just by virtue of the logistics of the selling process. And until we see other dynamics that would change that, that's the best way to model the business.

Anthony Petrone

Very helpful. And on prostate, the initial studies here on da Vinci Prostatectomy 110,000 a year. But you have a pretty big active surveillance prostate population out there of nearly 1 million patients, and there's certainly intermediate risk patients out there as well. So when you just think of prostate more broadly beyond DVP, are you going to go after active surveillance, intermediate patients? Or should we be thinking about this as exclusive to DVPs at least for the first few years? Congratulations.

Michael Dale

Thank you, Anthony. It's first things first. I mean, the value proposition that we can speak to with high confidence is the unilateral or bilateral non-nerve-spared patients. So in those situations, we unequivocally bring to bear a value without risk that there's simply no alternative for comparison to. Now what we expect and what we've heard from our market research and from surgeons is that as the potential risk of the cancer intervention itself shows promise of mitigation that they expect that more patients will be more willing to, first of all, enter into the screening process itself, which is one of the biggest issues is most men just don't even want to know the answer, much less an intervention. And so these things will take time. Awareness will have to build, but everyone believes that this will be a tide that will raise everybody's boats in terms of better cancer care and better screening.

Operator

Our final question is from the line of Frank Takkinen with Lake Street Capital.

Frank Takkinen

Just one for me. A little bit broader question. Any guideline updates we should be looking for over the next, we'll call it, 12 months or so? I know you've gotten a few this year already, but any other major ones outstanding that are in the relative near term?

Michael Dale

Are you referring to clinical guidelines or coverage updates?

Frank Takkinen

Clinical guidelines.

Michael Dale

Okay. We don't see any changes to clinical guidelines in the coming 12 months.

Operator

Ladies and gentlemen, this concludes our question-and-answer session.

I'll now turn the floor back to Mr. Dale for any final comments.

Michael Dale

Thank you, operator.

On behalf of the Axogen team, I want to thank everyone for their time and interest in our work to fulfill the promise and potential for all stakeholders of our business purpose, which is to restore health and improve quality of life by making restoration of peripheral nerve function an expected standard of care.

We look forward to updating you on our continued progress on our earnings call next quarter. Thank you very much.

Operator

Thank you. That does conclude today's teleconference and webcast. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation.